ABSTRACT

Fighting COVID-19 is Not Like Fighting a War   [open pdf - 0B]

From the Overview: "The full scale of the economic losses from government-mandated closures in response to the pandemic came into focus with the publication of first-quarter GDP [gross domestic product] and government deficit projections. The extremely rapid move of governments in providing income support to Canadians invites the analogy to a war effort. However, comparisons with the Second World War are misleading. The wartime expansion of government spending and debt was much larger, while their post-war reduction was facilitated by an unexpected surge in economic growth. Instead, the current fiscal challenge is more comparable with the austerity introduced in 1995 and 2010. Governments then relied mostly on spending reductions rather than tax increases to curb deficits while sustaining economic growth. Invoking the Second World War also recalls the myth that the sharp expansion of government spending during the war both ended the Depression and paved the way for postwar prosperity. Like many myths, this has little basis in fact."

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Date:
2020-06
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Macdonald-Laurier Institute
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Macdonald-Laurier Institute: https://macdonaldlaurier.ca/
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