What’s so good about being independent?

A popular target for modernizers is political interference in the proper management of government agencies and businesses. In the name of economically rational policy-making and scientific management think tanks propose changes to enhance the independence of public agencies, commercial and not-for-profit government assets. This perspective is influential in places as far apart as western Europe, China and Ontario, Canada.  

They hope that greater institutional independence will make government smarter. A good example of this point of view was presented by economist Arthur Sweetman in a paper for the Mowat Centre’s task force on Employment Insurance (EI) reform in Canada.

“The government's actions [freezing premiums], though correct, point to a larger problem with how EI premiums are set. Right now, despite the creation of the new Canada Employment Insurance Financing Board (CEIFB), the setting of rates is still vulnerable to political and partisan influence. Canada should remove politicians and partisan politics from the rate-setting process entirely and grant the CEIFB the same independence to set EI premiums as the Bank of Canada enjoys with respect to interest rates.”

Read more: http://www.nationalpost.com/Take+politics+Employment+Insurance/4129480/story.html#ixzz1BrTNS9yO

Economic experience and democratic instincts would surely not go along with this without a fight.  In politics and business “independence” alone is not a virtue and taken too seriously for too long is a vice.

Comparing the idea of a government agency being free to set premiums—a payroll tax on employees and firms—and a central bank’s freedom to set interest rates is shaky. A central bank has no different or additional interest than the interests of the people at large.  Its decisions—whether popular or not—provide no separate or distinct benefit to the bank and its professionals. And in any event, the policy independence of central banks was a last resort, a necessary evil in a democratic society that we bear but should not easily imitate.  

Of course, governance arrangements that put greater distance between the imperatives of good management and the preoccupations of political strife and patronage are good things. However, giving organizations the unfettered power to raise the price of their services is dangerous.

Price setting in the public sector is exactly the same as it is in business: organizations that are not disciplined by competition or political oversight end up charging too much. They raise money to do what they want to do, rather than do what the market will bear.

In Ontario, electricity rates were once set by Ontario Hydro, an independent self-regulating public monopoly, and they ended up financing an electricity system that was overbuilt and uncompetitive. About ten years ago, the Government of Canada granted the Greater Toronto Airports Authority the power to set its landing fees. Toronto’s magnificent international airport now has roughly the highest charges in the developed world.

Elected governments are often attracted to the case for greater independence by their agencies. Governments don’t like making tough decisions either. However, the powers agencies and pubic monopolies wield are created by government and, ultimately, government must own what they do.

Iconic Canadians

One contemporary illustration of the consciously deferential Canadian living alongside the unconsciously laissez faire American is the growing use in Canada of the words “icon” and “iconic Canadian.”

If you search Google for “iconic Americans” you get about 1.7 million results. If you next search for “iconic Canadians” you get just over 1.3 million results. With a tenth the number of participants and fellow citizens to pick from, it seems we’re five to eight times more likely use the term. But distinctions, even big ones like that, don’t necessarily make Canada a better place.

Beyond its original religious meaning, an icon is an object of uncritical devotion. Surely, we owe it to ourselves to think twice before offering that kind of loyalty to any individual or list of eminent Canadians. We needn’t be hectored by iconographers or lash ourselves for our lax fervour.

The assignment of the adjective “iconic” to individuals, works of art, landscapes, and public and private corporations is pursued with great enthusiasm by numerous organizations, including the CBC and the Dominion Institute. (In a June press release, the institute’s Executive Director, Marc Chalifoux, complained, “Some of the most iconic figures of our country’s past are strangers to many of us, unrecognizable and underappreciated.”  Apparently, the problem isn’t choosing who to revere, it’s getting us to take note.)

Most of their choices are merely silly: the writer Pierre Berton, The Beaver as “an iconic Canadian history magazine,” and the Royal Canadian Air Farce as “an iconic Canadian Comedy Series.”  Charlie Pachter, the family estates of the Group of Seven, Tim Horton’s, the Hudson Bay Company, and Bombardier shareholders everywhere may benefit from the branding value of the adjective “iconic.” Such flattery is of little harm; we’re not ostracized for not being ardent fans.

In the political realm, however, assigning the adjective “iconic” to praiseworthy politicians and individual political creations bolsters the status quo and makes reasoned progress more difficult. Elevating John A. Macdonald, Pierre Trudeau, and Tommy Douglas to the commanding heights of “iconic Canadians”—lifting them above second thought, above the terms of normal debate—not only makes their times appear less interesting but it gives arbitrary advantage to one polished narrative of the past. (Macdonald was a Canadian visionary but his assessments were not flawless, for example, dismissing Abraham Lincoln as a “beast” that should be elected, if only for Canada’s sake.[1])

In politics, there is no such thing as a level playing field; what works fairly well now usually beats an idea that might work better. That conservative bias, however, needn’t be assisted by the mere assertion that the original architect was a great man and a nation-builder.  The word “iconic” confers an aura of permanence and perfection that can only make contemporary change that much harder to discuss.

One needn’t be an iconoclast to insist that there are further useful things to be said about healthcare, the delivery of electricity, and how we express ourselves in our constitution. Progress is still possible, in fact, because our earlier heroes were mortals—and we can find our own mortals to improve on their accomplishments.

Our most illustrious leaders invariably called themselves practical thinkers. Their works were borne of the options that were available to them at the time. For instance, there was no alternative capital market in Toronto to electrify Ontario in the 1900s without government ownership or public borrowing. So, Adam Beck created Ontario Hydro. Thanks to Pierre Trudeau’s ability to hold together nine premiers and Parliament, we have a new constitution with a Charter of Rights and Freedoms. However, that Constitution Act of 1982 also included an amending formula. Someday, hopefully, a new generation of leaders will successfully put it to use to do something about our constitution’s continuing anachronistic features. 

 The past itself— its advocates and beneficiaries—weighs heavily on how we choose to cope with the future. That burden needn’t be bronzed with icons.

[1] Gwyn, Richard, “John A: The Man Who Made Us”, Random House Canada, 2007, p. 242

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