CBC Stands for Conservative Biased Commentary
For those of you who don’t know, retired Harper Cabinet minister Stockwell Day now has two jobs: political “counseling” and journalism. Mr. Day has taken a position as occasional contributing columnist to CBC. This is presumably yet more evidence of the far-left agenda in our national media.
Today, Mr. Day has published a half-baked column filled with some extraordinary untruths. By untruths, I don’t just mean ideological statements that I don’t agree with. I just mean some incredibly obvious, basic, errors that someone with a course or two in economics really I don’t think would make. Which is where it gets kind of disturbing. We don’t have many retired Cabinet ministers kicking around, so it’s tough to generalize, but if this is the intellectual calibre of the people running our country, I don’t mind telling you, it’s a little bit worrying.
The main complaint from Day — and this is the hypocrite part — is that Barack Obama and Justin Trudeau both support fiscal policies which would keep their countries mired in budget deficits. Uh, hello? You know what party you were in, right? You remember the budgets you voted for? Or maybe you just slept through all those votes. The hypocrisy is extraordinary here. Our right-wing budget deficits are necessary responsible investments. Their left-wing budget deficits are unsustainable giveaways. I agree with Day that budget deficits are a problem. I’m just not sure he agrees with himself.
But, as I say, my concern is not with political grandstanding or ideology. It’s with things like this:
Don’t be fooled by high-sounding terminology such as “quantitative easing.” Although QE, as it is known, may have a regal tone, I can assure you there is nothing majestic about it. It simply means that public debt is being heaped upon the shoulders of this and the next generation. It is a fleeting fix to a problem that cannot be fixed with compound interest rates.
I don’t know where the compound interest rates come in, but the main point is — and now we’ve arrived at the ignoramus part — quantitative easing has nothing to do with debt. It doesn’t even have anything to do with government fiscal policy. Quantitative easing is a monetary policy of the central banks, which involves printing money and giving it to the private banks to “stimulate” the economy. This adds nothing to the bottom line of the annual budget. There isn’t even an authorization to do it coming from the White House. In both Canada and the United States, the central banks are run independent of government policy, and the money they give to the banks does not come from taxpayers.
Now that we have the proper definition for this, it’s worth pointing out — gasp, the horror! — that the sort of policy that underlies quantitative easing not only doesn’t lead to public debt, but it was also eagerly set in place by conservative governments, not liberal ones. It was the Bush administration that got this ball rolling in the United States. Our central bank has given out certainly tens of billions and very possibly hundreds of billions to the banks in a similar manner.
You may legitimately ask yourself — and me — how it’s possible for trillions of dollars to be pushed around the table without the public purse taking a hit from it. The answers are complicated. (The simple answer is: because most money is fake money.) But the question of whether “quantitative easing,” as it’s now known, is intelligent public policy isn’t at issue here. What is at issue is that, at least from what he has to say here, it’s not clear that one of this country’s most accomplished recent Cabinet ministers, admittedly now retired, has a sound grasp of basic monetary and economic policy.
And we haven’t even gotten to the best part of it, mostly because it requires a short lecture in macroeconomics: quantitative easing on a large scale would actually reduce government deficits, not increase them. Because, as I said before, most money is fake money.
It’s not just Day’s fault here either. Are there editors at CBC, or do they just let people put up any old thing on their website now? Surely the job of somebody at CBC is to save both their columnists and their organization from the embarrassment of publishing factually incorrect information.
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Sam Gunsch
As you would be aware this problem of economic nonsense being spewed by all sorts thinktanks, politicians, pundits, columnists, MSM editorial boards is pervasive.
CBC has been surrendering to this for some years now. Day is just the latest most outstanding expert in economic fact-free ideological idiocy.
Relative to my little rants, this has been said much better and said widely but of course not much at all among the ruling elites that are the self-appointed saviours of society on behalf the herd, but anyways:
Until modern society improves the public discourse around economics, the vested private interests and their handmaidens in politics, media, academia will continue to dominate by generating mass public opinion supporting reduction/restriction of any government economic intervention on behalf of the common good.
The West has suffered now from 30 – 40 years of ascendance of extremist monetarist, Friedman, Hayek, Chicago School propaganda intent on demonizing any government debt and spending and taxation policy that could be used in attempts to stabilize and generate economic results on behalf of the general welfare of the citizenry.
Thatcher, Reagan, Paul Martin, Harper, Klein, Harris, etc, etc.
Dogma: Austerity policies and cutting taxes are the cure for everything that ails the economy/society whether a nation’s economy is on the upswing or down phase.
Practice: Evidence free approach to setting public economic policy. Ideology on behalf of the vested interests.
As long as the analysis and discussion of economic issues by the Krugman’s, Stiglitz’s, Stanford’s continue to be few and marginalized by the current ideologies dominant inMSM/academic/rightwing economic universe, society will remain locked in current patterns.
We’re stuck with: Let the invisible market mechanism and its rational expectations inherent genetically sound processes prevail and they’ll lead us all to the holy land nirvana of wealth and prosperity.
Actually: versions of the 1930′s over and over and over.
But then I’d have to allow that this little blogosphere/social media thing may still have potential to break up the church of money’s monopoly.
Sixth Estate
I don’t disagree with any of that, but my point was (surprisingly) more basic: Stockwell Day doesn’t appear to know what quantitative easing is.
Which, as a recently retired Cabinet minister, is kind of disturbing.
We can’t even have an intelligent discussion about what policies are unjustiable if the leaders of the country don’t even know what their policies are.
Sam Gunsch
Ok… a reference on point. today. lucky i guess.
here: Krugman today… ( but from Andrew Coyne to Stockwell Day, for political purposes Krugman’s analysis doesn’t exist )
excerpt: “And this means that much of the advanced world blithely repeated the mistakes of the 1930s.
http://krugman.blogs.nytimes.com/2012/11/16/the-halt-and-the-lame-
You can always try to argue that this has nothing to do with the results we see. But since textbook macroeconomics says that contractionary fiscal policy is contractionary; since those of us who went with the theory rather than the confidence fairy said it would be contractionary; and sure enough, the areas pursuing austerity have done badly; the case for a connection is pretty strong.
And this means that much of the advanced world blithely repeated the mistakes of the 1930s.
http://krugman.blogs.nytimes.com/2012/11/16/the-halt-and-the-lame-2/“
crf
Stockwell fell off the jet-ski. You are right.
Your definition of QE is not, I think, right. QE is when the central bank buys assets of its choosing (any assets) in the open market, in exchange for cash. For example, the central bank may buy corporate or government bonds from a private bank. Or, more interestingly, the central bank may buy toxic assets from a bank, which may not be precisely worthless, but removes uncertainty and risk from private banks’ balance sheets, which may encourage lending (otherwise banks may hoard cash in order to cover the potentially bad loans).
It is only like giving money to banks if the assets taken in exchange by the central bank are totally worthless, and history shows that this is a rare thing (most QE is done with the central bank buying high-quality assets). The idea is that once the banks have all this cash, they’ll want to make it work by lending it at low rates to companies, who’ll hopefully use it to expand the economy.
Instead many banks are still hoarding cash, or buying government securities, fearful of lending it. And companies with good balance sheets are not investing (Carney’s “dead money”). QE might work better if governments did something about worldwide lack of demand.
Sam Gunsch
I appreciate your post was about Day’s nonsense/ignorance about QE and debt and CBC enabling him.
To me, it’s an example that is entirely representative of public economic discourse whether on CBC or in MSM. For 3 decades now. Ramped up early 1980′s.
Figures of conventional authority, e.g. ex-politicians, can just make shit up freely and on an ongoing basis. And cite Fraser Institute or any USA equivalent backed up by ideologues at the Chicago School, for e.g.
And be taken seriously because of their status/authority/platforms/money.
No accountability for the entire crowd of Andrew Coyne’s to Fraser Institute to Calgary School ideologues.
On the effects of contractionary fiscal policy, that entire class of ideologues have again in response to the depression the West is now in, spouted economic nonsense, completely Black is White, Gravity has been reversed! kind of stuff, while the evidence has shown, again, austerity kills growth and amounts to economic policies implemented by government serving the elite vested interests that in fact kill people.
Kill people? The number of deaths due to increasing inequality in the USA has been quantified. Work on social determinants of health as you would be aware has documented the common sense observation that people living under bridges die younger than Stockwell or Andrew’s.
Anyways… our PBO has been attempting to bring some evidence to bear on behalf of democratic and informed governenance… here:
http://www.pbo-dpb.gc.ca/files/files/Labour_Note_EN.pdf
And discussed here:
excerpt:
“The point?
If you look at Canadian labour market indicators carefully, as the PBO did recently, you see that there is still slack in the labour market, there is still room for fiscal stimulus. You see that there is still a need for extended EI benefits, and there is a huge need for public infrastructure investment. The Harper Government’s New Math aside, there is no room for any more *fiscal consolidation* (in other words, austerity).”
http://rabble.ca/blogs/bloggers/progressive-economics-forum/2012/11/unemployment-and-harper-governments-new-math?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+rabble-news+%28rabble.ca+-+News+for+the+rest+of+us%29&utm_content=Google+Reader
Sixth Estate
Thank you for the more detailed explanation. You’re right, of course.
My objection was more limited: quantitative easing, like any other operation by the central bank, has no effect on the bottom line of the government budget. The fact that Day seems unaware of this is both perplexing and disturbing. The fact that CBC would allow him to embarrass himself (and themselves) in the process is also perplexing.
If anything, by flooding the markets with cash and increasing inflation, I assume the net effect on the budget, if there is one, would be to make new deficits more expensive (due to interest rates) but old debts cheaper (due to inflation).
Sixth Estate
Hmm. And to clarify once more: that is what I mean by the central bank printing money and giving it to the banks. Exchanging would have been a better word.
The point is that unless I am missing something they are not collecting money from taxpayers and giving it to the banks, which is what Day claims they are doing.
Sixth Estate
Sam — yeah, I understand all that. I agree.
But again, my point is, we obviously are incapable of having such a conversation with our leaders, not because they don’t want to have the conversation, but because they’re evidently incapable of grasping the concepts necessary for it.
So we’re governed by idiots, who read briefing papers written by ideologues, who are in turn funded by wealthy corporate interests, who are enabled by tax breaks, subsidies and other goodies granted by the idiots.
WhigWag
Yes, thank you, I heard him say it more plainly a few days ago on ‘Power & Politics’ before he finished the piece: that “‘Quantitative easing’ is just a fancy term for ‘debt’.”
And I remembered seeing a similar posting after he did the same thing a couple months ago – on the same set of topics, as it turns out: boosting Justin Trudeau AND cautioning against debt. Here’s that post:
http://backofthebook.ca/2012/09/04/stockwell-day-shoots-an-old-canard/7880/
Odd, & even more worrisome, still, that no one within the CPC ranks has seen fit to try to set him straight, considering he embarrasses them all by revealing his ignorance like this.
Sixth Estate
I can only assume that most of them, and the people editing his work at CBC, don’t know either.
I know about that post. Check the byline on it.
The Sixth Estate » Spending Like Drunken Cons, Part 5: Conservatives Commit to Spending $165 Billion They Don’t Have
[...] inflation, and it’s one that retired Harper Cabinet minister Stockwell Day utterly missed in an extraordinarily incompetent attack on “quantitative easing” published by CBC a week ago. [...]
The Cons’ $165 billion fiscal cliff : Canada's online magazine: Politics, entertainment, technology, media, arts, books: backofthebook.ca
[...] of inflation, and it’s one that retired Harper Cabinet minister Stockwell Day utterly missed in an extraordinarily incompetent attack on “quantitative easing” published by CBC a week [...]