The Internet thinks I want to see chess videos. Which eccentrically is true, although it has been many years since I was actively mediocre at the board. But it also believes I want to see Ontario government infrastructure ads, which suggests a misreading of the situation almost as gruesome as that of most governments.
The particular ad that got my attention, and my goat, is a slick little "Building Ontario" number that says "Infrastructure is more than just construction" then touts a new school, public transit and a hospital. "It's how we build a strong community." And you'll notice, at least if you're me, that Rashid Nezhmetdinov was an unappreciated attacking genius.
No, sorry, that was the chess video. What you'll notice in that ad is that everything mentioned, in a soothing voice to cheery music, is governmental. Evidently we don't build strong communities by volunteering, building a business or raising our own kids. We do it through the state.
The ad doesn't argue these things. It assumes them. And that mentality could be building trouble because the state seems to be stretched well beyond its capacities without having any inkling that it is so, especially given a John Ivison column in Tuesday's National Post suggesting Canada could be in the early stages of a tax revolt. He says an unexpected $2 billion drop in income tax revenue in Ontario "may have yielded the tax equivalent of a butterfly moving its wings in one jurisdiction and causing a tornado in another."
The Ontario numbers Ivison cites suggest that our governments are starting to slide down the back side of the Laffer Curve. Yes, it's back, despite the chattering classes' persistent efforts to banish it through ridicule and denunciation, as though it were merely a matter of attitude whether excessive tax rates reduce revenue by stifling the economy and prompting active measures to avoid them.
Ivison argues that combined federal-provincial tax rates exceeding 50% in six provinces including Ontario and Quebec mark a significant psychological point beyond which avoiding the excessive tax burden becomes a priority. But if so, it affects more than accounting. It affects people's attitude toward the state, which for far too many Canadians has for far too long been one of indulgence.
Politicians are fond of the phrase "their fair share" when it comes to taxes. But they never say what anyone's "fair share" is. And more than 50 cents on a dollar doesn't strike almost anyone as fair, especially when it's them. When the government takes more than half of every extra dollar you earn, it is not just hard to find the motivation given that you are probably already working hard and possibly also taking considerable risks in pursuit of income. It also makes you feel abused and unappreciated.
For that reason, if there really is a tax revolt coming, it won't just affect taxes. It will affect the ability of governments to spend, directly by reducing the money available and indirectly by reducing public intellectual and political support for ever-expanding government.
Such a development would bring serious trouble for our political class, because I see little evidence that they can even grasp the proposition that enough is enough, let alone that they could act on it. The same day that Ivison's article appeared, a bewildered New York Times commentary on Germany's political paralysis approvingly quoted a German analyst lamenting the absence of a grand vision when "the German economy is thriving, meaning that the new government will be in the enviable position of having the financial means to develop projects and undertake reforms like never before."
Like never before? Really? An expansion of the state on a far grander scale even than from 1960 through 1990? That's what you think current EU circumstances call for? Yet which of our political parties does not also offer a grand vision of increased public activity and spending?
I do not think there is a province in Canada, or a nation in the West, where there is serious political or intellectual discussion about reducing the size of the state anything like the intellectual ferment we saw in the 1980s, however disappointing the results of Brian Mulroney, Mike Harris, or even Ralph Klein, Margaret Thatcher or Ronald Reagan were in practice. Except perhaps from a few outlying think tanks and weirdo journalists who spend their spare time watching old Mikhail Tal games.
Finance ministries and political war rooms may brush off this temporary dip in revenue. The programs are beneficial and popular, and hence sustainable economically and politically. But what if they're not? A recent C.D. Howe Institute study saying "Canada's greying workforce will spell big fiscal trouble for future taxpayers" estimated that, among other things, "the present value of the unfunded liability for age-related social spending — amounts to $4.5 trillion." It went on to make some prudent suggestions for staving off disaster which you can find on their website. But are governments listening, or do they have their fingers in their ears?
If Ivison is right, this surprising Ontario fiscal news is just the beginning, and people in government should be making plans for the scenario in which revenue starts falling because the state is too big. I don't ask them to like it. But if it does happen and they're not ready, it will be checkmate, for them and us. And it won't be fun to watch.
Photo Credit: Jeff Burney Loonie Politics