Friday, February 21, 2014

Trudeau promises to slay dragons that leap only from his own imagination

The leader of the Liberal Party likes to go on about his plans as a champion of the middle class. Problem is, the challenges he’s identified are pretty much the challenges of the Jean Chrétien era, not those of the Stephen Harper years. 

In other words, to find the bleak economic outlook Mr. Trudeau paints of today’s Canada, one needs to go back to the 1990s, a period Andrew Coyne once wrote is “generally remembered as a golden age of rising incomes and enlightened, liberal-minded governments.” (I suspect Mr. Coyne had his tongue firmly in his cheek as he penned those words.)

The following is the story StatsCan’s figures tell—the real story, not Mr. Trudeau’s fear mongering and half truths.

The number of low-income earners (i.e., those living in poverty) topped out at about 15 per cent in the mid-1990s, and average family real after-tax income had fallen from a high of about $50,000 in 1980s to about $40,000 by then. Income inequality had also shot up with the share of taxable income going to the top 1 per cent rising from 8 per cent in 1980, to 12 per cent by 1998. (It may be instructional for readers to remember that by 1998 the Liberals had already been in office for five years.)

After the late 1990s, however, Canada’s economic prospects brightened a great deal with the foregoing statistics either turning around or levelling off.

The proportion of those of us living below StatsCan’s Low Income Cut-Off (LICO), has fallen sharply since the 1990s to an all-time record low today of below 9 per cent.

Furthermore, total family income and after-tax income (both adjusted for inflation) of the middle class are currently at all-time highs, despite the recent recession.

Moreover, the charge that income inequality has widened has been greatly exaggerated. According to figures, compiled by McMaster University’s Michael Veall, the share of the top 1 per cent of Canadian earners dropped in the 1930s through to about 1980 then rose sharply to about 2000, after which it’s bounced about a bit. As a consequence, the share of income going to the top 1 per cent in Canada was no higher in 2009 than a decade earlier.

Who would have thought, eh?

Listen to Mr. Trudeau and Thomas Mulcair and you’d think Canada’s economy was going to hell in a hand basket, when all the while things have never been better.

Perhaps Mr. Trudeau is confused by the media coverage in the US, which does have some widening income inequality issues and other serious challenges not faced here in Canada—or, at least, not nearly to the same extent. I guess he’s counting on other Canadians being similarly confused—he’s certainly doing his bit on that score.

A major weak spot in the Canadian economy is government debt, but Mr. Trudeau gets that wrong too. He wants to increase government debt—he says he wants the federal government to “step up” and spend more. In his mind, apparently, budget deficits automatically disappear if only governments spend enough. He famously said recently: focus on growing the economy “and the budget will balance itself.”

Enough said.


[Statistics source: StatsCan as reported by the National Post, 2013]


  1. 2009 was the worst year in recent for the top income earners because of the beating the markets took.

    Even from 2009 - 2010, the top 10% accounted for 55% of income gain. The top 1% accounted for 25% of total income gain.
    The bottom 50% accounted for a mere 3%.

    If you look at this on a per person basis, 3 / 50 = Each person in the bottom 50% of income accounted for 0.06% of per person income growth, whereas each person in the top 1% accounted for 25% of per person income growth (25/1 = 25%), which is a ratio of 417 to 1. For every extra dollar an average person in the bottom 50% of income earners in the country realized as a result of income growth in 2009 - 2010, a person in the top 1% realized 417.

  2. I'm not familiar with the Coyne column you refer to but during yesterday's At Issue panel, Coyne seems to have changed his mind, stating that Trudeau's talking points about middle class & lower income families' incomes are not factually correct.
    "... this line that the middle class is going nowhere, that no one's had a pay raise in 30 years is just factually incorrect. Real wages have never been as high as they are now, family incomes have been rising for 20 years, household net worth is at all-time levels ... so it's a great talking point and it's got lots of borrowed interest from the United States to back it up but it's just not true in Canada."

    And talking about the United States ... it's been reported that a lot of Obama people are here to participate in the Liberal convention. While channel surfing, I saw Larry Summers, former Secretary of the Treasury under Clinton, participating in a one-on-one talk with Liberal MP Chrystia Freeland.

    Why do I bring that up? Because MSM commentators would be outraged if some US analysts or shudder !!! Republicans !!! were to participate in the Conservatives' convention. The line would be that the Conservatives are subservient to the Americans and adopt their Rovian attack strategies. But if the guests happen to be American Dems, then everything's hunky-dory.

    BTW, the only one on the At Issue panel who consistently rah-rahed for Trudeau was Althia Raj, the journalist who wrote that ebook bio of Justin Trudeau. She sounds smitten.
    -- Gabby in QC

    1. Gabby in QC, Coyne hasn't changed his mind. His arguments on the most recent At Issue show mirrored his points in the article from which I quote him. In my extract from his article, Coyne was being ironic.

      You are right about the double standard of the Grits when it comes to "borrowing" from US politics--all OK if it's from the Dems, but unacceptable if the ideas come from the GOP.

      But with the Liberals it's always a case of: Do as I say, regardless of what I do.

  3. The Economic Action Plan TV commercials that advertise a non-exist ant job program makes me think Harper lives in fantasy land.