The deficit has always been one of the financial evils that plague our economy. The other evils are the public debt and high taxes. Years of consistently borrowing more and more money have left today's governments saddled with monstrous debts that put them at the mercy of foreign and domestic lenders. Politicians are always the first to talk about the great fiscal recovery that is well under way in this country. However, the numbers tell a different story. Instead of quickly ridding this country of its overspending, the current federal government has taken its time in cutting the federal deficit, and in the process the debt has gone from $508 billion in 1993-1994 to $610 billion in fiscal 97-98.< John DeMont and E. Kaye Fulton, "Martin's Message: The Federal budget emphasizes deficit-cutting success," Maclean's (3 March 1997), p. 17.> In other words, the current federal debt represents a whopping 71 percent of Canada's GDP.<DeMont et al., p. 17.> What recovery?

To taxpayers this means that in the near future the federal government will be forking over a cheque for billions of dollars to pay for the interest on the debt, courtesy of the Canadian taxpayer. This at a time when interest rates are the lowest they have been in almost four decades. What happens when interest rates go up? What happens if lenders decide that Canada is incapable of meeting its obligations to them? Can you spell B-A-N-K-R-U-P-T? How can we think about spending more on programs when the ship is still sinking!? Our nation and her provinces must wrest away their fiscal independence from the jaws of foreign lenders and place it squarely back in the hands of Canadians.

Instead of allowing Canadians to enjoy the fruits of their own labour, governments in Canada have always chosen to play the role of the big, bad Sheriff of Nottingham. The result has been a rapid decline in disposable income. David Perry, senior research associate for the Canadian Tax Foundation, found that at almost every income level, in every province, after inflation, Canadians took home less pay in 1997 than they did in 1993.<Mary Janigan, "Some Recovery," Maclean's (Feb. 17, 1997), p. 17.> This comes at a time when inflation is running at less than 2 percent annually. Moreover, in 1989 the average Canadian took home about $17,945 after taxes, but by 1996 that number had fallen to $16,765, in 1994 dollars.<Janigan, p. 18.> Where's the recovery?

Furthermore, I find it very insulting that the current federal government has the gall to talk about an economic recovery, while at the same time it announces increases to Canada Pension Plan premiums that will raise taxes by $2 billion over the next seven years.<Janigan, p. 17.> The burden on Canadians of Ottawa's income tax, CPP, and Employment Insurance payroll tax has gone from 9.9 percent of GDP in 1993 to 10.2 percent this current year, and is expected to rise in the future. This translates to an increase of more than $660 for every taxpayer who earned $30,000 in 1997.<Janigan, p. 17.> Govern ments must learn that more money left in consumers' pockets means more money in the economy, which means a stronger and better economy, with better standards of living, more jobs, and greater prosperity for all Canadians.

Retaining the status quo is not an option. After years of taxing and borrowing, Canada and the provinces have been left with stag gering debts and high levels of taxation. Clearly, the time has come for Canadians to take a stand against both the injustices of the past and those of the present, so as to promote greater economic growth and prosperity in the future, through cut taxes and reduced public debts. 

As a check upon the propensity of politicians to adopt poorly thought out, dangerous, or just plain ridiculous economic policies, Worzel would have us assign a much higher priority to teach basic economic concepts to primary and secondary school students.

We shouldn't have any illusions about this idea. As the notable British Conservative thinker, John Redwood, once said, "Freedom needs defending every day." Worzel's idea is not a cure-all, and would not lift from our shoulders the task of upholding and maintaining our free-enterprise system in the face of criticism from the left. We would not be able to declare victory over the statists and collectivists and rest easy because young Johnny can now quote from The Wealth of Nations

why do they have so much faith in the state's ability to create jobs, when all the evidence is to the contrary?

But Worzel's prescription has real promise. In effect, it would ensure that young people—who are in every sense the most vulnerable in our society, especially intellectually—would be immunized against the lies and distortions which so often pass for "facts" in discussions about our economy.

Naturally, there are those in this country who would be terrified and outraged by such an idea. Imagine the gall of someone, suggesting that we teach kids the economic facts of life! What kind of society would we be if high school seniors were told that low tax rates encourage prosperity? Or if students conducted their own case studies of former socialist countries and why they abandoned state intervention in the economy? And what if they presented in-class summaries of the theories of thinkers like Milton Friedman, Ludwig Von Mises, or Friedrich von Hayek?

Why, I'm sure that if we were to implement Worzel's suggestion coast-to-coast in Canada, within a few years, certain candidates for office might have to answer tough questions about why they have so much faith in the state's ability to create jobs, when all the evidence is to the contrary. And, make no mistake—there are folks out there who would find that scary.

All that Richard Worzel is proposing, really, is that we extend a program already in place. It is now routine for schools to ensure that children are immunized against dangerous diseases like measles and mumps. Thanks to the patient work of dedicated school health workers, youngsters today are free of some of the illnesses that often struck down others their age at the beginning of this century.

By communicating to these same children some of the fundamental tenets of our free market system, we can inculcate them against the half-baked ideas that still inhabit our public discourse like antibiotic-resistant germs. Basic economic education and preventative medical attention are alike in important respects—in the long run, both will save us a great deal of money and make Canada a healthier place to live. 

Earlier this year in Saskatchewan, it was revealed that the provincial government was on the brink of bankruptcy in 1993. At that time, Saskatchewan's per capita debt and per capita deficit were both higher than those of any other province. To compound the problem, a series of bond rating downgrades had resulted in a sharp reduction of lending sources for the Saskatchewan government—from over 100 to just over 20.

Perhaps even more alarming is that, by the government's own admission, Saskatchewan may have indeed defaulted on its interest payments and could have been forced into bankruptcy were it not for the actions of the federal government of the time. Meetings between Saskatchewan's finance minister, and the then finance minister of Canada resulted in an adjustment in the federal equalization formula that enabled Saskatchewan to avert this crisis.

The cause of this financial crisis was not difficult to deduce: financial mismanagement. From 1982 to 1991, Saskatchewan's finances were drawn to ruin by a careless provincial government which incurred nine consecutive deficit budgets, some to the tune of over one billion dollars—a staggering amount considering that Saskatchewan only has approximately 1 million people living within its borders.

the Saskatchewan government was on the brink of bankruptcy in 1993.

The example of Saskat-chewan's debt crisis should serve as a reminder to all people who doubt the severe consequences of high government debt. Clearly, bankruptcy in the public sector can and will occur if governments do not maintain tight controls on their fiscal purse strings. Saskat-chewan's government was confronted head-on with a situation that many socialists claim does not exist. Saskatchewan's near bankruptcy experience demon-strates that bankruptcy in the public sector of an industrialized society can—and almost did—occur.

Now, if only Saskatchewan's government could take a few lessons from the financial markets about the adverse effects of high taxation. 

Steve Forbes is coming to speak in Toronto...

Tuesday, September 30, Toronto Marriott Eaton Centre, Toronto Round Table Luncheon: "Reforms for the New Millennium" with Steve Forbes, President and Chief Executive Officer, Forbes Inc. and Editor-in-Chief of Forbes magazine. Co-hosted with The Empire Club of Canada. Fee: $60 Single; 10% Discount for Fraser Institute members and students.

Is global warming all hot air? Find out in Vancouver...

Wednesday, October 29, 1997, Renaissance Vancouver Hotel Waterfront, Vancouver Conference: "The Science and Politics of Global Warming" 9:00 a.m. to 5:00 p.m. Fee: $195 until September 29, 1997; $205 until October 28, 1997; $225 on site. 10% discount for FI members, academics, and students.

Why are we waiting for health care?

Monday, November 3rd, Toronto & Tuesday, November 4th, Vancouver Conference: "Putting Patients First" Fee: $195 until October 3rd; $205 until October 31st; $225 on site. 10% discount for Fraser Institute members, academics, and students.

From the failed bureaucratic rubble of our parents' attempt to transform the welfare state come many lessons from which we must learn if we are to establish a solid economic and social foundation for long-term successful welfare reform. For one, we now know for fact that an over-centralized, bureaucratic, one-size-fits-all approach to welfare reform has been a manifest failure. We also know that real compassion is not measured by the number of zeros at the end of a government welfare cheque. And, we should also be soberly aware that in order to overhaul the welfare system, we must be honest and blunt to those trapped in the welfare glass-house that they have a responsibility to play an active role in their own social and economic salvation.

De-centralizing our bureaucratic welfare labyrinth is the key first step to meaningful welfare reform in B.C. There are countless reasons why people become welfare dependent: learning disorders, domestic violence, poor education, substance abuse, mental incapacitation, etc. This reality requires a flexible welfare system that allows alternative delivery of social assistance to meet the demands of those in need. Faith-based organizations, alternate learning institutions, and private social assistance delivery would allow for innovative welfare alternatives that compete openly for provincial dollars by effectively helping those in need. Results would be the only factor used to determine eligibility for taxpayer funding.

When politicians campaign on the notion that the sole gauge of the public's compassion is the amount of money we transfer to those in need, they are actively deceiving our sensibilities about true compassion. In 1990 the entire budget for the Ministry of Social Services was $986 million. By 1996 that number ballooned to $2.78 billion. That's an increase of 281 percent! In 1990 British Columbia spent over $888 million on welfare. By 1995 that amount swelled to $1.8 billion. The largest single component of the Ministry of Social Service's budget is the $1.8 billion welfare expenditure. And what do we have? A dramatic increase in the number of British Columbians who now collect welfare. In 1996 374,000, or one in ten British Columbians, collected welfare. Those aged 19 to 29 accounted for 36 percent of all recipients, and over the past five years the fastest growing group of recipients are single men-up 96 percent! In 1996, 92,000 single, able-bodied men, without dependants collected welfare. Compassion? Is it compassionate to tax families into collapse, and businesses into bankruptcy, to fund a welfare system that has only served to dramatically increase the number of people dependant on a government cheque instead of themselves? Absolutely not.For generations we have lied to the poor. Our system lies to them, our politicians lie to them, and our values system lies to them. When our welfare system teaches the poor that they don't have to go out and learn, that they don't have to actively pursue personal excellence, or develop a consistent commitment to staunch self-discipline, we are being more than dishonest, we are destroying the poor. The inhumanity of this systematic lying must cease.

To salvage those British Columbians trapped in our welfare system we must enact a three-pronged approach to welfare reform. First, we must de-centralize our welfare system to allow flexibility and innovative new social assistance delivery. Second, we must admit that massive government spending and cash transfers have failed to build self-sufficient human beings. And third, we must be honest to those trapped in our welfare system that it will require self-discipline, personal strength, and perseverance to escape British Columbia's growing welfare tragedy.