Tuesday, November 13, 2007

Policy Ammo

Recent articles have given lots of argumentative ammo for the privatization of crown corporations, a smaller civil service, implementation of single-rate tax structures, and offering private health care.

In SaskTel versus MTS, David Seymour of the Frontier Centre compares the two telephone companies ten years after MTS went private. Today MTS earns twice the revenue, has three times the assets, employs 20% more people, and offers Manitoba $125 million annually in income taxes that SaskTel is exempt from giving to the province of Saskatchewan.

Bloated Government is worse for the economy than the rising loonie, says William Robson of the Financial Post. After showing how Canadian public sector employment has grown 4.9% in the past year, while private sector employment has only grown 0.9%, Robson sums it up this way:

While no one begrudges government employees their jobs, and more health and education workers will be welcomed by many patients and students, a rising share of government employees in Canada should concern us. Canada needs more output per working person over time -- to expand our dwindling productive capacity, which stresses inflation control in the short term, and to support Canadian incomes and public services in the demographically challenged years ahead. Productivity in the public sector tends to be lower than in business, while compensation costs tend to be higher -- particularly the rich pensions whose accruing costs are understated in government accounts. Recent provincial and local elections have underlined, moreover, the importance of government-sector workers as voters, who naturally tend to support candidates promising yet more public-sector jobs, and yet richer wages and benefits.

The Canadian Institute for Health Information notes that for the first time ever health care spending will reach $160 billion this year, and that spending is growing faster than the economy.

In the Wall Street Journal, Stephen Moore asks, "If tax-cut strategies don't work, why are they so popular abroad?", pointing out Estonia's economy has grown more than any other in the world after adopting a single tax rate of 23% in 1994.

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