Three questions Liberals need to ask themselves this weekend

There are ways to ensure prosperity is broad-based

by Mike Moffatt

Liberals from all over the country are meeting this weekend at the Liberal Biennial Convention in Montreal. Earlier this week, the leader of the party laid out a policy vision in this seven-minute video. It is now up to the delegates of the convention to vote on a series of policy proposals that—if done correctly—will enhance the vision laid out by Mr. Trudeau. I would like to offer some unsolicited policy advice in response to delegates voting on those proposals.

My first piece of advice is to engage Canadians, particularly those that you do not agree with. You have heard criticism of the ideas in the video, with Stephen Gordon, Andrew Coyne, Alex Usher and many others taking issues with all or part of it.  Do not dismiss this criticism, as there is a great deal to learn from these comments. Gerald Butts tweeted a link to Stephen Gordon’s criticism of the video, stating “Constructive criticism of our economy piece from @stephenfgordon here. Worth reading even if you disagree.” This is the right attitude to take, as there is much that can be learned from constructive critics. A set of policies that cannot withstand constructive criticism now will be of little use in a general election.

Like Stephen Gordon, I believe Mr. Trudeau’s question of:

I worry that at some point, Canadians will say: “Why should we support a growth agenda if it doesn’t help my family?”

is a compelling one and can be the sound basis for policy. I would frame the policy question as “What mix of policies can we use to ensure economic growth and the benefits of that growth are shared by all.” The latter is the novel and tricky part because, aside from a small minority in the Green Party, all political parties strive for economic growth. It is much more difficult to ensure that the benefits are widespread. However, aside from simple redistribution, there are at least two general ways that prosperity can be broad-based.

The first way is through promoting competition. Markets that lack competition will tend towards high prices and poor quality for consumers, slow productivity growth, and high profits for their owners. The Liberal Party needs to identify the market imperfections and barriers to entry that cause a lack of competition, such as foreign ownership restrictions in the oil sands and airline markets, and find ways to break down those barriers. High and uneven tariffs also restrict consumer choice and raise prices paid by consumers. Increasing competition, however, does not necessarily mean less government regulation in all instances; the Competition Bureau plays a vital role in ensuring that businesses do not engage in anti-competitive behaviour. A prosperous Canada is one where consumers are not overpaying for goods and services.

The second way is through increasing the demand for labour. Stephen Gordon is absolutely correct when he states that “the surge in income at the top has been driven by earned income, not their asset holdings.” The 1% (or 0.1%) have seen their incomes rise dramatically as the demand for their services have increased thanks to the superstar effect. Our challenge is to find ways to increase the labour demand for the rest of us. Having a strong economy is a necessary, but not sufficient condition for strong wage growth. The decoupling of income growth and middle-class wages in the United States since 1970 is a prime example where the two did not move in tandem.  The most common solution given for increasing labour demand is ensuring that our graduates have the type of skills that are currently in demand by employers. This is important, but should not be the end of the discussion. Tax reform can also play an important role. There are many ways in which the tax system favours companies finding a technological solution to a problem or offshoring a process rather than hiring a worker. The tax code should be neutral between these activities, so finding and eliminating areas where it discriminates against labour can both enhance productivity and increase wages.

This weekend when Liberals are voting on policy resolutions, delegates should ask themselves a series of questions:

Does this policy promote broad-based economic growth? Will it increase productivity and lower prices, through enhanced competition or through some other means? Will it strengthen the overall economy while also increasing the demand for labour?

If they cannot answer ‘yes’ to at least one of these questions, the proposal likely does not fit into the vision articulated by the Liberal leader.




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Three questions Liberals need to ask themselves this weekend

  1. Insanity: doing the same thing over and over again and expecting different results.

    Albert Einstein

    Those 3 questions could have been asked by any of our parties….and at any time in our history.

    • Yet you keep copying & pasting the same tripe.

      • As another commenter recently pointed out to her, a little self-awareness goes a long way. Sadly, she has none.

  2. I suspect by the end of the convention, many Liberals will be asking themselves why the heck they voted Trudeau for leader.

    • LOL you wish.

    • The difference between your guy(harper) and Trudeau is, you guy is always in Reverse, while Trudeau is always in Drive.

    • Your wide eyed optimism is so sweet.

    • You remind me of the PUMAs the night Barack Obama was first elected, outlining all the ways that California would, for sure, go Republican. It was adorable then, too.

      • How’s that hopey-changey stuff working out now?

        • How do you think the actual alternative, John McCain and Sarah Palin, would have worked out?

          • Probably just as bad, but the Plebs would have expected it.
            The puppet does not alter the message.

          • Then why the focus on Obama and “hopey-changey stuff” if the alternative was no better?

          • Pointing out delusion. When the game is rigged, the only way to win is not to play.

          • It is a delusion to believe that you can predict Canada’s future based on US history.

          • What prediction? That voting does not matter? That we get to select our rapists by ballot?
            Human nature dooms society to the same foibles.
            I watch & laugh.

          • Your delusional prediction that Canada’s future with Mr. Trudeau as PM can be predicted from the US experience.

        • You mistake description for endorsement.

          • Apathy.

  3. “Three questions ….”

    Sonic Youth – Kool Thing:

    Hey, Kool Thing, come here, sit down beside me
    There’s something I got to ask you
    I just wanna know, what are you gonna do for me?
    I mean, are you gonna liberate us girls
    From male white corporate oppression?

    http://www.youtube.com/watch?v=SDTSUwIZdMk&feature=kp

  4. I thought I read earlier this week that Moffatt was one of the economists that is advising Trudeau so I wonder what means by unsolicited advce – is he telling Macleans readers ideas he didn’t mention to Trudeau campaign?

    • ‘I thought I read’…..there’s your problem right there.

    • You may want to read more carefully in the future.

      • My reading skills are fine, thanks. Maybe you should declare your biases instead of trying to appear non-partisan.

        Globe/Mail – Feb 15 2014:

        Since becoming leader, Mr. Trudeau has been consulting with businessmen, bankers, academics and former politicians on economic matters. The list is not entirely public, but he has had discussions with former New Brunswich premier Frank McKenna, senior Bay Street figures and academics Mike Moffatt, Kevin Milligan and Chris Ragan.

        • The last time I spoke with an MP about policy was yesterday. He was (and is) a member of the Conservative Party. So I guess I’m a Tory partsan.

          • You have gone from denying that you advice Trudeau to now claiming you advice more than one party. Which is it?

          • Having a discussion is now “advising”? Okay, then I advise all four federal parties, all four Ontario provincial parties, Bill Gates, the Los Angeles Kings and five or six Major League Baseball teams. I’ll be sure to note in this in the future.

          • So, have you deleted that blog on WCI where you acknowledged your offer to consult with/advise Liberal leadership candidates prior to JT being elected?

          • And btw, in case you’ve forgotten, search your twitter archives. Remember that weekend where you shut down your account with 50,000+ tweets, and when it re-emerged a few days later it had like a few thousand publicly available. There was one from Gerald Butts, linking to that blog where he said by all means he would continue to accept your advice. Despite the fact that you were at Ivey and had recently participated in their ring even for new grads (ethics etc).

            Here I thought it was a condition for acceptance into the Lawrence Centre that you purged all record of partisan activity.

          • Maybe the Libs ignored the advice you gave them because you are fantasist?

      • Twitter Feb 15:

        Nic Rivers – Trudeau consulting with some good quality econos: @ctsragan @kevinmilligan and @MikePMoffatt .

        Mike Moffatt – Thanks Nic!

  5. My first piece of advice is to engage Canadians, particularly those that you do not agree with… set of policies that cannot withstand constructive criticism now will be of little use in a general election.

    ***

    HAHAHAHAHAHAHAHAHAHAHAHAHHAHAHAHAHAHAHHA!!

    Good sir, whatever your qualifications as an economist, as a humourist you are first rate.

  6. Where is the disclaimer in this piece that the author is a Trudeau advisor?

    And where have the disclaimers been?

    • Source please.

    • I am? I’m always the last to find these things out.

      • It was reported in the Globe and Mail on the weekend (Daniel LeBlanc’s piece) that Trudeau consulted you (amongst others on economic policy).

        • I’m rather liking this idea that I can call myself an “advisor” to anyone I’ve ever had a policy discussion with. I’m going to have one heck of a CV!

          • Looks like you’ve attracted the attention of the Swiftboat crew – shades of your committee appearance.

          • Better you than Larry Summers. Oops…Summers is on the Trudeau/Freeland team.

            Canada is doomed…this time directly, not indirectly from the economic implosion created by the United States of which Larry Summers was one of the key contributers.

          • Interesting how you feel the need to defend yourself for the third time here on this comment board.

            I wonder why you feel that need.

          • If he hadn’t, you’d presumably be shouting “Why won’t he answer these questions?! What does he have to hide?”

            Academics should make themselves available to politicians of all stripes for policy discussions. It doesn’t make them an advisor or a partisan.

          • Pyongyang Pearl will now look at root causes.

    • How do you define advisor?

      • In any way possible that makes any even slightly positive commentary on Trudeau biased in their warped little minds.

      • It’s not the consulting per se. It’s the combination of consulting /advising/being a sounding board, and then commenting in places like Macleans on the very same topics. Some of these academics are so naive, and are often motivated by self promotion and narcissism.

        There are probably hundreds of economists in academia that they could consult. It is no coincidence that the three listed above that Nic Rivers tweeted (MM, KM and CTSR) comment in the Globe and elsewhere. They’re being used. Willingly. And unprofessionally, IMO.

  7. I’m slightly confused as to why Mike is taking heat for consulting with parties on economic policy. He offers his assistance to every party and so he clearly isn’t beholden to any one in particular. Plus, we should want our academics to engage parties on issues that are in their wheelhouse.

    Some solid advice for delegates when considering policy.

    I’d just say that we would probably be better served by “ensuring that our graduates have the type of skills that are going to be in demand by employers both currently AND in the future,” than by “ensuring that our graduates have the type of skills that are currently in demand by employers.” The emphasis on the future is important and perhaps it would be a way to cut back on the number of jobs an individual has over his/her working life (which could be important because of the occupational specificity of human capital).

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