Greece, Detroit, San Bernardino, Puerto Rico, Spain, Portugal, Ireland. This mix of countries and cities: what do they have in common? All of them experienced economic catastrophe by accumulating debts they couldn’t meet or defer. Everyone of them were forced to make major sacrifices.
They got there by papering over their real situations by accounting games until the lenders woke up. Austerity in various forms followed: slashing costs, rising taxes, and losing control over their affairs.
Manitoba’s NDP claims restraining public spending is unwise. This even after Moody’s cut the Province’s credit rating. For the NDP, ideology trumps the lessons provided by other governments that got too far into the glue.
Greece’s government has accepted outside control in exchange for yet another bail-out. Ahead of the country’s third bailout, its banks closed and its fragile economy shuddered. Greece is in receivership. They failed to rein in their spending, borrowed unwisely and didn’t keep honest books.
Some argue Manitoba stands on the edge of a Greek-style collapse. While the Province’s overall debt is too high with more to come, reasoned actions could still pull the Province out of an icy plunge into unknown depths.
Manitoba’s debt is already a mortgage on future taxation and utility revenues. And, the more they add will bring even less flexibility for future generations. Our kids and grandchildren, if they stay in Manitoba, will not have the choices we had. Rather than stay and pay for our generation’s blunders, many will leave.
Recently, British Columba, Saskatchewan and Quebec balanced their budgets; the federal government insists it will. With Alberta’s resource sector and Ontario’s manufacturing base both in trouble, should Manitoba count on rising future federal transfers? The Selinger NDP ignores reality and risks all in a pellmell rush to buy our votes with our own borrowed money.
While not Greece, we are on the road to financial distress. Greek debt is junk bond debt; Manitoba’s downgraded credit rating is still investment grade. Greece is in default, we’re still able to accumulate more debts. Because we can borrow more doesn’t mean we should. Best to learn from the mistakes of others.
Selinger ignores lessons and risks. He only listens to what he wants to hear. Two prominent NDPers – Niki and Steve Ashton – tweeted support for Greece’s now overturned “No” referendum vote. They cheered the defiance of the Greek people, standing up against financial reality on the urgings of its reckless socialist government.
Political defiance doesn’t mean much when you run out of cash to pay your bills. Quickly dropping his outage, Greece’s leftist Prime Minister Tspiras was reduced to begging their Euro partners. Greece’s divided parliament surrendered to even harsher terms than those Tspiras told Greek voters just days before that they could avoid.
Note to the Ashtons: democracy doesn’t trump financial irresponsibility. It’s the other way around. CCF/NDP founder Tommy Douglas understood that high debts reduce democratic choices. Debt can put a government’s operating budget in hock to the bankers, bondholders and other governments. Too much debt creates the risk that, someday, a committee of lenders will be making the decisions.
When you have too much debt, you have sold your future. You’re surrendering your freedom to act.
More From Manitoba Forward