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Outflows, too, have increased steadily and reached a record $100 billion in 2017

However, much blame for this deterioration stems from recent Canadian policies. As discussed recently in these pages by Jack Mintz and William Robson, and in a recent Fraser Institute publication by Niels Veldhuis, Milagros Palacios and Jason Clemens, these policies worsened the investment climate in Canada.

This worsening resulted from the increase in environmental and climate policies such as: The mandated closing of coal-fired electricity-generating plants in Ontario (and the rapid rise in electricity prices that followed); the capping of future extraction of oil in Alberta; and the prohibition of tanker traffic along the northern coast of British Columbia and of pipelines in B.C.’s Great Bear Rainforest. There was also the imposition of stricter conditions on the construction of pipelines to prevent oil spills and the requirement to obtain “social licence” before one could be built.

The worsening of the investment climate is also due to the pursuit of the “progressive” political agenda in vogue lately across Canada, including: Heavier regulation of equity policies in pay and employment; increases in minimum wages; and restrictions on property development and the imposition of more stringent building codes.

The most important element of this progressive agenda has been the increase in taxes on corporations and high-income individuals and the prospect of still higher taxes through rising carbon taxes. Since an important part of the cost of the progressive agenda is covered by deficits, the growing debt portends even higher taxes in the future.

Clearly politicians and some proportion of Canadians are certain to consider the costs of these policies to be worth the benefits brought by improvements in environmental protection, the prevention of global warming and better social conditions. Upcoming federal and provincial elections, like the one that just decimated the Liberals in Ontario, will continue to reveal how prevalent this view is among voters.

Herbert Grubel is professor emeritus of economics at Simon Fraser University and a senior fellow at the Fraser Institute.