Jeff J Mitchell
The debate on what role the state should play in Canadians' lives passed the broken-glass test at the weekend's Couchiching Conference on public affairs.
It was worth running barefoot over broken glass to hear.
On stage were Thomas Flanagan, University of Calgary political scientist and the central player behind Prime Minister Stephen Harper's rise to power; Armine Yalnizyan, senior economist with the Canadian Centre for Policy Alternatives; and Alex Himelfarb, clerk of the Privy Council under former prime ministers Jean Chrétien and Paul Martin.
You knew whose side everyone was on; the enjoyment was in listening to them make their case.
For Prof. Flanagan, the evidence from history was a world basking in sunshine over the past 30 years as governments removed their heavy hands and left markets alone to make good things to happen: the collapse of the Communist bloc, free trade, deregulation, lower tax rates, privatization of public Crown corporations, the abandonment of the mirage of socialism and the lifting of hundreds of millioins of people out of poverty.
People, he said, weren't lifted out of poverty by foreign aid.
"It happened because of the market, it happened because of wave after wave of technological revolution. It wouldn't have happened without deregulation.
"I regard the last 30 years as one of the most optimistic periods in history."
He said the global economic crisis that began in 2007 was the result of inevitable recession in the business cycle and the failure of governments rather than of markets.
Once some regulatory glitches were fixed, Prof. Flanagan said, the state should stick to the jobs assigned to it by 18th-century Scottish moral philosopher Adam Smith: defence, the administration of justice and the production of public goods - "those things not in the interest of any individual to produce."
Ms. Yalnizyan argued that the economic crisis was far more than a routine recession: the loss of a half-million full-time jobs in six months was the worst in 70 years. And the fraying of the state social safety net meant the jobless had to face the crisis with reduced income support and fewer than half qualified for employment insurance at a time when household debt was - and remains - unprecedented.
The role of the state, she said, was to protect its citizens from internal as well as external threats, to look after all people, not just those able to care for themselves.
Ms. Yalnizyan said that despite corporate profits largely recovering, all the triggers of the crisis remained: ineffective regulation, shifted risk to those least able to absorb it and unmanageable debt - plus the failure of good, full-time jobs to reappear.
The presence of the state is required, she said, to manage the economy for the betterment of all its citizens, to deal with issues such as an aging population, rising inequality and climate change.
Mr. Himelfarb said Adam Smith was dead.
He said Prof. Flanagan's praise of a rising tide lifting all boats beginning in the 1980s overlooked the fact that few people got on the boats and the tidewater was polluted.
He said the global praise of Canadian banks during the crisis overlooked the enormous pressure the banks put on government to allow them to be deregulated along with banks elsewhere - pressure the government resisted.
And he said that governments prior to the Harper government did not buy into what he called "the supply-side argument of tax cuts.
"We did not cut taxes we didn't know how to pay for. When you disconnect taxes from the services they provide, there's a problem."
He said Canada faces a hyper-competitive global economy, enormous household and provincial debt in the context of an aging population, a widening productivity gap, climate change (you can only ignore until we all melt) and deepening inequality with more people being excluded from productive lives.
"We have to decide what kind of Canada we want. If only the deficit is important, you'll have one view. If social cohesion and social justice are important, you'll have a different view."
(Photo: A bronze statue of Adam Smith in Edinburgh. AFP/Getty Images)