Globe and Mail letter - Canadian Infrastructure Bank, with footnotes to editor

Re UBS Chair Champions Infrastructure Bank (Report on Business, July 12):

In the postwar era, the federal government used central bank financing to help pay for the building of highways, airports and bridges. Before 1975, the federal government also introduced Canada-wide medicare, universal pensions, the modern unemployment insurance system, and costsharing with the provinces for higher education and welfare.

The federal government did not go cap in hand to global asset managers to do this.

Handing over vital infrastructure to foreign and institutional investors today is foolish and will cost the public dearly.

Big money managers seeking maximum returns will exact monopoly charges and fees, but if things go sour, the government will still be forced to step in and pick up the tab.

That the chairman of Swiss banking giant UBS AG praises this plan concocted by Justin Trudeau's corporate economic advisers is not surprising. This is a plan of the banks, by the banks, and for the banks.

Copyright The Globe and Mail Jul 17, 2017

Footnotes:
 

1.  Is Monetary Financing Inflationary? A Case Study of the Canadian Economy, 1935–75
http://www.levyinstitute.org/pubs/wp_848.pdfAs shown in figure 1, between 20–25% of Canadian public debt was financed

and held by the central bank and government from the end of World War II up to the early

1980s but inflation was below 5% right up until the early 1970s..............

***
....in the period 1945–70....Federal government capital expenditure funded highways, airports, bridges,

schools, hospitals, and other physical infrastructure.

***

During the period 1960‒75, the federal government also introduced virtually all of the major

policy innovations that make up Canada’s system of social programs: Canada-wide Medicare,

universal pensions, the modern unemployment insurance system, and cost-sharing with the

provinces for higher education and welfare.
2. The glorious gouging of the public purse
William Mitchell is Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), University of Newcastle, NSW, Australia
http://bilbo.economicoutlook.net/blog/?p=23811

"The real problem with the PPPs in this regard is that is a falsehood that the risk shifts from the public to the private sector. Who ultimately bears the risk? The risk premium in private financing is based on the fact that a private entity can become bankrupt with its product and service exiting the market. With an essential public service it is a fantasy to say that the PPP contract transfers risk to the private sector.

If the private partner defaults, the public always has to pick up the pieces. There is no real risk transferred."

3. Thatcher – ‘Sorry You’ve Lost Your Job’
http://michael-hudson.com/2013/04/1843/

what the “free marketers” promised would be an efficient, streamlined, low-priced economy has become the highest-priced economy in the world...... The telephones cost more, and nearly every kind of public utility that was privatized now costs much more, capped by railroad and bus service.

__________________________________________

Modern Monetary Theory in Canada
http://mmtincanada.jimdo.com/

Globe and Mail letter - Canadian Infrastructure Bank, with footnotes to editor

Re UBS Chair Champions Infrastructure Bank (Report on Business, July 12):

In the postwar era, the federal government used central bank financing to help pay for the building of highways, airports and bridges. Before 1975, the federal government also introduced Canada-wide medicare, universal pensions, the modern unemployment insurance system, and costsharing with the provinces for higher education and welfare.

The federal government did not go cap in hand to global asset managers to do this.

Handing over vital infrastructure to foreign and institutional investors today is foolish and will cost the public dearly.

Big money managers seeking maximum returns will exact monopoly charges and fees, but if things go sour, the government will still be forced to step in and pick up the tab.

That the chairman of Swiss banking giant UBS AG praises this plan concocted by Justin Trudeau's corporate economic advisers is not surprising. This is a plan of the banks, by the banks, and for the banks.

Copyright The Globe and Mail Jul 17, 2017

Footnotes:
 

1.  Is Monetary Financing Inflationary? A Case Study of the Canadian Economy, 1935–75
http://www.levyinstitute.org/pubs/wp_848.pdfAs shown in figure 1, between 20–25% of Canadian public debt was financed

and held by the central bank and government from the end of World War II up to the early

1980s but inflation was below 5% right up until the early 1970s..............

***
....in the period 1945–70....Federal government capital expenditure funded highways, airports, bridges,

schools, hospitals, and other physical infrastructure.

***

During the period 1960‒75, the federal government also introduced virtually all of the major

policy innovations that make up Canada’s system of social programs: Canada-wide Medicare,

universal pensions, the modern unemployment insurance system, and cost-sharing with the

provinces for higher education and welfare.
2. The glorious gouging of the public purse
William Mitchell is Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), University of Newcastle, NSW, Australia
http://bilbo.economicoutlook.net/blog/?p=23811

"The real problem with the PPPs in this regard is that is a falsehood that the risk shifts from the public to the private sector. Who ultimately bears the risk? The risk premium in private financing is based on the fact that a private entity can become bankrupt with its product and service exiting the market. With an essential public service it is a fantasy to say that the PPP contract transfers risk to the private sector.

If the private partner defaults, the public always has to pick up the pieces. There is no real risk transferred."

3. Thatcher – ‘Sorry You’ve Lost Your Job’
http://michael-hudson.com/2013/04/1843/

what the “free marketers” promised would be an efficient, streamlined, low-priced economy has become the highest-priced economy in the world...... The telephones cost more, and nearly every kind of public utility that was privatized now costs much more, capped by railroad and bus service.

__________________________________________

Modern Monetary Theory in Canada
http://mmtincanada.jimdo.com/