A Pragmatic Manifesto

Can Quebec’s social democrats make markets serve equality?

Can the left’s project of democratic egalitarianism find new moorings in the age of global competitiveness? Despite the dark shadow recently cast on neoliberal governance schemes, there remains an air of doubt about the economic feasibility of leftist hopes and ideals.

This should make political analyst Jean-François Lisée’s book Pour une gauche efficicace (For an Efficient Left) required reading for all the disheartened social democrats out there. As a special advisor to both Jacques Parizeau and Lucien Bouchard while they were premiers, Lisée is well positioned to appreciate the real challenges of statecraft. If this has led him to espouse certain neoliberal “imperatives,” his determination and ingenuity have enabled him to develop a persuasive set of proposals on how to renew the classical left’s project of social and democratic equality.

The main premise of Lisée’s program — for this is, in fact, what the book offers us, a program — is that, with the onset of globalization, the capacity of a nation to prosper depends crucially on state reduction of the fiscal and regulatory burdens on industry. Without such a move, the domestic industrial sector is unlikely to be able to secure the capital investments needed to maintain a healthy economy. The scandal of the right, Lisée argues, is to have conceded these benefits to the economic elite without wrestling any tradeoffs from them for the good of everyday men and women. The “efficient” left response that Lisée proposes, on the other hand, which differs from the classical left by treating the market as its ally, seeks to obtain a whole series of compensatory concessions from the wealthy.

For the efficient left, just as the state must work tirelessly to assist local entrepreneurs (by which Lisée means not just capitalists but also leaders of the social economy, encompassing groups from non-governmental organizations to cooperatives and the public sector), it must also work tirelessly to guarantee workers’ rights and protection of the environment. One does not exclude the other; with political will and creativity, Lisée emphasizes, both can be achieved together.

His proposed program of reform is vast. It covers everything from public sector revitalization, greater unionization and lifelong retraining for workers to the introduction of carbon and consumption taxes. And while Lisée is in favour of reducing corporate taxation, one of his strategies to compensate for the associated loss of state revenues is taxing rich individuals instead. Right-wing commentators will be quick to suggest that any increase of income taxes on the rich will push them to flee, leaving us worse off than before. Lisée knows this, but argues that taxing incomes does not exhaust the state’s fiscal options. More targeted measures can be used instead. To start with, there could be a reduction of contribution limits to registered retirement savings plans and tax-free savings accounts, as these are fiscal measures that run counter to the purpose of progressive taxation in the first place. While across-the-board increases in taxation would certainly lead to an outcry, closing the above loopholes is not likely to elicit the same response.

Lisée heads up an institute for international studies at the Université de Montréal, and the scope of his research there results in some innovative and imaginative proposals. In Europe, Lisée notes, it is now common practice for traffic fines to be matched to personal income. In France, fees differentiated by income are considered part of the normal run of things. Following this approach, he proposes the idea of a tax revenue card that indicates one’s salary quintile. This would allow fees to be set accordingly when dealing with public agencies, be it for driving permits or daycare. A similar logic could apply to energy pricing for residential usage, with user thresholds being established such that past a certain level of consumption billing rates are increased. This would mean that publicly owned Quebec Hydro, for instance, would stop contributing to global warming by subsidizing heated pools and three car garages.

Lisée presents the recalibration of gains and losses among classes as a matter of renewing the egalitarian “social contract.” The above-mentioned tradeoffs are not the only ones he has in mind. For example, he also envisions more direct concessions from business in the area of employee retraining. Inspired by the Danish model of “flex-security,” he argues for more on-site training, as well as a right to off-site training that would incorporate a rotation of jobless workers seeking to gain experience.

But this, in turn, is merely part of a broader package of reforms elaborated throughout the book, beginning with greater public investment in the earliest years of schooling. Quebec has universal daycare, yet the tough neighbourhoods in which it is most needed suffer from a scandalous shortage of spaces and resources. In making his case for a more efficient and socially just use of public resources, Lisée contrasts this situation with the province’s higher education system, where doctors and engineers profit from state-subsidized training but can then settle abroad to enjoy lofty incomes.

Another component of the efficient left program that needs mentioning is revitalization of the public sector. For Lisée, a strong public sector is one in which workers share in the pride of offering a service that commands the public’s respect. This, in turn, is partly due to an efficient use of time and resources. Lisée believes that an element of competition in the public sector can help to promote such efficiency. He refers to Indianapolis’s use of managed competition as a case in point: this approach typically involves the designation of self-governing work units that bid for contracts, with workers claiming 25 percent of any savings on previous budgets. Given the positive implications of managed competition for the city’s public servants, American unions are ready to endorse the idea as long as it is implemented with respect for workers. In contrast to the right’s ideological war against the public sector, for the efficient left it is crucial that such reforms only be introduced on the basis of guaranteed job and wage security.

These, then, are some of the main ideas put forth in Pour une gauche efficace. Lisée was able to test-drive them prior to book’s publication in what has come to be known as Quebec’s lucides versus solidaires debate. This “national conversation” began at the end of Jean Charest’s first mandate and involved prominent commentators from political and intellectual circles. In the media, it was cast as a battle between left and right, although Lisée himself does not see it that way. Rather, he considers that both the lucides and the solidaires defend what are ultimately different variants of social democratic pragmatism. The lucides demand tuition hikes, for example, but not without compensation for the underprivileged. The solidaires, who are mostly rooted in the new leftist party, Québec Solidaire, call for the nationalization of wind energy, yet their proposals remain largely within the ambit of a market economy.

For Lisée, what is unfortunate is that while the lucidessolidaires debate opens new possibilities for Québécois social democracy, Charest was able to profit from the media dust-up by picking and choosing from the suggested reforms in a one-sided manner. Indeed, the premier dismissed the one major point of agreement between the two groups — that of a guaranteed minimal revenue scheme — to focus on more isolated reforms: lower taxes and straightforward tuition hikes. Charest is currently considering increasing user fees for electricity and other services, but without the progressive elements that Lisée insists on.

If previous Parti Québécois leader André Boisclair did not have much time for Lisée, things are different with Pauline Marois at the helm. This, however, does not mean that she is eager to defend his ideas. The PQ is not the leftist party it used to be, but it is still rooted in classical leftist ideals, many of which are shared by a majority of voters. Accordingly, Marois has only very tepidly moved toward efficient left proposals. Indeed, on certain issues she has waffled back and forth so much that some have claimed that there are “two Paulines.”

Marois may ultimately agree with many of Lisée’s ideas. She seems to think that Quebecers are not yet ready for them. In order to make his program of reforms more convincing, both to her and to Quebecers, Lisée goes so far as to offer a detailed budget covering the first 100, 500 and 1,000 days of a program implementation schedule. It becomes clear at this point that Lisée is not proposing any massive new investment schemes. Aside from targeted investments in education and in an emergency “generations’ fund” in case of a future global catastrophe, the aim is essentially to bolster the existing welfare state by maintaining and enhancing economic competitiveness.

Criticism from economically adept leftists is therefore likely to have less to do with budget numbers than with the assumptions behind them. More specifically, some readers are likely to find that the guiding assumption structuring the book’s entire argument — the blanket reduction of corporate taxes and other costs of doing business — is not adequately explained and defended. It is interesting to note that Lisée contradicts the logic of this blanket approach in a brief passage in which he rejects the reduction of wealth taxes on banks and oil companies. His reasoning seems simply to be that the profit margins and competitiveness of these companies are high enough already.

But can this not be said of other industrial sectors as well? Is it the fact that these industries are territorially fixed that makes them exceptional? By following this train of thought, readers will end up wanting to know where Lisée stands with regard to the classical leftist idea of fixing an industrial strategy geared toward developing comparative advantage in specific sectors of the economy. Far from requiring the blanket reduction of production costs, such a strategy aims at assisting the growth of particular niche industries. So, for example, it may be in the public interest to provide tax benefits geared toward the sustained burgeoning of a domestic aerospace industry. But this does not mean that we should aim to provide similarly amenable conditions in all industrial sectors, regardless of the long-term benefits to Canadian men and women.

For confronting these sorts of dilemmas, Lisée fails to give his readers much analysis to go on. This does not undermine the project of introducing reforms of the sort he suggests. But it raises complicated questions about how they might be combined with continued use of corporate taxation levers in order both to redistribute riches and to encourage the growth of industries that are in the country’s best long-term interest.