We Are The State
Chairman of the Board,
Royal Bank of Canada
Board of Trade of Metropolitan Montreal
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
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
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
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
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
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
- 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
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
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
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
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
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
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
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
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.