Taxation in Canada

Articles on:

      •     Tax Freedom Day

      •     British Columbia's Dangerous Path

      •     Tax Reduction and Economic Growth in B.C.

      •     Taxpayer Funding of Federal Economic Development Programs

Contents       .......        July 1996

Editor's Notes
This Issue's Authors
Cover Stories : Canadians Start Working for Themselves on June 25th
British Columbia is Headed Down a Dangerous Path
Tax Reduction and Economic Growth in B.C.
Who's Responsible?
Who are We? How Health Care is Mired in the Canadian Sense of Community
July Question and Answer
Lawyers, Lawyers Everywhere
Indicators of Deprivation
Enlightened Unionism
Are Religious Schools Facing Extinction?
Government the Culprit Behind Restructuring
Callous Conservatives versus Caring Liberals
The King's New Advisors

Editor's Notes

You might think that this issue of Forum would be bursting with good news. Not only has Tax Freedom Day arrived, as Joel Emes and Michael Walker explain in our cover story, but for Canada and each of the provinces, the Balanced Budget Tax Freedom Day is earlier than it was last year (see table 9 in their article beginning on page 10). This means that governments are beginning to be a bit more accountable for their spending, in that they are attempting to link spending with revenue.

However, despite this good news, not all governments seem to have understood the message-a message which The Fraser Institute has reiterated countless times-that government over-spending and over-taxing are damaging to the economy. Such measures do not stimulate the economy or create new jobs; they destroy them. With this in mind, Michael Walker examines the effect of the results of the recent election in B.C. His analysis does not make for happy reading. Owen Lippert, meanwhile, looks specifically at marginal tax rates in British Columbia and draws the obvious conclusion: we are overtaxed and our economy will pay for it.


This Issue's Authors

Michel Boucher is Professor of Economics at l'École Nationale d'Administration Publique in Montreal. He is an expert in transportation economics and public choice economics and is widely published.

Gordon Davies earned his Ph.D. in Economics from the University of Michigan. He is a Vancouver-based freelance economist.

Stephen T. Easton is Professor of Economics at Simon Fraser University. He has edited, co-written, and written several Fraser Institute books.

Joel Emes has his Masters in Economics from Simon Fraser University. He is a research economist at The Fraser Institute.

Peter Holle is Principal Associate with COG Associates in Winnipeg. He has an MBA from the University of Wisconsin at Madison, and has written widely about government reform.

Owen Lippert is Senior Policy Analyst at The Fraser Institute. He received his Ph.D. in History from the University of Notre Dame, Indiana.

Lydia Miljan is Director of the National Media Archive, a division of The Fraser Institute. She earned an M.A. in Communications from the University of Calgary. She researches and writes On Balance.

Kate Morrison is Co-ordinator of the National Media Archive. She has a B.A. (Honours) in Economics and Communications from Simon Fraser University.

Filip Palda is Professor at l'École Nationale d'Administration Publique in Montreal, and Senior Fellow of The Fraser Institute. He is the author, co-author, or editor of several Institute books and publications. He received his Ph.D. in Economics from the University of Chicago.

John Robson is a freelance writer based in Ottawa. He has his Ph.D. in History from the University of Texas at Austin. He has written several Critical Issues Bulletins and many articles in Fraser Forum.

Christopher Sarlo teaches economics at Nipissing University in North Bay, Ontario. He is the author of Poverty in Canada, published by The Fraser Institute.

Karen Selick practices law in Belleville, Ontario, and is a columnist for Canadian Lawyer. You can reach her at kselick@connect.reach.net.

Michael Walker is Executive Director of The Fraser Institute. He received his Ph.D. in Economics from the University of Western Ontario. He has written, edited, or co-authored dozens of Fraser Institute publications.

Mark Weller is the Manager of Information Systems at the Fraser Institute. He has a B.A. in International Relations from the University of British Columbia.

Walter Williams is John M. Olin Distinguished Scholar at George Mason University in Fairfax, Virginia, and is a syndicated columnist. He has a Ph.D. in Economics from the University of California at Los Angeles.


Canadians Start Working for Themselves on June 25th

Joel Emes and Michael Walker

Canadians will work until June 24 this year to pay the total tax bill imposed on them by all levels of government. From June 25 to the end of the year taxpayers can keep all the income they earn. Working until June 24 to pay the governments in Canada represents 48 percent of cash income for the average family. Total taxes of the average family rose by $390 over their level one year ago. This year's results stand apart from those of all previous years as the news is not all bad. Most provinces have balanced their budgets and the federal government has made significant progress in eliminating its annual deficit.

The Institute has been calculating the comprehensive tax burden for the average family in Canada and each of the provinces since 1977. The most well known product from this research is Tax Freedom Day, the day of the year that Canadians finally start working for themselves. All money earned prior to this day goes either to a provincial, municipal, or the federal government. Canada's Tax Freedom Day falls 53 days later in the year than it did 35 years ago. In 1961, Tax Freedom Day was May 3rd. By 1974, Tax Freedom Day had advanced to June 8th, and in 1996 Tax Freedom Day falls on June 25th.

Tax Freedom Day for each province varies according to the extent of the provincial tax burden. The earliest 1996 provincial Tax Freedom Day falls on May 28th in Prince Edward Island. The latest date is June 30th in British Columbia.

Newfoundland, P.E.I., and British Columbia all experienced delays in their Tax Freedom Days, meaning that residents of those provinces will have to work more days this year than last to pay off their obligations to government.

Meanwhile, Tax Freedom Day is earlier this year than last in four provinces. In Nova Scotia, this is due to an increase in cash income and a small decrease in taxes. In Manitoba, Saskatchewan, and Alberta, Tax Freedom Day is earlier than last year in spite of increased taxation because of an increase in cash income. Cash income is higher in the Praries due to a one-time transfer to grain farmers from the Western Grain Transition Payments Act which resulted from the removal of the Crow Rate subsidy. As of April 15, the Conference Board of Canada predicted that growth in personal income would be 7.6 percent in Saskatchewan this year mainly because the province will receive $677 million of the $1.2 billion to be transferred from the federal government.

The Institute also has been keeping track of governments' use of deficit financing. It does this by calculating the Balanced Budget Tax Freedom Day. On this day, average Canadians would start working for themselves if governments were obliged to cover current expenditures with current taxation and were not able to defer any of the tax burden by running a deficit. Currently, tax deferral amounts to $10.9 billion by the provinces and $24.3 billion by the federal government. This compares with $12.4 billion and $32.7 billion respectively in 1995. Improved fiscal responsibility and less dependence on deferred taxation is a very positive trend in Canadian government. Table 9 shows that the Balanced Budget Tax Freedom Day is earlier than last year in every province. While taxation remains at record levels, governments are finally beginning to attempt to show some sustainable relationship between revenue and expenditure. If Canadian governments have finally realized the harmful effects of persistent deficits there is hope that they will recognize that high taxation levels are as much or more of a problem, and move to correct this situation as well.

For Canada, Balanced Budget Tax Freedom Day will be July 16th in 1996, 21 days later than Canada's Tax Freedom Day without deficits. Fifteen of the 21 days are due to the federal deficit and the remaining 6 days to the provincial deficits. The latest Balanced Budget Tax Freedom Day will fall on July 24th in Ontario, 28 days later than that province's Tax Freedom Day without deficits.

In response to concerns about the fairness of the Canadian tax system, this year The Fraser Institute has calculated the decile distribution of income and taxes. This distribution shows that the top 30 percent of income earners pay 62.5 percent of all taxes and earn 54.6 percent of all income. The bottom 30 percent of income earners pay 5.7 percent of all taxes and earn 10.7 percent of all income.

This distribution shows that the tax system is very competent at extracting money from those on the higher end of the income scale. Irrespective of concerns about income redistribution, however, are Canadians all along the taxpaying spectrum getting good value for their tax dollars?

Click here to view Table 1: Taxes of the Average Family (with two or more individuals), 1996

Click here to view Table 2: Taxes of the Average Family (with two or more individuals), 1995

Click here to view Table 3: Difference in the Average Family's Tax Bill between 1995 and 1996

Click here to view Table 4: Average income and Tax for Three Different Types of Family, 1996 estimates

Click here to view Table 5: Breakdown of the Average Family's Tax Bill by Level of Government, 1996 estimate

Click here to view Table 6: Tax Freedom Days

Click here to view Table 7:Tax Rates

Click here to view Table 8: The Distribution of Tax Income and Tax Across Deciles, And Average Tax Rate by Decile, 1996 Estimate

Click here to view Table 9: Tax Rates Including Government Deficits and Corresponding Tax Freedom Days

Click here to view Table 10: Impact of Federal and Provincial Government Deficits on Tax Freedom Day (in Days)


British Columbia is Headed Down a Dangerous Path

Michael Walker

There has been considerable discussion in Canada about the implications of the recent election outcome in British Columbia. Any suggestion that the outcome may be bad for the province is generally regarded as sour grapes. After all, the differences between governments are rather small, so why make a fuss about the election of one or another?

As a matter of fact, the attitude of the researchers at The Fraser Institute is that it is very difficult to tell a government by its stripes. More important than their label is what they do. It is the latter consideration that causes us concern about the recent election outcome in this province.

Earlier this year, The Fraser Institute published a book with the collaboration of institutes in ten other countries. The purpose of Economic Freedom of the World: 1975-1995 is to create a way of measuring the amount of economic freedom provided to citizens by the governments of different countries. Economic Freedom of the World: 1975-1995 is the product of 13 years' effort by some 61 economists in 11 countries and it provides economic freedom ratings for 103 countries. In all, 17 different variables are used to rate the countries' performance. By the way, this "freedom index" has been hailed around the world as a path-breaking new approach to the measurement of the critical ingredients for economic success. It has been praised by the Economist, the Wall Street Journal, Forbes and a group of the top Nobel Laureates in Economics. So its ratings are not just some fuzzy thoughts off the top of somebody's head.

Canada, as a country, does quite well in this index, and is ranked ninth overall. Unfortunately, we have not yet created an index of the performance of Canadian provinces. But a look at the provincial policies that are included in the index gives us the basis for assessing the implications of the recent B.C. election.

The factors that the freedom index takes into account include: the extent of government expenditure; the freedom of businesses and cooperatives to compete in markets; the equality of citizens under the law, and the access of citizens to an impartial system of laws; transfers and subsidies as a percent of GDP; the top marginal tax rate; and restraints on the ability to engage in trade.

When we look at not the party, but the policies of the government of British Columbia through the prism of this highly acclaimed index, we find a very disturbing pattern. Not, of course, in what our ranking would be on the index, but in the direction toward which we are moving. Once we are actually in trouble, it won't take a sophisticated index to tell us the bad news-it will be obvious. The trick is to see the trend early.

And, unfortunately, the province is moving in a direction that will soon get it into trouble from which it will be costly and painful to withdraw. The government of B.C. is spending-once we include the billion dollars off the budget-at an unsustainable rate. It is borrowing at the fastest pace of any government in the country. It is treating entrepreneurs like a species of pox, both in terms of the continent-wide maximum tax rates it imposes on them when they are successful, and the high capital taxes it imposes on them even when they are not.

It has used its power to reward with expansive legislation the labour unions which have provided it support, while sacrificing the interests of workers generally and the countless thousands who will find no jobs. The jobs won't be there because the arrival of a union, according to research out of the University of Saskatchewan, means that firms stop growing. The government has not provided impartial access to the formation of laws to the families of loggers and miners whose futures have been dashed along with the industries upon which they depend, in order to appease the environmentalists who also support it.

While making it increasingly difficult for those who want to work to find suitable employment, this government's policies have encouraged those susceptible to its blandishments not to work, with a welfare apparatus which in its operation is acquiring adherents at a faster pace than any in the country. While B.C. has enjoyed the fastest growth and the fastest job creation in the country, its government's policies have increased the number on welfare by a third.

So the outcome of the B.C. election is a concern, because the policies followed by the recently re-elected government restrict the freedoms of its citizens in ways that will make overall economic growth more difficult to achieve. It was perhaps in recognition of this that fewer than 30 percent of the eligible voters thought it wise to come out on election day and cast a vote in favour of this government. This number, less than a third of the population, is more or less the number of people who will benefit from the transfers that the government will engineer away from the 70 percent of the electorate who did not vote for these policies.


Tax Reduction and Economic Growth in B.C.

Owen Lippert

When, during the recent B.C. election, both Premier Glen Clark and the Liberal leader Gordon Campbell promised to cut taxes or resign as premier, it raised questions about the impact of tax cuts on the economy. In The Fraser Institute's Change and Choice: A Policy Standard for British Columbia-101 Ways to Improve the Province, we recommended eliminating the two provincial surtaxes on personal income tax (PIT) and reducing the provincial income tax as a percentage of the federal income tax from 52.5 percent to 45 percent.

One reason to eliminate the surtaxes is that, at 54.2 percent, B.C. now has the highest top marginal income tax rate in North America. This compares to marginal tax rates in the low 40s in the U.S. and 46 percent in Alberta. The economic effect of such high rates is to discourage "knowledge-based" companies from starting or expanding their businesses in B.C. No matter how attractive our weather, individuals will resist paying more of their marginal dollar of income to the government than to themselves and their families. For innovative companies, high income tax rates make a difference between keeping or losing human capital.

Removing the surtaxes would reduce the top marginal rate to 46.5 percent. The provincial income tax as a share of the federal income tax would then be at 52.5 percent.

It is difficult to forecast what exactly would happen to provincial revenues as a result of removing the surtaxes. The provincial Treasury Board estimates that the surtaxes bring in $350 million. However, the surtaxes may actually be reducing provincial revenues. The evidence suggests that a Laffer-type response may be at play here. (The Laffer Curve measures the tax revenues for different tax rates: it predicts that high tax rates actually bring in less revenue because individuals will take extraordinary steps to shield their income.) At the very least, the estimate of $350 million is probably far too high.

Another factor to consider is the surtaxes' impact on the provincial economy. In Deficit Reduction: What Pain, What Gain? (C.D. Howe Institute, 1994) University of Alberta Professor Bev Dahlby estimates that each additional dollar raised through the surtaxes costs the B.C. economy $64 in lost economic efficiency. The technical term is that surtaxes have a marginal cost (MC) of funds ratio of 1-to-64. If you restored that efficiency to the provincial economy, the result would be some combination of price cuts, reduced cost of inputs, and greater economic output.

There are three possible outcomes if you eliminate the surtaxes. 1) If the surtaxes have placed the PIT on the far side of the Laffer curve, then their elimination will raise more revenues. 2) If the surtaxes have placed the PIT at the apex of the Laffer curve, then ending them will have a neutral revenue effect. 3) If, despite the surtaxes, the PIT is still on the near side of the Laffer Curve, then the province will lose revenue. It is difficult to forecast the effects of tax changes because we know little about the behaviour of taxpayers.

Here is one order-of-magnitude outcome for a worst-case scenario. Suppose the Treasury Board is correct in its "naive" assumption and the surtaxes do raise $350 million. Eliminating them would then lose the treasury that amount. Suppose the resulting economic efficiency gains led to a 25 percent increase in economic output. The result would be $5.6 billion of new nominal GDP. The B.C. Treasury Board's own rule-of-thumb calculation is that revenues will increase at a rate 75 percent of the increase in nominal GDP. If you added up the resulting new taxes in just the PIT, corporate, and sales tax categories, the result would be $520 million in new revenues.

The likeliest scenario is that the surtaxes have placed the PIT rates on the far side of the Laffer Curve and that removing them would lead to substantially more than $520 million in new PIT revenues.

With the surtaxes removed, the next step is to reduce the basic rate of the PIT to 45 percent of the federal income tax paid. According to UBC economics professor Jon Kesselman in a recent article in Canadian Business Economics, economists generally consider 45 percent as the highest possible rate which does not induce counter-productive tax avoidance. Each percentage drop, say from 52.5 to 51.5 percent, would, according to the Treasury Board, reduce revenues by $90 million.

Here again, lower rates may induce taxpayers to incur fewer risks and costs in shielding their income from taxation; and, as a result, provincial revenues could actually rise. As well, the resulting increase in economic efficiency could make up for the initial revenue loss within three years and with a lower tax rate. Surely everyone would wish to see more growth and lower taxes.


Who's Responsible?

Stephen Easton

Ontario's decision to talk about the responsibility of parents for their children's criminal behaviour is a welcome one. The way we treat young offenders today has not been notably successful, and some changes tied to principles of accountability and responsibility are not out of place.

What kinds of problems are we talking about? In 1994-95, of the 109,000 court cases regarding offenses committed by Canadian young people (who were caught) at or under the age of 17, over 12,000 cases concerned acts committed by children ages 12 and 13. Theft and break and enter amounted to 37 percent of all offenses in this age group. Another 39,000 cases dealt with offenses committed by 14- and 15-year-olds, and a further 55,000 cases concerned crimes committed by 16- and 17-year-olds. Over half of these acts involved property-related crimes. About 21 percent involved crimes of violence.

Of the young offenders actually brought to trial, 40 percent are repeat offenders, and of these, about 25 percent have three or more convictions. We have a significant recidivism problem.

These acts are expensive. The costs of the major crimes committed by just those young offenders who are caught comes to over $100 million; and this figure does not include the cost of their processing by the justice system from trial to punishment. This adds millions of dollars more. As of 1994-95 there were 4,900 young offenders in custody, and 36,000 on probation. With the cost of our incarceration facilities running at about $136 per day per inmate, incarceration and other youth services adds about $480 million to the cost of dealing with youth crime. Of course, these costs are not the total cost of youth crime. There are 3 million crimes that police are told about each year. We can only gather statistics from those who are caught for particular crimes. For crimes that are more likely to be committed by younger people-break and enter, theft, and motor vehicle theft or vandalism-less than 20 percent of the incidents are resolved by charge or otherwise settled.

Who should bear the responsibility and pay the restitution costs of criminal acts when we catch the person who has committed the crime?

Since adults are responsible for themselves and often for their children, one reasonable approach is to allocate the responsibility associated with a criminal act between the two. Some responsibility must be borne by the miscreant, and if that person is too young, or deemed not responsible for himself (80 percent of young offenders are male), then the rest of the financial responsibility must be borne by the parents. After all, the crime has been committed by their child. If your kid breaks the neighbour's window, you are expected to pay for the damage. If your child causes criminal harm, then it is you who should be on the hook for costs and whatever restitution your child cannot be induced to make on his own.

It is clear that a parent should bear a different amount of responsibility for a 12-year-old than for a 17-year-old. A 17-year-old is expected to be more responsible for his or her own conduct than a younger child. This leads to the issue of the legal balance of responsibilities. In any given case, this balance must be set either by statute or by a judge. One can reasonably imagine a parent being responsible for 95 percent of the costs of their child's behaviour when the child is age 12 or younger, and 5 percent of the costs when the child is age 17. But what the appropriate balance is remains to be determined. As Charles Harnick, Ontario's Attorney-General, notes, there may well be a case for treating 16- and 17-year-olds as adults. They can drive and can contribute to the carnage on the highways; commensurate with that is that they be treated as responsible adults. Alternatively, the driving age could be set at 18, and more responsibility apportioned to parents until children reach that age.

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If your child causes criminal harm, then it is you who should be on the hook. . .
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Without a doubt, some parents are incompetent. They cannot induce their children to behave in a socially acceptable way. If the children have to be apprehended and housed, it is reasonable for the parents to remain financially responsible for at least some share of the child's care. It is crucial that a relationship be re-established: by having children, parents incur a responsibility. This responsibility lasts in some measure until the child reaches an age of full personal responsibility. Although the current initiative of the Ontario government is targeted at the young offender population, the underlying principle of responsibility is deeper. Any social service provided to children does not absolve parents of their responsibility to the child or to the rest of us. By rethinking the rules for young offenders, Ontario is requiring all of us to look at ourselves and our responsibilities.


Who are We? How Health Care is Mired in the Canadian Sense of Community

Michel Boucher and Filip Palda

If a case could made for banning free speech, the word "We" would head the list of forbidden words. "We" is one of the strongest words in the dictionary. Just say, "We Canadians believe in universal health care," and no one will question you. Humans are group animals. Words that evoke the image of the group are powerful motivators. Politicians and special interest groups understand the motivational power of this word and how it can be used to mine wealth. "We" is a switch that opens citizens' hearts to policies that work against their diverse interests. How can citizens guard themselves against those who would curtail freedom of choice in the name of universal access?


Limiting the right to health

To catch a political thief, you need to spot him in action. Action is thick in the national health system. Social activists hold that the duty of a caring and compassionate nation such as Canada is to provide universal health care of a common standard across the country. Medical attention must be the same for all. It must obey a common standard because all individuals are equal before the eyes of God, Marx, or whoever sends down these proclamations. What this doctrine really says is that individuals should have no choice in the type of health care they get. They should simply get an acceptable standard that does not vary across the country. If you have worked hard for 60 years and decide you want to spend money getting above average health care in your older age, forget it. Belonging to the "We" means that you cannot invest in your health. You have to live with the same standard as everyone else. If you want care in a private hospital that believes in music therapy and serves champagne breakfasts, you will have to drag yourself to the cruel south.


Expensive protection

It is true that this system protects the poor. But it protects them by making average and above average income earners more miserable than they need be. Worry for the poor is not a problem that needs universal standards. If you are worried about the poor you can have the state set a minimum standard of health care. What possible sense does it make to put a cap on the maximum health care independent individuals can afford? Would it make sense to limit how much exercise the health enthusiast can take? Or to limit how much toothpaste the worshipper of dental hygiene can buy? And yet, carrying the logic of one standard of health care to its logical extreme, this is the sort of absurdity you bump into. It is the sort of absurdity that might seem natural to the peasant who is the hero of a famous Russian joke. God informs the peasant that he will grant him any gift, but the peasant should know that God will also grant the same gift to his neighbour. After a bit of reflection, the peasants says, "God, please pluck out one of my eyes." Universal health care rests on a similar philosophical foundation.


Cashing in on "We"

Whose interest does the great "We" stand for in health care? To get the answer you have to look into who is setting the standard. After all, someone has to decide. The notion of "We" does not fall from the sky. If I do not make my own choice on health care, someone has to make it for me. There is no escaping choice. In this case though, the choice is forced on Canadians. Whenever something is done by force, there is room for abuse.

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What possible sense does it make to put a cap on the maximum health care independent individuals can afford?
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In health care, the universal standard of service has abolished the need for hospitals to be efficient and innovative. Canada is a growing, powerful nation, advancing on every front. Why has a nation of the highest achievements come to lamely accept that its hospitals be overcrowded and inefficient? Why is health care in retreat? The answer is that this system is rotting from a lack of competition. The essential ingredients of competition are that consumers get to choose products, and that producers who do not satisfy consumers go out of business. The universal standard means that there is little to choose from and that government does not allow hospitals to go out of business for not satisfying these choices. When customers are not allowed to demand that "little extra" (because a "two-tier" health system is banned) why should hospitals bother to provide it? Why should a hospital try to minimize costs in a system that guarantees a standard across the country? Under this system, a badly managed hospital that loses money knows that politicians with public dollars bulging in their saddlebags will charge to its rescue.


A heavy cross to bear

Keepers of the nation's blood supply have not been as successful as hospitals in resisting a two-tier system of service. Their failure is not for want of trying. The Red Cross does not hide its belief that it owns every platelet and blood cell that you might wish to share with others. The Red Cross justifies its claims on your blood by pressing the fairness button that is found on standard-issue Canadian hearts. They explain that if competing blood suppliers were allowed to surface, rich Canadians would have better access to good blood than poor Canadians. This sounds like a reasonable argument until you think about the consequences of a common blood standard. One consequence is that parents are not allowed to donate blood to their children. These haemoglobin monopolists try hard to explain that a loving parent is a threat to "fairness." They do not mention that loving parents are also a threat to the power of the Red Cross. If parents were allowed to donate to their children it would not be long before friends got together to form private blood "pools." Private entrepreneurs would then crop up and charge a fee for organizing strangers into blood "clubs" where membership depended on whether donors were free of HIV and hepatitis and had a documented medical history. Soon the Red Cross would be left with little blood to draw, and would need to take a serious look at downsizing their bureaucracy. This is a possibility the Red Cross may soon face. A recent court decision allowing parents to donate blood to their children may be the first of many challenges to Canada's blood monopoly.


Cry wolf

It is wrong to pretend that there is no such a thing as community feeling. But it is also wrong to suggest that such feelings can be pressed on a community from above. This feeling is something that has to evolve on its own, as does friendship. As with friendship, our ability to refer to ourselves as "We" is a precious commodity. It allows us to cooperate and makes us tolerant. What might seem an insult from a stranger can pass as a misunderstanding if I believe the stranger holds the same values I hold. A sense of community helps to ease frictions between people who come from different backgrounds but share the same principles. Unfortunately, Canada has a political system in which special interest groups have used government to mine sentiments of tolerance to exhaustion.


Protecting our sense of community

A strategy for conserving Canada's sense of community is to take power away from Ottawa. A country with different types of governments allows people to sort themselves into communities of like-minded individuals. Under decentralized government it starts to make sense to speak of the will of the people, and social justice. Under a central government, "the will of the people" and "social justice" are words that interest groups use to hide the fact that they are putting taxpayers' money where the groups' mouths are. In a decentralized system of government it makes sense to speak of one tier of service. Hippie communes, Kibbutzes, and the Amish are examples of people who have sorted themselves into communities that stick to very strict common standards. Decentralization is an admission that no one has a monopoly on wisdom, and that when it comes to government, humility is in order. No one can tell us who "We" are. That is something that people have to sort out for themselves.


July Question and Answer

Gordon Davies

Question: How much taxpayer money is spent on federal economic development and support programs in Canada?

Answer: According to a Ministry of Supply and Services document called 1996-97 Estimates, Part II: The Main Estimates, in 1996/97, Ottawa will spend $1.7 billion on regional economic development and support programs. Such programs include the usual regional development programs, as well as programs designed to help a region adjust to adverse economic circumstances unique to an entire industry in a region, such as fisheries or agriculture. Federal Equalization payments-enshrined in the constitution-will total $8.8 billion in 1996/97. These funds are designed to ensure that Canadians in all regions have adequate access to a reasonable range of public services. In addition, funds for health, education, and social assistance are provided by the $15 billion Canada Health and Social Transfer. These programs are not included in our tally because their objective is to help equalize the standard of living across Canada, by an explicit, on-going federal/provincial transfer.Note

There are currently three major federal programs that have the objective of developing or sustaining regional economies: fisheries support programs (particularly in the Atlantic region); support to farmers (particularly in the West); and a group of explicit regional support programs operated by Industry Canada which are discussed below. Projected expenditures in 1996/97 under the previous infrastructure development program are now included in the current regional development programs in all provinces except Ontario, where they are treated separately. All expenditures under this earlier program are included in the regional tally which follows.


Atlantic Region

In 1996/97, Ottawa will spend $130.6 million on fisheries in the Atlantic area, all but $2 million of which is targeted to provide special compensation for fishermen disadvantaged by the depletion of cod stocks, mainly in Newfoundland. In 1996/97, Ottawa will also spend $355 million through the Atlantic Canada Opportunities Agency "to support and promote new opportunities for economic development in Atlantic Canada." ($44.5 million of the $355 million total is money originally allocated under the government's earlier infrastructure development program.)


Quebec

In 1996/97, Quebec will become the beneficiary of $369 million to be doled out under 30 programs administered by the Federal Office of Regional Development-Quebec. ($160.9 million of the total is money originally allocated under the earlier infrastructure development program).


Ontario

The most well-known federal economic development programs operating in Ontario involve expenditures of just $305,000 for a "cooperative tourism marketing initiative in Northern Ontario" and $436,000 to be spent under the Northern Ontario Development program. The province also gets a share of monies earlier allocated by Ottawa under the infrastructure development program-$149.4 million-but there are no other sizable federal economic development programs operating in the province.


Western Canada

Most of Agriculture Canada's clients are in the West. In 1996/97, Ottawa will spend $408 million subsidizing farmers' incomes in the Prairie provinces. At the same time, Ottawa will spend another $325.5 million under the Western Economic Diversification program, in a contentious but on-going attempt to stimulate economic diversification in the Western provinces.

The accompanying July graph summarizes federal regional development expenditures for 1996/97 in the four main regions of Canada.

Click here to view July Graph: Federal Regional Development Expenditures for 1996/97 in Canada's Four Main Regions (in Millions of Dollars)


Lawyers, Lawyers Everywhere

Karen Selick

In January of this year, a story in the Globe and Mail came close to creating an instant crisis where none had existed before. Readers were told that the Crown prosecutor's office in Ontario was being forced by the provincial government to reduce its spending by one-third over two years. Sources in the Attorney General's office were quoted as saying that its only options were either to persuade the government to exempt it from the spending cuts, or to lay off one-third of the province's 480 prosecutors. Critics of the cuts, such as columnist Michael Valpy, dredged up memories of the Supreme Court's Askov decision (which resulted in the dismissal of many criminal charges due to court delays) in an attempt to stampede a crime-weary citizenry into demanding an exemption from the cuts.

Truly, Ontario would experience a serious crisis if budget cuts allowed criminals to start getting away with murder. However, ask most Ontario lawyers about the state of their profession these days and they'll tell you there is another crisis already in progress: the province is up to its eyeballs in lawyers. Is it possible that these simultaneous crises might beget a solution to at least one of the two problems? The two alternatives cited by the Attorney-General's office (stop the cuts or fire one-third of the prosecutors) do not exhaust the logical possibilities. Another way of saving one-third of the prosecutors' salaries would be to keep the same number of prosecutors' jobs, but reduce the salary levels by a third.

Over the past decade, Ontario has produced more than 1,000 new lawyers each and every year. In February of this year, some 1,200 were called to the bar. They didn't all have jobs lined up. According to surveys done by the Law Society, usually less than two-thirds of the graduating class have managed to find employment by January of the year in which they are expecting to be called. Even that figure is deceptively high, since it includes graduates who have plans to continue their education and those who intend to start their own law practices-hardly a guarantee of steady work these days. So we can be reasonably certain that in this year alone, more than 400 newly licensed, unemployed lawyers have been turned loose on the province, actively seeking work.

Over the past few years, these hordes of hungry new lawyers have ushered in a trend that had previously been virtually unknown to the legal profession: they have been cutting fees to obtain business. Established practitioners in many areas of law have been compelled by the fierce competition to do likewise. Indeed, many lawyers in private practice have been experiencing such lean years that they have been unable to pay their liability insurance premiums or their Law Society dues on time, resulting in temporary suspensions from practice. Some have simply quit practising. Without a doubt, many lawyers in the private sector have suffered substantial reductions in income.

I am not suggesting that the province simply fire all of its existing Crowns and replace them with brand new lawyers fresh out of law school. However, the competitive pressure which these new graduates have put on the profession as a whole makes it conceivable that Crowns might be willing-indeed, eager-to work for a lot less money than they previously commanded, if the alternative is being displaced by someone else.

One option would be to put the Crown positions up for tender. Existing staff could be given notice that their current positions, at their current salaries, would terminate at some fixed date within the next two years-a time sufficiently long to prevent wrongful dismissal claims. However, they would be free to compete for the positions they had vacated, so long as they understood that they would not stand much chance of being re-hired unless they were prepared to accept a salary no more than two-thirds of the old figure. This would give them a reasonable length of time to adjust their lives to their new incomes, or to seek greener pastures if they think that such exist.

Nor will it be necessary to fill the vacated positions entirely with greenhorns should existing Crowns choose to try their fortunes elsewhere. Many lawyers in the criminal defence bar, hard hit by recent problems in the Ontario Legal Aid Plan, would be glad to exchange the uncertainty of working under that program for the security of a regular-albeit not princely-salary. It is not uncommon for Crowns to become defence lawyers and vice-versa.

The taxpayers of Ontario have already paid a large portion of the cost of educating what now appears to be a surplus of lawyers. They have the right to reap the benefit of their investment by way of lower prices for lawyers' services. This is already happening on private real estate purchases-why should the Attorney-General's office be the only purchaser of legal services not to benefit from competition?


Indicators of Deprivation

Chris Sarlo

I've often been asked, "Why all the fuss about poverty lines?" What do your basic needs poverty lines give us that we can't get from Statscan's low income cut-offs (LICO)? Why bother when we already have a well-known and widely used measure in LICO?

My initial response is that Statscan never intended LICO to be a "poverty line" but simply, as the name suggests, an indicator of low-income. That answer is rarely persuasive because many researchers, reporters, and the general public, have come to view it as a poverty line. The LICO lines are fairly low. Some people with incomes below those cut-offs would indeed "feel" poor or at least view their income as inadequate. So why bother with a re-examination of the prevailing approach to defining and measuring poverty? The answer is simple. The use of LICO won't tell us anything about those among us who are deprived of the basic necessities of life. If you think that's what poverty means, LICO will not be useful. If you regard that information as important, then you are going to need a basic needs poverty line.

For example, I have estimated that a family of four would require about $20,000 in 1996 in our major cities in order to afford a modest apartment, nutritious food from grocery stores, clothing, health and hygiene needs, household supplies, telephone service and essential transportation. (I have costed these items out in detail in Poverty in Canada.) Below that income level, they can be regarded as poverty stricken because they cannot afford all of their basic needs. In contrast, the 1996 LICO line for a family of four in our major cities is about $32,000. While this income is by no means extravagant, it is adequate to easily meet all basic needs and some extras as well. Indeed, it is about 60% of the estimated average family income for 1996!

It would be hard to argue, then, that a family living on $30,000 would necessarily be impoverished. The most we could say is that they are "relatively" deprived in the sense of being less well off than most others in the community. While they may have their basic needs covered, it is the "social amenities" they lack. Such things as annual vacations out of the country; a home (as opposed to rented accommodation); expensive clothing; expensive electronics; frequent restaurant meals, etc. would almost surely be out of reach for such families. However, occasional restaurant meals; modest gift giving; colour TV; cable TV; modest travel/vacation; and a new automobile every six years may all be affordable with this income. A fairer description of people with this standard of living would be "near poor."

The distinction is crucial. People living below the basic needs poverty line endure absolute deprivation. If we are concerned about poverty, we will certainly want to determine how many Canadians are in this predicament. My own estimates suggest that, in 1993, about 1 million Canadians, or just under 4 percent of the population live in households whose reported incomes were below the basic needs poverty line. Now, if we set a "social comfort line" at twice the poverty line and define those living between the two lines as "near poor," there were another 4.6 million persons or 17 percent of the population who were near poor in 1993.

This information, I have argued, gives us a detailed picture of the nature of deprivation in Canada that we currently lack. Basic needs lines are determined by the costs of actual goods and services (food, apartment rents, clothing, etc.) in the various parts of Canada. LICO, on the other hand, is estimated by determining the level of income that is consistent with a household spending 20 percent more than average on three major categories of spending (food, shelter and clothing). What is important is that LICO is a "relative" measure in the sense that the lines change as average living standards change and not as the costs of necessities change. Thus, with LICO, higher living standards across the board do nothing to reduce the incidence of low income. Curiously, a fall in living standards but a simultaneous reduction in inequality would actually mean a reduction in "poverty" according to the LICO standard. With basic needs lines, we are always able to measure the number of people suffering absolute deprivation. This number will decline if living standards increase across the board, as we should expect.

If the purpose of poverty research is to better understand the nature and extent of deprivation within a population, permit me to suggest the following "package" of indicators that Statscan should deliver as part of their income reports. Included is a handy comparison of the rates for 1981 and 1993.

The Gini coefficient is a popular indicator of inequality and ranges between 0 (every household has identical income) and 1 (one household has all the income). Thus, the higher the Gini, the greater the degree of measured income inequality. This handy statspack informs us that between 1981 and 1993, basic needs poverty in Canada declined by 15 percent. In other words, a smaller portion of the population endured the sort of absolute deprivation that is normally implied by the term "poverty." Over the same period, however, the LICO indicator (rates shown below the table) shows "poverty" rising by 14 percent. Because LICO is a relative measure, changes in low-income rates reflect changing inequality of incomes and will be broadly consistent with movement in the Gini coefficient. Our table also reveals that, despite modest success against poverty, we have seen a small rise in "near poverty" over the period. This is clearly a concern and it is uncertain whether the adverse impact of structural economic change on the working class completely explains this trend.

Click here to view Table: Deprivation Statspack


Enlightened Unionism

Peter Holle

At a recent conference on local government reform I met Stephan Fantauzzo, the union leader of Council 62, American Federation of State, Country and Municipal Employees, AFL-CIO, representing municipal workers in the City of Indianapolis. A soft-spoken, confident man, Mr. Fantauzzo provided a union perspective on the tidal wave of reform now under way in local government around the world. His story was one of practical realism in changing times.

Indianapolis, with a population of 700,000, is a little bigger than Winnipeg. On its payroll, however, are less than half Winnipeg's number of employees-about 4,500 personnel. Indianapolis is also a place where the union and the mayor work closely together to ensure that services are provided as cost-efficiently as possible.

As expected, Mr. Fantauzzo opposed strict privatization of city services. "We have been pretty aggressive in pointing out the disasters of privatization," he told me. The present mayor, Steve Goldsmith, ran on a privatization platform during the last election campaign, while the opposition campaign operated out of union hall. The union's efforts were for naught, however; the pro-privatization candidate won handily.

The first four months were very difficult, but things changed when both sides looked for common ground. "We didn't want to lay in for a four-year siege," Fantauzzo said. The compromise lay in the "competitive model."

In this model, services are identified and fully costed. They then are "competed" out in the marketplace. City work units get involved in the process by putting together a competitive bid. The best price wins, of course. To the surprise of some, union involvement in preparing an in-house bid leads to a respectable 80 percent success rate in keeping the work in house. Where the union is not involved in the bid process, the city and public managers only win three out of 10 bids.

Today, privatization is a non-issue in Indianapolis. Mayor Goldsmith no longer talks about privatization-he favours competition. In fact, according to Fantauzzo, he wants the city union to win because it gives his administration more flexibility. "We can throw a blade onto garbage trucks during snowstorms, for example," Fantauzzo says. "The private sector doesn't have the same versatility we do."

To compete, the union removed narrow, old-style, task descriptions that had the effect of raising costs and pricing its members out of work. Today, the union staff have broad-banded job descriptions so staffing is more flexible. "In Indianapolis," Fantauzzo says, "the union has cross-trained and upgraded employees to many different tasks. It has meant wages of employees rising to the level paid the highest skill. The mayor doesn't care what the city pays for the service as long as it is cheaper than elsewhere."

Fantauzzo exhibits none of the rhetoric and posturing that bogs down municipal services in Canada, and is an avid proponent of the flexible, competitive model. "We've gone far in the competitive model: wages are up, and we've done well with a gain sharing bonus system." Competition has forced the union to transform and redesign the workplace.

So, if wages are not down, where are the savings coming from? They come from reduced bureaucratic overhead. "We have less management and fewer bosses," Fantauzzo continues. "We've always said that if we don't make profit, pay no taxes, pay less for gas ($.80 versus $1.20 a gallon) . . . and you can't win in the competitive model, then you better look at the system. It means you have too many guys watching other guys pick up the trash."

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To compete, the union removed narrow, old-style, task descriptions that had the effect of raising costs and pricing its members out of work.
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Indeed, the Indianapolis model suggests that the biggest cost raiser in civic services is over-administration. "We have eliminated front-line managers, foreman, and supervisors. In the new system, one employee is now designated the lead worker and gets two bucks an hour more for doing supervisory tasks. We brought managers back down into line services, we have more crews working the roads, and fewer paper pushers.

"The bargaining unit is about the same size-1,000 workers. But management has gone down dramatically, about 40 percent over 4 years. Steve [Goldsmith] has eliminated those fake positions that all governments use to pad the payroll and make them look good at budget time [when these positions are "eliminated" without anyone actually being cut from the payroll]." In terms of real positions, Fantauzzo suggests, about 400 people are gone. "If you include the waste water plant it's about 700.

"We opposed the privatization of the waste water treatment plant because our concerns were not addressed. We had to sue the city, then negotiate the issues." Again, the city and the union moved along the learning curve. "We've standardized the bidding process to automatically address our concerns. We now have a successorship clause; employees have to make similar wages and benefits. Others affected get jobs somewhere else at the city."

In Indianapolis, union participation in the competition model has meant more communication with the administration. The adversarial and reactive tone that pollutes the old-style, top-down structures elsewhere is gone. Fantauzzo says that the union used to file about 300 grievances a year. In the new system it's down to 20, because the union is involved up front in issues before they become problems.

He meets monthly with the mayor, and talks weekly with the deputy mayor. "There is a lot of communication because we are breaking new ground." Fantauzzo points to trust and credibility as ingredients missing in many jurisdictions. He respects a CEO who is committed and has the guts to do the job. He refers to Mayor Goldsmith's courage in taking on his party people. He gained the union's trust by laying off dozens of supervisors who were Republican party patronage appointments. The union couldn't compete when saddled with all that cost-raising overhead.

Fantauzzo, not surprisingly, is still seen as a maverick by fellow unionists, but less so today than he was 2 or 3 years ago. He admits that at one time "our traditional allies would look at us and say what the hell are you doing?" Movers within the Democratic party, church groups, and environmental groups have all asked him why he is working with the mayor. He bluntly answers, "My mission is not some altruistic goal. It is to protect our members, and if I can do that by working with the mayor to develop an employee-friendly system that allows those employees not only to survive, but thrive, I am going to do that."

Beleaguered municipal taxpayers in Canada can look with some hope to the Indianapolis model and the example set by union leader Mr. Fantauzzo: "We win four out of five contracts that the union bids. When we do the work, we do it for 25 percent less than it was done for in the past because of competition and because you start asking people to bring their brains to work instead of parking them at the door."

In Indianapolis, where competition has generated millions in savings, taxes are not going up.

Not hydro, not gas, not any kind of taxes.


Are Religious Schools Facing Extinction?

Mark Weller

In the past month, two significant changes have been made to the Canadian educational system; changes which for the most part have occurred with very little debate. The first was the vote by the House of Commons to amend the constitution of Newfoundland and Labrador. The second was the Quebec government's decision to move to a language-based method of providing education. Each of these decisions marked the historic end of state-funded education provided by churches. And it happened in the two provinces where, historically, this has been a long standing practice.

To many, this change is viewed as a good thing, and indeed there are some healthy aspects to it. Religious institutions will no longer be receiving funding from government, and the separation of church and state will be clearer. No longer will parents who have a different religious tradition, or no religious tradition, be forced to install their children in schools run by churches which have philosophies they don't share. However, these reforms are also effectively limiting choice in the name of efficiency. And in the end, the probable efficiencies of such a change are few.

A much more efficient and, indeed, more sensible system would be one that maximizes the choice of parents to place their children in the school of their preference, religious or not. One model for this is the voucher system, where parents would be given educational credits to spend at the school of their choice. Standards for joint curriculum could still exist, and the licensing of schools would continue, but the choice of what kind of school a child would attend would be left up to parents, not government, to decide.

Although there is considerable debate over whether the intrusion of the welfare state into people's lives has been detrimental to Canada's religious communities, it is clear that the involvement of the state in the delivery of church-based social services, such as education, has ultimately resulted in the wholesale takeover of these institutions by the government.

The rationing of services and the limiting of choice in order to "preserve the program" is a fate now familiar to Canadians, and not just in the delivery of education. Racked by the inefficiencies of government, many programs which were once delivered privately have been stripped of their effectiveness as a result of creeping government control. This has happened in orphanages, it is happening in health care, and it is beginning to happen in even the smallest areas of social service delivery.

The effect of this government interference is significant. Not only is there increasing evidence that social service delivery is less responsive and more costly after state takeover, but these programs often serve to replace and eliminate the institution that was formerly doing the job. If the government is performing a given service, there is no incentive for a private alternative to continue. For example, church-run daycare centres have begun to decline in B.C. as the government has become more involved in the delivery of these services. This robs society of needed daycare spaces and eliminates an area of community-based service that the church formerly provided. This affects the community-and it also effects the church.

The prevailing notion, and one that has been related in the media, is that institutions are increasingly being moved out of the church sphere and into the government domain because of changing demographics. Canada is increasingly secular, so the decline of religious-based institutions makes sense.

However, there is another process operating as well. In some ways, Canada has lost some of its religious character because the government has gradually taken over a wide variety of services once provided by the church. Of course, these two phenomena are linked , but consider for a moment the consequences. The welfare state, in addition to its many other effects, including crippling government debt, has also altered the religious character of Canada by transferring activities that were once the role of the church into the role of government.

The opinion one may have of this inevitably depends upon one's view of religion and of religious institutions. But regardless of one's religious orientation, it would seem to make sense that any reform of the educational system should allow for the involvement of community groups that have demonstrated that they can deliver educational instruction. Instead of eliminating church-based services, why not bring choice back into education by providing families with vouchers? Then, rather than the issue being coloured by politics, a system would be provided that would allow for the market to determine what role churches should play in the delivery of educational services.

Church-based institutions should not be sheltered from the marketplace as they once were, and to that extent, some of the changes that have occurred in educational delivery are good. But why not strip the government of its monopoly as well, by fully empowering parents to make decisions regarding their children's lives, religious or otherwise?


Government the Culprit Behind Restructuring

Filip Palda

Restructuring is a hated word. But businesses are not to blame for putting the word into action. They are just cleaning up a mess left by government.

A recent study by the Canadian Manufacturers Association showed that Canadian businesses pay $115 billion a year in costs mandated by government. If this money had been used to hire workers, 2.8 million jobs would have been created. Most of these costs come as payroll, UI, and property taxes. In its 1994 Report on Canada, the OECD warned that these taxes are job killers. They are not based on whether a company is making money, but rather on how many people it hires, how much it pays them, and on the value of the company's offices. These tax obstacles discourage entrepreneurs from starting up new businesses. Large companies deal with the obstacle by investing in machines instead of hiring people. According to University of Alberta Business Professor Alice Nakamura, Canada is overmechanized. High business taxes are among the culprits.

Business taxes would not be so bad if government was giving higher quality service for the rising sums of money it collects. Government, though, is giving less for more. Hospitals are closing beds and rationing care. Universities are raising tuition fees, and highways go untended. By now, we are so used to non-performance in government that we are willing to believe these trends are normal, even acceptable. But we are less willing to believe that the private sector is being forced to pick up the slack in govern-ment's handling of social programs. Sick pay, company dental and medical programs, and pension contributions are costs that fall on business, because government service in these areas is sub-standard. To deal with these costs, businesses "restructure." They desperately find new ways to make money, even if this means forgetting their traditional obligations to workers.

Government incompetence turns the marketplace into an arena with little room for mercy. To get an idea of how tight things are, consider that in 1993 in a standard 8 hour manufacturing shift, it took the average company 7 hours, 55 minutes, and 56 seconds to cover its operating costs. These costs included salaries, taxes, and the burden of obeying industrial regulations. That left the company with 4 minutes and 4 seconds to pay its shareholders and invest for the future. Razor thin margins force companies to cut whatever inputs are going up in price. Since 1989 taxes on labour have gone up by 43 percent. It is not surprising that companies have tried to cut their use of this input.

The recent revival of business profits is a small and welcome miracle. Somehow, after years of being bashed with high taxes and costly regulations, entrepreneurs have bounced back. Whenever profits have risen in Canada, jobs have not been far behind. The problem is that government taxes and regulations have never been far behind either. For every two steps the economy takes, government is there to pull it one step back.

Canadian governments are starting to sense that their blunders weigh on the economy. But so far, most of this is just talk. Governments will only be forced into action when they face the same competitive pressures that businesses face. As the United States gets its act together and starts lowering taxes and restructuring government, Canadian leaders will have to come to grips with reality: governments have to contribute to the economy. They cannot dump all their problems onto business.


Callous Conservatives versus Caring Liberals

Walter Williams

The Republicans want to re-examine health and safety regulations and require the Occupational Safety and Health Administration (OSHA), the Environmental Protection Agency (EPA) and other regulatory agencies to undertake a cost/benefit analysis prior to making regulations. President Clinton and other liberals have accused Republicans of callously disregarding the health and safety of America's children. That's nonsense. It's liberal regulatory excesses that beg for relief, and here's just one example why.

Mrs. Cleaster Mims is founder and director of Marva Collins Preparatory School of Cincinnati. It's a private school with a student body of 185 mostly low- and middle-income black students enroled in grades K through eight. Virtually all of her students score at, and in some cases, two, three and four years above, grade level. The school radiates with discipline, love and high expectations. Scores of students are on her enrolment waiting list.

To meet the demand for Marva Collins' superior, not to mention safer, education, Mrs. Mims has started a campaign to raise money to purchase a $450,000 former nursing home that will allow her 500-student capacity and provide facilities for a few boarding students. While quite a bargain, the building is in need of repairs and alterations that include mechanical-electrical modifications, teaching-space renovations, painting, roofing and exterior work that could easily run the price tag to close to $1 million. To raise that kind of money in and of itself is a daunting challenge, but regulations created by "caring" liberals could easily put her mission entirely out of the question.

Because of the building's age, asbestos and lead paint are present. But according to Cincinnati architect William Miller, who made an inspection of the building, "The materials are sound and non-hazardous by prudent reasonable standards of safety." He concludes that only relatively minor repairs need to be made to address existing asbestos and lead paint hazards.

But when have you heard of OSHA and EPA being reasonable? Miller estimates the combined cost of regulatory mandates for asbestos and lead paint removal could add as much as $200,000 to the renovation. Then, there are close to 200 doors in the building. To bring them up to Americans With Disabilities Act (ADA) mandates and construct ramps and meet other mandates might add another $150,000 to costs.

Mrs. Mims' plight is a result of the liberal vision of the world. Liberals see only benefits from regulations and ignore costs. Sure, it would be wonderful if the 500 students at the new school had zero risk of asbestos and lead paint hazard. It would be wonderful if a wheelchair-bound student, who might enrol, would find no physical impediments. On the other hand, the cost of those regulations, and hence their invisible victims, is the 500 black students who might have had a better and safer education. You can bet that the hazards of government education are far greater than those posed by asbestos and lead paint in the building Mrs. Mims wants to purchase.

All's not lost. Mrs. Mims is a woman who knows no false pride and has boundless energy. she is willing to beg, plead and cajole these federal and state agencies that have been allowed to proliferate arbitrary, punitive and heartless mandates. She should certainly be the one to get our political and financial support.


The King's New Advisors

John Robson

Once upon a time in a small kingdom far away there lived a tired and worried king. He was neither a particularly good king nor a particularly bad one, but like all kings he had many cares. When he was just a little boy, he had imagined that growing up to be king would be great fun. Even a prince got to do pretty much what he wanted a lot of the time, but he had to obey his father and mother, and the people they appointed to look after him, and he had to follow the rituals even when his clothes were too hot and uncomfortable and things went on too long and were boring. When he was king, he would change all that, he thought. Then everyone really would have to do as he said, and he could do as he liked.

But when he became king, he discovered it wasn't like that at all. Instead of being able to do what he wanted when he wanted, he had to spend all his time attending to the affairs of state. There were enemies on his borders, and potential enemies, and his allies were potential enemies too, at home as well as abroad. Among the nobles there were many who were ambitious and unscrupulous, and among the people there was much discontent, and a lot of it was directed at him, and his advisors were untrustworthy. Whenever there was hunger, or natural disasters, people found some way of blaming the king, and there was no shortage at court of those who would exploit these discontents if given half a chance.

And he had to make sure the courts functioned and justice was done, and that there weren't riots or bandits, that the army was paid so it didn't revolt, that the household was paid and furnished, that his own sons and daughters were properly educated. He barely had a minute to enjoy himself, either playing with his children or just sitting quietly, the exhaustion of a monarch piled onto that of a parent.

One particularly long and tiresome day, he was seated in his high chamber surrounded by his unreliable and depressing advisors, who were plying him with even more than the usual pile of incomprehensible papers on domestic economy, outstanding bills larger than incoming receipts, and accounts of administrative foul-ups and miscarriages of justice throughout the kingdom. His robe was hot and prickly, and his crown hurt his ears where it rested on them. He couldn't concentrate, and he felt annoyed and confused. Suddenly he stood up. "Enough!" he shouted. Bring all this nonsense back tomorrow! I'm through for today." The Chancellor of the Exchequer rose in protest. "Your majesty," he protested. "We've not even begun to discuss the upkeep on your winter castle, and the Treasury is empty, and . . ." His military commander also objected: "Your majesty, the soldiers haven't been paid in ages . . ." And Rhodes, his Minister of the Interior, said "The main highway repairs, sire, we must . . ."

"No!" shouted the king. "I'm the king, and I've had enough!" And he gathered up his robe and stalked out. He marched away down the corridor feeling much better, and he felt better still when he took off the crown that was hurting his ears and the robe that was so hot and prickly. Why hadn't he done this more often? he wondered.

Just then, he heard the voices of children coming from the courtyard, where the children of his ministers and courtiers were playing. They laughed, and shrieked, and when he looked out the window he could see them running around when they wanted to, and throwing themselves down on the grass when they felt like it. It brought back happy memories of his own childhood, and he decided to chuck all his responsibilities for the rest of the day and go down and play with them.

When he got down to the garden, the children stood up, but he waved to them to sit down. "Don't let me spoil your game, children," he said gently. "I just want to relax and watch."

"Sire," said one of the children perceptively, "you look tired. Are you ill?" "No," said the king, glad that someone had asked. "I'm not ill. But I am tired. It's so hard being king. There are so many troubles. We're short of money, the people are hungry, there are enemies on our frontiers, there are floods in the north and drought in the south, and everyone's always blaming me whenever anything goes wrong. It's very difficult."

The boy looked at him solemnly for a moment. "How can you be short of money?" he finally asked. "You're the king. Why don't you just order your mint to make more?"

The king looked at him in surprise. Why hadn't any of his advisors ever suggested this? He was sure the Chancellor of the Exchequer, who was as clever as he was annoying, would come up with some objection. He always did. "Then you could give some of the money to the people who are hungry, and they could buy food," said a little girl. Everyone took up the chorus.

"And you could just invite all your enemies to tea and tell them what you had done, and how generous you'd been, and then they'd see how nice you were and there'd be peace."

"And if there are floods and droughts, you could use the money to build houses for the people somewhere else."

"And then everyone would be happy and no one would blame you for anything and you'd be happy and could come and play with us all the time," concluded the first little boy triumphantly.

The king looked at them in amazement. Children had such wisdom. Adults tied themselves into knots over problems by being too clever, while children in their simplicity just saw solutions. He thanked the children, ordered a servant to bring them more cakes and tea, and raced back up to the high council chamber.

There he found all his advisors looking even more worried and annoying than usual, passing piles of parchment around and grumbling-had he known it-about the king's peculiar behaviour. They were relieved to see him back, the crown back on his head, and they all immediately started thrusting pieces of paper at him with problems attached.

"No, stop!" he ordered them. "I've been getting advice from some other people, and it's much better." And he explained the simple, beautiful ideas the children had.

As he expected, his miserable advisors rose up as one in protest. "But your majesty, the reserve ratio . . ." "Our enemies to the north invent grievances . . ." "Where could they all live?" "Our southern enemies claim that province . . ." "No one can travel on the main road any more because of the potholes . . ." and so on, the usual looking for problems. His advisors, the king realized, had very negative attitudes. Suddenly it hit him: he didn't just need new ideas, he needed new advisors.

"NO! Get out!" he shouted. "It's all so easy." And as they filed out taking all their rotten papers with them, he leaned out the window and called to the children far below "Come up here, you delightful children." And when they arrived, he made them all his new advisors and told them to carry out the marvellous, simple, idealistic plans they had devised that very afternoon.

So the new Chancellor of the Exchequer went to the mint and told them to make more money. They said they had no gold or silver. He told them to make the coins of brass or iron, and melt down a few old ones to coat them with (he really was a very clever boy). The new Minister of Defense sent messengers to invite all the King's enemies to tea. The new Minister of the Interior sent word to the people in the south to come and live in the new houses being built in the north, where there was no drought, and to those in the north to come and live in the new houses being built in the south, where there was no flooding. And in one afternoon the King solved all his administrative problems.

Unfortunately, the people realized the new money was made of base metal and could buy nothing, and they blamed the king. His enemies came to tea bringing many other guests, clad in iron beneath their party clothes, and they beat everyone up and stole their possessions, and would have killed the king had they not fallen to quarrelling among themselves and become distracted.

The people blamed the king for that too. His subjects fleeing drought in the south met those fleeing floods in the north at a particularly bad stretch of the main road and each accused the others of reneging on the promise to make them welcome and give them housing, and a riot ensued. Then the rioters were attacked by some of the king's enemies who were late for tea and in a cross mood because of the terrible roads. Predictably, they all blamed the king for that, too.

And sure enough, before you knew it grumbling had turned to action and the turbulent people, the ambitious nobles, and the treacherous advisors had the king deposed and a new one put in his place.

The old king was locked up in an old wing of the castle, but it did have a little garden where the children could visit and play at being advisors with him, so he wasn't all that unhappy in the end. Many people had been killed or beaten or robbed because of his policies, or had starved to death because of the economic turmoil those policies had caused, but he knew it wasn't his fault. It was just because others hadn't managed to share his idealistic vision.

Occasionally he would sigh and mutter sadly "If only people weren't so mean-spirited . . ." But on the whole it didn't bother him much.

Meanwhile, the new king sat in his high chamber surrounded by his annoying officials, with his crown pressing down on his ears and the fur of his robe scratching the back of his neck in the sultry heat, wondering why he'd ever wanted to be a monarch and whether this meeting would end in time for him to get to the next one. If only, he thought, there was an easier way. From far below, he heard the voices of children playing. . . .

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Last Modified: Wednesday, October 20, 1999.