The Liberals ask leading questions in budget consultations
The federal government’s budget consultations are open until Friday. Their purpose, Finance Minister Chrystia Freeland says, is to hear from Canadians “on how to restore strong growth, forge a more resilient middle class and build back better.” She adds that the economic plan should be an “inclusive” one. So why are her budget consultations designed to be exclusive of anyone who does not share the Liberals’ vision of higher government spending and more economic meddling?
According to the department of Finance website, “The government has a plan to make smart, targeted investments that jump-start the country’s economic recovery,” and the focus of the consultations is to provide people an opportunity to share ideas on “how the government can make investments to grow the economy.” So even before the consultations began, the Liberals had already dismissed the ideas of Canadians who think the government should do less “investing.” The only question they want answered is which door to shovel the money out of.
The first survey question asks: “What investment do you think would best create jobs and grow the economy?” Among the multiple-choice options are: higher spending to increase employment in hospitality, tourism and arts and culture; support for small and medium-sized businesses “to adopt digital technologies and be more competitive” (as if the way to make businesses more competitive is through government handouts and control); spending to “accelerate Canada’s green transformation;” and more funding for public transit and green infrastructure.
Another question asks how “the government can help drive Canadian innovation to spur new jobs and growth in our economy?” demonstrating their complete commitment to government economic planning, or industrial policy as they often call it, the Liberals ask respondents to select up to three options from a list of 12 interventions, including: government support for domestic manufacturing; addressing gender inequality in professions in which the government believes women are under-represented; providing “incentives” for businesses to invest in clean technology; and making low-carbon options more affordable (presumably by making the cost of government less affordable).
Apart from supplying the Liberals with apparent evidence of public demand for increased government spending and meddling, it is not clear what the budget consultations are supposed to accomplish. It seems mainly an exercise in promoting economic fallacy. even if we assume the survey responses are representative of the entire population, instead of, say, special interests looking for handouts, the results are meaningless: in general, it makes no sense to aggregate the preferences of individuals into the preferences of the country as a whole.
To illustrate this point, consider a society in which half of the people surveyed prefer wearing blue shirts to green shirts, and the other half prefer green to blue. It would not make sense to aggregate everyone’s preference and conclude that the collective preference of the society is indifference between blue and green shirts. There are many individual preferences, but a “collective preference” is not really something that exists. Nor would it make sense, on the basis of the survey, for the government to pass a law saying that everyone should wear a blue shirt from Monday to Wednesday and a green shirt from Thursday to Saturday. (On Sunday, members of this unfortunate society could be afforded a day of rest).
Applying this same thinking to the federal budget, suppose half of Canadians say X per cent of income should be spent to increase employment in the manufacturing industry, and the other half say it should be zero. Would it make any sense for the federal government to impose taxes on all Canadians to spend X/2 per cent of GDP on increasing employment in manufacturing? Certainly not. As in the case of the coloured shirts, there is no collective-action problem here; nor is any public good being supplied. Just as shirt colours should be decided individually, not collectively, so too should the percentage of income spent on domestically produced goods be decided individually, not collectively.
More generally, the only way that spending and investment decisions will reflect the preferences of individual Canadians is if individual Canadians do the spending and investing. That way, if people think it’s important to have strong arts and culture sectors, they can spend more money on arts and culture; if they think domestic manufacturing is a priority, they can buy lots of domestically manufactured goods; and so on.
Instead of consulting Canadians about spending, then, the Liberals should be cutting government spending. Their current plan only ensures that lots of money will be spent unproductively, in ways that do not reflect what Canadians want or need.