The heady days of summer are upon us (not that you can really tell if you’re in Calgary) which means that, as most of you enjoy your summer holidays, some of our writers are also enjoying some time away, which means that this week’s Voice is a bit shorter than we’ve been doing lately, but you can use the extra time to enjoy some of those outdoor activities you’ve been missing out on.
When you come back in, though, check out our feature article where we interview Ravi Parhar. Like many AU students, for Ravi, AU is simply a stop along the way to completing his education at a more traditional bricks and mortar university. It can be easy to forget, sometimes, that not all of us here at AU are “lifers.”
Personally, my own thoughts this week have been back on government finance. You may know that the Bank of Canada recently lowered its prime rate by a third of what it used to be, dropping it to 0.5%, on the reasoning that inflation is too low, which indicates our economy is stalling. Unfortunately, I think that this is the right answer to the wrong problem and so simply won’t work.
Traditionally, when inflation is low, we lower the rates and so people are able to borrow money and spend it, and when they spend it, businesses start expanding and hiring, meaning more people have jobs so have more money and we get into a virtuous cycle. However, the base assumption of this model is that people don’t have enough access to money. In today’s society, access to money really isn’t the problem. We know this because even as the Bank of Canada lowers the rates, it sends out dire warnings about people taking on too much debt. They already know we have more credit than we can handle, and yet the solution that Mr. Poloz offers is to provide even cheaper credit.
No, the problem isn’t that the money supply is too tight, it’s that it’s not being distributed efficiently. We keep seeing new reports about how income disparity is increasing, and how the share of wealth that the wealthiest control is vastly increasing, while for the rest of the population, it stagnates or decreases. Of course our economy stalls in those circumstances, the people who have the resources don’t need anything else, and the people who have unmet needs don’t have any resources to fulfill them. The answer, then, is to redistribute these resources. This is not something that the Bank of Canada can do, and in fact, its actions to increase the availability of credit only work to exacerbate this situation in the long run.
What’s needed is a government that understands the benefits of taxing those who have more than they need and giving it to those who can’t meet their needs with what they have (either directly, through social welfare programs, or through hiring people to build public infrastructure). Unfortunately, the very base assumption of a conservative makes this idea untenable. That assumption? That life is fair. The idea that “if you are a good person and work hard, you will succeed,” is a core of conservatism, and so giving resources to people who haven’t succeeded already is giving resources to people who are not working hard and are not good, and thus, do not deserve them. Unfortunately, reality doesn’t care about deserving. And, in the end, reality always wins.
Enjoy the read!