In The Weekly Wrap Sean Speer, our editor-at-large, analyses for Hub subscribers the big stories shaping politics, policy, and the economy in the week that was.
Student protestors aren’t on the ‘right side of history’
As the pro-Palestinian/anti-Israel encampments on Canadian university campuses marked another week, we increasingly heard the dubious argument that we ought defer to these student-led protests because they’ve been right in the past.
Daniel Manulak, a historian of Canada’s anti-apartheid movement, took up this case in a recent Globe and Mail op-ed. His basic argument is that the anti-apartheid movement, like the current pro-Palestinian/anti-Israel protests, was similarly driven by young Canadians’ demand for equality and justice and that while it was seen as radical in its days, it’s now rightly viewed as a crucial catalyst for moral progress.
Two weeks ago, the New York Times Matter of Opinion podcast made a comparable argument about today’s student protests and the American civil rights movement which was by and large fueled by the passions of young people.
While it’s of course true that social movements tend to be overly represented by young people—and in fact, there’s even evidence that youth participation is associated with successful movements—it’s a historical fallacy to assume that young people necessarily have better moral judgment than others or every social movement involving young people must be self-evidently just.
For the examples of the civil rights or anti-apartheid movements, one can point to highly destructive cases of youth-driven movements, including, most notably, twentieth-century communism and fascism. Think for instance of student-led movements to help establish Fidel Castro’s regime in Cuba, Mao Zedong’s Red Guards, violent French student strikes in 1968, the Marxist students who helped Ayatollah Khomeini come to power in Iran, and of course various instances of harmful student radicalism in North America.
One can argue in fact that the positive examples of youthful radicalism are aberrations and the negative cases of radical or reactionary movements driven by young people have tended to be the norm. They’ve just as frequently—and actually more frequently—been on the wrong side of history.
This doesn’t mean of course that a political or social movement comprised of young people should be summarily dismissed. But it also shouldn’t be instinctively affirmed. We owe young people the same treatment that we ought to grant anyone in a democratic and pluralistic society: a fair hearing of their ideas and agreements.
This topic was taken up this week in the Munk Debates podcast. If you haven’t listened to the episode, I’d encourage you to check it out.
We shouldn’t just accept economic stagnation—despite what our leaders say
Statistics Canada released a study this week that reinforced what has increasingly become conventional wisdom: Canada is suffering from a sustained period of economic stagnation. One has to go back decades to find a comparable period in which output per person was flat or declining for as long as we’ve seen in recent years.
The paper’s key contribution to understanding our economic challenges is as follows: given that GDP per capita has fallen in five of the past six quarters, it’s now 7 percent (or $4,200 per person) below its long-term trend and would need to grow faster than the historical norm over the next decade (1.7 percent rather than 1.1 percent) in order to get back to its pre-pandemic trajectory.
The paper has generated considerable discussion and debate including a reference in a Conservative Party fundraising email. It hasn’t been fully endorsed though. Claude Lavoie, a former Department of Finance official, published a column in the Globe and Mail on Wednesday that was critical of Statistics Canada’s paper on the grounds that the agency ought to have known that its findings would be politicized.
Setting aside the obvious problems with the argument that the federal bureaucracy ought not to say or do anything—including releasing basic economic data—that’s contrary to the political interests of the incumbent government, there are other problems with the column.
The main one is what can be described as a “secular stagnation” mindset. It effectively says that we shouldn’t take for granted that historical growth rates are still possible. There are inherent limits to comparing past economic growth with the future. And we should reconcile ourselves to lower growth—we’re living inescapably in an era of the “new mediocre.”
This line of fatalistic thinking is flawed for three principal reasons.
First, it’s ahistorical to think that the technological developments in the nineteenth and twentieth centuries that drove our step-change growth were somehow easy and inevitable. No one thought that the steam engine or the automobile or penicillin or whatever other major technological advances that pushed us onto a different economic trajectory were low-hanging fruit. They depended on a culture that was committed to progress.
Second, not every advanced market democracy has experienced the same economic stagnation as Canada. The idea that this is somehow inexorably rooted in our current economic and demographic condition loses its explanatory power when compared to the rates of growth elsewhere. U.S. GDP per capita, for instance, has grown by an average of 1.6 percent per year since the onset of the pandemic.
Third, it underestimates the inherent risks of the politics of degrowth. The implicit bargain of our governing system is that people defer collective decision-making to political elites in exchange for rising living standards. If the political class is now throwing up its hands and saying it can no longer live up to its end of the bargain, the consequences could be huge.
If one understands the rise of Trumpian populism in the United States as a demand for better economic outcomes among people and places facing economic stagnation, then calls to reconcile ourselves with lower growth amount to extending those populist conditions at scale.
The good news is that, notwithstanding Lavoie’s pessimism, there’s reason to believe that we’re on the cusp of major technological developments that can pull us out of stagnation, including mRNA medical technology, the rapid growth of AI-driven large language models, and so on.
As the StatsCan report itself notes:
The ability of Canadian companies to harness the benefits of new competitive technologies related to artificial intelligence, robotics and digitalization will be critical to the link between investment and productivity in the coming years and potentially important contributors to changes in living standards.
The key point: we have greater agency over our economic future than Lavoie and others seem to appreciate. It’s incumbent on political leaders to advance a renewed pro-growth agenda rather than condition people to lower their expectations.
It’s time for Canada’s public servants to return to the office
On last week’s Roundtable podcast, Rudyard Griffiths and I were critical of the public sector unions’ over-the-top reaction to the federal government’s new policy that public servants must be in the office three days per week beginning in September.
Our weekly exchange generated a bigger reaction than normal. Most of the response was positive. But some were critical of our comments, including those who support remote work in general and those who believed we were wrong to single out public sector workers in particular.
I thought it might be useful to elaborate on our objections to the union reaction to Ottawa’s back-to-work plan.
Although we generally think that the negative effects of remote work are underestimated and that all things being equal, workers benefit, individually and collectively, from being in physical proximity with their colleagues, we believe that it’s reasonable to have asymmetric expectations of public sector workers.
That is to say, while our personal belief is that people should generally be back in the office, we recognize that in the private sector those decisions will be made by employers based on their understanding of the interests of their respective companies.
Government workers, by contrast, should, in our view, be thought about differently. As taxpayers, we have a collective interest in their workplace arrangements.
There are three chief reasons why we think public servants should be back in the office.
First, we’ve discovered through the We Charity scandal, the ArriveCan scandal, and the details of public servants earning millions of dollars as third-party contractors that there’s a “crisis of culture” in the federal government. One proof-point: The federal public service has grown by more than 40 percent since the Trudeau government took office and yet its service standards and state capacity seem to have deteriorated. Getting back into the office is a crucial step to restoring a more performance-driven culture.
Second, the unionization rate is almost five times higher in the public sector which means that there are inherent limits on the employer’s ability to terminate unproductive or underperforming staff. This is important because we know that public-sector productivity is already generally lower than the private sector’s. Working-from-home can enable public sector workers to lower their productivity even further and yet the government has little to no recourse to address it. Getting back into the office should be understood as a key mechanism for accountability in an employer-employee environment in which traditional forms of accountability are weak or essentially non-existent.
Third, as we discussed on the podcast, there’s something inherently unfair about public sector workers who already benefit, on average, from higher wages, more benefits, and greater job security relative to their private sector peers to also have more flexible workplace arrangements. But there’s also a risk that, in an era of labour scarcity, an asymmetry between the public and private sectors could create perverse incentives for where people want to work. A growing concentration of scarce talent in the public sector due its long list of advantages could come at the expense of Canada’s long-run dynamism and productivity.
That’s because, whatever the strengths of the public sector, it’s not generally viewed as a source of productivity. Many in fact would argue that Ottawa is actually a drag on productivity—which is to say, the deadweight loss of financing and staffing the government typically subtracts from the more productive deployment of these resources in the broader economy. Therefore, as we face a combination of slowing labour growth and ongoing weak productivity, we cannot afford for the government’s workplace arrangements to distort the labour market.
The upshot: Federal public servants—it’s time to return to the office.
Sean Speer is The Hub's Editor-at-Large. He is also a university lecturer at the University of Toronto and Carleton University, as well as a think-tank scholar and columnist. He previously served as a senior economic adviser to Prime Minister Stephen Harper....
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