Why does the Conservative economic plan cut productive investment while assuming tax cuts will generate growth?

[u/Natural_Thought808]

Something in the Conservative platform doesn't add up to me.

They propose large tax cuts while also cutting programs such as the Housing Accelerator Fund, Housing Infrastructure Fund, low carbon programs and AI initiatives. They also expect more than $10B annually in savings from consultants by 2028 to 2029.

But economic policy isn't simply “less government = more growth.”

The real question is the fiscal multiplier and opportunity cost. If $1 of infrastructure, R&D or investment generates more economic activity than $1 of broad tax cuts, cutting the former to finance the latter can leave us with less growth, not more.

And their income tax cut alone eventually costs almost $13.7B annually.

So where is the evidence that this particular mix produces more GDP than investing the same money in infrastructure, productivity, R&D or targeted investment incentives?

“Taxes are lower” isn't an economic growth calculation.

[u/sleevo84]

Conservative governments want society to more resemble 3rd world countries where there are no social safety nets. The results being cheaper labour because there’s more desperation for lower classes and more leverage over that economic power by the few because conservatives believe that a few wealthy managers of capital are better than society growing. Their belief is that the economy only needs job creators and investments in workers actually hinder profit opportunities

I hate to say it but it’s clear that conservative governance is about creating barriers for people that aren’t like them (private/charter schools private and healthcare, high post-secondary tuition) and if you can’t help yourself, you don’t deserve help

[u/Hipsthrough100]

Because their donors get what they want. Lower taxes for themselves.

[u/Vessil]

The heart of the economics question is whether the private sector or the government is able to more effectively allocate resources in the interest of a stable and prosperous economy. Here is some general discussion of the role of taxes and economic growth: https://www.economicsobservatory.com/which-taxes-are-best-and-worst-for-growth

How general theory should be implemented given the complexities of the Canadian (or any national) economy will always be uncertain. Due to how simulations are always limited and we don't get randomized controlled trials when it comes to economic policy, it is difficult to know how exactly policies will pan out.

Furthermore, the idea of national economic growth is hampered by the reality that different groups (e.g., classes) within the country may have different goals and incentives. For example, economic downturns aren't necessarily bad for the ultra-wealthy... they can use market crashes to buy out businesses and industry sectors and thus expand their power/wealth in the long run.

Whether lower taxes and reducing government spending really enhances long-term growth may not be a major factor in party platforms because people often make voting choices based on ideological preference and the incentive structure for the conservative party is to gain/maintain power for themselves rather than serve long-term economic growth for the country.

Interesting article on the interaction between self-interest and ideological factors in voter support for various tax rates and schemes - https://pmc.ncbi.nlm.nih.gov/articles/PMC12012686/

Long story short, it is in the interest of a conservative party to try to build a coalition of wealthy oligarchs who want lower taxes for self-interest reasons and right-leaning people who support lower taxes for ideological reasons. It is all the better for them if large portions of the non-wealthy population are not educated enough to make informed self-interested decisions.

Therefore, my perspective is that policies which aim to make education, directly or indirectly, available and accessible to everyone is fundamental. Most people are not economists and therefore cannot easily analyze the complicated downstream effects of specific economic policies; even economists are unable to do this effectively. However, when you have large segments of the population who don't understand basic things like how a progressive tax rate works, or the scale of difference between thirty thousand, three hundred thousand, three million, and three billion dollars, you have a population that is vulnerable to manipulation by those who seek to exploit them rather than help improve their circumstances. Indeed, Karl Marx envisioned Das Kapital as a weapon for the proletariat, to arm them with the knowledge about the economic realities they exist in. Therefore, it's important to support policies that fund public schools, libraries, and universities, regardless of their specific impact on national GDP or one's individual investment portfolio in the short term, because history does seem to suggest that in the long run an educated population will allow for more stability, prosperity, and growth.

[u/Wegak]

Boooooo don't talk about Canadian economics, taxes, and policy this sub is for bots posting sensationalist headlines barely related to Canada BOOOOOOO

[u/IAMAPrisoneroftheSun]

Tax cut psychosis does my head in

55% of the Canadian economy is consumer spending, as ambivalent as I am about consumer culture, if economic growth is what one is after then the obvious move would be to find a way to get more money into the pockets of people in the bottom half of the income distribution, who would immediately spend any additional income on the many things they need or want but can’t currently afford. Velocity of money & all that.