What, If Any, Social Services Should the Public Sector Provide?

0:00Now, this was advertised as a debate, and the question was put, what, if any, social services should the public sector provide and or deliver? And I did a little subsequent research on debate, and that's not a debating question. We can't affirm we gave that question, but it is a question that we wanted answered. And so we're just going to explore the minds of these two persons who represent, we assume, diverging and perhaps antagonistic opinions on that question. There's going to be, however, some elements of what a formal debate would be and that we keep in time in order to have it fairly represent both viewpoints.

0:48There will be a 20-minute presentation of each position, and then opportunity for each to have a 10-minute return. You can see the rebuttal, if that's the way you wish. Followed by a 40-minute approximately, depending on how much time you actually do have in an open forum, and we'll discuss open forum when it comes. So, please welcome these two gentlemen. Thank you very much.

1:31I'd like to begin by commenting on the introduction where it was mentioned that we might have diverging or antagonistic views. I expect that we might, but my view is that if we do, it will not be on the goals, it will be only on the means. I think I share with my opponent and with all people of good will the idea that the poor should be helped. And the debate is not whether the poor should be helped or not, but how best can the poor be helped. And the means that some people adopt for helping the poor is the welfare state, and in my view, this is just about the diametric opposite of the best means for that goal that we hold in common, namely to help the poor.

2:19In my view, ideally, there should be no welfare state at all. It's demeaning to the recipients, it creates dependency, it reduces self-reliance, and it's suspect morally because it's based on force. What it does is it forces people against their will to pay taxes, and then these taxes are given to the poor. With that introduction, let me just pause for a commercial break, as is consistent with my political philosophy, and mention that I've put my name and address on the board there, and I would invite you, if you're interested, in any of the citations I give or any further information to just drop me a note and if you do, I will make you a gift of a free four-month subscription to Fraser Forum, which is a publication of the Fraser Institute.

3:16Okay, back from the commercial. I suppose I should have done a jingle, but I assume I have your attention at least this early on. A large part of the perceived need for the welfare state, I contend, is created by excessive government itself. In other words, the reason people think we need a welfare state is because of poverty, and yet it's excessive government in my view that creates poverty in the first place. So if we just got rid of government or eliminated as much of it as possible, we would eliminate the poverty and with it the felt need for the welfare state in the first place. For example, the minimum wage law, beloved of all progressive people and right-thinking people, I think is a sham and a disgrace because it boomerangs.

4:10I think many people that advocate the minimum wage law do so in order to elevate wages, to put a floor under wages and raise that floor. But the findings of economics indicate that what this does is just about the opposite. Namely, it makes unemployable people at the bottom of the economic pyramid. Other legislative enactments which have the same effect, namely creating poverty, creating The very need for the government welfare state in the first place would be occupational licensure, taxi medallions, things like that, marketing boards, unions, rent control, tariffs. The poor are frozen out in all of these cases and they are victimized. So I think the first step in a humane, sensible welfare system would be to get rid of government programs which cause the problem in the first place.

5:04However, even if all of this is corrected, and I've only touched on the very tip of the iceberg, there were just hundreds of legislative enactments which create poverty, still there would be handicapped people, blind people, quadriplegics, women with infant children, so I think still we would have to have some sort of welfare. Given this, I have created or concocted three principles which should guide us in our choices in this area. The first one is that private charity is vastly preferable to government welfare. First of all, on the moral ground, the money that is dispersed by private charities is given to them voluntarily, not coercively, as is money given to the government. Second, when you have government getting involved in it, most of the money goes to the rich.

5:51We have that very famous statement, I think it was by Tommy Douglas, one of the older NDP people, he said, corporate welfare bums. And to my way of thinking, this captures it just perfectly. For every penny given in welfare to poor people, thousands, hundreds of thousands, millions of dollars are given to large corporations owned by very wealthy people in the form of bailouts and subsidies. So I think the poor get shortchanged through the government in a way that they do not through private charitable organizations. And third of all is the efficiency question. So we have a, this is one of the monthly publications in the series that I was offering for free.

6:39It's by General Arnold Brown of the Salvation Army, and I'll send you this if you're interested, who says that the cost of raising the funds that the Salvation Army disperses is between 2 and 7 percent. This is minuscule compared to the rake-off that the government takes for all sorts of money handling charges. Even more important, the emphasis on the part of the church or other charitable organizations is to get people back on their feet. It is to breed responsibility in them and not dependency. And I think it's dependency that is the main result of government welfare programs. Traditionally, private charity was run by the churches, the Mormons, the Hutterites, the Catholic Church, synagogues, Christian churches of all denominations.

7:31And yet the main objection to the thesis that I am now putting forth, paradoxically, comes from religious spokespersons. Let me read an article I once wrote that's a very short one that's relevant to this. In virtually every case where private citizens compete with government or try to, they do so wholeheartedly. They are anxious to show that they can do a better job at a lower cost. This applies, for example, to private sanitation, private bus lines, and even to private competitors for mail delivery and police and fire protection, where such private alternatives have arisen. But there is one glaring exception to this rule. The ideological new class run private poverty centers, which are in the business of providing food for the needy. They are, however, highly ambivalent about their role.

8:16According to the spokespersons from such groups as the Vancouver Food Bank, the Richmond Food Bank, the First United Church in Vancouver, the New Westminster Unemployment Action Center, the Federated Anti-Poverty Groups of B.C., giving food to the poor should really be a government enterprise. In the good society and the view of these people, there would be little scope for private initiatives such as their own. The public sector should do the job. The Reverend Alan Bush of the St. Albans Richmond Food Bank even goes so far as to claim that the B.C. government, during its cutback several years ago, was taking advantage of the kindly and loving people administering to the poor, such as he. And according to Sylvia Russell of the Vancouver Food Bank, they have no intention of expanding their base of operation to take up the slack left by the government, as was proposed by Premier Bennett when he cut back on government services.

9:06All this is in sharp contrast to the views of the old-time, long-term private groups in B.C. which have been on the scene for decades. Groups such as the Salvation Army, Harbor Light Center, the United Union Gospel Mission and the Sisters of Entombment Mission says a spokesman for the Union Gospel, quote, Our main purpose is to feed the hungry and spread the gospel. That's what Jesus Christ was all about. It doesn't depend upon what government does or does not do. But suppose needs are so high, even with the free enterprise system, unlikely as that will appear to most people, and with the government not causing any problems of the sort that I've mentioned. And even with an unstinting private, mainly religious, although non-religious, to effort. And suppose still that needs are unmet. Then we come to my principle, too, that we should have limited state welfare. We should have state welfare as a last resort, not as a first resort.

10:01And it should not be generous to a fault as it is now. It should be as little as possible consistent with maintaining adequate financial support, Otherwise, it retards incentives. One great example of the deleterious effects of Welfareism run amok occurs with the black family in the United States. And I'd like to read a few quotes about the black family from a commentator, William Tucker, on this problem. He says, quote, The facts about the black family are brutal. More than half of the black children born in the U.S. today are illegitimate. Most half of these are born to unwed teenage mothers. Every year, more black girls drop out of high school to have a baby than graduate from college.

10:48Over 50% of all black children are now being raised in single-parent households, meaning by unmarried black women. And he goes on and on making the case, which I don't think I have to make in this audience that the black family and the black situation is very bad. The welfare system makes an irresistible offer to every eligible female over the age of 16. It says George Gilder, who he's quoting, another expert in this free enterprise view on welfare. It says to every black female teenager, you may be poor, you may have family problems, you may be discouraged about your future, but if you have a baby right now, we will give you your own apartment, free medical care, food stamps and a regular income over the next 20 years. If you have another baby soon after, we will increase your allotment.

11:35How many black men, poor or affluent, can match that offer? How many teenage girls anywhere, black or white, poor or affluent, can afford their own apartment and pay for their own medical expenses at age 16? Of course, this is relevant to the United States, not so much to Canada, the medical expenses part. These teenage girls who drop out of school and have babies are not ignorant, they are not morally weak, and they are not sexually loose. They are simply rational human beings making the most intelligent choice of how to improve their economic condition. Skipping along here, black families are not really breaking up at all. Instead, black families are no longer forming. When women start families, they no longer look for a husband, they simply marry the state.

12:24Now he contends with the argument that the black family was always dissolute and weak. On the contrary, the black family was more than strong enough to survive the ordeal of slavery. There were cases of black men and women walking up and down the countryside after the Civil War, searching for wives, husbands or children from whom they had become separated during the chaos of the conflict. Advertisements for lost spouses and children were still appearing in black newspapers as late as the 1880s. This survival continued right through the 1930s. One study of ethnic groups in Boston in the early part of the century revealed that the rate of broken families among blacks was actually lower than among other ethnic groups, only about 10% at a time when illegitimacy in Irish families was running over 30%.

13:11Black social patterns were ruined only when liberals arrived on the scene in the 1930s with their aid to families with dependent children and other blandishments to let the state do for people what they aren't capable of doing for themselves. The tragedy occurred because blacks trusted the system. They didn't have the inherent suspicions to resist government assistance and avoid sympathetic bureaucrats like the plague, as many ethnic groups did then and still do today. No, the black family was more than strong enough to survive slavery. It was just not strong enough to survive the welfare state. Principle 3. Money welfare or welfare in money is vastly preferable to gifts in kind. Now, during the Bennett years, 82, 83, I forget the exact years, when he had all these cutbacks, there was a ewing cry from the welfare establishment with regard to the closing of the Janus Child Care Center, the Consumer Association of B.C., Planned Parenthood, Health Collective, Rape Relief, Rape Crisis Center, Family Places, Vancouver Transition House, Legal Aid, Postpartum Depression Center, the list goes on and on.

14:22It was contended that the people hurt by the closures were really the beneficiaries of the program, namely the poor. I contend just the very opposite. I contend that the people that were really hurt by this and the people that were protesting vociferously against this This were the white-collar, highly-educated, articulate new class led by Marxist leftist intellectuals. Let me give you a quote on this, which says that it's not the poor, it's this group that I was discussing. The poor are in the minority. This is a quote from Dwight Lee in an article, The Politics of Poverty. The poor are in the minority and less likely to vote than the more affluent citizens on a seldom organized into politically focused groups. It is unlikely, then, that the poor will be very effective in the competition for political influence.

15:12Indeed, if the poor had the skills and attributes that are necessary for effective political action, they would not be poor. So while the political demands of the poor will no doubt push in the direction of increasing the funding for poverty programs, the magnitude of this influence will be small. A more effectively organized and politically potent group with a vested interest in expanding government programs to aid the disadvantaged is made up of those whose employment depends upon these programs. These people include the several million people who are employed either directly by government welfare agencies or as private contractors and academic researchers assist in develop and advise these agencies. With the job security and income of these people tied to the funding of poverty and poverty related programs, they have a common and dominant interest in the continuation and expansion of this funding.

16:03When this focused interest is coupled with the relative ease with which people can organize for political action through their employee organizations, poverty professionals become much more effective at obtaining political funding for political poverty programs than the poor themselves. Let me give you an example, a survey that I've offered in talks of this nature. Take those services that were closed, that I mentioned, the Janus and the Rape Leaf and this and that and the other, post-partum depression. Assume that the total costs for this were umpteen million, and assume that the beneficiaries of this were several hundred people. And when we divide this on a per capita basis, assume that the cost per person served was ten thousand bucks.

16:54Now, we have two possible systems. The system as it was, namely the umpteen million for the several hundred people at the rate of $10,000 per person per year. Or we could just say to these poor people, hey, poor person, we'll give you 10,000 bucks. Do with it as you will. Buy a new hat, buy a car, buy a TV, a VCR, or you can spend it exactly as it has been spent in your behalf on the rape relief and the crisis and this and that and the other. Now, I ask you to estimate in your own mind what proportion of these monies would have been spent in these crisis centers. How many people think 80% or more would have been spent in that way? Nobody. How many people think more than half would have been spent that way?

17:42Nobody again. How many people think less than a quarter? Well, are you all holding out for between 25% and 50% or are you not with me or am I jibbering here? In most surveys of this sort, I think the honest answer is, you know, 5% or 10% or 15% or something. Which means then that in the eyes of the recipients, they only value a dollar given to them through the intermediation of people such as yourselves at the rate of 15 cents on the dollar. The point is to underscore this principle that I'm holding forth here that it's much more efficient to give people the money than to spend it in their behalf by offering them free services because they don't value those free services at the full value.

18:30It's only paternalism. It's only the view that we know better for these heathen, or whatever they are, that motivates a system such as exists. And it's the same thing with welfare on the international scale. I refer to foreign aid. Mainly what this does is it props up foreign dictators. The aphorism I like to leave people with is the three M's. M is in Mary. And they stand for Mercedes, monuments and machine guns, which is what a lot of this, or virtually all of this money goes for. We find that the people that are starving in the world are the ones that are receiving this government-to-government transfers of aid. We see the Ethiopian situation where they take this foreign aid, which doesn't go to those poor people in the little ads or the little girl who's starving.

19:19Marxist dictatorship, 20th anniversary celebration of Marxism in Ethiopia, new buildings in downtown capital city and not food for the poor. Whereas those countries that used to be very poor, such as Singapore, Hong Kong, South Korea, which went the free enterprise route, which even now they're considering going in the Soviet Union and China, those countries have elevated the welfare of their poor, namely underscoring the point that I made at the beginning, that what we're debating about here is not whether the poor should be helped, but what is the best means of doing so. So, to conclude, to answer a little bit more directly the question, what if any social services should public sector provide and or deliver?

20:09My answer is little or none. The classical liberal tradition, the tradition of Adam Smith and John Stuart Mill and David Hume, was that government was mainly for defense, judiciary, and when it tries to act in the public good, it actually worsens the situation of the people that it is acting in behalf of. The Fraser Institute would certainly advocate the government as a safety net of last resort, but not one of first resort, as is all too popular in this province and in this country. Thank you. Okay. You say we have ten minutes to deal with things, but we'll do that at the end, is that correct? Yes, we have twenty minutes of presentation.

20:54Okay. Well, I'll just all present my ideas first and then we'll come back, I guess, to have a discussion on different issues. Okay, I'll try to answer the same question, oddly enough, probably, just so that you understand where I'm coming from. I probably don't have too much difficulty, in some respects, with Walter Block's principle two and three. I'm not so sure about one. But the question, I guess, are the nuances and the criteria that one uses to apply two and three I'll try to make three arguments for why there should be collective provision of social services. I use the word collective rather than public for reasons I hope that will become clear. I think that there are three conditions under which collective provision of social services makes some sense.

21:42One, that is generally accepted by economists, although they dispute amongst themselves just exactly what that should be, would be when there's some sort of market failure. Two, on equity grounds, and those are the sorts of, I think, issues that social workers particularly appeal to, or appeal to social workers because there is a perception that to some degree the distribution of resources in a capitalist society in some ways are, for some people at least, inequitable and therefore have to be offset, and therefore equity criteria tend to be invoked. And the third, I think perhaps the most important one, the one that tends to be, I think, ignored the most, except, well, I shouldn't say ignored, but I think the one that perhaps is the most compelling, is that social services in some way tend to generate solidarity in a society and enhance the rights of citizenship.

22:34Now, in talking about that, I think one also has to keep in mind that when one talks about collective intervention, there are three forms of it. At the minimum level are forms of regulation, where either one is simply regulating the market itself to make sure that it operates within certain rules, and you get that for example to some extent in Europe, where a lot of the social services would be offered The Theory of Money and Credit

23:29The second form of intervention is the level of finance, which can either be in the form of cash transfers, as Walter was suggesting, or in relation to cost-sharing for services themselves, for example, child welfare, and the third, and the one that

24:29There are three reasons for this. One is that the market is, in a sense, more efficient because of competition and because the profit is an indication to both the producer of the services and the consumer of the services of the benefit that they're getting at a reasonable cost. Secondly, that there is a type of consumer sovereignty, namely that the consumer of that service drives the use of it and determines what amount of money he or she will allocate to it, as a consequence of that, that consumer not only maximizes his or her own welfare, but presumably the welfare of society as a whole, and perhaps most importantly, and Walter alluded to this at the very beginning, that the market is in a sense non-coercive, that people engage in the market in a form of voluntary exchange.

25:17Collective provision is inefficient, bureaucratically determined, it's a queuing process and coercive. Coming back then to the market, if there are market failures, one has to understand to some extent the limiting conditions under which the market operates itself. There's always the assumption that there are many suppliers, therefore you can't have a monopoly, otherwise the market would tend to break down, or you can't have major barriers to supply as you would in times of war and so forth and the market breaks down. Other than kind of things like that, there would be an assumption that there would be many suppliers and the potential for that. Secondly, that information is already available to the consumer because the assumption of a market, of course, is that people are intelligent when they make choices voluntarily and that they're not coerced. In order not to be coerced, they have to be rational the way they do it and have to have information available to them.

26:06Thirdly, that there are no externalities, that in fact the benefit is basically a private benefit, that when I buy an orange, I'm the basic beneficiary of the orange. and that when there are certain services where if I use that service I also benefit you or you in taking a service or not taking a service benefit or disbenefit me there's an externality in other words there's something shared between us that isn't captured so to speak by the voluntary exchange and therefore there might be some grounds for government intervention and that fourthly there's certainly about the type of service that's going to be used. Now do these limiting conditions in other words those are the kind of conditions

27:15For example, the question of externalities has tended to be used as an argument for public intervention and public health. Because public health is very important. Communicable diseases are not something you can contain between a buyer and a seller or between two people. That once I get vaccinated, I not only benefit myself but benefit others. Equally, if I don't get vaccinated, I disbenefit not only myself but others and so forth. are grounds then or assumptions that the market wouldn't necessarily be the best possible way of dealing with that issue and then some form of government intervention would be required. Equally, one can talk about consumer ignorance. One talks about health care. It is difficult, particularly in the health field, for the average person, co-patient, to be very clear about what information to make a kind of a rational judgment.

28:04One tends to be very dependent upon professional people, and professional people themselves, depending upon technology and so forth, so you get derivative kinds of information. Certainly in times of urgency, emergencies, that becomes even more the case, where you're not in the position to kind of shop around and decide where you're going to go, what's the most sensible place to do. and often times of course breakdowns in health and certainly before the age of 75 tend to be not terribly repetitive and therefore you don't get the kind of experience you would in the normal market so consumer ignorance is kind of an argument similarly the business of uncertainty in relation to health care the difficult to predict the degree and the duration of health care you might need so in terms of setting aside the amount of money do you need ten thousand or hundred thousand or whatever now sometimes the insurance is used One can make the same kind of argument in relation to child care in relation to the current debate, for example, in Canada.

29:22Now, generally, that kind of analysis, in the sense that we're looking at market failure, can be looked at a whole host of social services. If you wanted, you know, around the question of incompetence or consumer ignorance, I think, for example, one can think in terms of services for psychiatric patients or the developmentally handicapped would fall into that kind of approach. The business of conventional externalities, as I mentioned, that I think has a lot of bearing in terms of, say, anti-smoking laws or bylaws and so forth are increasingly being introduced because there is the understanding that whether you smoke and I don't and so forth, that I'm affected one way or the other, even if I don't. And the other issue, of course, is the business of donor preference, which has sometimes been recently argued.

30:08And things like child welfare and alcoholism and substance abuse, those are areas where donor preference does perhaps play a role in the sense that if I'm giving money, I not only want to give it in a way that it's going to be given in the form of cash, but that it will be directed in a particular way that if somebody's abusing a child, I don't want simply to have a cash transfer, knowing that they'll only use a proportion of that to deal with treatment for themselves. But in fact, I want that money to be used for the treatment of child abuse. Those kinds of issues in terms of market failure I think are also backed up by arguments of equity, the fairness, in other words, some sense that the market distribution that's out there is in some sense has to be corrected. And when one looks at it, the market failure might be an argument, so to speak, for some sort of collective provision, but not necessarily directly for public provision.

31:02Social Provisions, and I make a distinction there because one can talk about public administration, as I've mentioned, or one can talk about public funding of voluntary agencies, or one can simply talk about subsidizing private agencies, and we have all three, of course, in the social services, and they also have to deal with the questions of user charges. And those, I think, oftentimes tend to be argued more around equity grounds. And let me just give you a couple of examples in relation to public provision. If we want direct public provision or public administration of a social service, we tend to argue it on grounds of universality. The health care field is an example of that because there is a perception you want one class system, you want equal treatment for everybody, you want probably common high standards and you want to have universal accessibility. If you're arguing for public funds for voluntary agencies, as has been the case for example in the child care field, the equity principles tend to be a little different in the sense

31:55Equality is an argument that has been used so that men and women have equal chances and women are treated in the same way. And while you want high standards in child care, you don't necessarily want kind of uniform standards, isn't it, in the health care field, because there isn't that kind of scientific knowledge in the same way, and therefore a lot of cultural values influence the outcome, and therefore you want a little more diversity, and the voluntary sector usually can generate that. If you're going towards subsidized funds for commercial agencies or private sector, examples would be, I think, counseling or employment trading programs. Program. Very often here you're dealing with targeting or relatively small groups where there isn't the kind of infrastructure out there and where government might simply want to subsidize established organizations so that they can experiment with those things and see which is the most efficient way of operating them. User charges are difficult in principle to deal with, not in difficult in principle, difficult sometimes because you have to

33:00make a judgment on individual cases, but various arguments have been put as to when there should be user charges in social services. For example, Derek Hum has made the argument that generally the more a benefit is primarily a private benefit, in other words, to the extent that I benefit primarily myself and it doesn't have any externality, the more the charge makes sense. I would take examples of family and marriage counseling as coming close to that, because basically the beneficiaries are the partners to the relationship, although sometimes there will be offsetting benefits, on the other hand, the more a service is mandatory or intended to modify behavior, as for example child welfare or institutionalized child care and certainly the corrections field, the more likely public provision.

33:47Now, Michael Krasinski, whom some of you might know, has kind of made the argument for cash user charges in the face of inability, in other words, the greater the inability to use a certain level of income and the more difficult to measure exactly what amount of income people will need, the more likely to have a public provision and then for the lower the user charge as a kind of a general principle and I think it's one that makes some sense and he uses of course the disabled as an example of that where it's very difficult and very costly to determine on a case by case basis and one runs into those administrative costs that Mr. Block was referring to. So generally in terms of user charges there's the targeting for the most needy tends to be kind of a way of trying to deal with on equity grounds or if you're trying In terms of collective provision, equity principles and market failure are only two issues. The real important issue, of course, is around the nature of the society we want. There are two general views.

35:01The rationale for expansion stems in part from a distinction made by T. H. Marshall in the early post-war period between the rights of citizens and the right to freedom. The rationale for expansion stems in part from a distinction made by T.H. Marshall in the early post-war period between the rights of citizenship, where he talked about civil rights, like association, free speech and so forth, things we tend to take for granted and have evolved over a period of time, political rights, where there's universal suffrage, and social rights, which are the guarantees of basic minimum, education, health and so forth. And it's the latter, the concept of social rights, of course, that is the most contentious from The State is a threat to liberty and freedoms. It is undefineable. It is unlimited. It can expand like a snowball, grow and grow until it overtakes us. It is an indefinite growth of the State, therefore an indefinite growth of coercion.

36:17Secondly, there is, by implication, gradual infringement of freedom, because even if you have 80% of the people agreeing that there should be a health care system, it still is coercive for the other 20%. And the whole notion that there's a gradual infringement of freedom because of the extension of social rights is a very real one. By contrast, of course, as I indicated, the market is perceived as being a form of voluntary exchange. And those who prefer a minimalist government are certainly associated at base with civil rights and political rights that I think Mr. Block mentioned at the beginning. Although there are some recognition of social rights in a broad sense of the term, that people like Friedman and Hayek have made it clear that Friedman of course refers to his classic terms of mad men and children requiring some sort of state intervention.

37:08and that Hayek, who's much broader in his definition of recognizing that those who somehow are disserviced or disadvantaged by the market probably should have some sort of basic social security, although he doesn't necessarily mean the government itself should provide that, but that the state might have to intervene to assure that it happens. Now, the problem with the minimalist position, as I see it, is that this notion of voluntary exchange recurring the market is true,

38:06The State itself was both a determinant of, and in some respects, a maintainer of, of the market system. Historically, it certainly was involved with the creation of the market. It wasn't in any sense neutral, so the market didn't come about itself by voluntary exchanges. The Elizabethan Poor Laws were labor laws, primarily to help labor or force labor to be free, to move away from medieval and feudal customs and traditions.

38:58So you get a situation where, in fact, the state then became a determinant of the market and also, of course, is very important to its maintenance, even though there's no necessary consensus that the market itself should continue or prevail. Now, what's, however, more important from the positive point of view is that liberal democratic tradition involves two claims, okay? One is the maximization of individual preferences, which the market to some extent can realize. The other one is the maximization of uniquely human attributes, okay, what C. B. McPherson calls the developmental powers of people. Are there rational understanding? Two minutes? Rational understanding, moral action, aesthetic creation, and so forth. And one has to balance these two. And in order to create the capacities for people's developmental attributes to develop, there have to be a certain kind of basic minima.

39:50So, put another way, there is that distinction which people like Hayek don't like, of course, namely between the idea of some sort of formal equality under the law and some sort of distributional justice by which, in fact, we deal with the inequalities in society. Now, that debate goes back as far as Aristotle, so it certainly predates the development of the market itself. But the essential thing is the notion that the liberal democratic society, to remain to remain democratic and to remain liberal has to maintain a delicate balance between the individual preferences or what McPherson calls the extractive power out of the market and the developmental capacity of people, more kind of humanistic ends of the society in some sort of tension. In a sense, in a free society it seems to me the tension between the two is what's key.

40:38So that liberty then, from that perspective, from the McPherson perspective, from what I guess would be called the liberal perspective, implies that rational human beings can create social solidarity through things like the social services. That it doesn't simply presuppose that prior ethical harmony emanating from the market itself. Somehow the market will generate all these kind of nice things. That it really takes the conscious rational effort of human beings to do it. Secondly, that collective forms of action are not necessarily coercive, providing individuals are free to generate private services as alternatives. We see that in the school system, we see that in social services and so forth. That the just role of the state is not to provide relief from poverty, but to provide the conditions which keep the individuals away from falling into poverty.

41:30I would quite agree. Welfare is a loss of liberty. It's an enslavement. It was intended as enslavement, and there to be a period on. The just role, then, of the state is to assure minimum claims to general rights of property, and the notion that property is something which is not only individual, but it basically is a social creation of the state and of the society, and therefore all of us are entitled to some part in it as a basic minima. Social Services, therefore, and the able to be more able, help us to meet common needs, help us to foster community, and help us to foster individual security and independence. Well, let me say to begin with my rebuttal, it's not so much a rebuttal as a congratulation.

42:33My own coloring of social work, I guess, has been prejudiced or something beyond belief. It's usually my experience of social work professionals has been sort of do-gooders, you know, crying all over my shoulder, and that's about the end of their sophisticated intellectual argument. In very great contrast, I'm just delighted with Glenn's presentation. I think it was witty, articulate, it took into account very many important points and I'm just delighted to be part of this conference or seminar with him. Having said all these nice things and exhausted my niceness for the moment, let me try to differ with him on certain points.

43:28But again, it will be sort of, I think we really share the same goal of helping the poor. It's just that we see different means toward it. I don't see him as an enemy or anything like that, but as sort of a fellow traveler or fellow person seeking at the same goal. I think he's mistaken in some ways, but I am very much impressed with his statement. on the question of collective I resist the idea of saying that collective could be either private or public it seems that there's an equivocation here I'm much more comfortable with a tripart distinction it seems to make more sense to me one you have the the public and the other you have the private and under the private you can have two subcategories one is individual and one I would call them both private. I would claim both from my side.

44:26I am as much a socialist as anyone else is, as long as the socialism is of the voluntary collective nature, as in a kibbutz or a monastery or a how-to-write community. What I oppose on moral and practical grounds is not collectivism but coercivism. So if we have a voluntary collective of the sort that I've mentioned, I mean even the family is a voluntary collective. I'm very much in favor of that. Indeed, I see one of the main problems with the welfare state is ruining the family, which is a voluntary collective. So I reject the distinction or the way that he puts it, and I think that this has implications for other disagreements. Let's consider the question of externalities for a moment and the healthcare system.

45:16I distinguish, and most economists distinguish, between positive and negative externalities and I lack, or I find a lack of that distinction in Glenn's presentation. By negative externalities, I mean things like infecting people or raping them or murdering them, spillover effects that are negative. And I think that the case of communicable diseases is just that sort of an instance. There was recently a case here where two people had some disease. Anyone remember what it was? TB, and they refused to take treatment, and they said, well, you know, we're free, you know, let's go out and mix with the people. Well, in my way of looking at that, that's akin to murder.

46:03I mean, maybe not purposeful, maybe not first degree, but that's, you know, that's bad stuff. You just can't let people with TB running around loose infecting other people. The effect on them is as if you took a knife to them and plunged it in. I think a sharp distinction has to be made between such negative externalities and positive ones. Unfortunately, in the case of negative externalities, I personally favor the death penalty as a means of reducing some of these things. Instead of this parole system where people just go off and kill other people, I think it's a shame and a disgrace what's going on with negative externalities and certainly with child abuse. It seems that a lot of the social work answer to child abuse is giving them more of a subsidy, whereas to my way of thinking, very severe penalties should be visited on people who abuse children.

46:50These are negative externalities. Now, in case of positive externalities, I think you can justify government intervention in any area. Food, clothing and shelter all have positive externalities. If I use soap, it benefits you. If you learn something, it benefits me. So if you're going to use that as a justification for government action, we'll have the system of which the Soviets are now trying to wrestle their way out from under. A system which has meant death for millions of people, and to not go in accordance with the points presented, to skip now to the third point, and I'll skip back. Glenn says that harmony is created from this kind of a situation. To me, that's the exact opposite of the truth.

47:38You've had millions of people killed in the Soviet and Chinese experiment with coercive collectivism. In the third world, before foreign aid, it's relatively peaceful. Once the foreign aid comes, you get tribalism, where the tribes start murdering each other and having genocidal operations, mainly to get those foreign aid bucks, which isn't much from a Canadian context, but in their context, this is, you know, monuments, Mercedes and machine guns are worth fighting over and you've got millions of people killed over that. And even in our western democratic liberal societies, I think these are forces for disharmony, not harmony. Now with regard to the healthcare system, I think that socialized medicine, that is coercively socialized medicine, like rent control, it takes decades for the problems to come about.

48:24We don't yet see the problems in Canada, but in Great Britain where they've had socialized medicine a lot longer than we've had, they've got this triage stuff where people over 55 just can't get operations for love or money or anything else because they're triaged out of it. You've got situations where unions are now stipulating in their employment contracts, and unions are among the most ideologically susceptible to this argument, they're now stipulating that they want private services because the public services have become unraveled. It just makes no economic sense to do this. Suppose we had the same system we have for socialized medicine, only we did it for milk. Milk is important, milk for babies. What this would mean would be we'd collect money from everybody for milk, extra taxes, and then we'd say, well, now you can have all the milk you wanted for free, no user charges.

49:19Well, kids, instead of having water gun fights, would start having milk gun fights, or people would take baths in milk instead of in water. They'd waste it. They would treat it at a zero price, as is rational economically for them to do so. Well, that's what's happening, and more so with Great Britain. What people do is they waste these services, and then when they really want an important service, they have to go down to the United States, because they have to be on a three-year waiting period here in Canada. Well, in Great Britain, it's more than three years, so the system is very inefficient. It boomerangs against the well-intentioned who are trying to help the poor. In terms of ignorance, we're all ignorant about auto repair. I mean, the thing breaks and we go to an auto mechanic, we don't know what's under that hood.

50:04Well, according to the argument put forth here, we should nationalize these things. I mean, anything about which there's ignorance of, we have to have the government do. But this is a contradiction, because under democratic ethic, we're assuming that people are smart enough to vote. Well, if they're so bloody stupid they can't pick a doctor or they can't pick a mechanic, how are they going to pick a prime minister? I think that this argument reeks of paternalism. And certainly, uncertainty is the same kind of an argument. I mean, oil wells are uncertain, Broadway shows are uncertain, everything is uncertain. Well, if anything that's uncertain should be providence of government, well, we're back to government doing everything. With smoking, there is such a thing called internalization of externalities, which Glenn seems not to be fully cognizant of.

50:52This is the idea that the marketplace can internalize the externalities through property rights. For example, take restaurants. Some restaurants in a free society would allow smoking anywhere. Other restaurants, maybe natural foods restaurants, would prohibit it. And third ones would have smoking sections or smoking times or smoking days or whatever. And in that way, people would sort themselves out, and no one would have to sit idly by while someone else smoked in his presence if he didn't want to, because he wouldn't go to that kind of a restaurant. Instead, we have a government which has one rule for everybody, and it just violates the liberty of people to smoke, which is our new minority. In terms of employment equity, the Fraser Institute has done two books. One was an attack on the Abela Royal Commission report on this.

51:40And the finding here is that the reason we have the female male income ratio of some 65% has got nothing to do with employer discrimination. Rather, and this is to summarize a vast amount of research, it has to do with the institution of marriage. Marriage enhances male income and reduces female income. such that when you take people who have never been married, you aren't able to find any wage gap virtually at all. In terms of what kind of society we want, and Friedman and Hayek and Nozick and people in the minimalist tradition, I'm delighted that Glenn is aware of this and is making coherent, rational objections to this. Actually, I had a big debate with Friedman on the very point, and I took the point that Glenn took, and I'll be sending him a book there to show him that he and I are on the same side of that one.

52:32It has to do with his point of the prior distribution of income and property and with that point I fully agree with him. Okay. I just want to go back to some of the initial comments made by Walter at the beginning. First of all, in terms of government creating poverty, he made references to unemployment insurance And the argument there, I'm sure you're aware of, is the notion that, or also the minimum wage, I should say, particularly in unemployment insurance, I guess, is part of that, particularly the minimum wage, the notion as you move the wage up, then you tend to create unemployment because it has a disincentive effect for people to invest in other kinds of things if the wage rates are beyond that, which they can legitimately produce a service. And the studies that have been done primarily in North America tend to substantiate that on the margin. And one can argue higher that you have to tolerate that to some extent and compensate

53:24for it or you can look at other societies where they don't seem to have had the problem to the same extent in Sweden with for example a much higher minimum wages than we have and also much lower unemployment than we have one of the reasons why that kind of negative effect hasn't occurred is because of other structures in society particularly the business of wage negotiations which tend to be tied to productivity levels and so forth so that while it is in part true I think that government programs

54:24Transfers going to the rich, that of course is true. Some government transfers, for example, family allowance even, tends to be a transfer not between rich and poor, but between men and women. Or other transfers are intergenerational. They're between working people and non-working people who are retired and so forth. And therefore, again, they're not intentional, the transfers from the rich to the poor. Transfers to business, I was just kind of looking at the data, as a matter of fact, and it is true that there has been an increase, so I was struck, however, that the actual increase of transfers to business has been much greater with the provincial governments than it has been with the federal government in recent years, but that is a factor and certainly the debate and the people in the social policy area has been a concern about the growth of that and some attempt to rationalize it. Cost administration is higher in the public sector, kind of a and Assumption. Well, it may or may not be. Michael Mendelssohn and Walter knows

55:21and studies in this were some public sector programs are very high costs administratively, others are relatively low cost. In any case, I'm not convinced frankly that public administration has to be a simple part of what I still call collective provision. I'll explain myself in a moment. But the issue here, it seems to me in fact, is whether government provides regulation and funding, whether it's directly administered by government or administered by voluntary

56:17100. It will astonish you. 100 people for the whole country. That's there. He says, we can see our minister every day. No wonder, with 100 people, that they can see their minister every day. But it's because, in fact, administration of social service is not a responsibility directly of government in Sweden. So that, in fact, one can offset that, and if one is really concerned about cutting administrative costs and so forth, there are ways, it seems to me, in which public funding can allocate that to deal with that. But it isn't necessarily The welfare system in the United States is disastrous. The welfare system in Europe, in Sweden, is disastrous, okay? The reason why the Swedes basically minimize their welfare system is because they know welfare, once people get there, tend to be at the bottom, okay? And very, very difficult for them to get out. And that's a common experience in the United States.

57:05The reason why they minimize their welfare system is because they know welfare, once people get there, tend to be at the bottom, and very, very difficult for them to get out, and that's a common experience in most countries. Frank, it's also a common experience in the Soviet Union and other countries. The issue then is really where you have other programs to prevent that from happening. I was struck, for example, when I did some work on employment training for single parents, mostly women, that when I looked at the system here, as you well know, up to about 50% of single women over a period of time, not at any given point in time, it's only about 30% will be on welfare. In Sweden, it's less than 10% ever get on welfare because they have a whole set of programs that prevent that from happening. Collective versus public.

57:50I mean, I agree conceptually with the distinction that Walter is making, if one simply associates collective with voluntary. I was using the word collective in the sense that I think in a democratic society, a liberal democratic society, There is a process of collective decision-making that comes about, that does involve an element of coercion, I don't think there's any question of that, and that I was using a collective as to distinguish that from public administration where government itself, and maybe a better distinction, is government administration versus public provision. I'll time up? Oh, okay. Harmony. That's an interesting one because he made the example reference to the kind of coercive pressures within the USSR. Interestingly enough, the USSR collective provisions of social services are in some respects, and maybe that's the point he's making, not very different from capitalist societies, even though I don't think capitalist societies set out to model themselves after the USSR. But I don't think there's necessary correlation between collective revision of social services and Stalinist death camps.

58:53In fact, we have quite a few deaths taking place in relatively free capitalist societies throughout the world that would not be accused of having the same kind of collectivist mentality of the Soviet Union. And I think that if one takes either South Africa or certainly the many countries in South America, their records are not exactly idyllic in these areas. Well, I don't have the comparative data of death rates between the various countries. I suspect they're relatively high in both areas. The point being that harmony and other things come about not simply because of the market, per se, or the lack of a market, but because of a whole set of values in society that treasure liberal democratic traditions. And that's my very point that I was trying to make at the end of my presentation, is that's a delicate balance between the maximization of individual preferences and the Maximization of Human Attributes, Other Humanistic Attributes.

59:46A reference was made to the UK. I agree, it's a bad healthcare system. I've experienced it. I've lived with it. I know the system there. I know the system here. As a matter of fact, it wasn't one of the first set up. Others were set up in Europe that I think were historically provided precedence. The British typically were stubborn minded, didn't follow the Europeans, and set up their own kind of centrally administrative system, Which for a while worked, but I don't think we have to go to the UK to see where we'll go down the road. The Europeans have had some of their systems established long before the British, still are established, still seem to be doing quite well, and I think relatively speaking represent better models. I think frankly even the Canadian model represents a much better model than the UK. And equally, when one goes to the US, it might be true that one can run down to a Texas clinic if one has dough,

1:00:32or one can depend upon a healthcare system here to pay for it, But it's a good number of people, let me tell you, in the United States, and I'm sure Walter knows that, who would have no chance of queuing up anywhere in Texas, except in the welfare goal. And the issue, I think, around the child care and employment equity, yes, I wasn't trying to make simply the argument that child care will deal with all employment equity problems and that any discrimination is simply due to the lack of child care or other things. Murray Gunderson's book that I'm sure you're familiar with has tried to discriminate, using regression analysis, the amount of, you know, in terms of the average differential between rage, race of men and women, how much of it is directly due to discrimination, how much due to other factors, and has broken that down, so I'm aware of that, but even Gunderson tends to argue that at least child care provides, and he has provided some statistical evidence for that, some advantage to women to give them a choices in the first place, and secondly then to be treated roughly equal

1:01:31to men in terms of the way they benefit from government. Now, this would be not an example that Walter would necessarily accept, but one of the realities example is that males get a lot more employment relief out of the tax system than women. And women are simply saying, that might be bad or good, but let's have it as equal. So whether you like it or whether you don't, there's plenty to argue for equity on those grounds as well. I'll just talk to him. Thank you both very much. Now we go up to the floor. I'm sure you'll just be here to hear a few questions. And that's primarily what we're after, is questions. So I'm going to stand here and recognize the fans. And if I don't know your name, please give me a name, and if there's a word of explanation, If you are going to give a statement of your position, a response to either Glenn or Walter, Then I'm going to limit you to three minutes, okay, but you have unlimited access by question.

1:02:52Also, if you address your question to one and the other wishes to respond, they're free to do that, of course. So, who's going to go first? I was just saying, I'll answer both sides, since you're here.

1:03:14Yes? My name is Betty Kaelin, and I'm a social worker at the Ministry of Social Services and Housing. And I just want to comment on Walter's statement that government is always the first resort instead of the last. And I just agree with that, because usually when we do get clients come in too, is we are the last resort in terms of inconsistence. They have exhausted all their other resources before they come to us. And it's all, it's due to being human, I mean, you have set the price, et cetera, and you don't, you know, you don't come begging until you're really desperate. Well, I have no reason to disagree with that, but I think we're speaking on slightly different points. I have no reason to disagree that many people, ... individuals who need help would first seek other places and then only later go to government, although some might seek it first.

1:04:09I was addressing my point to a slightly different issue, namely as a philosophy or as a public policy. How much of a role do we see for government? Is it minimal and as a last resort, or is it larger and larger and as a first resort? The First Resort Now, some of the people who I read quotes of, the Vancouver Food Bank, people like that, when Premier Bennett cut back government services and said, well, he hopes that the private sector will take up the slack, and by private sector he meant collective sectors such as food banks, and they were saying, not on your life, if I could paraphrase that, that this is the responsibility of government. What they were in effect saying is that government should be the first resort, the first and is an only resort, and that we shouldn't have a Vancouver Food Bank financed by voluntary contributions.

1:05:01And that was what I was opposing, that philosophy. So I don't think that that's incompatible with your correct acknowledgement of the fact that some people will have pride and not go to government until all other avenues are exhausted. Are you not concerned about the stigmatization that goes along with forcing people to go around looking for charity, rather than having a system whereby when you have a legitimate need, you are entitled to help?

1:05:48And that's one of the problems that I have with universality, that there is no stigma. I think that if people say, well, you know, I've got a problem, I'll just go get money forcibly taken from other people through the tax system, and everyone starts doing this. You know, it's sort of like that little red hen who said, well, I'm going to, first I'm going to sow the wheat or plant the wheat. Any of you other farm animals want to do it? No, forget it. Now I'm going to bake. Anyone want to help me bake? No. Well, a system like that, everyone is going to be stent, or not everyone, but the incentives will be for people to put their hands out like this for relief instead of to roll up their sleeves and go and produce. I think that's one of the problems. One of the problems and one of the benefits of the private sector, private collective sector vis-a-vis the government sector, is that it doesn't give people a fish, it gives them a fishing rod, or the wherewithal, and says go out and fish, or go thou and fish, if I can put it in biblical terms.

1:06:50So I think that this stigma is a positive, not a negative, for the goal that we presumably both share, namely the betterment of people. Let me ask you this, suppose you were dying and you had a young child, age five or something, would you want to leave him in the hands of a system where you knew he'd have enough food and clothing and shelter, but there'd be a diminution of his incentive to produce for himself, or would you rather some other system where there were more, sometimes more difficulties, more challenges, I know that I would entrust my children more to a system, a productive system of that sort than to this welfare state where welfare is the first, last, and only alternative for everyone, and everyone is encouraged to get that by lack of stigma.

1:07:47Since Walter corrected me conceptually, I want to correct him conceptually. I think that it is important to make a distinction between stigma and deterrents, and the way you describe that, I would take it that you are concerned about certain deterrents, so that because of the zero cost associated with a lot of public services, there have to be kind of very clear about who gets, who doesn't and so forth, and if there are costs attached

1:08:46not only with disincentives to people but the putting down of people. It is a psychological notion which implies that people are demeaned in some fashion. So that it's much more than a deterrent. It is psychologically a form of alienation. And I think that there is a legitimate distinction being made between those two. Having said that, I think one can also argue that there are various forms... There are various forms, and maybe having said that, I'll give you an example, I think, of something where there is a stigma, well, to put it the other way around, that programs can create deterrence without being necessarily stigmatizing. If one looks at welfare, it is both certainly a deterrent in the sense that people are discouraged for a whole host of reasons from using it, not only administratively and mechanically through the administrative process, but through the values of society.

1:09:40and the other is once they get into that system of how they are put down so that once they're in it for any length of time, it's incredibly difficult for them to get the self-confidence to get out of it. That's the stigmatizing process for me. GINs, the guaranteed income supplement, is a good example where I think there's a clear deterrence in the sense that it's very clear that certain people are eligible, certain aren't, so that it is income tested It is related to people who presumably have some sort of perceived income need, but I don't think on the whole GIS by the average elderly person is perceived as stigmatizing. So I just think that's worthwhile keeping in mind. It's interesting also that when one talks about social programs, and maybe this is not really tied to stigma and deterrence, but it is an issue that, once you've made it, I've forgotten the point.

1:10:31Well, anyway, I'll raise it my own way, maybe you'll respond to it, is that one has to be very clear about when there should be public provision, what form it should take, and so forth. In other words, I wasn't simply saying carte blanche, there should be a range of everything. That one has to ration, very rational in terms of what should be provided through the public sector. Education is a good example of a universal service that most of us have benefited from in some respects,

1:11:27and what you get in the system and that's of course where the private sector would discriminate because it would tend to respond to certain demands and neglect others or allow other organizations to develop those services to accommodate those demands. But in the educational system we have basically a multi-disciplinary, multi-family problem kind of social service, the worst kind of system development. So to me it is a good example of where lack of clarity and lack of focus as to what a service should be, how it should be funded and so forth, where you can get deterioration in the public sector. I'd like to make two points. One on this topic that this person mentioned, another on a point that Glenn mentioned, with regard to South Africa and deaths in South Africa.

1:12:15One way economists tell where there are deaths and where there aren't and where the benefits and where the losses are is people voting with their feet. We think that this is a lot more credible than statistics that are put out by UN or other groups such as that. The blatant fact in the South African situation is the immigration and emigration of blacks. There is no emigration of blacks from South Africa, horrendous though that system might be. On the contrary, there is emigration of blacks from the surrounding countries into South Africa. This is in sharp contrast to, say, East and West Germany, where the emigration is virtually all Western.

1:13:01I mean, it's sort of ludicrous. It's almost as if saying that the Jews were trying to get into Nazi Germany. They were trying to get out, and from the fact that they were voting with their feet to get out, we deduced that things weren't so great. Well, in the South African situation, I mean, take the Soviet situation, they're trying to get out. Nobody's, you know, queuing up to get into the Soviet Union. They're queuing up to get into South Africa. Blacks, that is. With regard to the stigma versus deterrence, I guess I'm in favor of both. There are certain communities, ethnic communities, Hungarians, Jews, Albanians, Polish people, for whom welfare is an out and out disgrace. You get welfare, you're a disgrace. It's a disgrace to the individual and it's a disgrace to the community.

1:13:47And those communities are growing in vibrant and vital, compared to the blacks and other groups where we have this welfare rights philosophy and they're in disarray. It's pathetic what's happening to these people that depend on welfare and welfare rights and have that philosophy. Take the experience of the Chinese boat people, immigrants, Vietnamese, that come to this country and the parents work, you know, 92 hours a day and they put their kids through school and their kids are working too and when they're not working they've got a book open behind the counter. Now that, I think, is the kind of a situation I would want my kid to be in, if I died and had to leave him to someone I'd like to leave him to a Vietnamese family that was working like that, and not to a family or a society or a subgroup that had this welfare rights philosophy and said, well, you know, it's our right, we've got to have welfare and, you know, let's have more welfare. I want a stigma. It's a disgrace in the Chinese or these ethnic communities to have welfare, and that's very vital for the well-being of those people.

1:14:53I think there are two things. One is talking about welfare rights. One of the reasons why I think we, way back in the 30s, decided not to go the welfare route the way the Americans did, they went the work route. They said what you need in a society is the right to work. That's the first right that people should have, and they made that a condition there for their public policies. That's influenced, I think, the direction that they've taken. The second is, I honestly, I don't have the data, and maybe Walter does, but I honestly doubt that there's much difference in terms of elderly Jews, elderly Hungarians, and elderly, well we don't have a large black population in Canada, but the other amorphous group presumably, in terms of the uptake of GIS. And that would be an example I was trying to make, that it really depends. The welfare system is structured and in North America it's modeled itself after Britain, the Americans basically modeled itself after Britain.

1:15:48Generally in this area, as in the healthcare system, it's lousy. We haven't been raised to that. The question is how to change it. But in fact, that has not been the experience, the European experience. Any questions? Yes, I wanted to address a question to Walter. The last year or so in banking, there's been a fair amount of publicity and concern about hungry children in schools. And that led the Bank for School Board to try and establish a practice program for the school. It needed the cooperation of the city of Vancouver. I think if I'm not today, the city turned it down once.

1:16:33I'm not sure it's turned down again. At the time that that was being debated and discussed in some public forum, The Ministry of Social Services and the Minister for Collaboration has steadfastly refused the public knowledge to go to such a program and stated that social workers would be assigned to interview individual children from families where there was everyday life in schools to determine if there was a need to provide assistance. Given that there's a couple of different points of view, the minister taking one direction, the Vancouver School Board taking another, presumably the city of Vancouver will take another.

1:17:23I wonder if you'd like to comment on, say, what the view, what your view would be, what the view of Fraser Institute would be, since emerging social issue and they obviously seem to have fairly broad concern in the public model.

1:18:30And that's the way it's been in my family and I'm sure in your family and in every family which is not in disarray. The kids come first. And for a parent to take money and spend it on whatever and not to feed the kid is just an instance of child abuse. And what should be done? This is a negative. It's worse than raping an adult. I mean, these are kids. These are helpless kids. So, in a situation of sort of respecting the autonomy of the family versus the intervention of the state, In fact, this kind of situation would stand for greater intervention of the state.

1:19:53Are you not aware that foster care is a very separate system to keeping families together and providing services that will increase their parenting skills?

1:20:23Let alone forming and then being undermined. Yes, foster care has got problems too, but we're talking about actual cases of child abuse. I mean, starving a child is child abuse. It might not be putting a cigarette out into the child's skin, but starving a child, if it occurs, is certainly a very abusive thing. And I would certainly favor anything but that, practically anything but that. I mean, I suppose there are worse things than that, but you'd have to go pretty far. Thank you, God, I have worked as a social worker, such as at St. Helens, and I've had about 14 years of experience from a problem which has been with rejection cases, and most of them have been on inconsistence, and I've been to their homes, and I'm wondering whether you're aware of any amount of money we're talking about when we're talking about family and inconsistence, and I have consistently challenged musicians that I can to give and leave a breakdown without it, and leave, and we can't do it, the money can be there.

1:21:40Well, they must take money from us every time we visit, because I have seen them, and I wonder how often other religious does.

1:21:54George Stigler, Nobel Prize-winning economist and a buddy of Friedman and Hayek and Matt Ilk

1:22:24The point he was making is that if you're just talking basic nutrition and keeping body and soul together, it's very, very, very, very cheap. And what we're talking about here is not nutritional food requirements. What we're talking about is, I don't know, choice in food and preparation and fancy sauces What do you mean by costless?

1:23:22The amount of money given to welfare is so high that it is competitive with low-wage employment. People who are on the margin of accepting low-wage employment, on the one hand, which would lead them out of the poverty trap, and on the other hand taking what really is 40 hours a week of leisure and staying in the poverty trap, are tempted. Even, as Glenn said, elderly Jews and Hungarians also, there's a bit of family disarray there. Why should the Jewish family, say, give money to grandma when the state will give money to grandma? So you have the rise of nursing homes, whereas in a bygone era grandma would have got the back bedroom or something and been with the kids.

1:24:10There would have been more of this extended family. So, this is pernicious. I mean, I don't think the Jewish community is anywhere near the disarray of the black community. But even in a strong community such as that, there are great dangers. Yeah, I just, you know, the difficulty with the welfare, I mean, there are two or three comments here I guess I'd like to make. A general comment about the welfare field is that the nice part about the welfare field, that whatever our biases or views are, we can state them, because there's so little research that's systematically or empirically based, that it's hard to either substantiate or the opposite any judgement made. The second about the welfare field, I think that one has to note, is that it isn't a homogeneous whole.

1:24:58Okay, in fact, when we talk about welfare, we're talking about a whole range of people, all the way from, in fact, the kind of classic welfare syndrome person who represents, I think, a minority, in fact, I'm sure represents a minority, because the studies that have been done tend to point that out, to a whole range of people, the single parents, the young employables, etc. And you know the categories, I don't have to go into that. I guess there are about 18 categories in the welfare field. So that one, I think, has to disaggregate that and seriously study it if one wants to know what incentives work, what incentives don't, what are the behavior patterns and so forth. The third is that the studies, as limited as they are, that have been done, for example, we always get the, almost predictably, before any elections or in this province, the whole problem of welfare fraud.

1:25:43Okay, every study that's been done in this province or anywhere else always shows that the amount of welfare fraud portion is very, very small. And yet it's a favorite of politicians and it comes out every time. One doesn't talk about tax fraud, which probably in terms of the millions of dollars lost to the government is much more important, but certainly one tells about welfare fraud. It's kind of like the old argument, Raymond Aaron, if you remember the United States, when they had the great debates in the United States about the billion dollars that were going in terms of public housing subsidies, which Hoover Institute and others were somewhat major contributors, until Aaron pointed out in fact something like eight billion dollars of subsidies were going to the middle class in terms of housing subsidies. Nobody talked about the eight billion, but they certainly talked about the one billion for the public sector which was going directly to the public sector so you get this phenomenon it seems to me in terms of the welfare sector which I think

1:26:29really if one wants to be serious about it the Fraser Institute and other groups have to do serious studies and really let's get the facts at least the the interesting feature is that some of you probably know the province of Ontario is coming out with a study which will be out I've actually seen the draft which will be out in September it's actually ready but won't be released until The Theory of Money and Credit

1:27:18The reality is that that's rational, but I'm always surprised when one looks at the studies how a few people in fact do it, and therefore that one gets these kinds of assessments all the time, this is happening, and I don't doubt on the margin it is happening, but again one has no sense of the magnitude of these things, and therefore I just kind of make a pitch for in the welfare area, backing up our debate, because it's one area that everybody loves to debate, everybody has opinions about, but it's the one area in public policy which is least substantiated by any serious study. I was just wondering if you realized that a lot of the money that people are going to get goes towards their housing costs, that it does send into the money that they're allowed for their food costs. It's not the fact that they spend money on other things, it's the fact that it's going out of their budget by costs that they cannot control,

1:28:03such as housing, which takes up a very large chunk of welfare versus money.

1:28:18and the government has enacted several bits of very pernicious legislation which escalate land costs. For example, we have zoning, we have the agricultural land reserve which takes land out of the area of development for people which would lower the prices of housing and puts it into vegetables or something. And the economics of it is that the market, that is the people, have valued this agricultural land at some 10,000 an acre for real top growing land. And some of this land could sell for a million bucks an acre for development, which shows the great disparity, which shows the almost criminal misallocation of resources.

1:29:10The people in the Fraser Valley or in Vancouver or the lower mainland are crying out in effect for more land because the housing costs are very high, as you put your finger on quite correctly, and yet the government in its other role is acting in a way to make it impossible for the land to be sold at a much more reasonable price, at which case the housing costs would be much lower. I wanted to reply to this point about the lack of research. I imagine you're all familiar with Charles Murray's book, Losing Ground, where he documents an awful lot of the points that I've been making. And I just can't resist getting into the minimum wage very briefly.

1:29:57When Van der Zand came in as premier, he publicly mused that he might get rid of the minimum wage law, that is, just repeal it instead. And in the event, what he did is he raised it from, I think it was $3.50 and now it's $4. And this has had a very deleterious effect on the unemployment rates of teenagers and unskilled persons whose unemployment rate is two to three times higher than the adult minimum wage law. Now, I'm not familiar with the Swedish minimum wage case, but I know from all the research on the minimum wage that it is a cause of unemployment of the least and the last and the lost among us. It's a mislabeled law. It should be called the unskilled unemployment law.

1:30:48Because what it does is it prices people out of the market. It prices unskilled workers out of the market. and it does so at the behest of unions because unions are collectives of very skilled workers are always competing with unskilled workers and the best way to get rid of your competition is to price them out of the market. It's too gruff to have to beat them up off with sticks and call them scabs and stuff like that. It's much easier, it's much cleaner, it's much more white-collarish to go to Victoria and get the minimum wage law raised which just un-employs teenagers and

1:31:54I just need to point out that in terms of dollars that are available to poor people, Your entire shelter cost, which is food, rent, hydro, telephone, probably cable vision, is $412 for a month or two people.

1:32:41$412, and I don't know anywhere that anybody has been able to do that, to get that kind of cut over the last three, four, five years. The cost of rent for the most mean of Basin or room is... Yes, but I think it's a correct analysis, but it's superficial because it ignores why is it that the cost is so high. The governments are now planning to more fully uphold the zoning laws, which would kick people out of basements and raise shelter prices. They follow zoning laws, they follow the agricultural land reserve, all of these. So again, this is the point I'm making. On the one hand, the government is raising the cost of housing.

1:33:31And on the other hand, people are saying, well, you know, the cost of housing is so high, government needs to do more. Yes, your darn tootin' government needs to do more, not to give people more money for shelter costs, but to stop raising shelter costs in the first place. What kind of a sensible program is one that allows government to raise the price of housing and then to come to the rescue with money to help people with housing? Wouldn't it be more sensible if they stopped causing the problem in the first place? And is it sensible that they keep raising the amount of money that's given to people to people which has these very negative impacts on family formation and incentives. Now look, we all share the same goal of helping people who are needy, who are impoverished, who are poor.

1:34:20Is this the way to help them, to have a system where government first hurts them and then hurts them again by giving them money ostensibly to help them? No. A much more sensible, coherent system is to rely to a much greater degree on private health and then to get the government off the backs of the poor in the first place to stop grinding them down. Now you people are ignoring all the instances where the government grinds down the poor, keeps them down, gets on their back, impoverishes them. You're accepting this as given, that somehow it's part of the free market, it's market failure or whatever, that we should have this poverty. And then you're saying, well, only the government can help them. But government is the cause of the problem in the first place. You say these things with such certainty, so that you're really pretty intimidating in the way you present your argument.

1:35:12And I don't know of any evidence that coding laws regarding housing, for example, or the lack of controls that you propose with lower rents, it makes no common sense to me. Now, I don't have any data, and I can't speak to the certainty you do, but I find you a most intimidating person. Oh, I'm sorry. If you could write down the line, which you stand for, I oppose. I didn't mean to be intimidating. I suppose I was being enthusiastic. But intimidating, if I did that, I'm sorry. Let me just, can I answer this very briefly? Just on the common sense, supply and demand, I suppose that's economists' common sense.

1:35:59The more supply there is of something, the lower the price, the less supply of something, the higher the price. Well, what is the effect of the agricultural land reserve and zoning on the supply of land and availability of housing? Are ecological issues known? where you have buildings all over the place. Well, ecological... Building developer, they need a power that we shouldn't bow down to. Well, I don't think we should bow down to the building developer. I think we should bow down to the people that these two ladies were talking about who are suffering under the burden of high housing costs. Yes, if we had more housing scattered around... You see, now, you're getting off on a different question. You said that there's no common sense in my assertions. I'm just all intimidation.

1:36:47Well, my point is that there is common sense. There's a strong core of common sense, namely that any law that prohibits or repeals or reduces the amount of land or housing coming onto the market will raise the price. I give you examples of laws that do this. And then you say, well, how about ecological problems? Well, if you want to address ecological problems exhaustively carefully, we need a long time. And I'm being given signals here that I have no time. So how can I address the... I mean, I'll come back and I'll give you a half hour lecture on ecological problems sometimes, but I think it's unfair to say that there's no common sense, and then when I give you the common sense, you say, well, how about this? We haven't even discussed ecology. Okay. Is there anyone out there who's familiar with the news report this morning about Ontario's legislation to ensure 25% of the market goes to low-income, accessible housing?

1:37:43I can't speak, but I'd sure like to have a point for that. Is anyone familiar with that? It's very relevant to this discussion. Okay, Tim, you were next. My name is Tim Bethel. I'm with the staff training for the Ministry. My experience in the field is dealing with the NUSAR organization, which was set up as a poverty research movement and was funded publicly. I have a question to both of you. You both seem supportive of private agencies in terms of distributing such funds as may be available. My comment on that is that private agencies are essentially anti-credit.

1:38:35I have no control as a voter or a member of a society over what some of the private agencies do and some of the private agencies are philosophically, fundamentally opposed to what we do. Everybody's familiar with people coming in to a food bank and before they can get their bowl of soup they must call out on the news and pay somebody. The other comment in terms of budget agencies is that the power groups in another sense will control the budget agencies and set the goals, and that is essentially the leadership of the anti-democrats.

1:39:29Well, I wanted to deal with, if I can, with your comment and also, I guess, around the earlier discussion in terms of private agencies. I mean, I don't inherently, I guess, share your judgment on private agencies per se. I think I'm not sure I would necessarily agree with the position taken by Walter because I'm not sure exactly what his position would be. Well, I'm pretty sure what his position would be in that. My point being that, in fact, one cannot simply kind of say that government subsidies of private agencies is necessarily bad. One has to be careful in terms of what goals you're trying to achieve as to whether it's appropriate to have public administration, voluntary organizations or use of private agencies or whatever.

1:40:18Private agencies will always have their... Private being commercial, by the way, is what I mean by private. Pardon? See, private agencies will always have their own goals. For instance, the church is always, their primary goal is not to assist the poor, but to recruit, to recruit, and to enlighten, you know, the Pakistanis. Oh, I see, I see, I see. And just give us an example of an agency that's widespread throughout. Okay, you're using private as encompassing basically partisan groups and other things. Yeah, in that case, obviously one has to be somewhat careful. I think that if you're talking about government subsidies of a range of religious organizations whose ostensible purpose is to proselytize, but whose more informal purpose is to take care of children or whatever, I think that one has to scrutinize very closely government subsidies at that kind of thing.

1:41:15When I was talking about private agencies, I was talking more about the commercial agencies, the for-profit sector, and making a distinction between them and non-profit groups. But in that sense, anybody that's in the business of running a private agency is in the business of making a profit from a private agency. I personally don't see that in the sense that profit after all is some measure of efficiency. I think that you can't ignore the fact that profit is a way of trying to measure what the efficiency is of the service provided.

1:42:03People won't necessarily make a problem. Let's take child care, because I think one can be more precise if one uses an example. We know that in the United States, for example, there are large chains of child care. Most Canadians, including myself, wouldn't be terribly happy to see those chains up here. Nevertheless, I think that if one looks at our own child care system, there are various commercial agencies involved. The study that was done again by Michael Krasinski for the Parliamentary Committee on Child Care showed in fact that the change, which most people are concerned about, provided relatively average care for children. They were neither very good or very outstanding.

1:42:48The private organizations that varied all over the lot were the mum and pop shops, which varied from very good to very, very bad, in terms of standard, and they were measured against about 17 variables. The public agencies tended to be, again, hovered toward the middle, they tended to be good to very good, very few of them were very bad. So if one looks at it in terms of the range, one can't carte blanche say that because they were private they were necessarily bad, because that didn't show up. And the logic of it is true that if a firm is investing in something, the last thing it wants is to develop a bad reputation because people are not terribly likely to use it. And so those firms that kind of moved in have tended to move toward the average because the average is what government sets up as the standard that they must meet.

1:43:35So the debate oftentimes centers then around whether those standards should be raised. In other words, if what we're really concerned is about the standard of care that children get, then just simply for government to raise the standards and say that whoever provides that service must meet those standards. Now the reality, of course, is that those standards go up. The private sector declines because most of them can't usually make much money, if the standards are very high, given competitive wage rates and other sorts of things. So then the trade-off then is really about the quality of care you want and what kind of standards you want to set in the public sector and what role the private sector is likely to play vis-à-vis that. And generally, the more you provide a service that the private sector can't provide at a competitive rate, the less likely they will be to move into it. But I have no inherent opposition personally to the fact that they might be involved if they can meet whatever standards are considered publicly acceptable.

1:44:25I want to come back to the other issue, the one about proselytizing and so forth, I think is a different kind of issue. I don't think it's because they're private per se. The Theory of Money and Credit

1:45:03Could I also reply to this, and then we can go on? It's past 12, and I don't know how long your commitment is going on. As long as we don't get off the ground. I wanted to get on his point also. I interpreted it a little differently, maybe perversely, but I'm not so interested in government subsidies to private agencies. It's just an area that doesn't interest me that much. I don't think that there should be the government involved in the first place. So for me the question is a private agency that is voluntarily financed, say the Salvation Army or the Catholic Church. And as you quite rightly say, although maybe not in these words, that they have to pray first and eat later.

1:45:49And you say, well, they're not really concerned with the poor, they have their own agenda, which is to save souls or recruit or whatever it is. I would say two things about that. First, if you don't like that agenda, let's say you're an atheist, you could set up the atheist's welfare society or the atheist's aid society and give people food only after they don't pray, or whatever your agenda is. What is appropriate for disadvantaged groups and small groups to compete against the hollow princesses of the Catholic Church? Well, but the Catholic Church, at one time, did wield coercion during the Inquisition.

1:46:37But lately, my understanding of the Catholic Church is that every penny they get, they get from voluntary contributions. Any Catholic building, any building that's owned by the Catholic Church, any part of Catholic that they want to get rid of, is promptly and immediately locked by very little money. Just instantly.

1:47:15The Constitutional Statement, by the way. The Almanzari part.

1:47:45about it. As we asked General Donald Brown when we had him down to a Frasier Institute luncheon and we published this booklet on the basis of it, he doesn't see it quite that way. He doesn't see that the purposes of the Salvation Army are to save souls and not the other. He sees the two as inextricably intertwined. He sees the one as a means toward the other. He sees body and soul as two wings on a bird. You can't fly with one wing. You can't fly either without the one He sees the way to help the poor is through a religious way, and I think there is at least some evidence in support of that view, that when people adopt this religious attitude and forswear drugs or booze or whatever it is, they improve their lives.

1:48:32The third reaction I would offer to you is this sort of knee-jerk democracy, democracy uberalis. As far as I'm concerned, I'm very suspicious of democracy as an institution. of the Constitution. I mean, Hitler came to power in a democratic election. And I mean, what more can you say, except that democracy represents the modal view or the majority view if you have only two parties. And that can be good or bad. It need not necessarily be good. And therefore, if it's non-democratic, it need not necessarily be bad. Now, what's Tom Hayden has got this thing, the League for Industrial Democracy or something, and his argument sounds very similar to yours, that the problem with private property is that it's undemocratic.

1:49:23We don't all vote on what General Motors does, only the stockholders do, and that's unfair since we ought to vote on everything. And I think that that is a philosophy that is very much in variance with my own. I think it's a denigration of private property. And the ultimate extreme of that is that we don't even own ourselves, because there is no difference in principle between cars and people. If we all have to vote, if we want to take democracy to what I would consider ludicrous extremes, you might say, well, I shouldn't have the right to hold this pen unless we've had a vote for this. We all own each other, you know, we're all each other's brother's keepers or something, There are five billion of us, we each get one five billion to vote on everything. Well, that's one philosophical view and I say that people that subscribe to that and act on it will not long prosper.

1:50:15I would put forth a different model of individual initiative and private responsibility and private rights where we only vote on certain things. I'm for a limited democracy, not just an open-ended democracy where we vote on whether a Jew shall live or not or left-handed redheads shall do this or not. Let me make this one a general comment, a little less passionate when I talk to people about it. It has to do with how research arises. It arises out of theory, but the same open questions and any answers are acceptable. The kinds of documentation that Mr. Block gives for his ideological perspectives throws out an ideology where the answers are they all before the inquiry is done.

1:51:11I know the names of some of the people he has cited, and I don't see this as a way to find answers to questions about which one really is curious. And I think this is one of the dangers the ideological perspective presents. I just wanted to very briefly respond and say that this sounds to me like an ad hominem, and I don't think it is worthy of... I don't think that it is worthy of inclusion in a scholarly discussion.

1:51:59I just think it comes down to your basic belief of whether you feel that we're going to end up with a system that's going to be free, but it's going to be run on a profit basis, and feel that society is basically out for themselves, or whether you feel that private charities are going to spring up because you feel that society is altruistic. and the way our society and our culture is set up, that altruism is not an accepted way of dealing with things within our culture, that it stigmatizes and you get labeled as being without, not being productive, and without some means of getting altruism to work, that you get people to put their time and effort into things that already exist, that they're not going to be people, Okay, we're going to cut, and I have one final question. My question. From your separate, Ideological perspectives. What do you have to say to the 11 students here who are pursuing a career as a professional social worker?

1:53:24What is their role? What should they be doing? What's the guiding principle for their professional, their role in society? When you finish that, of course, you may answer, and then we're done. Go ahead. I'm just trying to be clear about what the question is. The question is, what are the guiding principles for social workers? If they go forth in society? Out of your ideology, what is the role of the professional social worker in society? Oh, I see. Well, it seems to be two issues there. Historically, social work has responded in part because with the development of market-oriented societies, a lot of the kind of supports, historically and so on, family and church and so forth, have become more formalized through institutional structures.

1:54:16And therefore, social workers, like people in medicine or law in some sense, have evolved to serve those institutional structures. The debate seems to me not about social work per se, but the legitimacy of those institutional structures. And if one accepts that legitimacy, which I do, then social workers play a very pivotal and important role in the quality, then, of the social work and the quality of the social worker becomes very key to the quality of the service. I see that, for example, in the research, for example, in child care. When one looks at the research in child care in the United States, it tends to show that child care isn't necessarily worse than family care. That's because child care in the United States on the whole is pretty lousy. The research tends to show in some respects that children actually do better outside the family, which is kind of contradictory to what perhaps people would like to see than they do in the family.

1:55:10The only point I'm trying to make there is that they have, because they've attached importance to these institutions, they've attached importance to the people who service those institutions. So I would see, as a guiding principle, quality of care, quality of education, quality of inquiry as being very important for social workers. I think in terms of the ideological stuff, I would only, I think, come back to Henry's comment that one has to read and provide as much, not only an informed point of view on these kinds of issues, but much more importantly, frankly, empirically based substantive research focus to these kinds of things. I would answer a little differently. I would say that the role of the social worker is to help poor people or disadvantaged people. And in that sense, I guess I would like to be included as a social worker because my analysis is aimed, at least in part, at helping poor people.

1:56:02Maybe helping poor or disadvantaged people in a different way, but still I think the similarity is more important than the difference. By analyzing economically what causes the poverty, I think I am making a contribution. And I would say that the people in social work, or people of all people of good will, who want to help poor and disadvantaged people, should do it. And they should do it in a sophisticated way. They should realize that just throwing money at them need not necessarily be the best way to help them. And I guess that would be my message. Thank you all very much.