If taxes push profits down to five per cent, people won't work more or smarter, they'll work less. The effort that was just worth it to pull in six per cent isn't worth it for only five, so effort will decrease and profits will fall still further. Of course, it takes time for people to adjust their behaviour, but by now in Canada they have, and our sluggish productivity growth and persistent high unemployment are the result. John Manley is thus proved wrong. High taxes aren't the only source of trouble, of course.
Government makes lots of spending mistakes too.
But they too come from failing to understanding how people make choices. It was that failure, not the wind blowing his tongue around, that got John Manley in trouble.