The High-Tax Trojan Horse

Tomorrow, the Liberal Party will kickoff its biennial convention. Party leader Justin Trudeau insists that the party convention will flush out his party's first substantial policy proposals leading into the 2015 federal election. So far, he's only offered up one: the legalization of pot.

This was, and always has been, a blatant appeal to potheads -- the kind of sad individual who populates the typical 4/20 festival -- for votes. As I've noted before, any marijuana user who votes for the Liberals on the back of a legalized pot promise is setting themselves up for a serious disappointment. Perhaps even a disappointingly-life-changing disappointment.

But recent news out of Colorado -- one of the states to legalize marijuana -- shows just how bad it can be. Users in Colorado were already beginning to get a sense of just how badly this was going to go for them:

But as it turns out, it's even worse than they ever imagined. The tax take in Colorado has exceeded lawmakers' wildest expectations. By a whopping 21%.

To some people, this would seem like a good thing. For example, if you favour big government, and love to see the government raking in lucrative tax revenue in order to pay for it, you might love this. Perhaps not so much if you're a pot user paying for it all. And if you're a pot user in Canada thinking that you won't pay through the nose under Trudeau's promised marijuana legalization, you just haven't been paying attention. At least not to this issue. Maybe there's been a magic eye poster monopolizing your attention.

OK, I'm done being facetious. But here's the point: a Liberal government legalizing marijuana won't hesitate to tax the living bejeezus out of you. It's just what they do. And they'll find all sorts of pet projects to fund with it that won't benefit you in any way, shape, or form. Although I'd bet that the $10 in tax on the above pot buy, left in your pocket, probably would. Especially cumulatively across numerous buys.

That doesn't necessarily mean the status quo, either. Decriminalization offers pretty much all the freedom of legalization, without the government's hand digging to the bottom of your pocket.

Think about it carefully, before you wake up to find a Trojan horse in your living room.

Michael Bolen Lowers the Bar on Raising the Debt Ceiling

Apparently, Huffington Post Canada news editor Michael Bolen wants a piece of Anthony Furey. And he got it.

But in Bolen's appearance on Byline, Furey really was far too gentle with Bolen than his drivel warrants.

Essentially, Bolen's column shakes out as such: Canada should not have a debt ceiling because it would prevent Canada from taking on more debt. Government debt, Bolen maintains, is a good thing, and because governments can print and issue their own money, as well as inflate and deflate currency at will -- which is actually untrue -- it's OK.

Bolen writes:

"Governments are not like families or businesses. Families and businesses can't print currency and are not tasked with managing the money supply for the purpose of encouraging economic growth and curbing inflation. Deficit spending is an essential tool used by every reasonable government on Earth and growth is the best way to reduce debt. Not cuts."

This paragraph couldn't possibly be any more fiscally- or economically-illiterate.

First off, in Canada and the United States, governments do not print money or manage the money supply. Central banks do that, and they are arms-length institutions. Central banks print currency, set the interest rate, and while their governors may be appointed by the government, they operate as separate institutions.

Secondly, Bolen draws a link between economic growth and deficit spending that is spurious at best. It's true that properly-managed stimulus spending can help a government mitigate the effects of an economic downturn. The extent to which it can do that, and the extent to which it has, are very much subject to debate. But even upon accepting this to be true, in the case of the United States we aren't talking about periodic deficit spending during a recession; we're talking about continuous and uninterrupted deficit spending over the span of decades.

Unlike Prime Minister Stephen Harper, American Presidents -- Democrat and Republican alike -- have failed to balance their deficits against economic growth and shrink them as a percentage of GDP. When it comes to these failures, Obama has led the pack on a previously-unthinkable scale. Which is basically what this entire issue is about.

And perhaps Europe has been experiencing a rough ride under austerity. This is to be expected. But it wasn't austerity that was a disaster in places like Greece: it was unrestrained socialism.

Bolen is certainly right about one thing: the debt ceiling hasn't worked in the United States, for two reasons:

First, the American congress made a grievous error by setting the debt ceiling as a dollar figure, as opposed to a percentage of GDP. Should they have had the wisdom to set a limit on that -- say, limiting debt to 50% of GDP -- congress would have had to handle the deficit long before the debt reached 100% of GDP, as it did this past year.

Second, the current US congress has found itself working under the administration of a President who seems to have very little interest in governing and a great deal of interest in casting blame. It doesn't help that the Republican establishment seems very terrified of taking the blame for anything, even forcing the President to finally negotiate with his congress and actually passing a budget.

Other than that, Michael Bolen's column never manages to raise above the level of empty, economically-illiterate demagoguery.