Paul Martin and the Common Good?
Paul Martin and the Little Market That Could
Contact:
Jason Clemens, Policy Analyst
The Fraser Institute, (604) 714-4544 Email: jasonc@fraserinstitute.caPatrick Basham, Director, Social Affairs Center
The Fraser Institute, (604) 714-4549 Email: patrickb@fraserinstitute.caRelease Date: 18 February 1999
If Paul Martin is as conservative a Finance Minister as many on both the political right and left think he is, then why did he choose to disparage the free market economy during his February 16th budget speech?
As the cornerstone of democratic capitalism, an economic marketplace, according to Mr. Martin, is able to "do many things and…do them well." "But," [and it's a huge BUT] "there are many things they (markets) cannot do."
Namely, "Markets cannot provide quality health care to all of us when we are sick." Markets "cannot prevent the gap between rich and poor from becoming an unbridgeable gulf." And, shame of all shames, markets "cannot deal with the root causes of homelessness."
After all, markets "do not…deal with the common good. Therefore, we [i.e., the government] must."
Oh, really. Unfortunately for Mr. Martin and his coterie of statist speechwriters, facts are stubborn things. And the facts in this case are firmly on the side of the market.
Let's consider health care. As The Fraser Institute's Economic Freedom of the World rankings clearly reveal, infant mortality rates are lowest and life expectancies are longest in the world's most economically free countries. By contrast, those countries whose economies are most riddled by government interference, ownership, and expropriation suffer from the worst health care statistics.
Now, consider income inequality and poverty. Contrary to Mr. Martin's comments and to Prime Minister Jean Chretien's recent utterances at the World Economic Forum in Switzerland (namely that the gap between the rich and the poor is growing at an unacceptable rate), the good news is that poverty and inequality are less of a problem today than they've ever been.
For example, in 1951, one in every three Canadians lacked the income needed to afford the basic necessities of life, such as adequate food, clothing, and shelter. Today, in the cold-blooded throes of an allegedly harsh and heartless competitive market economy, the number of truly needy Canadians has fallen dramatically--to just one person in 25.
Neither the latest Statistics Canada data nor a recent C.D. Howe Institute study found any trend towards increasing income inequality in this country. It's true that the Canadian middle class is shrinking. But not because more Canadians are falling into poverty. Rather, in net terms, a significant number of formerly middle-class families are moving up the income ladder into the top tier.
But, allegedly, the marketplace has no place to shelter our most unfortunate fellow citizens. This is straw man rhetoric at its worst. The homelessness 'crisis' in our major cities is clearly the result of government action, not market indifference.
Homelessness has two root causes. The first is the so-called "deinstitutionalization" (i.e., the compulsory release into the community) of mentally ill patients. This cruel policy was successfully promulgated by progressive health care and social workers whose collective social conscience was much larger than their collective common sense. It has produced a homeless population that is predominantly (if not entirely) composed of the mentally ill and the drug and/or alcohol addicted.
The second cause is government-imposed rent control legislation. The capping of private rents predictably reduced the available supply of affordable, low cost housing throughout our major cities. For example, William Tucker's rigorous analysis of the American experience with homelessness demonstrated the existence of rent control as the factor influencing the size of a city's homeless population.
Mr. Martin is correct in arguing that markets don't explicitly deal with the "common good." Theoretically, in a free market, individual, private acts of exchange and cooperation take place within a competitive, noncoercive economic environment producing social outcomes far more efficient, prosperous, and equitable than any government-driven alternative. Therefore, the common good is implicitly realized, a theory whose implications have been felt by converts to capitalism the world over.
Overall, the 20th century has been an experiment in policy priorities. The experience of Canada and of countless other countries shows that if a country chooses economic equality over economic freedom, it ends up with less of both. However, when a country chooses economic freedom over economic equality, the result is more of both.
Perhaps, then, the lesson for the millenium is that there's a moral as well as a practical case to be made for the market economy. This is a neglected, if not unexplored, theme dating from Adam Smith's classic 1776 treatise, The Wealth of Nations, through Milton Friedman's provocative 1962 Capitalism and Freedom, to George Gilder's 1981 influential Wealth and Poverty.
Call us pessimists, but we don't expect any such book to find its way onto our 'conservative' Finance Minister's Budget 2000 reading list.
Established in 1974, The Fraser Institute is an independent public policy organization based in Vancouver.
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