Both parties ignore the chance of tough times ahead because of tariffs. But the Conservatives are more careful about debts and deficits

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This week we have been treated to the detailed Liberal and Conservative fiscal plans. Both parties predict their policies will have the happy endings of better growth and higher incomes. The key difference between them isn’t the numbers but the philosophy underlying their proposals.

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The Liberals believe economic growth is achieved by government intervention, in particular by setting up funds to serve as a “catalyst” for private industry to build corridors, electric grids and modular homes. Call it “the Brookfield approach,” after Brookfield Asset Management, where Mark Carney was vice-chair after leaving the Bank of England.

Experience has shown that state-guided capitalism doesn’t work well. The private sector is interested in maximizing profits while the state has multiple objectives, including employment and fairness. Throughout the world, governments have used public-private mixed enterprises, tax holidays, grants and refundable tax credits to try to spur private investment. But because various non-economic requirements impinge on businesses’ competitiveness, such policies often fail.

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