To end economic populism

Pierre Poirievre, a candidate for the leader of the Conservative Party of Canada, called Tiff McClem, the current governor of the Bank of Canada, incompetent and questioned the institution’s economist’s expertise. (Photo: Peregrine981 / CC)

Economic analysis. The movement was expected to be confined to the United States, but has crossed national borders and is now spreading like a wildfire in Canada. Welcome to an era of complex and nuanceless economic populism.

What is the best example of this economic populism? Candidate Conservative Party of Canada (CPC) leader Pierre Poirievre has repeatedly attacked the Bank of Canada, a venerable and respected institution in Canada and around the world.

This federal agency, appointed by Ottawa, remains independent, oversees financial institutions, influences certain major interest rates (starting at major interest rates), and indirectly provides the money supply. To decide.

Therefore, according to Statistics Canada, the mission is to curb inflation with a target of 2%. The consumer price index for April rose 6.8% compared to April 2021.

However, Pierre Poilievre called Tiff Macklem, the current governor of the Bank of Canada, “incompetent.” He also questioned the expertise of the economists of this institution, which is arguably one of the most capable institutions in the country.

By the way, my favorite in the CPC leadership race is to attack institutions because I opposed monetary policy that couldn’t prevent the global phenomenon of inflation in Canada. Why? Are you involved in facts and nuances?

Also, ignore the fact that it takes a certain amount of time (usually 18-24 months) for the Bank of Canada’s intervention to penetrate the economy and have a significant impact on inflation.

Of course, we have all the right to discuss and criticize central bank policies, for example, as former Liberal Party Prime Minister Jean Chrétien did in the past.

On the other hand, damaging Canadians’ confidence in the Bank of Canada is not only dishonest but also dangerous. Just as former President Donald Trump repeatedly attacked the Federal Reserve Board (FRB).

Wealth and unity of all nations

Another sign of this economic populism is the new discourse that the desire to tax or tax the wealthier people is … populism.

This is exactly what some analysts and conservative politicians have criticized Justin Trudeau’s September (similar to some European countries). This especially affects cars and private jets.

It is even said that it could have a negative impact on Canada’s economic growth.

The problem with this kind of discourse is the terrible lack of historical and economic perspectives.

For example, after World War II, as you can see in this graph, the marginal tax rates for wealthy people were much higher than in the United States, Great Britain, France and Germany today.

After World War II, the marginal tax rates for the wealthy were much higher than in today’s major industrialized nations. (Source: Economic Alternatives, work by economist Thomas Piketty)

In Canada, the combined tax rate for Canadian (federal and state) marginal incomes even peaked at 84% in 1949 at the end of the war. According to the analysis by, it was still 80% in 1971. Canadian Tax Journal.. But that has declined in the decades that followed.

However, despite these very high marginal tax rates, Western nations have experienced long-term economic growth and prosperity during the 30 years following the war.

French economist Jean Fourastié baptized this period (1945-1974) as “the thirties of glory.”

During this period, the GDP of developed countries increased by an average of 5% per year. Economics Dictionary (Larousse / World). From 1950 to 1973, West Germany recorded an average growth rate of 6%, while Japan clearly stood out with a growth rate of 9.7%.

Bottom running chimera

Finally, another form of this economic populism (much older, this) is the “trickle-down theory”

In the United States, former President Ronald Reagan propelled this theory (and Donald Trump) by significantly reducing taxes on the wealthiest people.

But this economic doctrine, which has been used for 30 years, especially in Canada, does not work. Utopia, chimera. And that was said in a study published in 2015 by the International Monetary Fund (IMF), which is not really a left-wing temple.

“Increasing the income share of the poor and the middle class actually increases growth, but increasing the income share of the top 20% slows growth, which means that when the rich get rich, they don’t make a profit. I see. Trickle down, “the IMF wrote.

Populism is characterized by providing simple solutions to complex problems. It’s the same with economic populism. You need to be aware of this when using intelligent tools to break down these ideas.

Will inflation explode? Take power from the Bank of Canada and bet on cryptocurrencies to democratize the monetary system.

Does the government want to tax luxury goods? Let’s argue that taxing the rich more will hurt the economy and increase populist anxiety …

Need to stimulate economic growth? Lower the tax rates on the wealthiest people to enrich the entire population.

That makes sense, right?

Make me suspicious …