We Did Lose out on Economic Growth

Mandos points us to Brad DeLong who argues that Frum has made, at best, a rhetorical flourish to state that the federal government took the "lion's share" of new economic production in Canada over the past ten years. I won't argue with Mr. DeLong and Mandos here. That's a pretty huge and biased bit of political spin.

But the core of Frum's argument holds. The economy grew by 67%. The value of what was in Canada grew by 67%. People saw their revenues increase by 31%. At the same time though, the government's revenue rose by 45%. So the government acquired more of the benefits of economic growth than did the people. (Where'd the rest go? I don't know the Canadian economy well enough to know this. Some was lost in trade deficits for sure. I'll defer to someone else to give a proper accounting of this.)

Normally, the people and the government should have become richer by the same amount. We didn't because the government raised taxes on us to take away our fair share. And the Liberals then used much of our fair share on boondogles, their friends, and themselves.

Don't get distracted by the absolute values. Those are correct data, but they explain other things. What Frum was arguing was the benefit people vis-a-vis the government got from economic growth and the absolute values are skewed when interpreting this by such factors as population growth. The percentage growths of our income and the govenrment's income is the most direct way to view our relative growths in income. And that story is 31% for us, 45% for the government.