The Separation of Market and State
The impression among some angst-driven Catholic intellectuals in Canada is that the nation is a complete failure in the category of social justice. They often ask, “Why are there so many poor in such a wealthy nation as this?” One of the most important reasons? The cost of government. The market economy provides a foundation for prosperity. The commercial environment in Canada has become more like the ‘Classical’ version: price restraints on exchange and interest rate controls have been eliminated. The climate for business seems good, however, in the most critical dimension, Canada is suffering abysmally from state obesity (as are all nations from the OECD). The government has not just grown fat – Canada’s overall taxes were well over 35 percent of GDP when this article was written in 2005 and climbing (66 percent in 2016) – but much of its own state labor is unproductive, antagonistic and overpaid for its semiskilled work.
In sharp contrast, the private sector – those who carry the weight of the Canadian bureaucracy through taxation – work harder, have less job security, get paid less and are better educated. As the state burgeons, real wages in the private sector decline as does real wealth. As they do, the enemies of open market economies – the armchair socialists – call for ever more income distribution and regulation. This is a reoccuring cycle which has grown a larger and larger polictical class. The minimum wage is a case in point. How could anyone oppose an increase of it no matter how much unemployment it caused? Like universal health care and old age pension, it’s a political French kiss as foreplay to love-making. Those Leftists fill their books with unrecoited disdain of CEOs and industrialists earning salaries thousands of times higher than the minimum rate. Do you think that there is any greater sin to a socialist eaten away with resentment?
Since the mid-50s, a fundamental escalating increase in the growth of governments has occurred. The increase of public outlay as percentage of GDP has in the decades between 1960 and 1990 averaged in all the OECD nations over 20 percent; that percentage has jumped incrementally over the years; after the 2008/9 economic crisis, it skyrocketed.
In 1913, the modern flourishing state was first given a burst of growth with the inception of the Federal Reserve System in the USA by the political enemies of capitalism. From the 1930s to present, fiscal Conservativism has been on the defensive despite the dynamic global swelling of the state. This irrespective of the fact that the scientific evidence sides with The Austrian School of Economics. Most fiscal-conservative economists believe that their historical explanation of the economic events of 1929 to 1955 is superior to the Keynesian socialist one.
From 1990 to 2000, those in the highest 10 percent bracket of income in Canada saw 15 percent increases. The middle income group didn’t grow at all. (In the United States, the gap between rich and poor has neared levels not seen since the Great Depression. From 1980 to 1995, the bottom 40 percent of the population experienced a net loss in household income, while the top five percent gained almost 50 percent). Government expansion was the main cause of this stagnation in the middle-class. Right now, America has the greatest inequality gap than any other OECD nation. As the alarming growth of the state has mushroomed, the top incomes in Canada have increased dramatically. As big business and the state join into a technocracy which I call ‘The New Ancien Régime,’ the middle-class has become diminished.* The top 50 percent of individual Canadians own 90 percent of all the wealth. The other 50 percent? The result of the systemic failure of our big fat government.
At some level of growth, the state simply ossifies and bureaucracy takes on its own agenda. The New Ancien Régime – representing the industrialists, union bosses, politicians and the intelligentsia – doesn’t pay for this government expansion. The working middle-class does.
After six decades of social welfare, massive bureaucratic growth and ardent Canadian-style socialism, corporate Canada is in an intimate and self-satisfactory relationship with the state. They take the profits and skip their share of tax. They’re bareass drunks in the snow after all night at the party. If the government asks for more rent from them, they threaten to leave to sunny Mexico or some warm Caribbean destination with a cheap labor pool. The lobbyists intercede as bagmen. State and business working intricately with the Left and Right produce unionized jobs which provide rich operating revenue for hungry indebted governments.
It’s not about you, it’s about Ottawa, Le Toute Naturelle – pull my finger to find out why it has that nickname – it’s in permanent prorogation of the only single significant issue which justifies its very existence: economic management. However, only one school of thought exists in this country: it comes from The Canadian University of National Mismanagement where every Canadian political scientist has graduated from for the last century. They think the economy is a static event like a catholic mass and that Maynard Keynes is a prophet in the realm of Jesus Christ. They’ve started a learning endowment to help out this great nation of ours. Its motto is: Debt is not just for savings anymore. And they forget to remember that in a rich country like Canada, poverty is often a sign of personal gross mismanagement.
As for the Right and Left, having a relationship with a corporate robber baron is much more profitable than one with the union boss, but either way, the middle class always gets squeezed. Just as the Nazis and Communists in the 1930s understood that their common enemy was democracy, so the Right and Left recognize that the separation of economy and state would hear their death knell. The Mulroney, Chrétien, Martin, Harper and Trudeau regimes have lowered corporate taxation in the vain attempt of keeping multinational monies in the country. Labor law protects the unions, tax law protects corporations, licensing law shelters the professionals, the state itself protects the politicians, and you well know that these devoted servants are working hard for our country, or at least you hope. What about us poor suckers of The Third Estate who pay the bills? If we are directly or indirectly employed by the state, we’re protected. However, the un-unionized, unlicensed, unprotected, untenured working class – the majority – we’re the tired huddled masses without a voice. Our liberty? It’s disappearing before our eyes. We’re exploited by the capitalists, socialists, professionals, unionists and state employees.
As the modern state grows, the clock moves closer to midnight: total state control. It’s no secret that the vast majority of government employees and those who are subsidized by the state, vote to expand government at all levels at election time. The tipping point is growing nearer. The public sector earns well above the average income, with 20 percent of the working force in Canada employed by the state with another 20 percent working indirectly for them. They are unionized, often supplying a monopoly service like the TTC without competition and have an absenteeism record which would bankrupt any private business which had competitors.
Those businesses in comfortable relationships with the state have seen much less taxes, more profit, less investment output and more low-cost labor. Getting into bed with the state produces an elite aristocracy which indirectly takes control of the government with a broad-based modern autocratic paper monetary oligarch, generally in Canada made up of wealthy Conservative Protestant Christians and rich Liberal Catholics. They’re a direct threat to democracy, more so than even the socialists. The certified Left don’t know what they’re doing. It’s their one grace. Like Jack Layton and Tom Mulcair, the NDP are true believers without a church, but make no mistake, their god is the state. Without government, they believe our lives are pointless or at least too brutish to be fulfilling that free markets make us animals. The Right however knows exactly what they’re doing. They’re the Conrad Blacks of the new world order, the current untalented robber barons – paper chasers – without the state, they’re nothing.
* Government Tax, Revenue as a percentage of GDP: (2005) OECD Average 39%; United States 29%; Britain 37.4%; Australia 31.5%; Japan 28%; Germany 38.4%; France 45.4%; Netherlands 43%; Sweden 53.2%; Denmark 49%; Norway 41.9%; Canada 37.2%; EU Average 43.6%. See the alarming increase for 2016.
© 2017 - E. A. St. Amant