Terence Corcoran: Liberal budget marks a major shift toward centralized state planning
We should call it what it is: Reverse Perestroika
Welcome to the new Canada, where on Monday the Liberal government launched a grand experiment in retrograde economic policy. Canada is now moving in the other direction. The 724-page Liberal budget, a document worthy of the great Gosplans that dominated Soviet economic life, lays out a massive increase in government spending and debt in a document whose essential aspect is to weaken the role of markets and enhance the power of government and planners. By my tabulation, between 2019 and 2026 the annual Liberal budget deficits totals $725.5 billion, exactly $1-billion per page of the budget.
The net federal debt will almost double to $1.5-trillion. As the nearby graph shows, that works out to $38,000 for every man, woman and child, up from $21,000 in the last Liberal budget, an increase of $17,000. The claim is that the great federal spending machine will boost economic growth. One graph in the budget claims that improving potential GDP growth by about 1.1 percentage points per year «would increase per capita GDP by about $6,000.» Which is not a lot considering that the $6,000 output gain per capita means it will take a few years to recoup the $17,000 in new debt per capita.
Growth rates had slowed, inequality increased and the social needs of the people were not being met. The objective of Perestroika was to get rid of at least some of the planning, put more emphasis on markets, and install economic incentives to replace bureaucratic power. Canada is said to have the same issues, although on a different scale, but instead of enhancing existing economic and market structures, the new Canadian model involves increasing the planning power of government. There are two mains streams to the Canadian Perestroika.
One is social, with the government taking on a great role in directing programs to foster «social infrastructure,» such as childcare, a $15-minimum wage and other populist and «feminist» initiatives that smack of pre-election goodies to dangle before voters recovering from the pandemic. The Freeland budget aims to use government planning as a vehicle to boost Canada’s long-term economic growth prospects. The government sees the 2050 net-zero carbon objective as the new foundation for a Canadian Reverse Perestroika. The budget continues Liberal hype about a «Net Zero Accelerator.» Through major interventions in the economy by the new master planners of carbon control, the economy will flourish for decades to come.
Launched last December, the Net Zero Accelerator «will help build and secure Canada’s clean industrial advantage. » That’s the plan, the Green Gosplan foundation for Canada’s economic future.
Source: Terence Concoran | Financial Post