Category Archives: Economics

Today you actually get paid

Woot. Today is Tax Freedom Day in Canada. That’s right. June 7. That’s the day, according to the Fraser Institute, that the average family stops working for the state and starts working for itself. And that was the good news.

The bad news is that if governments paid for everything they took, that is, if you count deficits as if they were covered by taxation now instead of later, it still wouldn’t be tax freedom day until June 18. (This methodology I believe relies on mean averages for income and taxation.)

You can find the depressing details including a provincial breakdown in their study. But here’s a question to ponder as you do so. How can it be that, with Canadians so much wealthier today than they were thirty or sixty years ago, we can possibly need so much more help from government?

Remember, as we get richer, government could keep getting bigger while tax freedom day got earlier. Why isn’t it happening? If it’s too much to ask that government actually get smaller as our private means, including for charity, get larger, couldn’t it at least take a smaller share?

Instead the total tax rate (see p. 9 of the Fraser study) is higher in every province except Alberta and BC today than in 1981. So where does it all end? And why does current political debate take so little notice of the relentless expansion of the state relative to citizens, talking instead about all the wonderful things we could get if only government finally became truly big and busy?

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Free the beer 35 million

In my latest National Post commentary I praise the New Brunswick court ruling that our Constitution (S. 121) does indeed clearly expressly ban interprovincial trade barriers. It’s high time someone did something about them, and shameful that the New Brunswick cabinet apparently intend to continue riding roughshod over the rule of law and their citizens.

See also the paper I had the privilege of co-authoring for the Macdonald-Laurier Institute in 2010, along with its Executive Director Brian Lee Crowley and the late Robert Knox, a veteran of efforts to free up interprovincial trade, arguing for striking down all internal protectionism in goods, services and trades on exactly those grounds. It looks as if it’s finally going to happen.

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Choo choo cachingggg!

In my latest National Post commentary I agree that trains are charming, historical and fun. But I deny that they should be subsidized just because people like them. We can’t continue to subsidize everything or we’re going right off the fiscal rails. And there’s just no justice in picking my pocket for your train ticket.

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A sleeper fiscal issue

Yet another warning in my inbox this morning from the C.D. Howe Institute (full disclosure: my brother runs the place and was co-author of the study) about how the federal government continues systematically and dramatically to understate the unfunded liability in its employee pension plans. It may seem like a sleeper. But one day it will wake up and it won’t be pleasant.

According to authors William Robson and Alexandre Laurin, the feds admit to roughly a $150 billion shortfall. But the real figure is $269 billion. And, they say, if the difference were added to the national debt (as the admitted amount already is) it would stand at $730 billion not $612 billion.

It goes without saying that you should not try this sort of thing at home. The government would not like it.

It’s a Three Fold Total Bad. In the first place, it’s deliberately dishonest. C.D. Howe has been warning about it for years and they are not some radical right-wing outfit prone to bungling or torqueing their calculations.

In the second, it’s fiscally reckless. Even the move to have federal employees fund their pensions more fully is undermined, that other Robson and Laurin note, because they calculate the amount required according to the understated figure. And all the blather about how debt is small and manageable as a share of GDP is also undermined by such jiggery pokery.

In the third, it’s yet another case of people in government cutting themselves a great big generous slice of pie while the rest of us tighten our belts in hard times and, when we look at them sidewise, go “What? What?” as though their cheeks were not bulging. Whatever happens, federal employees will collect generous pensions they have not paid for. Even if the rest of us have to be taxed within an inch of bankruptcy to make it happen.

Then they wonder why government is in disrepute nowadays. All the way to the bank.

Of course, they’re counting on us to sleep through the various alarms. But this is no time to hit the snooze button.

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Keynote address to the Real Estate Institute of Canada

Next month, I’m delighted to say, I’ll be taking part in the REIC annual meeting and conference in Ottawa. The topic of my address will be “Without Ethics, None of This Works”.

Institutions are vitally important. But even more fundamental is a political and commercial culture that values honesty and shuns and punishes deceit. Without honesty, formal rules mean nothing, in government, in real estate and commerce generally, and in our private lives.

Without ethics, none of this works.

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Be counted… or else

Today I got this envelope from Statistics Canada saying “2016 Census: Complete the census – it’s the law.” (Equally rude in French: “Recensement de 2016: Répondez au recensement – c’est la loi”.) I am told the government is the servant of the people. But this peremptory tone, giving orders without even a pretence at “please,” is not how a servant speaks to a master. Quite the reverse.

Remember how all the right people were shocked and appalled when the Harper Tories got rid of the long form census? Without accurate data, they complained, social scientists would find it hard to engineer satisfaction of the human units to a sufficient number of decimal places. Which I always found rather an odd conception of the proper role of government and of its abilities. And look how they talk to us now that it’s back.

The smart set make a lot of fuss about “evidence-based decision-making”. But a decision to trust the intelligence or benevolence of government doesn’t seem to me to be based on much sound evidence. Not even the personal stuff I have to provide or else, according to this envelope that just marched into my house, waved a pair of handcuffs at me and started shouting questions.

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I’ll drink to that

On Friday a Provincial Court judge in New Brunswick struck down a duly enacted law and I couldn’t be happier. It was a section of the provincial liquor act limiting the right to buy beer next door in Quebec and it was clearly unconstitutional.

Now it might seem that I like judicial activism when it goes my way. But it’s not that at all. It’s that properly designed constitutions are set up to keep government limited even when the ambitions of politicians or a temporary lapse in the good sense of the public push them to expand, and to guarantee that rights are respected even when expedience seems to argue for violating them. When courts strike down laws that infringe basic constitutional guarantees of liberty, it’s not activism. It’s proper checks and balances against legislative or executive activism.

There is in the end no paper defence against people genuinely heedless or contemptuous of their own liberties and those of others. But the American Constitution is famously an appeal “from the people drunk to the people sober” and so is ours even when the issue is the right to buy beer. As a Macdonald-Laurier Institute press release praising the judgement rightly notes, our Constitution deliberately forbade the provinces from engaging in petty internal protectionism.

The release links to a paper I had the privilege of coauthoring with Institute Executive Director Brian Lee Crowley and the late Robert Knox back in 2010 explaining what our Founders did and why and how, and how the federal government could and should act to make their vision a reality. It’s excellent that a court has taken the right view of this matter and I hope the ruling is not appealed or, if it is, that it is upheld.

I also hope the federal parliament will be emboldened to legislate and end to all such protectionism. It clearly has the power and not just the right but the duty.

Meanwhile our own draft constitution, part of our “True, Strong and Free” project, will not only reiterate but strengthen the constitutional provision against internal protectionism just to be safe. But here’s one case where a court has acted in the genuine spirit of the constitution and of upholding legitimate rights not inventing unworkable ones. And it deserves our applause.

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Been there, done that, got the debt

In my latest contribution to the Economic Education Association of Alberta’s “Been There, Done That – Shouldn’t Have” series I recall what happened last time governments started borrowing as if there was no tomorrow and then it came anyway.

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