Opinion: Government policies should promote economic growth, not constrain it

Canada economy slowsUS With the economy in a technological recession, with high inflation and deteriorating long-term prospectsfor economic growth, Ottawa and the state have adopted clearer and more purposeful policies to promote economic growth. have to focus.

Unfortunately, government policy is limited to redistributing existing income rather than promoting income growth or virtue signaling, rather than economic pragmatism. increase.

A recession is, by definition, a period of decline in the production of goods and services, and the income associated with that production. Like most Western countries, the risk of arecessionis becoming increasingly apparent in Canada. Government policies that stifle economic growth increase the risk of a prolonged recession.

Alarm bells about Canada's long-term economic growth prospects sounded long before a recession was even possible. For example,as noted in the 2022 Federal Budget (Figure 28),the OECD will be among the 17 countries from 2020 to 2060.

Meanwhile, Canada's central bank raised interest rates and reduced liquidity to control inflation and return the economy to relative price stability. increase.

In light of these challenges, Ottawa and the states should focus on improving economic growth—increasing the economic capacity to produce goods and services. Inflation is always too much dollars and too few goods and services, so this eases inflationary pressures.

Creating a more predictable business environment is critical to fostering investment, which underlies future economic growth. 55} We need to move more aggressively and deliberately to balance budgets based on spending cutsand fiscal restraints.

Governments can also spur growth by loweringbusiness taxes and regulations. Business tax relief will improve Canada's attractiveness for business investment. This is amuch-neededimprovement before COVID and the current economic downturn.

Reducing red tape reduces the cost of doing business and allows entrepreneurs, small business owners and executives to spend more time on innovation, product development, customer service, etc. Because it is important.

Ottawa and the state should also lower marginal personal income tax rates to encourage entrepreneurship, innovation, risk-taking and labor market participation, all of which improve prospects for economic growth. I will.

And while not prevalent in Ottawa and many other capital cities (including Washington), the renaissance of Canada's oil and gas industry has improved economic growth and reduced global greenhouse gas emissions. Reduce quantity. Replacing coal-fired power generation in countries such as China and India with increased oil and gas production in Canada (and possibly the United States) would result in a net reduction in global emissions.

These are all win-win, practical and proven solutions to the economic challenges we face today. Better policies, focused on economic growth and based on practical solutions that have worked in the past, are urgently needed now.

Jason Clemens is an economist and Professor Steven Globerman is a researcher at his Fraser Institute.