My April 27 column discussing the failure of universities to allocate research dollars on the basis of merit, and educational dollars to where the jobs are, drew a wide range of reaction.
A thoughtful opinion piece that appeared in this paper by University of Calgary president Harvey Weingarten pointed out that researchers often forget that universities need funding to provide research labs and welcomed the $2-billion included in the federal budget for that purpose. I also heard from furious faculty members who thought my suggestion that they be required to make hard choices as in the private sector reflects my "corporatist bias." In a courageous letter to the editor, Memorial University Professor Claude Daley sounded a contrasting note: "The problem is the basic structure and culture of universities. … The few who try to work for the general good slowly get tired, or cynical or both. … Cutting funding, or increasing it, will do nothing to change the situation."
Well, here's a news bulletin to virtually all who rely on taxpayer funding: It doesn't get better than this, and it's going to get a lot worse.
Across the industrialized world, governments are pouring "stimulus" money into public sector projects and programs with unprecedented vigour. Then there's the auto company bailouts and, in every Group of Eight country except Canada, bank bailouts. In effect, governments are attempting to offset the downturn in private sector investment with huge deficit-financed expenditures.
Meanwhile, businesses are engaged in a Darwinian struggle that will see the survivors emerge leaner and better. When recovery comes, the private sector will be ready to compete in the new economic landscape, while the bloated public sector at both the federal and provincial levels will be affected by cuts needed for deficit elimination and interest payments. And given that the interest rate on those higher debts will inevitably be driven up by the inflationary impact of the current money-printing craze, the public sector spending hangover could go on for a long time.
The Canadian government also tried to spend its way out of the 1982-83 recession. The result was interest rates that hit 20 per cent and 14 years of Draconian cuts before the dead weight of debt was lifted from the shoulders of Canadians.
It will take a lot more than bringing an end to scattergun subsidies, such as the $100-million for "festivals" and the hundreds of millions more in "shovel-ready" infrastructure projects, to rebalance the books. It will require the elimination or restructuring of virtually every public program, a formidable task that will be made even more difficult, given that health care costs continue to spiral out of control. Acute and long-term health care already dominate spending in every province, and our aging population will keep pushing costs ever higher.
Those on the political left think wealth is a zero-sum game and all social problems can be solved through "progressive redistribution policies." Indeed, the U.S. and British administrations have signalled their plans for higher taxes for the rich. But a policy of high taxes and high spending is unlikely to prove popular to Canadians; witness the backpedalling that followed Liberal Leader Michael Ignatieff's musings about the possible need to raise taxes. Experience both here and throughout the world has shown that high tax-and-spend policies not only kill initiative, but also drive wealth-creating brainpower and capital to more friendly shores. Paradoxically, tax revenues go down rather than up.
Canada is currently undergoing a private sector bust and a public sector boom. Business failures, layoffs and tough choices are the order of the day for the real-world occupants of the private sector. Meanwhile, public sector unions clamour for more and, rather than finding ways to deliver programs at lower cost, our public administrators spend their energy trying to justify higher ones. Instead of making tough choices, the solution to every problem always seems to be crying out for more taxpayer largesse.
The ultimate private sector discipline is the prospect of getting better or going out of business, at least for everyone but Ontario's auto companies. This discipline has never existed in the public sector. It's a world where real change doesn't happen from within, but rather in response to funding crises. As this wrenching private sector crisis ends, that public sector funding crisis will begin.
I know there are many dedicated and capable public sector employees who understand the need for change, but feel powerless to make it happen. My message is be pro-active in working to convince your colleagues that, in the words of Prof. Daley, "to work for the general good" is in their own self-interest. The choice is to either help drive change, or become a victim of it. Transformation of Canada's public institutions could bring competitive advantage that, together with a leaner and more efficient private sector, would see our country emerge from the global financial crisis as a leader in public program innovation and private sector prosperity.
Gwyn Morgan is the retired founding CEO of EnCana Corp.