CHAPTER 4 Media Article
Government debt totals $171,032 per person, group warns,
Canada.com, November 15, 2006


This article provides insight on a report done by the Fraser Institute about Canada’s federal, provincial, and local government debts. The debt is increasing. Budget surpluses deplete quickly as expenses that result from government provided social services and other financial obligations continue to grow. The government relied on the population, economy and wages to grow like it did in the 1960s but the opposite occurred and it is expected that social programs will be inhibited from their intended level of benefit as a result. Nonetheless, Canada is not the industrialized country holding the highest debt.


Connection to Chapter4- Wagner’s Law, Gross Public Debt

This article is connected to Chapter Four through the topics of Wagner’s Law of Increasing State Activity, Gross Public Debt. Wagner’s Law describes that government spending will increase at a greater rate that economic output in industrialized economics. The reason that could be applied here is promises from political campaigns. These promises have led to the existence of various social programs that are very costly to the government. Moreover, Gross Public Debt is applicable here because all of Canada’s different types of debts are summed up as this one in the figure given by the article to be $2.7 trillion, which is probably even higher now. Gross Public Debt includes immature bonds, treasury bills, notes and other liabilities. Specifically, this article focused on net direct debt, which is their total liabilities less financial assets, but it did mention others very briefly.

Personal Reflection

Canada’s debt will likely be a liability for a long time. $171 032 per Canadian is a lot of money. However, in my opinion, social programs such as Medicare, Old Age Security and the Canadian Pension Plan, are all necessary for country that wants their economy to grow and flourish. These services help keep their citizens working and/or spending. Medicare is needed to make people more productive and to help prevent outbreaks of diseases. Accessible pension to all is necessary to keep the retired people spending and healthy. Not everyone has a good pension plan, if they have one at all; so it would not be fair to make people retire and not help them survive by giving them some kind of income. Yet, as mentioned in the article, the aging population is going to very hard to support pensions to as the tax base decreases. The number of retirees is going to exceed the percent of the population that is still working. Consequently, the government is either going to obtain new debts or increase taxes to generate the much needed revenue, meaning I am going to be paying either very high taxes if the government chooses the latter. Even with the first decision, I am not very happy since getting into more debts will probably mean that programs will most likely still be cut in the future or taxes are going to be raise even higher to pay it off. The government should clean up their act. It’s not smart promise lower taxes now just to get into office, since it’s better spread out the burden than suddenly increase taxes or cut important social programs to attempt to meet the budget in the future.


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