:LPE:

I had dinner with my uncle in the late 1990s, an educated, well-read, genial and retired professional ad man and former Executive Director of a major disease charity. He told me that he thought it was high time we got costs under control, and stopped burdening the next generation with such debts, incurred so recklessly by his own generation. We needed to downsize government and social programs because it was unfair to burden the next generation with the high cost of these things. It was the flavour of the day, the dressing up of social policy pain in the guise of fiscally prudent medicine. He seemed very worried about the future, and understandably so: he was retired, it was legacy time, and he wanted to get things in order.

This same argument has new legs, it is getting used to justify things like marking-to-market and support policy options like paying-for-what-you-get. It is used to rather selflessly say, we’ve been living too high off the hog, now we going to start paying for all that, first, by denying the next generation the same privileges, and so-on. We don’t want to burden them…

What is interesting in this argument is that it is profoundly anti-social and used by people who don’t mean to be, in fact, they’re trying to be responsible, if a little lean on the sharing thing (what do they tell their kids at daycare: don’t share with the new kids?). Anti-social in the sense that it seeks to stop the sharing of costs and benefits. It wants to compartmentalize lived experience, the ups and downs, and allocate them by generation, or even more discretely. I heard a university professor of economics recently say he got lucky on the stock markets in the 70s and that his generation benefitted from an expanding economy, but he saw no reason to share the good fortune with other generations, in fact, he opposed it as a matter of principle. I wondered who paid for his expensive education, because if it was his generation, they got a bad deal.

I’ve been reading a bit about these so-called intergenerational inequities lately - the term for the (unjustified) shifting of costs or benefits between generations. It’s got some interesting roots in social discount theory, where the central question is at what rate can we discount future improvements in life so that our relative contributions are equitable (but not necessarily equal) . Like anything, it gets used to justify present positions, which have tended to the individual and anti-social the past decade or two.

Why stop at inter-generational inequities, we could also oppose intra-generational inequities too: why should anyone get something they didn’t pay for? Let’s stop the sharing of costs and benefits of schools, heath care, prescription drugs, subsidized housing, subsidized public transportation. That’d make things more fair.

If we were serious about the principle, we’d even ban insurance, which is just another way of pooling costs and benefits — some people pay fire insurance and never use it, some people use it twice or three times, although your premiums do rise, so you pay a little more for it. Same with car insurance, life insurance (well, you can only use that once), any kind of insurance. Come to think of it, we would need to ban limited liability of corporations as well, because that is a government-imposed policy that stops the direct costs flowing through to the people who benefit from those costs. That’d improve things.

It also invites us to compare the relative treatment of generations. I don’t think you can mount a credible argument that the folks who were educated and worked from 1965 to 1995 benefitted from the state or general public policy less than the generation after them, or before them. They had it best, is, I think, is the broad conclusion. So very telling that when it comes to sharing with others, they don’t see it that way, or at least, not yet. There must be a generational fiction genre out there that gets past the whinging of Douglas Copeland’s bust generation and deals with the privilege of this cohort (sure: there are many divisions within it). Or maybe they will collectively be the prodigal son from beginning to end.

We got through to the petit fours, and I asked my uncle if I understood him correctly, we needed to improve the country’s finances? He said yes, and priority to pay down the accumulated debts of the Trudeau-Mulroney years. I asked him if he thought it would be fair, then, to pay a special “debt retirement tax”. He blinked at me through his specs; he picked up the bill.

Yesterday in the Globe Neil Reynolds made the point that Jack Layton was hurting workers by voting against the tax cut. His argument was that “research shows” that tax increases are passed on to workers (and potentially to customers of businesses) in wage cuts or price increases. Apparently, shareholders (profits) do not suffer. The research was done by three Oxford economists.

I have not checked the research yet, but if it is any good, then Reynolds and the Oxford gang have done the union movement a massive service. If employees actually “pay” for things like taxes or some other change,m individual or systemic, then they “own” the benefits of those shocks. So, for example, if workers have “paid” for the cost of higher taxes, they have the best moral and economic claim to the tax cuts (a better claim than customers, shareholders, other creditors to the corporation), precisely because they have “paid” for them already. Similarly, if interest rates rise and a massive surplus develops in the pension fund, then workers “own” the surplus, because they “paid” for it through forgone wages, when interest rates were low and their wages were cut back in favour of ensuring the fund was fairly solvent.

Jack Layton and Jim Stanford should send him a thank you note, and we should all double-check the Oxford research, because it seems too good to be true.