'Stimulate the economy' is the rally cry we hear over and over again from governments trying to appear to be doing something about the recession. This Keynsian notion of spending our way out of a recession was buried in the 1970s and unfortunately, it seems to have risen from the dead and re-infected policy makers with  ideas that don't work.

Why don't these ideas work? Because much of the so-called stimulus money is funnelled to pet projects that probably won't lead to higher economic growth, but certainly do add to the deficit and debt, which means higher taxes in the future.

A good example of where governments like to spend tax dollars is provided by the City of Kamloops. This is a city that needs a new sewage treatment plant and, coincidentally, had a boiled water advisory on August 28, 2009.

On September 24, 2009, to great fanfare, the City of Kamloops announced how it was going to spend almost $10 million in tax dollars to 'stimulate the economy.' Was it the new sewage treatment plant or a project to keep poo out of homeowners' water taps? No, the  'investment' will be in softball fields!

If we truly want communities to "meet their pressing infrastructure needs, help stimulate the economy, create jobs and support continued economic growth" the last thing government should be doing is stripping hard-earned money away from families to funnel to feel-good projects that yes, make great photo-ops for politicians today, but leave the rest of us with a legacy of debt tomorrow.

Tax cuts work better than stimulus spending to boost economic growth. They provide the incentive to individuals to work, save and invest, and those are the key components to greater economic prosperity in the future.

By: Maureen Bader
Posted: October 01, 2009
Topic: British Columbia

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