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The Hobgoblin of Little Minds

By Scott Proudfoot, Hillwatch Principal

“A foolish consistency is the hobgoblin of little minds, 
adored by little statesmen, philosophers and divines.” 
Ralph Waldo Emerson

Critics are always hanging governments on the cross of inconsistency.

For the Trudeau Government, the sale of the Canadian Light Armoured Vehicles (LAVs) to Saudi Arabia ia is the current example.  For all intents and purposes, the sale was complete before the new Government took office. This has not stopped former Liberal Ministers and others demanding its cancellation due to Saudi Arabia’s history of human rights violations and the risk these vehicles might be used to crush internal dissent.

Critics of the deal pretend the solution is obvious but it is far from it.

Canada has a small military. We also have a small but important base of Defence Industries that support 100,000 plus Canadian jobs directly and indirectly.  These are not Walmart or Starbucks jobs. They are skilled manufacturing and engineering jobs with a high component of R&D. These are the type of jobs governments generally covet and the Trudeau Government has promised to create.

The plant producing the LAVs in London, Ontario has provided armoured vehicles for the Canadian military for decades. The Canadian military needs quite a few such vehicles and Canada has a competitive advantage in producing vehicles, so it is a logical fit for our country.

With only a small military, we do not generate enough contracts to fully employ Canadian defence companies.  They must rely on export sales. The defence industry generates $12.6 billion annually in revenues but half ($6.4 billion) comes from exports to other countries.

Canada has preferential policies in place to favour the manufacturing and servicing of defence equipment. Defence equipment is the largest single slice of the Federal Government’s capital expenditures. These preferences ensure, at least, some of those billions of dollars generate jobs and investment in Canada. And we do not always want to be reliant on foreign suppliers in a conflict and be second in line while their military meets their needs. Not everyone agrees with these policies but they have been supported for decades by successive governments of different political stripes.  Most allies have similar policies in place.

With such a small domestic market, Canadian companies must fan out and sell their products around the globe. They usually do this as junior partners in complex supply chains dominated by a small number of large defence contractors. In the case of the LAVs, it is General Dynamics and this sale has as much to do with the relationship between the Saudis and the US military as it does with Canada.

While it would be nice to restrict our sales to countries that do not violate human rights, there is not much of a market.  Most nice OECD countries like ourselves favor their own domestic or regional defence suppliers.  That leaves Canadian companies largely cut out of their big defence sales.  Many of those countries were competing against us to win the Saudi deal.  So sometimes we sell our military goods to countries who are less than ideal international citizens.

Depending on how you look at it, the Saudis are a good or bad example of this. They are a kleptocracy with a poor track record on human rights.  Our values and theirs do not line up in any number of ways.

But they are also an ally. They are not a great or a reliable ally but, in the snake pit that is the Middle East, they are what passes for an ally. They are fighting Al Qaida and ISI; they line up against Iran; they are not as directly aggressive as others on Israel; the West needs their help and money on refugee issues.

And they have all that oil! The West support them is not because we like the current Saudi Regime but because we are scared of who will come after them and control that oil.  We support them because of shared fears, not shared values – proving the old adage that the enemy of my enemy is my friend.

Critics of the deal pretend walking away has minimum consequences.  They are naïve or fibbing.

First, contracts have been signed.  Law suits and damage claims would ensue.

Second, more than the 3,000 plus jobs at the London LAV plant would be at risk.  Authoritarian regimes do not like to be publicly embarrassed. They will not buy other defence goods from us. Many Canadian non-defence suppliers in Saudi Arabia would lose business. (Canadian companies currently exports $2 billion annually to Saudi Arabia.)

Third, other regimes will notice. Why take a chance with Canada when there is the risk we might cancel the deal and embarrass them at the last minute? The short and long-term damage to our Defence industries would be significant. Other Canadian export industries could suffer.
 
Commercial reputations matter. If we don’t want to sell to the Saudis; take the decision up front – not two years after the contract has been awarded. Don’t cancel at the last minute when buyers and sellers have invested so much in the sale and the Canadian Government has already supported and endorsed it. To its credit, this is the positon the new Government has taken.

Our relationship with Saudi Arabia is not about our ideals, it is about our economic and security interests.

If we took a stronger stand on human rights and cancelled the deal, one of our allies would step in and get the sale.  There would be a large cost to Canada in terms of jobs, investment, and exports. Our defence suppliers would fall out of contention for many other contracts in the Middle East and elsewhere. We would end up with a much smaller defence industrial base and fewer jobs in Canada. The Canadian Government would be exporting more defence jobs outside of Canada.

As much as the critics suggest this is a black and white decision, it is not. There are no ideal trade-offs between human rights and our economic and security interests. There are only morally ambiguous choices.

This will not be the last time the Trudeau Government is criticized for being inconsistent. It will be front and centre if a trade deal with China is pursued.  (What about their human rights record?) It will be repeated when Liberal promises on the environment or aboriginal policy or gender equality come up short.

At one time or another, most Governments are criticized for being inconsistent.

Journalists love inconsistent Government stories.  They are easy to write.  Such stories puff their occupational narrative of holding the government’s feet to the fire.

For those advancing a particular issue, it is less about consistency and more about having a stick to beat the government in the hopes of winning their support for a preferred positon. For example, assume the Trudeau Government announced defence sales were more important than human rights and henceforth, they would support one and not the other. Critics of the Saudi deal would not congratulate the Government for being more consistent. 

The more interesting issue is that many of us believe that Government actions should be consistent and hang together.  This is demonstrated by how Government spokespeople act when caught in an inconsistency. They dodge and weave.  They deny and obfuscate.  They do everything possible but admit government policies are working at cross-purposes.  The contortions involved confirm the public importance of maintaining an image of consistency.

But, policies working at cross-purposes are a common feature of Governments.

Government supports competitive, efficient markets but many regulations protect some industries and impede others. We tacitly accept oligopolies in Telecommunications and Banking. Regional economic subsidies help companies in one region to the disadvantage of companies in another.

Supply management makes certain food staples more expensive and works against consumer interests and, particularly, the interests of poorer consumers who spend more of their disposable income on food.

Government supports the scientific management of fish stocks and then scientifically manages them to near extinction.

Governments want to reduce gambling addiction but support lotteries and casinos.

We support representation by population but the votes in some provinces count for more (E.g., Prince Edward Island).

All parties want to improve the educational attainment of aboriginals and increase their job opportunities.  To the tune of billions of dollars, we maintain a Reserve system that guarantees poorer schools and fewer jobs.

The Trudeau Government is considering more aid to Bombardier. Yet, they cancelled the expansion of Toronto Island Airport which will kill the conditional sale of $2 billion worth of Bombardier jet sales to Porter Airlines – a sale that would have cost taxpayers nothing.

Often when legislation is introduced some group, not the object of the legislation, is negatively affected. Sometimes these ‘unintended consequences’ get fixed before the bill receives Royal Assent, sometimes not.

Then there is the tax code which help and hurts savings; helps and hurts job creation; helps and hurts investment. A separate book could be written.

These examples just scratch the surface.

So why is Government shot-through with inconsistent policies and programs? 

Sometimes it just makes sense. Efficient markets are good but, in 2008, it was an advantage for Canada to have a well-regulated banking oligopoly. Human rights abroad are important to the Canadian Government but so are creating jobs at home.

Bureaucratic programs require transparent program criteria intended to be objectively and fairly applied. By design, that ensures their inflexibility. Standardized treatment will generate a certain percentage of inconsistent outcomes because all potential applicants’ circumstances are not standard.  So disproportionate, unfair and unintended outcomes for most government programs are inevitable.

Every time society has a problem, governments creates a new program. There is no automatic subtraction of an old program. Like sediment at the bottom of a pond, new programs are layered on top of older ones with entirely different objectives.

The democratic electoral process guarantees inconsistent policies. To obtain power, political parties must attract a broad base of voter support. This is achieved by making promises to multiple interests while pretending these promises are mutually compatible e.g.,we are going to improve services and lower taxes. Our investments in infrastructure will be strategic but every region will get its fair share.

At the root of the issue of consistency is a human longing for a coherent and stable social order - a longing which is neither obtainable or desirable.

We make sense of the world by plunking it into a conceptual box. But, no matter how much we insist the box is real - reality in all its confusing and messy details spills over the sides, on the floor and out into the yard – like kids’ toys strewn about.

As individuals, we see ourselves as more consistent than we are. E.g., we say family comes first but works usually get precedence. We care about the environment but live in homes far larger than our parents and have an anxiety attack when our devices are uncharged. Most of us are a mess of inconsistencies which we resolve by excuses, denial and self-delusion – the same strategies deployed by cornered government spokespeople.

So why insist that our Governments be consistent when they represent the sum total of our aspirations, demands and needs? In a democracy, inconsistency may simply mean Government is being responsive to a wide range of interests.

To be overly-concerned about consistency suggests a certain unhealthy monomaniacal obsessiveness. Great saints or great sinners comes closest to consistency in their lives but neither are desirable as political leaders.

It is possible for Government to be more consistent but it would have to do a smaller number of things and be unresponsive to the demands from certain sections of the population. This might work for a dictatorship or a theocracy but it does not work in a democratic system in which parties make bids (using our money) for popular support.

There was great consistency between Genghis Khan’s philosophy and his methods but we would not want him as Prime Minister; no matter how catchy his election slogan might be: “Slaughter the Men; Burn the Cities; Ravish the Women.”

The Physicist Neil Turok, Chair in Theoretical Physics at the Perimeter Institute in Waterloo brings an interesting perspective to the question. He suggests that, at both its tiniest and largest size and scale, the Universe obeys simple and predictable laws. But, in terms of size and scale, a living cell falls between these two extremes and resides in the “messy middle” where order and predictability often break down.

Inconsistency can be valuable for the social function it performs. It is an adaptive evolutionary strategy that allows us gloss over a complex reality that we cannot capture with our philosophies, religions, and values. It allows us to fudge difficult issues, paper over differences, and muddle through.

Perhaps when it comes to Government programs, we just need to ask ourselves whether the Government’s actions are consistent enough given the conflicting demands being juggled and the particular circumstances faced at a given time? If the answer is yes, then it is good enough for government work!





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