Trudeau knows even less about entrepreneurship than monetary policy

The business community should know better than to parrot government misinformation about business and the economy

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Last year, Prime Minister Justin Trudeau informed Canadians that he was not considering monetary policy. Maybe he’s thinking about business instead. If so, it didn’t do much good. Consider his confused thoughts on the subject last week in a statement acknowledging the economic contribution of entrepreneurs. In it, he trumpeted the federal government’s $4 billion enterprise welfare program for digital adoption, a $1 billion investment agency to provide “incentives” for entrepreneurs to innovate, a $6 billion women’s entrepreneurship strategy and a $265 million black business program . If money is all it takes to start a business, Canadian entrepreneurs will soon lead the world.

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But to anyone who is really serious about business, one thing is clear: government economic planning, government economic strategies, government subsidies and government allowances – often based on people’s skin color or gender – have nothing to do with real business.

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The failure of the federal government’s approach to business and entrepreneurship is plain to see in the numbers. A chart in his fall economic statement shows that since 2015, real business investment has fallen by about 10 percent in Canada, a drop well below the bottom line of other G7 economies and in sharp contrast to about 20 percent. scale up in the United States over the same time period. An August study by William Robson and Mawakina Bafale of the CD Howe Institute summarized the data: “A comparison of investment in Canada with that of the United States and other OECD countries shows that prior to 2015, Canadian businesses were overcoming a long-standing gap. between the investment per available worker in Canada and abroad. But since 2015, the gap has become a gap.” Among the causes the authors identified: government spending and transfers, uncompetitive corporate taxes, regulatory uncertainty and unpredictable fiscal policy.

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That the Liberal government’s approach – a confused tangle of central planning, affirmative action and general economic incompetence – produced dire results did not deter it from continuing down the same path. The persistence of its failed policies with adverse outcomes illustrates the differences between government and the private sector. In the free market, entrepreneurs face financial restrictions. Businesses that lose money either close to stem the losses or eventually run out of money to lose, and the failed businesses are replaced by entrepreneurs who start new ones. It is no different in government, where bureaucratic programs and handouts continue to destroy economic value while taxpayers hold the bag.

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The prime minister naturally claims that his government’s business programs have other benefits than financial ones. In a statement, he said federal grants for entrepreneurs who are women or racial minorities help business owners who face “systemic barriers.” He did not say what the systemic barriers are, but he probably means that the programs are a form of assistance to the disadvantaged population. The problem is that the correlation between being a business owner who receives public funding by appearing to be disadvantaged and actually being disadvantaged is probably negative. Furthermore, the real obstacles to business and entrepreneurship in Canada are government failures: regulation of industry and labor where there are no externalities, excessive government spending, and lousy school systems that fail to properly prepare young people for work, to name a few. Expanding government even further to take over business is a dubious venture at best.

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That liberals have the wrong views on economics and business is not surprising. What is truly inexcusable is that the same ideas are promoted by some within the business community. So in a statement from the Coalition for a Better Future, a group of 140 organizations including many of Canada’s top business and industry associations, co-chair Anne McLellan applauded the government’s fall economic statement and advocated for the government to create “an industrial strategy that is inclusive and sustainable.” This kind of business advocacy for government of economic planning is a prime example of what Milton Friedman called the “suicidal impulse” of the business community. The coalition also called for “more federal support,” pointing to the $391 billion climate change spending bonanza (part of the fraudulently named “Inflation Reduction Act”) as something Canada should strive to compete with and praising the “planned government”. incentives to encourage businesses to invest in sustainable technologies.”

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When Margaret Thatcher was Prime Minister of the United Kingdom, businessmen with the same deplorable inclinations as those in Canada today told her that “we need more stimulus!” To which Thatcher would reply: “You do realize that ‘stimulus’ means more taxation, right? Someone tell the coalition for a better future! Incentives and government support mean higher taxation, and government industrial strategies will not deliver the investment needed for good jobs and economic growth. The business community should know better than to parrot government misinformation about business and the economy.

Matthew Lau is a writer from Toronto.

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