Vancouver Institute Lectures

The Kidd report Angus, Henry Forbes 1932-10-15

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.0._LiBR RY THE KIDD REPORT. CAT NO ~ ~!~‘ P3 C~ ACC. A Lecture delivered before the Vancouver Institute, 15th Oct., 1932. H’—-, F. I The purpose of the lecture and my position as lecturer. This is a lecture and. not a debate. The Chairman of the Committee whose report I am discussing has generously con sented, to speak at the close of the lecture, but this fact in no way relieves me from my duty of dealing fairly with the report~ My object is to give a fair and. balanced. view of the Committee’s work and., when I disagree with the method.s used or the conclusions reached, to give my reasons clearly. To accomplish this object I must speak bluntly, and. I hope that Mr. Kidd, who is our guest this evening, will not consid,er frank criticism offensive. I i~ealize that I am not without personal interests in the q,uestions discussed in the report and. that I am, therefore, exposed to a conflict of interest and. duty which may be/embarrassing for a. lecturer as for a committeeman or a trustee. As a precaution I am going to state the oonsid.era~tions whioh~if I am to be fair in thought and. speeoh,I must ~anish from my. mind.. 1. I am a member of the staff of the university whose abolition is practically recommended in the report I am prejudiced, in its favour and I do not wish to join the ranks of the unempl~yed. 2. I am Head. of a Department in the University which might, not unreasonably, have expected. to be oonsu.lted by the Committee when it~ work was in progress. I am q,uite confident that I and. my colleagues could have given — and would willingly have given. — relevant information and pertinent criticism. I think that the Committee would have done better to get our criticism beforehand. in the form of advice than to force u.s to give it subseq~uently in public in a form which may look like an attack. Our advice which would, have been construotive was theirs for the asking. Our criticism, which must appear mainly destructive, is now a duty which we owe to the public who, at one remove, are still our employers. It is thus not by choice that we speak under conditions which are some what embarrassing because our motives may be misconstrued.. 3. I find. it hard. to discuss, or even to think of, education in terms of its economic results alone. I can do it, but I feel some resentment in being forced. to do it. I do think that the education which is given in our schools and. universities does add. to the ~ ita real income of society, but I cannot consider this a q,uestion of the first importance. hat matte~s to me i~ whether we are improving the q,uality of the men and women of the Province. It is by this test that I judge the achiôvement of our university. and, of our primary.and. second.aryed.ucation as well. For the purpose of this evening’s lecture I am dismissing this larger q,uestion from my thoughts. 4. I am naturally harsh in my judgment of men who seek not the truth whether it be congenial or distasteful, but the pro,~otion’ of some ulterior aim, even if this aim is d4sinterested and uns~1fisb like that of the missionary or the prohibitionist. I draw a sharp —3— line between those who try to make us holy and those who try to make us free, between those who try to make us rich and thdse~ ‘who.. 0 try to make us wise, I do not see much ground to fear that posterity will not be rich enough. I do think that there is serious ground to fear that posterity will not be wise enough. But to-night I shall speak of economics alone. If I do all this in order to be fair you. must not reproach me if I am cold-blooded in my reasoning and. exacting in the standards which I set for men who have undertaken important public duties. II. Is the, Report advice or propaganda? The Kidd. report is in form the expression of the agreement reached by five business and professional men oonoerxking the financial position of British Columbia. These men undertook a public duty. Their fellow citizens looked to them for a trustworthy statement of the facts of the case, and for a reasoned. statement of the conclusions which they drew from those facts. When I read. the report this was what I expected to find.. I have come reluctantly to the conclusion that the authors of the report succumbed to the temptation by which they were assailed. to state their own Opinions and to arrange the facts which they cited. as a defence of those opinions. I shall give you, in the course of the lecture, my reasons for this conclusion. bat we have before us is in my opinion a piece of propaganda, or a debater’s argument in support of the cause which he has eleotëd. to serve. It is a statement of the views of a limited case inthe corn-. munity, and. of an effort to persuade others that these views are —4- sound.. But this statement has been printed at the expense of the taxpayers, many of whom are in complete d.isagreement with the opinions which it expounds. I need. hardly emphasize the degradation of public discussion which results when a position of confidence is abused. and~ when to highly controversial opinions the label of impartiality is attached.. But in fairness I must add., as I have done else here, that I think that if the members of the Committee have put themselves in the position of masQuerading as impartial experts, they have done so thoughtlessly and. without the sinister intentions which would. justify the resentment which is bound. to be felt in many Quarters. III. The Kid.cJ. Report and the May Re~port The authors of the Kidd. Report have obviously been greatly influenced. by the celebrated. May Report and. they freQuently stress their resemblance to the May Committee. This Committee was appointed. in England. in March 1931 in accordance with the resolution passed in the House of Commons by 468 votes to 21. The report, published. in July l93l~ cost ~75:l2:lO in addition to the expense of printing. It sells for There is no better way of seeing what was in the minds of the lCid.d. Committee than to consider their reference to the May Report. Sec. 30 of the Icidd. Report reads, “It is interesting to note that the May Committee’s report was published just a year ago hen the financial position of Great~alarm. Since that date a balanced budget has been produced and. last week it was announced that the b~k rate is now 2 per cent., the lowest in existence since 1897. —5- The conversion of ~2,OO0,0O0,OOO of public debt from a 5 ~er cent. to a 3 1/2 per cent. basis is in progress. It does not r quire much imagination to appreciate the benefits to industries and the taxpaying pub1~o generafly of the foregoing reductions resulting from a balanced budget . This section bristles with inaccuracies and. our first critical problem this evening is to see what inferences can legitimately be drawn from them. In the first place the section does seem to imply that British Columbia has a ban~c rate ~p lowØr and a~ large interest bearing. debt sue eept~1ø of conversion. Thus vague expectat ions are oxo~.ted. In the seoond:the whole contention of the Kidd Report is that we must balance our bud~et b~- economies. To omit to state that the ‘~Br~tish-budget was improved more by taxation than by economy might be fair~ in debate but it is hardly a trustworthy situation of the relevant facts. (T~.xes~M. ~ Economies~M. 70). - To say, “Sinee that date a balanced budget has been produced.” does suggest that previou~ budgets were unbalanced. But in the sense in which British Columbia has had. unbalaced budgets Great~ Britain has had none,. aragraph 1 of the May RepOrt shows that in evOry year fx~m 1921 to. 1931 money was made available for the redu~ti.on of debt - normally about 150,000,000 a year. The May Conimi%tee argues tI~at appearances were dec:eptive because non—recurrent receipts or nest eggs were treated as ordinary revenue à.nd. beoãus6 loans to the unemployment insurance fund were not counted. as an expeMiture. But thè~è loans never equalled, the amount~ set asjde~for debt reduction. The Committee anticipated that there would be no nOn—recurrent items left for 1932-33, and. wanted no more loans to tbe~ un— eznploynie4t fund. and. wi~bed to maintain the sinkihg fund. ‘On this basIs~a deficit of ~ M 120 was anticipated. . . It is true that on Sept. 10th, 1931 a ~eoond ~d.get was intro duced. because of the unexpeotedmonetary crisis. foreign lenders in sisted. on reduced. expenditures. Lilce its pred.eoessors it —6- was a 1~Lanoe& budget. It is also true that British budgets had. two defects: future liabilities were undertaken without setting aside a reserve fund. to accumulate for their payment; and. the dead. weight of the debt increased faster because of falling prices than it was reduced. by repayment. A balanced. budget was not a new thing in England.. Was the Kid.d Committee justified in saying that the reduction in the bank rate and. the debt conversion resulted. from a balanced. budget? Even the man in the street knows that other important causes were i\\L ~Od~~’ ‘~&~ ~)%4~S~ ,~ ~X ~ ~. ~ ~ _ operative.,, Grreat ~ritain “went off gold.” and~. high bank rate .~ ~ ~ Z~’~ no longer required. to keep foreign balances in London and. to protect British gold. reserves from demands by foreign creditors. Drastic restrictions were placed. on imports, on investment abroad., on foreign travel, indeed on all transactions which might deplete the London money market. New issues of stacks and. bonds were restricted. Money, therefore, accumulated for investment and was practically driven into ~he government bond. market. Under these circumstances the bank rate was reduced and. the conversion of the debt put throu€h. A balanced budget was helpful but was not absolutely essential for these measures. In no real sense could. they be said. to result from it. This at least is the usual view. The Kidd. Committee gives no reasons for believing it to be erroneous. Their omission is to be regretted. Good reasons would. have been a contribution to the science of economics which would, have been unequalled, in the past century. If good reasons exist I hope that Mr. Kid.d. will state them to—night. If the Committee has given bad —7- reasons it would. at least be free from any suspicion of insincerity. As it is we are left with two alternatives: either the Committee was extremely ignorant of economies, or it made its statements recklessly without foreseeing the distrust which they would. inevitably excite. When I have spoken elsewhere on the Report I have found. myself defending the Committee, for I think that its members are honest men and that they meant what they said., The end. they had. in view may have been relatively innocent. They were obviously preparing the way for the appeal which they make in block capitals in section 31, “OUR RECOMMENDATION IS TO FOLLOW THIS EXAI4PIiE. AS WE HAVE EADY INDICATED, INCREASED TAXATION IS IMPOSSIBLE, AND, ~THEREFORE, THE ONLY ALTERNATIVE (sic) Is TO REDUCE EXPENDITURE AS RECOW~ENDED IN THE SUCCEEDING CHAPTERS 0F THIS REPORT.” -~ ~S ~ ~‘ ~‘ ~i *L~J~\ ~ ~ q,~ •.-~ In my view hen section 30 is intended. as a blurb, or perhaps as salesmanship (an art of which the Committee think so highly that~ they would ha e it taught to children of bweicve, who would, I uppose, be taught that you may puff your goo~.s~ as .iong as you avoid mis representation). Or the Commiti~e.e may have. ~oa~ted. a little to keep its courage up and section 30 may be analogous to the rum ration issued to infantry going over the top. IV. Differences between the two Committees. The first difference. Although the ICid.d. Committee believe that their work resembles that of the May Committee, a critic can distinguish two important differences. The first concerns economics, the second. concerns social justice. —8— The May Report is a document which an economist can understand. and which be must take seriously. It deals with the financial situation of Great Britain over a period of twenty years without any undue emphasis on the recent depression. Wage and salary rates are constantly measured by the indexes of the cost of living and. compared with the buying power of the pound on the one hand, and with the rates in private employment on the other, subject always to the consideration that those who do not benefit from the boom should not suffer in the slump. Under the phrase “sacrifices all—round” the May Report indicates the possibility of taxation which will not be a burden to industry, but says that taxation lies outside its province. e have seen how the Kid.d. Report deals with economics (or at least with financial histozyr). To prove that higher taxation is impossible it lays down, without any attempt at proof, ant. ecqnoiz4c law, “Taxes of every description are an important factor in the costs of all in dustries; they affect both the employees’ cost of living and the in dustry itself.” (Section 27) The May Report makes no exciting con tributions to eeonomic theory. IV. A. Digression to examine the use of figures by the Kid~. Committee. It is convenient at this point to examine how the ICidd Com mittee deals with statistics. Like the May Committee it has to explain the growth of education costs. The May Comn4ttee, in paragraph 499 ~ Uji~ Cv’~ shows the expenditure from l92~. to 1931 year by year; divides it be tween rates and, taxes (i.e between local and zational taxation) and relates it to the population of state—aided schools. Paragraph 500 goes on to say that the cost falling on public funds has nearly trebled. —9— in the period. So too has the cost per child. The Kid.d Committee in section 154 says, “The total cost of public education in the province has risen from ~1,9l’7,263 in 1910 to $l0~06l,,387 in 1931. These figures are taken from the annual report on public schools and include the cost of education to both the Provincial government and the xn~nicipa1 authorities. The increased cost of public education shown by the above figures can only partially be explained by increased population.” The year by year figures are not given. If they had been given it would have appeared that the cost of education more than doubled between 1910 and 1913. The latter year is freq~uent1y used as a basis for comparisons as being the last pre-war year. The Kid.d. Committee takes its revenue and expenditure figures back to 1912 (Para. 4) and. its figures for gross debt back to 1914 (Para. 13). The choice of 1910 is thus peculiar, it is not exj~1aine&. From 1913 to 1929 (the peak year) education costs rather more than doubled, as against nearly trebling in England. The cost per child ed.ucated did. not increase very greatly as the school popu— lation increased by 90 per cent. The Kidd Committee makes no mention of this relevant fact but makes its comparison with the total~ When the May Committee considers ~ salaries in paragraphs 134 to 155 it relates them carefully to changes in the cost of living. The Kitiö. Committee does not allow in its calculations for changes in the bu~ring power of the dollar which taken alone would have led us to expect an increase in education costs between 1913 and 1929. Indeeo. in terms of commodities the cost of educating a child — 10 — was almost 20 per cent0 less in 1929 than in the average of the three years before the war. Of course all that the Kidd Committee has said in so many words is that the increase in cost “can only partially be explained. by increased population”. Well, I have given the rest of the explanation. But, if I am to speak frankly, I must say that I was profoundly shocked by section 154. It seemed. to me that the Committee was deliberately using misleading (though true) figures to make the public think not only that economies were possible in our educational system — this may well be true — but that gross wastefulness had. grown up in recent years. That suggestion was used. instead of direct statement seemed to give an element of treachery to the proceeding. However, I reflected how serious a char~ I was mentally making, and. I wondered. if it were not possible that the Com mittee had really believed~ that their figures and. their remark gave a. substantially true picture, or if there could. not be some other innocent ex~p1anation. The problem is not unlike that which faced us when we examined the economic arguments about the balanced budget. If I were debating and not lecturing I shou.)i press this dilemma: Did. you deliberately when in a position of trust use selected figures and defective economic analysis to deceive your fellow citizens, and. make them accept conclusions which they might repudiate if they knew the truth; or were you yourselves so ignorant and so incompetent as to be misled. by your own figures and, statements s#—tha-t when their shortcomings are pointed. out 1y~u are~ready to modify the conclusions which you. reached on the basis of this defective material? — 11 — As a lecturer I must point out a third. possibilityr which I think the true explanation. Many practical men form their opinions more or less unconsciously and. look for their reasons afte~~?ward.s. They cia nøt ôxamin~ facts and argimeñts in or~r~t~,o rna~c.~ ~p their minds birt they make u~ their mi~n~&s first and. idok for reason~ later, when they wish to convince others. Utterly s~ire that they are right1 sincerely cony need. that they ~. \‘~j~ ~ ,,g~ % ~ -~ cannot be wrong, they are not inclined. to be critical of any arguments which seem likely to be effective. Ernest Renan in speaking of religious controversies deplored, the general im—. scrupulousness of mankind. as to the n~ans used, to cionvince others. The word. propaganda has spread. from religion to economics and. has aoq,uired a more and. more sinister connotation. But I am not accusing the Committee of complete oynioiem in dealing with the publio~ I think they were, q,uite simply, careless about something which in their opinion n~ttered. very little: the arguments used. to convince the public of the truth of opinions in which they themselves sincerely believed.. I believe it to be the duty of a university to a~ttack this sort of carelessness; to take a stand. for integrity in reasoning and, to attack opinions based. on unconscious judgment or bias, The whole advance of science — more broadly the whole advance or human thought — depends on integrity in reasoning. We try to teach students to think. Thinking means looking for facts and. arguments first and. basing opinions upon them. In controversy they must not look for — 12 - arguments as one looks for a stick to hit a dog. This is the in tellectual phase of education, distinct from its aesthetic, moral or physical phases on the one hand., and from the aoquisition of knowledge which is popularly supposed to constitute its aim, on the other. One must grasp this point if one is to understand why we think that even higher education should. be relatively widespread and why the education of women is important even if they do not enter business or professional careers. It is a point which it is often hard to explain to bu.ainess men ~ho are confident that they think very well indeed even when they cannot put their thoughts into words. I am, therefore, not sorry to have an opportunity of using the Kid.d. Report as an Ulustration. However, my explanation, if true exonerates the Committee. Tout c’est tout pardonner. Those who resented. what they thought a deliberate and. treacherous attack were misled by appearano~ and perhaps those too were wrong who supposed that the grotesq~ argu ments advanced by the Committee really constituted. the path by which they reached. their conclusions. It is on this charitable hypothesis that I explain the dootrinnaire statements of alleged, economic principles which appear throughout the report when it is more convenient to speak with the voice of authority than to advance reasons. For instance, take section l9~~ ‘~ “it i~ ‘o~f the very essence of economy that a state (the context ‘obliges us to take this to mean a province as well) be as self—sustaining as possible in the way of sup~plying its eople with essential food products.” How happy for us that our customers have — 13 — not discovered this basic truth Section 160 ~ontains another example, “The capacity of society, as i is at present constituted., to absorb aspirants wheth~ ciualified or not to the scholastic, professional, executive and similar occupations is limited., and our educational authorities should. not ignore this very practical aspect of their problem.” Here the con tribution to economic science lies in indicating the existence of occupations with unlimited capacity to absorb aspirants. It is of these that educational authorities would. be glad to hear. IV. B. The second difference between the two Committees. The second di~fferenoe between the two aommittees is still more important than the difference in their competence to 0 onduot economic investigations. The proposals of the May Report are based throughout on a standard of social justice. Paragraphs 565 and. 566 go to the root of the matter. The concluding words are, “But if a policy of selection is adopted, if economies are only attempted where little opposition is anticipated, if certain classes are called upon in the national interest to suffer serious reductions in their emolu.— ments while large unprofitable expenditure goes on unchecked in other fields, resentment and opposition will be arouced. an& the eventual result in savings will be negligible; the object of our appointme~it will remain unfulfilled “ This paragraph shows that the May Committee clearly recognized that it stood in the position of a judge attempting to distribute — 14 — burdens fairly and eq~iit ably within the community, and also tha t only by inspiring confidence in its fairness and. eq,uity could. it hope to persuad.e people tp~ak~e~ saerifioes. The words fair and. eq,uitable recur again and. again. , Whe~ther it is discussing the p~ of .poilóemen or of teachers, or the pensions of service men or of the indigent, the Committee is careful to examine when and how the rates were fixed~, what the movement of prices has been, and. what the position of comparable services is. For such calculations you will look in vain in the Kidd Report. In the main the May Report justifies proposed. reductions of pay or pension on the ground that there is some special privilege to be swept away before all—round, sacrifice is asked for. It insists that what it calls the relativities must be preserved. The Kid.d Report practically denies that all—round, sacrifice is possible (for it would be t4xation). It defends its economies as matters of necessity rather than of justice This line of argument supplies no answer to the uni versal q,uestion, “Why me rather than another?” V Similarities between the two reports. While the Kidd. Committee has unfortunately nO~ followed either the careful economic methods of its model or its appeal to justice, it has unhappily imitated. it in matters in which imitation is dangerous. It has tried to transpose to British Columbia the economic situation of Great Britain by stressing the similar need for a reduction in public expenditure0 In doing this (and. I think from no sinister motive) the Kidd. Committee is led. to treat the sit~ation 15 — in British Coluiiibia as if it were chronic when no strong reason for such an opinion is forthcoming. The situati n in England. in March 1931 was the result of ten years of serious unemployment. Until the recent depression people had carried on hoping for a trade revival. Many temporary measures were adopted. Money we have seen was lent to the unemployment insurance fund. Rates of insurairee were actu~rial1y unsound. Budgets were balanced by nes.t e-gs. Thd.~epressionsbowed.. that the situation ~. .‘~ was not temporary and that new financial policies had. to be found. Rçnce the May Committee, and, hence, its pi~oposaia for rediioing salaries which would not have been touched in a temporary depression. ,~‘ These English cond.itjona have no real parallel in British Columbia. Recent years have been prosperous years with high empioy~ S mont and. with rising per capita. income The Province had a bi~ real income. If the finances were in baLd. condition it was because ‘services had been undertaken without ad.eq,uate provision, for pa’ing for them. There were no privileged. services in the sense of the S * sheltered ocCupations in Er~land.. With us the, pay of teachers did. not attraot men and. women of wastefully great ability or wastefully high q.ualifioations. The pay of government services was low in com parison with many alternative occupations. The present depression in British Columbia i~ as far as we imow temporary. Our plans for unemployment relief, etc., have been based. on this supposition. People with fixed. (?) salaries enjoy an advantage at the moment, which they have often surrendered. — 16 — by a temporary salary reduction. But over a ten year period, there (certainly none appears in the Kid.d Report) for Supposing them overpaid. Presumably business men made provision out of the fat years for the lean years while sa1~ried men were more likely to treat their i~co~es aS.ermanent. I~ what we are facing is a t~mporary ewêr~&noy the natural measur~t6 :~S~ ja one of sacrifice all—round. wi?th èorne” speài~ai bui’dens on those who benefit by ow prices and some special concession for those who are suffering most from the slump. B~.t.thë•’Kidd. Committee seems to contemplate permanent rather than temporary changes and either in order to reach the conclusions de sired by its members, or, as I think more likely, under the influence of the May Report which spoke of British conditions, the Kiild Committee treats our financial difficulties as if they were of long standing. The part which the depression plays in oreating our present difficult situation is, therefore, greatly understated. Indeed. it is used. mainly in order to show that we can no longer pay for the services to which we have become accustomed On the other hand. the long Be ies of deficits resulting from wasteful expenditure and,u.ate taxation is given full value. The result of this method of approaching the problem is disastrous to clearness of thou€ht. It forces certain con~luaions into prominence: the difficulty of taxation and the necessity of economy. It shuts out a ~.anoed. long time view of our financial position. — 17 — VI. A reasonable approach to the problem. The first distinction which we draw when we consider public finance is between the real incoim of a society and the re— venue of a government. A society must in the long run live within its income. A government may be poor when society is rich and if taxable capacity exists it can increase its income to meet its needs. In normal conditions a government does not say “Here is my income, how shall I spend it.” It says, “Here are my commitments, where ~ c ~, ~ \~ c~c~ ‘,-z~ ~. ~. ~. ~, -~. shall I get my revenue.” Its problem is one of arranging things so that no expenditure is und.ertaicen if the tax to pay for it does more harm than the expenditure does good; and what is equally important that no expenditure is neglected if it can be paid for by taxation which will do less harm than the expenditure will do good. Then instead of raising revenue a government may borrow. Such a course may be justified at times when expenditures are urgent and taxes would do great harm, e.g., by checking economic recovery and thus reducing the income of society-. The Kid.d Committee reviews our expenditure from the stand point of our taxable capacity in a depression year. It even appears to judge past expenditure by this standard rather than by the inoonE of society in the year in which it was incurred. Thus our expenditure on education is represented as rising shockingly at a time when it was not rising as fast as our per capita wealth. It is condemned on the ground that our income during the depression is low. This method of reasoning would be valid only if the depression had been foreseen. — i8 — I am not attempting to evade the immediate issue. e must d.eoide what to do during the depression when society?s income is low. Taxation is not only peculiarly disagreeable bu~ it may retard our economic recovery, If ou.p were good. there might b.& somet~iing to be said for borrowing to carry on important services. Unfortunateiy this device has been used. to excess in prosperous years and we have to pay interest on past debts in the face of falling prices. Since we cannot borrow we must either economize or 3_~ t~y~~a-4.’L,~ tax or do both these things. The problem of government finance is still to balance expenditure against taxation but the evils of taxation have increased and. a different balance will have to be struck. You see that I am coming to conclusions not very far removed from those of the Committee but by a path which I consider intellectually respectable and. without I think creating the distrust and. resentment which their method of approach arouses. By all means let us see what economies can be made and. how little we need. rely on new taxation. The economies proposed by the Kid.d. Committee fall into several groups. The first consists in eliminating the wasteful ex~pend.iture incidental to pari~ politics. This is well worth doing but hard. to do. The Committee suggests that the time has come for a change of heart. For once I think them too optimistic. The second. group of economies consists in lowering the cost of administration by combining departments and, eliminating overlapping. U — 19 — Nothing could. be mdre.d~s’irab1e and. th~ suggestions of the Committee on how this cai~ ‘~e done, made after consultation with the civil servants concerned., deserve the most respectful attention. Closely allied are economies to be made by simplifyirg our government. Even the retention of the office of Lieutenant— Governor is made to depend on the possibility of getting him to recognize as duties the rights which Bagehot attributed to Queen Victoria. However, an amendment of the B.N.A. Act is a o~Eb~r~ä’r~4 process. Provincial legislation alàne oould. reduce the siz~e~ of~ the is islature and. of the Exeou~tive Council. Here some taxation could be obviated with no great sacrifice in service. Economies in connection with the administration of the social services and. in seeing that no money is diverted. from the specific objectives of each project are at all time desirable. From these more or less non—controversial economies we must turn to economies which raise q,uestions of social policy or of social justice. Here the Committee is at its veryworst. It is not representative enough to deal with such matters. It contains no representative at labour, none of the indigent classes, no economist and, no wo an. Of jLlstioe it takes no account except in recommending that there may have to be some indemnification for dismissals (Section 239). There are other nested interests to consider. The abandon ment of the P.G,E. would inflict some hardship on settlers who rely on its continued operation. Their circumstances reciu.ire study and — 20 — receive none. The closing of the university would inflict some bard.sbip on property owners who have invested in the reasonable expectation of its continued operation. Members of the staff who have bought land at the site deserve some consideration. So do investors who have built apartment houses, or who have committed themselves to ventures in WestPo~.nt Grey. The effect of neglecting to discuss these vested interests must not be overlooked. It paves the way for those who would. sacri fice the holders of provincial and. municipal bonds, who have aft~ all actually benefitted by falling prices of commodities. It makes it easier to say, “We will inflate the currency by Dominion legis lation, or repudiate our bonds by provincial legislation. Legib— lation will make either of these courses legal. As for moral obligations, five representative business and professional men have shown us how much to worry about that.” Closely allied to these vested interests are those of employees whose salaries it is proposed. to out. As the May Com mittee forcibly points out a salary out to be aocepted. with good. grace must be justified. Salaries out of step with those prevaili~ outside the government service can fairly be reduced, subject of course to the reservation that earnings over a reasonab)e peric~. must be averaged. An argument on this basis must be reinforced by a study of the cost of living of the class of employee affected. it requires attention to any assurances which may create a moral — 21 — expectancy if not a legal right. The May Committee proposes many reductions bu.t it never abandons its conception of fair wages or of the State as a model employer. It indicates the point at which reductions must stop and all—round sacrifices begin. The Kid.d. Committee, without establishing or attempting to establish any eq,uitable basis for its recommendations, proposes to reduce the incomes of teachers by 25 per cent, in the aggregate. As some small incomes could not be reduced, at all the larger ones would have to bear very large percentage cuts. But a proposal which I made elsewhere to increase the income taxes, after every reasonable economy bad been made, so that the avery richest class of taxpayer would, be affected in a much lower percentage of his inoon~ was spoken of by a n~mber of the Committee as “wild and illusory”0 It seems reasonable to predict, that in the wise words of the May Committees “resentment and opposition will be aroused” and. that “the object of the appointment will remain unfulfilled” We have next to consider another class of economy: the definite for,going of certain services. The Committee would. stop free education on the fourteenth birthday and. would presumably send bills to parents for one half of the proportion of the cost appropriate to the ~nexpire6. portion of the term, taking into account the proper share of interest and. sinking fund. charges on the cost of the building. It would, therefore~ be cheaper to attend school in an old bui)&ing which had been paid for and, most extravagant to attend. a school built — 22 — when prices were high After the sixteenth birthday the parents must bear the whole cost. Curiously little attention is paid to the indirect costs of this change in social policy. In the depression it is not easy to get jobs and, a boy or girl more especially a boy) icept ±t±at’i~.& at this critical age d.eteriorates morally very fast0 Criminals are very costly to society and it seems wasteful to manufacture them. Suppose the depression over. We can then afford, to educate these boys and, girls if we care to do so The Committee think it better not to educate them. It is good for the majority to enter industry or agriculture or salesmanship when their ole— (4r1~~~ mentary education is over: I.e., at the ages of •~ ~- .r tbirteen,~ How maxay of you are of this opinion when the education of your children is under consideration? How many do withdraw their children at this age, for the sake of the child? What would you think of someone who did? The Committee?S opinion is an unusual opinion. It may be true for all that. What has the Committee to say in support of its contribution to the theory of education? Not one wordi The Committee adds tb t this early entry of children into industry ( we are of course, though the Committee does not say so, supposing the depression at an end) is good for society. Once more no proof is given. There seems a little evidence to show that only a society with a backbone of peasantry would. satisfy the authors of the report. But what if society aims at limiting the number of men— — 23 - hours in industry to avoid, the financial ruin which comes from pro d.uoing too much for the market to bear at profitable prices? Might not raising the school age be the best method, of accomplishing this limitation? The Committee seems to have come to a conclusion as to what was good. for society without bothering about these conjectures. And. yet if one really studies the subject this is not an easy thing to do. There are to be scholarships for pupils of exceptional promise and. ability. What percentage of the youth of the country will be placed. in this classification by our five educational experts I do not know. And. yet until I know this I can. hardly form an opinion either of the merits of the proposal or of its cost. The classification is not known to ed.u~ational psychology. “Exceptional” is an indeter minate term. Does it mean 1 per cent ; 10 per cent.; cr 25 per Oeflt~? Does the Committee itself know what it means? Or is it to be defined. by the funds which on some quite non-educational grounds the Committee may think can be made available? If so its social eonseq,uenoe are in determinate. Presumably rich parents will remain free to injure their children by keeping them at school after their elementary education is over even if then are of only moderate promise and. ability. Why the rich should be allowed to injure their children in this way I do not know. Frankly it is absurd. to ask us to consider such “wild and. illusory” plans as these, thrown out in a completely irresponsible way. To leave the inchoate is only possi 1e if there is someone who is to be trusted. 24 — to work out the detail. But the Committee wants instant action. VII, The im lementation of the Re ort. The Committee propose an immediate session of the legislature to make those changes in our provincial constitution which must obviously, to be of use, precede an election. This session is also to give legislative effect to “ALL OTHER RECOM— ME1WATIONS IN THIS REPORT WHICH MAY REQ,UIRE THE AUTHORITY OF THAT ASSEMBLY”. (Section p4). To the wretched. M.L.A.’a no latitude or .liscretion is left. Qhey have been told what to do and~ are to do it. What possible q,ualifioations have the five members of the Committee for arrogating to themselves the functions of the electorate. Unfortunate2~j we are not oonsid.ering here a comic form of megalomania bu.t a seriou.s proposal made to a legislative body. It is a dangerous proposal. A large portion of our popu lation even if it does not believe in class war, does thinic of business men as hostile to them and, as utterly unsorupu.lou.s as to the means they use to promote their ends. I have indicated how much there ia throughout the report to confirm these people irvtheir opinion, Not only is the report as it stands highly provocative but an opportunity was missed for d.oing something to promote the confidence of different elements of society in one another by substituting discussion for private influence, Nothing could do more to weaken the position of any who wish to persuade the mass of the people that social justice and reasonable good. government can with patience be obtained. under the — 25 — existing constitution of society than to suggest that the legis lature without consulting the electorate should. embark on extensive changes in social policy which are very objectionable to great sections of the community. Such a proposal is revolutionary. A democrat might call it fascist. It is dangerous to make revolutionary proposals at a time when other have every temptation to be revolutionary too. Why this dangerouB proposal was made the Committee does not tell u.s. If I may hazard. a gu.ess it represents a certain dis trust of the electorate, a fear that if the electorate has time to think it may turn hostile. Demos may indeed. be a fearful beast, but bhose who would tame him to their purposes should. not begin by showing their fear VIII. Conclusion The Advice which mig~ have been given. Suppose that the Department of Economics bad. been con sulted while this report was in preparation, what advice would it have given? I do not know, but I do know what I individ.aally hope that we should have done. You can judge for yourselves whether it js good or bad, sober wisdom or “wild. and. illusory” nonsense. 1. We should, I think, have emphasized the importance of distinguishing economies of athninistrat ion from economies which involve Questions of social justice and also from economies which involve Questions of social policy. The importance of these dis tinctions is that when Questions of justice are involved the ecohomies should. be justified. by adeQuate argument in the report or else do— C., — 26 — finitely left to some boay which is able to weigh the consid,erat ions raised. When q,uestions of social policy are in issue the legislature should. not be urged to act without giving the electorate an opportatnity to pronounce its opinion. The test of whether such an issue is raised is not that the Committee should be doubtfu] of its own wisdom, but whether there is any important seotiQn of the publio likely to dis agree. Disagreement, whether rationally justified or not, means op position, and oppositionto one part of the report weakens it on otker points where there may be substantial agreement. 2. If the Cormnittee had, recognized. that some of its proposed. measures were open to dispute and that voters might conscientiously object to them i~t would have been forced to face the question of what is to happen if some of the proposed economies are rejected. It would have bad to say what form of additional taxation would be least objectionable. Even from its own standpoint I think that it would have been well advised to deal with th±s question. For people are more likely to reject economies if the alternative is vagt~ than if it is recise ~ the Committee could, have counted on a widespread. dislike of any form of taxation. 3. Finally we should have emphasized the importance of complete frankness in the use of statistical material and of utter siro.erity in economic argument. It is unsa~e to allow the public to think that you are trying to hoodwink them. A careless argument is far worse than no argument. The educational advantage of discussion on a high plane is not to be despised. Nothing does more to promote 3 1 eanflRenae 4vst as nothing &tspel$ 44nfttmC* more thazi sele~4,( ftgures or &afl0u~a reaso$ing~ BuS tar above all these qxzestt~~~ of b efl44.i0fl7 az~d O~t stratea rises the ree~c1 for the trflh a ~ )4ç&L)~ of thought withn.t which thought itself can barfly auntie. tt La no small matter to be able to feel, not merely that oze ~s Ljat<eztioz&a have been goo~ aid. one?s efforts generous - t~ membørs at the Committee eau~ I am ocfl~eat, feel tbi~ — hat ale that in ~‘a struggle for gook, elean. and. efficient g~ovemment one has not gtren i~u4*e weight to the oflnione and. iatercsts of one~s, that one’s flJs’weapona have been antarrdabed, that ane has retamed. the un~3talifie& res~eet as friend. and, foe sUite, and. that ~whether one has won. or lost, a eozflrtktion has been make to the s&vaneement of truth ane to tAt maintenance of that loyalty and. soUd.arity in society which are one essential if from our troubled. world. ord.erawd. iuatlaeA ~rosflrit~ a~a~.—hatna~y are ever to emerge.


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