The Peak, Simon Fraser University's Student Newspaper since 1965, Simon Fraser University, Burnaby, British Columbia, Canada V5A 1S6, e-mail: epeak@mail.peak.sfu.ca, phone: (604) 291-3597 fax: (604) 291-3786
Volume 92, Issue 4 January 29, 1996 Arts 

Book Review: Shooting The Hippo

By Linda McQuaig. Published by Viking.

Linda McQuaig's most recent book is about the causes and results of the debt. It is about both the real causes and about those that are merely presented as such in the mainstream media. The book reads like a mystery novel. The crime has been committed and all the usual suspects are rounded up and investigated for their part in the debt. In the end, it turns out to be the least suspected factor, the one ignored by all, that is the culprit.

Backing up her arguments are interviews and publications by: a chief statistician at Statistics Canada who has been working on the statistics of social spending since the middle '60s; the man at Moody's bond rating service in New York who is in charge of setting the credit rating on our federal debt; and noted economists, among others.All of whom show that the deficit is not caused by runaway social spending.We are not anywhere near hitting a "debt-wall," and that fighting the recession (rather than eliminating social programs) would do the most to eliminate the deficit.

Spending on social programs has not contributed much at all to the increase in deficit according to a study put out by Statistics Canada.The study was written by Hideo Mimoto, chief of the social security section.McQuaig relates that he reached this conclusion by calculating how increases in social spending (little or none) since the early 1970s when the deficit was small, have contributed to the federal debt. For example, unemployment insurance has created one per cent of debt growth, and welfare only 4.5 per cent.As far as social spending is concerned one of the biggest contributions to the debt (at eight per cent of debt growth) was "protection of persons and property" which covers police, the military and prisons.Thus, if debt-heads like Manning and Martin were truly concerned about effectively attacking the debt they would be cutting back on police and prisons. McQuaig writes that in 1991, when the study was published, "We were spending roughly the same proportion of our Gross Domestic Product on social programs as we had in the mid-seventies, when our deficits were very small."

Her exposure of the political pressure of the finance department to get a retraction of these results published soon afterwards also reveals how little the powers that be are interested in open debate. The "retraction" that was published did not contradict any of the basic findings of the study.If anyone should be knowledgable about debt it should be Moody's of New York whose livelihood depends on producing credit ratings on coporate and government debt.

Vincent Truglia, senior analyst specializing in Canada for Moody's Investors Services, decides our federal government's credit rating. He felt that there was a lot of confusion in Canada over the debt.In an interview with McQuaig he related how the Canadian financial community is the only one in the world that consistently lobbies him to downgrade Canada's credit rating.If that isn't compelling evidence that we are being misled by the people in power, I don't know what is.Truglia issued a "special commentary" in June 1993."The commentary described Canada's debt as 'grossly exaggerated' and pointed out that Ottawa's fiscal position was not 'out of control.'" The "special commentary" says that our debt was manageable in the late 80s but that it rose suddenly in the early ninties.This rise was "mainly because of the economic downturn.Such a development is normal during a recession."

The book goes on to investigate why the recession in Canada was the worst of the G7 nations.If there is a simple reason to account for most of the recession then it will also account for most of the increase in the debt.McQuaig also presents a bit of history of banking, monetary systems, and the struggle for public policy in favour of creditors (the rich minority) versus that which in favour of debtors (the rest of us).All of this is presented in a very readable and interesting manner.(One of the more interesting tidbits is that the C.D. Howe Institute study that formed the basis for the Liberals' plan to increase tuition dramaticaly and change the student loan program, suggested that tuition might be allowed to rise to $60,000 for a four-year arts degree.)

Through out the book is solidly researched throughout, and both sides are presented.However, especially in the case of the business-financed C.D. Howe Institute, the debt heads often manage to demonstrate the folly of their views all by themselves.

This is a great book and it should be especially illuminating to people who are unable to distinguish between using a credit card and running the nation's finances.


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