The economic theory where using taxes to deal with demand shocks works is predicated on lowering taxes while cutting spending when things are going well in the private sector, driving down investment with high interest rates, like in the last 15 years. Especially lowering social spending, trying to get as many people into the private sector as possible so that more people work when the inevitable next crisis comes, at which point a movement in the other direction (at which point the government would have lots of saved up money and resources to both drive up demand and take care of people the private sector can't take care of anymore)
The idea is that government-generated demand is adjusted to keep total demand for the economy to service roughly constant, while keeping everyone either employed or receiving benefits. This means when the private sector does well, the government deliberately slows down, almost hinders activity and builds up a bank (you can tell: when the government does this it drives down house prices). When the private sector does badly, the government generates economic activity with their piggy bank.
Of course, the government never lowered its expenditures. I could say "after the last crisis" but with only very few exceptions the government has never lowered expenditures. In fact all governments worldwide have lowered expenditures so few times in all of history that a lot of economists can recite the entire list of exceptions by hard.
So there will be a demand shock, which will really hurt the private sector, and this gives the government a steep drop in income while the private sector is dropping employees by the thousands and everyone is screaming for government benefits, because they're really needed. Oh and meanwhile interest rates are going up, so the government is also rapidly losing the ability to borrow, which they'll try to prevent by ... driving up house prices.
What can be said? This is exactly what Canadians (and UK, and US, and EU, and ...) citizens have voted for. Governments will be forced into drastic social services cutbacks while doing everything they can to raise house prices (in fact all prices, since that's where they loan the money, which then results in the people that manage to keep jobs/keep in business produce more goods for the government)
This sounds more disastrous than it is though. All that's really lost is the ability to buy foreign goods. So if the government is able to quickly get the private sector to build/grow the goods that are currently imported there won't be much of a crisis. However ...
All there is to say is: either move to a tax haven, or enjoy.
The idea is that government-generated demand is adjusted to keep total demand for the economy to service roughly constant, while keeping everyone either employed or receiving benefits. This means when the private sector does well, the government deliberately slows down, almost hinders activity and builds up a bank (you can tell: when the government does this it drives down house prices). When the private sector does badly, the government generates economic activity with their piggy bank.
Of course, the government never lowered its expenditures. I could say "after the last crisis" but with only very few exceptions the government has never lowered expenditures. In fact all governments worldwide have lowered expenditures so few times in all of history that a lot of economists can recite the entire list of exceptions by hard.
So there will be a demand shock, which will really hurt the private sector, and this gives the government a steep drop in income while the private sector is dropping employees by the thousands and everyone is screaming for government benefits, because they're really needed. Oh and meanwhile interest rates are going up, so the government is also rapidly losing the ability to borrow, which they'll try to prevent by ... driving up house prices.
What can be said? This is exactly what Canadians (and UK, and US, and EU, and ...) citizens have voted for. Governments will be forced into drastic social services cutbacks while doing everything they can to raise house prices (in fact all prices, since that's where they loan the money, which then results in the people that manage to keep jobs/keep in business produce more goods for the government)
This sounds more disastrous than it is though. All that's really lost is the ability to buy foreign goods. So if the government is able to quickly get the private sector to build/grow the goods that are currently imported there won't be much of a crisis. However ...
All there is to say is: either move to a tax haven, or enjoy.