Conservative social programme spending

This is, in a way, Part 2 of yesterday’s comment about 800 pound gorilla that is the Canada Health Act and that threatens to destroy the entire Canada social safety net unless we can learn to contain its costs.

Canadians love their social programmes. Many in the chattering classes assert that our social safety net defines us as a country ~ that’s poppycock, of course, but my guess is that more than half of all Canadians actually believe it. That’s why I say that we must accept and understand and, even, affirm, that social programmes, broadly, are a “sacred trust,” and that we, Conservatives, will protect them. Any other position is a recipe for electoral defeat. It’s important to remind ourselves that it was Otto von Bismarck, not exactly a flaming Liberal, who “invented” the modern social safety net back in the 1860s. He was a hard headed, pragmatic political leader, and the least we can do is to honour him by being equally pragmatic when we offer Canadians good government.

About five months ago I commented on social programme spending and agreed with Jeff Hodgson that “Campaigning on taking money away from people or most programs is a recipe for failure,” and Conservatives of all stripes need to stop functioning as the parsimonious scolds of the political world and build a more ambitious and salable 21st century fiscal conservatism.” I returned to that theme earlier in August when I said Despite being a fiscal hawk, I do not advocate dismantling the social safety net, or firing 100,000 civil servants; we cannot get elected if we do that. I do, however, want to slow the rate if growth in social spending and, gradually, giving individuals more and more choices for taking some responsibility for their own social safety nets.

Now I’m looking at an article in Foreign Affairs by Nima Sanandaji, a Swede who is a research fellow at the Centre for Policy Studies in London, and was cofounder and (until 2011) CEO of the Swedish think tank Captus. The article is entitled “Misreading the Nordic ModelHow American Admirers Get Scandinavia Wrong,” and in it Dr Sanandaji says, quoting his brother, the Swedish economist Dr Tino Sanandaji, “American scholars who write about the success of the Scandinavian welfare states in the postwar period tend to be remarkably uninterested in Scandinavia’s history prior to that period. Scandinavia was likely the most egalitarian part of Europe even before the modern era. For example, it was the only major part of Western Europe that never developed full-scale feudalism and never reduced its farmers to serfdom.

He goes on to point out that “Good social outcomes in the Nordic countries,” the sort of “outcomes” that almost all Canadians want for ourselves and our children and grandchildren, “predate the welfare state because what makes Nordic societies unique is related not to policy—large welfare states can also be found in countries such as Belgium, France, and Spain—but to culture. Over 100 years ago, German sociologist Max Weber observed that Protestant countries in northern Europe tended to have higher living standards, better academic institutions, and more well-functioning societies than countries in other parts of Europe. He attributed their success to the “Protestant work ethic.” Swedish scholar Assar Lindbeck later built upon this theory by looking at factors other than religion. For instance, he explained that in the hostile environment of preindustrial Scandinavia, it was difficult to survive as a farmer without working exceptionally hard. The population therefore adopted out of necessity a culture with a great emphasis on individual responsibility, honesty, trust, punctuality, and hard work … [and] … These cultural attributes help explain why Nordic nations developed high levels of prosperity and low levels of poverty during the small-government era of the late nineteenth and early twentieth centuries. The welfare states were introduced only once Nordic societies had already become prosperous and 51U98GKcHzL._SX328_BO1,204,203,200_equal. Everything that Bernie Sanders, Barack Obama, and other leading Democrats admire about Nordic countries already existed in the middle of the twentieth century, when these societies had small public sectors and low taxes.” In other word, as Samuel Huntington said: Culture Matters. Canada parallels Scandinavia in many respects: we too had a hostile environment for farmers, and our peoples “adopted out of necessity a culture with a great emphasis on individual responsibility, honesty, trust, punctuality, and hard work,” and we, too, didn’t adopt the overwhelming welfare state model until we were prosperous and, as Dr Nima Sanandaji said of Scandinavia, our overall levels of prosperity actually declined after the full blown nanny state was implemented by Pierre Trudeau.

Dr Sanandaji goes on to say, and I suggest that all Conservatives need to take note of this, that: “The simple truth is that there is nothing magical about the Nordics. Like other countries, they have thrived economically in periods of free market reforms and have stagnated when taxes and government involvement in the economy have increased. Their social success predates the welfare state and is no more or less impressive than the social success of Nordic Americans. And as I show in Debunking Utopia, norms related to hard work and individual responsibility, which developed before the welfare state, have begun to change since it was introduced” … He explains, further that:  “In recent years, a number of Nordic economists have linked the Nordic welfare state to evolving norms around work. The Danish economist Casper Hunnerup Dahl, for instance, has argued that there is a strong correlation between the expansion of Denmark’s welfare programs and a decrease in the Danish work ethic. The Swedish economist Martin Ljunge has found that Sweden’s generous sick leave insurance system has gradually increased the population’s desire to stay home from work, with younger Swedes 20 percent more likely to take sick days than their older counterparts, other circumstances being equal. Ljunge claims that “the higher demand for sick leave pay among the younger generations can be seen as a measure of how rapidly the welfare state affects attitudes toward the use of public benefits.” In the paper “Family Welfare Cultures,” the economists Gordon B. Dahl, Andreas Ravndal Kostol, and Magne Mogstad study the Norwegian disability insurance system, in which the benefits that claimants are granted often depend on the strictness of the judge who hears their case. The authors find that when a parent is granted disability insurance by a lenient judge, his or her adult children are significantly more likely to claim disability benefits in the future, with the effect increasing over time. So the lesson from Nordic countries is not that large welfare systems can be introduced without harming economic growth or creating a culture of welfare dependency—the lesson is that they will do precisely that.

While we, Conservatives, must not threaten to cut and gut social programmes, we must affirm that they are not any sort of magic bullet and, in fact, they may do as much ~ even more ~ harm, than good and we must promise to ensure that every tax dollar is spent wisely, on programmes ,and in ways that help those who need help and allow the rest of us to become more and more prosperous and self sufficient through our own, individual efforts, not through programmed income redistribution.

Now my question is: who, from amongst the declared and likely CPC leadership candidates, is going to propose a coherent social programme funding model?

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Their question, to me, should be: what is that model?

First: it is a model that we can “sell” to Canadians, one that gets us elected and re-elected. It obey’s Mr Hodgson’s rule that “Campaigning on taking money away from people or most programs is a recipe for failure,” and my rule that we should promise to not set about “dismantling the social safety net, or firing 100,000 civil servants;” instead

Second: the model says that we should promise to review every programme, line-by-line to ensure each is operating as Canadians want and in an efficient and effective manner and then we should promise, as Jeff Hodgson suggested, to maintain funding for all those that pass the efficient/effective test and to maintain them “at the rate of inflation plus population growth.” We need to honest with Canadians: we want to give them what they want, and what they can afford because, in the end, they ~ directly or indirectly ~ pay for every single programme, but we are not willing to just throw money away à la the Trudeaus, Père et Fils; and

Third: the model tells us that we will reduce all federal constraints on provinces for all programmes that are shared, like Medicare, so that the provinces, who co-fund ~ by taxing the same people we do, and often deliver the services, can innovate and find new, better ways to fund their share of co-funded programmes.

But, what we are really talking about, behind the facade of fiscal and social policies, is re-establishing the culture that, in the 1940s, ’50s and ’60s, made us prosperous enough to afford the welfare state in the first place. It is our culture that needs to be rebuilt ~ ‘ours’ whether you and your great grand-parents were born in Canada or whether you just got your landed immigrant card this week, it is based, as I have said before, on “our enlightened, secular, Anglo- Saxon, liberal democratic values [that] are the “gold standard” for all Canadians.” We need, as Milton Friedman said, to make our society fiscally fit, but not by “starving the beast,” as Friedman suggested, without regard for the realities of politics in a democratic society, but, rather, by offering it better socio-economic “eating habits:” individualism, self-reliance, trust, hard work, saving and co-operation with neighbours and in our communities. Those are the good, solid, old fashioned liberal values that Disraeli, Gladstone, John Stuart Mill, Sir John A MacDonald, Louis St Laurent and John Diefenbaker would recognize. They should be the values of 21st century Conservatives, too.

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