Canadian federal elections draw worldwide attention as bellwether for US 2020 campaign Election Day Canada - Monday - 21 October 2019
... you can cut all business taxes, some of the time, you can cut some taxes on the wealthy, all of the time, but trickle-down economics is still 'Scheer nonsense'
E LaMont Gregory MSc Oxon
As many economies swing steadily to the right of the political and social spectrum, the contest between the Liberal candidate Justin Trudeau and the Conservative nominee Andrew Scheer to become the next Prime Minister of Canada, could not be more important. And, this race stands as a bellwether for the 2020 presidential campaign in the United States, where a Trump victory in the 2016 election unearthed a disquieting underbelly of ethno-nationalism in American society. Canada, except for a brief period of Conservative rule under Stephen Harper, prides itself on its ethnic diversity.
Whereas there are wide differences in the social worldviews of Trudeau (the incumbent) and Scheer (the challenger) it is their economic policies which most distinguish them.
The following article is based upon a speech by Tariq Chaudray, Liberal candidate for Member of Parliament from the constituency of Edmonton-Riverbend in the Province of Alberta. Alberta has been the problem child of Canada in its handling of its oil and gas resources, and the difficulties it has had in getting those resources to market. Chaudray uses Alberta as an example to outline the fundamental differences between Liberal and Conservative economic policies.
This author is of the opinion that it is a significant contribution to understanding the Canadian economy.
'... the Conservatives restrict, when in reality we must increase the number of economic decision makers, because you cannot grow an economy, by contracting it.'
Tariq Chaudray, Liberal Party, Edmonton-Riverbend 2019
Trickle-down economics, is a theory, and when taken seriously, suggests that an economic stimulus policy that results in a reduction in taxes on businesses and the wealthy, will stimulate business investment in the short term, and will then accrue benefits to the society as a whole in the medium to long term.
If there is one thing on which economists, and not the ideologues masquerading as economists, agree; it is that economic policies - attempts to steer the economy in one direction or another - when they work, work in the short term, only.
Therefore, any suggestion that economic stimulus measures, which are based on reductions in business taxes and taxes on the most wealthy today, will result in a medium or long-term benefit to society as a whole, in some distant tomorrow, is simply lacking in historical comparison, and thus, is a bridge to nowhere.
The same predictable outcome holds true when governments bail out failing financial institutions, as well as, direct infusions of cash into the coffers of big businesses on the skids.
Any stimulus that is to be of benefit to society as a whole, must be a benefit to society as a whole in the short term, that is, the effectiveness of the stimulus must be measurable shortly after its implementation, or any benefits derived from the stimulus are rendered ethereal, at best. And, at best, represent morally-attractive sloganeering, couched in the language of the otherwise serious science of economics.
Governments have consistently bailed out businesses and the wealthy, and bailed on workers. When in reality, as discussed here, it is in the best interests of the economy as a whole that government intervention in the economy must be as concerned with its impact on workers, as with its likely impact on any other groups of economic decision makers, such as, businesses and the wealthy.
Alberta is an example in fact.
For a more detailed rendering of the the Alberta oil industry saga, click on the 'Alberta oil at the crossroads' banner below and read the article 'To refine or not to refine' on this site.
Basically, however, for many years the oil industry in Alberta sold its unrefined oil products in its most basic form and at a highly discounted price. In a fashion that is otherwise associated with under-developed countries selling off their raw materials, while at the same, importing finished goods.
The margin between the selling price of the raw Albertan oil product and what a refined oil product would sell for, the differential, has and continues to be, each and every year over the decades this has been the pattern, an amount of money equal to the cost, each year, of building an oil refinery. This amount of money was lost to Alberta and to the Canadian economy as a whole.
In the waning days of the previous administration in Alberta, some seven (7) billion dollars was injected into our market-challenged, oil industry sector, with the hope that somehow that money would trickle down into the hands of the hard-working families of this province.
There are 4.6 million people living in Alberta, with an average family size of 3, there are over one (1) million families. That same 7 billion dollars, through means that we have available to distribute that money; tax credits, direct payments, among other means, would put more than ($4,800) forty-eight hundred dollars into each family in the province.
So that is the choice, do we put our money in the hands of a few economic decision makers, who chose to squander an amount of money each year for decades that would build a refinery each and every one of those years, or do we put money in the hands of more than one (1) million economic decision makers?
We may someday know how that 7 billion worked its way into the economy, but it has not sparked economic growth.
That money in the hands of working families, increasing the number of economic decision makers, the multiplier effect, is the key to the diversification of our economy, and support for our small and medium-sized businesses, which are the lifeblood of our economy.
A fixed income in times of rising prices, is much more than a matter of numbers on a ledger sheet.
And now, the party of bailouts and massive injections of public funds directly into the accounts of a small number of economic decision makers, who chose to squander billions of dollars each year for decades, and now that that era is over, they tell the public that we have to live within our means, and of course, balance the all important budget ledger sheet. And that is Sheer nonsense.
Sound economic decision making, is and always will be, about investment, not some ethereal balancing of the budget. The concept of living within one’s means, whereas it can be made to sound morally attractive, belies the reality that you cannot grow an economy, by contracting it.
This article is based upon a speech by Tariq Chaudray, Liberal Party candidate for Member of Parliament, Edmonton-Riverbend
Advance voting starts, 11 October 2019, and runs through the Canadian Thanksgiving long weekend Advance voting in Canada - 11th - 14th October
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