Recently, I attended a luncheon speech given by Neil Brooks at Toronto's tony (and Tory) Albany Club. He was received as the emissary of a foreign tribe, with which his hosts had only lately established diplomatic relations.
A professor of tax law at Osgoode Hall and newly named vice-chairman of the Ontario NDP government's Fair Tax Commission, Brooks represents the social justice side of the tax debate. Hence his thesis: that the deficit could be controlled without cutting spending simply by closing the more gaping corporate and personal tax loopholes, which tend to disproportionately benefit the rich. His speech, needless to say, did not go over well.
Nonetheless, it struck me that the same speech, with only minor changes, could have been given by a representative of, say, the C.D. Howe Institute, and gathered huzzas. For the loopholes Brooks wished to close in the name of equity - the capital gains exemption, the special rate for manufacturers, the deduction for business meals and entertainment - could just as well be attacked under the banner of efficiency and free markets.
After all, if individual investors, and not governments, are the best judges of where to put their money, then it makes no sense to bias their decisions one way or another through the tax system - even for such worthy conservative causes as capital gains. The effect of each of the preferences Brooks described is to divert business away from the creation of wealth and into the pursuit of tax goodies.
But because Brooks chose to put the lefty spin on his argument, his audience immediately got their backs up. For that matter, Brooks himself seemed convinced from the outset that no one in the room could possibly share his enthusiasm for social justice, mentally decoding every question or remark put to him for its subtext of self-interest. And so what might have been a useful exercise in persuasion became yet another polite but trivial provocation, with everyone's prejudices confirmed and little accomplished.
This is not an isolated example. The whole of our political discourse is formally arranged around the poles of right and left, conservative and liberal. So far as these labels mean anything, they are associated with a concern for, respectively, efficiency and equity. Issues are routinely presented in the press as - at best - a pragmatic tradeoff between these two mutually antagonistic values, though ideologues would insist on one or the other.
Yet for most public policy questions - I am tempted to say all - there is no such conflict. Far from opposing one another, in most cases efficiency and equity are aligned. Indeed, they are in many respects the same thing: effiquity, perhaps. It is not only inefficient to restrict imports, it's inequitable: without import competition, prices of essential goods are driven higher, which hits the poor hardest. Just as the present, disincentive-riddled welfare system is not only unfair, but desperately inefficient.
The market, in other words, together with associated concepts like tax neutrality, is a necessary but not sufficient condition for social justice - and other values not traditionally associated with the market, like the environment, community, order. The mistake of the left is to think that markets are unnecessary or even antagonistic to these values. The mistake of the right is to think the market sufficient.
Why should it be more than coincidence that efficiency and equity are both on the side of markets? Because any measure that distorts markets, whatever its effect on the overall allocation of resources, also has a distributional impact. The well-to-do are not only best placed to lobby for privilege, but they are first in line to capture its benefits - and, more important, to avoid its costs. It is not surprising that the chief beneficiaries of Ontario's rent controls, which have dried up vacancies across the province, have been upper-income tenants. When there is a shortage of apartments - or of anything - it is not the rich who get stuck in the cold.
The effect of the left and right system of political classification is only to set this false opposition in stone, and so to ensure that policy is neither efficient nor equitable. Anyone who argues for a progressive tax system is branded a dangerous lefty; anyone who suggests replacing rent controls or the minimum wage or farm price supports with cash transfers is immediately rejected as a heartless right-winger. Worse, most people seem content to be so labelled: the tribe provides them with a sense of belonging, and everyone enjoys a good scrap. So provocation replaces persuasion.
If we are to make any progress as a society, we must subvert this tribal order. Here's how. When making the argument for something you value on fairness grounds, put the case in terms of efficiency. If the issue for you is one of efficiency, argue instead on the basis of fairness. Persuasion may not be as much fun as provocation, but we'd sure get a lot more done.