The moose and the modern welfare state

Posted on December 28, 2011 in Policy Context

Source: — Authors: – business/commentary/neil-reynolds
Published Tuesday, Dec. 27, 2011.    Neil Reynolds

Dr. Seuss’s story of Thidwick moose begins one autumn day on the northern shore of Lake Winna-Bango where a herd of moose – big-hearted Thidwick and 60 others – are seeking moose moss to munch. A Bingle Bug happens by and asks Thidwick for permission to ride on his antlers. Thidwick consents: He has plenty of antler to share. The bug tells a tree spider about the deal and the spider is soon building webs in Thidwick’s antlers.

A bird settles next, then the bird’s wife, and then the bird’s uncle, a woodpecker who drills holes in the antlers and makes nesting places for four squirrels. More squatters arrive: a bobcat, a turtle, three mice, a fox, a bear, and 362 bees. Winter approaches and Thidwick must get to the lake’s distant southern shore. His beneficiaries refuse permission. They proceed to decide the argument democratically and, predictably, Thidwick loses the vote. Suddenly, the big-hearted moose realizes that he has lost his freedom – and that he lives solely for the creatures who have staked claims to his benevolence.

It would be mean to reveal the ending but as the author himself put it, in life-cycle terms, the “old horns came off so that new ones can grow.” Thus concludes the cautionary tale of Theodore Seuss Geisel’s Thidwick, the Big-Hearted Moose, a parable more evocative now than when first published in 1948. Mr. Geisel was famously liberal, a champion of FDR’s New Deal, yet his liberalism was neither squishy nor sentimental. He once said that his children’s stories were “as subversive as hell,” as Thidwick’s adventures in a modern welfare state wickedly confirm.

Across Europe these days, countries are taking a lesson from Thidwick and shedding tens of thousands of public-sector workers. Much pseudo austerity has taken place. But many benevolent countries are shaking off civil servants at a rapid clip: 20,000 in Denmark; 55,000 in Germany; 70,000 in Romania; 13,000 in Spain – and 490,000, over four years, in Britain.

Other countries prefer hefty salary cuts. In Greece, public-sector wages have been cut by 25 per cent; in the Czech Republic, by as much as 40 per cent.

For these countries, austerity is a form of repentance for cheating, after years in which they routinely borrowed and spent more than they were permitted by European Union rules. They had pledged to keep budget deficits to less than 3 per cent of GDP. In 2009, of the 27 EU countries, 21 were in violation of this commitment, with Britain (at 14.4 per cent) the worst fiscal offender of all.

Sweden was perhaps the most fiscally disciplined of the EU countries, a discipline maintained since the 1990s when it hit the wall early on (as did Canada). In 2009, Sweden’s deficit was running at 0.9 per cent of GDP, the lowest in Europe. It became the only euro-club member to need no extraordinary fiscal restraint.

Paradoxically, however, Sweden employs more public-sector workers, as a percentage of labour force, than any other OECD country: 31 per cent. (South Korea employs the fewest: 7 per cent.) In its analysis of public-sector employment in Canada, Statistics Canada provides an answer. The further a government goes into debt, Statscan says, the more aggressively it tends to cut public-sector jobs, an ostensibly obvious conclusion that nevertheless leads to intriguing tradeoffs. People who want to expand public-sector payrolls must logically champion paying down of the debt. Sweden has roughly half the federal-provincial public debt of Canada, and sets a good example of pay-as-you-go government.

Canada sustains 3.6 million public-sector workers – one in every five jobs in the entire economy. The country went through a public-sector downsizing in the 1990s but has since more than replaced the jobs that disappeared. In Newfoundland and Labrador, public-sector workers constitute 30.9 per cent of all jobs, essentially matching Sweden. In Alberta, public-sector workers constitute only 17 per cent. Go figure.

Statscan identifies a number of idiosyncratic traits in provincial public-sector employment. The Atlantic provinces employ far more public-sector workers, with 135 per 1,000 inhabitants, than the Canadian average of 105.8. British Columbia and Alberta employ the fewest. Nurtured in socialism, Saskatchewan requires 50 per cent more workers, per 1,000 inhabitants, than Alberta, its next-door neighbour. And Ontario employs more than one million public-sector workers – roughly 100,000 more than when Premier Mike Harris left office in 2002.

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