Article published in The Gazette, May 6, 2003
The new provincial government has found a hidden deficit. Nobody should be surprised.
When I was teaching at the École Nationale d'Administration Publique in the mid-1990s, I used this very phenomenon to awaken my students to the economic analysis of politics. The 1969-70 Union Nationale budget was corrected by the new Liberal government to increase the real deficit by 5.5 per cent. The deficit in the 1976-77 Liberal budget was boosted 62 per cent by the new Parti Québécois government. The 1985-86 Parti Québécois budget was reviewed by the new Liberal government, which increased the deficit by 1.6 per cent. The new Parti Québécois government found the 1994-95 Liberal deficit seriously underestimated, and jacked it up by 29.2 per cent. There's nothing new under the sun.
Why is it that incoming governments have so often found discrepancies in the public accounts of their predecessors, and why has the discrepancy always gone in the same direction? Do the worst liars and evil men become politicians? Or are politicians just like the rest of us - motivated by self-interest?
A positive answer to the last question summarizes the lessons of the Public Choice school of economic analysis, which developed during the last half of the 20th century under the leadership of Nobel laureate James Buchanan. Before the Public Choice theoretical and empirical inroads, it was generally assumed that homo economicus acting in the market was self-interested while the same individual, when he entered politics or public service, became a benevolent angel. Theories built on these hypotheses showed that "market failures" could result from economic self-interest and had to be corrected by politicians and bureaucrats working selflessly for "society."
Once Public Choice economists assumed that individuals are motivated by the same basic self-interest whether they work in the public or the private sectors, economic theory started yielding very different conclusions. Sure, markets are not perfect, and contrary to what Adam Smith has taught, the "invisible hand" of free interaction sometimes leads to sub-optimal results. But state intervention ( i.e., the political and bureaucratic coercive processes) often make matters worse. Jacques Parizeau or Jean Chrétien would have done much less damage as CEOs of Eaton's or Enron.
From this perspective, one must expect politicians and bureaucrats to do whatever is cost-effective to stay in power and increase their power. Although there might be some saints among them, most will not balk at telling small lies and using the state to further their own selfish interests. Actually, the saints might be even more dangerous than the ordinary selfish statocrats. As Public Choice theorists Buchanan and Geoffrey Brennan wrote, constitutional or other constraints put on government "become much less effective, and may well be evaded, if the motive force behind governmental action is 'do-goodism.' The licentious sinners we can control; the saintly ascetics may destroy us."
In its simplest terms, the lesson is: Beware of politicians even when, like the Greeks at Troy, they give you presents. More generally, beware of Leviathan. The state has built-in mechanisms to co-opt and break any resistance to its growth. Think twice if you think that well-meaning and smiling politicians can change the system from within.
Thomas Mulcair might be the most libertarian - and probably the only libertarian - in the new Liberal government. But which portfolio was he given? The environment. Strangely enough, this is the portfolio that was held for many years by Pierre Paradis, who also, some decades ago, appeared to have iconoclastic and libertarian, or at least populist, tendencies. One thing we can be certain of, is that after a few years at the Environment Department, Mulcair will sincerely think that the state is necessary to save the galaxy. It will be in his interest to think so.