Future generations will carry the burden

RE: Economics and cost

A major everyday problem for governments is the control of inflation and unemployment levels. Most people who have studied economics are familiar with the Phillips Curve. A.W. Phillips, an economist, addressed the relationship between unemployment and inflation. The Phillips Curve posits that you can have low inflation or low unemployment, but not both. If a businessman incurs an increase in his costs which seriously challenges his profitability he will increase the cost of his products which is inflationary, or reduce staff which will increase the level of unemployment.

Some years later Milton Friedman advocated addressing all “outside costs”, which increase the price of labour, (collective wage bargaining, mandatory minimum wages, outlandish benefits). If constraints on these issues are not lifted inflation would rise without a corresponding reduction in the levels of unemployment.

This kind of reasoned economics seems to have bypassed Queen’s Park whose single fiscal policy is to borrow, borrow and borrow some more. Ontario now has the largest nonsovereign debt in the western world. It is foolish to believe that this debt will ever be satisfied. Sooner or later we will default on our payments and we will slide into bankruptcy.

Our children and grandchildren will be left to carry the burden created by our collective insanity in believing that Liberal politicians are capable of governing or can be instruments for general reform. Jack Mellor, Mount Hope