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Maxed out

Ahead of the curve

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I'm mad as hell and... and... and there's not a damn thing I can do about it. Except take the blame people keep saying is mine, even if I don't agree with them.

For the 310 th time since late November, someone's come up to me and said words to the effect, "I voted for Ken and I'm sorry I did. You shouldn't have endorsed him." I don't think all, or maybe even any of those people voted the way they did because of anything written in Pique , but I understand the sentiment behind their feeble attempts to blame me. Hey, I'm disappointed too. But if I had to do it over again.... Maybe that's one of those sentences I'm uncertain how to end.

But being the kind of positive, upbeat guy I am, let's look on the bright side. Who knew Ken and Bill were such insightful economists? Long before Nobel prize-winning economist and New York Times columnist Paul Krugman started writing about the paradox of thrift, Ken and Bill were way ahead of the curve in doing everything they could to negate its dreaded, recessionary effects.

Don't keep up with economic recession theory? Let me summarize. Hypothetically - since everything economists seem to do takes place in a hypothetical universe - when economies head south, when investments lose value, when people live in fear of losing their jobs, when businesses vanish like farts in the wind, the natural response is for people to become more thrifty. They find ways to spend less and save more.

While thrift has always been a virtue - penny saved and all that - it, like so many other virtues, has been one North Americans have mostly practiced in the same hypothetical universe economists live in. The American, and to a slightly lesser extent Canadian, model has been more aptly described as Live for Today or Some Debt Good - More Debt Better. Ironically, I write about that from something of a hypothetical perspective since the working title of the book I'm writing is Confessions of a Cheapskate .

But it turns out that thrift, at least in times like these, isn't a virtue at all. The paradox of thrift operates on both a macro and microeconomic level. When everyone tries to increase savings at the same time, concomitantly decreasing spending, the effect is a depressed economy. If consumers cut their spending, and nothing appears to replace that spending, the economy descends into recession, businesses lay more people off, everyone's income is reduced, a feedback cycle is created. On a micro level, individual incomes may actually fall more than the amounts saved. Talk about your vicious circles.

That's partly the rationale for governments stepping in and, for example, pouring massive amounts of taxpayer dollars down a rathole like Chrysler.

Imagine my surprise when it became clear Ken and Bill instinctively understood the paradox of thrift. I mean, here we are, struggling through what can only generously be called a disastrous season. Tourist numbers are down. The amount spent by those tourists who did come was down. Businesses are closing, laying off staff, cutting salaries and benefits, struggling daily to keep from papering over their windows. Workerbees are responding just like economists predict. They're spending less. Don't know if they're saving more but many of them are earning less and living under the spectre of earning nothing so they're definitely spending less.

Into this breach, Ken and Bill, mindful of the paradox of thrift, move boldly to implement a plan to save us from the worst effects of the paradox. To ensure there are still a core of mindful, spending consumers, they've assured muni workers that no one will be laid off, no one will be fired. And then to really rally the troops, they've also promised them they'll stand by the inviolable "contract" that ensures them pay increases of 3-4 per cent for the years 2006 through 2010.

And then, just to make sure we all do our part, they fund everything through property tax increases. "Ha," I hear them say, "there's money you poor, misguided fools won't fritter away in meaningless savings."

When Ken and Bill stood, hand-in-hand, before the seething mob at the Squamish Lil'wat Cultural Centre in February and said they were bound by the contract they had with nonunion muni workers and they wouldn't breach it, I was proud. "What great guys," I thought. Not weasels like the guys running so many companies and other municipalities who are tearing up contracts, asking workers to take pay cuts, forego expected cost of living increases or simply pick up their last paycheque and hit the unemployment line. No, these guys honour the rule of law, contracts being legal entities.

I still thought that some days later when those three years I spent in law school kicked in and I skeptically thought to myself, "Hey, wait a minute. What contract? How exactly can they have a contract with nonunion employees?" Contract being one of those legalistic terms of art, it dawned on me that there was no real contract. There was an expression of intent to extend the union deal to nonunion employees in an attempt to stave off any further incursions by the union. Legalistically, that's about as close to a contract as foreplay is to rape.

But hey, why quibble. Clearly there is a higher purpose to this legalistic dodge. Ken and Bill are trying to save us from the paradox of thrift and make sure we don't embarrass ourselves before the Whole World when the Olympics come to town next year.

And that's when the true genius of their plan kicked in. Taking a page from the Obama team's go-big-or-go-home playbook, they jumped in with Phase II of their anti-recessionary strategy. Not only were they going to make sure there was a core of well-paid, job-secure consumers, they were going to buy them nifty new Arc'teryx jackets and Olympic tickets as well. Masterful! Brilliant! Downright Machiavellian ! And to soften us up for this, they had both a telephone survey and a blue-ribbon panel report to support their plan.

So, to you 310 people, I don't know what you possibly have to complain about. In fact, I think you owe me an apology. No, I wasn't smart enough to think so far ahead and clearly didn't have the insight to understand Kenny's comments during the campaign about fiscal responsibility actually meant saving us from our wrong-headed attempt to save money, but it's the results that count, isn't it?

Now if I could only get rid of this nagging concern that they may actually be wrong. But what are the odds? And it's not like they won't be around to shoulder the blame if everything goes south and the oft-spent hotel tax takes a nosedive. I mean, Kenny's going to run again, isn't he? And Bill's not really going to retire after the Olympics, is he? And neither of them are studying for their real estate license, are they?