Why Liberals Will Fail The Economy
"We're proposing a strong and real plan, one that invests in the middle class, so we can grow the economy, not from the top down, the way Mr. Harper wants to, but from the heart outwards. That's what Canada has always done well.” – Justin Trudeau
It’s been one year in power for Trudeau’s Liberals. Despite endless criticism of Stephen Harper’s economic record during the election, the Liberals haven’t fared any better. The unemployment rate hasn’t budged. The GDP growth is constantly revised downwards to the point where – in 2016 – we will be lucky to pass 1% growth. Big industrial projects are still in limbo. Layoffs on a large scale are becoming constant. The malaise continues...and will continue to do so.
Here’s ten big problems the Liberals are up against...much of it being their own doing.
#1. Commodity Bust
Justin Trudeau and his Liberal gang of sophisticates are embarrassed by Canada’s reputation for having an over-reliance on primary resource based industries. As Canada gets more urban and removed from the bounty of Canada’s rich geography, the disdain for utilizing our natural resources grows.
Nevertheless, our natural resources are crucial to our prosperity and standards of living. With a worldwide commodity bust currently raging into it’s third year, Canadian wealth is getting crushed. Without selling our natural stuff, we can’t build a vibrant economy. We’re a small population tied to a sprawling land. It’s our destiny to be “drawers of water and hewers of wood”. So long as commodity prices are depressed, so too will be our economy.
#2. Consumer Debt
Canadians have never been saddled with more debt in our entire history. Credit cards are maxed. Mortgages are enormous. Lines of credit run to the brim. As a result of this already-spent money, future growth in the consumer economy is limited. The growth that comes from spending tomorrow’s paycheck today has already happened. Now everything already bought is getting paid for...slowly...grindingly...over the course of years.
#3. Housing Bubble (and the policy to correct it)
People have been warning of it for years and if you want some hardcore doom-and-gloom surfing, head over to Garth Turner’s THE GREATER FOOL blog and check it out. The housing bubble in Canada is now comparable to what happened in the United States in 2008. Of course we were told it could never happen here, but as prices got more and more insane, the people up top realized that it totally could happen here.
Thus, the Liberals have introduced new regulations making it harder to buy a house. The problem is that the policies introduced may incite the exact bubble-burst it is intending to avoid. We’ll have to stay tuned to see how this plays out, but either way, housing is a major driver of the economy and we’re looking at a slow down soon.
Probably the most important macro-economic factor in this list is demographics. The peak of Canada’s baby boom was 1959. This makes the average baby boomer roughly 57 years old. There are more people over 65 in Canada then under 15. We’re an old and greying country.
In order for a nation to have a vibrant, dynamic, growing and innovative economy...you need to have the people to drive it. Canada is instead heading down the same path as Japan and Europe. People are trying to save for retirement and they don't have enough money. As houses get liquidated and consumer goods go unpurchased, Canada’s economy is destined to decline. At the same time, public demands for more entitlements will grow.
What could possibly go wrong?
#5. Diversification Dream
Justin and the Liberals want Canada to have a “cool” economy. Natural resource extraction, manufacturing cars, and paper-pushing in cubicles is a hallmark of Canada’s real economy. We don’t have Canadian Googles or Amazons or Microsofts or Facebooks or “a knowledge economy” or “green-collar jobs”...and that’s what Liberals are infinitely infatuated with.
Their determination to force this love affair to happen is going to leave us with more Nortels and Blackberries. Fast burners with lot’s of promise and no follow through.
Countries need to play to their strengths, but the Liberals want Canada to be a northern Silicon Valley.
It won’t be.
#6. Social License
Normal people have put up with the notion of “social license” for far too long. Social license is nothing more than an apology for existing. The apology is extended to people that want Canada to become a giant national park in which nothing productive ever happens. Social license is a tactic used by our competitors to stifle our economy.
But Liberals love it. This sort of virtue-signalling is a huge part of what Liberals are all about. It’s more important to win the approval of orthodox leftists then it is to actually build the economy. Read this wonderful article for more.
#7. Cultural Malaise
Andrea Mandel-Campbell wrote the book, Why don’t Mexicans drink Molson?. It was a scathing look at Canada’s parochial business culture. Too nice. Too complacent. Too afraid of greatness. Our inherited prosperity is beginning to fade though, as Canada becomes increasingly a nation of distracted NIMBY palookas.
While Canada chases social license with carbon dioxide tax schemes, the rest of the world is eating our lunch. People don’t seem to connect the dots between our distracted and risk-averse culture and our lack of innovation and progress. They don’t notice (or care) because the embers of prosperity are still warm in Canada...but they’re cooling fast.
More hustle is needed. We need to be better sharks. We need to win and not apologize for doing so.
#8. Horrible Provincial Governments
Right now there are many provincial governments that are just appallingly horrible, but Alberta’s NDP is the best example. Once the engine of Canada’s economy, Alberta is now wrapping up a second year of recession with no end in sight. The NDP have done to Alberta what they always do to every province they run...it’s not surprising. When you remove the most successful province in the country from Canada’s economic equation, it makes it difficult to prosper no matter what sort of federal policies are offered up.
Then there’s Ontario’s Liberals...lead by the fantastically unpopular Kathleen Wynne. Ontario is drowning in debt, obsessed with “green energy non-sense” and looking to be booted from office in 2018.
The Maritimes seem to be doing what they always do.
Manitoba is just now beginning to clean up the mess that their own NDP left behind.
That leaves BC, Saskatchewan and Quebec.
When you are looking to Quebec to pull up the country economically, you know times are tough.
#9. The U.S. Economy Is Due For A Recession
The U.S. hasn’t had a recession since 2008/09. Next year will mark 8 years of recession-free economic growth. Lot’s of optimism abounds as people have gotten used to this situation as being the new normal, but history has shown that periodic recessions are just a fact of life. When the U.S. gets hit by the next downturn (likely soon), it will coincide with Justin's first term. And where the United States goes...Canada is soon to follow.
#10. The Near Death Of CETA
A free-trade deal with the European Union was gift-wrapped and handed to Justin Trudeau’s Liberals by Harper’s Conservatives...and they blew it. Justin Trudeau is now racing over there for a salvaged photo-op signing, but it remains to be seen if any of this comes to pass. It really needed to happen now.
Canada is an exporting, trading nation. We needed this. Desperately. It was worth a lot.
A joint Canada-EU study estimated CETA’s economic benefits in terms of annual real income gains within seven years of implementation: $12 billion for Canada; $17 billion for Europe.
An extra $12 billion a year could’ve covered Justin Trudeau’s original promise to run $10 billion dollar deficits and left an extra $2 billion to throwaway on climate thumping or social justice warrioring.
Many of these issues will remain regardless of which party is in power. It’s time we started realistically assessing Canada’s malaise and coming up with real and effective solutions. This leaves the Conservative Party of Canada well positioned to capitalize on 2019’s inevitable discontent. A friendly, unified, truly conservative, Conservative Party will be readily embraced as Canadians slowly wake up to the fact that Justin Trudeau is not the person to head our government and his band of liberal elitists are unable to actually accomplish anything worthwhile.
With the leadership race in full-swing, it’s time for concerned citizens to get involved and join the Conservative Party for their chance to select the correct leader to replace Justin Trudeau. With the right leader, and the right platform many of the above points can be realistically addressed. If they aren’t...then you’d better get used to news of decline, layoffs and recession...because that’s where we’re going right now.