The rise of the entitlement class

The rise of the entitlement class Photo source montrealgazette

“We’ve spent so much of tomorrow today . . . we’ve run out of tomorrow”

By Gwyn Morgan

What do the government union rioters who have turned parts of Athens into charred ruins and the university student rioters who burned and looted shops on Montreal’s St. Catherine Street have in common?

In a devastating lament for the decline of his home country, After America, Get ready for Armageddon, Mark Steyn gives the answer; “the Greek rioters are the logical end point of the advanced social democratic state: not an oppressed underclass, but a spoiled over-class, rioting in defence of its privileges and insisting on more subsidy, more benefits”.

Armageddon – Greek-style

The Greek form of Armageddon came after decades of building a bloated and corrupt public sector that devised ever more regulations, making starting up and operating a business a bureaucratic nightmare.

Private sector businesses collapsed or went underground. Tax evasion became a national art, reducing government revenues while deficit-fueled government spending kept rising.

It’s a graphic illustration of words written by Adam Smith in his 1776 masterwork, The Wealth of Nations, “No regulation of commerce can increase the quantity of industry in any society . . . it can only divert a part of it in a direction into which it might not otherwise have gone”. The end comes, as in Greece, when private sector wealth creation is overwhelmed by public sector wealth destruction.

So what does this have to do with those rioting Montreal university students? In two words: entitlement addiction.

The total tuition for a four year degree in Quebec costs less than a subcompact automobile. The very modest $325 year increases to be phased in over the next five years will still leave Quebec universities the biggest bargain in the nation. The average annual tuition in Quebec is $2,519 compared with $6,640 in Ontario, or 263 per cent higher. Tuition in Alberta, Saskatchewan, New Brunswick and Nova Scotia average more than twice that in Quebec. Even after the increases are phased in, students will be paying just 17 per cent of the full cost. The other 83 per cent comes gratis from taxpayers who spend their time working, rather than protesting.

All successful nations, perhaps most notably the United States and Canada, were founded on the industrious determination, self-reliance and personal responsibly that transformed an unsettled new continent into two of the most productive and wealthy nations in the world.

A great paradox of human nature is that the more handouts people are given, the less they appreciate them. And the more they are given, the more they expect. Or, as Mark Steyn states, they become the “spoiled over-class, rioting in defense of its privileges”.

And a big part of that spoiled over-class is unionized public employees. While workplace rigidity and excessive demands have led to the demise of unionized private sector corporations, employees of monopolistic government services face no competitive market discipline.

A stark example is Air Canada versus Westjet. While Air Canada unions seem determined to see their employer return to bankruptcy, Westjet’s highly-motivated union-free employees are keen to boost the value of their shares.

In Canada, competitive forces have driven private sector union membership rates to just 16 per cent, while public sector monopoly union membership has soared to over 70 per cent. Capitulations by strike-fearing governments at all levels have steadily widened the gap between wages and benefits of public employees and those of private sector employees whose taxes pay for them.

Of course, the more people become dependent on government, either through employment, government contracts or handouts; the less likely they are to vote for spending cutbacks. As Luxembourg Prime Minster Jean-Claude Junker put it “We all know what to do, but we don’t know how to get re-elected once we have done it”.

The climb back will be tough

The inevitable outcome is described by Herbert Stein’s famous adage, “If something cannot go on forever, it will stop”. And when it does stop, those who have come to see government handouts as a birthright will take to the streets, while those who truly need support will suffer. As Mark Steyn puts it, “We’ve spent so much of tomorrow today . . . we’ve run out of tomorrow”.

And, as we’ve seen in Greece, when no one will lend a nation any more money, the cutbacks are sudden, deep and painful. High unemployment and crippled social programs lead to civil unrest, making matters even worse. Witness the Greek riots that drove away tourists, the country’s prime source of revenues.

The only chance of recovery for nations which have “stopped” lies in the same place it always did – private sector growth. But the climbing back up from the bottom requires a complete new national mindset, and that is a perilous prospect indeed.

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

Troy Media