Terence Corcoran: Net zero plans, slower growth and trade wars coming soon to an economy near you

The possibility continues to grow that the world economy is heading toward a new era of slower development, reduced efficiency and trade battles under a renewed push toward central planning. From Canada to America, India to China and Europe, trade and growth-killing political and economic ideas continue to gain traction.

Is this conclusion nothing but a warped view of the world fashioned by an out-of-touch advocate for free markets and open international trade? It is hard to know for sure, but consider some of the evidence from the last few days from local and international political leaders.

In a speech last Thursday, United States Trade Representative Katherine Tai explicitly denounced economic efficiency as a worthy policy objective. “When efficiency and low cost are the only motivators, production moves outside our borders,” Tai told the National Press Club in Washington, D.C. Imports, in this model, are undesirable.

When efficiency and low cost are the only motivators, production moves outside our borders

Katherine Tai

Tai went on to denounced the trade liberalizations of the 20th century as flawed policies applied “for the sake of liberalization.” Freer trade may have supplied lots of goods at lower prices for consumers, but they hurt that national economy.

That’s the theory under which the Biden administration’s climate-driven clean energy regime operates. Freer markets in energy and industrial production are being abandoned in favour of planning models that use top-down government decisions-making to direct economic activity.

The massive controls and subsidies being introduced in the United States and Europe — and Canada — to decarbonize the economy and build national renewable energy operations are being attacked internationally — and accurately — as anti-free trade initiatives that hinder global development. India’s renewable energy minister, Raj Kumar Singh, told the Financial Times last week that the moves by western nations are simply “protectionism.”

Singh said he sees the protectionism “in the Inflation Reduction Act in the United States. I see it in this green hydrogen auction in Europe.” The moves make western nations look like self-serving hypocrites. “We had the developed world lecturing the rest of the world on how important free trade is,” noted Singh. “And here they themselves are erecting barriers.”

We had the developed world lecturing the rest of the world on how important free trade is

Raj Kumar Singh

There was no mention of Canada by Singh, even though the Trudeau Liberals are building the foundation for protectionist policies that aim to make Canada the big winner in “the global race to net zero,” phrasing that dominates federal policy language on trade and industrial strategy related to autos, minerals and manufacturing.

The latest move came last week when Natural Resources Minister Jonathan Wilkinson tabled the Canadian sustainable jobs act, a major interventionist economic planning document that would grant new powers to a new minister to meddle in the economy, with Big Labour playing a guiding role. Wilkinson said the act — developed on the basis of an earlier “Sustainable Jobs Plan” report — is part of Ottawa’s plan “to become the clean energy and technology supplier of choice in a net-zero world.”

The wording in the act is broad in its embrace of government planning as the economic driver of job creation over the next 30 years. The government is committed to developing a plan “to achieve a prosperous net-zero-emissions future by 2050, supported by public participation and expert advice.”

For that expert advice, a new minister of sustainable jobs development will be guided by a 15-member “sustainable jobs partnership council” that will be co-chaired by ”individuals who represent trade unions and industry.” Notably, the news release announcing the act contained enthusiastic supporting comments from five of Canada’s top union leaders.

The jobs act is but one more move by Ottawa to seize control over economic policy through central planning — much of it supported by some of Canada’s leading corporations and institutions. RBC is cited by Natural Resources Canada as the source of a claim that “building a net-zero economy could create up to 400,000 new jobs in Canada by the end of this decade alone.”

On the other hand, RBC  known on this page as the “Royal Bureau of Centralization” —  issued another report Monday warning that the province of Ontario, thanks to federal and provincial net-zero energy planning, faces an electricity crisis. As early as 2026, “the province’s grid could strain to meet demand during peak hours; by 2030 soaring demand could outpace generation capacity.”

The risk of a crisis is the result of planned fossil-fuel phase-outs and soaring demand for mandated electric  vehicles, heat pumps, battery manufacturing and other objectives. Ontario and other provinces plan to add natural gas power to meet the government-driven demand spike — a logical solution that RBC’s planners reject.

So what is to be done? More centralized plans to reduce the risks created by the net-zero plan. Ontario will need the right incentives, including home monitoring systems and technology for EV owners to use their car batteries to power home appliances and other power needs, according to RBC. The province also needs too “ramp up” incentives, increase on-peak electricity rates and provide more subsides for smarter grid and behaviour changes.