PINDER: When governments pick 'winners' we all lose

Part I of this forecast, published yesterday, addressed global dynamics, especially geopolitical risks. In this essay we consider North American prospects, also significantly impacted by politics. Elections are slated in British Columbia, Quebec, Saskatchewan, Canada, and the US in the next 17 months. Economic policy formation emanates from beliefs and values, very much in dispute these days. Opposing visionsIn Canada and the US for example, the notion of using taxpayer dollars to subsidize selected industries is back in vogue. Subsidies, tax credits and loans, encourage short-term investment which satisfies the exigencies of election cycles but which must eventually be financed by taxpayers. This reduces private capital investment in favour of politicians and bureaucrats who believe, in their own estimate of their superiority to grubby profit-seeking men and women, that they should take our money and make such decisions. Re-election objectives, versus financial return hurdles that drive private sector decisions, impact economic performance, usually negatively.The Trans Mountain pipeline is a sad example. Even recognizing that building pipelines through the mountains is challenging, inordinate delays and staggering cost escalation of the TMX highlight the incompetence of our federal government. Extensive delays, perpetuating producer competition for inadequate takeaway capacity, cost this country tens of billions of lost revenues.Although US employment numbers are falling, the economy has been resilient such that interest rate reductions may not be imminent. Slowing growth and persistent interest rates beyond the target range look ominously like stagflation. Government support for unions in both countries can only be inflationary.Canada’s prospects are much worse than the US. This issue is highlighted in the recent Bennet Jones economic commentary, one of their best: “Since 2006, the year before the onset of the Global Financial Crisis, real GDP per capita in Canada has grown at an average annual rate of 0.4%, well below the average of 1.6% of the prior years. Cumulatively, since 2006, our real income has grown by a disappointing 5.4%. On the trend of the prior 30 years, it would have risen by 35%”.The report lasers into Canada’s productivity, falling versus the US, and recommends: “To restore stronger growth in GDP per capita and to improve standards of living, our economy needs to invest more per worker and to innovate faster in the use of capital, technology and labour.The Financial Times in London recently reported that Rockefellers International rated Canada last among the 50 developed countries for GDP performance since 2020. Shrinking at an annualized rate of 0.4%, the article referred to “breakdown nations” and lessons to be learned from Canada and others. Voters seem to already know this.The 2024 federal budget anticipates another $40 billion deficit without effectively addressing our housing crisis, in part the result of irresponsible immigration levels, and the collapse of private investment. It is being presented as “intergenerational fairness” by those oblivious to the burden of tomorrow by borrowing today.The increase in the capital gain inclusion rate is pooh-poohed by the government as small increases in taxation on an even smaller group. If that is true, why bother? This provision has received persistently wide criticism and is another reason for capital to move elsewhere.As well there is a cynical suspicion that by making early dispositions potentially advantageous, the one-time revenue bump might soften budget criticism in an election year.An analysis in the Fraser Institute's Winter Quarterly compares Canadian and American median employment income in Atlantic Canada cities versus New England metropolitan areas. Halifax workers earn nearly $24,000 less than those in Boston, and New Brunswick cities are $12,000 lower than in Portland, Maine. The five Atlantic Canadian cities occupy five of the bottom six places in the comparable rankings. This analysis applies across the country.Perhaps the ideological pursuit of carbon dioxide emissions, gender equality, and aboriginal reconciliation is not the pathway to economic growth, improved productivity, surplus budgets (which don't “balance themselves”), and tax revenue to fund ever-growing programs and expanding civil service.ConclusionIn Canada “sunny ways” have evolved into stormy days, and polling shows that Canadians are unhappy and restless. As any experienced corporate director or successful CEO will tell us, the “tone from the top” is a fundamental ingredient to the culture of a productive company.To that, I would add a country. One of Prime Minister Trudeau’s first steps was to double the number of Canadians attending the Paris climate talks. The sunny ways culture set the tone which allowed the ArriveCan scam, and widespread irresponsible spending, to occur. Historic spending and civil service increases are not a coincidence. Perhaps always true to some degree, I am astonished at the increasing impact of politics today on our future economic well-being. This evolution, especially in Canada and the US, makes it harder to be optimistic. Values and beliefs will also impact the important forthcoming elections. It is no surprise that a country as large and diverse as Canada has differing values, but successful federations also structurally anticipate that reality.Our next federal election will reveal whether our troubled country can be successful, or indeed continue as currently constituted.This was the second installment in Saskatchewan businessman Her Pinder's economic outlook. Parts III appears tomorrow, and will review current prospects for oil and natural gas..This is what the Western Standard is up againstThe Trudeau government is funding lies and propaganda by directly subsidizing the mainstream media. They do this to entrench the powerful Eastern, woke and corrupt interests that dominate the political, social and economic institutions in Canada. Federal authorities are constantly trying to censor us and stop us from publishing the stories that they don’t want you to read. Ottawa may weaponize our taxes and police against us, but we’ve got a powerful ally on our side.You. Free men, and free women. We need you to stand with us and become a member of the Western Standard. Here’s what you will get for your membership:Unlimited access to all articles from the Western Standard, Alberta Report, West Coast Standard, and Saskatchewan Standard, with no paywall. Our daily newsletter delivered to your inbox. .Access to exclusive Member-only WS events.Keep the West’s leading independent media voice strong and free.If you can, please support us with a monthly or annual membership. It takes just a moment to set up, and you will be making a big impact on keeping one the last independent media outlets in Canada free from Ottawa’s corrupting influence.

PINDER: When governments pick 'winners' we all lose

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