LYLE KRISTIANSEN Kootenay West Brother Lyle Kristiansen, on leave from his duties as Financial Secretary of Local 1-405, is running for the second time as N.D.P. candidate for Kootenay West. Lyle came very close last year, and N.D.P. sources advise that his chances for victory this time are excellent. Brother Joe Leclair, veteran Local 1-357 activist and business agent is running on the N.D.P. ticket for the first time in Fraser Valley West. The Pundits have not predicted a victory for Joe, but his popularity and hard work will surprise them. A BUDGET THAT DESERVED DEFEAT By RUBEN BELLAN Toronto Star special WINNIPEG — The most elementary of economics textbooks published in the last 30 years have demonstrated that a national debt is not a genuine burden. It consists of the bonds sold by a national government to the country’s business firms and citizens. It’s true that the government must raise taxes to pay the interest charges on those bonds, butit pays that money to the country’s own citizens and business estab- lishments. Since the bondholders are tax- payers, the government, to a very large degree, winds up taking money out of one of the typical taxpayer’s pockets in the form of taxation and putting it back in another pocket in the form of bond interest. When bondholders and taxpayers do not exactly coincide the government transfers to one group of its citizens money which it has taken from another group of its citizens. No money leaves the country; the nation as a whole is neither richer nor poorer for the existence of the debt. Advantage in debt While it is not a genuine burden, a national debt may generate significant advantage for a country. It may be the means — the only possible means — wher- eby available productive capacity can become usefully employed. The money bor- rowed by the government may put to work people who would otherwise have been idle. Thanks to government’s going into debt, the country gets the benefit of additional out- put; the individuals involved get the benefit of income and satisfaction from work as opposed to the frustration of idleness. The terms “debt” and “deficit” are in fact misnomers when applied to federal govern- ment borrowing. Deficit spending and indebtedness by a private person or firm are certainly burdensome and hazardous. But these terms, with their ominous implica- tions, should really not be applied to govern- ment borrowing. Alexander Hamilton, the first U.S. Secretary of the Treasury, long ago recognized the positive value of govern- ment borrowing at the right time, in the right amounts and for the right purposes. He suggested that what is called the national debt should instead be called the “national blessing.” Here in Canada the federal government, during World War IJ, ran up a debt that was the equivalent of about $300 billion today. That borrowed money financed much of our war effort. It was with that money that the armed forces were paid, that tanks, guns, planes, shells and bombs were bought. Had the government not borrowed that money we could not have mounted our war effort on the scale that we did. Like all good things, government borrow- ing can be overdone. It will prove to be inflationary and harmful if it serves merely to attract to government service people who were already employed in the private sector. But it will not be inflationary so long as it serves to put to useful work people who would otherwise have been unemployed; the extra spending is matched by increase in desirable output. Finance Minister John Crosbie repeat- edly declared reduction of the federal budget deficit to be his priority objective. In his budget he proposed to impose heavier taxation on the people and business firms of Canada, using much of the money to reduce the budget deficit. What he proposed would have sharply raised the cost of living. Once the cost of living rose, a good many people would have insisted on compensating increases in their pay, many would have automatically gotten such increases, thanks to cost-of-living clauses in their contracts. Production costs would have been pushed up hard, requiring a further sharp increase in prices. Reduced spending The increase in taxation would have reduced the public’s spending power, forc- ing them to buy less. Businessmen, their sales down, would have been obliged to lay off staff. The unemployment problem would have been seriously aggravated. Crosbie could have offset these effects by reducing taxation — the sales tax, the income tax. But because such tax reductions would hinder progress toward a balanced budget, he refused to consider them. In short, the Crosbie budget promised to worsen our already damaging inflation and unemployment problems in order to reduce what is essentially a non-problem. His budget had much in common with the practice followed by some primitive peoples in the past who offered up human sacrifices in order to avoid the wrath of their gods. To prevent an imaginary danger they did real harm. O Ruben Bellan is professor of economics at St. John’s College, the University of Manitoba, in Winnipeg. JOE LECLAIR Fraser Valley West INFLATION FIGURES MISLEADING The rate of inflation (consumer price index) issued by Statistics Canada, and announced throughout the country with an air of absolute truth, can be misleading. The number given is the increase over a period of time in the price of ‘“‘a certain basket of goods and services”. But 38% of ‘“‘the basket’’ consists of non-necessities (entertainment, cosmetics, etc.). Recently, the basic necessities (food, housing, energy) have been increasing in price about 50% faster than the non- necessities. What that means is that the poorer you are, (and therefore the larger the proportion of your income spent on the necessities), the more the official C.P.I. figures understate the effects of inflation on you.