Welfare Fraud-the Techno Fix

Mark Weller

Whether or not one believes that social programs are necessary, there is a point on which all Canadians agree-that government programs must be targeted to those most in need. People who misrepresent themselves in order to receive money to which they are not entitled are guilty of a most vile form of fraud-taking money away from the less fortunate in our society.

In British Columbia, the NDP government has made a few paltry attempts to reduce welfare fraud, but very little progress has been made. The department in charge of investigating fraud is so busy that it relies almost entirely on reports that are filed with the ministry by concerned citizens. There are so many fraud leads to follow up that the department has virtually no time left over to conduct its own investigations.

The argument is sometimes made that it may be less expensive to have some people cheat the system than to employ more investigators to pursue fraud cases. Experience in the state of California indicates that this is not so, but, in any event, more case officers are not required to catch more cheaters. All that is needed is a little technical ingenuity.

At the moment, the lists of beneficiaries of BC's Social Housing division, the welfare system, and the department responsible for disability benefits and health care are all maintained separately on various databases, and are often compiled using different systems. As a result, no central database keeps track of who receives what money from the government. This is so despite the fact that almost all these data sets contain a common reference code-the individual's social insurance number.

The solution is straightforward. The federal government should sit down with the provinces and agree on a protocol for data transference. The type of information exchanged could be limited to protect privacy. Then the governments could agree on a common export format for the data. A good test might be to have Revenue Canada provide the provinces with the names of individuals who make more than $40,000. The provinces could then run a check of this data against their lists of benefit recipients. Any names that came up in the cross reference could be investigated and their payments adjusted or stopped.

However, some may ask, how does this help those in need? First, by catching cheats, previously wasted money becomes available. Second, the amalgamation of data will result in better targeting of funding to those most in need. At the moment, people who are legitimately using the system often have their benefit payments delayed due to the immense bureaucratic overlap they encounter.

In fact, the bureaucratic web is so confusing that there is a huge incentive NOT to report overpayment or duplicate cheques. Reporting such errors results in a further delay in benefits paid, in addition to the waste of one's time. Simplifying benefit payments by integrating data sets would remove these perverse incentives.

So why isn't this happening now? Perhaps the reason lies in the bureaucracy itself. With the recent formation of the Ministry of Children and Families in BC, the Ministry of Social Services has become little more than a clearing house for welfare cheques. If the number of cheques being processed were reduced, then the number of staff required to process them could be similarly reduced.


In Whose Best Interest is                                               Government-Run Health Care?

Cynthia Ramsay

In the Greater Vancouver area, low income Canadians use uninsured, or only partially insured, complementary health therapies more than do Canadians with higher incomes.[The Complementary Health Therapies Task Group of the Health Planning Committee, Richmond Health Board, Use of and Interest in Complementary Health Therapies in the Richmond Community, June 3, 1996] Thus, these lower income Canadians are the ones who most often pay twice for their health care, first through taxation and then by paying for uninsured services out of their own pockets. It is not surprising, then, that nationally, people with lower incomes are less satisfied with the current health care system and are more optimistic about the prospect of a formal two-tiered health care system than are those with higher incomes.[Michael Posner, "Feeling the Pinch." Maclean's December 2, 1996, p. 49] So, on whose behalf, exactly, are we defending the sanctity of the Canada Health Act and its requirement that health care be government-run?

Regionalization: beginning to find out what people really want

Health care regionalization is now taking place across Canada. The rationale for it is that the health care system can more effectively meet the demands of its consumers if it allows them to have a say in how and what services are offered. This is a positive development, as changes in Canadian health care financing and delivery over the last 50 years have been driven mainly by political forces rather than by patient needs.

The Richmond Health Board in British Columbia was an example of how regionalization is supposed to work.[In 1996, with regionalization well under way, the BC Ministry of Health put all health care reforms on hold. Months later, several separate regions were amalgamated. This was an unfortunate development for some regions, including Richmond, which had already taken innovative steps towards improving the delivery of health care] The board created a new mechanism by which to allocate health care funding, and it organized almost 20 initiatives designed to determine its population's medical and health needs. One of these initiatives was the Complementary Health Therapies Task Group (CHTTG). The CHTTG surveyed the population in order to determine the kinds of health services the people who work or reside in Richmond were using and which types of services they would like to see supported by the Health Board. The surveyed population, comprised 4 groups: the general population, Richmond Hospital workers, Workers' Compensation Board (WCB) employees, and respondents to the Chinese language survey.[In all, over 2,700 surveys were collected by the CHTTG] This breakdown of survey respondents allows for comparison of the views about the health care system held by society's diverse groups.

Satisfaction with the current medical system

The majority of respondents to the CHTTG survey were content with the medical services currently insured by the government. On the whole, 59 percent of the total group felt that the current system was good or excellent (figure 1). However, satisfaction with the services currently being provided by the medical system varied substantially among sub-groups: 80.3 percent of the hospital workers surveyed rated the current system as good or excellent, while only 25.7 percent of the respondents to the Chinese language survey rated it this highly. The results of a Maclean's/Medical Post/Angus Reid opinion poll found that only 43 percent of Canadians believed their health system to be very good or excellent. (This is a decrease of 18 percent since 1991.) [Joe Chidley, "Radical Surgery: Cuts in Public Funding Imperil Medicare's Future." Maclean's, December 2, 1996, p. 45]

Use of complementary therapies

The CHTTG found that almost 60 percent of the survey respondents had used complementary health therapies. [The CHTTG defined complementary therapies as any holistic therapy or any alternative medicine or therapy. The term excludes all traditional Western medical practices. The CHTTG used the term complementary to remove any connotation of competition between the two approaches to health care] This percentage is quite high; national polls have put the percentage of Canadians using some form of alternative therapy at 22 percent. [E. Berger, The Canada Health Monitor, Survey #9, Price Waterhouse: Toronto, March 1993] The WCB workers were the most likely to choose complementary therapies (61 percent used complementary therapies), while the hospital workers were the least likely to do so (44.7 percent). Perhaps surprisingly, only 46.1 percent of the Chinese language respondents had used complementary therapies. This implies that the general dissatisfaction with the current medical system indicated by the Chinese language respondents is not necessarily related to the availability of alternative methods of health care.

Satisfaction with the complementary therapies received was quite high; 73.8 percent of respondents rated them as good or excellent. Of the sub-groups, 79.2 percent of the WCB workers, 60.8 percent of the hospital employees, and 42.5 percent of the Chinese language respondents considered the alternative treatments they had received to be good or excellent. Overall, the most common alternative therapies used were vitamins and supplements, chiropractic manipulation, massage therapy, naturopathy, and acupuncture (figure 2). Women were more likely than men to use complementary therapies (63 percent versus 53 percent), but age did not seem to be a factor.

The reasons for choosing complementary therapies were similar throughout the total group, with "improving or maintaining health" and "to treat or cure disease or illness" each rating more or less equally. For the Chinese language group and the WCB workers, the main reasons given for not using complementary therapies were a lack of knowledge about them and their cost. While hospital employees also indicated that their lack of knowledge was the main reason for their not choosing complementary therapies, they also indicated (their second most common response) that they believed such therapies to be of no benefit.

Complementary therapies: a cure for consumer/patient dissatisfaction?

From a public policy standpoint, the most interesting aspect of the survey was the negative correlation between people's satisfaction with the current health care system and their use of complementary therapies (figure 3). Of those who considered the current system to be excellent, only 48 percent had taken advantage of complementary therapies while 78 percent of those who considered the system to be poor had tried these therapies.

Private versus public spending on complementary therapies

Approximately 70 percent of those responding to the question, "How much do you spend monthly on holistic health therapies?" had spent some of their own money on complementary therapies. Most frequently, people who used these health therapies spent $10 to $24 a month for this purpose.

Of the entire sample of respondents, about 75 percent wanted more complementary therapies to be at least partially funded by the government: 81 percent of WCB respondents, 60 percent of Chinese language respondents, and 55 percent of hospital respondents. (These results compare to those of national polls where 75 percent of the public and 40 percent of doctors believe that Canada's health care system should financially support further exploration of alternative therapies.[Michael Posner, "Feeling the Pinch," p. 48]) About three-quarters of respondents were also in favour of a centre in Richmond for holistic health therapies, although the question did not indicate whether this would be a privately or publicly funded facility. Women showed more support than men for increased government funding of complementary health services (89 percent versus 78 percent). Support for increased public funding also tended to increase with age, from just above 80 percent of younger respondents to over 90 percent of seniors.

The higher the income, the higher the satisfaction

In addition to the survey results, the CHTTG's report includes other general information on complementary therapies. For instance, it relates that in 1995, Angus Reid conducted a telephone survey in the Greater Vancouver area on alternative and complementary medicines. Of those surveyed, 72 percent were interested in complementary therapies, with women showing more interest than men. Surprisingly, however, those with higher incomes (66%) were less likely to use complementary therapies than those with incomes in the lower (74%) or middle (75%) income range. This finding is very noteworthy because it shows that the current method of funding medical services in Canada provides greater benefits to higher income individuals than it does to those with lower incomes. Perhaps this is one reason that the Maclean's/Medical Post/ Angus Reid national poll found that affluent Canadians (those earning more than $60,000 a year) were more likely than those who earned less than $30,000 a year to say that the health care system was working well. It could also be the reason that people with lower incomes are more equally divided on the issue of two-tier health care: for many of them, Canada's system is already two-tier.[Those in the top income bracket disagree with the concept of a two-tiered medical system by a margin of two to one, while those at the lowest income level are split roughly half-and-half on the issue. Source: Michael Posner, "Feeling the Pinch," pp. 48-49]

Conclusion

The CHTTG's report on complementary medicine use in Richmond provided the regional health board with important information about the health needs and demands of its population. The results show that many people are paying extra for health care, over and above what they already pay through their taxes, and that many of them are in lower income brackets. The results of the Richmond survey, as well as those of the Maclean's/Medical Post/Angus Reid poll, indicate that the health services currently insured by the government do not necessarily reflect people's choices, and that the people least satisfied with the system are those we are ostensibly trying to protect by preserving our "one-tier" health care system.

The Richmond Health Board demonstrated that health care regionalization is in the people's best interests. In light of recent developments in British Columbia-specifically, the provincial government's amalgamation of many of the health boards, its reluctance to give the regions that still exist any fiscal responsibility, and its refusal to consider any Canadian private sector involvement in the health care system [The B.C. government is, however, willing to send patients to private clinics in Washington State, and to have Americans and other non-Canadians pay for treatment in Canada]-the question remains: In whose best interests are the Canada Health Act and government-run health care?

Who's to Save the CBC?                                                              An Appeal to the Faithful

Michael Walker

Well, now that Pierre Burton has spoken out and told listeners that the budget cuts to the CBC must stop, something will have to be done about the struggling corporation. Nonetheless, the avid supporters of the CBC, including Mr. Burton and the Friends of the CBC (ably led by Ian Morrison), must realize that demands for additional government funding are likely to fall on deaf ears. Of course those vocalizing from such a song sheet may regard their efforts as preventing even further cuts and do not actually anticipate any turnaround.

Let me make my own bias clear. I support the idea of a national Canadian broadcasting presence that will provide a truly Canadian perspective on issues, a showcase for Canadian cultural expression and a kind of electronic forum for sharing views about the Canadian reality. I am also addicted to "The World at Six," "Royal Canadian Air Farce," "Double Exposure," "This Hour Has Twenty-Two Minutes," and a number of other quintessentially Canadian productions.

Nevertheless, the antics of Ian Morrison and the Friends of the CBC, as well as the vituperations of Pierre Burton, make my skin crawl. I don't see why Canadians who have no particular interest in the CBC or its programming, and who prefer their local rock, country, or oldies radio station, or CTV, or Global Television, or one of the many foreign TV offerings, should subsidize my indulgence in the CBC. That is particularly the case when careful studies show that those who are inclined to the sort of cultural programming that predominates on CBC, particularly FM radio, have higher incomes than the general population.

So what is the solution? How can the Friends of the CBC, the lobby group, make common cause with the friends of the CBC, who don't agree with government subsidization of the organization? The obvious answer seems to be the creation of a new entity that is based on voluntary subscription and not on compulsory support through the tax system. After all, the central argument advanced by people like Pierre Burton is that the CBC is a popular Canadian cultural institution and it should be maintained. The true test of the CBC's popularity is to permit those who enjoy its offerings to support it through voluntary contributions.

To keep CBC's subsidy at its current level of $963 million would require something like $80 per household in Canada. To maintain only the radio operations of CBC would require a contribution of about $30 per household, and of course there are many shades of variation between these two positions. One aspect of this shading would be to recognize that at least some of the money currently spent through the CBC does not aid in the maintenance of a Canadian television network, but rather subsidizes political and cultural polemics like the densely ideological series on the Avro Arrow. Debates about this sort




Trash in Schools

Laura Jones

Environmentalism has hit elementary school. Activists now routinely visit classrooms and according to one survey, 63 percent of school children have lobbied their parents to recycle. [Roy Cordato, "It's OK to Throw It Away: Tell Your Kids," The Campbell Entrepreneur, Fall 1995, p. 10] Have the three traditional classroom Rs-reading, writing, and arithmetic-been replaced with the three enviro-Rs-reduce, reuse and recycle)? Some of the latest lessons being taught in the name of math, science, social studies, and English suggest that learning environmental advocacy has become more important than learning arithmetic and biology.

Consider a math and social studies exercise available from the Cornell University Resource Center in New York for children in grades K-3. Step one of the exercise is to unwrap packaged food and convenience items. Step two asks students to separate the packaging from the product. Finally, students are asked to determine which weighs more, the pile of packaging or the pile of product. The stated objective of this lesson is not to teach children how many grams in a kilogram, but to teach them to buy in bulk, to buy recyclable products, and to write letters to companies they believe to be using too much packaging.

Another lesson in speech and language arts for students in grades 4 to 6 requires that students present "a persuasive, well-organized speech promoting the establishment of a school recycling program." For this lesson, there is some suggested follow-up-have your students present the speech to local community groups or have them write letters advocating recycling to the editors of local papers.[The classroom activities listed come from the "Trash Goes to School" unit available at the Cornell University Resource Center]

These exercises are examples of a disturbing trend in education. In some classrooms, advocacy is replacing literacy and propaganda is replacing reason. Children are taught selected "facts" about the garbage "crisis." They are then taught that their salvation lies in the religion of recycling. This religion relies on the following popular myths which are perpetuated in schools.

Myth 1: we face a garbage crisis

This popular myth is based on the assumption that we are running out of landfill space. But, according to a study done by Resources for the Future, if all of the solid waste that America will generate for the next ten centuries were put into a single place, it would only require a hole 44 miles on each side and 120 feet deep (one tenth of one percent of the land area of the continental United States). Canada, whose land mass is larger and population smaller than the United States, would require an even smaller landfill representing an even smaller amount of the total land base.[Clark Wiseman, "US Wastepaper Recycling Policies: Issues and Effects," Resources for the Future Discussion Paper ENR 90-14, 1990]

Another false indicator used to scare students into buying the notion of a garbage crisis is the claim that many landfills are close to capacity. What children are not told by their teachers is that landfills are designed to have a short life span. That most landfills are close to capacity is not cause for alarm. Landfills are always scheduled to reach capacity and close within about 20 years of opening.

Myth 2: recycling always saves resources

The simple economic concept that is not taught to children when they look at waste disposal options is that any option involves trade-offs and costs. If recycling truly saves resources, it should cost less to recycle waste than to put it in a landfill. Although this is true for some materials, mandatory recycling programs often double the costs of waste disposal. [Dr. Jay Lehr, ed., Rational Readings on Environmental Concerns, New York, NY: Van Nostrand Reinhold, 1992] These high costs pose an environmental problem because the extra resources spent on recycling are no longer available to address other, more pressing environmental concerns. There is no need for the mandatory recycling programs that schools often press their students to lobby for. When recycling is the most cost efficient disposal solution, firms and households will recycle voluntarily.

Myth 3: recycling is the environmentally friendly option for waste disposal

Contrary to popular opinion, recycling is not always the most environmentally friendly way to dispose of wastes. The recycling process itself generates pollution. To recycle paper, for example, old ink must be stripped away and the paper bleached, a process that generates chemical wastes. Is this more or less environmentally friendly than letting the paper sit in a landfill? Recycling programs also require additional garbage trucks to pick up the separated garbage. These trucks contribute to air pollution. Recycling program evaluations do not usually consider such details as the toxic sludge produced by de-inking newspapers or the high energy costs of driving old bottles to glass recycling plants.

In many cases, the option that looks more environmentally sensitive is actually the more harmful one. For example, Martin Hocking, a chemist at the University of Victoria in British Columbia, has calculated that a ceramic mug is a more environmentally sensitive choice than a polystyrene cup only if you use the mug 1,000 times. If the mug breaks before its 1,000th use, the polystyrene cup would have been the more environmentally sensitive choice. Yet children are frequently told that to reuse is always less harmful to the environment than to throw something away-particularly if that something is plastic.

Based on these myths, students are asked to extol the virtues of recycling without considering any of its costs. Education like this is destructive because it does not encourage children to think critically about issues. How many children, by the time they have graduated from high-school, question that we face a garbage crisis? How many consider the costs of recycling? And, how will these future voters influence policy? When it comes to the environment, today's children are not taught about trade-offs and costs. The ultimate irony is that when children are not taught to think critically about environmental issues, the environment itself will suffer.


A Solution to Student Loan Defaults:                                           A Review of the C.D. Howe Institute's Report

Edwin G. West

Since it began in 1964, the Canadian Student Loan Plan (CSLP) has developed many problems. Most conspicuous has been the defaults on loans which, by 1994, had accumulated to over $1 billion. Some critics also complain that the majority of students are denied access to the CSLP because they fail an arbitrary means test that is based largely on parental income. They prefer an "income contingent" loan (ICL), open to all students as it is in Australia and New Zealand. These loans are repaid on the basis of a given fixed percentage of the borrower's future income and extend up to 25 years after graduation. With such flexibility, the critics maintain, and with the income tax acting as collector, the rate of defaults should drop dramatically.

In their new book, Student Loans in Canada: Past, Present and Future, (C.D. Howe Institute, December 1996), Ross Finnie and Saul Schwartz are lukewarm about the ICL option, preferring instead to wait and see the results of a new reform in Canada whereby the federal government pays participating banks a 5 percent risk premium in return for their taking full responsibility for student defaults. In any case, the authors argue, ICLs would have to be subsidized and therefore would still need a means test. If they were not subsidized, those who expect to have higher earnings and, therefore, pay back more than the amortized value of what they borrowed, would look elsewhere for their loans, and so undermine the solvency of the whole system. But usually it is only the rich who can obtain a non-government loan from a private bank because, typically, a parent with a good credit rating is needed as a co-signer. Finnie and Schwartz's idea of a subsidy to make ICLs viable, therefore, is designed mainly to ensure the continued participation of the well off and so avoid the so called problem of "adverse selection." But, having called for the subsidy on these grounds, the authors proceed to insist on a means test to prevent it from falling into the hands of students "not really in need," i.e. the well off!

In my full report, "Student Loans Under New Scrutiny," Public Policy Sources, Number 1, I contest the "adverse selection" argument at several levels and point out that there is little evidence of it in countries such as New Zealand that are now operating successful ICLs.

Finnie and Schwartz appear to be confident that the reformed CSLP will match the flexibility of the ICL and so reduce defaults. This is mainly because students will be able to undertake private negotiations with officials when they experience special repayment difficulties. Such negotiation was available, however, under the old CSLP. The authors also argue that the banks now have stronger incentives to pursue the defaulters. Yet the means for such pursuit, namely, the previously employed private collection agencies, are still going to be used as before. And these institutions are very expensive.

To be persuaded that the private banks can be at least as efficient as the income tax in reducing defaults is a tall order. Bruce Chapman, one of the discussants in Student Loans in Canada: Past, Present and Future, observes that in Australia, which uses the income tax for student loan collection, the cost of administration is only 1.3 percent of the revenue collected. This is a much smaller figure than the 5 percent that the Canadian government pays to the banks. Furthermore, in 1993 the CSLP started successfully using Revenue Canada to recover student loan debts by refusing to pay delinquent borrowers the income tax refunds that were due to them. About $42 million was recovered within two years in this way. It is odd, surely, that the government cancelled this practice, though Finnie and Schwartz do not probe this mystery.

Chapter 3 of the C.D. Howe book presents some interesting empirical analysis of graduates who left colleges and universities in 1982, 1986, and 1990. Interviews were conducted two and five years after graduation. Reported difficulties in repaying loans included the explanation of "insufficient earnings." But these graduates were clearly at the beginning of their careers, and, the more we take lifetime earnings as the repayment criterion (which is what the ICL does), the less pressure we can expect on this account.

Finnie and Schwartz do not completely dismiss the idea of an ICL, but they do treat it at arm's length. They recommend it be implemented only as a small-scale pilot experiment. To be fully representative, however, such a pilot scheme would have to last at least 20 years! The authors give me the impression that they are relieved that the ICL option is "simply off the federal policy agenda" for at least three years, after which the new arrangement with the banks comes up for re-negotiation. Meanwhile, thousands of students will continue to be denied access to loans because they are not eligible under the CSLP's means tests. Should this problem not be on the federal agenda at all times?

[Professor Edwin West's full report, "Student Loans Under New Scrutiny," is a Public Policy Sources paper (Number 1) available from The Fraser Institute for $5.95 plus shipping and handling. Call (604) 688-0221, ext. 325 or (416) 363-6575, ext. 325 to order.]


Choosing to End the Monopoly

Guy Cloutier

The release of the KPMG reports on the future of the Insurance Corporation of British Columbia (ICBC) and the appointment of the Review Team on Automobile Insurance gives British Columbians their first opportunity in many years to examine and decide what kind of auto insurance they truly want. Unfortunately, however, the time for this debate is short, and the scope is very narrow. Most British Columbians are unaware both of the significance of the contemplated changes and of the available options.

These are the facts. Despite record premium increases over the last 10 years (the highest rates of increase in Canada), ICBC is facing serious financial difficulties. The KPMG report seems to offer only two alternatives-some form of no-fault insurance that would deny citizens the right to go to court, or large premium increases that would continue to ask good drivers to foot the bill for bad ones. But there is a third and very viable alternative-competition in auto insurance.

When it was created in 1973, ICBC's original mandate was to stop the arbitrary cancellation of policies by private insurers, cover uninsured motorists, and prevent unaffordable rates. Do we still need a legislated monopoly to deal with these problems? The first two issues can be dealt with through amendments to the Insurance Act. Clearly, on the third issue, the government monopoly approach has failed to deliver for consumers.

Consumers have seen the benefits that competition has brought to the telecommunications and cable television industries. It is only natural that they would like similar benefits from competition in auto insurance.

The following proposal would reduce premiums and improve road safety. It will do so by: a) allowing free and open competition between insurance providers on a level playing field, with ground rules to protect the consume; b) imposing greater financial penalties on high risk drivers and owners of high risk vehicles who push up premiums for the rest of the drivers; and c) establishing a Traffic Safety Commission funded by all insurers, and in which all stakeholders (government, law enforcement, insurers) actively participate.

Truly open competition and choice, along with appropriate regulatory protection for consumers and vigorous traffic safety measures, will bring a sustainable solution to the problem. Consumers, not governments, will provide insurers the right incentives for better service and lower prices. Consumers do this by exercising their right to buy the insurance coverage that best suits their needs. Such competition will force insurers to become more cost-efficient. Simple regulatory measures will suffice to prevent unacceptable market practices and discrimination. Competition will also promote risk-based pricing, ending the subsidization of high-risk drivers and vehicles, and forcing bad drivers off the road.

The best evidence for the benefits of a competitive market approach to car insurance is found in Alberta, which has complete and open competition and also enjoys some of the lowest rates in the country for experienced, safe drivers. (They do this without the imposition of any "no-fault" provisions.) Higher risk drivers also pay significantly more in Alberta than they do in BC. These facts go a long way towards explaining the differences in both accident rates and insurance rate growth in the two provinces.

Retaining the status quo is not an option. Competition and consumer choice must be fully explored. )

Capitalism "Lite"?

Chris Sarlo

Next time someone says, "Yes, we do need capitalism to create jobs and ensure economic efficiency, but we need a kind of humane and compassionate capitalism," you have my permission to grimace, look at your watch and slide them the famous Woody Allen line: "Ahh... I'm due back on planet earth."

Capitalism is the natural result of freedom. If we have a society in which free and voluntary arrangements are permitted without interference, history informs us that capitalism will be the economic system of choice. Indeed, even in coercive, repressive societies, capitalism survives-and frequently thrives- in the shadows.

If freedom is the prerequisite to capitalism, its characteristics are private ownership of property, free markets, and profit. Those ingredients have provided people with more jobs and better living standards than any alternate system, organic or contrived. This result is not surprising. Any system that does not arise out of freedom is necessarily imposed. Any such system, no matter how well intended, can never succeed as well as arrangements people freely choose for themselves.

This is important to stress. Capitalism is an economic system arising naturally out of freedom. Because of this, some have argued, quite persuasively, that capitalism is a "moral" system. It would be hard to dispute that any mechanism based on non-coercion and voluntary arrangements is moral. If capitalism is both morally and economically superior to any alternative, why is there so much complaining and discomfort with what is regarded as the "practice" of capitalism?

Part of the answer is that the practice of capitalism is widely misunderstood and misrepresented. State rules or policies favouring one corporation over another, state subsidies to private firms, or indeed any form of protectionism have nothing to do with capitalism. These practices are the antithesis of capitalism which repudiates any role for the state in free markets.

In my view, a more important part of the explanation for the widespread dissatisfaction with capitalism has to do with its perceived outcomes. In a free market, rewards are largely based on effort and ability, but those qualities are unequally distributed in any population. Thus, capitalism inevitably leads to inequality of wealth and income. Many individuals, even those who are quite prepared to accept the morality of free and voluntary arrangements, are nevertheless uncomfortable with the sort of inequalities that are the result. As well, there is currency for the view that, without state intervention, corporations under capitalism have excessive economic power, to the potential detriment of workers and consumers. These perceptions are fed, not only by social democrats who have always believed in a strong state as the only effective counterbalance to corporate power, but also by some so-called "conservatives" who regard individual freedom as a highly overrated value. These are the folks who complain about capitalism lacking compassion and not fostering a sense of community. They wonder aloud how much better capitalism would be if it adopted these very human qualities. What they want, apparently, is capitalism "lite."

But capitalism "lite," in increasing doses, is essentially what we have had for the past two or three decades. It has meant more state involvement in the economy, higher taxes, and a massive government debt. It has been responsible, largely, for increasing irresponsibility, dependency and unemployment. Capitalism "lite" is not capitalism at all-it's socialism. Mandatory compassion is not compassion at all-it's coercion. The problem with capitalism "lite" is that it attempts to imbue an economic system with human characteristics.

Alas, human qualities such as compassion, generosity, a sense of decency and civility, are for human beings. We can, and should, expect compassion and decency and civility from each other. In all of our relationships, we should treat others with dignity and respect. We ought to be generous to the weak and vulnerable. We ought to help those in society who are unable to help themselves.

I have made the point here previously that, indeed, every one of us needs a safety net. Regardless of how successful we might be, circumstances can change. At the very least, all of us want and need some kind of insurance to enable us to avoid homelessness if the worst happens. And we want it to be universal. But how can this be done? How can we have a decent and compassionate society and still ensure that we have the kind of economic arrangements that people freely choose? This is unquestionably the key policy issue of our times, but capitalism "lite" is not the answer. )

Black English

Walter Williams

Y'awl might axin me why Ah be writin dis way. Y'awl might tink ma fambly didn't gib me a gud upbringin. Y'awl might say Ah be a no-count, woebegone yaller dawg fit fer nothin but taters and chittlins. What be wrong wid yo innards and book-learnin, y'awl might be axin?

Run that paragraph by an intellectual multiculturist at one of our universities. Ask him to comment on the language or dialect. Chances are he'll perk up and say, "Why that's black English; I'd know it anywhere!" But t'aint. It is as white an English as you can get.

According to David H. Fischer's book, Albion Seed, in 1773 Philip Fithian from New Jersey went to Richmond, Virginia to teach at Nomini Hall. In his journal, he told how Northerners said, "I am," "You are," "She isn't," and "I haven't," whereas Virginians, "even if high rank," preferred to say, "I be," "You be," "She ain't," and "I hain't." The Virginian dialect, Fithian discovered, even had its own vocabulary: afeared for afraid, cater-cornered for crooked, chomp for chew, disremember for forget, and a host of similar substitutions.

Virginians tended to add syllables to words and embellish vowels such as ha-alf for half, puriddy for pretty, and wah-a-tah-mill-i-an for watermelon. They also had a way of softening consonants: sebem for seven, chimbly for chimney, mo for more, and wid for with.

These Virginian speech patterns were not invented in America. They were derived from a family of regional dialects spoken throughout the South and West of England during the 17th century in counties such as Sussex, Surrey, Hampshire, Dorset, Devon, Wiltshire, Oxford, and Gloucester. By the late eighteenth century, these words had all but disappeared from polite usage. Fischer says, "in the twentieth century, words like dis or dat were rarely heard in any part of rural England, but they persisted among poor whites and blacks in the American south. According to Fischer, a few Africanisms crept into the English language, even words of African origin; however, "the major features of the Virginia accent were established before African slaves could possibly have had much impact on language."

The bottom line is the language we often hear spoken among blacks has little or nothing to do with Africa. They're speaking like purebred Englishmen of yesteryear from the south and west counties of Britain. So why don't Englishmen from those regions speak like that today? Because they have benefited from being educated to speak more correctly. And why does this English dialect continue to be spoken by some black people? Those blacks have not benefited from being educated to speak correctly. An added complexity is that blacks have had multicultural intellectuals convince them that "I be" talk is a part of their heritage and roots. Bad-talking Englishmen suffered through the brutal "insensitivity" of having someone tell them they were wrong and demand proper grammar and pronunciation.

So-called black English is nonsense and an attempted cover-up of government school corruption and capitulation to mediocrity. It's not simply that "black English" is hard on the ears. Poor command of language is devastating to learning potential and reasoning skills. After all, language is how we transmit knowledge and experiences.

But don't take my word. Just ax yourself: how many successful blacks be talkin' black English?

Anti-Smoking Lobby Has Its Own Addiction

Karen Selick                                                                                                                                                                        [A version of this article has also appeared in Canadian Lawyer ]

I think smoking is one of the dumbest things a person can do. It's bad for your health and it's a waste of money. I don't allow it in my home or my office, and I am forever trying to persuade friends and acquaintances to quit.

But, dumb as it is, there are things that are dumber still-for example, trying to use the coercive power of government to protect people from their own stupidity. The anti-smoking lobby, always so busy complaining that cigarettes are addictive, might better spend its time examining its own addiction to the almighty state.

It's hard to believe that with the fiascoes of the Prohibition and the war on drugs to learn from, some people are still pushing for new vice laws. It makes you wonder what forces are really behind this movement. One group that would obviously benefit from another caper of this kind is organized crime. Every new black market is just another source of profit to these guys. It wouldn't surprise me at all to learn that crime syndicates have been surreptitiously funnelling money into promoting the step-by-step outlawing of tobacco.

Despite all the ink spilled over Toronto's and Vancouver's recent attempts to ban smoking in bars and restaurants, it has been almost impossible to find a commentator who has correctly identified the nature of the controversy. This is not a battle between "smokers' rights" and "non-smokers' rights." This is a question of restaurant owners' property rights.

There's a clear distinction between public property, such as City Hall, which is owned by the government, and private property, such as your house, which is owned by you. Most people accept that the city government has the right to control whether or not visitors smoke in City Hall, and you have the right to control whether or not visitors smoke in your house. But lately, it seems, people have developed a notion that private property like a bar or restaurant suddenly falls into a brand new third category merely because the owner chooses to open it up for all and sundry to enter. They confuse the two meanings of the adjective "public": owned by the people versus open to the people. Suddenly, they think government has the right to decide whether or not visitors smoke on private property.

Since non-smokers don't own the air inside restaurants, they can't claim any "right" to a smoke-free environment. All they can do is look for someone willing to provide restaurant space that meets their smoke-free specifications. If they are prepared to pay enough to compensate the restaurateur for the loss of smokers' patronage, they'll probably be able to find someone willing to accommodate them. However, legislating smoke-free dining for them is giving them this privilege without their paying for it. Put bluntly, it's stealing. It's a partial confiscation of the restaurateur's property.

It'll be fun to see what happens when the anti-tobacco fascists run headlong into the human rights fascists. The recent Imperial Oil case informed us that alcohol addiction is a disability, and you can't discriminate against the disabled. The anti-tobacco fascists can hardly object when smokers claim to be disabled too-after all, they're always telling us smoking is addictive. So what's the justification for discriminating against tobacco addicts in restaurants?

Okay, we'll grant them the argument that smokers would not be turfed out merely because of their addiction, but only if they attempted to exercise their vice in the restaurant. But there's that mysterious little section 3 in Ontario's Human Rights Code. It says, "Every person having legal capacity has a right to contract on equal terms without discrimination because of . . . handicap." I always used to wonder what this section could possibly mean, but if it means anything at all, it surely must mean that smokers as entitled as non-smokers to contract with restaurateurs regarding the use of the air in restaurants. How can the tobacco fascists justify denying them this equal opportunity?

Strangely, the human rights fascists have been silent on this issue. They have not rushed to the defence of this persecuted minority. Like the tobacco fascists, the human rights fascists are addicted to the state. Ordinarily, they spend their time using their government-granted powers to bully landlords, employers, and other businesses out of their freedom of contract and property rights. Heaven forbid they should find themselves opposing the government on something, or supporting the freedom of business people to make contracts about the use of their private property.

Anti-tobacco fascists try to justify their activities by claiming they are protecting non-smokers from the medical expenses incurred by smokers. There are simpler ways of doing this. Smokers could be charged a premium for their health insurance, or denied coverage altogether for diseases such as lung cancer. Maybe the extra medical expenses would encourage them to cut back on their smoking. Anti-tobacco fascists are always telling us that extra taxes on cigarettes would do the trick.

Are they now going to say smokers are too dumb to think that far ahead or make the connection? Well, it takes one to know one. Anti-tobacco fascists are too dumb to visualize the crime, corruption, and waste their war on tobacco will cause.

This Space for Rant

John Robson

It should not be necessary, each time that government intervention is proposed or defended, to argue afresh that it is a deprivation of choice and must be justified against the costs which that deprivation entails. We should take the argument for granted, and then engage in a sensible exploration of whether this particular instance is one in which citizens should not be allowed a choice. Of course we should also floss our teeth every night.

In the case of the policy in place that protects the Canadian magazine industry, the issue is generally cast as whether those big, mean, crass Americans should be able to force us to watch Michael Jackson videos, or whether we should have the opportunity to watch CBC docudramas exposing our toxic past so the healing process can begin. This is not an appropriate framework for analysis, since the issue really is whether we should be free to choose to watch Michael Jackson videos-an activity I do not recommend, incidentally-or whether small, nice, cultured Canadians should be able to force us to turn off our TVs by filling the screen with the aforementioned docudramas (and thus promote literacy). It is not the Americans who, by giving us what we want, exercise coercion, nor is it the cultural police who, by using state power, enhance our freedom of choice.

Once this point is finally established, however, the forces of cultural nationalism admit that they are indeed coercing us, but say it is for our own long term good. They seem to think that if we are forced to consume Canadian culture long enough, we will eventually develop a taste for it, like people who were forced as kids to eat broccoli and now head straight for it at Ministry of National Heritage receptions, bypassing the smoked salmon, cream cheese, shrimp and other unwholesomely seductive snacks. If we consume enough of what is good for us, we will be both happier people individually, and better compatriots. So we should be denied the choice-at least until we grow up.

Since we are not children, however, it is unlikely that this policy has any benefits at all. But even if it does, these must be weighed against its long-term costs, which are much greater than is generally supposed, even by those who concede their existence. The long term costs of denial of choice always are.

Consider, in this case, that, according to the Ottawa Citizen, magazine advertising is now a $550 million-a-year business in Canada (February 21, 1997, p. A13) and that according to Peter C. Newman, in 1993 a full-page ad in the Sports Illustrated split-run edition cost $6,250, versus $25,400 for a full-page ad in Maclean's that same year. [Peter C. Newman, "The Canadian dream loses a big round," Maclean's, January 27, 1997, p. 56] Maclean's, of course, supports the policy, for, as Adam Smith observed, businessmen who plead for protection in the national interest are by no means such fools as those who believe them.

Of course the same fools who are glued to the screen during "The Boys of St. Vincent Bomb Innocent German Civilians Out of Sheer Malice but Not in the Arrow" also deplore advertising as quintessentially crass and moronic, and probably therefore actually think restricting it is good. Not for them the Pace piquant sauce ads with entire trail camps rioting because the salsa was made in... New York City! Not for them the subtle nuances of the question "Does your garage door put the ugh back in ugly?" Not for them the nation-building adventures of William and Jacques as they attempt to avoid swamp grass ale and also the outraged father of Amanda.

Not for them, either, any understanding that advertising communicates, that it makes people aware of goods and services, and communicates information about what sort of good or service the product in question is. To be sure, not all advertising is exactly above board: as my father was wont to observe, they tell you this year it is new and improved without having mentioned last year that it was old and shoddy.

But this does not justify the Oliver Stone/John Kenneth Galbraith view of the media as deftly manipulating helpless morons into buying useless junk. Most advertisers, you see, cannot recoup the cost of ads by selling you one of their products. Therefore they must have found that once you buy one, you will receive satisfaction and buy others. And even when the product is something that you would only buy occasionally-such as a house, a luxury automobile, an aircraft carrier-and whose cost would pay for considerable advertising, the same point applies, because the manufacturers assume that you will respond to the ad with enough interest to ask those who already have the product, not simply go out and buy one right away.

This function of advertising is probably most crucial when it allows new and struggling firms with innovative products to get onto the consumers' radar screen. It helps connect customers and companies who otherwise would face prohibitive transactions costs to find each other. And by forcing firms to spend $25,000 where they might spend $6,250, the government cuts the effectiveness of that $550 million by three quarters. Only one in four firms that might find customers via magazine ads, and customers that might find firms the same way, now do so. And it is not the small, struggling firms who can afford the higher rates.

Who can say what products fail because of this? Who can say what magazines fail that might otherwise succeed, and knock Time from its pedestal, and make the Americans start trembling at the Canadian cultural colossus? Who, indeed, is wise enough to know the future, and can justify restricting Canadians' liberty because they know that, in 50 years, it will all turn out for the best?

My stand in favour of freedom of choice does not imperil Canadian culture. It is Canadian culture. If our literati don't like it, they can move to Cuba. No one is selling or advertising in American magazines there, and people there are not distracted from contemplating the horror of their situation by a plethora of inexpensive, quality, consumer products.

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Last Modified: Wednesday, October 20, 1999.