Margaret Wente's "Takedown" of Thomas Piketty

Marget Wente’s purported “takedown” of Thomas Piketty’s Capital in the Twentieth Century ( "Who Cares About Inequality? Wonks") Globe and Mail, May 3, p. F2), while anti-intellectual in tone, reminds me of  the philosophical arguments made against idealist theories of equality decades ago.  Friedrich Hayek railed against what he called the “mirage” of social justice, since  "the results of the individual's efforts are necessarily unpredictable, and the question as to whether the resulting distribution of incomes is just has no meaning" (The Constitution of Liberty, ch.6). Likewise, Robert Nozick pointed out that any attempt to build a just society around a preferred distribution would be intolerable, because   “liberty upsets patterns”. 

 Like Wente, both Hayek and Nozick  thought that inequality was a problem only in some people’s heads. Get rid of the egalitarians and their misplaced notions, and you get rid of the problem. But their arguments don’t address a more recent line of thinking about inequality, which gives it a different ontological status from simply being an expression of envy or of subjective notions about "justice".  Fred Hirsch's Social Limits to Growth (1977) analyzed society's declining ability to simply buy social peace and legitimacy through growth  in terms of the growing importance of inherently scarce positional goods.  Richard Wilkinson and Pickett’s The Spirit Level (2009) was written by two social epidemiologists who found stronger correlations between the degree of inequality and various social ills than existed between those ills and any other social determinant. Their conclusion: "societies with more equal distribution of incomes have better health, fewer social problems such as violence, drug abuse, teenage births, mental illness, obesity, and others, and are more cohesive than ones in which the gap between the rich and poor is greater."  

Robert Frank (The Darwin Economy: Liberty, Competition, and the Common Good , 2011) has found that it is indeed getting harder and harder to join the middle class. His views are supported by the researches and arguments of prominent economists like Tony Atkinson, Joseph Stiglitz, Robert Reich and Paul Krugman.  Now, Thomas Piketty has tied a lot of this together and looked at several national economies over centuries and has demonstrated convincingly that there is an inherent tendency within capitalism for the return from wealth to grow faster than the return from work. This "rich-get-richer" dynamic is the norm in capitalism. America in the 18th and 19th centuries (which because of the abundance of land and higher productivity had much lower capital/income ratios)  and in the early-mid 20th century (because of Depression and war) was an aberration; it is now reaching capital/income ratios more like those that have been found historically in Europe. Piketty expects global capital/income ratios to reach about 6.5 in this century --barring another cataclysm.  That is why he argues for a global wealth tax as the best long-run solution, even if that is not practicable in the short term.

Even in societies where basic living standards and a full panoply of civil and political rights have  been achieved, much depends upon the assumptions of upward mobility  and equal opportunity. This is why Piketty threatens to turn conservative views upside down, because he shows once again that the problem may not be the virus of class consciousness or socialist attitudes coming from Europe, but the actual economic dynamic underpinning them. If that is true, then the baneful consequences of inequality will be felt here as well, whether we like to think about them or not.

 

 

The Federal Government and Healthcare Reform

The future of health care may be the most important issue that Canada faces heading into the 2015 federal election year.  The 2003 First Ministers’ Accord on Health Care Renewal injected $36 billion in federal money into health spending and the 2004 10-Year Plan to Strengthen Health Care added a further $41 billion over that decade in order to, in then-Prime Minister Paul Martin’s words, have a “fix for a generation” that would “buy change”. On March 31 that Accord expired.

Unfortunately, all this  federal spending mostly did was to buy the avoidance of  change for about half a generation. Hardly a “fix”.   And by avoiding hard choices, progressives in the Liberal Party and the NDP have opened the door for Stephen Harper – a man who was once the President of the National Citizens Coalition (an organization founded by an insurance salesman who hated Tommy Douglas for getting in the way of profits)—to do things his way.  The really scary part is that Harper doesn’t have to commit political suicide to undermine medicare. As prime minister, all he has to do is cap funding (with reductions conveniently scheduled to commence after the next election), not enforce the Canada Health Act very vigorously, and let nature take its course.  

But if  throwing more money at the provinces won’t work, what should we do instead?  We need only go to the source: when he first implemented medicare, Tommy Douglas was against the fee-for-services approach as something that blunted the cost effectiveness and equity of the single-payer system. Half a century of experience with our healthcare system (not to mention the analysis of the world’s most reputable health economists and policy analysts) shows that Tommy was right.  We need a federal government that will use its spending power to accelerate  the creation of a strong primary care foundation that is more patient-centred, more focused on prevention and chronic care,  and less focused upon high-cost providers simply billing the government for their services. We need to stop using acute-care hospitals as long-term care facilities.    And we need a national drug strategy so that we can  use the power of the single-payer to lower drug prices.

That drug strategy could have been accomplished by now.  Every business person understands that the larger your bulk order, the greater your chance of lowering the price. Economists estimated in one study that for four major drugs the savings in Canada of a single national drug plan could be as high as 50 percent.  Premiers Lorne Calvert of Saskatchewan,  Ralph Klein of Alberta, and Gordon Campbell of British Columbia all  called for a national pharmacare program. But prime minister Martin was too busy, and  he dithered. As a consequence, the deal was killed in 2006 when we elected the Harper Conservative government.

Senator Frum and Minister Poilievre Have a Strange--and Suspicious--Set of Priorities When it comes to Electoral Reform

Senator Frum seems to think that the route to higher voter participation lies not only outside the offices of Elections Canada, but primarily through the mechanism of restoring "integrity and public confidence" by demanding higher "common sense"  requirements of voter identification, even though there is no evidence that low turnout has in in any way been caused by questionable vouching for students and otherwise marginal voters and its supposed impact upon voter confidence in, or perceptions of,  the integrity of  the electoral process.  She and Minister Poilievre rely heavily on the 42% error rate in vouching, but that error rate is not linked in any significant way to specific cases of voter fraud. 

She also relies explicitly upon pages 23 to 27 of Harry Neufeld's report, which stresses the need to reduce error rates and to move to a new services model -- but in those very pages Neufeld stresses improved training for officials and the need to reduce, not increase, barriers to voting, and then goes on to discuss the New Brunswick model for accomplishing just that.  In his testimony to the Senate Committee, Mr. Neufeld himself  stated that “[i]In its current form, Bill C-23 creates a fundamental imbalance between accessibility and integrity.”

Which raises the questions of why this government persists in its misplaced and unbalanced focus on integrity, which is formulated unnecessarily at the expense of access, and its misplaced focus upon reducing vouching (as opposed to reducing the need for  vouching and registration without discouraging turnout) as a means of achieving integrity.  Why not simply weigh the competing arguments of Mr. Neufeld's report  and the response to it by the Chief Electoral Officer and other experts, and make that the focus of "common sense" reforms?

Nothing in Senator  Frum's comments on CBC radio have satisfactorily answered those questions.

The onus is not upon the critics to show that the government is not being self-interested; the onus is upon the government to demonstrate that it is not being self-interested. One traditional way of doing that is simply by stating that the controversial elements of the Elections Act will only take effect after next year's election.

What War Means

When I worked as a university instructor in Kiev in the academic year of 1994-95, my students were mostly young adults in their late teens or early twenties,  who  were already  bracing themselves for the second great public trauma of their young lives.  The first had come suddenly in the spring of 1986 when as young children many of them had been rounded up with little or no warning and whisked away to the south, preferably to the countryside or to some city on the north coast of the Black Sea such as Sebastopol or Yalta.  Many were fortunate enough  to escape  levels of radiation from the Chernobyl catastrophe that would cause cancer, limit their longevity, or stunt their growth.   Others were not so lucky. 

The second crisis came  not as a result of a sudden accidental explosion, but rather as a surfacing of tensions with deep historical roots—specifically, a structural conflict between the twin forces of Ukrainian and Russian nationalism, exacerbated by divergent economic prospects and regional power struggles. I recall visiting a student’s home in Lviv in western Ukraine during the  Christmas holidays in 1994. She confided to me her family’s worry that her brother might have to be conscripted to fight the Russians in Crimea or in the East, where secessionist sentiments were brewing thanks to a lower-than-Russian average  wage in Ukraine and a raging inflation that was quickly making the Ukrainian currency next-to-worthless in world markets. 

Today’s crisis is a continuation of this ongoing conflict, but one sharpened by several changed conditions on the ground. One is the poisoning of relations between pro-Russian and pro-Western factions in the country’s Parliament (I am not just using the wording “poison” metaphorically—recall the attempted assassination of  the increasingly popular Viktor Yuschenko by dioxin poisoning  in 2004, which left him permanently disfigured, and which helped to precipitate the “Orange  Revolution” later that year).  Since then, the question of how best to balance the need for good relations with Ukraine’s major creditor and supplier of energy, Russia, with the growing desire for gaining membership in the European Union became increasingly difficult: the attempted impeachment of  Victor Yanukovych (and the release of his opponent from prison) show that like other fledgling democracies, Ukraine has not yet learned how to share power.

Meanwhile, another one of my students from 20 years ago reports  that “the number of victims of police and snipers in Kyiv is growing every day (people are dying in the hospitals) and is already 100 … My family is OK. I just need to explain to my nearly 6 year old girl why people are flying to the sky forever and what ‘war’ means.”

The Audacity of Audacity

When Stephen Harper writes his memoir, I suggest that he call it The Audacity of Audacity. ( I was originally going to suggest that title  for Christy Clark, but maybe it suits Stephen Harper better. )

The root cause of Conservative audacity and smugness is their knowledge that they need only approximately 38% (plus or minus one or two percent) of the vote to get another majority government. In addition to being indifferent to the views of the progressive majority , they are able to essentially write off the province of Quebec--currently governed by a minority PQ government and a ticking time bomb if there ever was one. Liberals, who benefitted from this system of dis-unity for many decades , should have known that one day the shoe would be on the other foot. That day has come, with deleterious, if not perilous, consequences.

When Lac Megantic followed deliberate deregulation of the railways and a quadrupling of oil being transported thereupon, Harper blamed MM&A Railway for a predictable disaster. When he appointed two high-powered media celebs to the Senate, they were expected to do aggressive campaigning and fund-raising in addition to their regular duties; he expressed anger at their expense accounts. When he appointed Gerry Schwartz's right hand man from the Onex Corporation to head his PMO, to bring his private sector-style "fixing" skills to the public sector , he expressed bewilderment and betrayal when the Boy Wonder actual used those skills. Now, when the Chief Electoral Officer threatens to actually do something about illicit Robocalls in 246 (mostly Conservative) ridings, and to do something to promote higher voter turnout, the Government accuses "the referee of wearing a team jersey" and rolls back his powers. Clearly, there is a pattern here:  Harper keeps creating the conditions that are more conducive to bad things happening, and when those bad things happen, Harper keeps shaking his head and expressing disappointment at how  Mike Duffy, Pamela Wallin, Patrick Brazeau, the Chief Electoral Officer, the private railway companies, keep letting him down.  But here is the critical point: the prime minister may have just created the conditions for these failures, but creating conditions is what governments do.  It is therefore perfectly reasonable to hold the prime minister responsible for the conditions he creates.

Polls show a clear majority of Canadians dislike the selfish waste of money and unprecedentedly partisan nature of the "Economic Action Plan" propaganda. Even the Calgary Sun--arguably the most pro-Conservative newspaper in the country--has pleaded with them to stop. No dice. Why? Because they don't care what the majority thinks--they don't need that majority to form a  government, they only need that majority  to continue to split its vote between three opposition parties. It's the Conservative plurality in a majority of ridings that the Conservatives care about, and very deeply at that.

Where does all this audacity come from? A devilishly simple place: the pure and simple knowledge that it only takes 37%-38% of the vote to get a parliamentary majority in this country, as long as the opposition vote is split, turnout is relatively low, and the Chief Electoral Officer is suitably muzzled. Here's why: this government deserves to be hated by the majority of Canadians, and the strange ironic truth is that it is.  But the government doesn't care, because it  knows that everything about the system as it is currently configured works in their favour anyways.

There you have it: Democracy, Conservative-style.

Three New Thoughts du Jour

Thoughts du jour:

1) Provincial Parti Quebecois and federal Conservatives seem to both be cruising toward majority governments. Harper makes the perfect foil for Quebec separatists, given his low popularity in that province. He contributes to their "winning conditions".

2) "It is essential to understand that the main challenge for our electoral democracy is not voter fraud  but voter participation" --Marc Mayrand, Chief Electoral Officer of Canada.

3) If Russia successfully annexes Crimea and succeeds in violating international law and international treaties, three groups of actors will be encouraged and emboldened:

 First, China and Russia and some American conservatives will be encouraged to continue their traditional  "spheres of influence" thinking.

Second, Iran, North Korea and all rogue regimes will be encouraged to obtain and keep nuclear weapons, and not to foolishly surrender them as Ukraine did under the terms of the 1994 Budapest Treaty, to which Russia was a signatory.

Third, both prospective separatists in Quebec and actual occupiers in Israel will be encouraged by the trumping of international law by "facts on the ground".

B.C. Needs a More Centrist NDP

“B.C. doesn’t need two Liberal parties.” With those words,  B.C. NDP leader Adrian Dix  made the announcement last September 23 that he was going to hold the reins of the party leadership until a leadership vote could be taken “by mid-2014 at the latest.” This was in stark contrast to the calls by Ian Waddell, Bill Tieleman, Michael Byers and others for a much longer and more wide–open contest that would  stimulate party renewal and give every competent candidate a fair shot.   Dix’s initial insistence on a shorter time frame, with himself in control in the meantime, along with a thinly veiled swipe at the more centrist and business friendly candidates (Gregor Robertson?) invited some observers –myself included—to speculate that Dix  was perhaps allowing his own biases to influence the process too much. It was difficult to resist such speculation as long as his longtime friend and colleague John Horgan was the frontrunner to replace him.           

I am happy to report that the situation has changed somewhat. Last month the date for the leadership vote was set for September, which will mean that nearly a full year will have been allowed for the leadership race  to unfold.  Mr. Horgan decided not to run, saying more fresh blood was needed (evidently not an endorsement of Mike Farnworth). Mr. Dix still points to members of his caucus as the best people to replace him, but to be fair,  several are strong candidates and they do represent  a fairly wide range of backgrounds and viewpoints. The new schedule  is still awkward for the federal MPs (who must choose whether to fight the 2015 election) and the mayors of Vancouver and Victoria( who need to complete their terms of office) but is more reasonable than it first appeared.  It also gives us more time to reflect on Dix’s comment that “B.C. doesn’t need two Liberal parties.”

The statement assumes, first of all, that the B.C. Liberal Party is a liberal party.  Is it a liberal party in the same sense that Gordon Gibson and David Anderson used to imply that it was—a distinctly centrist alternative to either the NDP on the left or the Socreds/Conservatives on the right? Remember that until the early 1990s Gordon Campbell was clearly grooming himself to be a future Social Credit premier. With the sudden collapse of  Social Credit in the 1991 election, Campbell turned his attention to a takeover of the Liberal Party, openly saying that labels didn’t matter very much, openly speaking of Bill Bennett as one of his role models. He succeeded in taking over the party in 1993, bringing many former Socred supporters on board with him. Swingeing 20% across-the-board tax cuts, and attempts to shift revenue from progressive taxation onto carbon and sales taxes, were hallmarks of his time in office, even if he did change direction on environmental and First Nations policies when he needed to. The current premier ran the last provincial election with none other than Brad Bennett at her side as  a special advisor, running a classic Socred-style campaign that preyed on the economic fears of marginal voters. When she lost her seat in Point Grey, she was welcomed with open arms  by the Bennetts in their traditional Social Credit  Kelowna stronghold. She hopes Liquid Natural Gas will help her to avoid difficult decisions, and help to obscure her bad ones, while trying to frighten voters away from " the socialists". Is that what a Liberal is?

In two –party systems everywhere, both parties compete for the centre vote; those that do so from the left typically have a distinctly different set of priorities and base of support from those that do so from the right. For the NDP to  concede the centre  to the Liberals is to consign itself to Opposition most of the time, and to rely only on split votes and occasional government collapse in order to win by default.  And with the decline of the blue collar constituency as a proportion of the electorate, New Democrats cannot assume that history is on their side, as they often did in the mid-twentieth century. In this century, at least, it is in the interest of both the NDP and the public as a whole that it strive to represent a true majority of the electorate.  That means bridging urban and rural, business and labour, green as well “development” oriented voters —better than the Liberals have.  If that means "moving to the centre,"  then so be it--especially if  B.C. 's so-called Liberal Party continues to leave the NDP so much room to manoeuvre in the middle of the political spectrum.