William Watson: 1,000,000,000,000 | Financial position

Will Ottawa borrowing $100 million more produce more benefits than leaving the money for Canadians to spend?

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A trailing 12 zeros. A trillion. Or, if you prefer, a trillion. Or, the one I find most impressive, a million million.

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We used to talk about billions in fiscal policy. Now, increasingly, we’re talking trillions. US President Joe Biden’s proposed COVID package is US$1.9 trillion ($2.4 trillion), though the Wall Street Journal claims only a paltry US$825 billion is even remotely tied to COVID, the rest being a progressive vision made flesh.

Canada’s federal debt is now over $1 trillion, but only in Canadian dollars. If you want to see it grow, the Canadian Taxpayers Federation has a real-time debt clock. As of this writing, it’s at $1,063,743.57… oops, the rest is moving too fast for me to see, let alone copy. Just watching the numbers turn causes headaches. You can imagine how people are having a headache and having to find ways to fund it. Only 100 years ago, not a million, federal budgets listed spending to the nearest penny (a missing coin). Now, entries as far off as millions of dollars are probably not significant numbers.

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Imagine: a million millions! Before, it was a million, it was a very large number. When I was a kid, there was a non-reality (meaning pure fiction) TV show called “The Millionaire”. A lawyer handed out million dollar checks to an eccentric stranger who wanted to know how instant wealth affected people’s lives. If you were in a receiving line, like a Prime Minister or Governor General, and took 10 seconds to shake hands with every person you met, greeting a million people would take you almost four months, working 24 24 hours a day, 7 days a week. Even if your hand wouldn’t hold.

But if you wanted to shake hands with a billion people, it would take you a thousand times longer: just over 317 years. Of a trillion people? a thousand times this, or 317,098 years. Better start!

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The challenge of grasping such large numbers is trying, almost literally, to shrink them down to size. The US GDP is US$21.2 trillion, so Joe Biden’s US$1.9 trillion is just under nine percent of that. Is nine percent of GDP a reasonable amount to spend to get the economy back to producing all it can without forcing unduly? It depends on the distance that already separates you from this point.

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US GDP fell an unprecedented 31.4% in the second quarter of last year. But in the third quarter, it increased by 33.4%, which is also unprecedented. Given the collapse, the rebound has come from a smaller base, but it’s not easy to determine the size of the shortfall and how much of the US$1.9 trillion that will fill the gap rather than just moving money from less advantaged groups to more advantaged ones. questions to answer.

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When it comes to our own fiscal mega-bucks, the federal Liberals are proposing to borrow up to $100 billion more to spend on rebuilding politically properly. Statistics Canada has a population clock — it’s moving much slower than the fiscal federation’s debt clock, which is part of the problem — and at the time of this writing it says we are 38.1 million people. One hundred billion dollars divided by 38.1 million equals $2,624.67 for every man, woman and child identified as Canadian. For the proverbial, and now probably also mythical, family of four, that’s over $10,000.

What Canadians need to ask is if Ottawa is borrowing an extra $2,600 per person, or $10,000 per family, on top of the more than $26,000 per person and $100,000 per family it already has borrowed on our behalf will produce more benefits than leaving the money to Canadians to spend or not spend according to their own tastes.

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Yes, $100 billion in infrastructure spending would put money in the pockets of civil engineers and construction workers. But these are actually costs, not benefits. It’s true that engineers and cement colors would spend a lot of what they earned – but if you just want to pump money into the economy for people to spend, build $100 billion worth of real things is an incredibly expensive way to do it given that we now have electronic transfers.

The crucial question is: what are the benefits of such infrastructure spending? The track record of the federal government’s major projects does not inspire confidence. We learned this week that a single ship that Ottawa has been trying to build since 2008 is still on the drawing board and will cost at least $1 billion. It’s $1,000,000,000.00. For a ship. I guess non-government ships are built much faster and cheaper. Ditto for bailing out an economy.

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