For the past few weeks, I have been playing with the following argument. Tell me what you think:
In the past year, fuelled by Trump’s fiery rhetoric as well as the left, a lot has been said against trade, especially framing it as the cause for the decrease of manufacturing jobs in the United States or Canada. But the truth is, trade played a much lesser role than decades of efficiency gains due to automation and information technologies. Although most of us do not realize that fact, the US has never produced as much industrial goods as they do now, with the big difference being that they produce all of it with less workers than before.
Let us consider the following abstract case:
- 20 years ago, 200 workers built 200 tractors.
- Now, because of efficiency gains, 150 workers are able to build 210 tractors, while the other 50 workers are fired.
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Andrew Coyne’s column in the National Post today is an unusually clear example of a mistake that people on the right always make when talking about public pensions. The headline in fact says it all: Turning the CPP into 18 million RRSPs. Here’s the basic problem with Coyne’s analysis. A public pension, like CPP, is providing an insurance product to Canadian citizens, in the same way that the health care system provides an insurance product to Canadians. Having insurance is not equivalent to having a pile of money in a savings account. And yet people on the right – merely because they don’t like government – are constantly suggesting that we abolish these insurance schemes, and replace them with individual savings – effectively forcing individuals to self-insure. So people like David Gratzer want to get rid of public health insurance, and replace it with individual savings accounts. And now Coyne wants to phase out public retirement insurance and replace it with individual savings accounts.… Continue reading
Jeffrey Simpson wrote a column today on an issue that I think is of a paramount importance in Canadian politics – I’ve often said that the near-total collapse of the centre-right is the most important development in our political system over the past two decades. Unfortunately, the way that Simpson articulated the idea confused many people. First of all, he described it as “The Disappearance of the Moderate Conservative“, and second, he tied it to the unfortunate term “red Tory,” which is a complex political tradition that is not exactly relevant to the current set of issues.
The biggest problem has to do with the term “moderate,” because it suggests a person who takes a position between some set of extremes, and so if you think of the three political parties arranged on a left-to-right spectrum, a moderate conservative is just someone who is more like a liberal. This is not a helpful way of framing the debate (because conservatives just dismiss it, as the sound of a downtown Toronto media elite whining, “why isn’t everyone a liberal like me?”).… Continue reading
The most recent issue of Res Publica features a collection of articles on social insurance and the welfare state, a topic near to my own heart. It was recently featured by Bookforum under the heading The Greatness of Modern Welfare States. I thought I might say a few words on this paper (ungated here) by Xavier Landes and Pierre-Yves Néron (two of my former postdocs, I should mention). Much of the discussion is a response to this paper of mine (which is actually just a more academic presentation of an argument developed in my book, The Efficient Society), in which I basically present a philosophical defence of that standard “public economics” view that the major role of the modern welfare state is to correct various forms of market failure. Much of this activity gets misclassified, however, as “redistribution,” suggesting that it follows some sort of an egalitarian logic, when it fact it is just an insurance scheme being run in the public sector, and is therefore no more redistributive than any other sort of insurance.… Continue reading