More bad news on the economic front – and some good news!

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I’m starting to feel guilty. It’s not fun to continue to report bad news on the economy, but unfortunately there’s not much else out there right now. All economies run in cycles, and it certainly appears we are entering into a declining phase of that cycle at present. The unusual impact of the pandemic has messed up the usual path of business cycles in recent years, as it initially drove every economy in the world sharply into recession as governments shut down most of their economic activity. Subsequently, post-pandemic economic activity looked good, but only because things had been bad for so long that any improvement looked significant. 

Even before the pandemic hit, it was expected that most economies would slow. The pandemic meant that this would happen in spades, and quickly. Now that the post-pandemic bounce-back has occurred, we are back on a more regular business cycle trajectory with a slowing of activity as a result of higher interest rates and inflation boosted by Canada’s excessive pandemic spending which continues to this day. Despite the denials of federal government officials, the fact that Canada spent about twice per capita what other comparable countries did during the pandemic is finally being acknowledged by the Bank of Canada and other economists as a mistake that has left Canada with more debt than necessary and a tougher economic recovery. 

The Organization of Economic Co-operation and Development (OECD) has forecast that Canada will have the worst economic performance of all OECD countries not only for the next little while, but for decades to come. This pessimistic outlook is the result of failed Trudeau government economic policies which have focused on wealth redistribution at the expense of wealth creation. Unfortunately, you cannot redistribute wealth without creating it in the first place. Canada has done an abysmal job of creating wealth during the Trudeau years, and the chickens are coming home to roost. 

As we have just had the Labour Day weekend, it is only appropriate to look at what has been happening in Canada’s labour market recently. We know that the federal government massively increased its employment by about 40 per cent over the last few years. This sizeable increase was never contained in any Liberal pre-election platform. Despite this sharp increase in federal government employees, Canadians have not enjoyed any improvement in public services – in fact, the quality of those services seems to be getting worse. 

What happened to employment at the provincial government level was outlined in a recent Fraser Institute study, which showed that unfortunately the provinces also greatly expanded their public sector employment, to the detriment of the roughly 80 per cent of taxpayers who do not work for government but who pay the bills. 

The Fraser study found that nearly all job creation in Canada from pre-pandemic levels took place in government. Private sector job growth had been minimal. The analysis looked at job growth at the provincial level between February 2020 and June 2023. It found net job growth in government during this time was 11.8 per cent as compared to 3.3 per cent in the private sector. Job growth in the public sector was faster than the private sector in all 10 provinces. In four provinces, net job creation in the private sector was actually negative. 

British Columbia was the province with the fastest rate of government job creation at an enormous 22.6 per cent, accompanied by the slowest rate of private sector job creation at 0.3 per cent. Alberta was the province with the fastest growth of private sector jobs at 6.2 per cent, but government jobs in Alberta still exceeded that with growth of 8.9 per cent. Unfortunately, although provincial governments may not have duplicated the immense growth in the federal public sector – thank goodness – they still grew more than the private sector. Considering that governments don’t pay for themselves and need a healthy private sector to finance their activities, this is not a positive trend. 

Governments have justified their growth in the last few years as necessary because of the pandemic. This is partly true, but it is also true that Canadian governments increased their spending much more than other governments around the world, leading to more debt and a heavier future burden on taxpayers. And if it is true that governments only grew so much recently because of the pandemic, we should be seeing some substantial reductions in government employment very soon now that the pandemic has passed. I won’t be holding my breath. 

Despite all of the negative news on the economic front of late, all is not lost. Some recent developments indicate that Canadians are finally waking up from their “woke” stupor and developing a backbone to fight wrong-headed policies that have increased the growth and influence of governments. The example most in the headlines these days is what is happening in our public school system, with teachers being encouraged to keep parents in the dark about changes their child may be seeking in terms of their choice of pronouns, possible gender transition and changed names. 

Finally, parents are fighting back and rightly so. The leftist tactics have always been to label anyone who fights back as racists, homophobes, transphobes etc. For a while, this shut up the opposition. But now, thankfully, people are reverting to common sense and not being swayed by the insults – which were never accurate in the first place. 

We can only hope that Canadians’ recent feistiness on some issues will extend to others. The substantial growth of government at federal and provincial levels over the past few years is something that all Canadians should oppose as it is a recipe for long-term economic problems. Public opinion polls show that Trudeau’s grip on Canadians is fading fast, and it’s about time. It’s unfortunate that so much damage had to be done before Canadians would fight this harmful “woke” agenda. But better late than never. 

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