The idea behind China’s Evergrande real estate empire was that no amount of borrowing was too great, as long as you poured it into investments that produced a return sufficient to cover the borrowing costs.
If that philosophy sounds vaguely familiar, it should: it’s the same one Canada’s government follows in managing the national finances. As Finance Minister Chrystia Freeland has made clear, Canada’s government believes it “can’t afford not to” push the country deeper into debt in pursuit of the ambitious goals the Liberals hold for increased benefits and services. Pharmacare, daycare, eldercare … they’re all expensive “investments,” as Ottawa likes to term them, and a country that is already more than $1 trillion in debt doesn’t have the resources to pony up for them from available cash. So, keep up the borrowing, and hope enough money rolls in from increased productivity to cover the costs.
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