Canada’s Increasingly State-Managed Economy Is Growing More & More Hostile To Innovation & Competition

InsightSpencerFernando

The federal government appears to believe the economic pie is fixed and can only be redistributed, ignoring the fact that wealth and value can be created when government steps back and frees businesses to flourish.

Is there a set amount of wealth in the world?

It may seem like an absurd question, but our federal government doesn’t seem to know the answer.

Aside from their obvious obsession with centralized power and control, the Liberal government also seems to believe that wealth can only be taken and redistributed, rather than created.

For example, their attitude towards social media companies demonstrates that the government believes companies like Facebook & Google are stealing from media outlets by providing those media outlets a place to share links to their content.

In a great Tweet, Cpl Canuck explained how insane that idea is when extrapolated onto a more local situation:

“For those who don’t get it let’s try this:

Imagine we live in a small town. I run an ice cream store, Corporal’s Cones. Mark runs a coffee shop/Yearbook Business , Java and Yearbooks.

Mark is pretty smart guy so he decides to put up a bulletin board in his coffee shop. It’s free for people to post on it however, he does sell his own advertising space around the outside edge.

Mark pays all of the regular costs of running a business, property taxes, income taxes, electricity, employees, and so on. Despite that he allows anyone who comes into his coffee shop to post anything they want (within reason) on the bulletin board he made.

Over at my ice cream store I have coupons on the counter. From time to time people who like what they see in my store will post one of my coupons or flyers on Mark’s bulletin board.

A lot of people see Mark’s bulletin board in our town so I get a lot of people who come to my store because of my flyer posted there.

Of course, because Mark’s bulletin board is popular people, go to see what’s been posted on it, sometimes every day. Like I said, Mark is a smart guy so he sells advertising space on the bulletin board.

One day a less than brilliant government comes along with a “great idea”. They make it the law that Mark must now give me some of his advertising revenue because random customers of mine posted my flyer or coupons on his bulletin board. He’s now required to ask people who come and look at the bulletin board if they’re planning on shopping in my store so he can give me money at the end of the week.

Up to this point, Mark had been helping my business. His free bulletin board had been sending a lot of foot traffic my way.

Mark does with any other reasonable business owner does and he bans all flyers from local businesses.

Now with the reduced foot traffic to my business. I really don’t know if I’m going to make it. I was really benefitting from all that free advertising.

Mark did reach out to me and offered to allow me to post my flyers on his board for a small fee so that’s nice. Thanks government for getting involved. Yay.”

https://twitter.com/Bannedforlife69/status/1676915715704537088

Ironically, some of those who pushed the most for Bill C-18 now appear to be having some regrets:

“Notable to see Bob Cox, former chair of News Media Canada and Winnipeg Free Press publisher sounding the alarm over the potential harm out of Bill C-18. Government’s tough talk won’t compensate for losses stemming from this miscalculation.”

This isn’t the only way the government is demonstrating their hostility to real economic competition and their ‘fixed economic pie’ view of wealth. As you can see in the video below, Finance Minister Chrystia Freeland claims Canada needs to get our ‘fair share’ of green jobs:

“Our govt was absolutely determined that Canada get its fair share of those green jobs,” says Finance Minister Chrystia Freeland as she responds to question about federal and Ontario govts reaching deals to subsidize Stellantis and VW electric vehicle battery plants.”

The idea that a country is entitled to a ‘fair share’ of jobs implies is a profoundly government-centric and anti-competitive way of thinking. What is a ‘fair share’ of ‘green jobs’? Who decides what this is? Would another 1,000 jobs be too many and thus ‘unfair’? Would 1,000 fewer jobs be not enough and thus also ‘unfair’?

It makes no sense.

Now, some will argue that the government is ‘competing’ by providing massive subsidies to match what the United States is offering. But this is not real economic ‘competition,’ it’s a contest to see which government can spend the most taxpayer dollars on subsidies. It’s not about the best company winning through a battle in the market, it’s about the best lobbyists winning over politicians.

After the federal government agreed to give billions to Volkswagen, Stellantis demanded more money for their battery plant in Ontario – obviously realizing that both Justin Trudeau & Doug Ford would be terrified of seeing such a heavily-hyped project fall through.

Stellantis succeeded, and they will get billions more – paid for by Canadian taxpayers of course.

Take a moment to consider how absurd it is that the government is on the one hand attacking some private corporations – Google & Facebook – for not paying people for a service they are currently providing for free, while shovelling tens of billions of dollars worth of subsidies at other private corporations – Stellantis & Volkswagen.

You will notice however that there is a consistency here: The Liberal government demands that the state be in control.

With C-18, the state is imposing demands on Google & Meta.

With the subsidies, the state is ‘controlling’ which projects happen and which ones don’t.

And this gets at a deeper problem in Canada:

A state managed economy

Canada’s economy is increasingly dependent upon a housing market that the government is desperate to prop up at all costs, government payouts to individuals to make up for the damage caused by government policy (grocery rebates are glorified foodstamps to ‘respond’ to the rising cost of living that has been exacerbated by the carbon tax and anti-competitive policies), attempts to force private companies to direct profits to where the government demands, and huge subsidies to build a few massive projects with no regard for the broader economy.

The government is acting as if wealth cannot be ‘created,’ and that for someone to win, someone else has to lose. It’s a view common to those who view the world through a socialist lens. Consider how Jagmeet Singh has tried to get people to think that corporate profits are synonyms with theft, and tried to blame inflation on the private sector rather than the government/Bank of Canada.

Notice how politicians like Trudeau & Singh talk about ‘greed’ when corporations have a strong year of profits, but never seem to notice when corporations lose money in a down year. Every year countless corporations collapse and go bankrupt. Those that survive year after year do so largely because they continue to provide a service or product that people view as valuable. After all, we only buy something if we feel it will bring more value to us (however we define value) than the money we use to buy it. And that’s a decision for each individual to make, not the government. They only talk about corporations when they can either demonize them in an effort to expand the power of the government, or try to win votes through big announcements of new economic projects that just so happen to be dependent on billions of taxpayer dollars.

It’s not working

Here’s the biggest problem with Canada’s increasingly state-managed economic approach.

It’s obviously not working.

That’s not just my opinion as someone who is often critical of the Liberal government.

It’s objective reality.

Here’s what Vancouver Is Awesome wrote about it – citing Stats Canada data:

“Economic data confirm our experiences on the ground. According to Statistics Canada data for the first quarter of 2023, Canadian real GDP per person is now $55,677, down by 1.2 per cent since 2019 Q2. This reflects a precipitous drop in 2020 during the pandemic, followed by a weak recovery in 2021-22. That partial recovery ran out of steam by mid-2022. Canada is one of the few advanced countries that has not recovered its pre-pandemic level of per capita GDP.

Young Canadians entering the workforce today face 40 years of near-stagnant average real incomes. The OECD projects that Canada (and by extension B.C.) will be the worst performing economy out of 38 advanced countries over both 2020-30 and 2030-60, with the lowest growth in real GDP per person.”

As noted by Andrew Coyne in a recent column, Canada’s productivity has fallen in 10 out of the last 11 quarters, and our per capita GDP is now actually lower than at any point since 2017. In a striking comparison, he explains that Ontario’s per capita GDP is now equivalent to that of Alabama – one of the poorest states in the U.S. He further explains that Canadian business investment has gone into a serious decline, with new capital per worker just a bit more than half of what it is in the United States.

Our economy isn’t actually ‘growing’ at all in any real sense. We are getting poorer on a per person basis. The government is merely trying to hide that fact by ramping up the population.

The fact that we now have a food stamp program – really just a repacked GST rebate – basically says it all about how the economy is really doing:

“When more than 25% of the country’s population are deemed by the government to need help buying food, maybe the government’s policies – the ones they said were about helping you get ahead – are really part of the problem.”

Embrace competition

If we want to turn our country around and really start growing on a per capita GDP basis, there is no avoiding the fact that we must embrace competition. Real competition.

More money should be kept in the pockets of Canadians. Subsidies should be cut back. Failing businesses should be allowed to fail so capital and personnel can be reallocated to more productive uses. Lower taxes, the elimination of the carbon tax, and restrained federal spending are also necessary, because we must reduce the size of government in relation to the overall economy.

Finally, we need to embrace innovation and respect the market choices of Canadians. As I said on Twitter, Canadians chose to use Facebook and Google, and the government should not be interfering with that choice:

“Nobody forced Canadians to use Facebook & Google. Canadians chose to do so. The fact that some news organizations are struggling is no justification to use government power to force those Facebook & Google to pay for a service they were providing for free. Let the free market decide.”

If Canada is to truly become a wealthier and more innovative country, we also need to recognize that the economic pie isn’t fixed, and redistribution isn’t the answer. Instead, the government must step back and allow human creativity and entrepreneurship to flourish in a free economy.

Staying on the state-controlled path we are on will only lead to further economic pain, stagnation, and the wasting of Canada’s tremendous potential.

Spencer Fernando

Photo – Twitter

***

The damage being done by the Liberal Government and Bill C-18 makes it more important than ever for Canadians to support independent media. If you value my writing, you can make a contribution through PayPal or directly through Stripe below:

PayPal

[simpay id=”28904″]