Dead Prime Ministers, the Politics of Nostalgia, and Lucky Jim

20 03 2010

In other posts, I have spoken about the opening of a new think tank in Ottawa called the Macdonald-Laurier Institute. The institute’s website suggests that it favours a return to Canada’s “founding values” and praises Sir John A. Macdonald, Canada’s first post-Confederation Prime Minister.  I said that the first policy paper it produced was plausible but that the name of the institute is inappropriate for an organization that wants to publish recommendations in such areas as immigration and Native policy. Macdonald’s governments imposed some racist policies, although I suspect that the institute’s creators were not aware of this when they choose the name. Most Canadians  remember Macdonald as just a jovial drunk.

Sir John A. Macdonald, 1883
Image from Library and Archives Canada

Anyway, this got me thinking about the ways in which the social memory of Macdonald and other early Canadian Prime Ministers continues to be used in Canada today.  Selective social memory is an interesting topic. David Orchard, a onetime candidate for the leadership of the PC party, continues to venerate Macdonald. In the Fight for Canada: Four Centuries of Resistance to American Expansionism, Mr Orchard pays plenty of attention to Macdonald, as well as the famous free trade elections of 1891, 1911 and 1988 and Avro Arrow. Mr Orchard uses the social memory of Macdonald to lend credence to his own protectionist ideas. I suppose he needs all the ammunition he can get, since the overwhelming majority of academic economists support free trade. Economists differ on many issues, but this is something on which they agree.

Laurier

Former Prime Minister Jean Chrétien appears to venerate Wilfrid Laurier.  In 2008, he wrote this statement about Laurier for an essentially celebratory website called Macdonald-Laurier.ca.

“He was close to a secular saint in our household.  As a young man, my father, Wellie, had shaken Laurier’s hand – an experience he cherished for the rest of his long life,  For me, a young boy growing up in rural Quebec, a unilingual francophone growing up in a country whose power structure was decidedly – and almost uniquely English-speaking – Laurier was an inspiration and ideal,  Much in the same way that the election of Barack Obama is inspiring all young children to dream today of exciting and unlimited opportunities, Laurier, a rural francophone, who rose to lead an overwhelmingly Anglo-Saxon Canadian society, was an example to me… Laurier truly believed in the promise of Canada, and he inspired Canadians to make that promise a reality by calling on them to look beyond their particular region, language, or religion. Laurier believed that Canadian unity could be built on diversity, rather than sameness… From 1993 to 2003, the desk in my office on Parliament Hill was Laurier’s own. His portrait hung on the wall. I often found myself wondering, when facing the difficult questions of the day, how to apply his lessons and wisdom. Many of Laurier’s ideas remain as relevant as ever to today’s politics. His wisdom, now a century old, is surprisingly modern.” Chrétien went on to praise Laurier’s belief in “liberalized trade” and efforts “to bring down the walls and fences of protectionism.  He understood that Canada’s true economic promise could only be achieved by opening itself to the world”. Chrétien also extolled Laurier for being “a fierce and courageous advocate of Canadian independence.  For a young country, still very much in the shadow of the British Empire, that was a daunting and audacious stance,  In his time many – if not most – English-speaking Canadians felt themselves more British than Canadian. But Laurier resisted attempts, both at home and abroad, to weave Canada ever more tightly with the Empire.   He put it simply, clearly, unmistakably: ‘Canada first, Canada last, Canada always’ “. Chrétien concludes that “Laurier imagined Canada as a strong, independent country whose voice would be heard on the international stage, and the first modern nation to celebrate diversity, tolerance, and generosity. He built a country in this image through his four terms as prime minister.”

Mr Chrétien’s sentiments are fine indeed, although Laurier’s belief in trade liberalization and Canadian nationalism was only intermittently in evidence. Mr Chrétien’s belief in open immigration is commendable. I note that it was left to one of his successors to issue a formal apology for the Chinese Head Tax.

Robert Borden with Winston Churchill

Robert Borden was a very complex figure, a man who embodies many of contradictions embedded in the words “Progressive Conservative”.  It is therefore somewhat disturbing that political extremists in Canada have adopted Borden as a hero because they admire that racist immigration policies that Borden and most other politicians in Canada (and indeed, the United States as well) supported in the early twentieth century. However, I can understand why they might admire Borden, although I have found evidence in my own research in Borden’s correspondence that Borden was somewhat less racist in thought than his public deeds might indicate. (Part of this research was published in an article in JICH). Anyway, the video I’ve posted below is not for viewing at work (or right before dinner).

As I said in a recent post on nostalgianomics, I have very little time for nostalgia. Some types of nostalgia are essentially benign (e.g., old men admiring vintage cars). However, when nostalgia is translated into the political realm, things are different. The politics of nostalgia are good for neither the discipline of history nor present-day politics. Invoking the memory of past glorious accomplishments, historical heroes, or alleged “golden ages”  really serves no useful purpose. The serious study of history is a powerful tool for making decisions about public policy. But pining for an idealized past is not helpful.

Whenever I see the politics of nostalgia in action, I think of the great comic novel Lucky Jim by Kingsley Amis. The novel follows the exploits of a very junior historian at a small British university in the early 1950s. Jim Dixon is asked by his superiors to give a lecture that is an annual event in the history department. Local dignitaries will be in attendance. The central character has been instructed by the more senior historians to speak on the theme of Merrie England. He is supposed to argue that life in England before the Industrial Revolution was blissful and idyllic. Professor Welch tells Lucky Jim that this talk will determine whether his job at the university will be made permanent. For better or worse, the protagonist gets very drunk and delivers a rambling lecture in which he attacks the senior faculty and the thesis he is supposed to argue. He declares that life before the Industrial Revolution was bloody awful for most people and that it is only the “homemade pottery crowd” who think otherwise.

I share Jim Dixon’s sentiments.  I’m damn glad that I was born when I was and that I grew up in an age with Thai restaurants, antibiotics, inexpensive air travel, multiculturalism, cheap toasters from China, and universal healthcare. It’s just common sense!





Bliss on Taxation in Canada (Nostalgianomics)

18 02 2010

Michael Bliss, who is one of Canada’s most accomplished historians, has published a piece in the Globe and Mail calling for Canada’s system of taxation to be made more progressive. I really admire Bliss’s work as a historian and he makes an interesting case in this op-ed piece, but there are some ideas lurking in his piece that I cannot let pass without comment.

Bliss writes: “Inequality of compensation has soared in our time, as the rich have become much richer and much less taxed. Higher taxes on high incomes would begin to narrow the immense chasm that has opened up between the über-rich and the ordinary North American. If properly applied, they could put an end to the frustrating debate about the obscene salaries and bonuses that we pay not only to flailing financiers but to mediocre professional athletes.”

There is no such country as North America. Canada and the United States are very different countries when it comes to inequality. One common measure of income inequality is the Gini coefficient.  The most egalitarian society in the world is Denmark, with where the Gini coefficient is 24.7, according to the UN stats. In Canada, the Gini coefficient is 32.6. This makes Canada’s distribution of income somewhat more egalitarian than in France, Australia, the United Kingdom and far more egalitarian than in the United States, where the Gini coefficient is 40.8. Moreover, while the level of inequality in the USA has increased dramatically since the 1970s, it has remained roughly the same in Canada. Anyway, the divergence is partly a function of different economies producing different distributions of pre-tax incomes (there are lots of well-paying jobs for male high-school graduates in Canada) and partly because of different tax regimes (read Geoffrey Hales’s excellent book on this subject). Executive compensation is also lower in Canada than in the USA. My point is that we can’t say that the same trends are at work on both sides of the border.

“From 1945 to the 1960s, the United States and Canada experienced what appears to be a golden age of affluence, growth and, by our standards, increasing social equality.”

The  relatively egalitarian distribution of incomes in the US between the New Deal and the 1973 oil shock was due to a conjunction of factors that simply aren’t present today. Tax policy is just one of them. The world is more globalized (as workers in Flint, Michigan will tell you), the labour movement and the big Chandlerian corporations have declined, technology has automated certain formerly well-paying jobs out of existence, there is more immigration from low-wage countries, and gender roles are massively different. Bliss’s piece reminds me of Paul Krugman’s nostalgia for the relatively egalitarian society of the United States of his childhood. As critics have pointed out, Krugman’s “nostalgianomics” overlooks important flaws of 1950s American society (very limited immigration, women being kept out of a workforce).

We watched an episode of Mad Men last night. Neither I nor my wife would want to live in the society Krugman and Bliss appear to regard as some sort of golden age.

Canada’s egalitarianism is generally a good thing (it makes muggings less common), but it also has some drawbacks that we should acknowledge too. For one thing, it probably makes university students less competitive.  I also suspect that it is one of the reasons why the expected rate of return on investment in a university degree is lower in Canada than in the United States.

Update: I have been asked by a reader to back up my claim that the ROI on a university degree in Canada is lower than in the US. This OECD data shows that the present value of a degree is lower, which certainly suggests that the ROI is lower.

2009 OECD Report on Education, “Education at a Glance” Chart A8.1. Economic returns for an individual obtaining upper secondary or post-secondary non-tertiary education, ISCED 3/4, and for an individual obtaining tertiary education

“The chart depicts the present value of an investment’s future cash flows net of  the initial investment,  discounted by 5% interest rate. Investments in tertiary education generate substantial financial rewards in most OECD countries. Male students in Italy, Portugal and the United States can expect to gain more than USD150 000 over their working lives by investing in tertiary education. The returns for female tertiary students exceed USD 100 000 in Korea and Portugal. With few exceptions, the returns for investing in a tertiary education are higher than for upper secondary or post-secondary non-tertiary education… For males the returns are USD 81 000 compared with USD 40 000 and for females USD 51 000  compared with USD 26 000. Incentives to continue education on a tertiary level are thus strong for males and females in most countries.”

Direct cost Foregone earnings Gross earnings benefits Net present value of a post-secondary degree
Country Male Female Male Female Male Female Male Female
Australia -2,810 -2,810 -22,021 -22,719 73,492 70,932 49,482 25,782
Austria -2,032 -2,032 -38,001 -36,463 146,283 103,739 62,805 33,435
Belgium -1,441 -1,441 -32,999 -28,338 63,700 91,261 13,659 37,145
Canada -2,161 -2,161 -23,450 -24,386 91,065 71,299 53,918 37,540
Czech Republic -1,722 -1,722 -15,426 -14,635 44,843 50,019 63,524 55,584
Denmark -578 -578 -27,078 -27,534 111,279 82,278 23,587 2,828
Finland -138 -138 -22,955 -22,309 50,777 32,073 10,432 -2,020
France -2,119 -2,119 -30,492 -27,181 41,450 44,826 5,284 8,081
Germany -5,085 -5,085 -27,421 -27,631 51,356 109,920 19,134 32,039
Hungary -577 -577 -15,805 -15,024 38,406 39,545 15,046 19,029
Ireland -599 -599 -29,199 -28,740 66,937 76,038 31,618 35,058
Italy -1,114 -1,114 -35,954 -30,570 89,302 75,509 21,487 30,417
Korea -2,865 -2,865 -11,898 -11,980 68,412 4,787 50,950 -12,011
New Zealand -3,113 -3,113 -28,129 -27,056 83,873 75,997 31,051 11,511
Norway -2,372 -2,372 -33,342 -33,625 133,548 83,842 84,606 27,123
Poland -194 -194 -9,622 -8,202 31,601 40,648 27,137 31,933
Portugal -11 -11 -20,562 -16,867 123,842 88,143 62,570 50,158
Spain -481 -481 -5,925 -4,348 52,086 45,557 37,604 48,136
Sweden -19 -19 -19,592 -21,107 93,464 69,113 43,505 23,900
Turkey -324 -324 -10,837 -11,750 37,719 48,598 16,308 15,126
United States -2,689 -2,689 -21,168 -21,572 180,543 126,069 112,929 81,889
AVG -1,545 -1,545 -22,946 -22,002 79,713 68,104 39,840 28,223

The other interesting stat I would like to share is that ROI on a university education appears to be increasing. I know the cost of education has gone up a bit, but the earnings premium of college graduates has skyrocketed, at least in the United States. As globalization has accelerated and more manual labour jobs have been sent offshore, the gap between what a university graduate can earn and the earnings of high school graduates has opened up. Let me quote a recent report from the US College Board:

“The earnings premium for college education has increased over time:
Among men, the earnings premium for a college degree increased from 19 percent in 1975, to
37 percent in 1985, 56 percent in 1995, and 63 percent in 2005.
The earnings premium for women is larger—70 percent in 2005. It was 47 percent in 1985, but
has not increased since 1995.”

Anyway, I should get back to work….