Too much government is better than too little

Just like your home, countries can be expensive. If you want a good one in a good neighbourhood, you need to invest a lot into it. And just as happens with family homes, trying too hard to keep up appearances can get you in trouble, while too much frugality can seriously crimp your lifestyle.

The trick is to find the right balance between your expectations of security and comfort, versus the cost of upkeep.

A Nepalese police officer stands guard in front 

of the parliament building in Kathmandu, Nov. 18, 2013.  

(AFP/Prakash Mathema)

The Fraser Institute says that the right balance occurs when government spending takes up a third of a nation's GDP. That just happens to be the global average. Finding how they arrived at that figure is a rather dismal business, so let's just assume they know what they're talking about.

I've just returned from a business trip to Kathmandu. There. I never thought I'd ever be able to say something like that, but not working full-time at a newspaper does have its benefits.

If you want an extreme example of how tax rates and a stable government presence in the economy affects the quality of life, visit Nepal.

By the numbers, Nepal ought to have more government than anyone. For a country of 27 million people (half of them younger than 22 years of age), Nepal's parliament needs to cram 601 elected representatives into a rather small national assembly.

When you look past the armed guard at their parliament building, one has to wonder how that many MPs, plus the aids and infrastructure for 30 political parties could all possibly get inside.

But you needn't worry. The democratically-elected government there has never met. And for the equivalent of about $5, the guard will hand you his gun so you can take a photo of yourself standing in his spot.

The interim government that was to shepherd the country from being a hereditary monarchy into a modern democracy has been slow to release power. Elections were held last September, and all the newspapers report the eagerness of all officials to call members together — next week.

Nepal is a peaceful, hardworking, law-abiding country (that's if you discount the behaviour of traffic). Corruption and bribery are definitely present there, but in the absence of a working government, that's how people need to get by.

The tax rate there is 10 per cent, plus the sales tax that only tourists pay at the better restaurants. Government spending — including bringing electricity to its mountain regions — is reported at just under 20 per cent of GDP.

In Canada, government spending accounted for just under 40 per cent of GDP in 2011, compared with 39 per cent in the United States.

According to the Fraser Institute's figures and analysis, we Canadians are way over-governed and overtaxed.

By the same logic, Nepal is in a position of opportunity, because any increases in taxation and public spending will result in significant gains for the well-being of the country.

Except it's hard to say how much in real money Nepal can tax, when per capita income is something like $1,500 a year.

At the same time, it's too simple to judge that Canada is vastly inefficient, without a judgement of how well we get value for the money taxed and spent by our governments.

All things considered, I'd rather pay my taxes and live in Canada.

So would a whole lot of Nepalese people. My short visit to Kathmandu was to help with basic English testing for skilled tradespeople who desperately want to work in Alberta.

Without any advertising at all, highly-qualified welders, pipe fitters and mechanics showed up at our hotel conference room for a recruiting session, some coming from secure (and locally, well-paid) positions at embassies. Some even took a sudden overnight flight in from the oil and gas fields of the Arabian Gulf to show us some rather impressive resumes.

I got a whole lot more “thank you, sir” and “may I sit here, sir” in one day there than I got in 40 years in the newspaper business in Alberta.

We were propositioned (if that's the right word) for a chance to come to Alberta, from a young man whose job it was to recruit women for a nearby “dance club.” He had a degree in the hospitality industry, if I recall correctly.

Even the owner of the high-end hotel gift shop was hoping we could get him into Canada, so he could become overtaxed, just like us.

I don't profess to know the optimum level of taxation and government spending that buys us the civil society we have here in Canada. But this short experience showed me that “too much” government is vastly preferable to too little.

It's good to be home.