Back to Basics – Conservative style.

Andrew Coyne has an interesting article in the May issue of Walrus (, arguing that, more serious than electoral defeat, Stephen Harper’s legacy:

“was the atrophying of conservatism as an intellectual force that resulted from his tenure. It wasn’t only that the Harper government did so little, or that so much of what it did should not have been done – from deficit spending, to industrial subsidies, to the barring of foreign investment, to the narrowly targeted “boutique” credits it marbled into the tax system.  It was that Conservatives ceased even to talk about the policies they would like to pursue or the vision of society that underlay them”.

So Coyne sets out to outline what, in his view, a conservative policy framework would look like.

He states that “the Enlightenment tradition that conservatism protects ….  looks for ways to limit and divide power, to contain and channel it – through the rule of law, the dictates of convention, the test of periodic elections, the scrutiny of a parliament and a free press, the competitive discipline of the market. In other words, it is the opposite of populism. It seeks not to free the hands of those in positions of great power, but to tie them, to limit their discretionary power, and to oblige them to work within certain defined institutional constraints.  This idea can be expressed in two words: limited government.”

Further, he states: “Conservatism is not anti-government, for the coercive powers of the state are sometimes necessary and legitimate. Neither is it synonymous with small or less government, as if small and lesser were always to be preferred.””In a phrase, government should do only what government can do.” (Emphasis in original.)

He goes on to outline a framework for the role of government, arguing that governments should intervene only to provide ‘public goods’ such as defence and civic services and to remedy what economists call ‘market failure’, as is the case, for example in environmental degradation.  In these cases there is, absent government intervention, no method for ensuring either that the services are provided or that the costs of market failure are taken account of in private decision-making.  With respect to the latter, a conservative government would insist, “as a condition of intervention, on the presence of some demonstrable market failure”.

All of that is well and good and even 21st century liberals can agree with those fundamentals!

But he then argues that markets should be allowed to determine the allocation of goods and services among individuals. Governments should confine their interventions to those affecting the distribution of income:  if the distribution of income is deemed to be inequitable the tax and transfer system is the appropriate means of remedy.

While I, and I’m sure most ‘liberals’, agree that there is an important role for government with respect to the distribution of income, there exist considerable differences between liberals and conservatives as to the nature and scale of those interventions – the latter tending to reject measures favouring those with lower incomes and promoting those that favour higher income individuals.  And, let’s also note that a major policy initiative of governments, in recent years both liberal and conservative – expanding the scope of international free trade in goods and services – even if it leads to an expansion of national income in the aggregate – can have substantial distributional effects.  Governments generally have, I think, done a poor job of alleviating such effects by  compensating the losers.

Where I and, I suspect, those of a liberal persuasion generally, part ways with conservatives is with respect to the notion that the allocation of goods and services should be off limits to governments.  To adopt this position is to implicitly adopt the position that what economist’s call ‘perfect competition’ is the rule, i.e. that no institution or individual has market power – the ability to influence the price, quantity or quality of goods and services bought and sold.  Moreover, it assumes that all individuals are equally well informed about prices, qualities and quantities of goods and services.  Both of the foregoing assumptions are demonstrably false: the perfectly competitive market of Econ. 101 is the exception, not the rule.

According to Coyne this would “seem to rule out, among other activities, the operation of a state rail monopoly, a state postal monopoly, a state liquor monopoly and a state broadcaster”.  Well, not necessarily; so-called ‘natural monopolies exist – oil and natural gas pipelines come to mind as do electrical transmission lines – in which case either state monopolies or at least regulation of  privately-owned monopolies are required.  More generally, market power exists in industry which can require government intervention in some form such as, in Canada, the Competition Act.

Since minimum wage legislation influences the ‘allocation’ of labour, Coyne would rule it out.  But I, and I suspect most liberals, would not.  Absent substantial ‘countervailing power’ – such as labour unions – in the hands of workers, business firms do exercise market power in the workplace. And, as the strength and breadth of labour unions has declined in recent years, such market power has only increased.

More generally, the distribution of income in our society has become markedly less equal in the past couple of decades, favouring capital over labour and high income individuals over those in lower echelons. In my view this is a, major issue confronting governments in industrial democracies in years to come. Conservatives either generally dismiss it as a non-issue or favour the status quo while liberals do not.

Coyne correctly admits that “Ensuring the fair but competitive delivery of services can be tricky, especially when it comes to such spheres as education and health care… but that doesn’t mean the market should automatically be excluded from playing a role”.  Here,  with respect to health care, the experience of virtually every industrialized country except Canada is that private and public ‘markets’ in health care can co-exist and can jointly produce better outcomes at lower cost than does the Canadian system.  We definitely need what one observer once called ‘an adult discussion’ of health care policy in this country but so far there is little evidence of that occurring.

Coyne concludes that “the days of conservatism as a revolutionary force in the style of Reagan and Thatcher, Manning and Harris, are gone.  The movement must instead be rebuilt…. its objective should not be to move to the middle, but to move the middle.”  Liberals like me can agree with that – it’s the direction of movement advocated by conservatives that can be the problem!

Finally, there is one major set of issues in this country that does not fit neatly into a purely economic framework:  the socio-economic and political status of aboriginal people.  In my opinion neither ‘conservatives’ or ‘liberals’ have adequately addressed these issues. Surely they must be of major and immediate concern to people of all political persuasions in the immediate future.













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