Economic Bananas


American author Kurt Vonnegut had a brilliant anecdote, albeit entirely untrue, to describe the pig-headedness of the establishment.

During the Vietnam War, Abbie Hoffman announced that the new high was banana peels taken rectally.  So then FBI scientists stuffed banana peels up their asses to find out if this was true or not.

In 2008, men in wire-rim glasses presented us with a theory: the middle class is dead.

Ever since then, our politicians have been stuffing banana peels up their asses to find out if this was true or not.

New data released from the Luxembourg Income Study — widely reported in the New York Times — has inspired a divine revelation, with apologies to ScotiaBank:

We’re richer than we think.

While it should be noted that the LIS data is not conclusive — it is missing current data for Switzerland, Sweden, Denmark, Belgium and Norway — it concludes that the Canadian middle class is richer than their American competitors.

The data has been parsed by the Times already, but for the sake of simplicity, consider this:

The mean household income, in international dollars, for Canada grew by 3% from 2007 to 2010 (the statistic stays the same for high and low income earners.)

The same metrics for the Americans?


Perhaps it’s simply cultural osmosis that has led us to drink from the same trough as the anemic American economy, or maybe it’s Canadian politicians taking pages from the Obama playbook, but our political rhetoric appears completely out of tune with the Canadian reality.

I wrote in March on how the leaders were exploiting the issue of household debt for political hay.  And I wrote in February about the pop-enomics of the opposition parties.  Aside from that, I’ve been boring friends to death about the disconnect between the pocketbook and the soapbox.

Take Trudeau’s ‘Sunny Ways’ video.

There’s some clever misdirection in it.  First, he dings Harper on a meagre growth rate, then pivots to say that growth isn’t the problem, it’s middle class bank accounts.

“A strong economy is one provides the largest possible number of good jobs to the largest number of Canadians, an economy that works not from the top down, but because of the middle class — the people who live off their incomes, not their assets.  And right now, they’re hurting,” he coos over doodles of this so-called middle class.

There’s all sorts of indicators to suggest that analysis is wrong.  Let’s stick with one: debt service indicators (very simply put: debt service versus net income.)

It’s dropped 19% from 2007 to 2012, and it’s still trending downwards.

The myth that Canadians are living off their assets is simply untrue.  Canadians’ assets increased nearly 50% from 2005 to 2012 — their net wealth jumping by almost the same amount.

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Thomas Mulcair, for his part, has targeted his appeal a bit more narrowly, railing against ATM fees, credit card charges, and payday loans — stuff that the broad ‘middle class’ doesn’t fret about.

But he, too, has trumpeted the doom and gloom, arguing that our growth is but a gilded age.

“Over the last 35 years — under Liberal and Conservative governments — income for the top 20% has grown, while it’s gone down for the other 80%.  Our economy grew 147%, while the average family saw their income fall 7%.”

Now, see, this is just wrong.

In 35 years, every income quintile in the country has seen their incomes grow (in constant dollars, too, so this is real growth.)

From lowest quintile to highest, they rose: 14%, 7%, 6%, 14%, 32%.

Which brings me to me broader point: the opposition leaders are now trying to convince Canadians of bad news that isn’t true.

While Harper’s message has always been of tepid optimism, the opposition leaders have done everything but climb down the fire escape.

And Canadians appear to be getting wise.

New Angus-Reid polling numbers suggest that Harper has reclaimed the momentum, as Trudeau slides back on par with the New Democrats.

Then there’s an EKOS poll from early April showing that Harper’s approval ratings are on a heavy upswing, even as his personal popularity plummets.

I’ve written it before, and I’ll write it again: the opposition parties hawk their economic snake oil at their own peril.

As Trudeau sermonizes on the advent of everyday oil drum fires and soup kitchens, the average Joe is getting his boat ready for the summer.  As Mulcair sheds a tear for all of the tumbleweed-drawing factories, Jane is looking at buying a new car.  As Harper reminds us who presided over this golden era for the middle class, Jagmeet is looking at new condos.

It’s time the opposition stop stuffing bananas up their asses.



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Follow Justin Ling on twitter: @Justin_Ling


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