Defund The Government June 2020

Protestors focused on defunding police in Canada are not going nearly far enough when it comes to defunding government services for the sake of social justice. Almost all of the social issues we experience are solvable with the right action taken. Rather than stop at defunding one of the few bodies of government responsible for something useful (protecting property rights, which to be fair modern police seem to be doing a spectacularly poor job of), we should move to defund the entire government. No one entity has so consistently acted with harmful consequences to the people of Canada. Good intentions do not hold up to scrutiny of the harmful second and third order effects caused by bad policy applied over and over. The only thing that matters is results, not intentions. Let’s assess results.

Housing

More and more, governments are allowing homeless populations to form tent cities. The reason that no one (strongly) opposes this, is because no one can remember why we have building code in the first place, and generally speaking it’s clear to any reasonable person that a one-bedroom cabin is safer than a city of tents. Tent cities turn out to be a significant fire hazard, something we are re-learning. The problem is that until very recently, there has been no alternative, you had to have a house of significant size, on a foundation and following a very long list of entirely arbitrary requirements to be “safe”. The original intent of the building code, published in 1941, was “affordable and safe housing”. Like many political programs, choosing two contradictory (but good in theory) things and aiming for both at once leads to harmful side effects in unintended ways. It has failed at both: housing in Canada cannot be afforded without unsustainably large mortgages, and tent cities proliferation means that it is impossible to separate people from the housing they can afford, meaning that good intentions around safety lead to less safety for those who would otherwise be the main focus of programs like a building code law (the least fortunate). Canada’s building code now stands at 1404 pages but somehow fails to mention that housing the homeless in one bedroom cabins could solve homelessness.

If people are going to be allowed to live in places that don’t follow the letter of this 1404 page document, the issue is not about safety. The reason for our lack of affordability is that in places where people want to live, it is hard to build housing, and the market has been distorted by misguided policy. If the building code were abolished, we would be taking the one option we have for affordable housing. People could choose the safety trade offs that worked for their life, and everyone could be housed. Instead, we choose to have 1404 pages worth of reasons to keep having tent cities while the rule followers sell their souls to the bank. If not for the flood of cheap money into the financial system in the form of handouts, bailouts, unsustainably cheap lending, payment “deferrals”, unmitigated money laundering and other forms of market distortions, housing would rise or fall to the level that people are able to afford. Housing is not the basis of wealth creation, wealth is created when value is created. Increasing the “price” of housing always comes at the direct expense of something else: it’s zero sum. We should abolish the building code, abolish bank bailouts (so that mortgage rates become sustainable), abolish CMHC (so that any risk a bank takes has skin in the game), and focus our police on property rights (more specific: anti money laundering in real estate). We would focus on technologies (like building tall buildings) that enable affordability. In doing so, we would fix the housing market in a matter of a few short years. Otherwise, it can only continue to get worse.

Healthcare

Healthcare is another industry that has been harmed by distortions in the market it operates in, and made more difficult to operate by regulation. The debate is often focused on who funds healthcare, whether it’s a public or private form of insurance. This is a false choice. The real focus should be on how care is provided, and what the input costs are. If you draw a chart of the growth of care providers, and health administrators, any sane person will tell you that 5x growth in people in administrative roles while the care providing roles stay flat is not a good way to improve care. The reason for the administrative roles seems to be due to the proliferation of regulation. If not for the regulation, we would have the same amount (or perhaps more, dollar for dollar) care than we do now, but with far fewer administrators. This seems like a worthy trade.

Because healthcare is a scientific endeavor, where progress has largely come from science (primarily science done in vastly less regulated places, like the current world leader in medical research China) and not other sources, it’s not clear that care quality would go down at all if the federal and provincial healthcare regulation went away. It would allow doctors to exercise far more discretion in providing care, including using genetic, immunologic and other categories of emerging care experimentally, in order to accelerate the progress of healthcare. The proliferation of Covid-19 has shown that we are willing to throw out almost every single one of our regulations (and rights) when forced to by a fast moving situation. If we’re able to overlook, ignore or even act in direct contradiction to the regulations in place for the sake of an emergency, surely the decision making for these issues should happen at the individual doctor level. It is not hard to imagine a world where doctors act with their own discretion, and are held accountable to the extent reasonable for their mistakes. Instead of having a system that encourages incompetence with airtight protections from accountability, while doctors get very little day to day discretion in how to treat patients. The Covid-19 emergency shows that this regulation is a matter of convenience and self reinforcing government control, not safety. Again, the removal cost is not clearly negative in any way, and may indeed be highly positive.

Education

Picking on education almost seems unfairly easy, but I felt it warrants exploring because it may be the one area requiring the most change of all. For most people, education means two things at once. Earlier in life, it typically means learning and daycare. Later, it means learning and vocational training. If you break the three categories (learning, daycare and vocational training) down, you’ll start to see how harmful our approach to education has become in this country.

Let’s start with daycare. The primary purpose of school in the early years of a child’s life is to watch them during the day so that parents can work. Learning is a well intentioned activity to spend that time on, but Covid-19 shows us that the most important, highest removal cost reason for early childhood education is daycare. The reason daycare is so expensive is care provider ratios. There is a direct correlation between the number of children a provider can care for, and the amount it costs to care for those children. You take the income of the provider and divide it by the number of children they can care for: that’s the cost. These ratios are spelled out in regulation according to the age of the child. The one and only way to make daycare cheaper, is to increase the allowable ratio. People argue that this will lead to bad care, but the fact that the ratios are so low right now is actually the reason people are forced to tolerate bad care. If the ratio limits were abolished, people would have far more options when it comes to daycare. The bad providers would be weeded out, because the good ones could provide care at great scale.

The second purpose of education is learning. School is a terrible place for children to learn. If you take 30 students from any given place in this country, the amount of diversity among those students will be historically unparalleled. People from all over the world, of all kinds of different abilities, trying to learn the same things at the same time. Nothing could be more tragic for the development of children and their learning as school is. The entire basis of school is anti-science domination. If one’s goal is to foster child development, you would do better to open the doors of the school and let kids organize and play outside as they see fit. Countries tended to have similar levels of literacy (in terms of reading, writing and math, the things one actually uses later in life) before and after the introduction of school. What school changed for young children was to force them to learn concepts their brain can’t synthesize properly at earlier and earlier ages. This is purely for the benefit of anxious parents, but for the children it makes them long term less able to learn. For older children, school is about keeping them out of the workplace, where they might compete with (and beat) the adults. School as an institution could not be more anti-science in their approach to learning, and more against real learning. We should abolish schools and let kids do whatever they want. It will lead to more learning sooner.

Finally, vocational training. Imagine inventing a product, where 1. The banks would lend near unlimited amounts of money so that customers could buy your product and 2. The lent money was guaranteed, there was no way someone could remain living and not have to pay it back. What do you think would happen to the price of that product, and to the scale it is sold on? What I’m describing is student loans, which are not forgiven in bankruptcy, and the product I’m describing is higher education. The only rational thing to do if you’re allowed to sell something with unlimited demand and which customers are forced to pay for is to make as much of it as you can. It doesn’t matter if quality suffers as you scale production up, you’re going to continue making more. This is what has happened to universities, enabled by cheap student debt. The way to solve this is again simple: remove the requirement to attend university to access the most useful professions in society (engineering, medicine and law, among others). Abolish the guarantee on student debt, and watch the “price” of education fall drastically. Abolish public student debt, and watch employers start to fund education (but only the useful programs). Abolish the strict and pointless requirements on what constitutes higher education, and watch coding bootcamps, accelerated nursing programs and other highly necessary inventions of the 21st century fringe education system become the new norm. Another case where regulatory capture has enabled mass dysfunction and corruption of something so vital to our future.

Conclusion

Hopefully these examples across major categories of policy and public debate serve to demonstrate how well intentioned programs lead to disastrous second and third order consequences. We should measure the effectiveness of government intervention by the things it leads to. We are routinely subjected to “accountability” in the form of metrics like “amount spent on education”. This has nothing to do with the actual value that we receive for this spending. The government has expanded its scope over the past decades to a point where it is an institution so large and misguided, it can’t tell that the lack of progress in our country is directly attributable to it. For the sake of ourselves, our children and our future, defund the government.