MORE EQUAL? OR EQUALLY POOR? LAU.

In last week’s federal budget, the Liberals outlined their ambitions for a “more equal” society. Conservative MP Rachael Harder, displaying more economic perspicacity than is typical of politicians, suggested that, with their unrelenting spending of other people’s money, the Liberals would only make society “more equally poor.” There can indeed be little doubt that the Liberal equality plan will impoverish. History shows that massive expansions of government economic control do just that.

On the issue of equality, however, the budget’s effects remain to be seen. According to Stanford University historian Walter Scheidel, there are four things that reliably reduce economic inequality: deadly plagues, violent revolutions, existential wars, and state collapse. As Scheidel therefore warned in his 2017 book, The Great Leveler: Violence and the History of Inequality from the Stone Age to the Twenty-first Century, those “who prize greater economic equality would do well to remember that with the rarest of exceptions, it was only ever brought forth in sorrow.”

Though the budget may well be an economic catastrophe, it’s probably not on a par with an existential war and so cannot be expected to have the same impact on inequality. Nor should we want it to. The Liberals, of course, would disagree. Their budget, they would say, intends to impose equality, not via catastrophe, but by taking from the rich and giving to the poor. The problem with this strategy is that while afflicting the wealthy is easy, government efforts to redistribute to the poor often go amiss.

When some people are given the legal right to spend other people’s money, the beneficiaries of this arrangement are more than likely to be people with political power. This does not increase equality: the politically powerful tend not to be economically or otherwise disadvantaged. As a result, governments are predisposed to redistribute to people who are not poor. That is “Director’s Law of public income redistribution.” Named after its author, Aaron Director, brother of Rose Friedman, Milton’s wife, Director’s Law was most clearly explained over 50 years ago in an article in The Journal of Law and Economics by 1982 economics Nobelist George Stigler. It remains a long-standing indictment of the myth that bigger government helps the poor.

The Liberal budget contains several illustrations of Director’s Law. For example, in the name of increasing equality, the government will provide “affordable financing” to women, black, and Indigenous entrepreneurs, as well as entrepreneurs from other “equity-deserving” groups. Government procurement processes will also be changed to award more contracts to businesses owned by those same “equity-deserving” groups. There is, of course, a troubling implication here: that Canadians who do not make the list of equity-deserving groups are not deserving of equity.

Another problem with these policies is that they would not actually help disadvantaged individuals. Black and Indigenous people, among other demographics, may on average be relatively economically disadvantaged, but those among them who own businesses that can secure government funds and contracts by demonstrating to officials that they are “equity-deserving” are unlikely to be poor. The effect of these policies, therefore, would be to transfer income to people who share characteristics with other people who might be poor, but who are actually not themselves poor. Meanwhile, some of the people from whom that income is transferred could actually be poor — or at least quite a bit poorer than the “equity-deserving” people their income is being transferred to.

The Liberal equality plan also intends to benefit members of the public service workforce, an often-tenured demographic not generally known for experiencing widespread poverty or oppression. Nevertheless, the Liberals affirm that many civil servants are in fact oppressed — namely, women and other “underrepresented” groups. Thus they are committed to increasing diversity in government employment by hiring more of these supposedly underrepresented people. But women already outnumber men among public-sector workers by a ratio of 1.7 to 1, so here the Liberals are again redistributing economic benefits to people who do not appear to be in any great need of them.

In addition to the equality initiatives, other aspects of the Liberal budget — such as increased spending on climate change — will also deliver disproportionate economic benefits to relatively well-to-do bureaucrats and rent-seekers at the expense of ordinary Canadians. Given this widespread income redistribution to people who do not need it, it is not at all clear whether the Liberal plan will really increase equality. It is certain, however, to increase misery by making society poorer.

WHILE AFFLICTING THE WEALTHY IS EASY, GOVERNMENT EFFORTS TO REDISTRIBUTE TO THE POOR OFTEN GO AMISS.