Equality or barbarism?
TheStar.com – Opinion/Editorials
Published On Sat Oct 16 2010 . Ed Broadbent, Former leader of the federal New Democratic Party
This is the text of the Charles Bronfman Lecture delivered at the University of Ottawa on Oct. 14, 2010:
It’s a pleasure to give this year’s Charles R. Bronfman Lecture in Canadian Studies. And for this honour I am most appreciative to the University of Ottawa. I said it’s a pleasure to give the lecture because it gives me the opportunity to say something about current Canadian politics — by which I don’t mean the daily fluff of Question Period, but rather the broader, more alarming trend of contemporary thought and practice.
It’s become a truism to say that we are living through the most serious economic crisis since the 1930s. Clearly we could have used the past two years to rethink current assumptions about politics and economics and go in a new direction, as did happen in the aftermath of the Great Depression and the Second World War. Have we done this? On the contrary, the evidence is that Canada plans to stay put. Once the current stimulus package is completed next spring, the 2008 pre-crisis status quo will be re-established. How did we get there?
Writing in The New Yorker magazine two years ago, David Frum, the Canadian born speech-writer for George Bush, asserted that the conservative revolution launched by Margaret Thatcher and Ronald Reagan in the 1980s had as its specific purpose the rolling back of “social democracy” in the Anglo-American world. That’s probably not how the Thatcher-Reagan project would have been described by an American, for whom, as we saw in the debate last year on health-care reform, social democracy is largely an alien concept. But it’s not surprising that Frum would think in these terms. He was, after all, born and raised here in Canada, in a political culture where the broad social and economic values established after the Second World War have commonly been described as social democratic; and I think his formulation does capture what that conservative revolution of the 1980s and ’90s meant, in its attack on all the great advances of the postwar era. The idea, as Nobel Prize winner in economics, Paul Krugman, has pointed out, was to get government down to the size where it could be drowned in a bathtub. (Krugman was quoting another conservative.)
So what was the situation here in Canada, in the U.S. and the U.K. that so disturbed these new conservatives? I will try to put it in context. Virginia Woolf once said that following WWI, there was a widespread yearning for the pre-war years. That was certainly not the case following World War II and the Great Depression of the 1930s. There was no such atavistic desire for a rerun of the past. On the contrary, throughout the advanced democratic capitalist economies there were virtually unanimous calls for “social reconstruction.” A young English soldier writing home from Italy just before the war’s end, had this to say:
“We have almost won the war, at the highest price ever paid for victory. If you could see the shattered misery that once was Italy, the bleeding countryside and the wrecked villages, if you could see Cassino, with a bomb-created river washing green slime through a shapeless rubble that a year ago was homes, you would realize more than ever that the defeat of Hitler and Mussolini is not enough, by itself, to justify the destruction, not just of 20 years of fascism, but too often of 20 centuries of Europe.
He concluded by saying, “Only a more glorious future can make up for this annihilation of the past.”
That young soldier was Denis Healey, who went on to be a distinguished MP and chancellor of the exchequer in a postwar Labour government in Britain. Again, at the war’s end, another Englishman, this time an architect, illustrated what this “glorious future” meant even in architecture. It meant, he said, the broader claims of democracy, not merely the counting of votes, had to be taken into account. “If democracy means anything,” he wrote, it means deciding (in housing, for example) — for a change — to pay some attention to the expressed preferences of the majority.” What these and so many other postwar people were saying was that, in Abraham Lincoln’s accurate and precise phrase about democracy, there was at last to be a government not only by and of but also for the people. Virtually all aspects of the pre-war conventional political thought about the role of government were opened for serious discussion. Subsequently, a broad new political development took place throughout the North Atlantic democracies. Much to the chagrin of David Frum and his ideological cohorts, Canada, the U.K., and to a lesser extent, the U.S., were among them.
For four decades after the war Canadians joined with citizens in other North Atlantic democracies in creating the most productive and equitable societies in history. Although poverty was by no means eliminated, for the large majority this was the Golden Age. It was during this period that I came of age. When I graduated at the end of the 1950s, my personal debt was merely a few hundred dollars. The world, I believed, was my oyster. High economic growth rates were accompanied by a wide-ranging set of new social entitlements. Led by social democratic ideology in North America and Britain, as well as by many Christian Democrats in continental Europe, it came to be understood that, left to its own devices, capitalism was not only inherently unstable but would also produce a distribution of goods and services that was profoundly unfair. If citizens in the North Atlantic democracies were to have half a chance at a life of dignity — the stipulated goal of the newly established Universal Declaration of Human Rights in 1948 — governments believed they had to act. As I have said, in Canada we were part of this citizen-driven but government-implemented widespread political and economic change. While pushed by the CCF and the NDP, both the Liberals and the Progressive Conservatives in varying degrees came to share in this shift in ideology and practice. For both ethical reasons and the functional need for stability, an expanding role for government and increasing equality came to be taken for granted. Left behind was the belief that individuals and the economy should be left to fend for themselves. In its place was a new model of democracy, or rather an idea retrieved from ancient Greece, that democracy meant more than the right set of procedures for selecting and maintaining governments. It also meant government action for the people.
What emerged from this thinking was a Canada characterized by a wide range of new social and economic entitlements: government pensions, universal health care, trade union rights, comprehensive unemployment insurance, the expectation that every boy and girl with ability could go to university — and all were paid for by adequate levels of progressive taxation. What were once considered benefits appropriately provided by charitable organizations had become rights guaranteed by the state. Achieving more equality in their everyday lives, we Canadians also became a nation of greater social cohesion, and for the first time in history we started to describe ourselves as “sharing and caring.” This higher level of social and economic equality, symbolized by the signing on to the legally binding International Covenant on Economic, Social and Cultural Rights in 1976, also produced greater tolerance and a reaching out to provide new freedoms, to women, to First Nations, to gays, to the artistic community and to ethnic minorities. Multiculturalism, still so much a matter of contention in Europe, would become, as it remains today, an accepted reality in Canada. These new freedoms were best illustrated by the civil society activism and political leadership that led to the broad-ranging rights provisions for individuals and groups included in Canada’s new Charter of Rights and Freedoms adopted in 1982.
Whether put in place by political parties self-described as social democratic or by other political formations, the postwar combination of political, civil, social and economic rights aimed at citizens’ equality came to be known by many social policy experts and the general intellectual community as the social democratic alternative to the pre-war minimal-state, market-based democracies. Its principles were nicely summed up by John Humphrey, the Canadian who wrote the first draft of the Universal Declaration of Human Rights, when he wrote in his autobiography that “Human rights without social and economic rights have no meaning for most people.”
The kind of Canada I’ve just been describing was the experience of my generation. We knew from our parents what had gone before. They had lived through depression and war, and we could see very clearly how the changes were working to our advantage. The generation after us — the so-called baby boomers — had the benefits of those changes, and more, here in Canada. But in their historical moment, it may not have seemed to them so obvious where those advantages had come from. You might say that, while Canadians of that generation were born on third base, many of them grew up thinking they had hit a triple. Some, to be sure, went on to fight other battles for social justice, but in general there was a loss of historical memory, which made them and their successors much more susceptible to the neo-liberal shift that followed.
Long before the crash in the global economy two years ago this month, Canada and many other Western democracies had undergone a significant ideological and material reversal. Serious dissatisfaction with the governments at the end of the 1970s in the U.K. and the U.S. was used by incoming political conservatives and economic elites on both sides of the Atlantic to portray short-run difficulties in the economy as systemic failures in the relationship between the economy and government. Government, president Reagan proclaimed, is not the answer; it’s the problem. Hence, the attack on postwar social democracy so frankly described by David Frum. In Canada, the revision first took place in open ideological form here in Ontario. Rejecting the traditional Toryism of Bill Davis and of Progressive Conservatives like Robert Stanfield, Mike Harris’s new Conservative government portrayed government itself as an enemy of progress and eviscerated the equality building projects of the welfare state. This ideological approach was brought to federal politics by the right-wing populism of Preston Manning’s Reform party. Reform soon morphed into the Alliance and has since emerged in full bloom as Canada’s Conservative party. No longer self-described as “progressive” and no longer having the support of Conservatives like Joe Clark, Flora Macdonald and the late Senator Norm Atkins. But, significantly, this approach to government was also embraced by Canada’s Liberal party, which became market-driven in the 1990s.
This ideological shift became particularly pronounced in the middle of that decade, after the deficit had been overcome and surpluses restored. Under the Liberals and then their Conservative successor, federal programs were not fixed. They were abolished. Budgets were not simply reduced. They were slashed. Artists and the CBC were cut loose and encouraged to rely more on the market. Income taxes needed for the restoration of social programs were not only cut but also made less progressive. Not surprisingly then, during the period 1995-2005, the rich continued to get richer and the percentage of poor children remained virtually where it was in 1989 when Parliament had voted unanimously to eliminate it by the year 2000. We have no universal child care, national housing programs disappeared, unemployment insurance benefits were radically reduced, post-secondary education spending was slashed, and environmental reform never got off the ground. One of the dictionary meanings of “barbaric” is “rough and unrestrained.” Another is the “absence of civilized standards.” Such is the new barbarism in Canada.
Reflecting the ideological shift at the time, the Liberal minister of finance (Paul Martin) actually boasted that government spending as a proportion of GDP had been reduced to the level of 1951. Slashing social budgets, including health care and post-secondary education, the federal government’s new emphasis on the market virtually guaranteed that all the benefits of the economic boom of the 1990s went to the top 10 per cent of Canadians. During the same period in the United States, while Bill Clinton did deregulate the financial sector, he changed few social programs. Instead of such slashing, he increased taxes on the rich and relied on economic growth. It worked. The American deficit turned into a surplus. More than anything else, it was this American boom that pulled our economy into real growth during this period. Meanwhile, after our deficit disappeared, the federal government moved in the opposite direction. Instead of restoring the social programs — except for health care — the Liberals reduced capital gains taxes and provided income tax reductions which went disproportionately to the rich. This was far from what liberalism had meant in the era of Lester Pearson.
It’s been said that this return to a 1920s view had such an impact in the Anglo-American world partly because of the appeal of its leaders and partly because they won the battle of ideas. It is true that Thatcher and Reagan were forceful leaders. However, it’s laughable to pretend that the neo-liberalism that came to characterize the new conventional wisdom in Canada and the rest of the Anglo-American world, among both politicians and the press, in any sense reflected a triumph of critical thinking. Quite the contrary. We got the simple-minded clichés of an ideology, the kind that the great conservative thinker, Michael Oakeshott warned about when I was a student of his at the London School of Economics 45 years ago. Instead of arguments we got slogans. Instead of policies reflecting the complex interconnected roles of government and the economy, we got right-wing nostrums attacking the state. Instead of a robust sense of democratic citizenship, we heard much less about “citizens” and more about “taxpayers” and “consumers.” These nostrums plus potboiler summaries of editorials taken from the Economistcontinue to provide the social and economic guidebook of a whole generation of politicians and journalists. There can be little doubt, however, that they believe them, proving once again that there is no necessary correlation between conviction and truth.
What are these commonplace nostrums proclaimed so frequently as self-evident truths?
1. To have higher national productivity we must have lower taxes and less government.
2. To attack poverty and lessen the impact of inequality — once the current stimulus has ended — we must simply let the market grow on its own, and all will benefit.
3. To improve our competitiveness in an increasingly global marketplace we must reduce or eliminate our costly universal social programs.
4. To improve the level of voluntary participation in civil society, the level of government must be cut back.
Not a single one of these claims is true. When you look at the evidence in Canada or abroad, a very different picture emerges.
During the 1990s, Austria, Germany and the Netherlands (among other so-called high-tax countries) kept the level of taxes needed to maintain strong social programs. Did their productivity go down? No. It equalled or exceeded that of the United States and Canada. Indeed, within the United States, contrary to what establishment economists forecast at the time, when Clinton increased taxes on the rich, we now know productivity actually began to improve.
In spite of claims that poverty and inequality would be looked after by leaving the economy to grow on its own, during the 1990s, as I have pointed out, the opposite occurred. High levels of economic growth in Canada were actually accompanied by a widening gap between poor or average families and the rich. During this 10-year period, while the high percentage of poor children remained static, the Nordic countries virtually eliminated child poverty. According to the OECD report for October 2008, child poverty in Canada is now at a 9.5 per cent, down only 2 per cent from 1989, much worse than the global leaders Denmark, Sweden, Finland, and Norway, who range between 3 and 5 per cent. Instead of universal social programs reducing a nation’s economic competitiveness, they often improve it. Not only the continental European countries today but also some of the so-called “Asian tiger” nations decades ago had carefully applied this understanding in building their dynamic economies. In Canada, our own public spending on universal health care costs the economy much less per capita in comparison with private spending on health insurance in the United States. Even after President Obama’s reforms are fully implemented, their per-capita spending will remain much higher than ours, much of it to ensure profits to insurance companies, and several million Americans will still remain uncovered by insurance. During the recent debate in the U.S. about health-care reform, many U.S. economists pointed out, on efficiency grounds alone, that a public single-payer form of health insurance is less costly than having a plethora of profit-making insurance companies offering essentially the same service.
Instead of going up when governments slashed billions of dollars from social programs during the 1990s, levels of trust and voluntarism in Canada underwent a serious decline by the end of the decade. The scale of the increase in inequality in Canada beginning in the last decade of the 20th century is immense. Remember that for most Western economies, including Canada, the 1990s were the best decade of economic growth in 40 years, a period which the trickle-down soothsayers said would benefit everyone. Between 1998 and 2007 the average wage of full-time workers went up less than the rate of inflation (from $33,000 to $40,000). In contrast, during the same period the top 1 per cent increased by 100 per cent their share of total wages and salaries, and the compensation of the top 100 CEOs went from an annual average of $3.5 million to $10.4 million — up 300 per cent. Today we have 55 billionaires and thousands of multi-millionaires, none of whom pay any inheritance tax. Meanwhile, the majority of Canadians continue to see a downward shift in their share of the national income that they worked to create. Seventy per cent of Canadian households have a smaller share now than they had at the end of the 1990s. A final statistic: excluding the elderly, the bottom 50 per cent of Canadians actually have lower after-tax incomes than their equivalents in the 1970s. And, by the way, it’s worth asking whether changes in the census will mean we no longer will have reliable data to make such comparisons.
The present Conservative government has simply continued its predecessor’s onslaught on equality. As a consequence of the continuing underfunding of social spending and irresponsible tax cuts disproportionately favouring the rich, for many Canadians it came as no surprise when we were criticized by the United Nations in 2007 for failing to live up to our obligations under the Covenant on Economic, Social and Cultural Rights. This was followed in 2008 by an OECD report showing that growth in inequality in Canada is now among the worst in the OECD. This march to inequality was confirmed last year by the Conference Board of Canada. In contrast, in continental western Europe, where increases in inequality in general have been less severe, six months before the crash in October 2008, finance ministers at the European Union meeting in Brussels at least committed themselves to taking action to deal with inequality. It was the same group of continental Europeans who recently took the lead to curb outrageous salaries and bonuses of the super-rich. Even the Labour government in Britain, an early convert to deregulation, in the months just before this year’s defeat in the polls finally increased taxes on upper income groups.
This then is the legacy of neo-liberal ideology. While we Canadians did not deregulate our financial institutions, we must not allow this to continue to obscure the other, deeper democratic problem, the alarming increase in inequality created in large measure by politicians for whom the priorities of the market must trump all other considerations. In fostering this inequality, what recent Canadian federal governments have done is not only to reject the political legacy of the CCF and the NDP but also that of prime ministers Lester Pearson, John Diefenbaker and Pierre Trudeau — all of whom came to see the importance of fiscal policy and social programs as stabilizing and equalizing forces in the economy.
Under the leadership of the post-WWII generation, Canadians began to transform themselves in the 20th century. As I have already suggested, part of this transformation was picked up by my generation of politicians and was reflected to some extent in all of our parties. Under various political labels, as a nation we had embarked on the social democratic journey which combines a regulated and efficient market-based economy with strong social and fiscal policies aimed at overcoming poverty and achieving greater equality. It is this journey — so brilliantly described in the late Tony Judt’s Postwar — that has been dangerously undermined not simply by inherent forces in the economy but by wilful decisions made by politicians. Ideology matters. Values, good and bad, have consequences.
I also mentioned earlier that, as a consequence of becoming more equal in economic terms, we Canadians had also become more tolerant and more cohesive. Sharing and caring was not merely a slogan. Surveys showed that it was characteristic Canadian behaviour. The progressive politics of my generation were driven to the equality agenda because of ethical considerations and also concern for macroeconomic stability, both of which were the outcomes of war and depression in the 1930s and ’40s. However, we now have recent and clear evidence that more than stability and ethical concerns about equality is at stake. More equal societies are not simply more stable and just, they are also healthier in virtually every respect for everyone in them. Bringing together data from a large number of international studies (UN, World Bank, U.S. Census, Statistics Canada) two leading British social epidemiologists,Richard Wilkinson and Kate Pickett in their book, The Spirit Level, published last year, show the society-wide positive social consequences of more equality. As a result of their comprehensive analysis of data from dozens of comparatively rich countries, we now know that ethical concerns and practical benefits come together: equality works.
Their research has shown that more equal nations, as well as more equal states within the United States, are better off in almost every way. Their citizens are healthier, live longer, have fewer teenage pregnancies, are more law abiding, participate more in civic projects and are more trusting of their neighbours. Contrary to those who claim freedom is sacrificed with more equality, for the great majority the opposite is true. With more economic equality, there is a greater flourishing of the kind of responsible individualism and citizenship favoured by the great liberal, John Stuart Mill. A basic truth must be understood: a substantial level of real equality is necessary for equality of opportunity to work. Transcending any differences in religion, language and culture, it is the higher degree of equality that makes those nations so much better off than the U.S. or the U.K., which are the most unequal. I repeat and emphasize that once a certain minimum level of wealth is reached in a country, their accumulated evidence shows it is not more growth but more equality that leads to a better quality of life for everyone.
Wilkinson and Pickett’s work demonstrates that unequal societies are not only unfair, they are also dysfunctional. The status-related insecurity and anxiety produced by unequal societies promotes more isolation, social estrangement, and negative health outcomes than in societies that are more equal. Not just the poor but everyone is worse off. Rich and highly educated British and Americans do worse than their equivalents in more equal societies.
As a country Canada is somewhere in the middle of the pack of wealthy nations, but as I have said, we are moving backwards. We’re becoming more unequal more rapidly than most OECD countries. The implications are clear. Once we are firmly out of the current crisis, by promoting only more growth and not more equality we will continue to foster only more negatives in health and social behaviour. Such a policy could hardly be more dysfunctional. Low wages, low social benefits and regressive tax policies are not only ethically unfair for the poor whose market-based incomes are the lowest and whose human potential to flourish they reduce. Because such policies maintain or increase inequality and exacerbate social tensions and anxiety in general, they are also bad for everyone else. In contrast, more equality benefits all classes: lower, middle and upper. More growth alone won’t fix Canada, but sharing our wealth as many European countries have demonstrated, can make a huge difference.
We have known for a long time that poverty and inequality are bad for those directly affected by it — the unemployed, poor kids, anxious seniors, overburdened families. But, in thinking beyond the current crisis, we now have evidence that inequality harms us all. In recent decades in Canada, many who have become members of the middle class in income and expectations have not readily seen themselves as beneficiaries of new social initiatives aimed at equality. On the contrary, many have an apprehension that they will pay but that only others will benefit. For those of us who believe in equality as a core democratic value, the task is perhaps easier now than it once was. Because of the new evidence we can show middle class Canadians that equality-building measures do directly benefit them and their children. Such societies are characterized not only by better health outcomes for everyone but also by less violence, more citizen engagement, fewer teenage pregnancies, more voluntarism, and less consumerism. Surely this is what we all desire.
Yes, the evidence is on our side, but we must never forget what Louise Arbour said in herLafontaine-Baldwin lecture a few years ago (2005). The elites in our country resist such change, she said, “precisely because it threatens . . . to rectify distributions of political, economic or social power.” She stressed it was a struggle in the past to overcome such resistance. That struggle remains today.
From Periclean Athens to the 21st century liberty and equality have been seen as the core values of democracy. Given that we now know the positive impact more equality can have on the quality of freely chosen lives for everyone, all democrats should speak out. Instead of worship of the market, we should recognize its benefits but underline its limits. Instead of seeing government as the enemy, we must reclaim its possibilities. And instead of restoring the pre-2008 system, the federal government should join with the majority of provinces and launch the anti-poverty program that both the House of Commons and the Senate have called for. We must reclaim for the 21st century the ancient democratic goal of more equality.
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