The Canadian Red Ensign

The Canadian Red Ensign

Thursday, September 14, 2017

Trudeau and the Middle Class

In Rob Reiner’s 1987 film adaptation of William Goldman’s novel The Princess Bride, Wallace Shawn’s character of Vizzini, the leader of a trio hired to kidnap the title character, utters the word “inconceivable” every time something happens that interferes with his plans. After the umpteenth such exclamation, his associate Inigo Montoya, a Spanish swordsman portrayed by Mandy Patinkin, turns to him and says “you keep saying that word. I do not think it means what you think it means.”

This is something that should have been said to Liberal Party leader Justin Trudeau during the 2015 Dominion election every time he promised that the Grits would make the “middle class” stronger. He accused the previous Conservative government led by Stephen Harper of pandering to the wealthy at the expense of the middle class and claimed that his party would do the opposite. The Liberal Party’s “New Plan for a Strong Middle Class”, their platform during that campaign, stated:

A strong economy starts with a strong middle class.

This is a true statement, but it is probably the only true statement in the entire document. It immediately went on to say “Our plan offers real help to Canada’s middle class and all those working hard to join it”. Among the promises made were “We will give middle class Canadians a tax break, by making taxes more fair.”

Over the summer, however, Finance Minister Bill Morneau announced the government’s intention, when Parliament resumes in the fall, to introduce changes to the tax code as it pertains to the incorporation of small businesses. Trudeau’s evil henchman, of course, described these proposed changes in terms of closing loopholes that the wealthy exploit to avoid paying their fair share of taxes. This, however, is what in the language of Apuleius would have been called an onus stercoris. It is not the superrich, the “1%” about which there has been so much talk in recent years, that “trust fund” Trudeau and his gang are going after. It is the couple who own the local grocery store that barely manages to survive against the competition of the giant corporate chains, the family struggling to scratch out a living on their farm, and the guy who had a great idea for a business that would provide a valued service to his community and employment for his neighbours and who has sunk everything he had into the uphill battle to make this dream come true. In other words, the middle class.

Justin Trudeau does not have a clue what a middle class is. When the question was put to him directly in the 2015 election he answered “I’m going to let economists, and I have a few around me, argue over which quintile or decile the middle class begins or ends in.” In other words, he thinks the middle class is a group of people whose income falls between an upper and lower limit, even though he cannot define what those limits are. In the old days, however, when the words middle class actually meant something, they referred to those who were neither the “rich”, who could live comfortably off of their already accumulated wealth nor the “poor” whose only respectable means of subsistence was by earning wages by manual labour but rather those whose income came through the management of their own small properties and businesses. Two and a half millennia ago Aristotle argued that it was this class that made for a secure and stable state because it was a responsible class and where it is strong neither poor nor rich are likely to be oppressed as one or the other would be in an oligarchy of the rich few or a democracy of the poor many. This is lost on our Prime Minister, however, who could not understand the Politika even if someone translated it into English or French for him, and who is most likely unaware that there ever was any other Aristotle than Jackie’s second husband.

The Trudeau government’s proposed tax code changes have nothing to do with fairness and everything to do with their desperate need for revenue due to their fiscal mismanagement. They have been running deficits far in excess of those they had projected during the election campaign, saddling our country with a load of debt that will take centuries to pay off. Pierre Trudeau had ran massive deficits in the ‘60s and ‘70s and Justin’s attitude to the Canadian taxpayer is summed up in the words of Rehoboam – “my father chastised you with whips, but I shall chastise you with scorpions.” Nor is the spending that the Grits are unwilling to curb going into development projects that will benefit Canada and Canadians for generations to come so much as into sustaining Trudeau’s international image of a generous humanitarian at the expense of Canadians.

During the election campaign Trudeau said that his government would commit to growing the economy and that as a consequence of that growth “the budget would balance itself.” Those who sought to defend Trudeau from the charge of reckless fiscal irresponsibility that these poorly chosen words suggested maintained that this was basically a restatement of the premise of Reaganomics. While there is a resemblance, to be sure, there is also a fundamental difference. The idea of supply-side economics is not that economic growth eliminates the need for fiscal responsibility but that a larger total tax revenue can be generated at a lower rate if the tax cuts provide enough entrepreneurial incentives to spur economic growth. It is an argument for lowering taxes – not an argument for reckless spending.

At any rate, if your strategy for balancing the budget is to rely upon economic growth to raise tax revenues, then your policies ought to encourage economic growth rather than discourage it. The policies of the Trudeau Liberals, however, have all the appearance of being designed to bring Canada’s economy to a grinding halt. Their carbon tax needlessly and pointlessly – for even if the anthropogenic theory of climate change were true it would do nothing to alleviate the problem – increases the expense of doing business and in a way that further belies their talk about “fairness” as it is a thoroughly regressive tax, affecting people the hardest the further down the economic ladder they are.

Then there is their approach to the NAFTA renegotiations. Regardless of what one thinks about free trade in the abstract – I think that however good the arguments behind the theory sound on paper they have been completely debunked by history – a country’s closest neighbours will usually be its biggest trading partners and when you have a trade agreement with those neighbours and one of them decides that it needs renegotiation, your job, when you go to the negotiation table, is to look out for the interests of your country and to secure for it the best deal possible. Two of the three governments involved in the NAFTA talks understand this – one does not. The Liberals have made it their priority to inject climate change, gender equality, and a lot of other irrelevant and inane progressive nonsense into the discussions. This will not help them to secure the best deal possible for Canada and if anything will have the exact opposite effect.

Trudeau’s apologists will argue that the economy is healthy and growing because the GDP has been increasing faster than anticipated since the final quarter of last year. All this means, however, is that money has been changing hands at a faster rate in Canada over the last twelve months. GDP is calculated by adding up the sum of private consumption (C) with that of investment (I), government expenditure (G) and total exports minus total imports (NX or X – M). It is a pointless exercise because the figure you get doesn’t measure anything real. C and G go up the same regardless of whether it is wealth accumulated from past production or money borrowed that is spent. Neither is a distinction made between spending on projects that will have enduring benefits, spending on immediate needs, and spending that is wasteful or even destructive. Demolishing and constructing a building both raise the GDP and every time a bomb is dropped the GDP goes up. GDP is no indicator of productivity and real economic growth. Its chief purpose – perhaps sole purpose – is to enable finance ministers and economists to boast about their “growing economies” even as real incomes and savings drop while unemployment and debt grows. It has been used to obfuscate the truth about the devastating consequences of free trade for years.

Every time Justin Trudeau throws away money that the Canadian taxpayers’ will have to spend the next century or so paying back on some project of self-aggrandizement it increases our GDP. What it doesn’t do is benefit our middle class – or those working hard to join it.

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