Dr. Alex Himelfarb is a sociologist and the Director of York University’s Glendon School of Public and International Affairs. He is not an economist (disclaimer: neither am I). In 2012, MacLean’s Magazine named him one of the 25 most important people in Ottawa, calling him the “unofficial critic” of “Harper-style government” and “a blogging theorist of effective centre-left opposition.”
I now hereby appoint myself as the unofficial critic of the unofficial critic.
Himelfarb’s latest article is entitled “The Mean Test: How We Measure Success.” He begins by writing:
As we enter 2013, how is Canada doing? How do we stack up against other rich countries? Emerging from the year of the 50th anniversary of medicare, the 30th anniversary of the Charter, are we making progress? Do we even have any shared notion of what progress would look like?
First of all, Himelfarb appears to imply that Canada is a collective entity of action. But only persons act. This is the principle of methodological individualism. Canada, the nation, comes into existence through the actions of various individuals and the understanding of the meaning to which acting men ascribe them. In speaking of progress, Himelfarb is referring to the actions of the various individuals who constitute the government of Canada.
But Himelfarb, at least at the moment, is not a member of the government of Canada. Nor am I. Nonetheless, he utilizes the pluralis imperialis to imply a personal identity of himself and others with the ruling powers of the federal government. This, of course, is highly deceptive. For example, “we” did not institute medicare. “They” did. “We” did not invade Afghanistan. “They” did. The goal of this misleading rhetoric is often to incite fidelity to a particular government agenda. Hans-Hermann Hoppe, writing about publicly owned government (as opposed to a privately owned monarchical government) in general, described the disastrous consequences resulting from this line of reasoning:
The distinction between the rulers and the ruled as well as the class consciousness of the ruled become blurred. The illusion even arises that the distinction no longer exists: that with a public government no one is ruled by anyone, but everyone instead rules himself. Accordingly, public resistance against government power is systematically weakened. While exploitation and expropriation before might have appeared plainly oppressive and evil to the public, they seem much less so, mankind being what it is, once anyone may freely enter the ranks of those that are at the receiving end. Consequently, not only will exploitation increase, whether openly in the form of higher taxes or discretely as increased governmental money “creation” (inflation) or legislative regulation. Likewise, the number of government employees (“public servants”) will rise absolutely as well as relatively to private employment, in particular attracting and promoting individuals with high degrees of time preference, and limited farsightedness.
Regardless, the idea that a country consisting of over 34 million individuals could even have one shared notion of progress is sheer lunacy.
How we measure our success as a country matters. It tells us a lot about what we value most. It shapes what we ask of our politicians and how we judge the performance of our governments. It shapes politics and policy.
The notion of “success as a country” is a synonym for utility and a purely psychological magnitude. It has no objectively extensive unit. Because of this, it cannot be evaluated using cardinal numbers. For example, it would be preposterous to measure Canada’s success as 10 Himelfarbs and Mexico’s success as 6 Himelfarbs and conclude that Mexico is 4 Himelfarbs less successful than Canada as a country. It simply cannot be measured in any way that isn’t completely arbitrary.
Very often international comparisons of how well a country is doing rely on GDP and this has been the go-to measure in Canada as well. GDP measures the total value of the goods and services produced by a country and is the best way to track the size and growth of the economy. On this basis, in a world shaken by U.S. debt, European fragility and the emergence of new economic super-powers, we have been doing pretty well.
Of course GDP is important and especially to developing countries trying to lift their populations out of poverty. But it is a lousy measure of the health and welfare of a country such as ours. As countries get richer, growth brings diminishing returns; other things become more important.
GDP, too, is an empty concept. According to Ludwig von Mises, “the attempt to determine in money the wealth of a nation or the whole of mankind are as childish as the mystic efforts to solve the riddles of the universe by worrying about the dimension of the pyramid of Cheops.”
Also, how might one measure Canada’s health or wellness? In what units?
Our focus on GDP in media and politics reflects what has been for several decades now a preoccupation with economic growth, a preoccupation that helps explain the tiresome whining of some of our opinion leaders about how badly we were lagging the US even while we were doing pretty well on other counts. It probably also explains the equally irritating self-righteousness when we now lecture our allies on how they should manage their economies. But GDP tells us nothing about how the benefits of growth are shared or about the costs of growth to the environment, our community and even future economic prospects. It tells us nothing about those values that sit outside the market – the quality of our political and social commons, and our relationships to one another and to nature.
International agencies and a number of countries are developing indices that take into account equality, sustainability, democracy, and trust, as well as economic performance. In Canada Roy Romanow has proposed just such an index, and recently David Suzuki added his voice to the campaign to think beyond GDP – promoting a measure of General National Happiness with a central place for the health of the environment which enables all else. These are welcome initiatives because they ask us to consider what is important, what our future ought to look like.
However, according to Himelfarb, a mystical General National Happiness index isn’t satisfactory. He would go one step further.
To this work I would propose the addition of another measure, which despite its long pedigree is too easily overlooked. Gandhi and Pope John Paul II, Aristotle and Rawls, and artists through the ages have all reminded us that the real test of any society is how we treat the weakest among us, those who have the least.
He then conducts his own analysis of how the government of Canada today treats those among us who have the least. This is the so-called “mean test.”
His conclusion? Canada is a big meanie.
What all this yields is a meaner Canada. When governing is all short-term economic growth, damn the consequences, then aboriginal rights and environmental protections become inconveniences to be ignored or managed. Refugees, the unemployed, and the poor come to be seen and treated as freeloaders, a drag on the economy, rather than fellow citizens, often victims of an increasingly mean version of capitalism. And criminals are demonized, convenient scapegoats for our fears and discontents, the most heinous offences and frightening offenders used to blind us to the reality that those are people in our prisons, most of whose lives could be repaired.
(…) The debate brewing about how to measure success is not just about measurement. It is a recognition that we need to participate in a real discussion about what we mean by the good life, the purpose of the economy, the kind of Canada we want. It is about decency and dignity. It is about our political and democratic institutions, the need to find much better ways to ensure that all voices, particularly those speaking for the marginalized, are heard. This may be the only way to restore a sense of the common good and win back the many who have given up on politics, party and government.
Himelfarb does not realize that if we are to decidedly improve national welfare, arbitrary indices are not the answer. Because utility cannot be measured with cardinal numbers, it is impossible to quantify differences in utility between various persons. In order to be sure that a given policy increases “social utility,” it must satisfy the requirements of the Unanimity Rule. Namely, it must guarantee that no individual is worse off, and at least one individual is better off, because of a particular change. Such a situation avoids the impossible task of objectively comparing interpersonal utilities.
In a brilliant analysis on reconstructing welfare economics, Murray Rothbard explains how the free market satisfies this essential requirement.
Let us now consider exchanges on the free market. Such an exchange is voluntarily undertaken by both parties. Therefore, the very fact that an exchange takes place demonstrates that both parties benefit (or more strictly,expect to benefit) from the exchange. The fact that both parties chose the exchange demonstrates that they both benefit. The free market is the name for the array of all the voluntary exchanges that take place in the world. Since every exchange demonstrates a unanimity of benefit for both parties concerned, we must conclude that the free market benefits all its participants. In other words, welfare economics can make the statement that the free market increases social utility, while still keeping to the framework of the Unanimity Rule.
We may then say “that the processes of the free market always lead to a gain in social utility.”
On the other hand, Himelfarb sees “political and democratic institutions” and “politics, party and government” as the harbinger of increased social utility. After all, statists gonna state.
But there is a problem with this proposition. Government is a compulsory territorial monopoly on the initiation of violence. As Rothbard says of government, “It and it alone can interfere by the use of violence with actual or potential market exchanges of other people” and “it and it alone obtains its revenues by a compulsory levy, backed by violence.”
Consider two potential trading partners. When government forcibly prevents these individuals from completing a voluntary exchange, or compels one or both to complete an involuntary exchange, utility is demonstrably lost. This violates the Unanimity Rule. As a result, government interference with exchanges can never increase social utility.
More fundamentally, taxation, itself a coerced exchange, results in the loss of utility of the mulcted. And, since it cannot spend what it did not first expropriate, we conclude that government, by its very nature, is incapable of increasing social utility.
If Alex Himelfarb is truly concerned with increasing social welfare in Canada, he has no choice but to, in the words of Rothbard, “uphold the free market as always beneficial” and “refrain from advocating any governmental action.”
I’ll be waiting.
(Photo credit: www.alexsblog.ca)