Liberal Minority Government 2025 - ???

[Brad Sallows]

well lets look at how it may grow the economy,

• With the shift toward capital investment and ambitious private-investment goals, the budget projects that real GDP could be about 3.5 % higher than otherwise by 2030, assuming CA$500 billion of additional private investment over five years.

Where's the proof that real GDP won't be 4.5 % higher than otherwise by 2030 if Canada foregoes pushing out private borrowing and investment and allows entrepreneurs (thousands of them, orders of magnitude greater than the number of central planners who are mostly functionaries making decisions in ignorance of "knowledge of local circumstances") to apply their brains to the problem of making profits? People ought to stop accepting or regurgitating speculative claims as if they're the best possible numbers.

• It also suggests average annual real-wage gains of over CA$3,000 (on average) for Canadians as productivity and capital deepen.

These claims all amount to the same hand-waving. "See, things will be better." Left unexamined: whether things would be even better still without the "government hand" competing with the "invisible hand".

From FA Hayek's "The Use of Knowledge in Society":

"The peculiar character of the problem of a rational economic order is determined precisely by the fact that the knowledge of the circumstances of which we must make use never exists in concentrated or integrated form, but solely as the dispersed bits of incomplete and frequently contradictory knowledge which all the separate individuals possess. The economic problem of society is thus not merely a problem of how to allocate “given” resources - if “given” is taken to mean given to a single mind which deliberately solves the problem set by
these “data.” It is rather a problem of how to secure the best use of resources known to any of the members of society, for ends whose relative importance only these individuals know. Or, to put it briefly, it is a problem of the utilization of knowledge not given to anyone in its totality."

If growth is the aim, favour decentralization over centralization.

 

[MilEME09]

Yes. What is the foundation for assuming government has to "incentivize" people to seek to better themselves? Mostly government has to avoid discouraging investment. When government picks a player and backs it with money or contracts or special access to resources or regulations crafted to favour selected incumbents, that discourages competitors. Why try to compete against someone with an obvious and unfair advantage? Competition is how we get lower prices (effectively, wealth creation by freeing up resources for other uses) and more innovation (effectively, betterment of our lives through improving technology and efficiency). If Canadians can't push themselves to do big things nationally and internationally without a government sugar daddy, Canada has much, much worse problems than the existence of Donald Trump.

I don't know what the numbers would be. Do you understand the concept of an illustration? Empirical observation demonstrates that freer markets over the long run produce more wealth than centrally planned markets. Government choosing and backing investments is just domestic protectionism. Domestic protectionism is not exempt from the ill effects of protectionism that everyone seems to understand when it happens to international trade.

What is the compelling reason to not be more favourable, and thus competitive? Taxes discourage. Lower taxes discourage less than higher taxes. Lower taxes are just about the easiest "incentivization" available to governments. What stops them from going lower are a few things. One is fretting over profits being taken out of the country. Another is companies' use of public works (ie. "they would not pay!"), but that can be covered by property taxes. Another is "companies should pay their fair share", which is a nebulous unquantified moral assertion of no practical use. The most commonly cited is just an intersection with profits going abroad - governments losing a source of revenue because even if they simply gave up taxing the corporate middlemen and just taxed owners and shareholders when they realize profits, there'd presumably still be some small fraction going abroad to people not paying Canadian income taxes. All of it is too much taking counsel of fears due to lack of imagination, but even without zeroing taxes it is possible to do a great deal of "incentivizing" them by making Canada highly tax-competitive. Of course, this would go entirely against the instincts of the class of technocrats angling to set a floor under corporate taxation by colluding among nations to set minimums (and then presumably gradually raise them), citing a mystical "race to the bottom" (in tax rates) as a boogeyman. There is no boogeyman. Tax profits when realized by individuals.

What governments can do is mobilize/conscript resources for particular aims. But it must always be understood that is an inefficient use and that the aim should justify the losses to inefficiency.

I'll address point one and three, together as your second point is essentially your own creative guess work. As freer markets have not lead to large increases in growth or competition.

Empirical evidence (from Finance Canada, Parliamentary Budget Officer, IMF, and academic studies) shows mixed or weak effects:

Indicator 2000s trend Post-tax-cut outcome Business investment (non-residential, % of GDP) Peaked around 13–14% in 2000s; fell below 10% by late 2010s Declined overall Productivity growth (multifactor) Averaged ~1.2% in 1990s Slowed to ~0.6% since 2010 Private R&D investment Declined as % of GDP Fell sharply despite tax incentives Foreign direct investment (FDI) Fluctuated widely No consistent increase relative to peers

Parliamentary Budget Officer (PBO, 2018–2022):
Found little evidence that the major federal rate cuts of the 2000s led to higher private investment. Elasticity between tax rate and investment was statistically insignificant.


Finance Canada analysis (2020):
Estimated that Canada’s marginal effective tax rate (METR) on new investment is among the lowest in the G7 — yet investment intensity remains below the OECD average.


IMF & OECD studies:
Suggest that while very high corporate tax rates deter investment, reductions below ~25% yield diminishing returns — especially in mature economies like Canada.

Comparison to the rest of the G7

Country	Combined CIT rate (2024)	Business investment (% of GDP, avg 2010–2023)
Canada	~26.5%	~10%
U.S.	~25.8% (after 2017 cuts)	~13%
U.K.	~25%	~12%
Germany	~29.8%	~12%
France	~27%	~13%

At the end of the day, Corporate tax cuts made Canada highly competitive on paper, But private investment and productivity lagged anyway. Evidence suggests structural factors, not tax rates, are now the binding constraint on growth — especially low competition, skills gaps, and slow innovation adoption.

 

[brihard]

Matt Jeneroux’s office has denied rumours that he’s considering crossing. While his office is a slight distinction from he himself saying it I see no reason not to take this at face value.

https://twitter.com/x/status/1986149980181021012

 

[Brad Sallows]

I'll address point one and three, together as your second point is essentially your own creative guess work. As freer markets have not lead to large increases in growth or competition.

Point two, if you mean my second paragraph, is essentially a consequence of what the work of Hayek's I just cited is about. It is approximately impossible for a small cadre of central planners to out-compete distributed planners. Much ore than "on average", the latter will be expected to do better.

At the end of the day, Corporate tax cuts made Canada highly competitive on paper, But private investment and productivity lagged anyway. Evidence suggests structural factors, not tax rates, are now the binding constraint on growth — especially low competition, skills gaps, and slow innovation adoption.

At the end of the day, our rates are in the same ball park as major competitors, among the set of factors which are "other things being equal". They would not be given much weight in estimates. Without positioning them where they are dramatically low enough to draw attention, no useful conclusion can be drawn. Maybe cut them to half the US total rate and see what happens. As you write, other factors are in play. Since various forms of government preferential treatment are definitionally anti-competive, I don't anticipate any more improvement than all the previous rounds of "government investment" over past decades.

 

[daftandbarmy]

Matt Jeneroux’s office has denied rumours that he’s considering crossing. While his office is a slight distinction from he himself saying it I see no reason not to take this at face value.

https://twitter.com/x/status/1986149980181021012

 

[Jarnhamar]

well lets look at how it may grow the economy,

• With the shift toward capital investment and ambitious private-investment goals, the budget projects that real GDP could be about 3.5 % higher than otherwise by 2030, assuming CA$500 billion of additional private investment over five years.
• It also suggests average annual real-wage gains of over CA$3,000 (on average) for Canadians as productivity and capital deepen.
• Through infrastructure + housing + innovation, the economy can become more productive (more output per hour worked), which is essential because Canada has had productivity growth issues.

All that doesn't make you nervous?

Assuming $500 billion in private investment is quite the gamble.
Canada already struggles to attract private capital qnd business investment has been negative per worker since 2015.
Lots of best-case scenario with the budget.

 

[Jarnhamar]

Japan is a lot of people on a small archipelago. It has virtually no natural resources. With a declining birthrate and a cultural aversion to immigration, I'm not sure what its future holds.

Sex robots. Seriously.

 

[Altair]

Sex robots. Seriously.

Unless those sex robots start popping out Japanese children, they are, ironically, screwed.

I do find it amusing how people laud Japan for fighting immigration and remaining a homogeneous society when that's going to be a contributing factor to them being the first g7 country to completely fall of the cliff.

 

[Jarnhamar]

Unless those sex robots start popping out Japanese children, they are, ironically, screwed.

I do find it amusing how people laud Japan for fighting immigration and remaining a homogeneous society when that's going to be a contributing factor to them being the first g7 country to completely fall of the cliff.

You'll be excited to hear Japan has increasingly relaxed certain immigration and foreign worker rules in recent years. They are, as a matter of fact, not falling off any cliffs.

They're just being very selective still, probably to avoid looking like Europe.

Here's some examples I found.

-expanded visa pathways for foreign workers in labour short sectors
-SSW program to cover more industries
-allowed some SSW workers to bring families (previously restricted)
-created paths for SSW workers to obtain indefinite residency
-increased the number of foreign residents to 3.4M
-relaxed eligibility for working holiday visas
-increased intake of students and technical trainees
-encouraged companies to recruit foreign workers more actively
-simplified renewal and application procedures for some visas
-offering support services to retain
immigrants (language and integration programs)