TRUDEAU’S IRRESPONSIBLE SPENDING.
‘Asingularly consistent investigation you have made, my dear Watson,” Sherlock Holmes once said to his friend, who had just bungled an inquiry. “I cannot at the moment recall any possible blunder which you have omitted.” Holmes’s remonstration with Dr. Watson came to mind as I watched Justin Trudeau announce next month’s election. Trudeau hopes to gain a majority government. He certainly does not deserve one, or even to keep his minority mandate. Over the past six years, the Liberals have been singularly consistent in making economic errors, and I cannot at the moment recall any possible blunder which they have omitted.
The Liberals came to power in 2015 promising tens of billions of dollars in new spending. As a general rule, anybody who spends other people’s money, especially such a massive sum, should have a pretty good reason for doing so, and a strong case that the people to whom the money belongs will benefit from the arrangement. Unfortunately, the Liberals’ motivation for the spending — wanting a policy agenda more progressive than the NDP’S — is not exactly a good reason, and their unflagging belief in government economic planning should not be confused with actual evidence of economic benefits for taxpayers.
Having promised to fund their spending programs with accumulated deficits of $26 billion over three years, the Liberals proceeded to instead run four deficits totalling $91 billion before completely blowing open the spending taps in 2020-21. Some of the public health spending was appropriate, but for the most part, the Liberals attempted to justify their massive spending increases by promoting a wide range of economic fallacies and making exaggerated claims about the dangers of climate change.
The Liberals like to say, for instance, that increasing government spending on something — like child care — makes those things more affordable. That is nonsense. Does paying for something through taxes instead of out-of-pocket make it more affordable? The main differences are that by paying through taxes, consumers lose control over how their money is spent, competition is reduced, and producers increasingly rely on politicians’ generosity with taxpayers’ money instead of working to improve business operations. The result of government spending is therefore to reduce the affordability and quality of goods and services.
There is, as another fallacy, the idea that government economic planning is needed to boost certain industries and ensure economic benefits are widely shared. The Liberals’ industrial policy agenda includes government support through subsidies or protection for agriculture, domestic manufacturing, clean technology, the digital economy, and many other industries, as well as sundry regulations and spending programs aimed at engineering a distribution of economic outcomes that more closely conforms to Liberal ideas of social justice.
The effect of industrial policy is to replace the market’s allocation of resources — where decisions are guided by prices, productive uses of resources are rewarded by profits, unproductive uses punished by losses, and businesses are disciplined by competition — with the arbitrary diktats of politicians who distort prices, are impervious to financial losses, and are motivated mainly by gaining political support and power. Federal regulations that supposedly increase fairness, such as minimum wage and pay equity laws, instead increase the costs of economic transactions by trying to dictate their terms, making the regulations deleterious for all.
When it is pointed out to politicians or other industrial policy advocates that their initiatives again caused widespread economic harm and imposed significant costs on taxpayers and consumers, they usually provide some mumbo-jumbo about all the jobs their spending created or how their policies benefited some company or another. Politicians do not undertake any real cost-benefit analysis of their spending. They just do a benefit analysis, and finding that the people they gave money to benefited from the spending, they conclude that their policies are wise.
In fact, with the Liberals, even the most demonstrably economically harmful industrial policies can be declared a success, as they always have recourse to the claim that their policies probably somehow advanced feminism, increased diversity, reduced climate change, or otherwise delivered unquantifiable social benefits. Needless to say, the Liberals’ climate policies are also not based on any economic logic. Even taking the government’s own “social cost of carbon” estimates at face value, neither their emissions targets nor their specific policies for achieving the targets, such as electric vehicle subsidies, pass a cost-benefit analysis.
Wherever you look, the Liberal economic agenda is premised on fallacies and relies on intentions that sound nice instead of policies that actually make sense. The result is that for six years, the Liberals have been singularly consistent in committing economic blunders.
OVER THE PAST SIX YEARS, THE LIBERALS HAVE BEEN SINGULARLY CONSISTENT IN MAKING ECONOMIC ERRORS.