A study commissioned by the Broadbent Institute finds that the majority of Canadian families with children under 18 would get no benefit at all from the Conservatives' income splitting scheme – despite being the express target of the policy.
Quebec model balances greater equality with economic progress
Glance at just about any publication from the Fraser Institute and other conservative think tanks, and you will be told that too much government social spending and too much regulation of the job market damage growth and job creation. There is, we are told, an ineluctable trade off between social equity and economic efficiency.
Yet this does not readily show up in international comparisons. Germany and some Northern European countries have built highly productive economies and enjoy low unemployment despite being much more equal societies than the United States or Canada.
There is also little evidence of an equity-efficiency trade-off within Canada. Consider the case of Quebec's social and economic performance compared to other provinces.
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Read moreCanadian economy suffers from myth of comparative advantage
Economists love to talk about the theory of comparative advantage, which holds (somewhat counter intuitively) that two countries trading with each other will be better off if each specializes in what it does best, even if one country has an absolute competitive advantage in the production of all goods and services traded.
David Ricardo famously argued that it made sense for England to specialize in the production of cloth and Portugal that of wine, even though Portugal could produce both goods more cheaply.
Unfortunately, the theory has limited application to the real world, and can have pernicious policy consequences.
article originally appeared in the Globe and Mail's Economy Lab.
Photo: teegardin. Used under a Creative Commons license BY-SA-2.0
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