The federal Liberals’ middle-class agenda died last week; it never looked like living. Its only legacy is the endless number of press releases over the past few years earnestly — and sometimes laughably — referring the government’s nominal goal of improving the welfare of the middle class, and sometimes to its auxiliary goal of improving the welfare of those “working hard to join it.”
I keep going back to the story of Nathalie, partly because her situation is key to understanding the Liberals’ rhetoric, but mainly because the Liberals stopped talking about her long ago. Justin Trudeau introduced us to Nathalie — a fictitious but representative member of the middle class — at the convention of the Liberal Party of Canada in February of 2014. She and her spouse both earned $40,000 a year: roughly the median income at the time. Nathalie, Trudeau said, was anxious, and he didn’t “want to practice politics in a way that turns Nathalie’s anxiety into resentment.”
This was a compelling insight at the time, and is even more powerful in hindsight. Since that 2014 speech, inchoate middle-class resentment has elected Donald Trump as President of the United States and has voted to withdraw the United Kingdom from the European Union, with shambolic results in both countries.
To be sure, there’s room to quibble about the Liberals’ diagnosis of a weakening Canadian middle class: median incomes have been increasing over the past 20 years. But Canadian memories of the stagnation and decline during the previous 20 years are still strong, and they are also coloured by the current U.S. experience. It would be foolish to dismiss out of hand the dangers posed by middle-class anxieties; it’s far better to address and defuse them before they metastasize into a Canadian Trump or Brexit.
Except that’s not what the Liberals have done: their government has done pretty much nothing to assuage Nathalie’s anxieties. Nathalie and her concerns have been expunged from the Liberal narrative, because it turns out that they have almost nothing to say to her. The Liberals’ signature nod to middle-class anxiety — the so-called “middle-class tax cut” — is targeted at those at the 90th percentile of the income distribution, at people earning twice what Nathalie makes. Since Nathalie doesn’t earn enough to benefit from the tax cut, she benefits not at all.
Actual, living, Canadians with median earnings could fairly ask the Liberals how giving a tax cut to someone with incomes two times as high as theirs was supposed to make them less anxious about their situations. Happily for the Liberals, Nathalie is not a real person, so they could get away with suddenly pretending that she never existed in the first place. Liberals are nothing if not masters at messaging; a narrative based on real-life middle-class Canadians would have more difficult to control.
This raises the question of how and why the Liberals could have developed a plausible story about the need to address middle-class anxieties and then decided that reducing taxes for those at the 90th percentile of the income distribution would help alleviate those middle-class anxieties. Did the Liberals simply aim their tax cut at the middle class and … miss somehow? Was it a game of bait-and switch for the benefit of the upper-middle class? (As I’ve written earlier, a good working definition for the upper-middle class is those between the 80th and 99th percentiles of the income distribution, earning between $70,000 and $225,000 a year; the maximum benefit from the Liberals’ tax cut is for those earning $90,000 a year.) I’ve been wrestling with this question for almost three years now.
But no more: the Liberals have clearly moved on with last week’s “supercluster” announcement: a billion dollars thrown at the usual gang of well-connected consultants and professional sitters-on-boards-of-directors. Perhaps the most startling aspect of the Liberals’ supercluster messaging is what it did not say: the announcement was not accompanied with the usual boilerplate verbiage about how this spending would help the middle class. It would seem that even the Liberals have recognized that there are limits past which that particular talking point cannot be pushed.
Let’s get back to Nathalie. For upper-middle-class Canadians, the prospect of technical change is usually exciting: they have the education and training to take advantage of new technologies. But for Nathalie, technical change is a potential threat to her lifestyle. And of course, Nathalie won’t see a dime of that supercluster money; it will almost all go to the sort of upper-middle-class people who benefited from that tax cut.
The obvious way of addressing the middle-class anxieties associated with technical change would be to redistribute income towards the middle class and those working hard to join it, but as we’ve seen, the Liberals have had difficulty hitting that target. And now they’ve given up trying.
Stephen Gordon is a professor of economics at Université Laval.