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Evan Saugstad: The 1980s are back to bite us

The easiest way to throw a government out is to make life unaffordable for the majority

saugstad​Are you old enough to remember the early 1980s when the annual inflation rate was over 10% and interest rates went north of 20%? Remember the cause? Among other things, overspending by governments and low borrowing rates for the then emergent Baby Boomers, who were willing to pay inflated home prices to call a place as their own. That, topped off with high oil prices, which increased the cost of everything, which then triggered wage increases just so we could afford to look after ourselves. Wash, rinse, and repeat for 2022?

If you owned a home, business, or had debt in the early 80s, you would remember. I do, when my small business loan went to 22%, which then cost me a few years wages to get back to being debt free. Sound familiar? Remember Canada Savings Bonds? In 1981 they paid out 19.81% interest, 13.65% again in 1990. I wanted to buy them but couldn’t, as one needed cash to do such a thing.

Yes, governments can try to blame today on Putin and the war, but as the old saying goes, “The road to hell is paved with good intentions.” This war is just speeding things up a bit. Despite two years of warnings from economists about the dangers of government overspending money they didn’t have in the name of taming COVID, and mandating shutdowns of significant parts of our economy, inflation is now here. Just don’t know how much and how bad.

Free money combined with low interest rates, supply shortages, and high energy costs are back to bite us once again. After those recession years, we did get serious about reining in our free-wheeling spending ways, and successive governments worked hard to reduce spending and taming inflation by using something called “balanced budgets” and letting high interests rates slow the economy. When government quits spending and lets interest rates climb, it hurts; it hurts us all.

So now what are we doing?

If you live in Alberta, one could say not so bad, as their government is running a balanced budget and has a plan to reduce their debt and keep government spending under control. So much so that they can offer to drop fuel taxes to help save their residents a few bucks and make their lives a bit more affordable.

Not so here in B.C. Not even close. And, in fact, just the opposite.

Our NDP government plans to spend and tax their way out of inflation with a $5.3-billion deficit budget, same for subsequent years. Premier Horgan plans to increase government employment, increase taxes on those who still pay them, and increase payouts to those who don’t and live at the largess of government. So smitten with this ideology are Horgan and his crew that they are amending legislation so they can ignore deficit spending and now pay themselves higher wages in helping themselves in their personal battle with inflation.

Yes, Premier Horgan believes B.C. residents are willing to pay the highest fuels costs in Canada in the name of chasing the ever-elusive climate change target. They even think it is absurd that any government can have a balanced budget, can help its citizens by reducing taxes during high cost periods, and keep spending under control. Yes, Premier Horgan thinks it’s fair game to increase the costs to heat your home or increase used car taxes in the name of collecting what they say is rightfully theirs. Yes, they are even proud to provide subsidies for electric cars and ground heat pumps that are of dubious value to rural and northern parts of the province. Carbon taxes, increase them; it doesn’t matter how high energy costs go.

Ah yes, in a flat earth Canada there are two certainties: death and taxes. But in B.C. we have one more: an NDP government that believes my money, my house, my bank account, and my possessions really belong to them, and given time, they will get it all. They might be right, except for one small detail: The easiest way to throw a government out is to make life unaffordable for the majority (yes, easier than a bunch of truckers honking horns outside Parliament). History will show that not one government has survived that test at election time, no matter how much of our money and our future they spend.

Oh, and I did learn from the 80s. I never again ran out of cash, so much so that I am now free to pay my taxes. And note: in 2017 the Canadian government stopped issuing Canada Savings Bonds to borrow money as they no longer needed them, and we the people quit buying them as they paid less than 1% interest.

Evan Saugstad lives and writes in Fort St. John.