The Canadian Economy

The International Monetary Fund released statistics to show that the top one percent of the Canadian population receives six percent of market income, paying 11.2% of personal income and payroll taxes. In the United States, the top one percent receives 12.2% of market incomes, while paying 5.6% of personal and payroll taxes. Yet the Liberal policy convention that took place this past weekend featured U.S. economist Larry Summers as a guest speaker to discuss fiscal reform, American style.

  Former U.S. Treasury Secretary, Economist Larry Summers    JIM WATSON/AFP/Getty Image

The Canadian middle class has fared better than their American counterparts. Per capita family incomes have risen by 15% in the last decade, in Canada. And in Canada poverty rates have declined. Per capita net worth in Canada is higher than in the United States where the housing market took a whopping value decline when the empty-mortgage debacle hit the international financial market leading to a global financial collapse.

Canadian income inequality hasn't increased in the past ten years, with the top ten percent enjoying the same share of income to the present as it did in 2000. The top one percent of the population has received a larger share, but this hasn't emanated from the middle class, but rather from other high-income Canadians, as Jack Mintz, Palmer Chair, School of Public Policy, University of Calgary has pointed out.

In addition to which Canadian governments are redistributing more income today than they have in previous years, according to a School of Public Policy paper by Steve Richardson published a few years ago. Why, then, does it make prudent fiscal sense for the Liberal Party of Canada to pompously claim they have the economic answers that Canadians are looking for, in anticipation of the 2015 election?

The current Conservative government is anticipating a surplus that will enable them to provide tax reductions in the 2015-16 Federal Budget that will be expected to spur economic growth. The Liberals, for their part, and given all the promises bruited about during the just-concluded convention, plans to ramp up debt-financed public "investments" in social welfare initiatives. While at the same time assuring Canadians they won't raise taxes.

The Liberals decry the Conservative government move to balance the deficit and bring down the federal debt. They feel it is far more urgent to forget the deficit and just plan to implement those initiatives that they claim will benefit the Canadian middle class whom they now champion, actually in emulation of the Conservative government. New spending programs; infrastructure, health, education, social support have been labelled "Investment" strategies.

Finance Minister Jim Flaherty, delivering the 2014 General Budget

But no tax increases. Reliance on the "capacity" of the federal government to generate growth, while accumulating higher debt. Debt-financed spending was in fact a favourite of aspiring-prime-minister Liberal leader Justin Trudeau's famous/infamous father Pierre Elliot Trudeau, the philosopher-prince, to Justin's philosophy-princeling status.