Colin Bartlett’s letter in support of the privatization of public debt (The NEWS, June 4) suggests that, because of the government’s huge deficits in the 1960s and early 70s, it allowed inflation to rise to nearly 13 per cent in order to handle the debt. To avoid worsening the problem, privatization was the answer and that has kept inflation low. Not quite.
Canada’s federal debt had grown at between five and 10 per cent until 1975. For the next 12 years, after privatization, it grew at an average of over 20 per cent, taking the debt from around $20 billion in 1973 to $277 billion in 1987. Average inflation for the 24 years prior to 1974 was 2.8 per cent; for the 24 years after 1974 it was 5.4 per cent.
Today the federal debt is over $600 billion. In 2013–14, the government spent 29.3 billion taxpayer dollars simply to pay the interest on the debt; that amounts to over $80 million of our tax dollars each and every day going to private sources rather than to public goods such as infrastructure maintenance, health care, education, or lower taxes.
Were the government to borrow its shortfalls from the Bank of Canada, those interest payments would ultimately be returned to the government, and could be used for the public good, as was done prior to 1974.
Bartlett’s argument re: comparing North Dakota with British Columbia also suggests that population growth may not be such a good thing. As he points out, North Dakota’s dwindling population “placed little strain on (its) budgets,” while B.C.’s strong growth resulted in a “financial burden of infrastructure to service this growing population.”
That aside, North Dakota, the only state with a public bank, is also the only state that has had a budget surplus every year since the banking crisis of 2008 and it has no debt. B.C. has had a surplus only for two of those six years and has a debt of $65 billion. And North Dakota is the only state that reduced individual income and property taxes by $400 million in 2009 and again in 2011 by a further $500 million.
While the Bakken oil field has helped North Dakota, it certainly doesn’t explain why other oil producing states, such as Montana (with the greatest Bakken oil production), Alaska (producing twice as much oil as North Dakota) and Wyoming (extracting much more oil than North Dakota) have not fared as well. North Dakota’s ready access to credit through its public bank has made the difference and today other states, such as California, Washington, New Mexico and Arizona, are discussing the creation of their own public banks.
In Canada, we already have our own public bank, the Bank of Canada. It’s time we returned to using the bank for the benefit of all.