Lethbridge Herald, The (Newspaper) - December 30, 1974, Lethbridge, Alberta
4 THE LiTHBniDOI HIRALD Monday, Ototmbtr 90, 1974 Two economic events Put some incentive into MPs9 pay By Piul Hillyir, Toronto Sun commutator Two events have happened on the Canadian economic scene lately that have almost escaped notice. The Royal Bank of Canada has inaugurated a forecasting system, unique in Canada, to indicate trends in the economy. The Trendicator, as it is named, predicts significant changes in the pace and direction of economic activity in Canada and is based on 11 indicators, including the number of housing starts in urban areas, liabilities of business failures, ratio of selling prices to unit labor costs, primary steel production, average hours worked in manufacturing and Toronto Stock Exchange price-earnings ratios. These 11 indicators were selected from 60 which were tested for their ability to anticipate changes in the economy. Those chosen were the most consistent over a period of years. The Trendicator will be published eight times a year. It is expected to signal a downturn six months ahead of the event and an upturn nine months ahead of time. Its latest finding is that the downswing in Canadian economy will continue until midway through 1975, with below-average economic growth and ris- ing unemployment. Thus far it does not indicate that Canada is facing a major depression. The system, as it was designed by two economists of the Royal Bank, has fitted historical records very well. It remains to be seen how well it will serve the contemporary scene. If it works and its creators claim no more than that it will assist in predicting changes it will be a valuable tool for anyone who must make decisions predicated on future economic performance. The second event is the suggestion by an economic analyst of the C. D. Howe Research Institute on how to break the wage-price spiral which at present is boosting inflation. She points out that wage and price controls and indexing are the tools usually used to counter inflation but says that both have drawbacks and are not at present being seriously con- sidered in Canada. Her remedy involves both to a degree. She suggests co- operative restraint in which wage increases are held to the rise in the cost of living and prices increase only to pass on higher operating costs. Both in- dividuals and businesses would have to agree to a standstill in their real incomes for a couple of years but she points out that this is an attractive alternative to continued inflation. There seems little reason to dispute these tactics, but the means by which they would be effected are doubtful. Any kind of voluntary economic activity in- volving restraint has to be highly motivated and there doesn't seem to be anyone on the national scene at present who could bring this off. OTTAWA-Tht attempt by MPi to IncrciM their own salaries by SO per cent as a Christmas present indicates that they will never learn from past experience. A small increase each year, like everyone else, would be acceptable. But to wait several years and then go for a whopping big jump demonstrates incredibly bad judgment. The timing couldn't be worse. At the end of his budget address, Mr. Turner Mid: "Inflation li the enemy of sustained good economic performance." He added "I am convinced that if we can be shown that the other fellow is pulling his weight and not getting away with anything at our expense each of us will be willing to make a full contribution to the national ef- fort." So instead of setting a good example, the government blows it again. At the very moment that outrageous demands are being made on behalf of tht Ontario civil ser- vants, the government of Canada recommends a settle- ment that is equally out- rageous. At the very moment when the minister of finance is seeking the co-operation of management and labor in setting guidelines as a basis of national consensus, that same government proposes to raise MPs' salaries 50 per cent That will be the guideline. It is a great pity that the almost universal cynicism surrounding politics in the aftermath of Watergate should be further unnecessarily. It ii unfair to members of Parliament themselves. They work in- tolerably long hours 12-14 hours a day on the job with a great deal of overtime on Sundays and holidays. Based on the hourly rate of a plumber or carpenter and with straight time, rather than double or triple time for overtime, most MPs could justly claim the proposed rate. But productivity is impor- tant too. MPs probably work Controls coming? The way the government in Ottawa has been acting recently in no way suggests that consideration has been given to the imposition of controls on prices and wages. But the salary proposals that have been made have caused many Canadians to think controls are needed. Although controls are not being con- sidered in Canada, they have been ad- vocated elsewhere. In the United States. Senate Majority Leader Mike Mansfield has introduced legislation that would empower the president to establish controls over prices, wages, rents, profits, dividends and interest rates for the next three years. He contends that the worst days of the economic crisis, and the greatest need for policies to meet it, are still ahead of North America and the world. Facing what is regarded as the worst economic depression it has suffered since the 1930s, Denmark is holding an election early in the new year as a result of the defeat of the Hartling Liberal government on a proposal to freeze wages, prices and profits for a year. The election may not give any clear picture of what the Danes think about controls but the economic plight of the country that prompted the freeze proposal will still have to be faced. Denmark's national income has dropped this year by about eight or nine per cent, inflation is running at 18 per cent and unemploy- ment is expected to pass 10 per cent by the new year. Controls may not be the answer for the United States or for Denmark; they were not acceptable to Canadians at the time of the last federal election. Yet in the drift of the world toward an even more serious situation than now exists some drastic action seems required. Talk of controls would probably disappear if there was some evidence that steps were being taken to deal with inflation in an effective way, such as the exercise of restraint in government spending. "I think the government's campaign for restraint is working Rodney's about fit to be tied Civil service salaries push inflation By Bruce Whitestone, syndicated commentator It may not be a record, but 67 years does seem to be rather a long time for a library book to be overdue. A book of essays borrow- ed from the Dartmouth College library in 1907 has just found its way back. A librarian calculated that fines, if they were assessed, would amount to THE CASSEROLE A 50 year old California chemist, divorced and lonely, advertised for a From scores of applicants he selected an attractive woman of 35, and offered her a contract setting out duties, hours, days off, vacation time, other conditions of employment, and a salary of a month. Two years later, they're still living contentedly together. Orthodox housewives who are intrigued by the idea of agreed terms of employment and a regular salary, should note that certain con- ditions are built into any employer employee relationship. One of them is that he who hires may also fire. A group of foreign journalists visited Detroit recently, with the idea of gaining some insight into that unfortunate city's spectacular crime rate. At least one of the group got immediate and convincing proof that the situation is not being exaggerated. Minutes after he registered, two men burst into his hotel room, and held a knife to his throat as they robbed him. The French have an adage that translates (roughly) as "The more things change, the more they stay the Welfare Minister Marc Lalonde understands this very well. When asked about retirement at 60, he said it was out of the question, because "the govern- ment simply couldn't afford it." That's exact- ly what one of his predecessors said, away back in 1920, when the CCF proposed a month old age pension at age 70. ART BUCHWALD Christmas gift to Americans Someone once remarked that it is easier to open an oyster without a knife than to open a wage contract without offering a raise. Measured by today's soaring labor costs, most would agree that union agreements, like oysters, almost always offer delicacies to those that pry them open. Now, civil service employees, opening old con- tracts or negotiating new ones, have become the leading edge of the inflationary rush under way. Important new contracts are due to be negotiated with many civil service unions across Canada, most notably with the members of the Civil Service Association of Ontario (whose opening demand is for a 61.5 per cent increase in a one- year Salary increases granted public service employees do not cause our inflation, but they have a lot to do with the magnitude of the problem. Many remember the rippling effects of the 30 per cent wage settlement granted to the St. Lawrence Seaway workers a few years ago. As of 1972, the LETTER Prices and Income Commis- sion reported that professional categories in the federal civil service for several years had been receiv- ing annual, compound pay in- creases of 22 per cent. Public service employees represent the largest single employee group in the economy, and they are to be found in every nook and cranny of Canada. There can be little question that govern- ment pay policies are a major source behind the persistent institutionalizing of our in- flation. Pay rises and pension benefits are granted with un- believable frequency and with little thought about the impact that these increases would have on the private sector. An important element in this kind of wage inflation is the fact that wage increases negotiated by governments immediately become public knowledge, and through con- stant union pressure, serve as bellwethers of future compen- sation action in other union settlements. There has been an increas- ing effort to make public ser- vice pay comparable to in- dustry pay. This seems like a questionable approach as there are great risks in work- ing in private industry. Layoffs resulting from depressed business con- ditions, obviously, are not a factor with government employees and firings in general are less frequent in government because of statutory restrictions on dis- charging employees without "good cause." Everyone is aware of the different pace of work in government: neither the ten- sion nor enthusiasm which generates so much productivi- ty in the private sector exists in the public sector. So far there seems little willingness on the part of those in the public sector to acknowledge the differences between public and private employees. Now, several steps must be taken so that public pay scales will no longer fuel inflation. First, there must be a con- certed effort to determine the relative contribution of jobs to the total work effort. Not only should the same degree of competence be expected, but "output" must be a factor. WASHINGTON Last year if you recall I gave you for Christmas, the comet Kohoutek to gaze at. Unfortunately, through no fault of mine, it wasn't delivered, and it's possible some of you are still sore at me. This year, what with inflation and everything, I had a harder time. I tried to get everyone a five pound bag of sugar for 69 cents, but they threw me out of the store. I was going to give you each a seat to see Fanne Foxe do her act. But then she got busted in Florida and no one knows when you'll be able to see her next. Then a friend suggested I send everyone a pint of water from the Tidal Basin. But the park department put the whammy on that by claiming the basin is now a national monument. I intended to open Christmas Club accounts for you at the Franklin National Bank, but that fell through when the government put it out of business. I was going to give you all an "oil depreciation" allowance so you wouldn't have to pay such high taxes. But Congress killed that idea by declaring only the oil com- panies are entitled to pay low taxes. My wife suggested that I give everyone a new automobile. Just as I was about to buy them, Detroit raised the price again, and I said the hell with it. You're going to have to use the car you now have for another year I talked to the TV networks about adding an extra football bowl game for the holiday season. But they said they had a strict policy not to put any football games on TV between Christmas and New Year's Day. I called King Faisal about lowering the price of gasoline for Christmas and all he answered was "Ho! ho! which translates from the Arabic into "Are you out of your bleeping Then I called Secretary of Agriculture Earl Butz and asked him for a break on wheat prices. He just laughed and said "Whatta wanna calla me The Japanese were having a sale on autographed pictures of Premier Tanaka, but I decided against giving them when all the readers I talked to said they already had an autographed picture of Tanaka. I though of giving everyone a White Christ- mas. But since most cities, for economy reasons, are laying off their sanitation workers, I had no idea how you would get your streets cleaned. I was hoping to get you a tax break after the SALT talks from Secretary of Defence James Schlesinger. But he said it would actually cost more now for defence than it did before, which translates into English as "Ho! ho! Finally, just as I was about to give up on Christmas, I got through to President Gerald Ford and he agreed on my behalf to give each and every one of you a pardon, as you all have suffered enough. It wasn't much, I'll admit, but it's the thought that counts. Vaselenak argument too good E. S. Vaselenak (Letters December 24) challenges Herald readers to consider that "of the hundreds of thousands of unnecessary abortions each year in the world, there is just an in- finitesimal possibility there could be one genius among them." The holiday period has offered me time to muse and consider that remarkable statement. Mr. Vaselenak's argument is a good one. The only trouble with it is that it's too good. Take the case of that astonishing sixteenth century figure, Ivan Kudovbin. He invented a primitive form of gas light; he wrote 123 flute sonatas before the sonata form had been invented; he experimented with flying machines and arithmetic calculators. He was un- doubtedly a genius. But, as we know from studying the history of the period, he was one of the unlucky ones who was not born. His loss is a tragedy both to himself and to mankind. Perhaps Kudovbin was aborted or miscarried, I'm not sure. But T think the trou- ble was quite probably that he never was conceived. Perhaps he was the twelfth child in the family, and his parents stopped at eleven. Perhaps his mother was a nun, under vows of chastity. But what seems fairly certain mathematically is that the tragedy of his non birth could have been averted if everyone had really taken the matter seriously. Think of it. If the available reproductive plant had been fully utilized from the begin- ning of time, and every woman had and kept bearing a child a year from puberty to menopause, billions upon billions more people would have been born. And among them, presumably, would have been the usual propor- tion of geniuses composers who wrote greater polyphonic music than Bach; Elizabethan dramatists more universal than Shakespeare. The steam boat would have been invented in time to take people to the Crusades; the United Nations in time to reach a negotiated settlement instead. Frozen peas would have come in about the beginning of the Renaissance. Just think as well, how many innocent babes poten- tial great men among them have been kept out of this world because of legal or moral sanctions against adultery, rape, and inter- course below the age of consent. Sentimentalists have opposed these creative and life enhancing activities on various short sighted grounds, such as the well be- ing of the woman concerned, and the desirability of stable family and social life. I hope Mr. Vaselenak will forgive my tongue in cheek attitude, but I am afraid that's the only place where it will fit. MALCOLM V. EDWARDS Taber Techniques for computing output in the service sector are far from perfect, but some measurements must be used in order to determine the productivity, however im- precise, of our public ser- vants. These decisions call for judgment and, admittedly, are hard to document so that they are not attractive to a bureaucratic society. Nevertheless, more effective rules can be set up. One very expensive difference between the public and private sector treatment of jobs is the way jobs are valued. If a private company were attempting to set the value of a particular position, it would find out the "going rate." The public service all too often prepares a job description and then rather arbitrarily evaluates the job into the salary structure. The fact that the marketplace representing what big users pay for talent and what they expect in return is ignored, has been in large measure responsible for our problems. Hence, there must be a monitoring group inside the government with a real in- terest in restraining salary in- creases. Every civil servant naturally favors high pay for himself and so do unions. Up until now, the only voices one hears are those of the civil servants. But the time has come where the businessman had better let our government know that he is interested in salary levels. The average top industry executive is certain- ly aware of general in- flationary trends on his own employee costs. He does not yet seem fully aware of the powerful push civil service salaries are exerting on this inflation in his cost of doing business. harder than any other group compared to what they ac- complish. To blame them as individuals, however, would be unfair because their output is limited by the constraints of the system under which they operate. Nevertheless, no one else is in a position to streamline the system. In trying to set a figure that would be fair as an MP's salary, one is faced with a dilemma. Some MPs are worth a year and could easily command that figure in the market place. Others, by any reasonable yardstick, are overpaid already. So a mean must be struck. It is also difficult to set a realistic figure for the ex- pense allowance. Incidentally, nothing upsets MPs more than having this referred to as salary non-taxable salary. This suggestion often made by press and academic com- mentators is quite unfair. The tax-free allowance is in lieu of expenses for living away from home, enter- taining, etc. Arguing that the amount of the allowance is too high or too low is quite valid. As with salaries, it is difficult to arrive at a consensus. The problem relates to different life styles and different cir- cumstances. MPs from some constituencies have higher travelling and out of pocket expenses than others. In ad- dition, some representatives travel by taxi and send telegrams or flowers to con- stituents on anniversaries or other important occasions while others take the bus and send cards. The range of ex- penditure is significant. The most generous will spend several thousand dollars a year more than the most par- simonious. Some MPs live in a hotel while in Ottawa. Others rent an apartment or a room. Those who move to the capital usually maintain a house or apartment in their constituen- cy. Except in the rooming house situation which is now the exception costs in this area will be in the a year range. Air travel is paid for by the government but allowances to and from airports are inade- quate. Extra costs can run as high as a year. If constituents visit Ottawa, an MP is expected to take them to lunch or dinner. If he takes them to the parlia- mentary dining room heavi- ly subsidized for that purpose he can provide a good meal, including appetizer and a glass of wine, for to a head. The same fare would cost twice as much at one of the local hotels. Most MPs would be out of pocket a year in these categories if one includes renting a room and providing some hospitality at any func- tion where constituency representatives and party brass meet. Based on my own ex- perience, the present expense allowance is not unreasonable related to last year's costs. Escalating prices may now justify an adjustment equal to the rise in the cost of living. The overriding considera- tion apart from providing MPs enough to live on should be the impact the proposed settlement will have on the inflationary psy- chology. A 50 per cent award at this junction will, one suspects, end any attempt at restraint. Our economic system already shaken by the boot-straps will be further undermined. A compromise suggestion would be to grant MPs a 20 per cent increase now to compensate for increases in the cost of living. Then award the remainder as soon as the unemploy- ment rate drops to four per cent and inflation to five per cent. These are very modest .goals compared to what might be theoretically desirable. If members of the government and of Parlia- ment knew that any further increases in pay would be bas- ed on performance, we might see a little action. The ic Herald 504 7th St. S. Lethbridge, Alberta LETHBRIDGE HERALD CO. LTD. Proprietors and Second Class Mail Registration No. 0012 CLEO MOWERS, Editor and Publisher DON. H. 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