At the end of a recent interview about my new book Breaking Free of Neoliberalism: Canada’s Challenge, I was asked how it was possible that I claim to be optimistic about Canada’s future. Good question. The book does tell a pretty bleak story of a world upside down, unmoored, a story of how the neoliberal counter-revolution of the 1980s made us more vulnerable in an increasingly turbulent world. It’s hard to know which of our multiple crises we should be most worried about from day to day. I expect many Canadians are looking for any reason to be optimistic.
Probably every generation thinks they’re at some crucial crossroads where the decisions they make or fail to make will reshape the future. In fact it feels like we have been living through a succession of such turning points, always on the verge of big change but somehow never quite making the turn.
After the 2008 global financial meltdown and the recession that followed, the worst since the Great Depression, pundits declared that we had got it all wrong, that the status quo could not hold. The financial chaos had revealed how costly the deregulation of the financial sector had been and how fragile was an economy built on massive mortgage-fuelled household debt. That many banking executives who had contributed to the crisis got huge bonuses while others were losing their jobs or their homes or were just hanging on made clear that things were indeed upside down. Political leaders talked about the need for a new morality, that we were seeing the dark side of globalization, that we could no longer tolerate corporate giants too big to fail. And yet in no time we were back to business as usual.
Or take climate change. A few years after the financial meltdown, Naomi Klein wrote her powerful This Changes Everything about how climate change will force the world to rethink, well, everything. It seemed no longer possible to ignore or pretend away the already evident consequences of climate change and the risks it poses to civilization. Extreme weather events were telling us our antagonistic relationship with nature could not continue. In Canada, pundits wrote that no political party could hope to win an election without an ambitious and credible climate plan. For a while we were making progress, albeit very modest given the climate crisis. Yet now it seems we are ready to backtrack. Not only can political parties run without a climate plan, they can promise to undo the limited progress we have made.
And then came the pandemic. COVID-19 exposed how woefully unprepared we were, how stretched we had allowed our health and social services to become, and the often fatal costs of privatizing long-term care. It made glaring the consequences of inequality and weak labour protections, as the poor, the marginalized, Indigenous communities, people of colour and frontline service workers were hardest hit.
COVID-19 made glaring the consequences of inequality and weak labour protections.
But the pandemic also showed us that better was possible. Governments of all stripes stepped up to protect our health and keep people and firms afloat, rolling out with unaccustomed speed billion-dollar programs that, for a time, even reduced poverty and inequality. Firms raised the wages of frontline workers who put themselves at risk so we could stay safe. We experienced the kind of solidarity that often comes with crisis, finding ways of helping each other and celebrating healthcare workers and others on the front lines.
In the midst of the pandemic, governments here and just about everywhere were talking about huge public investments “to build back better.” Change was in the air. And then inflation hit, the result of fragile global supply chains, war and greed. The pandemic programs were rolled back, as were the pay raises. There was no more talk of building back better. Even the COVID solidarity proved fragile, momentary, the now infamous “Freedom Convoy” revealing how angry many had become at government and how raw our differences. Social media, the major source of human connection through the lockdown, fuelled our outrage and magnified our divisions. Yet again the opportunity for change passed, the optimism and solidarity with it.
And now we face a new challenge. Donald Trump’s tariffs and insistence that Canada should become the 51st state have ignited an unprecedented burst of patriotism. Will this finally be the turning? Perhaps to understand how to move forward we need to look back at how we got here.
It was not so long ago that most people assumed things would just keep getting better, that every generation would surpass the previous one. For decades after the Second World War, it seemed capitalism and democracy were not only compatible but mutually reinforcing, high profits and high wages could coexist, endless economic growth would benefit everyone. Unions were strong. Governments were active in the economy and in providing for our welfare. We owned things together—transportation, energy, cultural institutions, even a vaccine agency.
By the 1960s, in what has become known as the equality revolution, those who’d been left behind in the expansion of the welfare state were demanding to be let in and were making progress. Democracy was expanding, becoming more inclusive, more robust.
And then came the 1980s. While corporations and neoliberal think tanks had been fighting unions and the expansion of the welfare state all along, economic turmoil at the end of the 1970s gave the opposition their moment. The world was changing. Global competition was more intense. Former colonies were demanding more for their raw materials. Oil prices skyrocketed. Profits declined. Businesses raised prices. Inflation soared. Conditions were ripe for the neoliberal counter-revolution. Business leaders and neoliberal institutes pounced.
Defining neoliberalism is a tricky business. It’s a slippery concept and, like every -ism, is used in different ways and takes different shape from place to place and over time. Essentially it holds that competition in the free market is the route to freedom and prosperity, and that government’s role is to create the conditions for the market to work its magic.
As Karl Polanyi wrote in his classic work of economic history and social theory The Great Transformation, ideologies are often hijacked by powerful interests and transformed to support those interests. That was certainly the case especially in the Anglosphere as corporations invested heavily in a network of persuasion—media, think tanks, university chairs—to attack the welfare state and sell neoliberalism.
As a political project, neoliberalism is best understood as the single-minded focus on economic growth, the primary role of government being to create the conditions for business to thrive, stripping away as many of the barriers to profit as politics allows—capitalism with the gloves off. Competition in the “free market” would sort out the winners and losers. Inequality, in this framing, is not only inevitable but right. If the winners are unleashed, everyone benefits; good things will somehow trickle down to the rest.
The winners did win big, but without much of the promised trickling down. Instead, we got extreme inequality and increasing insecurity, as many, especially the young, find themselves competing for precarious jobs with few benefits or prospects, often working in cities where they cannot afford to live.
Neoliberalism has delivered corporate concentration, monopolies, plutocracy, a massive shift from public power to private power. It has even failed in its own terms. Profits grow but the economy not so much.
And yet neoliberalism refuses to die. It contains, it seems, the seeds of its persistence. Of course, those with power and privilege always try to hold on to both. Money talks, and with extreme inequality it talks louder than ever. Neoliberalism changed us. It changed how we view government and how we view one another. It changed what we think is important and what we believe is possible. It’s in how neoliberalism has changed us that it exerts its greatest hold.
Taxes are how we pay for the things we do together that we cannot do alone.
Sociologist Zygmunt Bauman argued that we’ve organized ourselves such that our collective action problems—the ones we can only solve together—have hit the level of “polycrisis” while our collective toolkit has rarely been weaker. Decades of neoliberalism has eroded public power. Nowhere is that more evident than in how we have come to view taxes.
Taxes are how we pay for the things we do together that we cannot do alone. They are also the way we reduce inequality and deconcentrate power. The generations that preceded us were much readier to pay taxes than we have been. No doubt they grumbled—who likes paying bills?—but they kept voting for governments that raised taxes. That was how we got medicare, expanded education, built public infrastructure.
All that changed. Taxes became the third rail of politics, a no-go zone. Just think of the reaction of many business leaders to the modest change the federal government introduced to the capital gains inclusion rate in the 2024 budget. Even though it largely affects the affluent. Even though capital gains are still taxed at a lower rate than earned income. Even though Canada’s marginal effective tax rate is still the lowest in the G7. Investment will dry up, we are told. Why would it? Investment didn’t suffer when not so long ago capital gains taxes were even higher.
People will flee, we are warned. Really? Where will they go? A telling study in the US puts the lie to the taken-for-granted assumption that when governments raise taxes on the rich, the rich take their money and run. Cornell sociologist Cristobal Young and his team recently published a study that examined whether millionaires do in fact move to lower-tax states when their state raises taxes. Their answer: no. Taking your money and moving to another state should be relatively easy compared to changing countries. But millionaires are less likely to move than any other income category, whether to avoid taxes or for any other reason. They prefer to stay right where they made their millions. The poor are far more likely to move, to escape poverty. Opportunity, community, quality of life matter more than tax rates. Of course tax increases have behavioural consequences, but so too do tax cuts.
Think of the language our political leaders use whenever they talk about taxes, offering us tax cuts as though those have no consequences, appealing to us as hard-working taxpayers as if to say we are paying taxes for what some “others” get—the hard-working taxpayer versus the undeserving. So we come to see taxes as a burden, punishment, even theft. No political promise seems to resonate quite as positively as the promise of a tax cut or a “tax holiday.” The revenue-neutral carbon tax, even as most Canadians got back more money than they put in, was made into a contentious issue.
Part of the “problem of taxes” is that people don’t like to be played for suckers, to think they are paying more than their fair share. Not only have we over the last decades shifted the tax burden from the rich and the corporations to the many, but the rich have become extremely effective at avoiding taxes, exploiting tax havens and loopholes, or even using illegal means to evade the tax collector. Ordinary people begin to think: If the system is rigged, why should I pay taxes?
Politicians have learned they should avoid any perception that they are “tax and spenders.” Yet all governments tax and spend. The questions ought to be: What is it we should be doing together that we could not hope to do alone, and what is a fair and equitable way to pay for that? What better way to constrain our ability to do big things together than to take tax increases off the table and treat tax cuts as a free good?
Not only were taxes off the table but government borrowing came to be seen as “for emergencies only.” We have been encouraged to view deficits as toxic and to measure governments on their ability to balance budgets. Here’s how this combination of tax and deficit phobia has changed our world: governments cut taxes on the promise that the cuts will generate so much growth that they will pay for themselves or will be paid for through greater government efficiency. But tax cuts never pay for themselves, and there’s never enough waste to cover the lost revenue. So deficits soar. And because deficits are supposedly toxic, public services are cut back. Quality declines. Wait times lengthen. We come to believe that we are no longer getting our money’s worth. If service is lousy, why not opt for a tax cut—even though that will make things worse—and why not support privatization, even if that makes services more expensive and less accountable?
Of course we need to be fiscally responsible, to manage fiscal risks, but that cannot mean giving priority to fiscal health over human health and the health of the planet. When the Trudeau government eschewed the long-standing commitment to annual balanced budgets, that was to the good. But fiscal hawks and much of the mainstream media continue to view deficits and increasing debt as a sign not that governments should raise taxes but that they must cut spending, regardless of whether spending was the primary cause and with no consideration of the human and economic costs of austerity. Robert Reich, after resigning from Bill Clinton’s cabinet, described the combination of tax and debt phobia as a conceptual straitjacket. And as we obsess over public debt, private debt breaks records and sets us up for more bubble-bursting.
Similarly, think about how we view government regulation. Regulations are how we protect the environment, labour and human rights. Instead, we have been encouraged to think of them as red tape, a drag on the economy. We are, it seems, ready to use the heavy hand of criminal law to regulate people but not so much giant corporations, despite their enormous power to drive prices and deflate wages, despite their devastating impact on our environment and on our democracy.
Yes, we have to take into account the costs of regulation, but we also need to consider what we lose through deregulation and regulatory capture, allowing corporations to self-regulate. Think of the bursting of the dotcom bubble, the Gulf oil spill, Enron, and of course the 2008 meltdown. Bruce Campbell’s book on the tragic oil train crash in Lac-Mégantic, Quebec, lays out in devastating detail how regulatory capture contributed to the disaster. Years before, a deadly E. coli outbreak in Walkerton, Ontario, traced directly to deregulation of the water system, helped bring an end to then premier Harris’s “common sense revolution.” And of course, climate change and nature loss are the most threatening examples of regulatory failure.
All this to say we have organized ourselves in a way that makes crises more frequent and intense and has undermined the tools we need to make things better.
Government has come to be viewed as the problem. Disdain for government now comes not just from those who have been ill-treated or who got the short end—that is to be expected—but from our political leaders themselves. Governments, we are told, should not interfere in the market.
Decades of neoliberalism—of favouring private power over public power and, for that matter, private debt over public debt—have left us with bargain-basement citizenship: government asks less of us, and we ask less of government. There is no society, we were told. Don’t look to government for help or to society for excuses. Look after yourself and your family. Not surprisingly, research has revealed an epidemic of loneliness, as many feel on their own to manage all the change that’s coming at them. If strength is not to be found through common citizenship, many turn to the people they know and like, often people “like them.” The trust and solidarity necessary to act together across our differences are weakened. If the future is not ours to shape, democracy itself is diminished.
The answer for Canada is in rebuilding our collective toolkit and rediscovering our collective power.
So, given all that, am I optimistic, and if so, how is that even possible? I find comfort in Antonio Gramsci’s formulation “pessimism of the intellect, optimism of the will.” I am optimistic, in other words, because I have so decided. Pessimism or cynicism sucks out all the energy for making things better. Despair is not an option. Gramsci, writing in Italy in the 1920s and 1930s as fascism was on the rise, cautioned that we must not underestimate the hurdles nor assume that better is assured—only that better is possible and we must fight for it. In these in-between times things could flip either way.
Most of us know the future we’d prefer—living in harmony with one another and the natural world, with security for ourselves and our kids, access to health, learning and the arts, affordable housing, decent work, a balanced life, a secure retirement, liveable communities, peace. Polls bear this out. What’s missing is the belief that we can do big things together, that we are in fact in this together.
Despite this, I do believe there are grounds for optimism of the Gramsci sort. While it’s true that Donald Trump’s Republicans won the White House and Congress, barely, Americans also consistently voted for progressive measures such as higher minimum wages, paid sick days, reproductive rights—when given the choice. Polls show that Canadians are ahead of their politicians in readiness to tax the rich and rein in corporate power. According to a recent Abacus survey, over 70 per cent of Canadians believe the rich and corporations are not paying their fair share.
Big change usually starts outside of conventional politics and political parties—in civil society. Despite everything, many people are fighting to make things better and sometimes winning. #MeToo, Black Lives Matter, Pride. Four Indigenous women decided to fight against a bad bill that undermined Indigenous rights. They lost that battle, but their efforts became a movement, Idle No More, whose impact continues to ripple. It’s been a very tough time for environmental causes, but we might take heart from the recent victory of a coalition of activists in stopping the mayor and council of Vancouver from implementing their plan to reintroduce fossil fuel heating in new homes and buildings, which had been banned since 2022. It was only through the tireless efforts of childcare advocates over decades that we are finally getting a universal $10/day childcare program. Disability activists made important if modest progress with the recent announcement by the federal government of a new disability benefit for working-age adults. Unions are making something of a comeback, bringing in some of the hardest to organize service workers. Recently 20 unions got a taste of collective power when they joined together to stop the Ontario government from thwarting a teachers’ strike.
If the many out there fighting—for decent work, for peace and against racism and hate and poverty, for human and civil rights, for electoral reform, for basic income, for climate action—can overcome the learned neoliberal competitive bias and distrust, to see that they are stronger together, who knows what big things could be achieved? Harvard political scientist Erica Chenoweth examined hundreds of protests and civil actions globally, trying to understand what it takes to move the yardsticks, and what she found, to her surprise, was that if just 3.5 per cent of a population join together to fight—peacefully—for progressive change, they almost invariably succeed.
Previous generations built things. They gave us medicare, pensions, welfare, employment insurance, universal education, public infrastructure. They passed along a world better than they inherited. We have not taken good care of what they built. What will we build?
In the face of Donald Trump’s threats and tariffs, some are urging us to do whatever it takes to appease him, and many business leaders are calling for more of the same: even lower taxes, fewer regulations, no more climate action—peak neoliberalism. Some are pushing for greater integration even as Trump has made inescapable the dangers of our US dependence. The answer for Canada is not this; it is in rebuilding our collective toolkit and rediscovering our collective power—taking back the future and breaking free of neoliberalism.
Alex Himelfarb is an author and academic. He served three prime ministers as Clerk of the Privy Council, 2002–2006.
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Read more from the archive “The Case for Taxes” January/February 2015.
