Too small, too big, just right

There will always be an argument that government must grow

April 30, 2018
by Michael Hlinka

From the April 2018 print edition

Toronto-based Michael Hlinka provides business commentary to CBC Radio One and a column syndicated across the CBC network.

I was recently asked to be part of a debate with the resolution being: Government is already too big. The topic was supposed to pertain, specifically, to its involvement in the economy. It was supposed to be a discussion about what the public sector should provide and what should be left to the private sector. The essence of the debate was supposed to be a careful cost-benefit analysis. It soon became clear to my counterpart and I that not only was this impossible but it was ultimately fruitless. That’s because a debate about the size and scope of government is fundamentally one about values.

My grandfather was born in what was then the Austria-Hungarian Empire in the year 1900. He barely missed World War I, but was then conscripted into the Army for a brief period of time. After being discharged, he returned to the tiny village, Litminova, where he had been born. Life was difficult. The peasants—and I use that term without any pejorative sense at all—toiled extremely hard and after harvest, soldiers were routinely sent to take most of what had been grown, and it was given to others.

This was life as he and his forefathers knew it. But then he heard rumours that life was different in America. He learned that there was a country where after you got to keep all the fruits of your labour. The idea was intoxicating, and he made spectacular sacrifices, scrimped and saved, and in 1928 made his way to the New World. The US was closed to him so he settled for Canada. His family never looked back. All of his children were professionals or had married one, and settled into the upper-middle class.

I grew up listening to those stories. I saw how hard he worked: Into his early eighties (and I’m not exaggerating) he operated his own small business. He was a gardener. And when I ran a small construction company and my grandfather was in his late eighties, he helped out several hours a day, doing light construction work. I looked at a man like that and thought it wildly unjust that there were men literally one-quarter his age sitting around all day producing nothing. Yet at the same time, I had to recognize that our lives were spectacular by any reasonable standard.

When I examine the Canadian economy—and I have talked about this before—I see an economy that has largely stalled over the past 17 years or so. I believe that a major reason for that has been the growth of government at the expense of the private sector. The employment numbers don’t lie. Since 2001, the Canadian population has grown by approximately 20 percent. Employment in the public sector has grown by about 33 percent while there are actually fewer people working in the wealth-producing private sector. It seems to me that anyone who agrees that the economy has stalled over the past generation should consider the importance (or lack thereof) of those employment statistics.

There is a reasonable argument to be made that government isn’t big enough, and those arguments center on inequality. While the lot of the average person is essentially the same as it was a generation ago, the elites seem to be doing better than ever before. Government, with its power to expropriate value through the use of force or implied force (think of those soldiers coming into the Czechoslovakian countryside taking the harvested crops) is in a unique position to equalize outcomes.

So it comes down to a question of competing values: should virtue—manifested through hard work and the ability to produce desired goods and services of real value—be what is rewarded and protected? Or is equality a more important value? Should everyone in Canadian society enjoy approximately the same fruits, completely isolated from our contribution towards creating that value? And if this is the case, that is, if equality is the most important value, then it’s hard to delineate in what way government should be limited.

Society should be understood as a collection of individuals who at times group into collectives when it is in their interest to do so. At times, some of those collectives believe that their short-term economic interests are served by taking what others have produced. It’s hard to argue that assessment. If I take my neighbour’s wallet and empty it, clearly I have more economic resources than I did before doing so. If that’s what I value most, then I’ll find a way to justify pick pocketing. This is why there will always be an argument that government is too small, and not enough is taken from some in order to give to others.