Brian Lee Crowley

Rebranding the minimum wage as a “living wage” triumph of marketing over reason

The latest marketing dodge by the Left is to start calling, not for higher minimum wages, but for a “living wage,” thereby cleverly evoking images of poor single mums struggling to feed themselves and their kids on low pay. No one should work for a wage they can’t live on is a pretty good battlecry. Except that there are lots of people, in fact the vast majority, who earn the minimum wage and don’t live on it at all. The bulk of minimum wage earners are secondary earners in families above the low-income cutoff (LICO). And how many single parents with dependents try to get by on a single minimum wage income? Just over 2% of all people earning the minimum wage.

In my Globe column for the ROB of April 1st, therefore, I try my own rebranding campaign for the minimum/living wage. Here are the three I thought best. To the extent it represents government forcing businesses to pay more for labour than the going price, it is a tax on jobs. To the extent it forces up prices  at providers of low-cost goods and services to the poor, it is higher prices. And finally to the extent that the minimum wage is actually the entry wage for young workers living at home looking for their first job, and therefore every hike in the minimum wage makes fewer such jobs available, it is a youth penalty.

Guaranteed Annual Income: Wrong solution, wrong problem

In my never-ending campaign to épater les bourgeois (aka the commenters on the Globe’s comments page), my latest column takes aim at one of their favourite policy prescriptions: a guaranteed annual income for Canadians, delivered through the tax system (also called a “negative income tax”). Almost all the arguments advanced in favour of this alleged panacea are deeply flawed and take little account of incentives, human motivation or of the complexity of administering fairly or cheaply a system that will not be simple but rather devilishly complicated.

This column appeared in the 11 Dec. 2015 edition of the Globe’s ROB in their Economy Lab feature.

Of unicorns, sasquatches and supply management

At the exact moment where Canada is risking its spot at the Trans-Pacific Partnership negotiations in a quixotic effort to buttress supply management, the EU, that bastion of neo-liberalism, is abandoning milk quotas to the delight of both consumers and entrepreneurial dairy farmers. In my column for the Globe’s Economy Lab (Aug. 21st edition), I walk readers through the massive changes shaking the milk world globally, and why Canada’s efforts (endorsed by every political party) to “protect” dairy farmers are in fact harming the industry and costing consumers handsomely to boot.

Don’t get hung up on AIT numbers game

In my latest column for the Economy Lab feature of the Globe and Mail, I take issue with the journalists who think the only issue that matters with internal barriers to trade is the price tag we assign to them. The fact that any attempt to quantify their cost is subject to challenge becomes the story, whereas in reality it is a disingenuous distraction much beloved by apologists for the status quo (cf Baloney Meter!). We know four things for sure about internal trade barriers: they’re real, they cost us a lot, their damaging effects compound over time, and they violate our rights as Canadians. Isn’t that damning enough?

If you want chapter and verse about the problem and the solutions, see the MLI paper I co-wrote with John Robson and Bob Knox, Citizen of One, Citizen of the Whole.

Taking Keynes’s name in vain

A C.D. Howe paper recently called for Ottawa to keep borrowing and spending up to .5% of GDP rather than to balance the books as Finance Minister Oliver plans to do in the spring. This advice reminds me of Nobel Laureate (and great Keynes critic) F.A. Hayek’s dictum that his problem was not with Keynes, but the Keynesians. Find out why John Maynard and I would side with Hayek and against further “stimulus” spending in my latest column for the Economy Lab feature in the Globe’s Report on Business.

Why the Parliamentary Budget Officer needs a few mental health days

The Parliamentary Budget Officer recently released a paper explaining why it doesn’t actually cost the government anything when civil servants take sick leave. His conclusion was, IMHO, so bizarre that I felt compelled to devote my latest column for the Ottawa Citizen and other Postmedia papers to dissecting it. My conclusion, which I was too polite to express this way in the column itself, was that the only way that it can cost nothing extra if public servants are absent is if they’re not doing anything when they are there. Somehow I don’t think that’s what the fans of the PBO’s paper had in mind as a conclusion….

Tackling the regulatory beast

In my latest column for the ROB’s Economy Lab feature (in the Globe), I regale readers with the story of what happened when a bureaucrat came into the café my wife and I owned in Dartmouth, NS (The Queen of Cups Too) and demanded to know if we lived on the premises. That was the beginning of a regulatory nightmare that is all too typical of relations between business and citizens on the one hand and the regulatory state on the other. Read my prescription for whittling the regulatory state down to size.

The Future of Federal Transfers

I was recently invited by the Federal-Provincial Relations Division of Finance Canada to participate in a panel discussion in Ottawa on the future of federal transfers to the provinces. Here is the text of my remarks.

Social change: Paul Wells say Fearful Symmetry shows the way

In this week’s Maclean’s magazine Paul Wells spends a lot of time discussing Fearful Symmetry and the social policy changes it portends:

“For next steps, many conservatives are turning to Fearful Symmetry: The Fall and Rise of Canada’s Founding Values, a new book by Brian Lee Crowley, an economist and founder of the new Macdonald – Laurier Institute.

Crowley does not regard himself as a social conservative. But many who do see themselves that way like what he’s saying. To caricature a complex argument, Crowley says the modern welfare state has overextended itself, is unsustainable, and causes more harm than good to institutions like the family. These trends will only get worse when an aging population sharply increases the cost of delivering most social programs. One size can no longer fit all. Social services will have to be narrowly aimed at those who need them most, and delivered only as long as recipients are willing to improve their behaviour by attending to their family, keeping or seeking a job, and so on.

Government is no good at any of that and, in the opinion of most, shouldn’t try. “It is precisely for this reason, in my view, that we have seen in both the United States and the United Kingdom a growing use of the private sector, including the not-for-profit and so-called faith-based charities, for the delivery of social services,” Crowley writes. “Such private agencies may be more demanding of their clientele and expect more in the way of improvements in behaviour.”

Crowley’s book was published last autumn. It seems to have been barely one step ahead of the news. This month’s Throne Speech contained a single line saying the government “will look to innovative charities and forward-thinking private-sector companies to partner on new approaches to many social challenges.” Such charities and companies were much in evidence at the Manning Centre conference. The changes Crowley anticipates are expected and embraced by social conservatives.

Meanwhile, the federal Liberals are still defending policies from five years ago, policies Harper has taken pains to ensure future federal governments won’t be able to afford, with his GST cuts and his massive cash transfers to the provinces. If the Liberals cannot begin to make a case for a return to larger, more activist — and more expensive — state-run social welfare, then Stephen Harper’s social conservative revolution will only accelerate.

Why cuts are how to balance the budget

In all the blather surrounding Red Ed Clark’s call for higher taxes, and the federal Tories response, most of the attention has been focused on either the issue of whether wealthy bankers should be volunteering other people to pay higher taxes OR whether the PM should be criticising private citizens for voicing their opinions about such matters.

Interesting as those questions are, they are not the most important matter. What really matters is whether raising taxes is the right way to fix the deficit. On this, history and human nature respond with a resounding “No”.

History first: the last time we wrestled successfully with the deficit, under Paul Martin’s stewardship at Finance, we did so chiefly by reducing the size of government. The most startling measure of our success: We went from spending a historic high of 53% of GDP on government in 1993 to roughly 40% in 2008, an unprecedented decline in our history. We were able to do so, by the way, while increasing spending on programmes AND cutting taxes because our fiscal discipline allowed us to stop spending so much on interest on our debt. And we ushered in an era of strong economic growth: we outperformed all the other G7 nations for over a decade after Paul Martin tabled the first balanced budget in the late nineties.

Remember that all other attempts to deal with the budget, including the gig tax reform that led to the creation of the GST, did not bring the budget into balance. It was *only* when we got our *spending* under control that that happened.

And that brings us to the human nature side of the equation. The fact of the matter is that politicians are human beings and subject to many pressures and incentives. When a dollar gets in their hands, it does not come with an endorsement saying “May only be used to reduce the deficit”. Instead it becomes the prize in a tug of war between various interests all wanting to get something out of government. Many and perhaps most politicians regard a dollar in the consolidated revenue fund as a reason to spend that dollar on their favourite programme.

That may be one reason why a recent poll in the US shows Americans deeply sceptical about using tax increases to bring their own public finances into balance. They told Rasmussen pollsters by a margin of 58% that politicians “are more likely to spend the money on new government programs.”

The reality is that if we want to balance the budget, the strategy that has proven itself without a doubt is to control spending. Raising taxes too often just gives politicians comfort that they can continue in the bad old habits. And it is those habits that have to be broken.

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Brian Lee Crowley
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