Friday, November 26, 2010

Needed: An Insistence that the economy can be grown equitably and sustainably

"Canadians need to make some hard choices to tackle the key structural problems challenging the country’s future prosperity, including soaring health-care costs and a tax system that is unfair to lower-income earners"
---Ed Clark, President of Toronto-Dominion Bank
                    "A Rising Tide lifts all yachts, and leaves the rowboats behind."
                    ---Warren Buffett

If the President of theToronto-Dominion Bank thinks the tax system is unfair to low-income earners, then why should acquiesce in both federal and provincial policies that appear to assume that the only path to economic success is to shift the tax burden onto workers?  If  Warren Buffett appears on ABC's This Week complaining that the rich don't pay enough in taxes , and that the Bush tax cuts should be repealed,  and Bill Gates is arguing for a bigger and better investment in public education in the United States, and Ted Turner is complaining that the U.S. Supreme Court made a bad decision in allowing corporations to make unlimited donations to political campaigns, shouldn't we be listening?

As  Doug McArthur's Report on the BC Economy indicates, one of the distinguishing features of the Campbell government was its reliance on increased inequality as an attempt to gain competitive advantage.  As I have argued on this blog, one of the great disappointments of the Campbell record has to be the failure of this 'supply-side' thinking.  His top-heavy salary boosts for senior officials in government, his regressive approach to tax reform (including both the carbon tax and HST)  reveal this "golden goose" approach to economics, yielded very little in terms of investment and jobs. The reasons, I suspect, are at least two-fold: (1) He was mistaken, just a smany premiers before him were mistaken, to think that he could have that big an impact when employment, investment and jobs are so highly determined outside of BC's borders. (2) Even if a large general benefit could be achieved, it would merely generate pressure for surrounding jurisdictions to do likewise --in other words, a race to the bottom.

Of course there are individual communities and industries that would appear to be exceptions to these generalizations--the coastal fish farm industry would appear to be a clear example.  But even there, the benefits to the local economy have to be weighed against the larger social and environmental costs. The bent of the Campbell government was to refuse to undertake that social calculation.  But what is the purpose of government, if not to perform that function?

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