With Attempt To Dictate Prices & Threat Of Grocery Tax, A Desperate Justin Trudeau Turns To Ignorant Populism In Attempt To Reverse His Political Decline

Throughout history, reckless and economically-illiterate national leaders have sought to find convenient scapegoats as their policies fail. Justin Trudeau is no different.

In a working paper authored by Bernhard Heitger of the Kiel Institute for World Economics titled “Property Rights and their Impact on the Wealth of Nations —A Cross-Country Study”it was clearly established that the link between property rights and economic growth was incredibly strong:

“The central hypothesis of this study was that secure and well-established property rights and the rule of law are a powerful tool to promote economic growth. The hypothesis was tested in an international cross-section of countries in 1975–1995. Empirical tests using a modified human capital augmented neo-classical growth model revealed that property rights have a significant positive impact on economic efficiency and the wealth of nations in 1975-1995. Compared with the more traditional determinants of economic growth such as physical and human capital accumulation and the growth rate of the working-age population the impact of property rights is quite remarkable.

As could be demonstrated, rising income levels lead to further improvements in the quality of property rights. This implies that property rights and economic development are determined simultaneously.

Hausman specification tests significantly support this relationship. The overall impact of property rights on economic development is considerable: A doubling of the property rights index more than doubles per capita income.

In addition it could be shown that property rights also impact the accumulation of the factors of production. Improved property rights significantly raise the accumulation of physical and human capital whereas the growth rate of the working-age population is significantly decreased. Thus the economic effects of property rights on factor endowments are as expected.

Given this additional area of influence it seems reasonable to class property rights among the ultimate sources of economic growth. In contrast, the more traditional determinants (physical and human capital accumulation as well as population growth) should be classified to only be proximate sources.

Obviously, in such a model of economic growth the relationship between property rights and economic growth is of central importance and would represent the reduced form of the model — whereas the other equations estimated in this paper could be thought of as structural equations. Estimating the direct relationship between property rights and end-of-period per capita incomes yields a highly significant regressor and again indicates that a doubling in the index of property rights improves living standards more than twice. Thus, the present property rights approach seems to lend strong support to Mancour Olson’s view that in the area of institutions there are to gain “big bills left on the side-walk” whose magnitude amounts to trillions of dollars (Olson 1996).”

Intuitively, this makes sense.

If you start a business and can be confident that the government won’t be able to just seize what you build and won’t be able to dictate what you charge for whatever products/services you provide, you can think more about the long-term. You can invest, you can take risks. You may fail, but even if you fail you can learn from that failure and try again.

By contrast, if you know there is a big chance that the government will take everything you create, or could – at a whim – tell you how to run your business, you will be far less likely to try and build something for the long-term. After all, why take the risk when it will likely just be taken away? Why run your ‘own’ business when the government can dictate how your run it? Why invest for the future when the government punishes you for it?

Imagine two countries – one that respects private property, and one that doesn’t – and then imagine the cumulative impact of day-to-day decision making by each individual in the country over a period of many decades.

The country where people are incentivized to invest for the long-term will obviously generate more wealth. The country where people are stuck in short-term thinking out of fear the government will seize everything will be much poorer.

Unsurprisingly, we don’t really have to imagine this, as it simply describes the way the world works. The countries with the most protection of private property rights tend to be far wealthier than authoritarian fascist or socialist states where the government dominates.

And – as noted in the working paper referenced at the start of this article – it’s not just about natural resources. Venezuela has the world’s largest proven oil reserves, yet they are quite poor due to years of economically-illiterate authorities socialists interfering in the economy.

South Korea vs North Korea economy

Look at South Korea & North Korea. North Korea actually started out with a significant economic advantage over the South:

“North Korea controlled 80 percent of the peninsula’s coal and minerals as well as the vast majority of heavy machinery from Japanese colonial rule; this advantage allowed the country to rapidly industrialize in the first decade after the Korean War. With total power in its hands, the government ensured that all citizens attained primary and secondary education, and it leveraged its large supply of machinery and electrical power to produce goods and grain for its people.

“Unlike the north, South Korea had few natural resources, and most of its population worked in small-scale agriculture. The fear of recreating colonial dependence on Japan meant that South Korea shied away from trading with Japan, whose economy was booming throughout the 1950s. In doing so, South Korea missed out on a clear opportunity for economic growth. To make things worse, the country was in political turmoil after a rigged election and unpopular constitutional amendments, and its unstable economy did not appeal to foreign investors. Instead, South Korea relied on large amounts of U.S. aid to keep the economy afloat. One decade after the Korean War, South Korea had few prospects for growth.”

Now, South Korea was by no means a model democracy at the start. But, they did continue to shift towards a market-oriented economy where private property rights were relatively protected, and the country became increasingly democratic.

Meanwhile, North Korea – despite their significant natural resource advantage – went in the opposite direction, further tightening state control over everything.

Where do the two countries stand today?

Well, South Korea has a per capita GDP of $34,997 USD.

By contrast, while getting accurate data out of North Korea is quite difficult, most estimates converge around North Korea having a per capita GDP of between $1,000 – $2,500 USD.

The gap is all the more astounding when you realize that the two countries were about tied in per capita GDP as recently as the early 1970’s.

The picture below says it all:


China falls short

This same pattern can be seen even in countries that aren’t free. China’s massive economic boom began when the country moved away from the completely insane economic policies of Mao, and somewhat opened up the economy. China moved in the direction of expanded property rights, while still stopping far short of what property rights are like in the West. As China moved in that direction, investment surged into the country, people started businesses, and wealth was generated.

Still, China’s economy remains middling on a per capita basis. They have about the same per capita GDP as Mexico.

And now that Xi Jinping is reversing the move towards more private property rights and is reinstituting a more purist form of communist economic policy, the country is stagnating. The country is still heavily dependent on large state-owned companies and debt-based infrastructure investment. The lack of a strong consumer sector – something Xi opposes for ideological reasons – means China will likely ‘grow old before they grow rich.’

By stopping short of true property rights, China has also stopped short of true prosperity.

Weak leaders turn to scapegoats when their policies fail

Looking at the importance of private property rights, and the clear contrast in outcomes between those countries that embrace & protect private property rights and those that do not, you would think that leaders in the Western world would want to ensure a strong separation between the role of government and the role of the private sector, and avoid interfering as much as possible.

Now, there are legitimate disagreements on where the line of separation should be drawn.

And nobody expects political leaders to be perfect, or to always get things right when dealing with difficult issues.

However, what is expected is that leaders will take responsibility for their errors, learn from those errors, and correct them when it comes obvious that their policies aren’t working.

That’s what strong and successful leaders do.

Weak leaders on the other hand always blame others.

They find scapegoats, and attempt to direct public anger towards those scapegoats.

And that brings us to Justin Trudeau.

As I noted in a recent article, by all objective measures, the economic policies of the Liberal government have failed.

One of the main ways in which Canadians are paying – literally – for that failure, is in the significant increase in food prices:

Chart 1 Food purchased from stores has outpaced headline inflation since December 2021, Canada, October 2019 to October 2022

The Liberal government – and by extension their NDP ‘Pact’ partners – are largely responsible for this.

They chose to restrain the energy sector – thus depriving Canadians of affordable energy – they chose to impose a carbon tax, and they chose to spend vast sums of borrowed money which drove down the purchasing power of Canadians.

As the negative impact of those choices became more and more obvious, the Liberals & NDP attempted to blame ‘greedflation,’ an effort to pin the blame on grocery store chains.

But, as a Bank of Canada study showed, the ‘greedflation’ narrative simply doesn’t hold up. This was the conclusion:

“In summary, we show that growth in measured markups contributed modestly to inflation in 2021. The data do not necessarily support the notion that the recent high inflation is a consequence of firms leveraging their market power to increase their prices through higher markups. Using a representative sample of Canadian firms, we find that the observed increase in markups in 2020 was primarily cost-driven. While the subsequent positive but declining markup growth in 2021 could have contributed to inflation, this effect was mild and accounts for less than one-tenth of the sharp increase in inflation.

Finally, we discuss how the periods in which we observe positive markup growth paired with increased inflation make sense in the context of the forward-looking behaviour of firms and their desire to smooth out price increases.”

A key point is that every company has its own costs, and those costs are effected by inflation. If inflation rises, a grocery store must pay more for storage, transportation, wages, etc. In that context, they have no choice but to raise prices if they are to remain profitable.

As you can see in the chart below, grocery chains were responding to increased costs, and their markups actually turned negative after initial price shocks:

Again, it’s simply basic common sense to understand that every firm has expenses, and those expenses are impacted by inflation.

Alas, that common sense appears to be absent in the thinking of Justin Trudeau & Jagmeet Singh.

Trudeau threatens to impose Grocery Tax

Having looked at the facts around ‘greedflation’ or the lack thereof, we can see that it would be absurd to blame food price inflation on grocery stores.

But the absurdity of that doesn’t matter to Justin Trudeau and the Liberal government.

The Liberals are more desperate now than at any previous moment during their time in office.

Their polling is absolutely horrendous, and in Pierre Poilievre they are facing the best communicator the Conservatives have had in a very long time.

When you combine that Liberal desperation with a Prime Minister who already has a penchant for being weak, economically-illiterate, and refusing to take responsibility for his actions, you end up with something like this:

“Here’s Trudeau threatening a grocery tax.

“We are not ruling anything out, including tax measures.”

Everyone knows what that means. A grocery tax.”

Having caused a problem – inflation – Trudeau is now attempting to blame grocery stores for the problem. And his threat to impose a grocery tax would of course push prices even higher.

This is classic Trudeau: Double down on failure.

Unfortunately – as noted by Mark Mulroney – it’s also classic socialism:

“In summary. COVID, 🇨🇦 prints more $ than any other G7 nation per capita then Government marries NDP to stay alive. Conservatives predict inflation, told to pipe down, inflation now rampant, socialist blame capitalists, can’t be their fault, bring on taxes, welcome to Venezuela.”


Notably, that post was reposted by Anaida Poilievre, who – having come to Canada from Venezuela – has seen where all of this leads. Even a wealthy, resource-rich nation can be turned into an impoverished wasteland by socialist populist authoritarians.

Jagmeet Singh gets in on the fun

Not to be outdone, NDP Leader Jagmeet Singh is also launching his own economically-illiterate rhetorical attacks:

“Sobeys just posted a 52% increase in profits.

When you pay more, Greedy CEOs make more.

On Monday, I’m going to introduce a law that will crack down on grocery price gouging and bring prices down.

Justin Trudeau and Pierre Poilievre, the ball is in your court.”

As pointed out by Jay Kowal, Singh just so happened to ignore the fact that a key source of higher profits for Sobey’s parent company was a one-time sale of gas stations:

“He left out an important point. The profit was boosted by the sale of their gas stations in Western Canada. You can only profit off that once and it had nothing to do with increasing food prices”

Clearly, Jagmeet Singh isn’t a big fan of getting the facts right.

Deliberate deception by Justin Trudeau & Jagmeet Singh

When I say that Justin Trudeau and Jagmeet Singh are demonstrating economic-illiteracy and are being deceptive, some may consider that to be an expression of an opinion.

And while I certainly am not a fan of Trudeau & Singh, that is not the point here.

By any objective and unbiased measure, Trudeau & Singh are being dishonest.

The facts show that the grocery stores are not gouging Canadians.

The facts show that markups were not excessive.

The facts show that the ‘greedflation’ narrative is false.

And so, by refusing to repeat those claims in the face of facts to the contrary, both Justin Trudeau and Jagmeet Singh are making a deliberate decision to deceive Canadians.

They are also ignoring the fact that they could easily ease food prices by repealing the carbon tax (or at the very least expanding exemptions from it). As the Canadian Taxpayers Federation explained, expanding the carbon tax exemption could save Canadian farmers $1 billion, yet the Liberal-dominated Senate has not yet passed legislation that would do so:

“The Canadian Taxpayers Federation is demanding immediate passage of legislation in the Senate to expand carbon tax exemptions for agriculture after today’s Parliamentary Budget Officer analysis shows it would save farmers almost $1 billion through 2030.

“Making it more affordable for farmers to produce food will make it more affordable for families to buy food,” said Franco Terrazzano, CTF Federal Director. “The House of Common passed legislation to expand the carbon tax exemption for farmers. In fact, MPs have passed that legislation twice.

“The Senate needs to stop sitting on its hands and pass this legislation immediately.””

Of course, there’s one key reason the Liberals & NDP won’t adjust their own policies in a way that would bring down food prices: It would deprive them of scapegoats.

Ignorant populism

Over and over again, we see members of the legacy media deride Pierre Poilievre as a ‘populist,’ attempting to lump him in with politicians like Donald Trump.

However, if you actually look at the substance of what Pierre Poilievre is offering compared to what Justin Trudeau & Jagmeet Singh are offering, you’ll see that it’s Trudeau & Singh who are far more populist.

Now, we are referring to populism in a negative context. Populism can be positive when it is based on truly expanding the participation of the population, or making democratic institutions more accessible and responsive. For example, instituting elections for the Canadian Senate would be a ‘populist’ move and would positively benefit Canadian democracy by giving voters more of a say over who governs our country.

But populism can also be a negative force.

The dark side of populism

The dark side of populism is when it is based upon appeals to ignorance and is used to advance policies that are based on punishing an easily identifiable group of people or organizations rather than addressing a problem at a deeper level.

By ‘summoning’ the heads of the grocery chains to Ottawa, Justin Trudeau is attempting to single out representatives of an industry. He knows they can’t just magically cut prices (all of them cutting prices at the same time after a meeting would be the kind of industry ‘collusion’ that the government supposedly abhors), and he knows that his demand puts them in politically untenable position.

But that’s the point.

Trudeau – and Singh – want Canadians to forget that our economic woes are largely the result of Liberal+NDP policy, and instead blame others.

That’s a classic populist move, something we can see been utilized around the world by authoritarian/quasi-authoritarian leaders in countries like Venezuela, Hungary, Turkey, and many other regions that are struggling due to economic incompetents having centralized power.

Poilievre’s populism, or Poilievre’s practicality?

When looking at Pierre Poilievre’s political appeal, it is actually not all that populist – at least in the negative sense of populism discussed above.

Poilievre repeatedly discusses economic/monetary fundamentals, such as the link between money printing, deficit spending, and inflation.

Poilievre focuses on things he can actually control.

For example, the federal government does not have the authority to order grocery stores to cut food prices, yet that is basically what Trudeau & Singh are implying.

What the federal government can do is repeal the carbon tax and stop strangling the energy sector, in order to bring down the cost of energy, bring down the cost of transportation and thus bring down the price of food.

The federal government can also help restore the purchasing power of Canadians by getting spending under control, which would ease inflationary pressures and provide space for the Bank of Canada to halt or reverse interest rate hikes over time.

Similarly, when it comes to housing, Poilievre focuses on what he could actually control as Prime Minister. The federal government provides substantial amounts of funding to municipalities. Tying that funding to housing approval is well-within the legitimate power and scope of the federal government.

So, rather than call Poilievre a populist, it would be more accurate to call him a practical leader. He focuses on practical measures, rather than overly ideological/utopian ideas. He looks at what can actually be done, and works within that space.

A Prime Minister, not a dictator

This difference between a practical focus or an ignorant populist focus is incredibly important.

Leaders like Justin Trudeau who indulge in the use of ignorant populism to scapegoat people/organizations and distract from their own failed policies often become more and more authoritarian over time.

Watching Trudeau stand in front of his MPs and blame grocery stores for high food prices, and then make a big deal of ‘summoning’ them to Ottawa smacked of the kind of thing you see in authoritarian states, or democratic countries sliding in an authoritarian direction.

The Prime Minister of Canada should be focusing on managing the federal government, not giving orders to private companies.

In a free country, the Prime Minister does not get to dictate prices set by businesses – unless those businesses are voluntarily competing for a government contract – which is obviously not the case when we talk about the nationwide grocery sector.

Our country is supposed to have a Prime Minister, not a dictator.

If we want to preserve our democratic institutions, we must speak out against the scapegoating rhetoric being used by Justin Trudeau and Jagmeet Singh, and make sure our elected leaders know to stay within the bounds of their actual authority.

Spencer Fernando

Photo – Twitter


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