PIERRE POILIEVRE has gripped the Conservative Party in a way that no other Conservative leader has since Stephen Harper.
But if he wants to seize power of the government of Canada, he better get real about economics.
His love of cryptocurrency denies the fact that they are not viable currencies and are a dubious investment. There’s his threat to make central bankers walk the plank. His clever “Just-inflation” slogan is just too cute.
His vague grip on economics smacks of U.S. president Reagan’s supply-side economics. Reagan’s “trickle down” theory was bogus. In response to a prolonged period of economic stagflation Reagan called for widespread tax cuts, the deregulation of domestic markets, lower government spending, and a tightening of the money supply to combat inflation.
Reagan believed that the savings generated by companies from corporate tax cuts would trickle down to the rest of the economy, spurring growth. He also assumed that companies would eventually pay more taxes, boosting the government’s coffers. Get real.
Before becoming president, George H.W. Bush derided Reagan’s economic delusions as “voodoo economics.”
Even when Poilievre sticks to the traditional Conservative line of reducing inflation and the budget deficit, he’s out to lunch.
It’s pretty hard to argue that the Bank of Canada is pursuing a policy that ignores inflation. In the past six months, it has raised its key interest rate five times, by a total of three full percentage points. Poilievre hasn’t noticed, or prefers not to notice, that the Bank of Canada is perusing one of the most aggressive efforts to quell inflation in the bank’s history.
Poilievre wants to tighten the money supply too. He argues that the Bank of Canada is “printing money” through quantitative easing. That claim is so yesterday.
While the central bank’s balance sheet swelled by an astounding $450-billion in the first year of the pandemic, since then the balance sheet has shrunk by more than $140 billion. Our existing central bankers are doing precisely what Mr. Poilievre prescribes.
The new Conservative leader wants to dump the governor of the Bank of Canada. In other words, he wants to politicize the very institution that should remain at arm’s length from elected governments. He wants to copy the disastrous effect that politicizing government institutions has had in the U.S.
“Meanwhile, the fiscal deficit has also gone into full-speed reverse,” says business reporter David Parkinson, “helped by a combination of a rapid economic recovery, tax windfalls from strong commodity prices and soaring corporate profits, and inflation (which, it turns out, does have some positive uses) provided an enormous $47-billion improvement over the same period a year earlier (Sept. 19 Globe and Mail).”
Gross domestic product, which is a measure of total economic activity including inflation, is on pace to come in about $300 billion higher than the government assumed this year.
The Bank of Canada is doing a good job of fighting inflation and reducing the deficit, something Poilievre seems unaware of.
Poilievre’s populist appeal has propelled him into an enviable position of having won the leadership of the Conservative Party. But he’s going to have to move beyond his new Voodoo economics to form the next government.
David Charbonneau is a retired TRU electronics instructor who hosts a blog at http://www.eyeviewkamloops.wordpress.com.