Provincial Procurement Policy and the Federal Trade and Commerce Power

The Obama Administration and Harper Government are exploring a deal where the US would drop the "Buy American" provisions of the stimulus package in return for provincial governments dropping their own local preferences in government procurement.

Stockwell Day is consulting with the provinces, and says he won't do anything unless "most" of them agree.

Constitutionally, I think there is a decent argument that the Feds could pass a law requiring "national treatment" and "most favoured nation" status on provincial procurement rules. In the Inflation Reference, the Supreme Court upheld wage controls affecting the provincial public service. It is widely accepted that valid federal legislation can bind the Crown in right of a province.

The Inflation Reference upheld the federal law on the dubious grounds that 1970s-era inflation was an "emergency" akin to the world wars. But there's a better case that a principled-based law imposing on provincial governments the general requirements of international trade agreements (especially national treatment and most favoured "nation" status) would be wholly constitutional. Indeed, it's hard to see why you would have a federation if you don't have free trade within it.

Social Security/ CPP

State of play:

1. We have a tax, the payroll tax, that is (a) regressive and (b) punishes employment.

2. We have a benefit, the social security benefit, which is also regressive, and which reduces saving.

3. The first brings in a lot more revenue than the second expends, and will continue to do so for a few decades. However, there is really no connection between the two.

4. We pretend that fact 3 means there is a "trust fund", but really there is just an accounting fiction within the books of the US Government, said books vastly in deficit overall.

Official Pith & Substance position:

1. This tax should be killed before any other tax. In a perfect world, the US Government would get the additional revenue (and enough to deal with the inevitable Bush/Obama deficits) from a national VAT.

2. This benefit should be kept at its current level. However, it should not be allowed to grow at the rate of the economy as a whole. Instead, government policy should "nudge" people into putting money in defined contribution plans, thereby increasing saving.

3&4. We should stop pretending there is a trust fund, since there is not, in fact, a trust fund.

Emerson, Reagan, Obama

Returning to the depressing theme of whether conservatism is played out, there is a good article by Richard Gamble on the ambiguous legacy of Ronald Reagan. There's a sense* in which conservatism needs to get in touch with its inner Jimmy Carter. It needs to emphasize limits, imperfectibility and original sin.

*Only sense. Carter was indeed a sanctimonious liberal technocrat.

Is the Right Intellectually Bankrupt?

We had a bit of a debate a few months back about which of the right or left is in greater need of intellectual revitalization. My two cents: inside the US, the right has become sectarian and doctrinaire -- elsewhere, it may still be the case that the left knows less about how its enemies think and is therefore dumber.

A rather more authoritative voice than mine has spoken. According to Richard Posner:

The major blows to conservatism, culminating in the election and programs of Obama, have been fourfold: the failure of military force to achieve U.S. foreign policy objectives; the inanity of trying to substitute will for intellect, as in the denial of global warming, the use of religious criteria in the selection of public officials, the neglect of management and expertise in government; a continued preoccupation with abortion; and fiscal incontinence in the form of massive budget deficits, the Medicare drug plan, excessive foreign borrowing, and asset-price inflation.

By the fall of 2008, the face of the Republican Party had become Sarah Palin and Joe the Plumber. Conservative intellectuals had no party.