Winds of change are blowin’

Perhaps contrary to the word’s definition, revolutions don’t happen over night. They tend to be the result of years and perhaps generations of pent up angst that finally manifests itself as a quick ‘revolution’. I spent six years in university at a fairly conservative school in Virginia. I remember having debates with economics and political science students and their ideas where very similar to those that are pervading the U.S. now. It takes ten years or more for ideas germinating at the university level to find their way into the political realm. The reason for this is obvious – those dewy-eyed dragon slayers passionately debating their ideals in college are now in positions of power. It is interesting to note that many of my colleagues from university are now in positions of power. A former roommate is the chief of staff for a U.S. Senator.

I see the winds of change blowing for Atlantic Canada. I just can’t tell if they are blowing in or out. The recent offshore oil & gas deals with Newfoundland and Nova Scotia injected much needed money into provincial coffers but started a firestorm of criticism among politicians and the media elite. Money good – growing sense of resentment, bad.

The Federal government in their recent budget boosted the EI program making it more ‘lucrative’ or more ‘fair’ depending on your idealogical point of view. At the same time, however; and under the radar, the Federal department in charge of EI funded a study by the Centre for the Study of Living Standards that called for the Federal government to put incentives in place to “encourage the seasonally unemployed or the unemployed in general to move to regions of greater employment opportunities”. Also, I am being told by other sources that the Federal government would like to ‘fix’ the EI program once the political climate is right. Translation, cut it.

Also, the UNB initiative, NextNB (partially funding by the government of New Brunswick) recently published a report concluding that EI and other Federal programs have “have robbed Atlantic Canada of its culture of risk”.

Finally, many of the nation’s top economic thinkers are starting to realize that Canada is becoming a nation of a few, high performing urban economies. John Ibbitson, the Globe & Mail columnist, calls this the ‘Six City Canada’. None of these six are in Atlantic Canada.

So what can we conclude here? There is mounting external pressure to reduce Atlantic Canada’s dependence on Federal income support. There is some internal pressure to reduce Atlantic Canada’s dependence on Federal income support. The vast majority of economic growth since the 1970s has been in these ‘six cities’. Sounds to me like these forces are headed for a collision.

The last time there was a major recession in Canada, Atlantic Canada bore a much heavier burden that the richer provinces (sounds intuitive right?). In fact, the levels of Federal government income support (in total) have not rebounded to the levels of the early 1990s recession. In times of national economic crises, the poorer provinces will always bear an unequal distribution of the pain. In the case of the early 1990s recession, I don’t think we ever rebounded. Out-migration and population decline in the 1990s was the worst of any decade since Confederation – and continues today.

Given that harder line attitudes towards subsidizing Atlantic Canada are growing and out-migration and economic decline are increasing the pressure to do just that, throw in an inevitable economic downturn in the near future and you have a recipe that could end up challenging our very way of life in Atlantic Canada. A massive decline in Federal support could topple our economies down here. Of course, given the very structure of our country and its laws, provincial governments in Atlantic Canada will never be ‘cut off’. But, there will be powerful calls for change. Change that will be forced upon us. What will that look like? Who knows but I have said elsewhere that it will most likely include a forced amalgamation of the Maritime provinces, a massive decline in EI to force people to move to Alberta, Ontario or anywhere else and a major, overall reset that will result in a much smaller, less governed and less subsidized Atlantic Canada.

Maybe that would be for the best. However, I still believe there is a better way. A way of strong economic growth. A way of climbing out of this massive hole we have gotten in . Like the alcoholic or the bankrupt person, there is a way out – but that way can be painful. It requires sacrifice.

But most of all, it requires admission of the problem in the first place.

In the U.S., there is a support group called Adult Children of Alcoholics that goes by the acronym of ACOA.

Irony or teachable moment?

I think the latter. Instead of treating Atlantic Canada like a problem, the Federal government should partner with the provincial governments (using ACOA, why not?) on a bold and very aggressive strategy for economic growth. Look at the tens of billions in infrastructure and economic development dollars that the EU gave to the poorer European economies to bring them up to the EU average. That money wasn’t for seasonal EI, Equalization or any other ‘support measure’. It was specifically designed to bring these countries up in their economic performance. In fact, a condition of continuing support was that the economic performance had to improve. Compare that with our Equalization formula which cuts funding every time a province has a little success.

Enough for today.