A Tale of Two Budgets With a Soupcon of Fake News and Science
The Trudeau Government released its budget on March 22nd and for the most part business has nothing to fear. In some cases business even has something to quietly cheer about. Seen this way from a business point of view the budget is a success. Trump revealed his first budget proposals on March 16th with details to follow later in the spring. In his budget proposals Trump has slashed spending on scientific research and a host of social support networks, both domestic and international. In the March 17th edition of British newspaper The Telegraph, Ambrose Evans-Pritchard described the budget thusly:
“This is how the U.S. hands over leadership of 21st century technology to Asia. It is superpower suicide.”
For those who are unfamiliar with The Telegraph it is a reputable publication.
Even republicans are railing against the budget cuts and former house speaker Newt Gingrich has called the cuts to science idiotic. Among the bodies buried in Trump’s proposals include many academic corpses. He plans to reduce scientific research funding to 300 universities as well as entirely eliminating research into new energy sources. Any research into climate change is being eliminated. The Environmental Protection agency has had its budget slashed and under Trump’s budget proposals America will no longer participate in cleaning up the Great Lakes.
Among Trump’s campaign promises was one which promised to spend on infrastructure. As Canadians well know, infrastructure investment is a Jim Dandy way to stimulate the economy and make doing business easier. There is no mention in Trump’s budget proposals for rebuilding aging highways to make shipping goods faster and more efficient. Instead the Department of Transportation budget is being cut by 14% and the TIGER program designed to fast track road, bridge and railway rebuilding has been eliminated. America is already losing its intellectual advantage. In 2014 China filed 928,177 patent applications and America filed 578,802.
Meanwhile, back in Canada, the Trudeau government has acted wisely, despite what the opposition parties have to say. Tax increases have been minor to say the least. Alcohol is going up by two percent and the public transport tax credit is being abolished. The much feared taxes on the rich and on capital gains have been put on the back burner until Trump reveals just how kind he is going to be to his friends in the business world when it comes to tax cuts. The Morneau budget has promised $1.18 billion on innovation and skills training, half of which has already been announced. It includes the creation of a new agency, Innovation Canada, at a cost of $950 million over five years to help create “superclusters” and advance the digital revolution in manufacturing.
Whether or not these policies will actually work is a moot question but the point is that the Trudeau government is trying to do something to prepare Canada to play a role in the digital science-based economy of the future. Trump on the other hand is doing his best to pretend that science, research and development are not a necessary economic engine in the digital age. Compared to our American neighbours Canadians can count themselves lucky. While the Canadian government is attempting to prepare Canada for the future, Trump’s America is retreating from it.
This brings us to another point. The woefully ignorant Trump was elected on a background of fake news. Whether or not the fake story about Clinton being involved with a paedophile ring operating out of tunnels underneath a pizza joint or similar alternate truth stories swung the election in Trump’s favor is anybody’s guess. One might ask the same question about the Brexit vote in Britain. How much did fake news, stories drummed up by the tabloids looking for headlines to sell newspapers queer the vote?
For decades British newspapers like the Daily Mail have been publishing fake stories about how the bureaucrats in Brussels have been destroying British life. One such story detailed how British waitresses would have to cover up their cleavage because EU regulations stated that agricultural workers should not be exposed to sunburn. In a brief aside my favorite headline in this category is “Bikini Clad Nuns Frolic in Five Star Convent.”
If Donald Trump was largely elected on the basis of fake news then the Brexit vote in Britain was much the same. The results of all this, the big lie if you will, will be very real. Scotland is threatening to hold another independence referendum because of Brexit. In Canada we know too well how political instability leads to economic flatlining. One of the top two financial centres of the world, the City of London, which contributes 12% of Britain’s GDP may lose up to 100,000 jobs by 2020, early analysis indicated. British research and science is going to take a massive hit as well. Once Britain leaves the EU it will no longer be eligible for grants from the European Research Council. From 2014 to now Britain has won 4,400 grants which totaled 22% of the funding granted by the European Research Council worth 1.11 billion pounds.
When you consider the scare effect Trump’s travel ban has on the international community you should remember that it also extends to students and scientists. A new academic model has been emerging in the research world and that is collaboration. Roughly 12% of the scientists working on European grants in Britain were from other countries. Being able to play together well in the sandbox, it appears, contributes to scientific progress. Canada may well benefit from this situation if the government can lay the proper groundwork. Like everyone else scientists like stable funding, something which is going by the board in both the UK and the US. European grants were responsible for three quarters of the increase in scientific budgets in the UK. In last year’s Canadian budget the Natural Sciences and Engineering Research Council of Canada, the Canadian Institutes of Health Research and the Social Sciences and Humanities Research Council all had their budgets increased. Canadian universities have reported that they are seeing an increase in applications from foreign students. The groundwork has been laid for Canada to shine scientifically. Let’s hope that the government is wise enough to take advantage of the situation and that as a result Canadian researchers can go on an international recruiting spree. If there is one thing that Canadians can do it is play with others in the global sandbox.
One of the big questions that remains to be answered is just how Trump’s presidency will play out economically. After he became the winner Wall Street rejoiced at the prospect of less regulation and fewer taxes. Will the Trump Bump remain is the big question. His inability to craft a travel ban that can pass judicial scrutiny has led to a brief market correction. Whether or not he can pass his healthcare proposals, the dismantling of Obamacare will be another bellwether. As will be his budget proposals. If they become long drawn out affairs with rebellious republicans splintering the party and these include both those who think he has gone too far and those who think he hasn’t gone far enough, business will doubt that he can make good on his promises. Gold as a safe haven may become the investment of choice.
By Noel Meyer