Fraser Institute take on stimulus plan off target
Readers must have been surprised to see the right-wing Fraser Institute attacking the federal government stimulus program (“Stimulus Plan Didn’t Help Economy,” Lethbridge Herald, March 31). After all, doesn’t the Fraser Institute usually cheer for the Harperites? Well, they do except when Harper and company are forced into doing something they don’t want to do by the majority of members of Parliament.
Memory takes us back to the fall of 2008 — the first time Harper prorogued Parliament to avoid a nasty situation: the confidence motion that might have toppled his government. The Tories went into overdrive, convincing a slight majority of Canadians that this was an illegitimate, undemocratic move by the opposition parties. Harper tossed away his credibility, particularly in Quebec, by accusing the Liberals and New Democrats of colluding with separatists. (All this is grippingly detailed in a recent book: “How we almost gave the boot to the Tories” by Brian Topp). The culmination of the drama was the budget of January 2009, brought in with enough stimulus to ensure that Michael Ignatieff and the Liberals would not vote it down.
So, did the stimulus plan help the economy? Fortunately other economists have analyzed the report done by the Fraser Institute and found it lacking. One (Erin Weir of the Progressive Economics Forum) analyzed Statistics Canada data and found that “government purchases and investment, which accounted for only one-quarter of the economy in the second quarter of 2009, have accounted for one-third of the economic growth since then.”
Weir then asked how the Fraser Institute got it so wrong. The answer is that the Fraser authors did not examine stimulus as a share of economic growth. Instead, according to Weir, they compared the rate of increase in stimulus between quarters. This would almost guarantee that no effect of the stimulus would appear. But then, that would suit the relentlessly anti-government-action Fraser Institute to a T, wouldn’t it?
