Saturday, June 23, 2012

What I Learned at Fraser Institute's 'Economics for Journalists'

Andrew Coyne argues left and right now converge on economy issues. Not in this classroom.

By Jonathan Sas

June 23, 2012

In front of a packed audience at the Gardiner Museum in Toronto in mid-May, National Post columnist and political commentator Andrew Coyne presented a compelling, if controversial, talk entitled "Post Economic Politics in Canada." He offered a bold assertion: the great ideological fights over economic issues that characterized Canada's public policy debates in the past have come to an end.

Yes, Coyne is referring to the country north of the 49th parallel, where a controversial budget bill has starkly divided Parliament and where one of the largest protest movements in the country's history continues to play out in the streets of Quebec over proposed tuition hikes. No, Coyne is not delusional. But with debates over austerity and the future of the welfare state raging across the Western world, one might wonder whether Coyne chose to stake his position at the wrong time.

When the financial crisis of 2008 exposed, once again, the instability of financial markets and the dark underbelly of global capitalism, many predicted an uptick in the political saliency of the economic ideas of the left. This backswing never materialized, Coyne argued. The left, it seems, was unable to rise to the occasion and offer any practical alternative to the existing order.

As Coyne sees it, the aftermath of the global recession in Canada solidified a convergence across the political spectrum, one already under way in preceding decades. Canada's left has by and large embraced the efficacy of markets. Conversely, Canada's right has conceded the value of aspects of the welfare state, and no longer aims to dismantle wholesale the fruits of the left's prior struggles.

Despite obvious differences about how to fine-tune the precise roles of the state and market, Coyne argues that no amount of rhetoric or acrimony in Parliament can obscure this underlying coalescence around the primacy of markets.

But if Coyne's right that the great ideological battles over economic principles are a thing of the past, someone ought to inform the men and women who work at the Fraser Institute. On June 5, the public policy think tank that champions free-market economics welcomed 24 Canadian journalists to Vancouver for a three-day seminar-style conference called Economics for Journalists, bringing together a diverse field of broadcast, digital, print and radio reporters from across the country to a trendy hotel in upscale Yaletown for a crash course in economic principles.

This reporter was there. And by the end of those three days, it was clear that what motivated the Fraser Institute to convene these seminars -- at great expense -- provides insight into the continued relevance of the very economic battles Coyne sees as destined for the dustbin of Canadian history.

No 'indoctrination' here

Bringing together 24 journalists to discuss any topic is a risk. One would imagine there are easier ways to spread the free market gospel than to lecture to a group of scribes and cynics.

But unlike Andrew Coyne, few journalists have studied economics formally, to say nothing of economic history or political economy. They are nonetheless tasked with reporting, communicating and ultimately connecting the dots of the daily economic events that shape the lives of their audiences.

The seminars, Fraser Institute President Niels Veldhuis explained politely to a skeptical journalist, are for educational purposes, and the substantive content that is taught is based on its rigorous, evidence-based studies.

In order to achieve the Institute's stated vision of a freer and more prosperous Canada, shaping a journalist's knowledge of economics seems a valuable strategic endeavour. The Institute understands well that publishing policy papers is only one of many different tactics to employ if they are to affect public opinion.

Nonetheless, participants were promised that the conference would respect and value "journalistic inquiry and independence." The seminars would seek to provide a forum for "learning, questioning, and critical analysis" that would help hone economic reporting skills, not attempt to "'convert' or 'indoctrinate' participants in free-market thinking."

To this end, Veldhuis kicked off the conference with a presentation that took aim at the current Tory government's "spending problem," one of many principled attacks of the Conservatives on display throughout the course of the seminars. Veldhuis warned of the dire consequences of growing deficits and the ballooning national debt, and held up the Martin-Chretien era of fiscal restraint as a proven model Canada ought to follow to right the ship.

Fraser economics 101

For the most part, the economics professors leading the daily seminars -- Mark Schug and Scott Niederjohn -- presented a basic round-up of the principles of the neoclassical school: Government intervention in the market leads to failures and distortions, and the world's most prosperous countries are the most economically free (as evidenced in the Institute's annual Economic Freedom of the World Index co-developed with Milton Friedman.)

Journalists were familiarized with key economic terms such as GDP, CPI and the unemployment rate. Other key concepts covered included opportunity costs; trade-offs and unintended consequences; cost-benefit analysis; the tragedy of the commons; and of course, the iron laws of supply and demand. Topics explored ranged from the functioning of labour markets to the dangers of a growing national debt, from the complexity of monetary policy to the fundamentals of fiscal and trade policy.

While (intentionally?) humorous video clips of libertarian journalist John Stossel kept the mood light, spirited exchanges did emerge. The assertion, for example, that minimum wage was an undue distortion of the market and a key contributor to high unemployment raised some eyebrows, as did the attribution of partial blame for the 2008 financial crisis to "too much" government regulation.

A presentation by Charles Lammam, associate director of the Centre for Tax & Budget Policy at the Fraser Institute, went "off the rails" when participants challenged his assertion that Canada's economic stimulus action was a "proven failure" and that the Institute had sound evidence to show that Keynesian economic policies more generally had no historical record of success in Canada or anywhere else.

While participants were assured that course materials reflected agreement amongst the vast majority of economists, the seminars were absent any mention of inequality or discussion of progressive taxation. Likewise, there was neither serious treatment of market failures nor any deviance from framing deficits as a purely government spending problem.

Room to waffle?

The key point to take from all of this is not the obvious ideological underpinning of the Institute conference teachings. Rather, it is in the convening of the conference itself. It underscores the fact that the Fraser Institute will not hang up its gloves because the left has lurched towards the centre and ceased to cling, at least in the case of the NDP, to more radical critiques of the market economy.

The Fraser Institute was founded in response to the Waffle Manifesto issued by a socialist splinter group to the NDP known as the Waffle movement in 1969. As Veldhuis explained in his opening remarks of the conference, the work of the Institute is but a continuation of this fight meant to ensure threats to the free market do not go unmet.

Whether the Institute is making firm distinctions between socialists and more moderate social democrats is an important question to consider as they pursue their own ideologically anchored public policies.

Coyne might contest that this point does not necessarily contradict his position; the Fraser Institute is simply engaging in what is, at times, the tumultuous "fine-tuning" of the consensus. They want more of a role for the market. But if this fine-tuning is so broad as to include bringing journalists to Vancouver to teach Milton Friedman, then the definition of "ideological battles" is too narrow and less meaningful.

The more centrist NDP leader Thomas Mulcair is no Mel Watkins or James Laxer, leaders of the Waffle movement. But as Mulcair continues to stake out major economic policy positions (ahem, the "Dutch disease" debate and the future of the tar/oil sands), might we not yet see deep chasms between left and right re-emerge to define, once more, the country's key public policy fights?

Calling for the abolishment of capitalism might have ceased to be as acceptable in our political discourse, but the fierce fights over Coyne's "fine-tuning" remain as important as ever for both the left and right. How long before the newly-minted Broadbent Institute takes a page from the Fraser Institute and holds its own conference for journalists, this one defending the economic credentials of social democracies and extolling the role of the public sector?

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