Our old friend C.D. takes on EI

The C.D. Howe Institute is the latest think tank to take on the problems with the EI program and concludes, as have many others, that it is contributing to high unemployment mostly in the Atl. Provinces.

There are a couple of points here.

1. This is a well thought out, academic review of EI with regression analyses and a laid out case. Folks that are pushing for the EI program and unwilling to change should not dismiss these guys. They do have the ear of policy makers. I know that Harper actually enriched the EI program when he came in but eventually after many of these papers, somebody’s going to try and ‘tackle’ it.

2. I can’t figure out why these Phds – Fraser, C.D. Howe, the Centre for Labour Market Studies and all the others that have castigated the EI program always come to the same conclusion: the EI program provides disincentives for labour mobility. They always conclude – check it out if you don’t believe me – that the EI program stands in the way of a natural labour mobility – puts a ‘disincentive’ in place for workers to move where the jobs are in Canada.

Not one of them actually comes to an alternate conclusion (mine, coincidentally) that the EI program is inhibiting economic growth within the very communities in which it is most utilized and that the issue is not to encourage more mobility but to try and better understand why these communities have no capacity to attract more business investment. All this brilliance and no one seems to waver from the tired old mantra of moving Atl. Canadians – as fast as we can – to Fort McMurray.

There is a deeper public policy issue here beyond removing barriers to labour mobility. I like labour mobility. In a well functioning economic environment where each region of the country has its strengths and weaknesses, labour would be highly mobile. Blue collar might move to Fort McMurray but computer programmers might be moving to Bathurst to get in on the (fictitious) growing animation cluster. Marine biologists move to Victoria but accountants move to Halifax. Crane operators move to Calgary but longshoremen move to Melford. Whatever.

But this lopsided economic reality that forces these Atl. Canadian communities to use what little political power they have to try and hang on for dear life is the heart of the problem. Not EI. That’s a symptom. Not a cause. There is some secondary causality there but the primary issue is a lack of good public policy that has left large swathes of Atl. Canada with almost no capacity or value proposition to attract business investment.

Wouldn’t it be neat if Fraser, CD, MEI, etc. turned their brilliance to try and fix that problem. Heck, why not AIMS and APEC? But that’s too hard and intractable. It’s far easier for politicians to prop up with scraps and for think tanks to take the intellectually easy way out.

And the wheels on the bus go round and round.