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Nice goal, hope to see improvements.

This isn't precise, but the build our own ships plan, and the fighter replacement, will eat a lot of money, also brp was awarded contracts to develop a moon buggy as well as a mars buggy, and if we want the CSA, to actually send those things off world, that will be expensive as well.

Why do anything with a surplus? If, indeed, it is result of increased economic activity, then spending the surplus is counter-cyclical. Then when the next slump comes, the deficit will be bigger than otherwise, causing fear and potential cutting back, which is also counter-cyclical. Counter-cyclical policy increases economic instability.

The above article has got macro and micro mixed up. When a microeconomic entity enjoys an $X surplus, that’s $X flowing into its coffers which it can spend.

In contrast, where a government is in surplus (and assuming full employment) that just means the private sector is relatively boyant, aggregate demand is relatively high as a result, and thus government needs to rein in demand by running a surplus so as to avoid inflation.

At least I assume the above mentioned 2015-16 surplus is based on the full employment assumption. If it’s not, then the assumption that there’ll be a surplus doesn’t make sense. That is, given excess unemployment, government ought to cut the surplus (maybe to nothing), or even run a deficit.

In short, given the full employment assumption, a surplus is just not money that government can spend. If it did spend it, there'd be excess inflation.

I want a national pharmacare plan. If the Brits can have it with the NHS, why can't we? We can file it under Section 94 and let the Feds be second-payer to the provinces, just like with CPP/QPP.

As for policy specifics, take the new New Brunswick plan and make it national.

That is all.

Oops! I said "counter-cyclical" when I meant "pro-cyclical". :( I think that most people caught that, though.

The tories just successfully shrunk government by > 10%. Before the crisis we were sitting at about 16% GDP in revenues and now we will have the books balanced at 14%. (Source: plots posted in WCI ;) ).

I think the tories will find another popular tax cut and shrink revenues more. Then they will cut spending to rebalance after a few years.

Wash, rinse and repeat.

The conservatives want to shrink government and exploit natural resources faster and with fewer rules. They are succeeding.

Almost all of the issues discussed in this post should be handled by the private sector. The idea that surpluses should be spent is just silly. Remember, it is the expectation of future surpluses that allows governments to borrow in the first place.

The is no economic reason to think that government should have any role in post-secondary education (pure research perhaps, but not broad based publicly funded institutions). As for an ageing population, again there is no special role for government.

I wish big-government economists were more consistent. Unless you can sensibly identify where the Welfare Theorems have failed, you have no reason to think that you can engineer society better than a free market. Furthermore, if you think transfers that maximize some imagined joint utility function is important, then logically you need to start with tags and one of the best tags is height. That is, if you really believe that wealth redistribution is an important role for government, we should impose a height tax as height not only correlates strongly with wealth, it also correlates strongly with potential success in life. If a height tax strikes you as ugly or unfair, then you don't really believe in redistribution for joint utility maximization reasons. Big-government economists also fail to tell us why redistribution within the country is so important, but redistribution outside the country is not. If redistribution is important to an economy, then why limit it at an artificial border? Why do free market principles apply globally, but redistribution does not? Seriously, why not send 1/3 of all our tax revenue to Africa if redistribution is so important?

Finally, even if you can identify a failure of the Welfare Theorems, we should be very hesitant to use the power of the state to correct the situation. In many cases (perhaps most) government just makes the market failure worse. Government monopoly is the worst kind of monopoly as the rent seeking industry comes out in full force to prevent any future change or innovation that would threaten the original economic reason for the government monopoly. At least a free market would constantly look for ways to get around a private monopoly.

Use the surplus to reduce the size of government, period. Friedman put most clearly, "I am favor of cutting taxes under any circumstances and for any excuse, for any reason, whenever it's possible."

"Unless you can sensibly identify where the Welfare Theorems have failed, you have no reason to think that you can engineer society better than a free market."

If you are going to rely upon the Welfare Theorems, you have to show that their assumptions are warranted. Besides, you make a false dichotomy between a free market and an engineered society.

The Welfare Theorems sit at the center of the foundations of all economics. As all economics is a parable to a more complicated picture, the Welfare Theorems are strictly an approximation. Nevertheless, the degree to which they get violated is paramount to policy. In the vast majority of cases, the Welfare Theorems hold so closely that there is no meaningful way in which a central planner could possibly hope to improve the situation. The issue isn't an imperfect market vs. a perfect, benevolent social planner; it is reasonably efficient markets vs. imperfect government and attendant rent seeking.

It is not a false dichotomy between an engineered society and a free market. We must remember that the organizing principle behind government is coercion and conformity, while free markets are based on voluntary interaction and unanimity. If we won't use prices and voluntary trade, we are only left with force. For those who are in charge, how do they know better?

Avon Barksdale: "free markets are based on voluntary interaction and unanimity"

Open your eyes.

Really, Min? Corporations advertise all the time - on TV, in print on the internet, etc. Ford tells me the have a great car, so does Toyota. Apple tells me they have great products, so does Microsoft. All these companies are trying to persuade me. If they can't convince me, I don't buy their products. I will only buy what they have to offer if it makes me better off. They will only sell to me if it makes them better off. If either one of us feel that we will not be made better off, we won't transact. That is, we must unanimously decide that we are each made better off before we trade. All these companies have to convince everyone who buys from them that their products makes their customers better off, unanimously. No company gets to use the police department to make you buy their stuff.

This is not how government works. The government only has to convince some people, not all, and in many cases just a minority. And once the government has convinced only the numbers it needs, everyone gets the same solution. You want less corporate welfare? Too, bad. You want more highways? Too bad. And so on, and so on, and so on,...

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