The limits of O’Leary
In light of the cash-for-access fundraising scandal plaguing the Liberals toward the end of 2016, many Canadians were likely nodding with approval when Kevin O’Leary, announcing the formation of his exploratory committee for Conservative leadership, wielded a large spatula and declared “we’re going to have to take a big spatula to Ottawa and scrape all that crap out.” A foul task to be sure, but a necessary one given the Liberals’ proclivity to waste or redistribute every dime they can get their sticky fingers on.
Numerous polls and pundits peg O’Leary as the favourite to win the Conservative leadership, and for good reason. His on- air personality involves him loudly, sometimes almost violently, objecting to whatever he believes to be a waste of money. His reputation is built on being a tough- asnails, no- nonsense business expert, which lends him credibility and allows him to forcefully criticize mismanagement of public funds.
However, before Conservatives swing into line behind O’Leary, they should be every bit as rigorous as O’Leary can be when he’s taking apart one of those on- air Dragons’ Den pitches. That means bringing the same critical l ens to O’Leary’s proposed economic policies that they apply to Liberal policies.
Despite usually coming down on the side of lower taxes and fewer regulations, successful businessmen are not necessarily good economists. Many voters, especially Tories, tend to conflate the two. But to borrow an analogy from American economist Don Boudreaux, suggesting that business success implies knowledge of economics is akin to assuming that somebody who l ives to be 100 years old must know a lot about medical science.
Centenarians might have some useful tips on healthy living, but few of them are medical experts.
Overseeing a national economy and running a business are two completely different things. A market economy is a self-generating or spontaneous order — “the result of human action but not of human design,” as Hayek argued — entirely different from a business firm or a centrally designed socialist project.
As Hayek understood, no person, firm, committee of business experts, or government has anything close to all the market’s knowledge, which is widely dispersed among the entire popula- tion ( it’s why he said centrally planned economies will always fail). That’s why conservatives should be concerned when they hear O’ Leary denouncing incompetent central planning by the Trudeau, Notley and Wynne governments, only to propose his own versions of activist government intrusion.
O’Leary isn’t against the government meddling in the private economy, he just says that he can fix it so Ottawa makes better deals that will, under him, somehow finally start turning out well for taxpayers. At last year’s Manning Centre Conference for conservatives, he outlined his grand plans for Bombardier, for instance, saying “I think we should save that company.” The difference between his support for funding Bombardier and the Liberals’? He would demand governance reforms, so “you make money” on the bailout. But if Bombardier is failing, it’s strictly due to a business failure, not what economists would call a market failure (where government intervention can at least be somewhat justified). So, if anyone needs to save Bombardier, that job should fall the private sector, not the government.
O’Leary might even be the man to do it — but as a deal- making private businessman, not a politician. In addition to his plans to save Bombardier, he’s also talked about special tax expenditures for aerospace, telecom and energy companies because he thinks that’s what will make them economic champions. What’s most worrying of all is that he’s referred to Donald Trump as a “free- market person” despite Trump’s plans to dismantle free trade.
Still, O’Leary’s business background shouldn’t be dismissed as not being useful for running the government, either ( it’s arguably as or more useful t han lawyering, which is where many politicians come from). Many lessons learned from business are at least helpful in understanding economics. People in business tend to see much more clearly the detrimental effects of high taxes, burdensome regulations, powerful unions, and public policy informed by unchecked environmental zealotry. All those things are piled around the government just waiting for someone scrape them out. But before Conservatives send in O’Leary with his spatula to do the clean up, they had better be sure he won’t turn around and use it to start cooking up a whole new mess of his own.
CONSERVATIVES SHOULD BE CONCERNED WHEN KEVIN O’LEARY PROPOSES HIS OWN VERSIONS OF ACTIVIST GOVERNMENT.