I bought Brian Lee Crowley’s Fearful Symmetry because I was enticed by the positive review blurbs (the cover was fairly disappointing) that came from very serious people from the Globe and Mail and National Post.[¹] The additional promise of learning from whence our “founding values” came and thither they went provided me with extra security in my choice. I was quite surprised to discover that Fearful Symmetry is largely a book of political philosophy from a Canadian libertarian perspective.[²] Crowley believes Canada’s founding values were those of free enterprise, hard work, thrift, and family values. In other words a laissez-faire economic system in a Christian cultural context. Since the 1960s we have abandoned these values in exchange for a predominating role of the state in economic life, a huge share of the labour force working directly or indirectly for the public sector, and a replacement of the family with the state. Crowley believes we will need to return to these traditional precepts as a consequence of declining macroeconomic growth rates, worsening demographic structures, and crippling public debts and deficits.

There are three hypotheses in Fearful Symmetry. The first is that a laissez-faire economic system is one of Canada’s founding values. The premise of this hypothesis is misleading in that it sounds exceptional to Canada. In 1867 when Canada was founded, virtually all European nations had very limited state involvement in the economy. True, states like Prussia or Russia had economic policies more closely aligned with what we would call industrial policy today, but the share of GDP spent by the government would have been very low (<10%).[³] Even though 19th century Canada and the United States had high tariff rates to protect domestic “infant industries” as well as loan guarantees for large infrastructure projects, most economic activity was carried out in the private sector. The economic and social conservatism described by Crowley is actually one of the Victorian era, and not Canada per se. Modern Japan, founded in 1868, would have had a very similar economic model to Canada’s for example.

Even if one believe that the 19th century Canadian economy was more libertarian than any state today, the book does not make a convincing argument that our society and economy would be better off today if it took a completely laissez-faire approach. It also fails to provide a roadmap whereby the government could possibly extricate itself from 40% of the economy. Instead, the book provides several convincing instances of government waste and economically counterproductive policies. Crowley makes strong arguments about why regional developments funds help to entrench dying industries and hurt provinces in the long-run. Even if we agree that the Canadian state should end equalization payments and regional transfers, it does not follow that the state should remove itself from providing healthcare, education, infrastructure, research and development, as well as social services. The second, and most interesting, thesis of the book is that Canada’s rapid acceleration away from economic liberty began in earnest in the 1960s due to a bidding war between Ottawa and Quebec City to keep voters on the right side of the nationalist/separatist divide.

Forget July 1, the birthday of the Old Canada founded in 1867. The “New Canada” was born on June 22, 1960. The profound transformation that emerged so forcefully in the last five decades or so can be summarized as a Canada of expansive government and social programs, or bilingualism and multiculturalism, of the appeasement of an endless list of demands from Quebec, nationalists, of the abandonment of anything but a highly sanitized history of the country, of the decline of the work ethic, of the family and of our fertility. The birth date can be fixed with such precision because that was that Jean Lesage led the Liberal Party of Quebec to power and unleashed the Quiet Revolution. … The competition between Ottawa and Quebec City for the loyalty of Quebeckers drove a vast growth in the size of the state at all levels in Canada.

There is a certain libertarian tendency to ascribe the inevitable with the desirable.[⁴] No one gets as excited about a generational war between Boomers and Millenials as libertarians because it is hoped that the youth will smash the healthcare and welfare system because they feel they have gotten an unfair deal. In a similar vein, libertarians chuckle with the thought that a greying society will force a reduction of tax expenditures and a shift from public to private sector spending. The third hypothesis of Fearful Symmetry is that Canada’s founding values will be making a comeback because the state-led model is unsustainable in a world of low-growth and worsening demographics. By taking this stance, Crowley has unfortunately played into the left-wing stereotype that free market policies are a consequence of undemocratic or technocratic forces: see Klein’s Shock Doctrine or MacLean’s Democracy in Chains. By failing to make the case for a systemically smaller government, rather than just instances of government failure, it seems unlikely that the public will respond to smaller dependency ratios by fundamentally reducing the size of the state. Instead, I suspect that as healthcare and retirement costs rise, Western countries will see higher taxes, fewer benefits, but also a larger share of government expenditures as a percent of GDP!

I often found myself in agreement with the facts presented in the book, but not their interpretation. Marriage rates are much lower today then they were historically. But marriage was also a requirement because of the implicit social safety net that a large family provided. In the the absence of government welfare, we should expect marriage rates to fall as the society becomes richer because (mainly) women no longer feel obligated to marry marginal mates. Even if government welfare leads to lower marriage or cohabitation rates because women no longer feel obligated to tolerate males for their economic earning potential alone, is this a bad thing? This, if anything, reveals more about the poor quality of the men that women find for offer. Crowley highlights the concern that researchers like Charles Murray have brought up that this effectively removes the social value of many men whose labour market earnings are near the poverty line. But again, women are no longer marrying economically marginal men because they are poor per se, but rather because they are poor and romantically unhelpful. In the 19th century women would stomach abusive or emotionally negligent fathers and husbands because they had no other option if they wanted to feed their children. But now, if a women deliberately choses the path of single-motherhood she is a sending a strong signal about the quality of the mate above and beyond pecuniary interests.

For a variety of reasons there is a large chunk of prime-aged males that are nowhere to be found in the labour market (see NEET). This is almost certainly driven by a combination of cultural changes and welfare provisions. In the 1950s, a young man who had finished his schooling and was not working would have been a social pariah. His parents, friends, and family members would have placed significant pressure on him to get a job. Today, unemployed males are not treated well, but they are more tolerated. This social toleration has been matched by increasing public and private welfare. Parents are letting their children stay at home, rent-free, for longer periods of time and governments have set up social safety nets to ensure that citizens can scrape by. But Fearful Symmetry conflates individual instances of poor work ethic with more fundamental structural challenges. During recessionary periods, no amount of hard work will save an economy from experiencing unemployment. Comparing work effort and macroeconomic forces is like comparing personal health and pandemics. Just as no amount of exercise, healthy eating, or annual checkups will help you weather an Ebola outbeak, no amount of thrift, hardwork, or energy will be able to help a carpenter in a housing market crash. Additionally, as the returns to capital and high-skilled labour increase, it is natural to expect that that the equilibrium quantity of low-skilled labour will go down.

But Fearful Symmetry is correct that we need to return to a world where holding a job, or some form of long-term commitment, receives respect regardless of its salary. This is especially true if AI actually does put further downward pressure on wages.[⁵]

Lots of well-meaning people dismiss such jobs as mean, cruel, pointless, and exploitative. But … it is condescending and paternalistic to look just at the job and make judgments about whether its balance of hardship and rewards is acceptable or even desirable. Jobs and the plans and intentions of those who hold them are intimately linked. People in the toughest, lowest-paid jobs still gain the dignity and moral self-assurance that comes from being responsible for themselves and paying their own way. To denigrate that achievement is to say that the hopes and plans they pursue through the work available to them are unworthy of respect… It is the worker who confers the dignity on the work, and not the other way round.

While Fearful Symmetry is heavily footnoted, there ares some claims that have a “reference” that is either misleading or insufficient. Take this offhand remark for example:

[U]nless governments get in the way, as they did in the Depression, for example…

The footnote goes on the explain Milton Friedman’s work on how monetary policy was responsible for the deflationary spiral that was seen in the Great Depression. Most economists agree that central banks behaved pro-cyclically during the depression – an example of incompetent technocratic management. But monetary policy is removed from the fiscal policy that is the purview of democratically elected legislatures. In fact most economists would say that while central bankers were at fault for deflation, elected governments failed to deliver the necessary counter-cyclical spending to stimulate aggregate demand (something Crowley would no disagree with). Another throw-away line I found amusing was this:

Yet the best book so far on the economic downturn of 2009-10, John B Taylor’s Getting Off Track… tells the story of government institutions played a key role in the creating of the recession of 2008-09… Had governments followed the so-called Taylor Rule for interest rates (named after John B Taylor himself …), the asset price bubble likely would be been avoided, and with it the risky lending practices that have brought so much misery in their wake.

Really the best book? Sure, the financial crisis was spurred on by many bad policy choices, but it was lead by reckless private sector lending and securitization. An economics professor claiming that if interest rates had followed his eponymous decision rule on the margin, a crisis would have been averted, defies belief. Bernanke has also written rebuttals to many of Taylor’s claims about Fed policy. While Fearful Symmetry might make many useful arguments to someone who has never considered the government’s role in the subprime mortgage crisis it does not provide evidence that an unfettered market would lead to fewer financial crises. Some of the books claims are totally erroneous:

Clearly you could have the boom without the massive expansion of government and particularly the welfare state … and you could have the expansion of the welfare sate without any real boom at all (much of Western Europe).

Tell that to the French or the Germans and see what they say! Crowley also describes rent-seeking in purely public-sector terms.

And while people will generally acquiesce in the distribution of income and so forth by the market because that distribution is not the imposition of someone’s will or preferences, they quickly grow to resent the arbitrary awarding of benefits and advantages to those close to the government.

Of course public-choice theory is a very useful tool to understand why governments make certain decisions, but rent-seeking is a more general phenomenon that is also carried out by the private sector. Any activity which obtains additional profits to you without the creation of new wealth is rent-seeking. Indeed rents are simply the surplus value accrued above and beyond the price needed to obtain a good or service. For property holders, the rental price charged above-and-beyond what is needed to maintain a property is the rental surplus. Even a small business person asking the question “what is my competitor charging for this widget?” is engaging in rent-seeking because she hopes to use this information to charge a price that may be in excess of their marginal cost. In a purely competitive market, all buyers and sellers are price takers. Marketing, pricing strategies, market share targets, etc, are all examples of private sector rent seeking.

Crowley cites Bastiat’s view of how we should view the state: “… the great fiction through which everybody endeavors to live at the expense of everybody else”. There is of course truth in this. I’ve often heard people say things like “the government has enough money already” – as though the government were a person. The government (like corporations) is not a person, and does not have money in the sense that you or I have it. In a strictly accounting sense, governments (like corporations) collect money from one group of people and give it to another group in the form of cash, goods, or services. Therefore a tax break for one group of individuals necessitates a tax increase or service reduction for someone else. But Bastiat’s view fails to consider the possibility that the other person could could simply be your future self. Governments, on net, provide surplus services to the young and the old. As an individual, I may be willing to pay high marginal tax rates during my working years if I know that I will receive free schooling when I am young and a comfortable retirement when I am old.

There are many places in the book where Crowley’s views come across as reactionary by today’s standards. He wants the repeal of no-fault divorce when there is a child involved as well as a return to the dichotomous thinking of the deserving and undeserving poor (literally). I don’t suspect that Canadian public will be sympathetic to either of these views. As divorce becomes easier, both spouses will invest less in the marriage because relationship-specific capital can be obliterated upon separation. However, it will also increase the number of marriages because the cost of them failing will decrease. This is indeed what we see in debt markets, where jurisdictions that have looser bankruptcy laws will see more borrowing and lending (although the quality of loans will be lower of course). So Crowley cannot have it both ways, if he wants less divorce, he will have to take less marriage. Additionally, if the goal is to spur relationship-specific capital, strict laws around alimony and an equal division of assets will will have a similar effect to restrictions around divorce (i.e. increasing the cost of the exit).

Similar to the argument about regional transfers, there are many good points about how certain government expenditures and practices have become deleterious in the post-War era. For example, most provincial legislatures and the federal parliament find it agonizing to balance budgets (or run surpluses) in economic good times, and impossible to do so during bad times.

Soon our spending outstripped politicians’ willingness to raise taxes, and we entered a long period of deficit financing. Then-finance minister Edgar Benson tabled a balanced budget in 1969. There would not be another until Paul Martin’s fifth in 1997-98.

It would be much better if government spending was counter-cyclical on both sides of the cycle. But this is a consistent Keynesian argument and not even a centre-right one.

Fearful Symmetry is good at making cookie-cutter conservative arguments, “government help is bet given in homeopathic, not massive doses”, but not in laying an intellectual foundation for a night-watchman state. The author shines most when he is discussing the political-economy of Canada-Quebec relations and how this antagonism has led to many poor policy choices and wasteful spending. The book also does a good job at describing the comparative historical development of the Canadian economy. It is least convincing in how it interprets these facts and it vision for the future. It is the libertarian’s burden to forever dream about re-becoming the greatness we never weren’t.

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