The Liberals have worked hard to make the link between the welfare of middle-income Canadians and economic growth, and rightly so. Economic growth is a necessary – if not always sufficient – condition for sustained, broad-based improvements in living standards. The Minister of Finance’s Advisory Council of Economic Growth set itself an ambitious target in its reports: to increase the growth rate of real median incomes from the current baseline of 1.2 per cent a year to 2.2 per cent in 2030. In growth empirics, a sustained increase of one percentage point a year would be an extraordinary achievement, the equivalent of an extra $15,000 a year for median earners.
But the chances of that actually happening are vanishingly small. And just as the so-called “middle-class tax cut” mainly benefits people in the top third of the income distribution, the proceeds of the “innovation agenda” will likely be absorbed by the usual class of well-connected rent-seekers.