Point of View 2-Book Bundle. Douglas L. Bland

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СКАЧАТЬ This time-honoured principle remains, at least in theory, to the present day. The government must submit its spending estimates to the democratically elected Parliament. The government can only spend money once Parliament has approved and authorized it.

      But in the last half-century, Parliament’s ability to hold government to account has declined significantly. At the same time, Parliament’s ability to control the public purse strings has been increasingly compromised, and now is almost completely neutered. The result of this increasingly weakened parliamentary oversight of federal public spending has been a runaway train of spending and dangerously accelerating public debt.

      In 1970, the federal public debt was $15.3 billion. By 1980, it had grown to $61.6 billion. By 1990, it had exploded to $336 billion. In 2000, it had grown at a somewhat decelerated rate to $550 billion. It actually fell to $477 billion by 2010; but recent out-of-control spending has caused the federal public debt to grow to $526 billion in 2011, $558 billion in 2012, $587 billion in 2013, and $616 billion by the beginning of 2014.[5]

      From $15 billion to over $600 billion in forty-three years, with over $125 billion of that additional debt added under the watch of the current Conservative government.

      According to the Fraser Institute, “The bottom line is that the Conservative government is simply not budgeting in a conservative manner. Not only is it failing to conservatively forecast GDP growth and revenues, or [put] … forth realistic spending projections, it is not dealing with the root cause of the deficit: excessive increases in spending.”[6]

      With the entire Canadian public debt, including that of the provinces, in excess of $1.2 trillion, many economists have warned all Canadian governments to stop searching for additional revenue sources and spend more time and energy finding ways to curtail and reduce their own profligate spending habits.

      Several interrelated occurrences allowed Canada to increase its public debt by a factor of four hundred in less than fifty years. The first was Canadian society’s transformation from a post–Second World War industrial state to a welfare state and eventually to an entitlement state. Changing and increasing public demands encouraged governments’ attempts to do more and more. Social-engineering bureaucrats were only too eager to design programs to improve the human condition and to attempt to satisfy a growing population’s insatiable demand for programs and services that somebody other than they would pay for.

      The second factor, occurring at almost exactly the same time, was a slow destruction of government’s tools for ensuring financial accountability. Sequentially, our system of public financial checks and balances was eroding. The second trend allowed the first trend to progress unabated. Government could spend money, confident that there existed inadequate (and, eventually, virtually non-existent) effective oversight. Parliament’s eight-hundred-year-old role in authorizing expenditures of the Crown and controlling the public purse strings was effectively coming to an end.

      The consequence would be a federal state, with combined federal, provincial, and territorial debt of $1.2 trillion.

      1. The Entitlement State

      In the last half-century, Canada has transformed itself from a welfare state to an entitlement state. Mark Milke of the Fraser Institute defines an entitlement state as one “where everyone feels they are entitled to a handout or a guaranteed income or a perfect life courtesy of other people.”[7]

      In 1962, in my home province of Saskatchewan, doctors went on strike and picketed outside of the Saskatchewan Legislature to protest against socialized medicare. A half-century later, almost any cut to any social program or even perceived inadequacy in the provision of that program (such as protracted surgical wait times) would result in public outcry and probable protest by the group or special interest affected. Our collective attitudes toward the role of the state in our lives have certainly seen gargantuan shifts during my lifetime.

      Those changes continue today. The welfare state policies of the 1960s and 1970s, such as medicare, old age security (OAS), and Unemployment Insurance (now called Employment Insurance) have been joined by more-recent entitlement programs. Welfare-state programs were designed to provide necessary services and programs to those who were truly disadvantaged or were imperilled through no fault of their own. Entitlement programs, however, seek to improve the human condition irrespective of the group lobbying for the project’s situation, financial or otherwise. Museums, art galleries, opera houses, and arenas to house professional hockey teams, cater disproportionately to the most, not the least, fortunate members of society.

      Moreover, there appears to be a real disconnect between government and the taxpayers it is pretending to represent. Fiscal conservatives understand intuitively that government does not create wealth and has no money or resources except for that which it taxes from its citizens and corporations. Fiscal spendthrifts believe, erroneously, that government can magically create resources of its own, and therefore can spend its fairy dust generously on all projects and programs without consequence. Most Canadians would likely fall into this latter category. But government has no fairy dust and does not create wealth; it merely redistributes wealth. It spends only resources taxed out of the private economy. When a government offers to a build an electorally popular project, it is bribing the electorate with its own money. As Margaret Thatcher famously said, “there’s no such thing as an entitlement, unless someone has first met an obligation.”[8]

      This reality would be sustainable if government spending grew only in proportion to the growth in the economy. Both income and corporate taxes increase as GDP increases, and if government spending grew in sync with economic growth, there would be no public debt. But it is when the former grows unchecked, without sufficient regard for growth in the latter, that we find ourselves with over $600 billion of federal government debt.

      The predominant economic theory of the 1960s and 1970s was that of John Maynard Keynes. According to Keynesian theory, society can borrow its way into prosperity. More precisely, during times of recession or minimal economic growth, governments can stimulate demand by borrowing, thereby creating economic growth. That may or may not be true economically; regardless, it is imperative that if borrowing occurs during recessed times that the monies be repaid during prosperous times.

      However, reckless politicians, supported by special-interest groups, began attempting too much, and once a program was provided, it became politically difficult, if not impossible, to take it away. Moreover, convinced that the good economic times were here to stay, the same reckless decision-makers reneged on the obligation to repay debt when the economy was strong, preferring to delude themselves into believing that good economic times meant they could spend even more recklessly, frequently doing so “like drunken sailors.”

      The provinces, municipalities, public-sector unions, and eventually even private business lobbied government to share the wealth during good times and stimulate demand in bad.

      The result of bad political choices, based on a misunderstanding of economics, was decades of expensive and inefficient multi-level funding arrangements; a growing public sector, with pay, benefits, and pensions in excess of the private sector workers paying them; and, most troubling, industrial subsidies and corporate bailouts that took taxes from functioning parts of the economy to subsidize non-functioning sectors.

      Industrial subsidies and corporate bailouts are perhaps the most troubling contributor to public debt. The public interest in supporting private enterprise is dubious, and there is growing economic data to show that subsidies and corporate welfare create neither economic growth nor stimulate jobs.[9] As the dollars used were originally taxed from sectors of the economy not requiring subsidy, the effect of industrial subsidy is to remove wealth from the functioning economy to prop up the parts working not quite so well.

      Regardless, Industry Canada has disbursed $22.1 billion over the last half-century.[10] Again, $22.1 billion have been transferred СКАЧАТЬ