Quebec’s Austerity Boogeyman


The end is nigh! By reading Huffington Post Quebec bloggers, one gets the sense the Philippe Couillard provincial government’s proposed austerity measures will create a bloodbath of unimaginable proportions. Apparently, Quebecers should take note of Europe’s failed austerity and simply maintain the status quo.

Perish the thought: Quebec Premier Philippe Couillard has proposed a limited degree of fiscal responsibility. (Premier’s Office)

There is only one problem with this latter statement: there has been almost no austerity in Europe. Indeed, many EU governments have been very sumptuous since 2007 by increasing spending, which has undermined growth.

Be it France, Greece, Spain, Portugal, or Italy, increased government spending and GDP growth are a mirror image: an increase of the former restrains the latter. On the other hand, nations that have kept spending under control — that have been “austere” — like Poland, the United Kingdom, Estonia, Sweden, and Latvia have had much stronger growth.

I did the same calculations for Quebec using data from the province’s Statistics Institute. Despite possible discrepancies — they don’t use the same methodology — there is clearly an upward trend for public spending in Quebec between 2006 and 2012, now 23 percent of GDP.

Other People’s Money

Beyond the faux austerity, there is a fundamental problem with the people opposing proposed budget cuts: their phony altruism is now laid bare for all to see. Be they community organizations, student groups, or labor unions, they all agree that they are entitled to other people’s money, by resorting to massive government intervention.

They aren’t. Any person who espouses the right to other people’s money is, in effect, pro-slavery. Indeed, if taking 100 percent of the fruits of someone’s labor is slavery, at what percentage does it stop being slavery?

To all the Marxists who opine the theft of “surplus value,” yet want to take from others, your guru’s theories on value have long been falsified. Since value is subjective, there is no objective way of telling how much a worker is “worth” other than by the “value” he produces: how useful it is to others. A cardiologist will always earn more than a janitor for that reason, and an entrepreneur — risking his own money — can earn more than his workers.

In addition, this strong desire to get other people’s money ultimately makes these “others” find ways to get around this tax on their efforts. They can work less, work under the table, or even move (the Laffer Curve effect). Burger King’s merger with Tim Hortons and the “surprising” deficit in former Finance Minister Nicolas Marceau’s budget are two telling examples. The former was a business tired of coughing up 40 percent of its profits, so it moved to a less greedy jurisdiction. The latter proved yet again Laffer’s line: “too much tax kills the tax.”

These “avoiders” are not traitors; they are heroes. They dare to defy the Leviathan by refusing to bow before him. They dare to proclaim their selfishness —  their right to pursue their rational interests and to be an end in themselves rather than a means for others’ ends.

By voting with their feet, they show that they are the masters of their destiny and production. Because unlike what Elizabeth Warren or Barack Obama might pretend, they did “build that.”

Without the government, almost everything could be obtained through voluntary exchange — through the markets. Nineteenth-century United States had private entrepreneurs offering education, turnpikes, railroads, and a vast array of innovations no government could match in efficiency or profitability.

Ignore the siren’s call of people railing on mere proposed budgetary cuts. Should they indeed come to pass, everyone will be better off. Indeed, if public spending were the key to growth, the USSR would still exist and Quebec would be the economic powerhouse of the country. Instead, La Belle Province is trailing behind so badly that PEI is about to pass Quebec with respect to net income.

Edited by Fergus Hodgson.

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