On March 11 I was the keynote speaker at the Institute of Marriage and Family Canada√Ę‚ā¨‚ĄĘs conference on family policy. I spoke about what we know today about the relationship between the health of the institution of the family and the transmission between the generations of values essential to democracy, freedom and the rule of law. Below is the text of that speech.
I was recently invited by the Federal-Provincial Relations Division of Finance Canada to participate in a panel discussion in Ottawa on the future of federal transfers to the provinces. Here is the text of my remarks.
In this week’s Maclean’s magazine Paul Wells spends a lot of time discussing Fearful Symmetry and the social policy changes it portends:
“For next steps, many conservatives are turning to Fearful Symmetry: The Fall and Rise of Canada√Ę‚ā¨‚ĄĘs Founding Values, a new book by Brian Lee Crowley, an economist and founder of the new Macdonald √Ę‚ā¨‚Äú Laurier Institute.
Crowley does not regard himself as a social conservative. But many who do see themselves that way like what he√Ę‚ā¨‚ĄĘs saying. To caricature a complex argument, Crowley says the modern welfare state has overextended itself, is unsustainable, and causes more harm than good to institutions like the family. These trends will only get worse when an aging population sharply increases the cost of delivering most social programs. One size can no longer fit all. Social services will have to be narrowly aimed at those who need them most, and delivered only as long as recipients are willing to improve their behaviour by attending to their family, keeping or seeking a job, and so on.
Government is no good at any of that and, in the opinion of most, shouldn√Ę‚ā¨‚ĄĘt try. √Ę‚ā¨ŇďIt is precisely for this reason, in my view, that we have seen in both the United States and the United Kingdom a growing use of the private sector, including the not-for-profit and so-called faith-based charities, for the delivery of social services,√Ę‚ā¨¬Ě Crowley writes. √Ę‚ā¨ŇďSuch private agencies may be more demanding of their clientele and expect more in the way of improvements in behaviour.√Ę‚ā¨¬Ě
Crowley√Ę‚ā¨‚ĄĘs book was published last autumn. It seems to have been barely one step ahead of the news. This month√Ę‚ā¨‚ĄĘs Throne Speech contained a single line saying the government √Ę‚ā¨Ňďwill look to innovative charities and forward-thinking private-sector companies to partner on new approaches to many social challenges.√Ę‚ā¨¬Ě Such charities and companies were much in evidence at the Manning Centre conference. The changes Crowley anticipates are expected and embraced by social conservatives.
Meanwhile, the federal Liberals are still defending policies from five years ago, policies Harper has taken pains to ensure future federal governments won√Ę‚ā¨‚ĄĘt be able to afford, with his GST cuts and his massive cash transfers to the provinces. If the Liberals cannot begin to make a case for a return to larger, more activist √Ę‚ā¨‚ÄĚ and more expensive √Ę‚ā¨‚ÄĚ state-run social welfare, then Stephen Harper√Ę‚ā¨‚ĄĘs social conservative revolution will only accelerate.
Thanks to Jack Mintz of the University of Calgary School of Public Policy I have been invited to be on a panel at a major national conference on the theme of The Future of Canada√Ę‚ā¨‚ĄĘs Retirement Income System to be held in Calgary on April 12th and 13th.
My panel will be called What are the problems with the existing system? The main speaker will be Larry Kotlikoff (Boston University), and I will be joined as commentator by Joanne√ā¬† DeLaurantiis (Investment Funds Institute of Canada). Here is how the conference programme describes the panel’s focus:
The research undertaken for the federal-provincial-territorial Ministers of Finance found that the retirement income system does well in support low income Canadians but there is a minority of middle class who may not have adequate retirement income. √ā¬†What are the reasons for possible underfunding of retirement income for this group and how significant is the issue?
On March 11 I was the keynote speaker at the Institute of Marriage and Family Canada’s conference on family policy. I spoke about what we know today about the relationship between the health of the institution of the family and the transmission between the generations of values essential to democracy, freedom and the rule of law. Below are some√ā¬† audio clips from my talk.
In all the blather surrounding Red Ed Clark’s call for higher taxes, and the federal Tories response, most of the attention has been focused on either the issue of whether wealthy bankers should be volunteering other people to pay higher taxes OR whether the PM should be criticising private citizens for voicing their opinions about such matters.
Interesting as those questions are, they are not the most important matter. What really matters is whether raising taxes is the right way to fix the deficit. On this, history and human nature respond with a resounding “No”.
History first: the last time we wrestled successfully with the deficit, under Paul Martin’s stewardship at Finance, we did so chiefly by reducing the size of government. The most startling measure of our success: We went from spending a historic high of 53% of GDP on government in 1993 to roughly 40% in 2008, an unprecedented decline in our history. We were able to do so, by the way, while increasing spending on programmes AND cutting taxes because our fiscal discipline allowed us to stop spending so much on interest on our debt. And we ushered in an era of strong economic growth: we outperformed all the other G7 nations for over a decade after Paul Martin tabled the first balanced budget in the late nineties.
Remember that all other attempts to deal with the budget, including the gig tax reform that led to the creation of the GST, did not bring the budget into balance. It was *only* when we got our *spending* under control that that happened.
And that brings us to the human nature side of the equation. The fact of the matter is that politicians are human beings and subject to many pressures and incentives. When a dollar gets in their hands, it does not come with an endorsement saying “May only be used to reduce the deficit”. Instead it becomes the prize in a tug of war between various interests all wanting to get something out of government. Many and perhaps most politicians regard a dollar in the consolidated revenue fund as a reason to spend that dollar on their favourite programme.
That may be one reason why a recent poll in the US shows Americans deeply sceptical about using tax increases to bring their own public finances into balance. They told Rasmussen pollsters by a margin of 58% that politicians “are more likely to spend the money on new government programs.”
The reality is that if we want to balance the budget, the strategy that has proven itself without a doubt is to control spending. Raising taxes too often just gives politicians comfort that they can continue in the bad old habits. And it is those habits that have to be broken.
This is the first in a wonderful series of articles in The Australian by Noel Pearson, an Australian Aborigine and the Director of the Cape York Institute for Policy and Leadership. Mr Pearson is clearly part of a world-wide awakening among young Aboriginal leaders questioning whether the social service state can really solve the problems of Aboriginal peoples, as opposed to Aboriginal people rising up and taking their own fate in their hands. Every word in this series applies with equal justice to the deplorable plight of Aboriginals in Canada. As Mr Pearson writes:
What my opponents and sceptics from the Left have failed to understand is that when we talk about disempowerment being the singular and devastating feature of Aboriginal Australia, we mean that our people have had their responsibilities taken away from us. Responsibility is power. If we want our people to be empowered, then we need to take back the responsibilities that the welfare state has stripped away from us.”
Noel Pearson’s original article generated a plethora of mostly predictable commentary of the type “Non-Aboriginal Australians would love to have the kind of all encompassing tax-financed welfare services that Aboriginals enjoy.” Pearson’s rebuttal, also in The Australian a few days later, is a joy to read:…
There is no freedom of private choice and action when governments have assumed responsibilities that are normally undertaken by responsible parents and individuals. That government intervention has crowded out the responsibilities of individuals, families and communities is my point.
It is a misinterpretation of history to say that service provisioning followed a lack of responsibility. Aboriginal people never chose welfare as the basis of their inclusion in the country’s citizenship. They wanted equal wages, not welfare. They wanted a hand-up, not a handout. They wanted freedom from discrimination and racism.
But the welfare state regarded Aboriginal people as helpless and hopeless. It has never had any expectations of Aboriginal people. Or disadvantaged people generally. That is why it has stepped into their lives to such an extraordinary degree.
On of my greatest bugbears is the abuse of language, for as the Chinese remind us, when words cease to carry clear and definite meaning, we cannot talk successfully to one another and what needs to be done remains undone.
High on my list of “linguistic abominations to be resisted” is the intellectually lazy language of politicians who are always promising to “invest” in their favourite spending programme. Elect me, they intone, and I will “invest” in (pick any of) health care or pensions, or EI, or welfare, or civil service salaries or innovation (whatever that is, other than doing new things…).
What’s wrong with this language? Investment actually means something quite precise. Here, from a recent issue of The Economist, is a classic definition of what’s at stake:
The goal of economic policy should be to maximise households√Ę‚ā¨‚ĄĘ well-being and hence their consumption√Ę‚ā¨‚ÄĚbut over time, not just today. Consuming too much today will make the next generation poorer. By investing (and saving), a country sacrifices current consumption but future output and consumption will be higher. The optimal level of investment is the rate that generates the highest sustainable level of consumption over time.
So there is an important distinction between consumption and investment. When you consume something, as its name implies, you use it up√ā¬† –it is gone. Consumption is the ultimate end or the objective of all economic activity — we work hard so that we can consume food and clothes and cars and clean air and all the other good things that we want. But to be able to consume successfully *over time*, to be able to enjoy a rising standard of living over the years, we can’t simply use up everything we make today. We have to set aside some portion of what we make today and invest it in long-lived tools that allow us to consume more in future. If we consumed everything we made today, we would enjoy nicer clothes and richer food and more theatre tickets, but because we didn’t save anything to preserve our standard of living over time, soon we’d not be able to afford a car, and we’d have to give up the house and move into an apartment, renting the space we lived in but not building up any equity in it. Our standard of living would decline….
Government is no different. When it takes our tax dollars and spends them on things used up today, such as civil servants’ salaries or social welfare payments or grants to business, they are not investing. They are consuming. There is nothing wrong with consumption, but if we overconsume today and underinvest for tomorrow, the long term consequence is a declining standard of living.
A classic example is infrastructure. For example many of our cities are limping along with infrastructure such as sewers and water mains that are very old — well past their useful life. We have been consuming the investments of our ancestors, but not saving up to replace them — a classic case of enjoying a higher standard of living today at the expense of tomorrow. Underinvesting (because we’re having too good a time consuming today) is very bit as morally reprehensible as long-term deficit financing of public spending, because in both cases we are making our children pay the costs of our decisions. And we’ll only fix that if we challenge politicians about the abuse of language involved whenever they turn consumption today into “investments”. It ain’t so…
A hilarious video in which two rappers represent F. A. Hayek and John Maynard Keynes! as they argue about the right role for government in dealing with the boom and bust cycle and economic management more generally. Those of you who know me will be aware that I did my Ph.D. on Hayek’s social and political thought and I also did a two part series about Hayek for CBC Radio’s Ideas programme√ā¬† that included a lot of material about the great rivalry that pitted Hayek against Keynes in the middle of the last century, when they were the two greatest living economists. If you’d like to hear part of those Ideas programs on the Hayek/Keynes bust-up, an audio extract is available on my media page.√ā¬† Thanks to Brian Ferguson of Guelph U for bringing this video to my attention!
Fearful Symmetry in the Halifax Herald
This review first appeared in the Halifax Herald on January 3. It is no longer available online so I’m reproducing it here.
Socialist policies will be history, Crowley predicts
By JEFFREY SIMPSON
BRIAN Lee Crowley predicts that Canada is on the cusp of a profound economic and cultural change that will take the country back to its ideological roots, even if they are unfamiliar to many citizens.
Crowley, the well-known conservative thinker who founded the Atlantic Institute for Market Studies, makes a compelling argument in his recently published book, Fearful Symmetry: The Fall and Rise of Canada√Ę‚ā¨‚ĄĘs Founding Values, that the last five decades spent as a nation with socialist leanings has been merely an aberration. Read more