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March 11, 2018 | Yada, Yada

A best-selling Canadian author of 14 books on economic trends, real estate, the financial crisis, personal finance strategies, taxation and politics. Nationally-known speaker and lecturer on macroeconomics, the housing market and investment techniques. He is a licensed Investment Advisor with a fee-based, no-commission Toronto-based practice serving clients across Canada.

Once upon a time I lost my mind and ran to be leader of a federal party. The Progressive Conservative one. Remember it? A little con. A little lib. Fiscally right-wing, socially neutral. Not too hot. Not too cold.

Brian Mulroney walked out of the hall after eight years and left five candidates standing on the stage in front of ten thousand delegates. No way could I win that convention, but what the hell? As a backbench (but charming) MP, I’d spent a few months campaigning for balanced budget legislation, debt reduction, tax reform (a flat one), property rights and other weird stuff, while Kim Campbell romped ahead. She won and became prime minister. I didn’t finish last, which was huge. Plus I got to make a Big Speech. Mulroney called me on my cell right after, lavished praise, and said Mila was going to vote for me. That may have been BS.

Well, politics have changed in recent years with a polarization between left and right. The cons have drifted off into a narrower social agenda while the libs slid radically left. Supported by a Millennial penchant for gender and same-sex equality, indigenous rights, the climate and narrowing the income gap, Liberals are turning into Dippers. Meanwhile thanks in part to Trump, Brexit, populism and globalization, Conservatives have started to openly support angry men opposed to government based on special interests.

 One of them was elected this weekend in Ontario. The provincial election in June will be a classic. The thundering, bombastic, right-wing, family-man, neophyte dude versus the experienced, wily, socially-progressive female premier with a same-sex partner. Behind those obvious differences lies a monstrosity called debt. Ontario owes more than $300 billion – about half as much as the entire country – and continues to borrow. Paying the interest consumes almost $12 billion in tax dollars, and is the fastest-growing component of the budget – even at a time of historically low rates. Just imagine what happens when that changes.

Spending has outpaced revenues for every year the current Liberal government has been in place, and there are no plans to change that. Public debt will rise from $312 billion to year to $336 billion in two years. Last year the government trumpeted a “balanced” budget with no deficit – but at the same time added $6.28 billion to the debt. Meanwhile the cost of education and health care (together adding up to almost $80 billion) soar, yet tens of thousands of people cannot find a family doctor. Bondholders, however, are doing great.

There are federal parallels, of course. After climbing out of a bottomless, credit crisis-inspired deficit hole, the departing Harper Cons left much debt, a small budget surplus and an angry electorate. The incoming Libs promised a temporary and shallow deficit to get the economy working, but after four years in power will have added $100 billion in new debt, having written every budget in red. Since being elected the T2 administration has increased overall spending by 20.1%, or $51 billion.

Sadly, nobody cares. Politicians are elected by people who (a) vote for more, or (b) vote against the last bums. Nobody goes to the polls to reduce spending, eliminate deficits, pay down debt or reduce the size of government. Part of the reason is that no politician ever campaigns on such a pledge. It’s why I sucked so badly at being in public life.

Will any of this change with Trumpian populism? So far the US president has done nothing to reduce the size or cost of government, and six of his cabinet members have been investigated for frittering away public money. But he did reduce taxes – a massive 30% cut in the amount corporations pay and also a general reduction for most Americans. Along with throwing up tariff barriers, defending the NRA, embracing ‘family values’ and dissing immigration, this makes him a classic populist. About what most people expect of Doug Ford. But so far Trump has not proven to be a fiscal conservative, since tax cuts without spending cuts will create the mother of all deficits and a multi-trillion-dollar debt. The outcome of that is simple: more tax.

Despite any of the above, this Ford guy stands a chance of being elected. The Ontario Libs are old and tired. They have baggage. The crazed, lefty Mills may throw more support towards the NDP. A lot of people in the middle are unhappy at having their kids gender-identify in primary school or their province turn into a drug dealer (the Ontario Cannabis Store was unveiled last week). So, given vote-splitting on the left and a soggy middle, the PCs could garner unexpected traction, despite their inability to hold a leadership convention.

The polarization of politics is deepening. Voters are routinely lied to and more likely to act out of anger than inspiration. How else can you explain BC embracing the NDP and Greens? And consider recent elections in France, Germany, Britain or Italy – where nationalism, tribalism and protectionism were major themes among divided and angry populations.

Meanwhile public debt, over-consumption, climate change, the wealth gap and a retirement crisis fester while we diddle over the arcane.

So I guess we get the leaders we deserve. And you didn’t deserve me.

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March 11th, 2018

Posted In: The Greater Fool

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