In The Weekly Wrap Sean Speer, our editor-at-large, analyses for Hub subscribers the big stories shaping politics, policy, and the economy in the week that was.
No wonder we have so many lobbyists—the size of government has exploded
In an article this week, The Hub’s data journalist Kiernan Green reported on the massive expansion of lobbying and lobbyists during the Trudeau era. The number of registered lobbyists at the federal level is up 40 percent since 2015.
Perhaps it’s not a coincidence that the ranks of lobbyists have grown so much at the same time that the federal public service itself has increased by more than 40 percent. The relationship between the two isn’t quite causal but it isn’t merely correlative either.
As the Trudeau government has expanded the role of the state in the economy, it’s only logical that industry would enhance its capacity to influence government decision-making. Big government invariably begets more lobbying.
This ought to be intuitive. The more that the government supplants the market’s role in allocating resources or using its regulatory powers to engineer economic outcomes, industry faces greater benefit (or cost) rooted in state action. Government policy is no longer tangential to a business’s interests. It becomes far closer to the centre of its ultimate success or failure.
In such a political environment, it’s understandable for industry (or other interest groups) to dedicate a growing share of their resources to trying to influence policy outcomes in a favourable direction. A lobbyist becomes as critical as an an accountant or engineer or a salesperson. The payoff can be huge.
The most obvious example in recent years is Canada’s electric vehicle industry which exists by and large due to government policy. Canadian governments are now massively subsidizing production, mandating and subsidizing consumer purchases, and using tariffs to block imports from China.
As an industry essentially manufactured by government, it stands to reason that its companies would spend a lot on lobbying. Its chief lobbyist was even awarded the Order of Canada last year for “advancing Canada’s automotive and technology industries on an international scale” which is a clever euphemism for securing billions of dollars in public subsidies.
The key point here is that we shouldn’t be surprised that the Trudeau era has been a good one for lobbyists. It’s a predictable consequence of the government’s conception of the economy and an expansive role of the state in shaping its outcomes.
The good news is that if one is concerned about the power and influence of lobbyists, this diagnosis presents a clear solution. It doesn’t lie in more rules and reporting. The best way to curtail lobbying is to reduce the size and scope of government. That’s because more limited government is one for which the incentive to invest in lobbyists and lobbying activities is inherently diminished.
Simply put: if you want to cut down on lobbyists, cut back on the size of the government itself.
A worker rolls signs past the Bank of Canada, April 10, 2024 in Ottawa. Adrian Wyld/The Canadian Press.
Canada’s empty-calories economy
This week was marked by some big policy decisions for Canada’s economy. It started with an interest rate cut by the Bank of Canada and ended with the Trudeau government’s downward adjustments to its previous immigration targets.
The first signals that the economy is slowing due in part to an ebb in business investment and a softening labour market. The employment rate has fallen ten of the past eleven months and the unemployment rate—particularly for younger Canadians—is now the highest outside of the pandemic in seven years. RBC Economics anticipates that next week’s GDP numbers for August will show zero growth.
The point here is that while the interest rate cut will be well received by a lot of Canadians, it must be understood in the context of flat-lined or even declining economic conditions.
Which brings us to the second development—the Trudeau government’s announcement that it intends to lower the annual immigration targets from 500,000 to roughly 375,000 over the next three years—which itself will no doubt affect economic output.
Large-scale population growth (including more than 3 percent last year) has had a disproportionate effect on GDP growth in recent years. It’s quite plausible in fact that were it not for such high levels of immigration, Canada’s economy would have probably been in recession last year.
The government’s latest immigration announcement (along with previous ones on international students and temporary foreign workers) is projected to result in population declines over the next two years.
This is bound to put downward pressure on previous economic projections. Bank of Canada governor Tiff Macklem has acknowledged that “If population growth comes down faster than we have assumed, headline GDP will be lower.” A Scotiabank economist speculated that it could lower growth by a half percent or even three-quarters of a percent.
That’s not to say that the government shouldn’t have revisited its immigration levels. It’s long been clear that both the overall immigration numbers as well as the composition of newcomers (with an over-indexation on low-skilled immigration) were unsustainable and needed to change.
But it is a reminder that Canada’s poor economic fundamentals—namely, low business investment and productivity—have been obscured by artificial growth driven by ahistorical immigration levels and deficit-financed government spending.
As immigration reverts closer to historic norms and fiscal policy tightens, we’ll see more clearly the structural challenges in the economy. We have a macroeconomic problem.
These two announcements therefore signal that the biggest policy challenge facing a prospective Poilievre-led government will about changing Canada’s economic trajectory by boosting consumer and investor confidence, pulling private capital into the market, and improving the conditions for productivity gains.
Shifting from the Trudeau government’s consumption-driven growth model (what we’ve previously described as the policymaking equivalent of empty calories) to a production model won’t be easy but it’s necessary if Canada is to break out of our current cycle of secular stagnation.
Conservative leadership candidate Kemi Badenoch addresses members during the Conservative Party Conference at the International Convention Centre in Birmingham, England, Oct. 2, 2024. Kin Cheung/AP Photo.
Anglo-American conservatism’s fresh new faces
Most of the focus these days is on the U.S. presidential election, but it’s not the only political race in the Anglo-American world that has interesting implications for conservative politics. Next Sunday (November 2), the U.K. Conservative Party will announce the results of its leadership campaign. Polls currently suggest that MP Kemi Badenoch is set to rather handedly defeat her parliamentary colleague Robert Jenrick.
There’s much that one can say about the two leadership candidates and what they may signal about the state of British conservative ideas and politics. But what’s perhaps most interesting is that they’re both late millennials. Badenoch was born in 1980 and Jenrick was born two years later.
This makes them part of a broader generational trend in Anglo-American conservatism that includes Conservative Party leader Pierre Poilievre and U.S. vice-presidential candidate JD Vance.
One can discern some unique characteristics among this group of millennial-ish conservatives. They’re generally less wedded to conservative economic orthodoxy, more predisposed to challenging the culture excesses of left-wing identity politics, more inclined towards a sharper form of communications and political strategy, and generally more responsive to the political realignment and growing working-class segment of the conservative coalition.
It’s not to say that there aren’t differences among them. Vance for instance is generally more statist than the others and Badenoch, who herself is a racial minority, has leaned more into criticisms of critical race theory and other expressions of “anti-wokeism.” Poilievre is arguably the most classically liberal.
But there are enough similarities to see a new generational centre of gravity emerging in Anglo-American conservatism. It will be generally market-oriented but less reflexively so. More culturally conservative and nationalistic. More populist in its poise and style. And more representative of today’s Conservative voter who’s as likely to be a wage earner as an entrepreneur or small business owner.
One can debate whether these shifts within conservatism represent good or bad developments. But in Badenoch’s expected leadership win next week and Poilievre and Vance’s own political trajectories, the future of Anglo-American conservatism is increasingly coming into focus.
Sean Speer is The Hub's Editor-at-Large. He is also a university lecturer at the University of Toronto and Carleton University, as well…
