for economic freedom
Updates from the Prairie Centre Policy Institute from Regina, Saskatchewan.
Hot off the press! Don Baron's Jailhouse Justice
web posted July 22, 2002
Challenges of an aging population
By Craig Docksteader
The latest release of Statistics Canada's 2001 census numbers said it again: Canada's population is aging.
Records show that our population has actually been gradually aging for over 150 years. In 1851, only 2.7 percent of Canadians were over 65 years of age. By 2000, it had risen to 12.5 percent. The recently-released 2001 census numbers report that the 65-plus portion now sits at 13 percent.
By 2026, Statistics Canada projects that almost 22 percent of the nation's population will be over 65 years of age. Between a falling birth rate, longer life-expectancy, and the retirement of the baby-boomers beginning in 2011, the over-65 portion of the population will increase as much in the next 25 years as it did in the previous 150.
The implications of this are significant. An aging population means increased costs for age-sensitive social programs such as healthcare and pension plans. Healthcare costs escalate with age, and increase most rapidly after 65. Government-funded pension plans for obvious reasons also incur their costs in the later years of life. As Canada's population ages, the overall price tag for these programs is going to rise as well.
An aging population also means a proportionately smaller workforce. In other words, while the total cost of government services continues to go up, the size of the tax base will become relatively smaller. With increasing demand being placed on social programs which must be paid for by a shrinking portion of the population, governments will be forced to either cut services or impose a higher tax burden on those who are still working.
But while all three prairie provinces will have to confront these challenges facing the nation, Saskatchewan is likely to feel their effects more significantly. Already, Saskatchewan leads the nation with the highest percentage of seniors (15.1%), and the smallest percentage of 20 to 64 year-olds (55.8%) next to Nunavut. In addition, the province's population is not growing, the aboriginal employment rate is decreasing, and young people continue to leave.
As outlined in a report released earlier this year by the Prairie Centre Policy Institute, by 2026, 46 percent of Saskatchewan's population is going to be either under 15 or over 60 years of age. After accounting for those who are not working, and those who work but do not pay taxes, each Saskatchewan person of working age making a positive net tax contribution will have 17 people dependent on them to pay for their social and economic services.
In the report, entitled, "This Year Country: Creating Wealth in Saskatchewan", author Dr. Graham Parsons notes that, "These levels of fiscal dependency are not sustainable or competitive. Tax burdens on supporting individuals must rise simply to accommodate the social service requirements of an aging population. People will leave Saskatchewan rather than have their well-earned pension incomes taxed away. This further reduces the tax competitive position of the province and can perpetuate continuing cycles of out-migration."
Rather than giving up and closing the doors, however, there is a growing determination within the province to find real solutions and tackle the issues head-on. As Dr. Parsons writes, "Retaining the status quo is no longer an alternative for Saskatchewan. The fiscal realities that will be introduced by the aging dependent population will force the province to choose a stronger economic future It is time for Saskatchewan to create the environment to attract the people back and to allow those at home to grow and develop the province's natural and human resources.
Craig Docksteader is Coordinator with the Prairie Centre Policy Institute.
web posted July 15, 2002
The myth of government efficiency
By Kevin Avram
I recently heard someone say that a certain journalist always writes with an "unbiased opinion". I laughed, because that's an oxymoron. An oxymoron is a contradiction. It's a statement about something or someone that combines opposite or contradictory terms. The word literally means "acutely silly".
Being almost perfect, pretty ugly, or going on a working holiday are the same. Found missing, acting naturally, and having a minor crisis all fit into the same basket. Their companions are old news, plastic glasses, and thunderous silence. None of these things actually exist.
In the English language there are hundreds of these phrases that describe non-existent things. There may even be thousands. But regardless of their number the king of them has got to be "government efficiency". It's an oxymoron that sounds especially good on the lips of an aspiring politician, but as good as it sounds, it'll never happen. For a very very good reason, it can't happen.
Governments are inefficient for the same reason that dogs bark. It's part of their DNA. There's no way to change it. The DNA of a dog is biologic. The DNA of a government and why it will always be inefficient is determined by the manner in which it spends. In all of life there are just four ways to spend money:
The first is when people use their own money to buy something for themselves. When they do, they look for the best value at the best price. They hunt for bargains and greatly inconvenience themselves to find them. This is why ranchers and farmers haggle with equipment dealers and why thousands of stores across the country put items on sale.
The second way to spend is when people use their own money to buy something for someone else. They still want a bargain, but aren't as interested in pleasing the recipient as they would be if they were buying for themselves.
The third way to spend is to use other people's money to buy something for you. People in this position buy exactly what they want, but price no longer matters. If we could all buy cars under this type of arrangement the world would be full of Porsches and BMWs.
The fourth and final way to spend is to use other people's money to buy something for someone else. As humorist P.J. O'Rourke says, if someone finds himself able to spend millions of dollars in this kind of a situation, "who would give a %$&# about efficiency?" This is the world that governments live in, and because they do, the idea that they can be made efficient is a fantasy.
Lots of people say that government should be run more like a business. The truth is that it can't run like a business. Businesses always spend their own money. Governments always spend yours. That's why politicians can give grants to businesses they'd never buy shares in, and pass fists full of cash to special interest groups. If they were spending their own money things would be very different.
Government efficiency is a myth. It is as far from reality as the doctrines of the Flat Earth Society. Who's doing the spending and whose money is being spent is always what determines efficiency. It explains why the best government is the government that does the least. And why the best politicians are those who work not to make government more efficient, but smaller.
Kevin Avram sits on the Prairie Centre's Board of Trustees.
web posted July 8, 2002
Why economies grow
By Kevin Avram
Most people know that it's not very hard to grow mushrooms. When the conditions are right, they grow like mad. Surprisingly, wealth is much the same. When conditions are right it also grows. In fact, the amount of wealth available to any particular society has nothing to do with chance. There are specific conditions, that when consciously put in place, ensure wealth will be created on an ever expanding scale.
To document the factors that lead to wealth creation the Washington-based Heritage Foundation examined 161 countries in order to establish a Wealth Creation Index (WCI). The analysis found that to the extent that a nation's government establishes institutions and procedures that are consistent with the WCI, economic growth is realized. The ten factors that make up the Wealth Creation Index are:
Government Intervention: When governments subsidize private businesses and operate Crown Corporations they crowd out healthy private sector investment and put a hold on economic diversification.
Fiscal Burden of Government: Keeping taxes low gives people an incentive to work. Societies benefit when the incentive to work more hours increases. The less a government taxes its citizens, the more money they have to invest and pursue their own goals, thereby creating more wealth.
Capital and Foreign Investment: When foreigners are free to invest in a country or province, citizens have more economic opportunity. Such investment provides employment for local residents and creates opportunities for local companies that can supply goods or services.
Trade: When individuals are free to engage in trade with people from other nations, economic growth is promoted. Buyers acquire goods and services more cheaply. For developing countries, open trade is essential for acquiring technologies that had previously been unavailable.
Monetary Policy: A healthy economy needs a sound currency that can be used for exchange. The currency stores value and allows comparisons across goods and services. If the government debauches the currency (inflation) or maintains policies that cause its value to decline, the country's citizens will suffer.
Banking and Finance: Many economic activities require financing through a bank. Governments that over regulate the allocation of credit through interest-rate controls or subsidies negatively affect economic activity. When governments make loan guarantees they encourage individuals to engage in risky economic activities that would otherwise not take place. (These ventures result in losses over the long run and crowd out more productive private investment.)
Wages and Prices: Wages and prices play a crucial role in a market economy by providing signals to producers, consumers, and workers. Wealth creation is greatly enhanced when governments allow prices and wages to be freely determined.
Regulation: Entrepreneurs transform capital and labour into goods and services that people demand. The entrepreneurs are rewarded with profits. Governments that make it difficult for entrepreneurs to start up or maintain businesses prevent them from effectively meeting peoples' needs. Similarly, when governments impose burdensome environmental or health and safety regulations, the cost of doing business discourages production.
Black Market: A black market is not necessarily a bad thing. Its existence indicates that some government imposed obstacle prevents people from exchanging goods and services in a legal marketplace.
Property Rights: A government that provides a secure rule of law, an efficient court system, and an independent judiciary, creates an environment that encourages exchange, innovation, and investment. If property rights are secure, citizens know that when they take a risk and the undertaking proves successful, they will receive a reward. No one will take away or confiscate their property.
Kevin Avram sits on the Prairie Centre's Board of Trustees.
web posted July 1, 2002
Changing the rules on farmland ownership
By Craig Docksteader
The government of Saskatchewan is about to change the province's farmland ownership rules. The Act to amend the Saskatchewan Farm Security Act was introduced on June 26, and is moving quickly through the legislative process.
The changes will effectively put Saskatchewan on par with the farmland ownership rules in both Manitoba and Alberta. All ownership restrictions are being removed for Canadian residents, citizens and corporations, but restrictions on the foreign ownership of farmland will remain.
Although much of the public debate has centered around the impact of changes on agriculture and the farm community, changing the Saskatchewan Farm Security Act is about far more than determining who can buy farm land.
It is about facilitating an essential and fundamental shift in attitude that is necessary if Saskatchewan is going to confidently meet the challenges appearing on its horizon and achieve its full potential as a province.
Consider the following:
1. Changing the Saskatchewan Farm Security Act counters the myth that we should be wary of outside investment.
Saskatchewan has an historical apprehension toward outside investment.
Outside ownership is repeatedly portrayed as a process by which profits are sucked out of the province rather than being put to work at home. As long as Saskatchewan continues to believe this myth and harbour misgivings about outside investment, the province will not be able to attract the capital necessary to secure its future as a dynamic, prosperous place to live and do business.
In actual fact, outside investment brings new wealth to the province and makes the economic pie bigger. Changing the Act is about leaving historical apprehensions toward outside private investment behind, and embracing a future characterized by the pioneering and entrepreneurial attitudes which founded the province.
2. Changing the rules on farmland ownership counters the old economic culture which looks at corporations with mistrust and suspicion.
While some corporations have earned their poor reputation, most of the misgivings about corporate ownership find their roots in myths and conspiracy theories. In order for Saskatchewan to face the future boldly and meet its challenges with confidence, the province must welcome not only personal and private investment, but also corporate investment. Changing the law to allow Saskatchewan and Canadian corporations to invest in agricultural land weakens the anti-corporation mindset and promotes attitudes which are conducive to wealth creation and economic growth.
3. Changing the farmland ownership rules will enhance the economic image that the province portrays to outsiders.
During committee hearings on possible changes to the ownership rules, the committee repeatedly heard reference to the fact that the perceived barriers created by the Farm Security Act were much greater than the actual ones. In other words, the image of the province that the legislation portrayed to outsiders was arguably more damaging than the ownership rules themselves. Changing the rules sends a signal to investors and observers that Saskatchewan is changing and desires to become a preferred place to both invest and reside.
Nobody is suggesting that changing the Farm Security Act is a panacea for Saskatchewan. It will not eliminate all of the challenges facing the province and will not suddenly solve the problems in agriculture. It is, however, a step in the right direction in the quest for economic prosperity.
The CFEN and CFFJ need your help! The battle against the Canada Wheat Board can only continue with your support.
Write the following and demand free market rights for Western Canadian farmers!
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