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We Are The State

Guy Saint-Pierre
Chairman of the Board,
Royal Bank of Canada
Board of Trade of Metropolitan Montreal
Montreal, Quebec
February 26, 2002

Ladies and gentlemen,

It is always an honour to be asked to address you and it is with pleasure that I have accepted the Board of Trade of Metropolitan Montreal's invitation to do so. While I have been invited in my capacity as chairman of the board of Royal Bank, I have decided not to speak as a banker. I will therefore spare you the bank's economic forecasts, or its stance on government monetary policy or regulation of the financial services industry.

Instead, I would like to share with you some reflections on a topic of concern to me, namely, the relationship between the State and citizens.

According to Freedom House, an international democracy watchdog, 120 countries representing nearly 60% of the world's population had democratic governments in 2000, a peak in the history of humankind.

Thus, democracy is making progress amidst constant social upheaval. For the first time in history, a majority of inhabitants of the Earth can say, "We are the State," a situation that can only foster optimism among citizens of the world.

However, while democracy is progressing, a malaise is appearing in the older democracies. It would seem that for the past 50 years, the relationship between citizens and the State in the industrialized countries has been deteriorating. At the very time when an unprecedented number of people can claim, "We are the State," growing numbers of citizens in democratic countries find themselves at odds with the State. This is, in any event, the conclusion of analyses conducted by American political scientists and published in 2000 in a book entitled Disaffected Democracies. Surveys carried out since the 1950s among citizens in most of the industrialized nations reveal a constant decline in the public's trust of governments and people in power. From Australia to Sweden, not to mention Canada, the United States and France, the surveys' findings are perplexing: citizens no longer trust the State.

It may well be thought that this break is in fact a sign that democracy is in excellent health and that an effective democracy is based on public mistrust of the State. After all, the founding fathers of the United States made this mistrust an underlying principle of their Constitution.

However, it is one thing to mistrust people in power. It is an entirely different matter to feel disillusioned with regard to democratic processes and the institutions that sustain such processes. Other research indicates that, in almost all of the established democracies, voter turnout has tended to decline in the second half of the 20th century. Canada is no exception to the rule - in fact, it has one of the lowest voter turnouts of all the industrialized nations. Between the 1984 and 2000 federal elections, voter turnout fell from 75% to 61%. While this situation is certainly not disastrous, I do find it troubling.

Together, the lack of trust and disillusionment of voters are worrisome. It would seem that, for many citizens, "The State is them."

The relationship between citizens and the State is not a matter of mere academic interest. In a country like Canada, even in the wake of the fiscal rigour that characterized the 1990s, government spending stills represents over 40% of GDP and government regulation weighs heavily on the 60% accounted for by the private sector. At another level, the individual comes into regular contact with the government. For most of us, it is the public sector that provides our health care from cradle to grave, educates our children, maintains our roadways, collects garbage and delivers many other services. I have not even mentioned our fascinating annual correspondence with tax officials. Canadian citizens are condemned, if I may say so, to being clients of their public sector, which explains why the quality of this relationship is of the utmost importance.

This may disappoint or reassure you. But let me say right away that I do not have a pat answer for you. Over the years, I have learned to be cautious about giving lessons. As a corporate director, my task is now to ask the right questions instead of giving answers. For this reason, it is in a questioning mode that I would like to share with you my reflections on the relationship between the State and the citizen.

Is the quality of the State declining?
Let us begin at the beginning. The first question is this: Has the quality of the State declined over the past 20 or 30 years?

I am not aware of an objective measurement that allows us to compare the quality of the State today to what it was a generation ago, although impressions and anecdotes abound. Waiting lines in hospitals and the state of certain infrastructures are but some of the indicators that suggest a deterioration in public services in recent decades. We have all experienced firsthand or heard anecdotes about the insensitive, absurd or indeed abusive behaviour of bureaucrats.

Perhaps the State's performance is deteriorating because it is trying to do too much. The size of the State is not measured solely in proportion to GDP. It is also measured by the span of its fields of intervention. It is believed that a private company cannot excel in all things and one that over-diversifies risks diluting its know-how and ending up mediocre in all things. However, people rarely question the ability of governments to diversify as they have done for half a century. Popular wisdom long ago perceived the problems that this raises, or as the old adage would have it, "jack of all trades, master of none."

Are we demanding too much of the State?
My second question is this: Are we demanding too much of the State? Democracy may be the victim of its own success. We expect a lot more of our governments now than we did a generation ago. Of these governments which inspire less and less public trust, we nevertheless demand that they support employment, regulate the economy, reduce socio-economic disparities, protect the environment, defend women and minorities, foster the development of businesses and consumer protection, guarantee access to education and health, all that while jealously protecting our individual freedoms. Quite an agenda! If we want to have our cake and eat it too, we are bound to be disappointed.

Let us take the example of health care. We all dream of having immediate access to the best health care for all those who need it, without new taxes, while minimizing the private sector's role, because it is immoral to profit from illness. That is just one example. We could formulate other fantasies of the same kind with respect to education, environmental protection, the protection of privacy, in a word, as regards any of the numerous responsibilities entrusted to the State.

We all too easily forget that the State cannot perform miracles. It cannot pull resources out of a hat. We are the State and the money is always ours.

I am not trying to rekindle debate on whether we need more or less government. When we examine the State's role in this manner, we inevitably lapse into dogmatism. What we must strive for is a better State, which demands a pragmatic rather than a dogmatic approach. Private sector, public sector, one thing never changes - it's always the people's money. Regardless of the nature of the goods and services that we consume, the approaches are fairly limited, that is, either we pay the producer directly, or through a private, for-profit or non-profit organization, or through the State. Whatever the approach, we pay. There is never a free lunch. If it looks free, it is an illusion.

What is at stake with regard to the State's role is simply the best way to organize things in order to attain two key objectives.

  • First, an efficient use of resources. Whether focused on the public or the private sector, no ideology in the world warrants wasting resources and no society can afford to waste, since waste is a loss for society as a whole.
  • Second, a fair use of resources. We must use our resources in a way that reflects the social solidarity of which Canadians are so proud, and rightly so.

Canadians can maintain their intrinsic values and still be efficient.

I avoid being dogmatic with respect to these two objectives. During my career, I have managed private-sector firms that did part of their business with governments and government-owned corporations not only in Canada but the world over. In Quebec, I served as the minister responsible for a public education system that had and maintains a large private component. During these years, I have learned, and I am still convinced, that the private and public sectors can coexist. I have learned that government intervention can be compatible with the efficient use of resources. However, I have also learned that intervention by the private sector can be compatible with the fair use of resources.

Allow me to take the example of education. In Quebec, as in all the other provinces, the private and public sectors coexist. Such coexistence is sound not only because it gives parents a choice of schools for their children, but also because it is a source of healthy competition, which enhances the quality of education overall. There are excellent public educational institutions, just as there are excellent institutions in the private sector. While we must acknowledge that our education system does have problems, we must also admit that the most recent international comparisons are encouraging. A study conducted by the OECD of 15-year-olds the world over ranked Canadian youth among the world's leaders in basic reading, math and science skills.

Let us now turn to health care. We have one of the most rigidly public systems in the world. According to the World Health Organization, our system ranks 30th in the world in terms of quality and accessibility of care. Thirtieth! The very least that can be said is that there is room for improvement. There is room for change. There is every reason to ask questions, formulate hypotheses and even experiment. Ranking 30th should make us highly receptive to new ideas or models that work elsewhere. Yet it is very hard to question the status quo regarding the organization of health care in Canada. Of course, there is talk of making our public health care system more efficient, but I cannot help but think that we are only looking for new ways to shuffle chairs on the Titanic. Even today, any mention of changing the fundamental organization of health care all too often sparks an outcry.

I have picked the health care system as an example because its topical nature illustrates my concern. What should be a resource allocation issue still engenders dogmatic responses. It is legitimate to raise the question of the respective roles of the State and the private sector. But if we cannot put the question clearly, we will not find the right answer.

Are people in power promising too much?
My third question is this: Are people in power promising too much? It may well be that the public and those in power have created a costly spiral in which we are all accomplices. After all, it is said that a politician's word is only binding on his or her listener.

On the one hand, we can deplore that we have expected too much of our governments, but on the other hand, it must be said that governments are very careful not to destroy our illusions. Just as bureaucracies like to extend their power, so do politicians willingly make exaggerated political promises.

It is deplorable that political discourse continues to hinge on promises that cannot be kept and oversimplifications formulated in light of the demands of television newscasts. It is deplorable that such discourse sometimes appears to infantilize voters.

It is normal and desirable for political discourse to continue to centre on politicians' commitments and that such discourse be accessible to everyone. However, I like to think that the most educated electorate in our history and one of the most educated in the world is more interested in the political choices to be made than in personal attacks. I also like to think that this electorate is capable of understanding the genuine issues and the true constraints pertaining to its choices. The drop in voter turnout should spur politicians to find ways of communicating with voters.

Adapting ourselves to a less consensual society
My fourth question is this: Does the electorate's disillusionment indicate that our political system is not adapted to a society that is growing less and less consensual? Over the past 50 years, technological progress has enabled us to shift from highly standardized mass consumption to tailor-made consumption, which fully reflects our individuality. The choices available to consumers have proliferated, whether with regard to cars, food or literature. At the same time, marketing campaigns are more and more finely segmented, to the extent that consumers almost feel that they are the targets of a personal appeal. Even more basically, the individual today is in a position to make many more life choices than was the case a generation ago.

On the other hand, the political sphere has not followed the same course. Under the electoral systems prevailing in North America, the parties that want to take power must seek to please a wide spectrum of the electorate or a majority of voters, otherwise they will not be heard. The discourse of our major political parties is the political equivalent of the Model T Ford. As Henry Ford said, "You can paint it any color, so long as it's black." It is possible that today's citizens, accustomed as they are to quasi-personal appeals, fail to identify with the standardized discourse of political parties.

Can we improve the situation?
Can we reverse this trend? Can we restore the individual's enthusiasm for public life? I would like to think that we could.

To this end, I believe it is important for citizens to assume control of their State. By this, I mean two things:

On the one hand, it is important for citizens to participate in the life of their State, which implies, first and foremost, that they vote in municipal, provincial and federal elections. Regardless of the system's imperfections, it is too easy to be cynical and to say to oneself that our vote does not change anything. We have even less impact when we do not vote.

On the other hand, it is important to realize that the State is not a means to deflect responsibility for our actions onto someone else. It is one means, and only one means, available to us to assume responsibility. The State cannot produce miracles. It is pointless to demand that it do so. It is cynical to promise that it will.

Moreover, there is good reason to remind the people in power that they are the trustees of our State - not the owners. They give nothing to the voters that they have not already taken from them. Furthermore, if I urge my fellow citizens to be responsible, I must ask those who govern us to treat us like adult citizens. John Stuart Mill wrote 150 years ago: "A State which dwarfs its men, in order that they may be more docile instruments in its hands even for beneficial purposes - will find that with small men no great thing can really be accomplished."

Our democracy is not in a state of crisis, at least not yet. However, the ongoing erosion of the public's trust in democratic institutions could ultimately degenerate and hamper the very functioning of such institutions. Let us not wait for the crisis. If we want our children to also be able so say "We are the State," I believe that it is time for us to deal with the matter.

Thank you.

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