Raise the Hammer

Jason Allen >> The obvious solution is more public money

And if you're completely ignorant of how the economy works, I can see why you might think that way. In 2000, government spending in Ontario was $82.3B, while the private sector created goods and services worth $358.8B. In 2009, government spending was up to $146.4B, while the private sector created goods and services worth $431.8B.

From 2000-09, government spending in Ontario is up 77.9%, while private sector output is up only 20.3%. For the past decade, government spending outpaced private production of goods and services by 284%.

TWO HUNDRED AND EIGHTY FOUR PERCENT.

That's the rate at which government spending in Ontario has outpaced production by the private sector over the last decade.

Let's return to your quote..."The obvious solution is more public money"

From the first quarter of 1995 to the last of 2000, government spending by the province increased by only 8.2%, or 1.67% per year. In that same period of time, GDP increased by 5.1%, Even more impressive, private sector output went from $362B to $459.6B, or 6.1% a year.

In contrast, since the end of the third quarter of 2003, when Dalton McGuinty took over, public spending has increased by 3.63% a year, 117% more per year than the late nineties. How has this more than doubling of public spending on freebies affected our ability to be productive? Well, in since the Liberals have been in power, private sector GDP has increased from $383.3B to $398.7B, or about 0.56% a year. Overall GDP under McGuinty has increased only 1.23% a year.

Looking at the numbers, it's only logical to assume that a slow rate of spending by government (on freebies) is better for economic growth. This is because when government spends our money, because it has the power of taxation, there is less fear in wasting money. In other words, too much public spending greatly increases the odds that capital will be wasted. Not good if you want to fight poverty.