Thoughts on 6 and 5

by Paul Geddes
September 1982

I applauded when Mr. MacEachen first announced that civil servants' salaries were going to be trimmed. Finally Liberals were admitting that their own irresponsible overspending was the chief cause of our economic troubles and that they were finally going to do something about it. It didn't matter to me that the government started their restraint program by reducing their employees' wages. Other financially troubled organizations were making similar decisions. And besides, I considered any cut in government spending to be a good cut.

What is beyond me is how the liberals got sidetracked from curbing their own spending into forcing crown corporations further away from economic sanity. They even began dabbling with private sector prices.

I considered restraining bureaucrat's wages good because it reduces government spending not because it controls the price of labour. Controlling the price of labour would produce the same unintended consequences that any government controlled price causes -- shortages and queues or overuse and waste.

Instead of throwing crown corporations deeper into debt by trying to control their revenue, it's time the politicians started cutting the apron strings so the companies can learn to live on their own. Rational businesses sell assets when they are in financial trouble. This would be good advice for Ottawa too.

The failure by our major commentators to distinguish between restrictions on government spending (which libertarians cheer) and government control of private prices (which libertarians abhor) is evidence either of muddied thinking or worse: it could be an attempt by the liberal flacks to reduce the popularity of government restraint or create public support for even more government control in the economy (i.e. wage and price controls). In the months to come it is important that libertarians make sure that the distinction between these two ideas is made clear.