Prosperity and free-market capitalism
A recent week began with a speech at a major Western Canadian university, followed by business meetings in Montreal where I walked past an “Occupy” protestor encampment.
A recent week began with a speech at a major Western Canadian university, followed by business meetings in Montreal where I walked past an “Occupy” protestor encampment. Meanwhile, the Greek disease threatened to spread from Athens to Rome, bringing economic Armageddon to the entire Eurozone.
It struck me that these seemingly disconnected events are intrinsically related. Here’s how:
At the invitation of the university president, I spoke to the 158-member General Faculties Council, which includes vice-presidents, deans, professors and student union representatives.
My theme was two-fold. First, undergraduate teaching quality is dismal; an inevitable result of a systemic misalignment wherein professor recruitment, tenure and compensation decisions are dominated by research credentials rather than teaching performance.
Second, universities continue to churn out large numbers of teachers even as schools close due to lower birth rates, driving the unemployment rate for graduates to 66%. Yet large numbers of academically qualified applicants are turned away from medical schools due to “lack of capacity,” while millions of Canadians can’t find a family doctor.
In response to statistics showing the majority of arts graduates end up in “low skill level” jobs, I was told, “there’s more to getting an education than turning out workers for corporations,” as if my advocacy of focusing university programs on where the jobs are was some sort of a capitalist plot.
A few days later, I walked by Montreal’s expansive Victoria Square that was taken over by “Occupy Montreal” protestors. TV reports carried protester interviews, including a McGill University philosophy graduate who blamed the “system” for her inability to find a job. Another protestor railed against the “capitalist predators” driving the poor Greeks into bankruptcy. Both called on governments to fix things by “changing the system.”
Well, governments have indeed changed “the system” with disastrous consequences. Greece has built a bloated, overpaid, under worked public service. Unless palms of public servants are “Greece’d,” it can take years to start a new business. This has not only crippled private sector job creation, it has resulted in countless unregistered businesses that pay no taxes.
Eurozone leaders decided to pour billions into this dysfunctional state. Now the entire Eurozone’s financial stability is crumbling.
But the Greek tragedy is only a symptom of the lethal delusion shared by Europe and the US that governments are able to counter the forces of economic reality by simply pouring in borrowed cash. Every euro and every dollar of government debt must be borrowed from another person or another country. And now, for the first time in modern history, the sovereign debt ratings of several large Western-developed countries teeter on the edge of an abyss.
Big spending governments are collapsing under a mountain of debt that is leading to decades of economic stagnation, ravaged social programs and civil unrest. Yet the key to harnessing the natural potential of people to create prosperity was stated succinctly more than two centuries ago in a lecture by Adam Smith. In his work, The Wealth of Nations, he said, “Little else is required to carry a state to the highest degree of affluence but peace, easy taxes and a tolerable system of justice.”
History clearly shows free market capitalism is the only system that has ever created prosperity. But you’d have a hard time finding that fact mentioned in any of our academic ivory towers. No wonder students believe bigger government is the answer to every problem.
Gwyn Morgan is the retired founding CEO of EnCana Corp., a Canadian business leader and director of two global corporations. This column is distributed by Calgary-based Troy Media.