Tags: Education - Quebec, Gwyn Morgan, Politics - Canada, Politics - Quebec, Provincial Politics

The rise of the entitlement class and the fall of democracy

No more free stuff

July 3, 2012

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VICTORIA, BC, Jul 3, 2012/ Troy Media/ – That Germany is almost singlehandedly providing the funds to bailout their bankrupt country didn’t deter angry Greeks from burning its Chancellor in effigy during last month’s Greek election campaign.

And for a few hours after that election returned parties in favour of staying in the Eurozone, financial markets cheered the news. Then reality set in as investors, realizing that continuing to pour cash into hopelessly dysfunctional Greece would only diminish the Eurozone’s chances of saving other beleaguered members, drove Spain’s borrowing rates to record highs.

The European situation is so bad that near zero yield US Treasury Bills, issued by a country whose debt clock is registering US$15.8 trillion and spinning ahead at over US$1.3 trillion per year, are viewed as a safe haven.

And the chances of slowing down the U.S. debt clock are small indeed. As social program entitlements make up half of expenditures balancing the budget would mean cutting all other expenditures by a staggering 70 per cent. Austrian economist Friedrich Hayek summed up the entitlements problem in his famous book The Road to Serfdom, ‘If you guarantee to some a fixed part of a variable cake, the share left to the rest is bound to fluctuate proportionally more than the size of the whole’.

My recent column titled The rise of the entitlement class garnered a lot of feedback. One reader forwarded an unattributed piece that put entitlements into perspective. ‘The folks who are getting the free stuff are mad at the folks who are paying for the free stuff because they can no longer pay for both the free stuff and their own stuff.’

You don’t have to leave Canada to find application for this statement. The ‘takers’ turning against the ‘givers’ mentality exists across our country, but nowhere is it more virulent than in La Belle Province, where student protests continue ad infinitum in support of their special brand of free stuff, otherwise known as the ‘Quebec Model’. NDP Leader Thomas Mulcair demonstrates his own version of being ‘mad at the folks who are paying for the free stuff’ by vilifying Alberta’s resources which fund the lion’s share of Quebec’s $7 billion annual equalization payments. Meanwhile, Quebec’s university tuition fees are half of those paid by Alberta students.

Perhaps it’s not surprising that Quebec’s protesting students and Mulcair share the same mentality. It’s become clear that those paltry tuition increases are just a sidebar for the students’ actual goal of replacing free market Capitalism with government-controlled Socialism. And the NDP is, by its own definition, a Socialist political movement.

Germany’s post-war history provides an instructive comparison of Socialism versus Capitalism. By the time the Berlin Wall came crashing down in 1989, West Germany had risen from the ashes to become the world’s second largest economy, while East Germany was an impoverished economic wasteland. The people shared the same ancestry, including many family members separated by the wall. The difference was command and control subjugation under Socialism versus Capitalism’s freedom of enterprise and innovation. The same phenomenon is being repeated today in China, where relatively small steps toward free market capitalism are lifting hundreds of millions out of abject poverty.

Given that it was just last century when Socialism brought unspeakable poverty and despair to over half of the worlds’ population, how can it be that so many young people want to turn the clock back?

A timeless truth – ‘Those who don’t learn the lessons of the past are doomed to repeat them’ – applies. How many students have been taught those lessons? The reality is our schools and universities not only fail to teach those sad historical lessons, but many teachers and professors actually espouse anti-free enterprise rhetoric. It seems that little has changed since 1944 when Hayek wrote ‘The younger generation of today has grown up in a world which, in school and press, the spirit of commercial enterprise has been represented as disreputable and the making of profit as immoral . . .’.

This history lesson takes us full-circle to ancient Greece, the cradle of democracy. In 1787, Scottish history professor Alexander Tytler wrote about the fall of the Athenian Republic some 2,000 years earlier:

‘A democracy cannot exist as a permanent form of government. It can exist only until the voters discover that they can vote themselves largess from the public treasury. From that moment on, the majority always votes for the candidates promising the most benefits from the public treasury, with the result that every democracy will finally collapse over loose fiscal policy.’

Gwyn Morgan is a Canadian business leader and director of two global corporations.

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