The Written Word
for May 23, 1999

When we elect people to the Legislature we expect them to some elementary understanding of arithmetic and how economies work. We would especially expect that if the person we elect is an economist from the London School of Economics.

But Joy McPhail has no such understanding, evidently. And she is a trained economist from the London School of Economics. The LSE, I'm told, is very fond of the Keynesian theory so called because it was proposed by the great economist John Maynard Keynes.

Broadly speaking, this theory has governments borrowing and spending in bad times and taxing and saving in good times. The critical problem is that politicans remember the borrow and spending times but forget all about the saving part.

So it is with this NDP government which has had nine consecutive deficits - the last one, when all the bills are paid, will likely exceed a billion dollars. This leads to the first point which Joy McPhail and her boss, Premier Clark, do not understand.

When you run up deficits they fall into the government's debt load.

Quite apart from having to pay that back some day, you must pay interest to the bankers ... just as you and I must to people from whom we borrow money. This means that next year, before the Finance Minister writes one cheque for social programs she must cough up about $3 billion dollars in interest charges. Which will mean more deficits which means an even higher interest bill the next year and so on.

This is what happened to the federal government and especially happened to Ontario under David Peterson and Bob Rae.

The second thing economist Finance Minister and her boss the Premier don't understand is that corporations don't pay taxes - they simply pass then through to shareholders (as often as not Union pension funds) or to consumers.

When they can do neither, that means they're broke. Most of you spend some time in the malls of the province. As I have, you've seen the excitement of a new business opening then the sadness of the failure often only a few months later.

In most cases, the straw that breaks their back is the Corporate Capital Tax which the NDP say they use to hit the big banks and nasty capiutalists with. But the Banks don't pay it - neither do the owners of the malls.

They pass these costs through to their tenants in the form of higher rent. This is why that nice little kids clothing store or the neat funky book store in your mall went broke.These are elementary truths.

And they have a double whammy - not only do they take money out of circulation they operate as a severe damper on the business climate. People are very reluctant to invest in economies which have huge debts and tax capital. It is these simple truths which propel B.C. further and further away from being a desirable place to do business.

Worst of all, the NDP, because of their inability to handle money, have probably made it obligatory that the next government do the same as Premiers Klein, Romanow and Harris have done. Then, of course, the NDP will scream that the new government is vicious and hard-hearted.