Let's have the business bigwigs share the pain SOCIAL CONTRACT " The Ontario government is putting the squeeze on public-sector employees, and this is unfair. What about the private sector? How come tycoons pay taxes on only 75 per cent of their profits while workers pay taxes on 100 per cent of their wages?

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Date: Aug. 2, 1993
Publisher: CNW Group Ltd. - Globe & Mail
Document Type: Article
Length: 1,165 words

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BY MICHAEL MANDEL IT may be that in the crazy world of modern capitalism, cutting public services, jobs and the wages that the families of 950,000 people shop with will be better for "the economy" than running a deficit. There's no hiding the fact that Ontario's social contract will hurt a lot of people, but let's concede for the sake of argument that the conservative economists are right: lower deficit, more prosperity for everyone . . . some day. I'm not an economist, so who am I to say?

As a self-styled expert on the philosophy of law, I also have to concede - and not just for the sake of argument - that although the idea of a social "contract" contains an element of voluntariness that seems to preclude its being shoved down one's throat, the classical philosophers were clever enough not to make their social contracts depend on actual consent. It was enough that you would have agreed to them because you should have agreed to them. And you should have agreed to them if they were fair.

So the whole thing comes down to fairness.

Ontario's NDP government argues that the social contract is fair because in bad times everybody should pitch in to set things right again. The idea is that the "private sector" has been bearing the brunt of the bad economy and now the public sector has to "share the pain," to use Premier Bob Rae's words. Those who can afford it should shoulder a bigger burden. Who could disagree with that?

So here's my gripe: I know private-sector employees are suffering, but private-sector employers seem to be doing just fine. The defining moment in the social-contract debate came for me when Mr. Rae told the Ontario Housing Corp. to "wake up and smell the coffee" because it had approved staff raises of "up to 5 per cent."

Why was this a defining moment? Because, as any faithful reader of the business pages knows, the papers had just reported that in 1992 Edgar Bronfman was paid $3.7-million by Seagram Corp., up 173 per cent from 1991; that his senior executive vice-president Stephen Banner had received $11.4-million for just his first six months and, although Anthony Petrina of Placer Dome made only a piddling $2.6-million, this was up 252 per cent from 1991.

I don't remember Premier Rae insulting these guys, let alone hammering them with a social contract. I want to know why people like this are left out of the pain-sharing business.

In fact (correct me if I'm wrong, ye conservative economists on the business pages), is it not to keep things profitable for people like these that we have to cut the deficit? Isn't the idea that otherwise they will take their balls and bats and go to Mexico where they can make a few more percentage points in profits?

According to the Fair Tax Commission, 23 per cent of all Ontario's private wealth is owned by just 1 per cent of the population; 46 per cent is owned by just 5 per cent of the population. How did all the balls and bats wind up in so few hands?

Maybe this way: We are all supposed to wear sackcloth and ashes because business had its entertainment-tax deduction cut from 85 per cent to 50 per cent. But where on a worker's tax form (public or private sector) can you find a box to deduct 50 per cent of your restaurant meals? Or $25,000 for your car? And $100,000 of your wages (the once-in-a-lifetime capital- gains exemption)?

Isn't it backwards that the barons of business pay taxes on only 75 per cent of their profits when workers pay taxes on 100 per cent of their wages? A lot of the great wealth in this country was made when capital gains were not taxable at all. And of course, there is no wealth tax or inheritance tax.

These are only the tax loopholes that are common knowledge. Imagine what those expensive tax lawyers tell their clients behind closed doors in return for those big, tax-deductible fees.

At the family barbecue, my brother-in-law the businessman replies that it would not cut the deficit very much to make these few ultra-rich people "share the pain." Okay, but couldn't you say the same thing about, uh, I dunno . . . university professors?

Anyway, how long do you think it would take for the editorial enthusiasm for the social contract to evaporate if the owners of the newspapers had to dig as deeply into their vast pockets as public-sector workers have to (and the private-sector workers who will be competing with those out-of-work and lower-paid public-sector workers for those disappearing jobs)?

My brother-in-law doesn't even bother any more to give me the stuff about private-sector salaries being the private sector's own business. He knows my answer by now: that big private salaries are just as much a claim on our scarce resources as big public ones, and that a boss's profits cut into a worker's pay cheque just as surely as a hike in taxes. The argument inevitably comes back to balls and bats and Mexico.

The point is that private business chooses our scapegoats for us very carefully: teachers, senators, hospital workers, welfare recipients - everyone but itself. It has defined private greed as "market forces" and the indolence of inherited wealth as "property rights," to exclude them from eligibility for "sharing the pain."

Toronto's three major newspapers are owned by some of the richest families in Canada, and one of them is owned by one of the richest families in the world. When you read editorials carping about teachers getting paid for nine professional-development days a year, ask yourself whether the guy who owns the newspaper could stand the same scrutiny of his work habits and the money he pulls in for them.

So, despite Mr. Rae's preaching, the social contract is not about fairness, it's about power. And the NDP's betrayal is that it has adopted not only the interests but also the narrow point of view of the powerful. In other words, the social contract is more than a painful or, depending on your point of view, wrong-headed program. It is an unfair program.

And speaking of betrayal, everybody agrees that the NDP did not run for office on the business-oriented program it is now so hotly pursuing. Maybe it should have. Maybe it was right, in the circumstances, to go back on its promises.

Our political system, God love it, gives it the power to do that. But if fairness requires anything, it requires giving the voters a chance to say whether they approve of the NDP doing the opposite of what they gave it their precious votes to do. Maybe the NDP should "share a little of the pain," too, and look the voters in the eye for once. Michael Mandel is a professor at Osgoode Hall Law School, York University, Toronto.

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Source Citation   (MLA 8th Edition)
"Let's have the business bigwigs share the pain SOCIAL CONTRACT ' The Ontario government is putting the squeeze on public-sector employees, and this is unfair. What about the private sector? How come tycoons pay taxes on only 75 per cent of their profits while workers pay taxes on 100 per cent of their wages?" Globe & Mail [Toronto, Canada], 2 Aug. 1993, p. A9. Gale OneFile: CPI.Q (Canadian Periodicals), https%3A%2F%2Flink.gale.com%2Fapps%2Fdoc%2FA163886735%2FCPI%3Fu%3Dyorku_main%26sid%3DCPI%26xid%3D714e86cd. Accessed 17 Sept. 2019.

Gale Document Number: GALE|A163886735