Sunday March 15, 2015

What Canada would look like if it were run by economists

REUTERS/Chris Wattie

REUTERS/Chris Wattie (Chris Wattie/Reuters)

Emotions ran high this week as federal Liberal leader Justin Trudeau spoke out about the Conservatives' anti-terror bill. Tugging at the heartstrings and playing the fear card are long standing tools of the political trade-- but what if a party were based entirely on economics, and not emotion, regardless of what voter reaction would be?

It's long been a joke among economists that the "Economist Party" would be a coldly rational and counter intuitive enterprise. This week, one of those economists takes a stab at a party platform, which includes a market for organ donations, raising the GST, and tolling all roads...everywhere.

Ivey Business School economist Mike Moffatt admits that while the theoretical party's platform makes perfect economic sense, economic thinking wouldn't necessarily connect with voters.

"We get to be a little Spock-like at times, you know, we're operating with our rational brains, not our emotional ones...We are a little Vulcan in our outlook."

"Economist Party" election promises

- Carbon Tax When a cost, like carbon emissions, isn't captured by a market transaction you've got what economists call an externality. Luckily, there's a fix. Put a tax on it!

- Legalized Marijuana Why impinge on individual liberty to curb a behaviour with minimal social cost? Let them smoke and watch the tax revenue roll in.

- GST Increase to 7% Economists like it when you tax consumption instead of income.

- Road Tolls Everywhere Want to shift traffic patterns to relieve congestion? Make people pay to play in the fast lane!

- Market for Human Organs Economists are all about incentives. When organs have no price, the only incentive to donate is the warm and fuzzy feeling of doing the right thing. Unfortunately, that's not working.

- Bring Back the Long Form Census Economists like to say that if it matters, you need to measure it and count it. Hard to do if you don't have reliable, comprehensive data.