Earlier this week, Elon Musk interviewed Donald Trump, in a wide-ranging two hour long conversation-style interview, which brought forward some novel ideas that had not been discussed before.
One idea proposed by Musk during the conversation was a “government efficiency commission”, which he offered to lead in a potential second Trump Administration, and was an idea which Trump was warm to.
Creating a commission focused on eliminating government inefficiencies, as well as promoting productivity and economic growth broadly, is a great idea, not just for the U.S. but for countries around the world, especially for those experiencing significant declines in productivity, which includes Canada, Japan, and much of western Europe. Many of these countries have experienced little to no growth in GDP per capita since the global financial crisis.
Raising productivity is essential to improving pay and living standards, especially for those earning below the median income. Productivity is intimately connected to poverty alleviation as such productivity gains often lead to better paying jobs. Excessive government often stands in the way of such gains either through excessive regulation, taxation, and spending that can crowd out private sector activity.
Amid declining growth in the 1970s, Canada established the Macdonald Commission, which began in 1982, making its final recommendations in 1985. Many of its pro-market, pro-growth recommendations led to the Mulroney government and subsequent governments supporting free trade deals like the North American Free Trade Agreement (NAFTA), the Chretien-Martin fiscal reforms in the 1990s and fiscal surpluses in the Harper years.
The Trudeau Liberals, in their 2021 party platform, promised to “establish a permanent Council of Economic Advisors to provide independent advice to government on long-term growth,” something which never materialized. Canada previously had its own “Council of Economic Advisors,” formally called the “Economic Council of Canada” which existed as a federal crown corporation from 1963 through 1993. Since then, the Canadian government has been essentially without a body dedicated to rigorous economic analysis of issues beyond the Parliamentary Budget Office (PBO) which largely only provides fiscal scores.
Australia established a Productivity Commission in 1998 and since has actively ran it with a specific eye on microeconomic, structural reforms to improve growth (Australia for many decades avoided recession, from 1991 to 2020, albeit in part due to spillovers from China’s rising economic growth). The U.S. has its White House Council of Economic Advisers embedded within the executive, that provides wide-ranging recommendations on economic policy from housing to education to macroeconomics, which includes both policy recommendations related to economic growth as well as stimulus responses to recessions.
There would be many gains to establishing commissions and governmental bodies (whether temporary or permanent) that are laser-focused on economic growth, productivity, and structural reforms of government. Regulations in Canada, the European Union, and even the U.S. have become increasingly burdensome.
Whether it is excesses of environmental land use regulations (emanating from legislation like the National Environmental Policy Act (NEPA) plus its state equivalents in the U.S.) and NIMBYism preventing growth in housing supply, making housing unaffordable, or relaxing occupational licensing regulations to make it easier for licensed workers (often below the median income) to find a job, rigorous analysis of such issues can add up to make a meaningful difference and a more dynamic and productive labour market.
Many people in Canada, the U.S. and elsewhere would like to migrate to more productive, higher paying areas that make better use of their skills but cannot due to absurdly expensive housing and related land use regulations. The energy sector is continually bogged down by regulation whether its regulators in Canada slowing the Trans Mountain pipeline construction through excessive environmental review or President Biden in the U.S. cancelling the Keystone XL pipeline on his first day in office. Increasing the flow of highly skilled immigrants can result in innovation breakthroughs.
A few experts with a laser-focus on pro-growth, pro-structural reform ideas can help many economies get back on the right track when it comes to productivity and economic growth, which is essential to economic mobility for the worst off.
Jon Hartley is a senior fellow at the Macdonald-Laurier Institute and a research fellow at the Foundation for Research on Equal Opportunity.