The Freedom of Disassociation

The freedom to associate – that is, the liberty of association protected under Section 2 of the Canadian Charter of Rights and Freedoms–is the individual right to participate, and, by extension, abstain, from any group of choice. This right is a central tenet of democracy, as it protects citizens’ rights to form political parties, interest groups, labour unions, etc., which represent their members’ interests.

Contemporarily, the right of organization is primarily a labour issue and union rights, collective bargaining, and other labour-related issues are at the forefront of this discussion. For example, the Supreme Court used Section 2 to uphold collective bargaining as a constitutional right in the 2007 British Columbia Health Services case. However, while the Supreme Court upholds the freedom to associate with unions, there have been serious Section 2 infringements in Canada regarding the ability to disassociate with unions. Most collective agreements require all workers to join the union at their respective workplace. The Supreme Court upheld this feature on several occasions, such as the aforementioned British Columbia Health Services case and the Quebec Advance Cutting and Coring case in 2001, where the Court upheld the requirement in that province’s construction industry.

Another barrier to the freedom of association comes via the Rand Formula, which the Supreme Court posited in the 1940s. Following its suggestion, several provinces enshrined this formula into law. It requires that all workers in a unionized workplace pay dues to the union, regardless of their relationship with it. In other words, workers must pay for the labour union, regardless of whether they agree with its actions or principles.

These rulings are disturbing insofar as they infringe on the ability of workers to leave their union without leaving their occupation. Although protecting the freedom of individuals to associate with certain groups is important, the other side of it must be the ability to disassociate from them–and unions should be no exception. Correcting this problem requires implementing right-to-work legislation, which would allow workers to leave their union if they are unhappy, while also keeping their job.

Critics of right-to-work legislation often suggest that it will weaken unions. Where this argument falls short, however, is that several developed democracies do not have mandatory union membership. Australia, for example, does not require union membership, yet the labour union density remains nearly 18 per cent and retains a strong presence in many industries, such as education, healthcare, utility services, transportation, etc.

Ultimately, protecting the freedom of association is important for a properly functioning democracy. However, it must go both ways, which entails the right to both join and leave any group. Unions ought not to be exempt from this principle. The provinces should introduce right-to-work legislation as a means of protecting the freedom of association, not because it will weaken unions.

Randy Kaye is a 2013-2014 Atlantic Institute for Market Studies’ Student Fellow. The views expressed are the opinion of the author and not necessarily the Institute

Income Splitting and the “Fairness Critique”

The federal government recently tabled its 2014 budget projections, claiming a slight surplus of $2 billion in 2015. With this is mind, discussion has arisen around what to do with the extra money. Should Ottawa pay down the national debt? Should it increase program spending? What about reducing taxes?

One campaign idea from the Conservative Party is income splitting. Essentially, a couple living together could “average out” their combined incomes for tax purposes, pushing the higher earner into a lower tax bracket. The Conservatives are selling this policy as “easing the tax burden on Canadian families,” which would presumably be picked up by someone else.

While I generally favor lowering most taxes, much of the time, and for almost any reason, we must ask the question that continually surfaces in economics: As opposed to what? In the case of income splitting, what alternative is the government foregoing?

First, debt payments should be seriously considered. One other option is to trim tax rates equally across the board by a small amount. This would address the main criticism of income splitting, which is that it favours “families” (or couples) at the expense of individuals who do not find themselves in two-person households. Indeed, it is unclear whether income splitting is a subtle nudge from social conservatives trying to support the idea of the so-called traditional family.

The “fairness” critique of income splitting extends much further. Not only may there not be a reason to favour certain social arrangements in this way, but also “families” seem to use a larger chunk of public spending–recreational facilities, healthcare and education costs for children, and the like. Critics claim that it would be unfair to reduce the tax burden selectively on that group of people who use the most public services.

For the reasons above, income splitting has generated a rift among Conservatives and among fiscal conservatives, more specifically–the controversy surrounds whether selective tax cuts for a specific group is fair or not.

Another problem is framing the surplus as a prize. It might be useful to remember that it is not, in fact, the government’s money in the first place. In this light, however, it is hard to disentangle the various interest groups that may find themselves scrambling for a piece of the surplus.

Nevertheless, it will be interesting to see whether the Conservative Party moves forward with income splitting in light of the fast-approaching election in 2015. To do so would appeal to their socially conservative base, in addition to fulfilling a campaign promise. However, enacting a broader tax cut would support the kind of “big tent conservatism” that seems to have held together an unpopular government through the last four elections.

Michael Craig is a 2013-2014 Atlantic Institute for Market Studies’ Student Fellow. The views expressed are the opinion of the author and not necessarily the Institute

Limits to Growth?

In studying economics, I encountered the “Limits to Growth Theory” (LGT), which offers an alternative perspective to mainstream economic theories dealing with development, growth, and financial behaviour. The theory suggests there are limited resources available and, without recognizing this, serious environmental degradation will occur. Following this logic, at current growth rates, and under current economic models, the planet will face grave problems unless there are changes to the status quo.

LGT is concerning for obvious reasons, however, it has flaws that are easily overlooked. It suggests that human behaviour is static, for instance, as opposed to dynamic. In addition, it assumes that current models cannot account for negative externalities, not to mention a failure to recognize the advent of environmentally friendly technology.

New developments, such as the hybrid vehicle, are an excellent example of how technological development responds to, and fights against, environmental harm. To offset rising fuel costs, for example, firms introduced automobiles that achieve higher mile-per-gallon ratios. Indeed, much of the increase in their popularity is also attributable to the substitution effect, whereby consumers seeks substitutes that save them money and align with their preferences.

In addition, LGT suggests that societies will deplete natural resources if growth continues at current rates. The Club of Rome, who was integral in the development of LGT in the 1970s, argued that society was nearing the end of its oil reserves. Citing “peak oil,” they asserted that declining reserves validated LGT. However, decreases in the supply of oil, combined with a global increase in the demand of oil, gas, and petroleum products, spurred natural resource development in areas that were once uneconomical to develop, such as the Alberta Oil Sands (not to mention that technological innovation made the extraction process more efficient).

The Club of Rome addressed the discovery of new oil reserves in a recent report, stating that, despite flaws in their earlier assumptions, natural resources are ultimately finite. While it is true that resources are finite, there is no shortage of examples where markets responded efficiently. In fact, economists proposed similar theories about copper and iron-ore to no avail. Competition, coupled with property rights, will compel individuals and firms to maximize the use of natural resources. Technological innovation can also bolster this process. In cases where consumers are unwilling to pay higher prices, they will seek substitutes, reducing the demand for petroleum products and stabilizing the supply. Furthermore, the “environmental Kuznet’s curve” hypothesizes a relationship between economic growth and environmental sustainability reinforced through demands for cleaner technologies, institutions that internalize externalities, and consumer willingness to support higher prices in favor of safer environments. This phenomenon is identifiable in developed countries, where the demand for cleaner technology is visible.

Ultimately, LGT merits consideration–everyone wants a clean and liveable environment. Despite this, however, the theory does not seriously challenge current economic growth models. It is true that resource depletion is a real risk, yet, due to technological innovation and the way in which markets respond to scarcity, the economy will continue moving along.

Randy Kaye is a 2013-2014 Atlantic Institute for Market Studies’ Student Fellow. The views expressed are the opinion of the author and not necessarily the Institute