Published on May 11, 2016

A bad recipe for economic recovery

9 December 2010

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Hi,

Over the past two years, I have discussed several times in speeches and on this blog the origin of the economic crisis and the solutions to it. In April 2009, I said that there was one thing more dangerous than the crisis: the way we will react to it. If we intervene too much or in an inappropriate manner, we could very well aggravate and prolong the crisis. Unfortunately, I fear that this is what the world is doing now.

The situation has not really improved over the past couple of months. Several countries, including Greece and Ireland, have experienced major financial crises due to an unsustainable level of debt.

Since 2007, public spending has exploded everywhere. A scholar at the Brookings Institute, Eswar Prasad, has calculated that the level of debt of industrialized countries in relation to their overall economy has gone from 48% in 2007 to 71% in 2010, and could reach 85% in 2015.

At the same time, monetary policy continues to throw oil on the fire. We need to remember that the current crisis is the consequence of previous crises provoked by the Fed and other central banks around the world.

When they create too much money out of thin air and artificially reduce interest rates, they bring on artificial booms, which are necessarily followed by a crash. We had the high-tech boom at the end of the 1990s, followed by the crash in
2001. And then the real estate boom, followed by another crash beginning in 2007.

Each time, central banks inject massive quantities of new money in the economy to prevent the crisis. But all they manage to do is to create more instability.

In the United States, the Fed launched some weeks ago a new phase in what economists call “quantitative easing.” In simple terms, what this means is that it buys securities with newly created money.

The first phase, which injected 1700 billion dollars into the American economy, has not succeeded in spurring sustainable economic growth, nor in reducing unemployment. Instead of concluding that this type of measure did not work, they are now going to inject another 600 billion, while continuing to maintain interest rates at record low levels.

This monetary policy is now being criticized by more and more people, in the US as well as around the world. It should be obvious to everyone that printing money does not increase the quantity of goods and services and cannot make anybody richer.

This policy is the equivalent of a time bomb. For now, consumer price inflation stays relatively low because banks are keeping much of this new money in their reserves and not lending it. That does not prevent inflation in some areas. The prices of energy, metals and agricultural products are very much going up.

But at a certain point, the money kept in reserves will start circulating in the economy at large. When there is more money chasing the same number of goods, prices necessarily go up. We’re talking here not just about some more money, but about enormous amounts of money.

The Fed will then have two choices: either to let prices dangerously go up and the American dollar collapse; or else increase interest rates and take the surplus money out of the economy, which might provoke another crash.

Economics has taught us that to have sustainable growth, we need monetary stability and prudent economic policies that favour entrepreneurship and trade. But for many years now, western countries have tried on the contrary to produce wealth with more debt and more money created out of thin air. This is a recipe that has never worked and which may only prolong the crisis we are in.

We need to change direction, and the sooner the better.

Thanks for listening, and talk to you soon.

Published on May 11, 2016

On November 22, I was the keynote speaker at a luncheon organized by the Montreal Economic Institute, where I briefly worked as vice-president in 2005 before becoming Member of Parliament. I spoke about my way of doing politics differently. You can read the text of the speech in English or watch the two-part video with English subtitles. Some demonstrators came to disturb the event, which explains my comments at the beginning of my speech in the video. I would like to thank Stornoway Communications for recording and producing this high-quality video. – 23 December 2010

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Doing politics differently
By Maxime Bernier
Montreal Economic Institute
November 22, 2010

(Introductory comments and words of thanks)

So, let’s discuss a crucial problem of contemporary politics, politics as it is practiced in a conventional manner: why is it that so many people have the impression that things are getting worse, or at any rate are not getting better, despite economic growth and the advantages of modern life?

If we look at certain general historical trends, I think we can conclude that this impression is indeed justified.

The main trend that we observe is that governments are constantly getting bigger. A bigger government means a government that taxes more, spends more, gets deeper into debt, and regulates more. It’s a government which intervenes in all aspects of our lives, all the while curtailing our freedom to act.

This happened all over the world during the 20th century. The scope, size and powers of government have grown tremendously.

Take for example public spending as a proportion of gross domestic product, that is, the portion of the overall economic controlled by governments. In the main countries of the western world, it has gone from around 10% a century ago to beyond 40% today.

This means that almost half of all economic activity is controlled by the state. Half of your salaries are going away in taxes.

But these gigantic sums are not even enough to pay for all the programs and interventions of governments. They still have to borrow billions of dollars every year to make up for their deficits.

Some of you may have young children, or are planning to have one. Well, you should know that when they are born, Canadian babies already owe many tens of thousands of dollars, which they will have to reimburse in one way or another in the course of their life. Perhaps this is why they start crying as soon as they arrive in this world!

Talking about babies, governments too often treat us like irresponsible children and act as if they know better than we do what is good for us. It’s almost impossible to do anything nowadays without some authorisation from a bureaucrat.

Did you know for example that there is a law in Quebec and in other provinces which imposes a minimum price on the beer that you buy at the store? That’s right, beer could be cheaper, but the government is afraid that you may drink too much of it if it’s too cheap. So the Liquor Board determines, and here I’m quoting the law, a “minimum retail price for beer so that it does not encourage irresponsible consumption.” It’s a nice coincidence because that also happens to bring more taxes in government coffers.

Governments control whole sectors of the economy, such as health care and education. Sectors which seem to be in a permanent state of crisis and always have funding problems. Still, every year, their budgets increase faster than the overall economy. How is that possible?

Former US president Ronald Reagan explained it best when he said that big interventionist governments tend to see things as follows: if it moves, tax it; if it keeps moving, regulate it; and if it stops moving, subsidize it!

What we need to ask is why are governments always getting bigger? Does everyone really wish to have these obese and tentacular governments? Is this what people vote for?

Economists belonging to the school of Public Choice have tried to explain this dynamic. Their research shows how groups that share the same goals have a strong interest in getting organized to put pressure on politicians.

These special interest groups want subsidies, trade protection, more generous social programs, a fiscal or legal privilege, regulation that favours them and keeps out competition. Any favour they get from the government can potentially bring them huge benefits.

Of course, in the end, it’s you, the citizens, who will have to pay for these favours. But you probably don’t have time to go to meetings and demonstrate in the street to oppose a particular program that will cost you ten dollars, even if ten dollars here and ten dollars there add up to hundreds and thousands of dollars. You have to work and take care of your family. But the lobby group who gets 100 million dollars thanks to this program has a huge interest in getting organized and pressuring politicians.

It’s very hard for politicians to say no to these lobbies because they have the means to hijack debates, quickly mobilize support and fuel controversies in the media. On the other hand, nobody hears what the silent majority think about it, even though they are the ones paying the bill or having to conform to a new regulation.

Public Choice economists also explain that within governments, civil servants have their own interests to defend. What are these interests? To have bigger programs to administer, bigger budgets, more prestigious titles and more power to intervene in people’s lives.

Civil servants have a very large influence on political decisions because they are the ones who control the information and the day to day agenda of politicians. I got first-hand experience of this as minister of Industry. I had to fight civil servants in my own department to achieve my goal of deregulating an important part of the telecom sector, in order to foster more competition and offer more choice and better prices to consumers.

If special interest groups and civil servants want a more interventionist government, and if politicians not only do nothing to oppose this trend but encourage it by trying to buy votes with taxpayers’ money, then voters will get a bigger government, whether they like it or not.

That’s how government grows and grows. That’s how we become more and more regulated and indebted, less and less free, and more and more dependent on government.

We could conclude from such analyses that governments will continue to grow and that there is not much that one can do to counter this trend. On the contrary, I believe that we can change things. That’s what I mean when I talk about doing politics differently. What does it imply?

First of all, we have to be conscious of the political dynamic that favours the growth of government. We have to know history, economics, and theories such as those of the school of Public Choice. We have to take them seriously and draw the necessary conclusions from what they tell us.

A politician who doesn’t have a clear vision of the principles he is defending and of what he wants to accomplish will rapidly get caught up in this system that I have just described. He will let himself be manipulated by civil servants and interest groups and will revert to the traditional way of doing politics.

If we want our ideas in favour of more freedom and less government to have some influence on debates, we must also defend them in the public arena. Unless he can distribute favours, a politician’s only influence comes from the support of all those who agree with the ideas he puts forward.

This is why we must convince and mobilize citizens by defending these ideas openly, with passion and with conviction. Even if this means that many people who don’t agree with these ideas or who have an interest in having big interventionist government will be displeased. In any case, when you try to please everyone, there are good chances you will also displease everyone.

A sizeable portion of Canadians have lost interest in politics and have stopped voting because none of the political options on offer seems attractive to them. They only hear partisan, manipulative and contradictory talk from politicians.

They can readily see that it won’t be possible for politicians to keep all the promises they make. That each favour granted to one group implies that another group will have to pay more. And that the traditional way of doing politics only results in a lower standard of living, more of their salary being taken away and more debt falling on their children.

By doing politics differently, we can give these people a reason to hope that things will really change.

This is why, starting with my first election campaign, I have decided to never make promises. And in the past couple of months, I have put forward the ideas and principles I believe in before various audiences across the country.

It’s true that you have to be careful when raising all these issues. I’m also part of a team, the Conservative Party of Canada, whose accomplishments I am proud of. And I have a duty to stand by my colleagues and my government.

But you know what? It works, to do politics differently. When you take a stand on the basis of clear principles, conservative principles in my case, it may sometimes create a stir or a controversy. But it brings a new awareness of an issue and moves the debate forward. It also causes people who do not agree with you to at least respect you.

It’s obvious that a large segment of the population has had enough of the clichés that politicians come out with, of their manipulative jargon to say one thing and its opposite at the same time. They want to hear something else, based on clear ideas, principles and not just empty slogans.

Something else has changed. Today, with the new means of communications, it’s much easier to stay well-informed and to get organized. The theory of Public Choice as it was developed half a century ago is still valid, but the situation it describes has evolved.

It’s not only the interest groups with large resources who can influence public debates nowadays. A small group of citizens can easily reach thousands of others by using Internet social networks. It’s a lot less expensive in time and effort to express your opinion by joining a group on Facebook than by participating in a demonstration, which was one of the few ways you could do it twenty years ago. The increasing number of media sources also allows points of view that are not often heard to spread more easily.

We’ve seen it with the Tea Parties in the U. S., with the election of Rob Ford as mayor of Toronto, and with the launch of the Quebec Freedom Network in my home province: the traditional way of doing politics is increasingly being challenged.

I am willing to bet that authenticity will become a quality that more and more people will be looking for in politics. People are ready to support politicians who say clearly what they believe in, who recognize that we have difficult choices to make instead of promising the moon and the stars to everyone. And they’re also ready to support politicians who talk about individual freedom and responsibility, smaller government and freer markets.

The Nobel laureate in economics Friedrich Hayek wrote in 1949:

“We must make the building of a free society once more an intellectual adventure, a deed of courage. (…) If we can regain that belief in the power of ideas which was the mark of liberalism at its best, the battle is not lost.”

If you are here today, it is because you also believe in the power of these ideas. I urge you to actively promote them, either by supporting an organization like the Montreal Economic or by getting involved in other fields of activity.

The more these ideas will be understood and shared by a large number of people, the easier it will be for me and for others of my colleagues to do politics differently. And eventually, to make Quebec and all of Canada freer and more prosperous societies. Thank you.

Published on May 11, 2016

29 January 2012

Governments all over the world have been talking for several decades now about reducing red tape, or what is called the “administrative burden” of regulation. In Canada, there has been one federal report on the issue every five or ten years since the 1970s. A Paperwork Burden Reduction Initiative was created by our predecessors in power.

Yet, there is a distinct feeling among small business people that nothing has really happened at the receiving end, except probably a still higher regulatory burden. The problem is not unique to Canada. The Organisation for Economic Cooperation and Development (OECD) notes that, even when governments have reported significant drops in the paper burden, “businesses expressed little enthusiasm”.

I think the problem resides with governments, not with businesses. All these exercises may have succeeded in reducing red tape in the short term. But if it starts growing again, we find ourselves in the same predicament as Hercules fighting the hydra, whose seven heads grow again as soon as they are cut.

The Red Tape Reduction Commission, over which I have had the honour of presiding since last May, was launched a year ago by our government to take another look at this problem.

As required by our mandate, the Commission’s first task was to identify irritants to business that stem from federal regulatory requirements. Helped by our cross-country consultations 2,300 such irritants were identified. The Commission’s report, which was unveiled on January 18, contains some 90 specific recommendations to eliminate or alleviate them.

However, these short-term solutions will only go so far. Efforts at treating the symptoms, which are the irritants, are not sufficient. A deeper, long-term approach is necessary. The second part of the Commission’s mandate was to recommend options to control and reduce compliance burden on a long-term basis.

Some regulations are of course necessary. But too often, people are treated as children by governments. Governments seem to assume that people do not have private solutions to which they can resort. They sometimes try to eliminate all risk, which is an impossible goal and unnecessarily stifles innovation and growth in the process. The presumption should rather be that the people who elect us politicians are responsible individuals and should be left free.

It is unreasonable to expect any significant reduction in administrative burden if the flow of new regulations, which is the underlying cause, is not tightly controlled. We believe the government needs to “hardwire” a disciplined approach to controlling new administrative burden. This is why our Commission is proposing the adoption of a One-for-One Rule, as promised in the Conservative platform during the recent election: every time the government proposes a new regulation, it must eliminate an existing one.

The United Kingdom is the only country that applies a one-in, one-out rule based on the net direct costs of regulations to business. The approach is supported by strong political leadership and appears robust. Each regulatory submission for a new initiative must be accompanied by the repeal of another regulation of equal cost to business. “Ins” and “outs” must be reconciled within six months. The accountability for ensuring that this exchange happens is reinforced through transparent forward planning and public reporting on results.

The task of measuring regulation is difficult as there is no single, obvious, measure of “regulation,” which is made up of a large number of individual regulations relevant in many different fields. Yet, applying the One-for-One Rule or any other goal for controlling regulation and its burden on business requires an unambiguous standard.

This is why we are proposing to give the Office of the Auditor General of Canada the mandate of reviewing and reporting on the government’s progress in reducing red tape through its One-for-One Rule aimed at cutting the costs to business as well as in implementing its overall red tape reduction action plan. The Auditor General would report to Parliament every year on progress.

Good intentions, of course, are not sufficient. Those who make the decisions need to have the proper incentives to regulate efficiently.

Consequently, and again to deal with the long-term aspect of regulatory growth, we are recommending that a substantial part of the bonuses of senior public servants be directly related to their success in implementing the One-for-One Rule. If a department or an agency does not at least respect the One-for-one Rule, its senior public servants will lose part of their bonus. If it does even better and succeeds in reducing the stock of its regulations, the higher the bonuses paid to its public servants should be. This will bring the public servants’ incentives more in line with the long-term goal of controlling regulation and its burden on business.

These are the most important out of 16 systemic recommendations to cut red tape contained in the Report. Combined with our recommended short-term solutions to irritants, we believe they would contribute much to the process of controlling federal regulation and its irritants, and make our government a leader in this field.

Published on May 11, 2016

While a similar legal procedure set up by my colleague Jim Flaherty follows its course at the Supreme Court, audiences will soon begin at the Quebec Court of appeal on the constitutionality of my government’s draft bill creating a national securities regulator. After reading the documents filed by the government of Quebec, I decided to intervene publicly on the matter. Le Devoir ran my opinion piece this morning (see the translated version below).

As noted by the journalist who covers the story in the same paper, I am well acquainted with this file, having worked at the Quebec Securities Commission in the late 1990s and participated in a working group on that issue. The arguments that I put forward in this morning’s article were already contained in a speech that I gave in 2004, which was mentioned in a National Post article more than a year ago. — 12 January 2011

Quebec offers weak arguments to keep its Securities Commission

By Maxime Bernier – Member of Parliament for Beauce and former director of corporate and international relations for the Quebec Securities Commission between 1997 and 2000

Le Devoir

January 12, 2011

In the coming months, the Supreme Court will have to determine the constitutionality of a draft bill creating a national securities regulator. My colleague Jim Flaherty, the minister of finance, asked the judges’ opinion to make sure this initiative from the federal government does not constitute an intrusion into provincial jurisdictions. Contrary to the Liberal Party of Canada, which never hesitated to tread on provincial powers, our government has said that it will respect the Constitution.

As I have already said in the past, I personally believe that securities regulation is a provincial responsibility. That’s what the Supreme Court should conclude on the basis of jurisprudence and the elements of proof presented to it – provided that the rights arguments are being presented, of course.

However, I read the document filed by the Government of Quebec with the Court of appeal in a similar case and I was disappointed and disconcerted by its weakness.

Quebec is arguing that securities are the responsibility of provinces on the basis of section 92 (13) of the 1867 Constitution Act dealing with “property and civil rights.” This is a well recognized and accepted argument. But after you have said that, you have not said much that is relevant to the case.

That’s because the Supreme Court, even though it has already accepted this argument, has twice stated that it could change its opinion if it is demonstrated to it that the securities trade is not local in nature anymore, as it was ostensibly in pre-Confederation times, but rather interprovincial or even international.

This is what the federal government is pleading to establish the constitutionality of its bill. According to this argument, the new reality pertaining to trade in securities places it under federal jurisdiction, in accordance with section 91 (2) of the Constitution dealing with “the regulation of trade and commerce.”

What is most perplexing is that in its memorandum, Quebec ignores the warnings from the Supreme Court. It offers no historical proof showing that transactions in securities were in fact already, in the pre-Confederation era, being carried out at the interprovincial and international level, and that the Fathers of Confederation knew this. There is no doubt that this proof exists.

It can be observed that trade in securities already constituted an important economic activity in Canada before 1867. The Board of Brokers was set up in 1848. This was the first association of brokers dealing in securities in Montreal.

Pre-Confederation laws also show that this trade was already taking place at the time in an international context. Several of those laws contained clauses that had an extraterritorial reach. It cannot be a mere coincidence that they often anticipated that the securities of a corporation could be issued or transferred abroad, and that dividends could be paid to foreign holders. Some of these statutes set out the names of cities such as London, Boston and New York, where subscription books could be opened.

The globalization of financial markets is nothing new. A first phase of globalization started around 1820 and ended with the First World War in 1914. The second phase began after the Second World War and is still going on.

International financial markets were already well integrated before Confederation. The network of financial institutions established in London was responsible for large movements of capital across the planet, which fuelled the rapid growth of economies such as Argentina, Australia and Canada. The development of natural resources in our country was largely financed by foreign investments.

A number of studies have established the importance of the mobility of capital in the 19th century, which led Alan Greenspan, the former chairman of the Fed, to note that “the degree of globalization today is not measurably greater than that prevailing in the century-ago world of our grandparents.”

Not only does the document filed by the Government of Quebec ignore these facts, it mentions none of the historical studies showing that the Fathers of Confederation were well aware of what was going on in that field.

When we analyze the biographies of the Fathers, we observe that almost two thirds of them had studied in law and almost half belonged to the world of business. Thirty out of thirty-six Fathers had a personal interest in the various fields of finance, either as investors, members of a board of directors or lawyers. As members of the legislature, they had adopted the private bills necessary at that time to set up corporations. They knew that these had the right to issues securities and bonds outside of Canada.

It was thus with full knowledge of the facts that they gave provinces jurisdiction over that sector. Nothing has changed fundamentally since then that would justify transferring this jurisdiction to the federal government.

In its arguments to the Court of appeal, Quebec’s attorney general offers no reply to his federal counterpart on any of these points. He provides none of the arguments that would be necessary to win this cause, and so risks losing it.

If that were to happen, nobody will be able to say this time that Quebec’s powers were weakened by another illegal assault from Ottawa, since our government did everything it could to follow constitutional due process. It will entirely be Quebec’s fault.

Published on May 11, 2016

On March 18, the Réseau Liberté Québec organised a series of conferences for a full day in Lévis, near Quebec City. The organisers asked me to address the participants for a couple of minutes before a panel and I took this opportunity to encourage them to continue their efforts in defending liberty. Here is the text of my short presentation. — 9 April 2012

Dear friends,

I would like to briefly discuss three ideas with you this afternoon: liberty, tenacity and popularity.

Liberty is the fundamental value that draws us together here today. It is not an egotistic desire to do whatever we want without any constraint. That’s the perspective of those who believe they know what is best for us and who want to force us to adopt it.

Liberty is nothing less than the basis of our civilisation. Human dignity and equality of rights, social pluralism and cultural dynamism, scientific advancement and economic prosperity: all these achievements are impossible in a context where there is no liberty.

We are the defenders of civilisation and we should not be afraid to affirm it. I believe we have the duty to be tenacious and persistent in the defense of freedom. We have a duty to not hide anything to our fellow countrymen that we believe is necessary and true.

How many times have we taken a step back when faced with the false arguments of our critics and those who disparage us? How many times have we hesitated to express our convictions for fear that the left-wing media establishment use this to fabricate a controversy at our expense?

I have personally provoked media controversies when criticizing Bill 101 and calling for freedom of choice, but this had the effect of pushing the debate forward. It’s up to us to bring people to the cause of liberty, so that we can live in a society that is freer and more prosperous.

What is the point of having the best solutions if we keep them to ourselves because we are afraid to displease others? What is the point of embracing the cause of liberty is we dare not fight for it with passion and conviction throughout Quebec?

Ron Paul is a good example of tenacity that we should emulate. He has been defending with conviction, fervour and enthusiasm the values of individual freedom and responsibility for more than 30 years. At first, he was preaching in the desert, but only a couple of days ago, he talked before more than 4000 students at the University of Missouri who hung on his every word.

We should not get discouraged because our ideas are not that popular today and are not shared by the majority of our fellow citizens.

It is not the case that an idea is not just and true because it is not widely accepted. An idea does not become just and true because it is popular. The ideas of individual freedom and responsibility are just and true and will become popular if we stick to our principles, if we continue to defend these universal values, if we remain true to our dream!

What is not popular today can become so tomorrow, whether it be a person or an idea. Ron Paul was not popular at first but he has become popular because he stayed true to the ideals of his youth. This is what I want you to do, to stay true to your dream and your convictions, because the future belongs to you and the cause of liberty will always triumph in the end!

Thank you!

Published on May 11, 2016

Justin Trudeau launched his campaign for the leadership of the Liberal Party of Canada a couple of days ago. This week, I gave an interview to La Presse about Mr. Trudeau’s economic vision – or rather his lack of vision. Here is an English version of the article by Joël-Denis Bellavance published on Friday. — 14 October 2012

Maxime Bernier goes after Trudeau

October 12, 2012

Joël-Denis Bellavance

La Presse

Justin Trudeau is using “empty slogans” to woo the middle classes, but he has nothing credible to propose to improve their lives from an economic perspective, believes Maxime Bernier, the minister of State for Small Business.

Stephen Harper’s conservatives have until now remained silent on the candidacy of the young MP from Papineau, who wants to lead the Liberal Party of Canada. Mr. Bernier broke that silence by sharply criticizing some passages of the speech delivered by Mr. Trudeau when he launched his campaign in Montreal Tuesday of last week.

In his speech, Mr. Trudeau claimed that the middle class plays a determinant role in economic growth. “We need to learn what we have forgotten. That the key to growth, to opportunity, to progress, is a thriving middle class, he declared. A thriving middle class provides realistic hope and a ladder of opportunity for the less fortunate. A robust market for our businesses.”

“The great economic success stories of the recent past are really stories of middle class growth, he added. China, India, South Korea and Brazil, to name a few, are growing rapidly because they have added hundreds of millions of people to the global middle class.”

Maxime Bernier thinks Mr. Trudeau has it all wrong. “It’s the other way around! It’s not because their middle classes have grown that China and India, among others, have become economic successes. It’s rather because these countries have first experienced strong economic growth that their middle classes have had the chance to develop.”

“And why did they experience strong economic growth? Because over the past couple of decades, their governments have abandoned their old socialist and interventionist policies and have liberalized their economies. They increasingly relied on private enterprise, open markets and a more reasonable tax burden instead of trying to control everything and to stifle innovation with excessive regulation, bureaucratic planning and restrictions on businesses.

In an interview with La Presse, Mr. Bernier said that he did not expect to hear specific proposals from Justin Trudeau right at the start of his campaign. But these words from the aspiring leader about the middle classes convinced him that he had to speak out.

“Justin Trudeau confuses cause and effect in terms of economic development. This is the only economic perspective we find in his campaign launch speech. This does not bode well. You can’t govern a country with empty slogans,” concluded Mr. Bernier.

Sources close to Justin Trudeau did not make much of the conservative minister’s remarks. “Mr. Bernier is ten days late. People are looking for something else than the conservatives’ dirty politics. There’s a reason why Justin’s candidacy is attracting so much interest. And the campaign is only beginning,” said a close collaborator who did not want to be identified.

Published on May 11, 2016

This is the original version of a speech I gave earlier this month at Carleton University, for the second edition of the Government Innovation Conference organized by the Municipal Taxpayer Advocacy Group. On the picture, I am with Ade Olumide, president of the MTAG. — 24 December 2012

The Benefits of Smaller Government
Maxime Bernier

3 December 2012, Ottawa

As a Member of Parliament for the Conservative Party, I am often described as a right-wing politician. According to conventional ideological divisions, this is what distinguishes conservative politicians from those of the Liberal Party, who are supposed to be in the centre. And from NDP or Bloc members, who are seen as left-wingers.

I have never really liked those distinctions, because I don’t believe they really tell us anything useful.

I prefer to use a more precise rule to define my position: when we are faced with a problem, should the government intervene or should we leave individuals to find a solution by working together? Should we have a bigger government with less liberty or a smaller government with more liberty?

My answer is we should have a smaller government with more liberty. Government should intervene less and every time it’s possible, we should defer to the free market and to individual initiative instead of imposing new rules.

I have respect and admiration for politicians considered to be right-wing, like Margaret Thatcher or Ronald Reagan. They managed to reduce government interventions in some areas.

But I also respect politicians considered to be left-wing who did the same. For example, Bill Clinton significantly reformed welfare programs, cut down spending and eliminated the budget deficit of the American government.

Still, I am a member of the Conservative party because it is part of conservative philosophy to understand the benefits of smaller government.

For us conservatives, government should ideally set up and enforce the basic rules of life in society. And then, leave individuals free to cooperate among themselves to provide for their wants. Government should not intervene to solve each and every problem on the road to a utopian and unrealistic vision of society.

To paraphrase John F. Kennedy from a conservative perspective: don’t ask what your government can do for you; ask your government to get out of the way, so that you can be free to take responsibility for yourself, for your family, and for everyone else that you care about.

Good government policy gives individuals the opportunity to dream and to realize their dreams; it does not impose the dreams of some on everyone. I went into politics to defend this kind of policy.

THE EVIDENCE

More specifically, if we look at the available data, what are the benefits of smaller government? I think the evidence is quite clear.

Most of you have probably heard about the Fraser Institute’s “Economic Freedom of the World” annual report. It looks at more than 20 components of economic freedom. Not only the size of government but also other components such as enforcement of property rights and freedom to trade.

Countries in the top quartile of economic freedom had an average per-capita GDP of $37,691 in 2010, compared to $5,188 for bottom quartile countries.

In the top quartile, the average income of the poorest 10% was $11,382, compared to $1,209 in the bottom. Think about this: the poorest 10% in the most economically free countries are twice as rich as the citizens in the least free countries. The poor also benefit from economic freedom.

There are still more benefits to living in an economically free country with a smaller government. Life expectancy is 79.5 years in the top quartile compared to 61.6 years in the bottom quartile, and political and civil liberties are considerably higher in economically free nations than in unfree nations.

Canada has improved in this ranking in recent years and is now in fifth position. The U.S., where government keeps growing, has dropped to 18.

Another recent study by a British think tank, the Centre for Policy Studies, has looked at the impact of the size of government on growth and other outcomes in developed economies.

The study found that for the period between 1965 and 2010, a higher tax to GDP ratio has a statistically significant, negative effect on growth. For example, an increase in the tax to GDP ratio of 10 percentage points is found to lower annual per capita GDP growth by 1.2 percentage points.

A similarly statistically significant negative effect on growth is found with a higher spending to GDP ratio. Between 2003 and 2012, real GDP growth was 3.1% a year for countries with a small government, compared to 2.0% for countries with a big government.

In this study, small government is defined as one where both government outlays and receipts are below 40% of GDP. I’m not sure I would qualify this as “small” government! But there would have been no countries in the category “below 10% of GDP”. About 10% of GDP: that’s how big government was in all rich Western countries like Canada a century ago. It just shows you how governments have grown and become gigantic in the 20th century.

THE LOGIC UNDERLYING SMALL GOVERNMENT

The logic underlying the benefits of small government is the following: governments can only spend what they have taken out of the real economy. A government cannot inject resources into the economy unless it has first extracted them from the private sector through taxes or put us further into debt by borrowing the money.

Every time the government takes an additional dollar in taxes out of someone’s pocket, that’s a dollar that this person will not be able to spend or invest. Government spending goes up, private spending goes down. There is no net effect, no increase in overall demand. No wealth creation.

Government borrowing has the same effect. The private lenders who lend money to the government will have less money to lend to other private business people. Or they will have less money to spend or invest elsewhere. Government borrowing and spending goes up, private borrowing and spending goes down. There is no net effect, no increase in overall demand. No wealth creation.

Government spending always competes with private sector spending for scarce resources. Moreover, bureaucracies use resources less efficiently than private businesses, which have to remain competitive to be profitable and survive. When you divert resources from the more productive uses that they can find in the private sector to less productive uses in the public sector, you will see less growth.

WHAT OUR GOVERNMENT HAS DONE

That is why to ensure we have a growing economy, we need to let entrepreneurs keep the means to create wealth. We need to create the best conditions possible for the private sector to become more productive.

This means first of all to restrain spending. In our Economic Action Plan 2012, we concluded a comprehensive review of approximately $75 billion of direct program spending by federal departments and agencies.

That review identified a number of ways to enhance the efficiency in the way we spend taxpayers’ dollars and achieved ongoing savings of $5.2 billion.

Government program spending is projected to steadily decline over the next four years as a proportion of our economy to return to pre-recession levels.

We also need to reduce taxes. Corporate taxes now stand at 15%, the lowest among G7 countries. They were at 22% when we took power six years ago. That’s a concrete way to leave resources in the hands of the private sector.

We need more free trade. That’s also smaller government. It means smaller tariffs, smaller quotas, less regulation, fewer obstacles, for businesses and consumers.

Our government has announced free trade agreements with nine countries. We are still negotiating with several other countries. We hope soon to be able to announce a very important agreement with the European Union.

We need less regulation on businesses. Unnecessary red tape is a hidden tax on entrepreneurs and weighs heaviest on those least able to bear it: small business owners. Unnecessary red tape stifles economic growth and job creation, reduces productivity and can crush the entrepreneurial spirit of Canadians. As minister for Small Business, this is one of my main preoccupations.

Last January, I unveiled the Report of the Commission to reduce Red Tape. It contained 105 recommendations to get rid of regulatory irritants and to prevent red tape from growing again. Several have already been implemented. That’s a concrete way to free the private sector.

Finally, if government is really going to get smaller, that means it needs fewer people to manage it. The Economic Action Plan 2012 stated that, in total, federal employment would be reduced by about 19,200 positions over a three-year-period.

The federal public service has stopped growing after considerable growth since 1999. Between March 31, 2010 and March 31, 2012, the population of the federal public service decreased by 4,863 employees (from 282,955 to 278,092). In proportion to the Canadian population, the size of the federal public service has decreased from 1 percent in 1983 to 0.82 percent in 2011.

WE NEED TO DO MORE

I think this should only be a beginning. We need to do more, a lot more, to streamline government.

A bigger government means a government that taxes more, spends more, gets deeper into debt, and regulates more. It’s a government which intervenes in all aspects of our lives, all the while curtailing our freedom to act.

You can barely do anything nowadays without having to ask a bureaucrat for some permission. You want to row a rowboat? Better be patient while you try to obtain all the necessary authorisations and learn all the rules that apply. Although there may be thousands of pages of obscure regulation or anything and everything, you won’t be able to claim that you did not know them before a judge if you are caught violating one of them. Ignorance of the law is no defence.

Governments too often treat us like irresponsible children and act as if they know better than we do what is good for us. From their perspective, this justifies all the measures they adopt to hold our hands, from the cradle to the grave and tell us what to do. And also to pick our pockets.

Governments are trying to control everything we do to protect us from all the imaginable dangers and risks of life. But who will protect us against governments?

CONCLUSION

I believe we are at the end of a cycle of government growth that began a century ago. The current crisis has shown that more government spending is not a solution. Government spending doesn’t create wealth. By taxing or borrowing government takes resources from some and give them to others.

It is like taking a bucket of water in the deep end of a swimming pool and emptying it in the shallow end. More government spending will act as an economic sedative rather than an economic stimulus.

We have to become not only better managers of government; we have to become better managers of a smaller government.

We need to rediscover the beauty of a smaller government with more freedom and responsible citizens. That is what made Canada a great country, what made us free and prosperous in the first place.

Thank you.

Published on May 11, 2016

This is the text of the speech I delivered this morning in Montreal before an audience of the Regroupement des jeunes chambres de commerce du Québec. 

How to reclaim our place within Canada

Maxime Bernier, MP for Beauce

20 May 2014

As was probably the case for many of you, when I reflected on the results of Quebec’s April 7 election, I got the sense that Quebec had reached a turning point in its history. Following a campaign haunted by the spectre of another referendum, the Parti québécois suffered its worst defeat since 1970 and the two federalist parties took home two thirds of the vote. Once again, Quebecers clearly rejected separation and embraced a stable future within the Canadian confederation.

Since the election, the media has devoted a lot of space to the uncertain future of the Parti québécois, and how it might bring young people back into the fold. But given the election results, there is a much more pressing and relevant matter to address, one that has received hardly any attention: How are we, as Quebecers, going to reclaim our place in Canada?

imagescae34dm8 Obviously, this question matters deeply to me, as a federal politician from Quebec. But I am here today, not as a member of the Canadian government, but as a Quebecer wondering what we can do to move our society forward.
The sovereignty issue has monopolized political debate in Quebec for decades. It’s a legitimate debate, but it’s one that just keeps going around in circles.

In the meantime, Quebec must continue to develop. We have serious problems that need fixing. Our public finances are in a sorry state. Ours is one of the most heavily taxed regions in North America, and one of the least wealthy. We need to make massive investments in our crumbling infrastructure. And as our population is aging quickly, we have particular challenges to face when it comes to integrating immigrants and keeping our social programs solvent.

If we are to meet these challenges, we need governments, both in Quebec City and in Ottawa, that are focused on the real issues at hand, not on identity crises, referendum dilemmas and constitutional debates that create uncertainty. What we needs is stability, and not just for the next four years, but for the long term.

As I see it, that stability hinges on three major changes in attitude, all of which are related to Quebec reclaiming its place in Canada.

First of all, we must come to terms with who and what we are, we Quebecers.

Throughout the election campaign, Parti québécois politicians kept repeating that we need to defend our identity and values. And they did this by playing on the fear of the other: fear of immigrants, fear of anglophones, and fear of the rest of Canada.

The truth is, they refuse to accept what Quebec is today. They have always been obsessed with changing it. They aren’t interested in defending OUR identity and OUR values. They want to defend THEIR very narrow view of what our identity and values SHOULD be.

Quebecers make up a nation, and our government has formally recognized that. This nation, however, is a pluralistic one.

To me, accepting Quebec’s diversity and pluralism means recognizing that many identities coexist in Quebec and that each of them is legitimate. Those who identify themselves as francophone Quebecers are not the only “real” Quebecers.

This may seem obvious and straightforward to many of you. I don’t believe that it is obvious at all. For the past fifty years, a nationalist elite has been trying to delegitimize any identity that deviates from a narrowly defined Québécois identity.

In particular, politically correct nationalist rhetoric demands that Quebec be referred to as a solely francophone society, where French is the only language that defines our identity. But this is simply not true.

English isn’t a language spoken by some foreign minority that has to be tolerated because we respect basic human rights. A large English-speaking population has been living in Quebec for a very long time. Unless you believe that only the descendants of French settlers are “real” Quebecers, the undeniable reality is that English has been a part of Quebec’s identity for some 250 years.

Can we not just clearly acknowledge this once and for all? Acknowledge that English is a part of us, a part of our history, a part of our culture and a part of our identity. Acknowledge that English isn’t some foreign language but is one of Quebec’s languages. And consequently, give up the endless battle to restrict its use and its legitimacy through coercive policies.

This doesn’t mean ignoring that French is central to our identity or that without it, Quebec would not exist. Nor does it mean we shouldn’t remain vigilant when it comes to protecting and promoting French, which will always be a minority language in North America. But it would allow us to come to terms with a part of ourselves and put an end to a lot of pointless conflict and animosity between the communities that make up Quebec.

We can lament the defeat at the Plains of Abraham and the British conquest all we want, but at some point, we’re going to have to accept the fact that it happened over 250 years ago, and that Quebec came to be what it is today over the course of those 250 years. Quebec is not some version of New France corrupted by the Anglo‑Canadian presence that needs to be restored to its former purity.

In addition to our French heritage shaping who we are, so too did the English language, and so too did British and Canadian institutions and symbols. Our identity includes all of this. Just like the French fact is part of the identity of all Canadians.

Quebecers have chosen to remain a part of Canada. We should draw the obvious conclusions from this. And that begins with accepting the parts of our history and identity that connect us to Canada.

It’s time to challenge the narrow definition of our identity that the nationalist elite want to impose upon us. It’s time to start looking at other Canadians as fellow citizens and as partners.

The second major change in attitude that I see as necessary if we are to reclaim our place within Canada involves the benefits of federalism.

In the 1970s, Robert Bourassa coined the term “profitable federalism” to counter separatist rhetoric. This was a very poor way of defending the merits of federalism. In the mind of many a Quebecer, the more money we extract from the rest of Canada, the more profitable federalism is deemed to be.

Federalist and separatist Quebec governments have both used the threat of separation to go and get more money. Do you remember the Bélanger‑Campeau commission? The whole debate on the supposed fiscal imbalance? It’s always the same story, the same policy of begging for scraps. Even when Ottawa sends more money, the reaction in Quebec City is that it’s never enough. We always want more, and if we don’t get it, well, then there’s the proof that federalism is not profitable.

This year, Quebec will receive $9.3 billion in equalization payments. This represents more than half of the $16.7 billion in the whole program. This money comes from richer provinces like Alberta, British Columbia and Saskatchewan.

It is true that other provinces, like Manitoba and the three Maritime provinces, collect even more equalization money per capita than Quebec, making them even more dependent on Ottawa. But that’s no excuse. As a Quebecer, I’m not very proud of the fact that ours is a poor province that receives equalization money.

And it’s not the rest of Canada’s fault that we are a poorer province, as the separatists would have us believe. It should be pretty obvious that unrestrained state intervention doesn’t lead to prosperity. If it did, Quebec would be the richest place in North America instead of one of the poorest.

If we are poorer, it’s because of bad economic policies that make Quebec’s economy less productive. It’s because the first reflex of much of our political class has been to keep begging Ottawa for more money instead of making the decisions that need to be made to fix our problems.

We need to stop looking at our membership in this country in such a selfish way, solely in terms of its financial benefit for us. Asserting our place in Canada means committing to responsible cooperation with our Canadian partners so that the country can function more effectively for EVERY region and EVERY Canadian.

Finally, the third major change in attitude I see as being crucial concerns the reform of federalism.

It’s been a truism for more than a generation that there is only one constitutional position that could rally the vast majority of Quebecers: a more autonomous Quebec within a united Canada. Federalism at its most decentralized while respecting provincial areas of jurisdiction.

But this autonomist position has always been poorly defended. This is because every Quebec government for the last 50 years has undermined it by constantly making unrealistic demands.

Put yourself in the shoes of Canadians in other provinces. For 50 years, they’ve been on the receiving end of two types of demands from Quebecers. On the one hand, there have been the separatists who want to separate but while remaining associated with Canada, sharing a currency, passports and so forth. In short, they wanted all the benefits of belonging to Canada while still being independent.

On the other hand, the federalists have kept demanding special privileges. Their message to the rest of the country has basically been: Quebec is the only special province, and we deserve more powers and influence than the rest of you.

Among other things, we’ve asked our Canadian partners to recognize Quebec as a distinct society and to use that distinction in interpreting the Constitution. We’ve asked for more representatives in Parliament than our population would justify. We’ve asked for the only veto power over constitutional changes. And we’ve asked for all of this while holding a knife to their throats: Say yes or we’ll separate. Every party has engaged in this game of one‑upmanship.

No one in the rest of Canada, nor in Quebec for that matter, wants to reopen the Constitution right now. If we truly want to achieve a more autonomous and prosperous Quebec, we must change our approach completely. And, in fact, there is absolutely no need to amend the Constitution in order to reform federalism; we just need to respect it. Respect the intention of the Fathers of Confederation who wanted a decentralized federation with provinces enjoying autonomy in their jurisdictions.

Imagine the sway and political influence Quebecers would carry if they rallied behind this vision of autonomy, one supported by a large majority. Imagine how much sway and political influence Quebecers would wield if they joined forces with other like‑minded Canadians who also want to live in a more decentralized Canada with less state control.

In the 1990s, the Reform Party, one of the two parties responsible for making the Conservative Party of Canada what it is today, put forward a vision of federalism that was quite decentralized. So it is with good reason that I support a similar vision as part of the Conservative Party.

What’s more, Quebecers need to take their rightful place in federal political parties if they wish to advance their interests and their vision of the country.

The Liberal Party of Canada has for decades been the party of centralization and of interference in areas of provincial jurisdiction. Now again, its leader Justin Trudeau is proposing that the federal government interfere in the area of education, an exclusively provincial area of jurisdiction according to our Constitution.

The NDP is a socialist party that wants to centralize everything so it can intervene everywhere. It is not at all in the interests of Quebecers to have a large, interventionist government in Ottawa limiting our individual freedom, because this will make us, and all Canadians, poorer.

We, the Conservatives, have a different vision to offer: that of a more modest, less interventionist government in Ottawa, a government that respects provincial autonomy. The Conservative Party of Canada is the natural vehicle for advancing the vision of federalism that is most widely embraced in Quebec.

For half a century, the political history of Quebec in Canada has amounted to a series of constitutional failures and failed referendums. One of the biggest reasons for these failures, in my view, has been an unhealthy and unrealistic attitude. We need to change our attitude.

We have chosen to remain Canadians, so let’s reassert our place within Canada!

• Let’s come to terms with our history and our pluralistic identity;
• Let’s stop begging Ottawa for help and instead solve our problems ourselves;
• Let’s forge alliances with other Canadians who want decentralized federalism;
• Let’s reclaim our place within Canada so that Quebec can thrive and prosper within the Canadian confederation.

Thank you.

Published on May 11, 2016

The Huffington Post Canada and the Huffington Post Québec ran the English and French versions of my article this week on Justin Trudeau’s absurd declarations about the economy these past several months. The English version is reproduced below.
Also, I was in Calgary this week and gave an interview to Licia Corbella, the Calgary Herald‘s editorial page editor. You can read her excellent article here.

–MB

If Trudeau Can’t Define the Middle Class, How Can He Work For Them?

Maxime Bernier, Minister of State for Small Business, Tourism and Agriculture

April 10, 2014

Should we trust a political leader who does not understand basic economic notions? This question is becoming more and more relevant as the leader of the Liberal Party of Canada, Justin Trudeau, keeps making absurd statements about the economy.

One of his key promises is that he won’t raise taxes on the middle class. Who exactly is the Liberal leader talking about? Last week, he gave us several strange and contradictory definitions of who he believes the middle class is composed of.

He started by saying that they are “people who work for their income, not people who live off their assets and their savings.” As several commentators noted, this absurd definition would include millionaire bank CEOs who work for their income, but not retired Canadians. All economists agree on a definition of the middle class based on total household income and not based on the source of income.

He came back with another definition a couple of days later, as absurd as the first one: they are “people who live paycheque to paycheque.” Does that mean that Canadians who manage to put some money aside are not part of the middle class?

Mr. Trudeau seems to have a pretty blurred view of the life of ordinary middle class Canadians. He already has a track record when it comes to saying weird things about the middle class. In October 2012, when he was running for the leadership of his party, he stated that the existence of a middle class was what brought about economic growth. Really?

“The great economic success stories of the recent past are really stories of middle class growth. (…) China, India, South Korea and Brazil, to name a few, are growing rapidly because they have added hundreds of millions of people to the global middle class.”

Justin Trudeau confuses cause and effect in terms of economic development. It is not because their middle classes have grown that China and India have become economic successes. It is rather because these countries have abandoned their socialist and interventionist policies and have liberalized their economies that they have experienced strong economic growth. It was then and only then, that millions of their citizens left the condition of extreme poverty they were in and were able to reach a standard of living which is that of the middle class.

Again, earlier this year, we were treated to another one of Mr. Trudeau’s absurd statements about the economy. In a video, he explained that since households and provincial governments in Canada are heavily indebted, while the federal government has considerably lowered its debt level since the 1990s, Ottawa is the only entity that “has room” to rack up more debt. It should therefore “step up” and spend more to stimulate the economy.

Can we imagine a more absurd economic policy? This is like the guy with a lot of consumer debt who checks the invoices of his three credit cards and thinks: I have reached my limit on these two, but I still have some credit left on this other one. The best way to get richer is to max this one out too. Let’s go shopping! Mr. Trudeau seems to forget that it’s the same taxpayer who will have to pay back the debts of both levels of government as well as his own.

He also seems not to understand that government spending does not create wealth and that to stimulate the economy sustainably, we must do the opposite. That is, curtail public spending and put in place the best possible conditions to allow the private sector to become more productive. We can do this by cutting taxes, reducing the burden of regulation and promoting free-trade.

The Liberal leader uttered another economic absurdity when he reacted to our government’s budget a couple of weeks ago. According to him, there is no need to worry about the deficit. We should rather aim at stimulating the economy and “the budget will balance itself.”

For Mr. Trudeau, the more a government spends, the more it stimulates the economy, the more its revenues will grow, and the less we need to worry about the deficit. One has to wonder why the deficit and debt exploded in the 1970s, when Justin Trudeau’s father implemented this type of irresponsible economic policy. Perhaps he wasn’t spending enough?

There’s not much harm in it as long as Mr. Trudeau cannot act on his absurd beliefs. But if the Liberal Party of Canada ever comes to power again, these ideas could become a threat to Canadians’ economic security. Can we afford to take such a risk?

Published on May 11, 2016

As I noted a year and a half ago already, Justin Trudeau doesn’t understand much about economics. And this is still the case today, as he tries to justify getting us back into deficits and piling up more debt.

The National Post and the Huffington Post Québec ran my article today on the economic proposals of the Liberals following their national convention in Montreal. Here is the English version.

More Liberal debt is not the road to growth

February 25, 2014

Maxime Bernier is the Minister of State for Small Business, Tourism and Agriculture

Now that its Montreal convention is over, we know a little bit more about the Liberal party’s economic platform. One of its central planks is that budget deficits are a good way to grow the economy, and that we should not be afraid to go further into debt.

In a recent video posted on the Internet, Liberal leader Justin Trudeau explains that Canadian households are heavily indebted, just like provincial governments, while the federal government has considerably lowered its debt level compared with other developed countries since the 1990s. His conclusion: Ottawa is the only entity with the ability to spend money and rack up more debt. It, therefore, has to “step up” and do the spending that others are not able to do.

At last weekend’s convention, Liberal delegates heard Larry Summers, an American economist, explain why we need “unconventional support policies” — economic jargon for “spending without restraint.” According to him, accumulating more debt is OK when it serves to stimulate the economy.

Are we in a recession? Does the current situation justify sending our public finances back into the red?

One could almost believe we’re back in the 1970s, when the federal debt, which until then was relatively modest, exploded as Justin Trudeau’s father launched one new program after another, most of the time by intervening in provincial jurisdictions. We saw where that led us in terms of public finance, but also with regard to federal-provincial relations.

Delegates at the Liberal convention discussed a whole set of “national strategies” on issues ranging from transportation to energy, mental health, children, water, pharmacare, youth jobs and science. This is the type of big spending, interventionist and centralizing federal government that Justin Trudeau is once again proposing.

They may claim they intend to remain fiscally responsible, but Liberals are actually going down a very slippery slope, as they adopt these kinds of policies.

The burden of debt diminished considerably during the first three years of the Conservative government — from 34% to 28% of GDP. It has gone back to 33% in the past couple of years due to measures taken to deal with the financial crisis. Our projections show that it should be scaled back to 25% of GDP by 2021.

This debt is not something abstract. Servicing the debt costs taxpayers about $30-billion a year. This is as much money as the GST brings into government coffers. The more we cut down the size of the debt, the fewer resources we will need to pay the interest and the more we will be able to afford to cut taxes.

Justin Trudeau and his American adviser still believe in the old Keynesian theory that says government can create wealth by spending more money.

In reality, every time the government takes an additional dollar in taxes out of someone’s pocket, it’s a dollar that person will not be able to spend or invest. When government spending goes up, private spending goes down. There is no net effect. No wealth creation.

Government borrowing has the same effect. The private lenders who lend money to the government will have less money to lend to private businesses. When government borrowing and spending go up, private borrowing and spending go down. There is no net effect. No wealth creation.

It is like taking a bucket of water in the deep end of a swimming pool and emptying it in the shallow end.

It’s these kind of policies that ruined our economy in the 1970s. This is not what Canada needs today.

To stimulate the economy, we need to give entrepreneurs the means to create wealth. We need to put in place the best possible conditions to allow the private sector to become more productive: by curtailing public spending, cutting taxes and signing free-trade agreements. Growth and progress depend on more economic freedom.