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I took a pretty vitriolic run at this piece in an earlier tweet, and got taken to task for denigrating rather than debating. So here’s a thread quoting from the piece and debating them. https://www.theglobeandmail.com/opinion/article-canadians-risk-becoming-addicted-to-pandemic-aid/?cmpid=rss&utm_source=dlvr.it&utm_medium=twitter
“[Moral Hazard] is present in the government’s actions in this crisis, and needs to be addressed.”
Present tense. But the moral hazard in the government’s actions WAS THE POINT of those actions. We wanted, on balance, people to stay home.
Present tense. But the moral hazard in the government’s actions WAS THE POINT of those actions. We wanted, on balance, people to stay home.
“It is as if an insurer agreed to cover substantially more than the actual losses in the case of an accident – something that runs counter to basic principles.”
A single $2000 universal benefit was the only way to get money in the hands of Canadians who lost their jobs.
A single $2000 universal benefit was the only way to get money in the hands of Canadians who lost their jobs.
“Moreover, if the perception sets in that government can insure them against all risks all the time...”
Is anyone in government saying we will “insure them against all risks all the time”? Where is this coming from? The government scaled back its efforts today.
Is anyone in government saying we will “insure them against all risks all the time”? Where is this coming from? The government scaled back its efforts today.
“…inevitable side effect is more and more private sector debt piled on top of corporate and household debt levels that were already worrisome before the pandemic .”
Seems like a pretty mild side effect given the alternative: the death of many of these firms.
Seems like a pretty mild side effect given the alternative: the death of many of these firms.
“The moral hazard arises from expectations that some temporary assistance will become indefinite…”
Again. What? Who is saying this will go on forever?
Again. What? Who is saying this will go on forever?
“Since the aid is based on the needs of firms – not their economic performance – the further unintended outcome would be a misallocation of both public and private capital…”
Another small price to pay for a short term injection to prevent firms from failing.
Another small price to pay for a short term injection to prevent firms from failing.
“It is as if, magically, the added debt is free and unprecedented deficits are costless.”
Canada faced this pandemic with the best fiscal stance of nearly any other country. We could afford to do what we did thanks to decades of fiscal restraint. Not magic, hard work.
Canada faced this pandemic with the best fiscal stance of nearly any other country. We could afford to do what we did thanks to decades of fiscal restraint. Not magic, hard work.
“This brings us back to where we were before COVID-19…”
What? The pandemic is over? Where?
What? The pandemic is over? Where?
“...but with even greater urgency: the need to innovate, to raise productivity and to be competitive…”
This is not helpful advice for how to emerge from the pandemic-induced supply-side recession. Just nice technospeak.
This is not helpful advice for how to emerge from the pandemic-induced supply-side recession. Just nice technospeak.
