Familiar Fallacies, But With Fewer Unicorns

Prime Minister Mark Carney and his Liberal government just introduced their first federal budget. 

After a decade of far-left, unicorn-and-rainbow budgets built on fantasy economics, this year’s federal budget feels almost grounded by comparison. 

That’s not to say today’s budget is great - more like, we’ve gone from full-on utopian delusion to more traditional left-wing economic fallacies.

That, at least, is progress of a sort - but we shouldn't get complacent and be happy with budgets being not quite as bad as they used to be.

So let's jump into our analysis of the budget.

First, to give credit where it’s due, some of the intentions in the budget are reasonable. 

The government says it wants to bring the budget back toward balance, get public sector employment under control, stimulate investment, and attract private capital to grow the economy. 

Compared to the days when Justin Trudeau promised to grow the economy “from the heart outwards”, this is a welcome return to something resembling the real world - even if the economics still don’t add up.

And they definitely don’t add up.

The deficit for this fiscal year is projected at $78 billion - nearly double the $42 billion forecasted in the last economic update under the previous administration.

Public service cuts were promised - and delivered, but the numbers are misleading. 

The government plans to reduce federal employment by just under 5% over three years - a figure meant to signal restraint. 

Yet even after these cuts, the total number of public servants will remain higher than 2022 levels. 

This illustrates a familiar pattern - Ottawa promises discipline, but in practice, the bureaucracy remains largely intact.

The budget also emphasizes “investment” as a driver of economic growth.

But what the government means by investment seems to be just funding projects that the private sector has already deemed unviable. 

Truly productive investments attract private capital naturally.

If private investment isn’t occurring, it is usually because projects are unprofitable or government policy has made them difficult, as we’ve seen with pipelines and energy infrastructure. 

Pouring taxpayer dollars into these unproductive initiatives doesn’t solve the underlying problems.

And it’s certainly not an investment - it’s just more government spending. 

The responsible approach would focus on removing regulatory barriers, clarifying policy, and encouraging private investment - rather than forcing outcomes with government spending.

Carney presents himself as an economist, so in theory you’d hope he’d understand this.

But, economists don’t always agree.

In fact, sometimes two economists can completely disagree.

And that means, logically, one of the economists is wrong.

So, clearly, credentials alone don’t automatically guarantee that you’re right.

Carney’s economic approach seems stuck in the early 20th century:

1. Broadly supportive of free markets, but only if they’re doing what he wants them to do.
2. As soon as they’re not, ready and willing to intervene to force the market to align to government expectations.
3. When markets refuse to comply, double down on telling them what to do.
4. If they still won’t listen, step in and have the government take over.

This heavy-handed approach ignores what other economists learned towards the end of the 20th century, when economies around the world de-regulated and prosperity exploded.

Of course, to the loony far-left, even Carney’s early 20th century approach is an anathema.

The Bloc Québécois called Carney’s plan a “conservative” budget - a stark reminder of how far left the baseline has shifted. 

So yes, this budget marks a shift from unicorn and rainbow economics to traditional left-wing economics. 

It’s less fantastical, but still fundamentally flawed. 

The rhetoric has changed, but the underlying philosophy - that government knows best - remains the same.

The solution isn’t more government spending on projects the government thinks are productive - it’s creating the conditions for private investment to succeed and letting the economy grow on its own terms.

The danger is that Canadians are being asked to accept a new baseline of economic expectations - where ballooning deficits, tens of billions in new spending, and barely meaningful public service cuts are considered radical, and the actual solutions are ignored entirely.

Without scrutiny, Ottawa will continue down this path, and the burden of failed policy will fall on everyday Canadians: slower growth, higher taxes, and fewer opportunities for productive investment.

Understanding the reality behind the headlines matters now more than ever, because these decisions will affect the economy for years to come.

This is why our work is so important.

We analyze budgets, expose accounting tricks, and highlight where government spending fails to address the real issues. 

We advocate for policies that encourage private investment, economic growth, and fiscal responsibility - policies that actually work instead of just looking good on paper. 

Your support allows us to continue this work, hold Ottawa accountable, and fight for a government that puts prosperity first. 

Consider making a contribution today - every donation strengthens our ability to push back against unsustainable spending and promote common-sense economic policy.

Thank you for your support so far!

- The Alberta Institute Team