The Battle Between Paradigms

With economic recovery, a new stimulus-based mentality has arrived to challenge the old laissez-faire way of thinking. Which will win?

"But great as our tax burden is, it has not kept pace with public spending. For decades we have piled deficit upon deficit, mortgaging our future and our children's future for the temporary convenience of the present."

– Ronald Reagan, inaugural presidential address, 1981

For about 30 years, much of the western world lived under the spell of the prevailing “less government, lower taxes, markets rule” paradigm.

But a year or more of economic recovery has allowed a new alpha paradigm to muscle its way onto the scene. The “stimulus/growth/spend lots/no limits” paradigm has successfully duelled the global “less-is-more-everything-costs-billions” paradigm, bringing it to a standstill.

This centre stage “smackdown” – where neither wins the decision in the hearts and minds of Canadians – is our defining battle.

For decades, the dominant school of thought was that there was no such thing as investment in the future if it was on the back of borrowed money. This uniquely American thinking and its messages to youth were swallowed whole in Canada – by our governments, the private sector, and diverse elements of civil society.

This thinking says that investing now is bad for the future. Its premise is that things will get worse unless we introduce restraint on spending, even if that spending is comprised of investments. It is thinking that introduces despair; that nothing can be done that won't make things worse.

When civil society adopts this mindset, the lofty goals of better health, social development, equity, and inclusion start to ring hollow – as if progress and growth can only be founded on endless and damaging debt.

We are offered the object lesson of the many species from the animal kingdom that reduce their birth rate when it becomes instinctively clear to them that their food supplies will be unavailable. But these examples of limits are all based on the same pre-millennial logic that the only sustainable answer to bad outcomes is to reduce and restrain.

Then the economy tanks and the economists walk into the room.

They remind us that limiting consumption and spending is ultimately unsustainable itself. We need to grow and prosper, and that is impossible in a state of perpetual restraint.

And that's why everything changes when an economic crisis strikes. We rush to stimulate, produce and consume in a way that seems entirely antithetical to restraint and sustainability. We appear to lose both the evidentiary and moral compass that took us down the road of discipline and belt-tightening in the first place.

The two “alpha” paradigms slide and grate against each other like the tectonic plates of modern discourse, each winning for a time, constantly erupting along the fault lines that separate them, each accusing the other of being in "denial," Kubler-Ross's first stage of the grieving process.

In any new age, usually one paradigm wins out over another, defining our history and our time. In the U.S., we think of Kennedy and Roosevelt vs. Bush and Reagan. In Canada, we think of Trudeau or Pearson vs. Mulroney or Diefenbaker. In each case, a particular vision won the day – usually justice and prosperity for all through good government vs. individual freedom through less government. They battled over Darwinism vs. inclusion, the nanny state vs. the market state.

And now we are in a time when no real wars are won – they are only waged and abandoned. Thus, we have no dominating narrative or paradigm to define our times. Yet because we expect there to be a defining narrative, we tend to forever think that we are on the cusp of a new age. But waiting for vision and direction is a dangerous game. You can wait a long time.

In Canada, $1 trillion is being transferred from older generations to the next – from the Depression- and war-era generation to the baby boomers and the gen-Xers, and from the early baby boomers to the generation Y.

These older generations did not follow a life course based on limitations. They thought all growth and consumption to be good, as they had learned to “go without” and to have their lives postponed.

Very few in these generations did not borrow money. They did not wait to buy homes from their savings. They did not wait till they had money in the bank to buy cars, and they did not wait to send their children to post-secondary education until they had saved up the sums to do so.

They borrowed and they paid back, and in so doing have $1 trillion left over to bankroll the next generation. It would be difficult to contend that they were as overtaxed as they claimed. Yet almost 30 years later, their children comprise the generation that Reagan thought was going to get done in by the high living of 1981.

As it turned out, investment and taxes worked out just fine for them, and for their heirs. Maybe that so-called mortgaged future we’re talking about today could just be a new and legitimate investment in the future