Non-thinking caps

A new movement is afoot in the U.S. to try to tie the hands of governments - even though the one current example has been a miserable failure:

A spending restraint initiative is also expected to appear on the November ballot in Ohio, where a signature gathering effort is wrapping up. By 2006, Maine and Oregon residents probably will vote on similar proposals.

Meanwhile, in Georgia, Missouri, Tennessee and Wisconsin, spending cap bills are picking up significant support in legislatures. And as lawmakers elsewhere continue to balk at such proposals — they have come up in 23 state legislatures this year but have not passed in any of them — activists are planning to go directly to the ballot in many of those places...

Colorado is bucking the trend. There, a decade-old cap threatens to squeeze state spending so much that Republican Gov. Bill Owens and leaders of the state's business community are imploring voters to pass an initiative on the fall ballot that would lift the cap for five years.

The evidence from Colorado supports what seem to be obvious intuitive problems with measures like these. Rather than paying the slightest bit of attention to the needs within a state, the caps set out an arbitrary top level, leaving all interests within the state to fight against each other for funding. It doesn't matter if a one-year investment at the right time can lead to a better long-term fiscal situation (say, a large infrastructure expense in support of expected development) - the government simply doesn't have the choice.

Never mind running government like a business; instead the government runs like a business which knows that it's prevented from expanding or investing. Which is another phrase for a business that's in trouble.

The cap movement is led by groups which effectively assume that any government spending is too much; this is never a safe assumption. But even where excessive government spending exists, the proper means of dealing with it is through a better government making better decisions with an eye to the long term, not through artificial caps which necessitate governance based on surviving the short term. Colorado has learned the hard way, and it may not be long before more states do the same.

As for Canada, we lack much of the basis for such restrictions in any event: most Canadian budgets are already under much better control than those to the south, and there's more political will for careful budgets thanks to the parliamentary system. But we should learn from the U.S.' mistakes, and make sure not to let any efforts for similar measures get near the Canadian political scene.