MONTREAL - When you listen to the most-repeated selling points in Conservative leader Stephen Harper’s election campaign, high on the list is his campaign’s business-friendly agenda of corporate income-tax cuts and steady economic leadership.
Why, then, do we find one of Canada’s leading business scholars, McGill University’s Henry Mintzberg, waging a determined campaign to prevent Harper from achieving the majority that the Conservative leader insists is essential to safeguarding Canada’s best interests?
Mintzberg has spent the current campaign saying exactly the opposite: that far from safeguarding Canada’s future, a Harper government would undermine it. The home page of Mintzberg’s website (www.mintzberg.org) is now entirely devoted to the election, featuring arguments against voting Conservative and advice on voting strategically to prevent a Conservative majority.
What’s going on here? Is Mintzberg suddenly opposed to the free-enterprise system and in favour of the heavily taxed, government-dominated society that Conservative attack ads suggest Liberals would favour?
Not at all, he said in a recent interview. “I don’t want a society dominated by government. I just don’t want a weak government.”
What Mintzberg wants, as he’s written for a number of years, is a balance between government, business and a healthy non-profit sector.
He fears that Harper’s brand of conservatism, which can be considerably more hard-edged and combative than Canadians have been used to, “puts at risk the things that make Canada different and wonderful” in a world he sees as increasingly dominated by “an unholy economic dogma of corporate entitlement.”
It’s true that Mintzberg sounds rather different from most people you’d find in a business school, but iconoclasm is nothing new to him.
Even as he became an influential management scholar, Mintzberg has been free with acerbic criticisms of business education as it’s practised in North America. A couple of years ago, The Economist listed him as one of the world’s management “gurus” but described him as “a consistently contrary Canadian academic who sometimes seems to be undermining the very industry that he works in.”
Mintzberg’s critique of the Harper government has less to do with specific policy positions than with an attitude that he sees as embodying the same unhealthy values that dominated the presidency of George W. Bush. Some key elements are the glorification of overpaid corporate leaders and short-term profits. That’s tied to the denigration of government’s role in providing a regulatory and socially conscious counterweight to business.
The U.S. financial crash and its devastating recession were directly related to this skewed view of the world, Mintzberg believes. As a result of Canada’s having followed a different path, with more willingness to let government regulate financial institutions, “we’re doing better than the Americans,” with an economy that suffered far less and unemployment that’s lower.
It’s also worth noting that the elements that saved Canada during the U.S. crash were put in place long before the Harper government arrived on the scene.
It was the Liberal governments of Paul Martin and Jean Chrétien, for example, that slashed Canada’s government debt. As for the strict bank regulation that helped keep our financial sector safe, it was actually loosened by the Harper government before it more recently reversed course.
And perhaps most worrisome, the Harper government insisted that it would balance the budget at any cost as the recession struck, a good formula for a more serious downturn. It reversed itself only after a chorus of complaints.
Still, Mintzberg doesn’t claim there would be any immediate lurch to the far right under a majority Conservative government, but he worries about a shift in emphasis that would erode much of what makes Canada unique.
Part of this would be that Canada’s political discourse could be debased by more of the harsh, personalized attacks on opposition figures that have become commonplace under Harper. And in tangible terms, Mintzberg would expect to see a steady erosion of government support for such Canadian icons as medicare and the CBC.
On the one specific election issue where he’s been quite vocal, however, it’s only fair to acknowledge that Mintzberg’s position is tenuous.
This is the clash between Harper’s intention to cut the current 16.5-per-cent corporate income tax rate to 15 per next year and Liberal leader Michael Ignatieff’s plan to raise this tax to 18 per cent.
Ignatieff claims that he’ll raise billions for social programs with this increase; Harper that he’ll create many new jobs with his cut.
Mintzberg accepts Ignatieff’s belief that the increased corporate tax burden would fall on corporate shareholders, bringing about a true shift in the burden of taxation and causing corporations to pay a “fairer” share, although he acknowledges that the shift would be small.
But more than one economist is dubious that corporate shareholders can really be made to pay more. Stephen Gordon of Laval University, for example, says that both economic theory and empirical evidence indicate that most of any rise in corporate income tax is eventually passed on to workers.
Shareholders can own shares of companies anywhere in the world, so if their profits are more heavily taxed in Canada, it’s very easy to sell shares here and buy elsewhere. That tends to limit the capital available to companies in this country, squeezing productivity gains and therefore wages. And, of course, it’s much harder for workers to escape by relocating elsewhere.
Gordon has a different solution: keep corporate taxes low to encourage investment, and finance generous social programs through progressive income taxes and high value-added taxes, as several Northern European countries do.
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Saturday, April 23, 2011
Posted by Brent Fullard at 11:25 AM