Everyone has heard about the 50-billion-dollar deficit announced by federal finance minister Jim Flaherty.
Opposition members of parliament are up in arms with the number and fear it may grow even higher.
Assistant professor of economics at the University of Windsor Mark Meldrum says deficit spending is a good thing in a recession and is usually expected.
Meldrum, working in one of the hardest hit cities in this economic downturn, says there is wise deficit spending which is up to 3 per cent of the Gross Domestic Product (GDP).
He says we’re at that number now but if the auto industry crisis continues and more money is put into it, he believes that line between wise spending and mis-managed spending will be crossed.
Meldrum says history shows that spending money to prop up an industry usually delays the inevitable of job losses as that industry re-adjusts to its new structure in society.
He tells Bayshore Broadcasting News says the textile industry in the U. S. went through this and it wasn’t saved by throwing money at it and the auto industry is experiencing the same thing.
Meldrum suggests governments look at new and emerging industries and services that are creating the jobs of the future.
He feels this is where tax dollars should be invested.
As far as the recession goes, Meldrum says from a technical perspective, most economies will exit the recession by the end of this year or the first quarter of next year.
But he is quick to point out that pyschologically we will likely “feel” recessionary for the next couple of years.