Are our governments too generous?

By Marcel Côté

It’s often been said that certain regions in Canada depend too much on the government. Although all citizens are considered equal, in practice, they’re not all treated the same. This is normal. The government focuses more on the poor than on the rich and some provincial governments are far more “socialist” than others. Is the government too generous with taxpayers’ money?

Two Harvard professors, Alberto Alesina and Edward Glaeser, looked at that issue. Their conclusions are highly relevant for Canada. Closely knit societies, such as those of Quebec and the Atlantic provinces, show more solidarity. They have more social capital and rely on collective solutions. They are therefore more likely to rely on the government to redistribute wealth.

More heterogeneous societies such as Alberta’s, and California’s, Florida’s and Texas’ in the US, are less likely to seek collective solutions. Their diverse populations know less about each other and their citizens tend to be less trustful of each other. Government tends to be seen as belonging to “others,” and consequently, citizens count less on its support. Not surprisingly then, these societies prefer individual solutions.

There are exceptions to this rule. New York City is one; Toronto is another. Both cities have heterogeneous populations, together with a longstanding tradition of multi-ethnicity and strong social solidarity. But overall, the greater the diversity, the greater the preference for individual solutions. Conversely, more homogenous societies tend to look for collective solutions.

Left-oriented provincial governments
Regions with slow population growth due to low immigration, such as Quebec, the Atlantic provinces, Manitoba, Saskatchewan and aboriginal communities, are more homogeneous and not surprisingly have a more collectivist perspective. They accept big government more naturally. On the other hand, Ontario, Alberta and BC, which are home to more immigrants both from elsewhere in Canada and from abroad, tend to be more individualistic, as they have less social capital and are less inclined to turn to the government for support. The more close knit the society, the greater tends to be the presence of the provincial government. Canadians should get used to wide disparities in the role of provincial governments across the land. They are here to stay.

The federal government is clearly caught between a rock and a hard place. Some regions are nudging it to the right, others to the left, not because of any particular ideology, but simply because of the degree of diversity of their populations. So how can Ottawa develop national policies in this context? All parties face that challenge. The Tories have trouble promoting individualism and their small government platform in certain parts of the country, while the Liberals and New Democrats encounter resistance to their redistributive policies in other regions. On the other hand, the Bloc Québécois, both to the left and regionally focused, is a good illustration of Alesina and Glaeser’s theory.

In this context, multiculturalism is subversive. By recognizing the immigrants’ right to maintain their cultural communities’ values and traditions, Ottawa is increasing Canadian diversity and implicitly undermining social solidarity among all Canadians.

A number of scholars, including John Helliwell at UBC, have studied the role of social capital in society. In their view, it is just as important as infrastructure capital. Yet Canadian multiculturalism is draining the country’s social capital by fragmenting it and is adding to the complexity of governing the country. We should fret less about how dependant some regions are toward government and be more concerned about multiculturalism. Indeed, it is time to review our multiculturalism policy.

Marcel Côté is president at SECOR Inc. in Montreal