The obsession with "results" is the first sign of a dying fiscal strategy.
Observers are currently breathing down Mark Carney’s neck, demanding a spring fiscal update that proves he can "fix" the Canadian stagnation. They want spreadsheets that show a tidy return to 2% growth. They want a roadmap for a "soft landing." They want the comfort of a technocrat telling them that the machinery is working.
They are asking for the wrong things.
If Carney delivers what the pundits want, he has already lost. The Canadian economy doesn’t need a tune-up; it needs a controlled demolition. For a decade, the consensus has been to preserve the status quo at any cost—propping up an unproductive housing market, subsidizing zombie corporations, and pretending that a bloated public sector is an engine for innovation.
The spring update shouldn't be about showing results. It should be about showing the courage to let the wrong parts of the economy fail.
The Myth of the Spring Pivot
The "lazy consensus" suggests that a fiscal update is a scorecard. It isn't. In the current climate, a fiscal update is a signaling device for global capital. If Carney focuses on short-term relief or "showing results" to silence the Parliamentary Budget Officer (PBO), he is merely managing decline.
The PBO’s concern—that the government needs to demonstrate fiscal responsibility—is technically correct but practically irrelevant. You cannot balance a budget on a foundation of sand. Canada's private-sector investment is abysmal. Our R&D spending is a rounding error compared to our peers. We have built an economy where it is more profitable to flip a condo in Toronto than to build a world-class software company.
If Carney spends this spring trying to prove that the current path is "working," he is gaslighting the country.
Real Growth Requires Real Pain
Everyone talks about productivity as if it’s a dial you can just turn up. It isn't. Productivity is what happens when you stop doing low-value things.
To increase productivity, Carney must stop protecting the inefficient. This means:
- Ending the era of cheap credit for non-productive assets. We have incentivized debt for consumption and real estate while starving actual industry.
- Decoupling the "social safety net" from "corporate welfare." We spend billions keeping companies alive that have no business existing in a competitive global market.
- Accepting higher unemployment in stagnant sectors. Labor needs to move to where it is useful, not where it is comfortable.
I have seen finance ministers try to "nudge" their way out of a recession. It never works. You don't nudge a ship that’s stuck in the mud; you purge the weight. The downside to this contrarian approach is obvious: it’s politically radioactive. People lose jobs. Portfolios take a hit. But the alternative is a twenty-year slide into irrelevance, where we become a "resource park" for the rest of the G7.
The PBO is Guarding a Burning House
The Parliamentary Budget Officer's role is to ensure the math adds up. But math can add up in a graveyard.
Focusing on the deficit-to-GDP ratio is a distraction when the GDP itself is composed of "ghost growth"—government spending and housing commissions. A "successful" spring update that satisfies the PBO might show a path to a balanced budget, but if that path involves taxing the few remaining innovators to pay for a stagnant bureaucracy, the math is a lie.
We should be asking if the quality of our debt is improving. Borrowing to build a nuclear reactor or a transcontinental high-speed data network is an investment. Borrowing to fund recurring operational deficits is a slow-motion suicide. Carney knows this. The question is whether he will say it.
Stop Asking About "The Future Of" Anything
Whenever an analyst asks about "The Future of the Canadian Economy," they are usually fishing for a reason to buy more bank stocks.
The reality is that Canada is currently a beta-test for a post-growth society, and it’s failing. To fix it, Carney needs to ignore the calls for "stability." Stability is what happens before rigor mortis sets in. We need volatility. We need the "creative destruction" that Joseph Schumpeter championed and that modern politicians have spent their careers trying to outlaw.
The Unconventional Directive
If Carney wants to actually lead, his spring update should contain three brutal truths that would make a traditional economist wince:
- Home equity is not a retirement plan. It is a massive misallocation of capital that is strangling the next generation of entrepreneurs.
- Public sector growth must be negative. We cannot have a shrinking private sector supporting an expanding administrative class.
- Competitiveness is not a choice. We either compete on the world stage by lowering the cost of doing business—meaning deregulation and tax reform—or we accept that our best talent will continue to move to Austin and Palo Alto.
The pundits want Carney to be a surgeon who doesn't draw blood. They want the cancer removed without an incision. That isn't how medicine works, and it isn't how economics works.
If the spring update is "smooth," "reassuring," or "responsible," then Carney has failed. We don't need a steady hand on the tiller of a sinking ship. We need someone brave enough to build a new boat from the wreckage of the old one.
Stop looking for results. Look for the courage to admit that the current model is dead.
