Sooner Or Later, Personal Responsibility & Fiscal Discipline Will Return

InsightSpencerFernando

No matter how much politicians or some of the public may want to avoid it, reality cannot be evaded indefinitely.

As we have seen over the past year and a half, the more we abandon personal responsibility, the more authoritarian the government becomes.

Many people have been glad to see this, revealing that a large segment of our population will jump at the first opportunity to offload responsibility for their own lives in favour of having the government control and restrict others, all ostensibly to make them feel ‘safe.’

We have also seen the complete abandonment of fiscal discipline, with government spending measures (initially needed since the government was telling people to stay home thus crashing the economy), transform into a long-term surge in debt and deficits.

This has revealed many people who would rather see a massive expansion of government than a return to a competitive, job-based market.

As a result, we have witnessed an unprecedented retreat of the values of personal responsibility & fiscal discipline.

The retreat of those values can be seen in the current state of Canadian politics, with all the major parties abandoning any plan to balance the budget in the near-term, while all promising a huge increase in government spending and the role of the state.

The Conservatives even pledged to spend more than the Liberals in the next few years, which left the PPC as the only party offering any semblance of fiscal conservatism.

Further, most Canadian politicians have fed into the dangerous zeal some members of the public have for ostracizing and punishing those who are unvaccinated, hence the push for vaccine passports and mandates (which is really about compliance and obedience), rather than focusing on immunity (whether natural or through vaccines), and rather than accepting that Covid won’t ever be fully eliminated.

What a crisis reveals

As they often say, you don’t know much about who someone really is until they are put under pressure in a crisis.

Some rise to the occasion, and some do the opposite.

Many Canadians – and people in other ‘free’ countries – have been surprised to see a large portion of their fellow Citizens give in to fear and embrace authoritarian government as they simply parrot the latest official line regardless of how absurd or contradictory it is.

Many have also given in to ‘Modern Monetary Theory,’ the idea that a country like Canada can simply keep on spending and racking up huge levels of debt without consequence, since we can ‘print’ our way out of any problem.

While MMT is correct that a country like Canada can’t go ‘bankrupt’ in Canadian Dollars because the Bank of Canada can create more dollars, they ignore the fact that Canadian Dollars can simply lose all their value, rendering the currency meaningless and destroying the purchasing power of Canadians.

The fact is, MMT isn’t something new, it’s simply a rebranding of all other failed attempts to ignore reality and spend unlimited amounts of money.

Why freedom & reality go hand in hand

Throughout history, the most relatively free country compared to others has also been the most powerful.

That’s no coincidence.

In many ways, the human brain is a problem-solving machine, and when a large number of people are free to both assess problems and then test out their varying solutions, the truth is arrived at far more quickly than in authoritarian places where one person or small group at the top directs everything.

It’s why the US is such an innovative place, even as people criticize it for being ‘unorganized’ and ‘chaotic.’ The ‘chaos’ is a key reason for the innovation, as the lack of centralized control and attitude of independent thinking so prevalent in the United States generates a tremendous amount of wealth and technological progress.

The same is true of countries like Canada, when – at our best – we embrace the idea of limited government intervention and a respect for individual freedom.

With individual freedom comes personal responsibility. In truly free nations, governments leave people alone for the most part, which means people take responsibility for their own lives. Further, this is linked to fiscal discipline, since a government focused on defending individual rights will be limited in size and scope.

With Canada clearly moving in the opposite direction of the principles listed above, the question is how long this can go on.

Indefinitely?

I think not.

The fact is, we are already seeing the consequences of abandoning personal responsibility and fiscal discipline piling up.

Supply chains are in crisis around the world, and – as noted by Pierre Poilievre – the inflation tax continues to hurt Canadians:

With higher interest rates on the horizon, Poilievre also warned of the ‘debtonation’ of Canada’s economy:

“Liberal politicians & central banker have sold Canadians on a house of debt with the promise that rates would never rise. Now a former Bank of Canada advisor expects an early rate hike.

What happens when Canada’s record debt collides with a return to normal rates?

Debtonation”

The comforting embrace of delusion

A comforting delusion is often better than reality.

Many people would love to believe we can spend unlimited amounts of money, and that they can be completely ‘safe’ if the government is powerful enough.

During the Covid crisis, we have seen politicians exploit those delusions to expand their own power.

But as we see with the rising level of anger and division in our society, and with the unsustainability of our fiscal and monetary policy, reality will reassert itself one way or another.

We also see this in the rise of support for the PPC. Millions of Canadians want personal responsibility, fiscal discipline & sound money to return, and if the CPC (with the exception of MPs like Pierre Poilievre) abandons that stance, others will fill that political demand.

And of course, reality doesn’t care about political preferences. Interest rates will rise at some point, and our ‘growth’ based on debt will be proven unsustainable.

At that point, we will have to decide whether to acknowledge reality and re-embrace freedom & fiscal discipline, or double-down on failed socialist & authoritarian policies that will only hasten collapse.

Spencer Fernando

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