Back in the USSR

by Ezra Levant, University of Alberta, Law

The winds of change have hit both the University of Moscow and the University of Alberta at the same time, but from different directions. While U of M phases out its required courses in state ideology, we at U of A Law School are gradually phasing in a programme of ideological education. They still teach the tenets of socialism at the U of M today, but such courses are optional, and unpopular. We teach socialism too; and here it is unpopular, but mandatory. I hope my colleagues will realize their errors before we see the U of M's 75 year social experiment relived at U of A.

Specifically, earlier this month, regular classes were cancelled and the first year student body was convened for "Perspectives Days"--a meeting with three political salesmen from the Canadian Bar Association. The pitch was simple: the legal profession is racist and sexist, and it needs massive state intervention now.

According to the CBA salesmen, even though fifty percent of law students are women, barely thirty percent of the practising profession is female. Since women comprise half of the general population, this discrepancy is obviously due to "systemic discrimination." Further, those women who are in the profession are less likely to be partners in their law firms, and are twice as likely as men to drop out of practise. More discrimination, we were predictably told.

The proposed remedies were also predictable--and numerous. Former supreme court judge Bertha Wilson wrote the CBA's report, "Gender Equality in the Legal Profession," which demands sweeping affirmative action reforms to the entire study and practise of law. Not only would private firms be compelled to hire lawyers based on gender quotas, but law societies would be empowered to investigate the status of women and minorities within these firms. Law schools, once bastions of free speech and thought, would hold special "forums" where gender issues would be discussed in a "safe way." Feminist scholars, actively recruited, would police these sessions. And of course, "Perspectives Days" would continue for all students. According to the CBA's president, these steps would usher in a new legal order, a "five-year plan" for equality.

Real equality is not measured by uniformity of outcome. Equality does not mean rigging the system to meet artificial quotas, or hiring unqualified tokens. Real equality for women means equality of opportunity and choice. And that means the freedom for some women to choose to practise law, and for others to choose not to.

Instead the socialist chicken-littles advocate total state control, from law school through to law firm. Their methods are shamelessly totalitarian; their plans strengthen big government and debase individual choice and merit. But while the tactics are shameful, the CBA's logic scares me the most. For if unequal results can only be due to an unfair system-and not the sum of individual choices-where do over represented groups stand?

The CBA's next task force might deal with an even more obvious anomaly or "inequality" in the legal profession-the over representation of Jews. I wonder what plans will be cooked up to stop this "systemic discrimination" against Gentiles. Asian lawyers are not yet over represented, but if current trends continue, they will be. After all, socialist logic denies that individual choice has any role; it is the unfair "system" that favours these people-not as individuals, but as members of a particular ethnic or gender group.

For the first time since Yuri Gagarin, the Russians lead the way. The fact that on campuses they may be beginning to lead us in personal freedom is an embarrassment to our intelligentsia.

No Need For Tax Loopholes!

by Marc Law, University of British Columbia, Economics

Governments often use the tax system to channel resources into activities which they claim lack "sufficient" investment. Through tax loopholes and shelters, governments create incentives for investments it wishes to encourage. The final result is that resources "trickle" into certain favoured businesses or business activities, somehow improving the profitability of these industries and aiding struggling sectors of the economy.

The use of tax loopholes can be quite damaging to overall economic efficiency. In a market economy, the free flow of scarce resources guarantees an economically efficient outcome; an industry which is profitable "naturally" encourages investors to move their capital to the place of best return. Losses, in contrast, signal to investors that their resources would be better employed elsewhere. Acting entirely on its own, therefore, a free market will direct resources to ensure that the right combination of products is yielded: this is the essence of economic efficiency.

Tax loopholes distort the profit and loss signals that guide resources and guarantee economic efficiency. Loopholes make certain industries seem more profitable than they really are, creating incentives to engage in activities that, in the absence of those loopholes, might not guarantee an investor a positive return. Thus, resources could be directed into activities which are inherently unprofitable. For example, the government may use a loophole to increase investment in Canadian films, even though this would not otherwise be a profitable enterprise. In the meantime, investment in potentially profitable ventures, for instance, software packages, decreases. Hence, a less than optimal combination of goods and services is produced, resulting in an economically inefficient outcome.

Why is it, then, that loopholes are present in our tax system, even though economic efficiency is reduced? Perhaps a complete analysis of the long term consequences has not been conducted, or has been ignored. Since governments are rarely noted for their foresight, this may be a valid explanation. Another possibility is that our government has a non-economic rationale in mind, that they are prepared to trade economic efficiency for some other objective. For example, loopholes that favour investment in certain cultural or artistic industries may be an attempt to preserve "Canadian culture." Or perhaps the objective is less noble, an attempt on the part of self-interested politicians to win votes by giving in to lobby groups who represent flagging sectors of the economy. Whatever the case, tax loopholes, by distorting pure economic incentives, encourage economically inefficient investment. The final result is an allocation reflecting the government's preferences rather than yours.

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A wise and frugal government, which shall restrain men from injuring one another, which shall leave them otherwise free to regulate their own pursuits of industry and improvement, and which shall not take from the mouth of labour the bread it has earned, is the sum of good government.
-Thomas Jefferson

Three Myths About Free Trade

by Peter Berezin, McMaster University, Honours Economics

Free Trade. There are scarce two words in the English language that once put together elicit so much vitriol. It is a pity so few people understand why nations trade, or who stands to gain from the unhindered international exchange of goods. As it turns out, the misunderstanding of the issue is as great in the corporate lobby as it is among Canadian socialists and nationalists. The following is an attempt to refute some of the mythology about free trade.

Myth: To compete in the new global marketplace, you have to be more efficient than your competitors.

Truth: A country will gain from free trade with another country even if it is less efficient in the production of every good.

Economics Nobel Laureate Milton Friedman provided an analogy to illustrate this concept. Imagine you are a lawyer and you employ a secretary. You are twice as efficient as your secretary at secretarial work. You are, however, fifty times as efficient in legal work as your secretary. Since you are more efficient in both tasks, does this mean that you should do both the secretarial and the legal work? Of course not! It makes sense that you specialize in law, the field of work in which you are relatively more productive. And of course, this is also true if you are the secretary.

The same principle holds true among trading nations. Canada can produce textiles more efficiently than India, but Canada can produce refrigerators even more efficiently than textiles, by comparison with India. Thus it makes sense for Canada to specialize in the task in which it is most productive: Canada should devote itself to the production of refrigerators. Countries should produce goods in which they have a comparative advantage, not an absolute one. (For a thorough explanation, look under "Ricardo" in any economics text.)

If trade is informed and voluntary, both parties will gain. Otherwise, why would one party participate? If you are hungry and I am thirsty, and I have a lot of food and you have a lot of water, we can both gain by exchanging. Trade is not a zero-sum game. There is, after all, a free lunch to be gained in mutually advantageous exchanges.

Myth: Exports good, imports bad.

Truth: Imports good, exports bad.

Those that claim that exports are the lifeblood of our economy falsely presume that work is better than leisure and that industry is better than goods. Actually, for the most part we work only so we can earn income with which to buy goods. If foreigners are willing to provide us with a cornucopia of goods in exchange for nothing, it is we who gain.

If I offered to give you a pencil in exchange for half of what you owned, would I not be better off? Similarly, if a Japanese merchant decided to "export" us 5,000 shiny new automobiles for one rusty Canadian toaster, would we Canadians not get the better deal?

Myth: Free trade increases unemployment.

Truth: Free trade has little effect on employment levels.

When Canadians buy goods from abroad, they endow foreigners with Canadian money. What will the foreigners do with the Canadian money? They can burn it, use it as wallpaper, or perhaps even eat it, but these are unlikely. All of the money is spent in Canada. This creates jobs for Canadians.

If demand for foreign goods in Canada becomes too strong, that is, if we decide to import much more than we are exporting, the supply of Canadian currency will exceed its demand. Our dollar will therefore depreciate. This will make Canadian goods cheaper relative to foreign goods; hence, Canadian exports will rise while imports will fall.

This explains why a country can successfully trade with another country, even if it produces everything less efficiently. If Japanese productivity suddenly skyrocketed, producing everything more efficiently than Canadian firms, the demand for the Japanese yen would soar as Canadians scrambled to buy the cheaper goods. This would, however, depreciate our dollar and again entice the Japanese to buy some of our goods. Equilibrium would be restored.

The one time when free trade will increase unemployment is when a nation makes the commitment to lower its trade barriers. This will result in the sort of "economic restructuring" that we are now enduring. The culprit, however, is not free trade, but the protection that existed before it. Structural unemployment would not be so severe today had we never sequestered ourselves from foreign competition in the first place. The first step to a sound trade policy is to understand what it is all about.

Editor's note: For more information about trade within Canada, please refer to Provincial Trade Wars: Why the Blockade Must End, edited by Filip Palda (Vancouver: The Fraser Institute, 1994).

Prosperity is achieved not by oppressing the individual, but by liberating him.
-William Trench, Only You can Save Canada, 1991.

A Closer Look at Government Spending on Infrastructure

by David Williams, Dalhousie University, Economics

The new federal government intends to stimulate Canada's economy by subsidizing infrastructure projects in every province. While details of this plan have yet to be announced, the merits of government subsidies for certain types of infrastruture are dubious, and are worth close examination.

The Collins English Dictionary defines "infrastructure" as: "[T]he stock of fixed capital equipment in a country, including factories, roads, school, etc., considered as a determinant of economic growth." The Collins English Dictionary, 2nd ed. (London & Glasgow: Collins), 1986, p. 784.Note If governments want to boost economic growth, should they automatically invest in all of these types of infrastructure? Careful analysis suggests they should not.

Economists widely agree that governments have a legitimate role in the provision of "public" goods. These types of infrastructure, including roads, sewers, and parks, benefit the economy as a whole, yet contain no incentive for any individual to supply them. Individuals cannot earn profits by providing "public" goods, due to extremely high fixed costs, Their high fixed costs are often accompanied by low marginal costs (the cost of supplying an actual unit to consumers). For example, while a bridge is costly to construct, each additional user imposes a very small amount of wear and tear on it. In the case of "public" goods, operating revenue does not offset their construction costs.Note or high exclusion costs. "Private" goods, on the other hand, are supplied most efficiently by private firms and individuals. They can be sold in the market, where prices reflect the scarcity of their inputs. However, subsidies for the production of "private" goods distort the link between scarcity and selling price. Hence, governments should not attempt to stimulate the economy through subsidies for such goods. Surely the question is when does a "public" good become a "private" good? Highways are usually considered "public" goods; however, they are more correctly thought of as inputs for trucking firms and bus lines, whose outputs are "private" goods. For example, government subsidies for highways transfer income from taxpayers to consumers of the goods transported by trucks, as well as to intercity bus passengers and owners of automobiles. The same analysis applies to seaports and railways. These facilities are important to the economy, but, for a variety of reasons, may not always be supplied by private firms. Does this mean that the government should intervene with subsidies?

The recent privatization attempt for Toronto's Pearson International airport suggests that the private sector could operate this and perhaps other airports profitably. The distinction between "public" and "private" goods is thus further blurred. Do such examples infrastructure in areas of high economic activity, such as metro Toronto, qualify as "private" goods, but infrastructure in less populated areas as "public" goods? Should government only subsidize infrastructure in regions of low economic activity?

Where possible, infrastructure should be paid for by those who benefit directly. For instance, economically meaningful highway tolls should be collected from trucking firms and motorists, and significant airport user fees should be charged to passengers. Costs associated with preventing individuals who do not pay for these goods from using them.Note Infrastructure costs would then be borne to a greater extent by the consumers of the goods in question.

It is clear that many government subsidies for infrastructure unfairly transfer income from taxpayers to consumers of particular goods and services. Such hidden taxes are often unnecessary, and distort the true costs of products which are more effectively priced by the market. Even those types of infrastructure which must be constructed publicly are more efficiently and fairly operated on a user-pay basis, thereby helping to restrict their costs to consumers rather than taxpayers. These fees need not be collected by government departments. Private firms could be hired to operate tolls, etc.Note

Editor's note: Soon road users in Ontario will be paying tolls for the use of a new super highway there. The highway will be built with private funding and the tolls will be collected by means of a transponder mounted on the car or by a photograph of the user's license plate.

Socialism won't work except in Heaven where they don't need it and in Hell where they already have it.
-Stephen Leacock

What Television Says About University Life

by Lydia Miljan, Director, National Media Archive

Not only can television influence how we think about the issues, but it influences how we judge individuals and institutions. The image of universities in the news is one case where the image is primed by how and when the institution is portrayed by the media. From 1988 to 1992, the only instances when life on university campuses was reported centred on sexism, sexual harassment and date rape. No other depictions of campus life were portrayed. There were no stories on CBC or CTV national news which examined the study habits of students, no stories on who received scholarships, no stories on students and instructors involved in the learning process. None. Every single reference to campus life involved some form of sexual deviance.

The reason for this finding is that journalists, and television journalists in particular, are not trained to report the norm. In a manner of speaking they're "pop sociologists" looking for deviance in society. For them what is newsworthy is events out of the ordinary. Academic achievement and scholarship is what one expects to find at universities, so it is not news. Sexual harassment, exploitation and perversion are not part of the curriculum, so any reports of them, any indication of their existence, no matter how small, no matter how unsubstantiated, will make the headlines.

To illustrate, we at the National Media Archive examined how sex was reported over the last five years. We found that television news finds sex interesting in only two ways: the sex you can never have and the sex you should never have. The news glorifies the sex you can never have--the pursuit of sexuality and sexual activity. Reports on what is sexy or who is sexy comprise about one-half of the networks' attention to sex. The remainder of the reports focus on the sex you should never have--sexual abuse, sexism or violent sexual acts.

Where do universities fit in this dichotomy? In the sex you should never have category. Universities are portrayed as being sexist, permitting sexual harassment, or being havens for date rapists. Essentially, sex on campus represents part of the deviance in society. You should be aware that the company universities keep in this coverage is that of the Mount Cashel Christian brothers, serial rapists, and mass murderers.

Discussion about sexual abuse or harassment at universities tends to focus on high profile events rather than emerging from studies or forming a news story because of a regular event. For example, violence against women became a media event not as a result of a statistical report that found that "in 1988, 57.4 percent of all female victims of homicide were killed by someone with whom they shared a domestic relationship, whereas only 24.4 percent of male victims were killed in such a situation," but as a result of the Montreal Massacre in 1989, where the act of one madman focused the nation's attention on the issue. Fourteen percent of both networks' attention to all women's issues during 1989 focused on this event. Despite the fact that Marc Lepine did not attend the Université de Montréal, engineering departments and universities were singled out for their sexist attitudes. CBC's Karen Webb reported in a February 4, 1990 story about engineering students examining their practices: "The lightening rod of the debate at several universities has been Lady Godiva. For the engineering students here at UBC, a naked woman on horseback riding across campus is a tradition of Engineering Week--the ultimate symbol of school spirit." In total, one third of the stories reported about sexism over the past five years were as a result of the Montreal massacre or its anniversary.

What conclusions should we draw from the foregoing? First, the image of universities created in the mind of the general public by television is that of a sexist, deviant, oppressive culture. Since the reality is the perception, it is not surprising that there are demands for radical changes in the policies that surround and support such conduct. Politicians, both inside the university and outside it, respond to perceptions rather than to realities. Their over-riding concern is to be seen to be legitimate. Their reaction, therefore, is to construct policy which is consistent with the perception.

Second, the image projected by television plays a crucial role in the formulation of these perceptions. It is therefore natural for those concerned to want to change the way in which universities are portrayed by the national television networks.

Academicians concerned about the evolution of policy on their campuses must become activists in their own cause. Rather than shunning media exposure as an irritant to the pursuit of scholarship, scholars must realize that this medium is being used to great effect, either unwittingly or purposefully, as the instrument of change in the fundamental structure in which scholarship occurs.

The news of the day is a figment of our technological imagination. It is, quite precisely, a media event . . . . Without a medium to create its form, the news of the day does not exist.
-Neil Postman, Amusing Ourselves to Death, 1985.

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