What Kind of economics do the teach at Harvard and Oxford?

Mark Carney announced that He was going to form a sovereign wealth fund.  Maybe someone should have told our “Genius Economist” Prime Minister that before you can create a wealth fund you must create wealth.

Problem is, we’re tapping debt, not revenue. When asked where the Fund’s initial $25 billion will come from, Finance Minister Francois Philippe Champagne admitted that it will be borrowed. But that’s ok, because we’ll get great rates. 

The media who have bestowed upon Carney the title of “Genius Economist” have got Carney’s back though.  They dutifully explain that Canada has abundant natural resources so the national fund can just use resource revenue.

So rather than use excess resource revenues to mitigate the risk of relying too much on commodities (as Norway and most other countries with SWFs have done), Carney proposes to use government capital at a time of high and persistent deficits to double down on Canada’s reliance on its abundant natural resources.

So, what is government capital?  In the language of government, that is borrowed money. Carney plans to use borrowed money for seed money to develop natural resources which will grow the fund.  The media loves the plan largely because the average Canadian journalist is an ideologic moron and liberal party lackey.

There are more than just a few problems with the idea.  First of which is that resources belong to the province.  Carney can’t access that revenue without confiscating wealth from the provinces.  The second problem is that the wealth he wants to confiscate is already in the system.  Provinces are already exploiting their resources, and they are all still running deficits.  Transferring resource revenue from the provinces to the federal government does not make Canadians any wealthier.  It just increases provincial deficits.

Canada could be, should be, wealthy.  Compared to many countries we are.  But we are not as wealthy as we could be, and we are moving backwards not forwards.  The answer is not some wealth fund that we don’t have the money to start.  We need to simply grow the economy which means eliminating what holds us back.  We need to drastically reduce the size of governments.

Government is Canada is a large, privileged, growing parasite class.  It consumes wealth.  If you want to build wealth a good first step is to stop destroying wealth.  The only growth industry in Canada is government.  No economy will ever build wealth with a burden like that.

Our “Genius Economist” Prime Minister either doesn’t know this or doesn’t care.