By Hugh Holland
Canada is currently plagued by the same set of challenges as many other countries: The end of a post-war baby boom that results in a large number of non-working seniors for the health care system to look after, the rapidly growing costs of climate change, the aftermath of supporting the vulnerable during the COVID pandemic, wars in Ukraine and the Middle East that upset global supply chains for energy and delay a rational response to climate change, scams and political interference from the other side of the world, and mass migration from all the worst-affected areas.
Trickle-down economics is the theory that tax breaks and benefits for corporations and the wealthy will trickle down and eventually benefit everyone. It sounds good, but it has never worked anywhere. If it works, why aren’t the top 1% to 5% keeping up with providing good jobs for others?
A little fact-checking clearly shows that the Scandinavian countries currently ranked highest in economic, social, and environmental comparisons are those that practice trickle-up economics. If the large masses of ordinary people are doing well, the rich will do even better.
The classic experiment in trickle-down economics took place in the United States where, in the early 1980s, a group of billionaires called Citizens United (an oxymoron if there ever was one) was concerned about protecting their mostly inherited fortunes and lobbied the Reagan administration to eliminate election campaign contribution laws. The result is that today, it costs an average of $26 million to get elected as a congressman or senator (vs $160,000 in Canada). So, wealthy people and companies can buy their congressmen and senators, and they do. The result is a deeply divided country with an unhealthy distribution of wealth and opportunity.
More recently, the British Conservatives went down in flames after 14 years of their version of trickle-down economics nearly bankrupted their previously excellent healthcare system.
The Internet and AI are making our world smaller every day. We are now affected daily by increasingly sophisticated scams, misinformation, and political interference from the other side of the world.
There is a big difference between center-right conservatives like Brian Mulroney and Bill Davis and Conservatives that think a far-right stance will get them that $203,000 MP salary and pension. Pierre Poilievre’s far-right Conservatives are peddling their version of trickle-down economics that, like Citizens United in the US, is very dependent on support from the fading and desperate fossil fuel industries. Instead of clinging to the past, Conservatives and the fossil fuel industries should be moving ASAP into the new forms of zero-emission energy that offer a much better future for us all.
Shame on us if we buy into Poilievre’s very simplistic but very loud “axe the tax” pitch. Given today’s formidable list of challenges, do we really have five years to waste on another experiment that has already failed in similar countries?
Hugh Holland is a retired engineering and manufacturing executive now living in Huntsville, Ontario.
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If Trickle Down Economics worked,( and there have been decades of this) there would be no such thing as an affordable housing shortage, food banks could be out of business and no one would be living in tents in the Canadian winter. All of our basic needs would be met. If business can really solve everything then there would be no climate crisis and no wars over resources. The more more more capitalism, less public services except for roads and highways is not nation/community building but a sophomoric libertarian dystopian nightmare. Do not kid yourselves, but middle-class taxpayers will still be footing the bills for the increasingly fabulous lifestyles of the wealthy and super-rich who will still somehow benefit from tax loopholes and corporate subsidies as the planet and humanity is degraded. We need policy based on sound objective data with thoughtful continuous improvement, not driven by corporate political lobbying by the top economic elites who are steering us toward an endgame for humanity. There is no other planet Earth to escape to. Let’s keep this planet liveable.
Bravo Hugh Holland for the exposing and revealing of the Reagan’s/Thatcher’sTrickle Down Effect (I would like to add Mulroney to the list, but am prepared for a small amount of push-back)
Masterfully done! Thanks for the shout-out to those pesky Scandinavian countries (for the likes of Trump – these would be the Marxist/Communist/Socialist countries that prevent his wealth expanding, because he would have to Share).
Meanwhile, back in Ontario -for-profit Doug who likes cars, trucks, beer, highways – helping aging people to stay in their own homes (e.g. PSW services from a non-profit Community Care service has already been sold out by Mike Harris) is not a viable option for this wave of baby boomers.
*Reminder of how well the for-profit LTC homes (also a Mike Harris gift) performed during the pandemic (to be read with sarcasm)
Thank you again.
Lots to think about here, Hugh. I always enjoy and appreciate it when you share your well-thought out and well-researched views.
Maybe we are starting to review our societal obsession with the flawed and failed approach known as ‘trickle-down economics.’ A 2020 paper published by researchers at the London School of Economics entitled “The Economic Consequences of Major Tax Cuts for the Rich” looked at UK and US data from the 1980s and found that tax cuts for the rich had no statistical effect on economic growth. Another report, from the IMF found that “a rising income share of the top 20 percent results in lower growth,” and that a more effective strategy was to increase the income share of the bottom 20 percent (a “trickle-up” approach).
The impact of tax cuts for the rich is clear – it’s bad – unless you are Pierre Poilievre, our very own CPC ‘rage farmer’. He doesn’t have policy. His “policy” is is a glorified mission statement that boils down to “anti-woke and no taxes” which is bad for most of us and disastrous for the planet. Alas, I do believe he may be our next PM unless you remember that he wanted to dump the Bank of Canada and put the government 100% on Bitcoin. This was , of course, before Bitcoin dropped like a rock. Not only would we be devastated as a country, but calling for the end of the Bank of Canada shows he really doesn’t understand how fiscal processes work.
It’s hard to understand why people often vote against their own self interest. Dr. David Hope(Senior Fellow, in the International Inequalities Institute at London School of Economics) offers a partial explanation: “The average citizen seems to be fairly poorly informed that taxes on the rich have fallen really dramatically in the past 40 years. If you give them that information, it makes them less likely to support tax cuts for the rich. And these effects, we’ve found, are particularly strong for Republican – and one assumes, Conservative- voters.” IMHO, progressives across the board have to start pounding away at this fact.
Mr. Holland,
Your rhetorical question: “Shame on us if we buy into Poilievre’s very simplistic but very loud “axe the tax” pitch. Given today’s formidable list of challenges, do we really have five years to waste on another experiment that has already failed in similar countries?” says and explain it all.
It is unfortunate that those who are likely to buy into Mr. Poilievre’s Trump-like rally call: “axe the tax”, do not read the arguments, based on science and logic, in support of the Carbon tax. Or perhaps they don’t read at all.