Posts in Economics
A sleeper fiscal issue

Yet another warning in my inbox this morning from the C.D. Howe Institute (full disclosure: my brother runs the place and was co-author of the study) about how the federal government continues systematically and dramatically to understate the unfunded liability in its employee pension plans. It may seem like a sleeper. But one day it will wake up and it won't be pleasant. According to authors William Robson and Alexandre Laurin, the feds admit to roughly a $150 billion shortfall. But the real figure is $269 billion. And, they say, if the difference were added to the national debt (as the admitted amount already is) it would stand at $730 billion not $612 billion.

It goes without saying that you should not try this sort of thing at home. The government would not like it.

It's a Three Fold Total Bad. In the first place, it's deliberately dishonest. C.D. Howe has been warning about it for years and they are not some radical right-wing outfit prone to bungling or torqueing their calculations.

In the second, it's fiscally reckless. Even the move to have federal employees fund their pensions more fully is undermined, that other Robson and Laurin note, because they calculate the amount required according to the understated figure. And all the blather about how debt is small and manageable as a share of GDP is also undermined by such jiggery pokery.

In the third, it's yet another case of people in government cutting themselves a great big generous slice of pie while the rest of us tighten our belts in hard times and, when we look at them sidewise, go "What? What?" as though their cheeks were not bulging. Whatever happens, federal employees will collect generous pensions they have not paid for. Even if the rest of us have to be taxed within an inch of bankruptcy to make it happen.

Then they wonder why government is in disrepute nowadays. All the way to the bank.

Of course, they're counting on us to sleep through the various alarms. But this is no time to hit the snooze button.

Keynote address to the Real Estate Institute of Canada

Next month, I'm delighted to say, I'll be taking part in the REIC annual meeting and conference in Ottawa. The topic of my address will be "Without Ethics, None of This Works". Institutions are vitally important. But even more fundamental is a political and commercial culture that values honesty and shuns and punishes deceit. Without honesty, formal rules mean nothing, in government, in real estate and commerce generally, and in our private lives.

Without ethics, none of this works.

Be counted... or else

Today I got this envelope from Statistics Canada saying "2016 Census: Complete the census - it's the law." (Equally rude in French: "Recensement de 2016: Répondez au recensement - c'est la loi".) I am told the government is the servant of the people. But this peremptory tone, giving orders without even a pretence at "please," is not how a servant speaks to a master. Quite the reverse. Remember how all the right people were shocked and appalled when the Harper Tories got rid of the long form census? Without accurate data, they complained, social scientists would find it hard to engineer satisfaction of the human units to a sufficient number of decimal places. Which I always found rather an odd conception of the proper role of government and of its abilities. And look how they talk to us now that it's back.

The smart set make a lot of fuss about "evidence-based decision-making". But a decision to trust the intelligence or benevolence of government doesn't seem to me to be based on much sound evidence. Not even the personal stuff I have to provide or else, according to this envelope that just marched into my house, waved a pair of handcuffs at me and started shouting questions.

I'll drink to that

On Friday a Provincial Court judge in New Brunswick struck down a duly enacted law and I couldn't be happier. It was a section of the provincial liquor act limiting the right to buy beer next door in Quebec and it was clearly unconstitutional. Now it might seem that I like judicial activism when it goes my way. But it's not that at all. It's that properly designed constitutions are set up to keep government limited even when the ambitions of politicians or a temporary lapse in the good sense of the public push them to expand, and to guarantee that rights are respected even when expedience seems to argue for violating them. When courts strike down laws that infringe basic constitutional guarantees of liberty, it's not activism. It's proper checks and balances against legislative or executive activism.

There is in the end no paper defence against people genuinely heedless or contemptuous of their own liberties and those of others. But the American Constitution is famously an appeal "from the people drunk to the people sober" and so is ours even when the issue is the right to buy beer. As a Macdonald-Laurier Institute press release praising the judgement rightly notes, our Constitution deliberately forbade the provinces from engaging in petty internal protectionism.

The release links to a paper I had the privilege of coauthoring with Institute Executive Director Brian Lee Crowley and the late Robert Knox back in 2010 explaining what our Founders did and why and how, and how the federal government could and should act to make their vision a reality. It's excellent that a court has taken the right view of this matter and I hope the ruling is not appealed or, if it is, that it is upheld.

I also hope the federal parliament will be emboldened to legislate and end to all such protectionism. It clearly has the power and not just the right but the duty.

Meanwhile our own draft constitution, part of our "True, Strong and Free" project, will not only reiterate but strengthen the constitutional provision against internal protectionism just to be safe. But here's one case where a court has acted in the genuine spirit of the constitution and of upholding legitimate rights not inventing unworkable ones. And it deserves our applause.

A sour finding

If you're looking for reasons we need to fix our Constitution, look at this story from today's National Post about a customer awarded $12,000 for "injury to his dignity, feelings, and self-respect" after a restaurant stopped accommodating his very special need for pseudo-hyper-clean surroundings. The man apparently suffers post-traumatic syndrome and OCD and can't cope with lemon in his water or cutlery placed directly on the table. And thus he has a human right to make other people do what he says even if it's not reasonable. Now I have sympathy for this person and his struggles. I don't doubt they are real. But what about the restaurant and its employees? What would happen if everybody demanded very special service including wiping the vinyl seats and always putting him in the same booth away from other patrons? How much would costs increase? And how could you seat everyone away from all other patrons without having a restaurant the size of a stadium?

Once the rule was that if you wanted special service and a restaurant was willing to provide it, as this one was for a long time, you went there. If they refused, or changed their service, you stopped going there. Just as you don't eat in a place where you don't like the food, the wait staff, the décor, the ambiance or anything else. They can't make you come in, and you can't make them let you in.

You don't always get what you want. And nor does anybody else. But nobody is able to make anyone else bend to their will regardless of consequences. All transactions must be mutually satisfying. And my right to swing my fist ends where your nose starts.

Not in the Brave New World of human rights tribunals. Instead you get to demand whatever you want of me, and I am in a very real way conscripted labour. You don't actually punch me if I don't serve the water without a straw or tell you you're too much trouble and should leave. You call the state and they send people to do it for you. First a summons, then a fine, then jail if I don't pay, and cops with weapons if I won't come quietly. Behind all this lurks the policeman's truncheon. But not the courts.

This fine came not from a judge or jury, following the due process guaranteed in Magna Carta and generally proudly upheld ever since. It came from a human rights tribunal, specifically the Ontario one. They follow very different rules, far more lenient toward the self-proclaimed aggrieved and far harsher on everybody else. And it's not a recipe for a good society.

Allegedly in this case the restaurant manager was very rude. And I like good manners. But for heaven's sake, you don't have a human right not to encounter rude people. De minimis lex non curat. And restaurants with surly staff lose customers unless the food is great and worth putting up with the abuse, or it becomes a weird kind of cult attraction. (Don't laugh; when I was in grad school there was a burger joint with an elaborate menu but only cheeseburgers actually for sale, and they ridiculed anyone who ordered anything else. It was always full. And we often asked for something else just to hear what they'd say.)

In short, we work out our own accommodations with our fellows. They can't use force or fraud and neither can we. We can negotiate but we cannot demand or compel. Or at least, we didn't use to be able to.

There were lamentable exceptions, of course. Governments drew invidious distinctions based on race or gender and punished people who did not obey such rules. But generally, people got to decide for themselves how to do things and with whom. And if you wanted the sympathy and respect of others, you had to show it for them and their difficulties too.

All that is changing now, into a society where everyone can coerce everyone else. But where does it all end? The Post story quoted a professor of hotel and restaurant management at Ottawa's Algonquin College that “Responsibility (to accommodate) will never be lessened. It will only be increased with time.”

That certainly is the way things are going now. But how do we accommodate one another once everyone has special demands, and I can't sit where I want so you can sit alone and vice versa, and the waiter is afraid of plain water, and the person at the next table but three has to bring their companion snake but someone else has a phobia about snakes? (The last is not an invented example.)

You can't. You literally can't build a society with stable rules, mutual respect, and restaurants that can actually operate if people don't have to respect other people's autonomy. Instead you get a free-for-all of uncivil demands and hurt feelings and everyone has a right to everything but there is nothing.

If that sounds bad to you, please back our "True, North and Free" project to fix Canada's constitution so that it really respects individual rights, including the right to run a restaurant where customers can't march in, redesign the place and call a cop if you object.