There are better methods of achieving the admirable goal of the elimination of poverty than just pouring out cash and paying for it by tax increases
by Conrad Black
It was my pleasure on Wednesday night to participate in a debate at the C.D. Howe Institute about the desirability or otherwise of a guaranteed annual income in advanced Western countries. Arguing in favour were the master of Massey College, former senator and chief of staff to Ontario premier Bill Davis and prime minister Brian Mulroney, Hugh Segal, and the U.S. Democratic activist, counsellor to president Clinton and CNN commentator, Paul Begala. The former minister of finance and of social services of Saskatchewan, Janice MacKinnon, and I argued against.
The other three speakers were all very fluent and often entertaining and the entire atmosphere, including the social aspects, were very convivial. The event was sponsored by the distinguished mining executive Aaron Regent and his most gracious wife, Heather. Janice and I were given to understand that our opponents were advocating outright payments to everyone who survived childbirth, for life, of $1,300 per month. As that would cost Canada $560 billion a year, and the United States over $5 trillion annually, this would be completely impractical, and we prepared ourselves for a rollicking debunk.
As the motion was formally read and our opponents spoke in support, it was clear that what was in contemplation was not at all preposterous, and was effectively a variant on Milton Friedman’s negative income tax and a program of income supplements to bring income-disadvantaged people up to a level above poverty. In my experience, in debates of this kind, where interventions are from two to five minutes and everyone has up to six opportunities to speak, preparation can be excessive and participants should be ready for fairly radical improvisation, which makes the whole exchange more spontaneous and effervescent anyway. It is, after all, a give-and-take debate, not a sequence of scripted recitations. Janice and I scaled back our responses to assertions that there were better methods of achieving the admirable goal of the elimination of poverty than just pouring out cash and paying for it by tax increases that could not fail to fall on the middle-class brackets, and by cancelling non-cash programs to assist low-income people in acquiring skills that would enable them to raise their incomes.
There was the predictable posturing and histrionics on both sides
There was the predictable posturing and histrionics on both sides, usually executed with considerable panache; Hugh and Paul swaddling themselves in “fairness” and looking for any opportunity to portray Janice and me as heartless reactionaries, indifferently resigned to the Biblical permanence of poverty and tight-fistedly dissembling while seeking more comfortable conditions for those already well-off. We had no trouble parrying that, and as we had no problem either with our opponents’ espoused goals, we proposed a series of suggestions of achieving our shared objective by more efficient means. The issue effectively changed in mid-course from attacking guaranteed minimum incomes to alternative methods than just doling out taxpayers’ money. There were four rather complicated questions from a panel of accomplished jurors (including four federal and provincial MPs). The questions were rendered rather ceremoniously by the equable chairman of the Bennett Jones law firm, Hugh MacKinnon, and the time limits were courteously but ruthlessly enforced by the president of the C.D. Howe Institute, Bill Robson.
Counterintuitively, Hugh Segal, always a Red Tory, and Paul Begala, a very liberal Democrat, and Hugh MacKinnon on behalf of the apparently moderately left jurors, invoked Friedman and Friedrich Hayek, the greatest intellectual champions of the free market since Adam Smith, in favour of giving money to those who need it as they will know best what to do with it, and because poverty is intolerable. Janice, a prairie New Democratic ex-social affairs and finance minister, attacked the extravagance of universality, and I, by far the most outspoken capitalist of the debaters, championed Franklin D. Roosevelt’s workfare programs and military buildup that brought the United States out of the Great Depression, out of isolationism, and prepared it to lead the world in war and Cold War.
Janice, speaking from her expert experience at administering income-assistance programs, emphasized that universality, as much as the substitution of cash for skill-development programs, would make matters worse and not better, and that it was impossible to support the cost of this form of assistance, however it was delivered, without raising taxes on the middle class, who in Canada are already creaking under the tax burden they bear. We broadened the field of discussion like two armies trying to outflank each other. Hugh Segal and I were in fervent agreement on the need for Canada to raise its military presence — he proposed an increase in trained forces from 63,000 to 150,000 and agreed with my commendation of the American experience that the non-personnel expenses in defence were the best form of stimulus spending as it went to the cutting edge of technology and throughout heavy industry, and that the armed forces were also the most effective form of adult education. It is also necessary to have a serious military to have any influence in the Western Alliance or in the world generally, and to be able to assist with maximum effectiveness when there are natural disaster in other countries, such as earthquakes, tropical storms and tsunamis.
My customary tax proposals, which will be familiar to long-time readers, achieved general acceptance: reduction of all income taxes, especially on lower and middle incomes, and compensating increases in luxury goods and services and optional transactional activity, including financial fees and speculative activity (not to discourage them — reducing income tax would facilitate them and make the tax less onerous and easier to collect). There was also some receptivity to my proposal for a small and self-reducing tax on wealth and high incomes, which would be paid through anti-poverty projects designed by the taxpayers themselves and authenticated as genuine, as charities are. The rate of tax would decline as defined poverty declined. The country’s most financially astute talents would be recruited to direct reduction of poverty, and the interests of the rich and the poor would be fully aligned together in reducing poverty.
The middle class in Canada are already creaking under the tax burden they bear
My advocacy of reducing university expenses by moving a good deal of undergraduate activity to the internet while academically upgrading skilled trades that are in much shorter supply than lawyers, professors and consultants, got some support, but there wasn’t really time to elaborate on such complex proposals, and while we all had our moments at concision, often humorously so, none of us wanted to be glib about such serious subjects that affect the lives of so many. The debate was effectively a draw as those who were undecided when they entered broke evenly and both sides held their position. Janice and I appeared to have won over one of the jurors, whose votes were counted separately.
The takeaway from the whole exchange, I believe, given the quite different backgrounds of the participants, was that Western democracy is ready and eager for some new thinking. The blending of the social market economy, which has see-sawed within moderate parameters in most advanced Western countries since the 1930s and 1940s, needs a new stage of evolution. There was implicit agreement that capitalism is the best system because it is most aligned with the almost universal desire for more, and that president Reagan was correct when he said that the best form of welfare is a real job. Harnessing the first to achieve more of the second as technology creates unemployment, and a low birth rate and generally higher life-expectancy (relative to when our benefit systems were established) reduce the economically productive population, has created a stern but stimulating challenge. Everyone seemed to enjoy the evening; certainly I did.
First published in the National Post.