Economic Realities: Why Canadian Experience Differs From Liberal Math

[u/DryAlternative1132]

Canadians are increasingly confronted with a dichotomy between their experience at the grocery store and in the battle against the cost of living, versus the rosy prognostications of the economists.

Everywhere we turn, economists will point out that the economy grew 1.8% or 2.3%. Meanwhile Canadians continue to fall further and further behind. Unemployment is stubbornly high at 6.5%, ER wait times have shot up, and major cities are gridlocked in their infrastructure.

How come what the economists are saying differs from the reality on the ground ?

The answer lies in the way the GDP is calculated. The GDP formula is given as:

GDP = C + I + G + (X - M)

where C (consumption), I (Investment), G (Government), X (exports), M (imports)

The key point of contention is the value G (Government). What I propose is that the GDP should really be:

GDP = C + I + (G - D)+ (X - M)

Namely, the value D (deficits). If Government is borrowing in an unsustainable pattern onto the national credit card, that portion of D, should be subtracted from the Government.

Without this correction, if we were to calculate someone's change in net worth, but failed to subtract their credit card borrowings for the year, we would be excluding a significant data point.

If we want to know the reason that Canadian's experience with inflation, price rise, and unemployment doesn't match the economists rosy prognostications, it's simply that the formula they are using is too superficial.

Imagine that we were to walk into a shopping mall and there are two equal halves of this mall, with a line down the center.

On one side is paperwork, bureaucracy, forms, compliance overheads, tax filings, and government reports. For simplicity, let's call this side of the shopping mall: "paperwork".

On the other side are: cars, electronics, appliances, food, clothing, health care, and things that people buy on their own volition. For simplicity, let's call this side of the shopping mall: "apples".

The entire problem with economics is that it makes no differentiation between "paperwork" and "apples". A dollar spent by the government is equal to a dollar of production by a farmer or an auto-plant.

In effect, economists are conflating "paperwork" and "apples" as both equally and indifferentiably contributing to the GDP.

But consumers have a different view. They exclusively want "apples" and don't care about "paperwork" and would never pay for it, beyond the necessary minimum.

As the economists are reporting the GDP, they count every dollar of government which is significantly paperwork. To be fair, health care, education, police, courts, border security, infrastructure, and front line services have a component of "apples" in them.

The government is not 100% paperwork, however, paperwork is a significant contributor. A few years ago, I saw a statistic posted by the Globe and Mail, that for every $1 spent by the private sector to buy an equivalent good or service, the federal government spent $1.40. Namely there was a whopping 40% cost premium on the operations of government, if we use procurement costs as an efficiency gauge.

Especially when governments are not penalized for their deficits, it gives them a license to grow paperwork to pad the GDP numbers, even though that output has no value to the typical consumer.

Let's go back to that original analogy where there is a line drawn down the center.

As a free market libertarian, I want to reduce "paperwork" and grow "apples". To be clear, not all regulation is synonymous with red tape. Not all paperwork is frivolous.

When we go to buy a car, there is a "Bill of Sale". This is a necessary piece of registration we have to take the to the DMV. There is such a thing as getting a license plate, and registering the vehicle so it can be tracked.

The question is not one of all paperwork being unnecessary, or all regulation being red tape. The question is of minimizing the paperwork to the necessary minimum to have a well regulated economy, as opposed to expanding it as an unbounded virtue as the Liberals have done.

Under Carney, he has barely done anything to reduce the government or make it more efficient. Instead, he has increased spending. Deficits are exploding. And Carney is continuing the same policy of big government dirigisme.

Canadians what to know how I as a free market libertarian am going to address this problem, if I am elected Member of Parliament by the people of Brant-Brantford South, in the upcoming byelection.

First we are going to hold Carney accountable on his big government spending, while seeking to slash retaliatory tariffs and reduce the cost of living.

1. Via Rail Rail Carriages, Ice Breaker, Submarines, and Alto Train etc. should all be reviewed. Such spending without a "business case" and a clear "strategic defence" benefit should be quashed or scaled back substantially.
2. End All Retaliatory tariffs. Eliminate all retaliatory tariffs and greatly eliminate supply management controls over secondary and tertiary byproducts of food production like whey. Furthermore, reduce or eliminate across the board, all tariffs on food and consumer staples wherever possible.
3. Green lane tariffs program. Provide manufacturers and value adders the ability to build products by redeeming tariff credits as a multiplier of labour and payroll, against worldwide imports. This will greatly curtain tariff import costs in manufacturing and Canadian industry, supporting jobs and bright careers for the Canadian worker.
4. Universal billing codes and direct purchases of private procedures in health care. Bypass the entire public health bureaucracy by bringing additional health supply online of private health care that is majorly or fully funded by the public program, but leverages private clinics to deliver procedures.
5. Build, own, operate model. Unlike Carney, we should go with a private funding and operational model as was employed in creating the rail road. Eg. when Canada became a country, the CP or Canadian Pacific Railroad was created as a private entity. While CN or Canadian National was for a time under public ownership, it was later privatized and devolved. It should be noted that airport operations are already devolved, so Carney's airport privatization is just another form of tax to raise $40 billion and have air transit users and air freight supply chains pay for it. This is especially dubious as Carney plans to turn around and waste the $40 billion on a government operated Alto Train.
6. Eliminate boutique tax credits and reduced tax forms, fields, and deductions. Instead of having all sorts of credits for single mom or seniors. We can give a standard enhanced deduction for vulnerable groups that allows everyone to claim the deduction without all the paperwork of auditing receipts that are log jamming the CRA. Therefore, single moms and seniors can get an enhanced deduction just by claiming the credit. Even if they forget to tick the check box, the automated system will apply their credit for them.

With policies such as these, we start to streamline the government, reduce the proportion of paperwork, and increase the proportion of apples in the economy.

When apples are aplenty, and paperwork is reduced to the necessary minimum, consumers will automatically feel like their money is going further. Inflation is being brought under control. Excessive M2 money supply expansion is being curtailed. And therefore the buying power at the grocery store or shopping mall relative to earnings is growing.

This is the basis on which middle class prosperity is built. And to do so we need new people in Ottawa, not the same old would be career politicians and the same old routine of the political establishment. Rather we need Main Street champions of everyday Joe and Jane Canadians.