LP_468x60
Screen Shot 2021-05-07 at 11.05.14 PM
on-the-record-468x60-white
and-another-thing-468x60

Warning: in_array() expects parameter 2 to be array, string given in /home/forge/looniepolitics.com/wp-content/themes/loonie-politics/template-parts/content.php on line 134

The reaction to this week's "fiscal snapshot" was pretty much universal across media platforms a lot of pearl-clutching and reaching for fainting couches at the size of the deficit and project net debt, followed by musings about needing to raise taxes to pay for it, tut-tutting by Conservatives about the need for some kind of austerity (but vague enough so that it's only austerity on stuff they can disingenuously misconstrue in a bad light), and the NDP's perennial demands for closing tax havens (harder than it sounds) and wealth taxes (for which their proposal would require an entirely new tax system).  So much of the Canadian establishment's thinking of our economy remains rooted in the mid-1990s, when the debt and deficit were at crisis levels but this is not the nineties, and this pandemic-related economic crisis is not like any we've seen in our lifetimes.

Sure, the deficit figure of $343 billion (almost assuredly high-balled) and the possible year-end net debt figure of $1.2 trillion are big numbers that get thrown around, but we also have to remember the counter-factuals, which Scotiabank Economics calculated to be a potential real GDP decline of 10.3% and much higher unemployment had the government not acted.  And because it's not the mid-1990s, and interest rates are at near-zero, it means that the government is able to issue ten and thirty-year bonds, which the Bank of Canada has been snapping up as part of their quantitative easing program ensuring that this deficit is largely being financed for next to nothing.  These are important considerations as we fetch the smelling salts for everyone who has swooned at the sight of such large numbers.

We've also seen a lot of "if only the government hadn't run a deficit before the crisis" talk, which is again rooted in the economics of the mid-nineties, and which ignores the effects of what Conservative austerity was doing to the broader economy.  In order to achieve an artificial "balanced budget" in time for the 2015 election (which booked a bunch of savings that turned out to be illusory), their deficit reduction plan wound up forcing the kinds of stimulus necessary in the weak economy onto monetary policy, meaning the Bank of Canada setting interest rates.  The effect of that meant that it was up to consumers and not government to keep putting money into the economy, and the legacy of that was the record levels of consumer debt.  This particular legacy of the underlying weakness of the Harper years is important when Prime Minister Justin Trudeau remarked correctly in the view of many economists that they took the decision to leverage the government's ability to borrow so that households wouldn't have to.

Of course, the mid-nineties mindset isn't just about the deficit it's also about how these same establishment voices talk about the recovery, where they keep calling for stimulus in things like infrastructure projects.  That isn't the kind of spending that we need right now there wasn't any softness in construction or infrastructure sectors going into the pandemic, and they are already bouncing back.  Where the real softness lies in this crisis is the service industry both because there is a demand-side shock that is directly related to the palpable fear of infection as a result of the global pandemic, and because those jobs tend to skew more heavily female, and too many women are being sidelined from returning to work because of a lack of childcare or education options.

To be fair to Trudeau, he does seem to get that childcare is an integral part of the economic recovery, which is why he included money for it as part of his $14 billion aid package for the provinces aid money that the provinces are balking at because they don't like that there are strings attached to the money.  The provinces have also been dragging their heels when it comes to signing deals with the federal government over childcare that have been years in the making (and in the lead-up to the pandemic, many provinces were also slowing down infrastructure project approvals or curtailing their own spending once federal dollars were on the table, which obliterated hoped-for productivity gains from those projects).  What we get instead are provinces who want Trudeau to simply give them money, and a lot of it, for them to spend how they see fit, while many of those provinces can't muster the intestinal fortitude to reopen schools in a safe manner (which will require hiring a lot more teachers).

The traditional mindset that surrounds economic crises has been that it's "animal spirits" or psychology that creates a demand-side shock, but this demand shock is different.  You can't throw money at this problem because no amount of liquidity will help businesses and sectors where they rely on a physical presence for their business models to work.  That's why traditional stimulus calls can't be relied upon to help us get our economy back on track.  It's not spending on roads and bridges it's spending on new teachers, new classrooms, and new child care spaces, all of which are areas of provincial jurisdiction.  It also means that we need to stop assuming that women will simply pick up the slack for childcare and education, thereby removing themselves from the workforce.  The economic fallout of removing 40 percent of many household incomes is going to be enormous, and you can't just find shovel-ready projects to get around that, nor will removing red tape somehow revive investment especially when you need even more health regulation as a result of the pandemic if you want people to be out and about.

The world has changed as a result of this pandemic, and our economic thinking needs to change with it.  While I see plenty of economists who are making these calls, I'm not seeing enough premiers who are listening.  Perhaps if the mainstream voices who dominate the discussion realize that it's no longer 1995, the political class will get the hint that we need to treat this crisis differently than those that came before it.

Photo Credit: Foreign Policy

The views, opinions and positions expressed by columnists and contributors are the author’s alone. They do not inherently or expressly reflect the views, opinions and/or positions of our publication.



Warning: in_array() expects parameter 2 to be array, string given in /home/forge/looniepolitics.com/wp-content/themes/loonie-politics/template-parts/content.php on line 134

Canada has been overcome by a case of 'rules for me and not for WE.'

ME to WE Social Enterprise, a for-profit agency connected to WE Charity, admitted this week it has paid hundreds of thousands of dollars in speaking fees to people in the Trudeau family notably $312,000 in fees for Justin Trudeau's mother, Margaret, and a more modest sum of $40,000 to his brother Alexandre.

The revelation shatters any benefit of the doubt that might have been afforded to Prime Minister Justin Trudeau over his decision to sole source administration of a $900 million cash-for-volunteering program to WE.

I don't care that the Trudeau family has managed to earn such a good living on the speaking circuit.  I do care that Trudeau tried to get away with gifting a sweetheart deal to group that has given his family a considerable pile of cash in recent years.

It's worth noting these speaking fees are only a small piece of the relationship between Trudeau and WE.

Trudeau himself has spoken at a number of WE events, as has his wife, Sophie Gregoire Trudeau.  Gregoire Trudeau hosts a podcast for WE and was most recently on stage at a WE Day event in London in March.

WE's founders, Craig and Marc Kielburger, have both donated to the Liberals, according to Elections Canada's donation registry.  Craig donated the legal maximum to Trudeau's 2013 leadership campaign, in fact.

Trudeau said earlier in the week he would continue to lend his name to WE initiatives, though it's not clear if that's changed.  Either way, Trudeau's team says there's nothing to see here.

"The Canada Student Service Grant program is about giving young people opportunities to contribute to their communities, not about benefits to anyone else," the Prime Minister's Office said in a statement.

Well yes, it's easy to downplay the "benefits to anyone else" when your family members are the "anyone else."

All of Trudeau-WE connections would be insignificant were it not for Trudeau's still-inexplicable desire to start outsourcing functions of the Canadian bureaucracy to WE.  To award any project that size to a single vendor without going through an open bidding process is concerning made all the more so by the not-even-remotely-hidden web of ties between said vendor and the guy making the decision.

After initially claiming the public service was responsible for awarding the contract, the Prime Minister's Office later confirmed cabinet  presided over by Trudeau  made the final call.

This decision has placed Trudeau in the crosshairs of Canada's conflict of interest and ethics commissioner yet again.  I can hope at this point that we're getting a bulk discount on ethics investigations.

If a relationship or transaction is aboveboard, no one needs to go through any lengths to hide it.  Yet with WE, Trudeau has downplayed his own connection to the (now abandoned) decision to have WE administer the program.  And WE has tried to downplay the financial benefits afforded to the Trudeaus.

WE Charity previously said it never paid anyone in the Trudeau family to speak.  This is little more than a technicality given speaking fees were paid out of ME to WE's coffers instead.

A WE statement posted by Brian Lilley shows some pretty unique spin.

"Over the years, WE Day corporate partners have sponsored, via speaker bureaus, speakers to participate at the event," the statement says.  "One of the corporate sponsors has been ME to WE Social Enterprises.

To call ME to WE merely a "corporate sponsor" ignores that it is apparently sponsoring itself.

As someone who's paid speakers and been paid to speak, I can say I've never seen or heard of a group booking a speaker referred to as the "sponsor."  "Client," sure.  But the speaker bureau is just the middle-man here: Margaret and Alexandre Trudeau were hired by WE.  And then Justin Trudeau tried to hire WE.

Even so, I don't see WE as being the culprit here.  It's the responsibility of lawmakers to not put themselves in a conflict of interest or the appearance of one a lesson you'd think Trudeau would know by now having been found guilty of violating the federal ethics laws twice.

There's always an excuse though.  The first time, the Aga Khan was a close family friend, so taking a vacation from him was all good.  The next time, with the SNC-Lavalin affair, it was all about Quebec jobs.  Now, it's all about the children.

As I mentioned on Twitter, things are so bad for WE right now they might have to rebrand as SNC-Lavalin to be taken more seriously.

Photo Credit: Edmonton Sun

Andrew Lawton is a fellow at the True North Initiative and a Loonie Politics columnist.

The views, opinions and positions expressed by columnists and contributors are the author’s alone. They do not inherently or expressly reflect the views, opinions and/or positions of our publication.