Social Policy in Ontario

Brad Savage’s letter criticizing Ottawa’s obsession with low corporate taxes is spot on, but there is more that should be said.

The impact of fluctuations of our currency have a far greater impact on profitability than cutting taxes. And the impact of oil and resource exports on raising the value of our currency did far more damage than any benefit from tax cuts might have created. If new jobs appear in the next year, it will be due to our dollar dropping in value, not from recent tax cuts.

A low currency is no guarantee of success either, particularly if instead of selling goods to other countries, we instead sell debt, land or ownership of our corporations. China’s recent success has been because of a policy combining a low currency, restrictions on imports, and limitations on foreign investment. It kept foreign goods out and instead traded its goods in return for U.S. debt.

Canada on the other hand has had an influx of foreign money raising our currency — leading to foreign ownership of our resources and only short-term construction jobs building tar sands plants. Our manufacturing sector withered.

Canada should be following the example of South Korea and Japan in developing an industrialized economy instead of a naive belief in free markets, foreign investment and low taxes to create jobs in resource extraction.

Brian Graff, Toronto

To achieve objectives that Canadians want, like poverty reduction, environmental protection and job creation, Ottawa has a tool called the budget. And depending on contractionary or expansionary measures required and applied, the budget balance will float up or down.

As Canadian-born economist John Kenneth Galbraith explains: “If there is idle capacity and unemployment, the government must spend more than it receives in taxes . . . there is no merit at all in a policy that just balances income and outgo, none whatever.”

But at a time when 1.4 million Canadians are jobless and additional stimulus is required, Finance Minister Jim Flaherty wants not just a budget balance but to receive more than he spends, so that when the 2015 election comes he can dangle tax-reduction goodies. In his machinations for re-election, the unemployed are just sacrificial pawns.

Larry Kazdan, Vancouver

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