Monday, May 26, 2008

Intellectual Dishonesty - Fraser Institute Style

According to The Fraser Institute, Canadians are in debt to the tune of an aggregate $150,000 each as a result of government borrowing.

However, the Fraser Institute's calculus is deeply flawed, as that $150,000 number includes "future cost" items from an assortment of government programs:

The net increase in total liabilities over this period was $243.9 billion. The growth in obligations under programs such as the Canada and Quebec Pension Plans, the Old Age Security, and the Medicare system has been a focus of this debt study for many years. Specifically, the concern lies in the size of these obligations and what this implies for the future health of these programs.


This is so intellectually dishonest it's not even funny. Those numbers are not debt at all, but instead are future expenditures that the Fraser Institute is ASSUMING will result in borrowing on the part of the various levels of government.

This is rather akin to looking at the fact that I spend $X on groceries every month, and therefore, in ten years, I will 120 * X in the hole as a result. It completely ignores that I fund my groceries out of current day income. Worse, it assumes that my ability to be creative about my food purchases is non-existent.

In my most charitable interpretation, the Fraser Institute's assessment is simply cynical manipulation of statistics to create the impression that our collective government's fiscal house is in worse shape than it really is.

More bluntly, it's downright dishonest to treat debt that has a probability of occurring as if it has already occurred. When calculating my net worth, I don't go rolling in the probable debt I will incur from some major purchase down the road - it simply doesn't make sense. I may state at the time of calculation that I have an intent to spend some amount of money that I anticipate borrowing to fund - but at most, that is a probable debt - one which I expect I will incur, but circumstances may arise that make the incurred debt less or none. (For example, I had initially planned to do my kitchen renovation by borrowing a few thousand on a line of credit - however, when I came to make the actual purchases, I was able to do it out of existing funds. Was there a probable debt? Yes; but it never actualized)

Programs such as health care, CPP etc are not cheap, but they also produce a huge return on investment - something the denizens of the Fraser Institute simply ignore. They view them simply as expenditures, rather than as investments in people. (But they are all too willing to consider PMSH's insane military expenditures as a "good thing" - regardless of the duplication of effort or the subversion of open bid purchasing to hand money to their pre-chosen favourites.

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