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Sunday, October 04, 2009

Traditionally Canadian

Fearful Symmetry

Review

Fearful Symmetry: The Fall and Rise of Canada's Founding Values, Brian Lee Crowley, Key Porter Books, $34.95

IF there is such a things as a Canadian conservative establishment, it has turned out to endorse this book. The back and inside cover includes positive blurbs by Michael Bliss, Barbara Kay, Margaret Wente, Tom Flanagan, Janet Ajzenstat, Rudyard Griffiths, William Gairdner and an introduction by no less a figure than Andrew Coyne. Even Lord Black, currently in less than hospitable circumstances, sends his praise. Theodore Dalrymple, the pen name for the brilliant doctor-writer Anthony Daniels, also sings well of the book. It is support and praise that is well deserved. Its 359 pages are laden with heresies that the choir invisible of right - but not Right - thinking opinion in Canada has long denounced. The book, however, is not original in its arguments. They have been made before, many times and in many different places. The value of this book is having drawn together a list of symptoms, provided a diagnoses and arguing, surprisingly, that the immune system of the Canadian body politic can heal itself. 

Crowley, a founder and long-time head of the Atlantic Institute for Market Studies, has spent decades preaching the free market gospel in some of the most inhospitable climes in North America for such a message. The theme of the book is tradition, Canadian tradition. A mental framework that dominated the first century of Canada's existence as a federal state. Thrift, family, economic individualism and small and limited governments were the hallmarks of Canada then. A confluence of two powerful forces, the first the entrance of the baby boomers into the workforce, and second the emergence of Quebec nationalism in the wake of the Quiet Revolution, provoked a dramatic - and detrimental change in public policy and cultural attitudes. Crowley does not dismiss the importance of ideas in the shift to bigger and more intrusive government. He notes that Canada's from its traditional approach was more dramatic than other nations with a similar history, notably the United States and Australia. Broad intellectual trends set the stage, but it was specific Canadian factors that gave us our current Canadian sized government.

Crowley begins with demography; the baby boom. A jump in the birth rate in the fifteen or so years after the end of the Second World War. This major blip in the demographic charts was more intense in Canada than elsewhere in the developed world. Placing unique pressures on Canadian public policy makers:

A different way of thinking about what has happened is that over the last fifty years the number of workers in Canada grew more, proportionally speaking, than any other major industrialized country. From 1956 to 2006 our workforce grew by 200 percent, and the growth in the number of young people of working age in Quebec led the pack in the early days. Even America, our nearest rival, was well behind us, growing by a relatively restrained 120 per cent or so. By contrast over the next fifty years, it is our workforce that will grow by a paltry 11 percent - better than many of our European counterparts, who will see shrinkage in absolute terms - but well behind America, where the number of workers will grow by nearly a third. pg. 24 

This labour glut frightened politicians and civil servants, at both senior levels of government, and drove them to find ways of "mopping" up the surplus. The alternative, to the Canadian elite that had grown up during the Depression, was social unrest or a even a collapse of the federation. Though Crowley does not note this, such a bleak prediction of "labour gluts" was unfounded. Only in the short-term (while the market adjusts) are there shortages or surpluses of labour in a free market i.e. a market without minimum wages, benefit taxes and unemployment insurance. An expansion of the labour force, particular one that takes place over several decades, gives the market more than enough time to adapt. In the short-term this can mean a drop in wages, in the long-term this is not necessarily so. 

An increase in the quantity of labour makes capital relatively scarce, consequently increasing returns to capital. This stimulates capital formation. The living standards of a nation directly depend on the productivity of its workers. Contrary to popular misconception, productivity does not necessarily mean working longer hours. Only so much additional output can be obtained by increasing hours worked. It is the ratio of capital to labour that explains the variation in living standards across the globe. Capital in the form of education (skill formation) and physical plant and equipment. Private enterprise would have created jobs for the Boomers, had it been allowed to do so. The panicked response of Canadian policy makers, in mopping up the labour "glut," was thus unfounded. Viewing the market as inherently unstable, policy makers attempted to solve a problem that didn't exist.

Crowley goes on to detail the efforts of Canadian governments to mop up the alleged baby boom labour glut. The state's two main policy tools were Unemployment Insurance (rebranded Employment Insurance by the Chretien government) and a massive expansion in the size of the civil service, and wider public service. 

The minister responsible, Bryce Mackasey, and his colleagues in Pierre Trudeau's first government, liberalized unemployment insurance in 1971, overnight creating the "UIC ski team," as it was affectionately known, a brilliant short-hand for a system that essentially paid people an income for most for most of the year in exchange for a token work effort - in fact, a very thinly disguised form of workfare. pg. 26

Economists have blamed this liberalization for Canada's higher structural unemployment over the last forty years. UI, over time, also acquired regional variations, being especially generous to underdeveloped parts of Canada. In tandem with liberalized UI, straight welfare was also expanded. Combined they produced a gigantic welfare trap. The end result can be seen in Margaret Wente's notorious, though accurate, description of Newfoundland as "the most vast and scenic welfare ghetto in the world." To finance this generosity the federal government expanded equalization, the transfer of wealth between the richer and poorer regions of Canada. Until the mid-1970s there were only two "have" provinces, Ontario and British Columbia. The main weight of equalization, however, fell upon the Dominion's largest, richest and most industrialized province, Ontario. When the province's premier in the 1960s, the charismatic John P. Robarts, was questioned about the burdens of equalization, he justified it thusly: Ontario was in effect exporting purchasing power to the other regions of Canada. 

They in turn would buy Ontario made products and services. It was a logic that worked, so far as it could work, as long as Canada did not have a free trade agreement with the United States. Behind the tariff wall erected by the Macdonald government, and in essence maintained until 1988, a policy of equalization made both political and economic sense. Consumers in western and Atlantic purchased over priced goods made in Ontario, Ontario in turn redistributed some of these profits back through equalization. The whole process was a tremendous waste of resources, though it had many beneficiaries in big business and big government. Its most damaging impact, an example of the old maxim that controls breed further controls, was in creating a political environment where politicians and bureaucrats could plan and spend with little impunity. Under the guise of equalization, practically any new program could be justified and financed.

Into this statist soup entered Quebec nationalism. The Quiet Revolution displaced the Catholic Church as the historic guardian of French-Canadian language and culture. The energies which once filled the seminaries of the province, directed themselves toward the state. The provincial bureaucracy expanded at a tremendous pace to absorb the new baby boomer graduate class, larger in Quebec than elsewhere in Canada. Quebec Inc., a nexus of crown corporations and private companies linked to the provincial government emerged. As Crowley notes, to his great dismay, Quebec opted out of the Canada Pension Plan scheme in the mid-1960s, specifically to create a Quebec managed pool of capital. Under the guidance of the Quebec government, the retirement savings of the province was used to financed private and public economic schemes, with the to be expected suboptimal outcomes. "Pseudo-work" in the public sector was matched with union supported feather bedding in the private. 

The end product of this enormous expansion in the scale and scope of government was a debilitating impact on the traditional Canadian work ethic. We drifted close to the edge of becoming a taking society, rather than a making one, in Crowley's words. This was particularly acute in Quebec. Using the threat of independence as a rationale, a "bidding war" emerged between Ottawa and Quebec City for the loyalty of the Francophones of Quebec. Since the Rest of Canada was footing the bill for this largesse, Quebec went further down the road toward a taking rather than making society. Beyond the obvious financial cost - decades of deficit spending - the emergence of post-1960s big government began to undermine the family. A high tax burden, and the instability of modern marriages, pushed women to delay child bearing latter in their fertile years, in turn lowering the national fertility rate to below replacement level. A generous welfare state changed people's behaviour, turning them away from family in moments of crisis. Ironically, the resultant labour shortage will be the most severe in Quebec. It's relative declining importance in Confederation will mean that the province will no longer be a king-maker. The faster growing provinces, the West in particular, will gain in relative importance.

The contradictions inherent in the system, however, will lead to its own destruction, argues Crowley. Reduced fertility means a critical shortage of workers in the decades ahead. The pseudo work, overly generous EI and feather bedding will need to be dispensed to deal with this shortage. Immigration alone cannot make up the gap that the Canadian labour force will need to sustain our standard of living. Canadians must have more children. This will mean placing a greater emphasis on family. Crowley goes so far as to suggest divorce must be made harder and encouraging stay at home parenting:

Divorce reform [it's liberalization in the 1970s] has, therefore, created the conditions in which the spouse who is least committed to the marriage is the one who holds the keys to the marriage's dissolution, regardless of the financial consequences (i.e. division of assets, spousal support) that may flow from that decision. 

[...]

On the other hand, if I am right that the undependability of marriage is one of the chief reasons that women delay marriage and childbearing so as to establish a career that is indisputably theirs (and therefore not endangered by marriage breakdown) and end up having fewer children than they might otherwise prefer to have, we have not got that balance between adult freedom, marriage and children right. pg. 272

The so-con, the traditional conservative and the libertarian will have much to cheer about this book, though perhaps not always at the same time. What Crowley points to is the interrelatedness of these issues. Big government, family breakdown and the coming fiscal and demographic crisis (brought about by the retirement of the Boomers) are not separate issues, but aspects of the same abandonment of traditional Canadian values. Each constituent faction of the Broad Right in Canada rides its own hobby horse. This book should serve as a reminder of the commonalities that exist, and need to be exploited, if the future of Canada is to look more like its past. Put simply, freedom, and its corollary personal responsibility, is our tradition.

Posted by Richard Anderson on October 4, 2009 | Permalink

Comments

Publius

Does Crowley look into private sector (declining) unionization as a trend that may bode well for changing the structural antipathy of Canadian conservative / libertarian awareness and support? Or does the growth of public sector unionization more than offset that trend? I worked on the BC Coast with many a gun-toting red neck who, sans the union, would be natural Conservatives and some, in fact did support Reform. Their long term job security would have also improved without the union but that is another issue.

Posted by: John Chittick | 2009-10-05 10:54:00 AM


Crowley doesn't deal with unionization in great detail. Pretending to be him for a moment, my counter argument would be that the public sector must shrink in the medium to long-term. Unionization will simply make that process harder.

Posted by: Publius | 2009-10-05 11:13:04 AM


The book sounds interesting and I look forward to reading it.

Publius, other than the lack of will on behalf of governments there is no reason why the public sector cannot shrink even with the existing unions. It can be done through attrition. If implemented, then no employee leaving through retirement or otherwise would be allowed to be replaced. Granted it is not as fast but it works. However to date every time the federal public service was supposed to do this, they managed to increase their numbers due to lack of enforcement by the government ministers.

Posted by: Alain | 2009-10-05 11:52:23 AM


Alain,

And the government ministers refuse to act because they don't want a labour action on their hands. Remember the kind of battles Mike Harris had to engage in?

Posted by: Publius | 2009-10-05 12:33:39 PM


True, Publius, but it is still a lack of will in my opinion. I should have included with the attrition approach that the federal government (all others as well) begin by eliminating all the duplication of services and programs between ministries. If I am not mistaken we still have the highest number of people working for the federal public service in relation to our total population than most other countries. The percentage of people employed by governments at all levels in Canada remains one of the major reasons for our economic situation. It is not a healthy situation. The public service unions will try to undermine it, but "public servants" do not have the sympathy of the general public, and I base this on the public's reaction to strikes by federal public employees in the past.

Posted by: Alain | 2009-10-05 1:25:55 PM


One more thing I should add is that dealing with teachers and health care workers is a different matter, not that it cannot be done. Opening up health care to include private options would be a good start and would reduce the union's hold. The same could be done in education by granting vouchers to all parents with children in school in order for the parents to have a choice and a say. The effect would be gradual and not overnight, but it would be positive and in the right direction.

Posted by: Alain | 2009-10-05 1:45:34 PM



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