National Post ePaper

TO FIGHT INFLATION, ABOLISH PRICES?

For years I’ve been leading a one-man campaign to reform the speech from the throne. It’s too long, it’s overwritten and it’s too partisan. The sovereign’s representative is asked to mouth government slogans and axioms, which is undignified and demeaning to the viceregal office.

The perfect model for our throne speech is the Queen’s Speech, the latest of which Her Majesty delivered in May. It was 939 words long, including benediction (“I pray that the blessing of Almighty God may rest upon your counsels”). The presentation is essentially descriptive, not exhortative: “Measures will be brought forward to address racial and ethnic disparities and ban conversion therapy.”

In comparison to that exemplar, this year’s throne speech did make some progress. It was only 2,883 words, which is shorter than it has been. But it’s still about two-thirds longer than it should be. If the organizers are operating under the assumption that gathering MPS and senators together and inviting in the TV cameras means the speech has to be at least a halfhour long, they might first ask those who have to sit through it.

And the vapidities! “Parliamentarians, never before has so much depended on your ability to deliver results for Canada.” You think? Not in 1885 or 1914 or 1931 or 1939 or 1980 or 1995 or 2008, to name just seven hard years for the country? Or “Collaborate with and listen to each other,” a lovely thought, which the GG expressed in three languages, though it does suggest that in her previous life she never tuned in to question period.

As throne speeches go, less would definitely be more — a lesson taught once and forever by Lincoln at Gettysburg. In the case of most other things, however, less is not more but, these days, evidence of inflation. The throne speech did mention inflation, once. It said “inflation is a challenge that countries around the world are facing,” which suggests the government is blameless, as if inflation were just bad weather. (Of course, in terms of actual bad weather, the government is taking responsibility, arguing that we need carbon taxes in order to make it less virulent.)

A main reason most countries are experiencing inflation is that most are following the same policies. For instance, not one of the 42 tracked in the Economist’s weekly stat charts is running a budget surplus. The closest to doing so, ironically, given its Marxist past, is Russia, with a deficit of 0.7 per cent of GDP. We are at 9.5 per cent of GDP, Britain at 10.9 and the U.S. at 12.4.

What does the government propose to do about inflation? Reduce the costs of housing and child care. On housing it does aim to increase supply (beyond what markets are already racing to do). But it also has several measures that will boost demand, especially from firsttime buyers. The net effect on housing costs is not clear.

On daycare, Ottawa is taking the interesting approach of combating inflation by abolishing prices. Whatever you’re paying now, the government’s plan is that within x years your costs will be down to $10 a day. The rest will be covered by federal subsidies and whatever Ottawa can strong-arm the provinces into adding.

That assumes you can get daycare, of course. Quebec’s experience, as so often the model for this federal plan, is that making sure supply keeps up with demand is a constant struggle: there are waiting lists, as there almost always are when prices are held below what markets want them to be. There are also times when the government and the unions are at loggerheads and no one has access to daycare because daycare workers are out on job actions of one kind or another.

The effect of Ottawa’s plan will be to reduce the retail price of daycare for those parents who do get access to the $10-a-day version. That may well put slight downward pressure on the Consumer Price Index — slight because “Child care and housekeeping services” account for less than one one-hundredth of the consuming that goes into the CPI.

As for the true cost of daycare, the government’s plan is all but certain to increase it. The plan stokes demand and also favours unionization and public, not private supply, all of which pushes costs up. Consumers may well pay less for daycare, if they can get it, but the society will pay more, when you count the combined cost to consumers and taxpayers.

If capping retail prices at a small fraction of the cost of goods is such an effective anti-inflation policy, maybe we should try it for everything. Fifteen cents for a cup of coffee. Five-dollar steaks. Ten thousand-dollar Cadillacs, all made possible by federal subsidies.

If you’re enjoying supply chain disruptions, you’ll love the shortages this would create!

COUNTRIES ARE EXPERIENCING INFLATION BECAUSE MOST ARE FOLLOWING THE SAME POLICIES.

FINANCIAL POST

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2021-11-30T08:00:00.0000000Z

2021-11-30T08:00:00.0000000Z

https://nationalpost.pressreader.com/article/282080575113478

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