Recently, both Brian Mulroney and Justin Trudeau claimed free-market reforms brought great prosperity to Canada.
Mulroney said his tax reforms (that primarily benefited the wealthy) and trade initiatives were the “pillars of record prosperity for Canada.” Justin Trudeau said this free-market “growth agenda” had the only shortcoming of benefiting the rich more than the middle class.
Growth didn't happen
But the fact is both of them are full of it. The free-market reforms of the past 30 years amounted to an anti-growth agenda. Both economic and productivity growth fell sharply over the past 3 decades:
Clearly the centrist, Keynesian economic policies of the post-war era brought real “record prosperity” to Canada.
The free-market reforms of the past 30 years caused prosperity to wither, culminating in the 2008 global economic meltdown we have yet to recover from.
Lopsided economy
The reason the centrist system worked is because it ensured all segments of society benefited from economic and productivity growth. The free-market reforms let the rich hog up all the gains:
Government debt
Not only did inequality skyrocket, but so did government debt (which we paid down during the centrist era):
Why conservatives lie
Free-market ideologues like Mulroney believe that self-interest is a virtue: if everyone acts in their own self-interest, an “invisible hand” will magically balance everything out producing the most prosperity.
So clearly it's in the self-interest of rich people and businessmen to create economic policy that's entirely self-serving. It's also in their self-interest to use rhetoric — or even lie — to promote their self-serving agenda. And when their one-sided ideology inevitably fails to work, it's in their self-interest to lie about the results.
Conclusion
So normal people have to understand where these free-market con men are coming from. If they have no problem exploiting child labor in sweatshops to make a buck, lying and cheating to get their way is no biggie.
If Canadians want a real growth agenda we will have to return to the centrist policies that created modern living standards and ditch the free-market reforms that are destroying them.
Notes
I got GDP and productivity numbers from the Conference Board's: Total Economy Database (Growth Accounting and Total Factor Productivity, 1990 - 2013.) I arbitrarily chose the "EKS" series on GDP and labor productivity. To calculate annualized growth I used the formula: "a = (e - s)^(1 / y) - 1" where, a: annualized growth; e: end amount; s: start amount; y: number of years. So for the 1950s, the end amount is from 1959, the start amount from 1950, and the number of years is 10.
For the history of top 1% income shares I referenced The World Top Incomes Database. For the Canada's total gross net debt burden I used the IMF's Historical Public Debt Database.
Well, I guess we can bring Pierre Trudeau back from the dead if you want tax and spend Keynesian policies, and we will see what sort of growth we get.
ReplyDeleteOr, maybe you should open your eyes and realize that still to this day, Canada is still reeling 30 years later from the harm that sort of crap did to the economy. Mulroney had balanced the budget on an operational basis in his first year, but just as Ontario is going through right now, the interest costs were still weighing the economy down.
How about we get those crushing debts paid off first, then debate what to do from there?