National Post (National Edition)
How do you tell a Tory from a Liberal? Ask an economist
Ibelieve I was the first to propose the creation of an Economists Party, a political movement that would advocate for the sorts of policies favoured by people who study economics for a living, based on the principles at its core.
It could not happen, of course, any more than the existing parties are likely to suddenly embrace the teachings of economists they have so cheerfully ignored until now, and for the same reason: because politics is, at its core, the opposite of economics.
The basic principle of economics is that everything is scarce. The basic principle of politics is that nothing is scarce. Economics teaches that more of one thing can only be had at the expense of less of another. Politics teaches that we can have more of both things, and of everything else besides.
Since more of one thing means less of another, economics tells us there is no point in favouring one part of the economy over another: the resources diverted to one firm, industry or region are simply resources denied to all the rest. Whereas politics is all about such transfers: a perpetual merrygo-round of redistribution, not from rich to poor, which is appropriate, but from everybody to everybody, which is impossible.
And if, for some reason, a politician were to resist this impulse, he would shortly find himself out of work. For whereas the benefits of a given intervention are typically concentrated on this or that group, the costs are spread widely; its beneficiaries, accordingly, have every incentive to organize and agitate on its behalf, while those footing the bill — consumers, taxpayers, or both — have comparatively little at stake as individuals. They may not even know who they are.
Thus it is that politics inclines, more or less inevitably, to prefer the narrow interest over the broad; producers over consumers; the present over the future. The only difference between the parties is whether this bias to the expedient is dressed up as a philosophy and celebrated as a positive good, or merely yielded to.
In practice this is only really an issue for the Conservative party. If you genuinely believe that scarcity is a myth — that deficits, far from a vice, are a virtue; that only cruelty and superstition, and not observation and analysis, prevents governments from substituting their own beliefs for how resources should be allocated for those of people with actual skin in the game — then your conscience is clear: muck about all you like.
But Conservatives have occasionally affected some familiarity with economics. For brief periods in the recent past — within living memory, at any rate — Conservatives have professed to believe in such ideas as balanced budgets, free trade and private ownership; to favour a neutral tax system and broad-based tax cuts over narrowly targeted deductions and credits; to understand how price signals are superior to regulatory edicts as spurs to efficient resource use.
So one has to suppose that the current generation of Conservatives, under first Stephen Harper and now Andrew Scheer, feels at least some discomfort at the dog’s breakfast they are asked to endorse as party economic policy.
Where once the party stood for bold, broad tax reform, it now confines itself to a clutch of micro-targeted “boutique” tax credits, such as for children’s fitness or transit passes: spending programs by another name, of precisely the sort of busy-bodying, social-engineering bent that Conservatives used to disdain, and not very effective even at that. Harper could be faulted for taking the party down this road, but Scheer now proposes to revive the same credits even after their abolition by the Liberals.
Or where the party does get around to proposing more broad-based cuts, it does so in a way calculated to produce the least bang for the buck. It was the GST cuts under Harper; it is the cut to the 15 per cent base rate of personal income tax now. As before, the proposal will cost billions, at the expense, not of spending — the party is no longer meaningfully committed to balanced budgets — but of the deeper cuts in the middle and top marginal rates that the same money would have bought: the kind of cuts that would actually do the economy some good.
(Wait, cut taxes at the top? Heresy! But much of the benefit of the Tory cut would go to those higher up the income scale — they pay the 15 per cent rate, too, on the first $47,630 of their income. Only it would take the form of a windfall, rather than an incentive to higher productivity, inasmuch as it would apply to income they had already earned, rather than to income they were thinking of earning — to the next investment, or the next hour worked. Want to help the working poor? Enrich the federal Working Income Tax Benefit, which doesn’t go to rich people.)
The news is a little better when it comes to business subsidies. But even as Scheer was announcing he would cut such “corporate welfare” payments by $1.5 billion annually — a fraction of the total — he was insisting he would preserve those distributed by the sordid pork-barrel rackets known as the regional development agencies. As for supply management, the state-organized price-fixing rings into which much of Canadian agriculture has been organized, we know where Scheer stands on that.
Which rather makes a mockery of his professed concern to make life more “affordable” for ordinary Canadians, as in his mulish opposition to the federal carbon tax — a tax that, unlike the costs of his own, more regulatory-heavy climate change plan, is refunded to consumers. Once, not so long ago, we might have expected the Conservatives to offer a more market-oriented alternative to the Liberals. But now I guess it will have to fall to the Economists Party.