Renewing faith in the future through economic reform

by Ken MacDougall

What with our federal budget now gaining focus from the opposition Conservatives, one would think that a federal election was to be held mere weeks from now.  The number does sound “scary”, mind you – “half a trillion dollars and growing to $1.3 trillion in the next five years” – but the problem is, not only are most people not paying attention, but they just don’t seem to care all that much. “It’s a ‘number’,” is the attitude – “Big deal.” Still, I have to laugh at the fearmongering the Conservatives are already employing in their attempt to start an economic dialogue with Canadian voters.

You really have to wonder what it is that Conservative wannabe prime minister Erin O’Toole expects to accomplish by drawing attention to the federal deficit.  The two provinces that most supported the messages the Conservatives delivered in the last election were Saskatchewan and Alberta, and they’re hardly bastions of frugality and sagacious utilization of taxpayer dollars.
Alberta’s Jason Kenney, who supported the O’Toole leadership bid, gave $4 billion to Big Oil just because – well, they’re “Big Oil” – adding to a deficit that of today is just shy of $100 billion. As for Saskatchewan, we’re only at $26 billion, but if you consider that we’re only 1/39th of Canada’s population, multiply that number by 39, and you get – just over $1 trillion? Man, talk about the Conservative pot calling the Liberal kettle “black”…

In the United States, President Biden is seeking to introduce legislation to begin tackling infrastructural needs that will add another $1.4 trillion to that nation’s debt. Over 70% of the nation – including 59% of Republicans – think this is a great idea. The Party of
Trump, however, thinks this is an abysmal idea, as it would eventually lead to the government re-hiking personal and corporate tax levels carved out for the very wealthy under the Trump presidency. Ironically, an increasingly outspoken group of corporate heads, instead of warning the public as to the possible negative economic consequences for such a roll-back, are lining up to support the Biden agenda.

Republican senators and Congressional representatives are also having difficulty with the way in which the Biden administration
is defining infrastructure. Instead of restricting the definition to the idea of fixing bridges, roadways, and power grids, the Democrats have added two new abut inclusive factors, education and technology.  This makes perfect sense, especially with Republicans having contended for years that China’s policies are eating an American-made economic lunch.

With the prospect of China becoming the world’s strongest economy by as early as 2030, President Biden has decided that it’s time to beat China at its own game by focusing on two key points. First, he wants the educational system to produce more graduates with skill sets compatible with industrial research and production needs. Secondly, and this is probably the more problematic
of goals to achieve, get employers to start supporting unionized labour, the premise being that, were employers to provide their employees with modernized and safer working conditions as well as a reasonable wage and better benefits, members of this work force would be able to afford the innovative products their industries would eventually start to produce.

Boiled down to its root principles, the president’s approach is not to engage in some demented tariff war which ultimately hurts American businesses and consumers alike; if the Chinese are eating the American lunch, make more sandwiches so that everyone
gets to eat a decent meal – but make damn certain that the consumer knows whose oven baked the bread.

To quote economist David Andolfato, Senior VP of the Federal Reserve Bank of St. Louis, we should be viewing most government’s increasing debt loads merely as banks do; it’s your monies “in circulation”, with its movement providing further stimulation for growth and prosperity. Andolfato makes the point that even though interest rates and returns on investment are currently extremely low, people still buy government bonds because they are “safe”, and carry the government’s guarantee of a return on investment. The Democrats, and specifically the Biden administration, have seized upon this reality so as to justify its agenda for providing relief to those hardest hit by this pandemic.

One may recall that in the federal government’s Throne speech, Canadians were essentially told the same thing, namely, that they should not have to be burdened by a debt not of their own making, but rather be able to turn to a government better able to
manage debt so that they can better concentrate on managing their own fiscal affairs. This enlightened economic approach has created its own controversial argument with Reagan-worshipping conservatives, who for more than forty years have viewed government the “enemy” and embraced the trickle-down economic theories Republicans received from its “Great Communicator”.

Under Biden’s approach, responsible government would use this debt circulation to stimulate other areas of growth potential, leaving the individual to handle debt for which he or she were responsible. For the government, when debt repayment comes due, notification of such deadline would be met by budgetary contingency planning, be it by having already set such monies aside in its regular planning, or perhaps paid for by the release of another bond specifically allocated for such tasking, and in which investors would inevitably include in their portfolios. And when one thinks about it, this really isn’t as “radical” approach as the Republicans, and now Erin O’Toole are, making it out to be; in fact, it’s how Canada raised money to pay for World War II military needs.

Shawn Stack, an insolvency trustee from Calgary, correctly pointed out in the April 24th edition of the Herald, that during this pandemic the number of individuals  ling for insolvency in Canada decreased by some 29%. What this number merely means is that of the entire pool of potential candidates for insolvency, being literally forced to confront their inability to properly manage
personal debt have sought means to change the way in which they are managing their economic life. To use the terms of the crisis that put us in this awkward situation in the first place, this is like the individual who, despite having already received their inoculation, still follows the health guidelines of the government.

 e length of this pandemic has given us opportunity to consider how one handles debt, and relieve us of the shackles that curtail economic growth. During the NDP leadership campaign, Guy Caron, an NDP Member of Parliament from Quebec, has published
numerous arguments laying out a possible infrastructure to which a guaranteed or basic annual income could be applied in Canada. Unfortunately, we have Conservative politicians such as Saskatoon West’s Brad Redekopp and Carlton Trail – Eagle Creek’s Kelly Block always trying to misrepresent this approach by claiming to see “virtue in the obtaining of work”, portraying its end goal would be to place still more Canadians on welfare or work relief. I personally find it funny that this was once a “conservative” proposal, indicating that were this party to again form government in Ottawa, even their “good” ideas will turn to nothing.

A federal election is coming, folks, and Erin O’Toole is stuck in the passenger train on a cut-out siding, waiting for the 200-plus freight to meander by, with his “Oh my God, look at the size of the debt!” nonsensical theme. We need politicians in Ottawa who see problems for what they are, with cause, and not as pebbles or rocks to hurl at opposing equals who are taking far more responsible positions in dealing with Canada’s political issue.

Canada, too, requires massive infrastructural modernization to be built with a vision in mind for what we can leave our children and grandchildren, not unlike the 100 year planning efforts undertaken by the Chinese.

We can no longer allow ourselves to listen to a campaign based upon hate-filled rhetoric and vacuous policies. Apparently, Mr. O’Toole never got that message from the failure of Andrew Scheer to obtain the post Justin Trudeau still holds.