One big happy family

I just wanted to follow up quickly on one more point relating to my previous mini-rant. 

These guys at AIMS and Fraser, et. al. are now constantly talking about how we need workers to move from areas where there are no jobs (i.e. here) to areas where there are lots of jobs (i.e. Alberta, Ontario when there is no recession, etc.).  When I quiz them (as I have) up on this they will say that it is only natural.  Canada is one big happy country and people should move freely around from places where there is limited or no work to places where there is lots of work.  Government, they say, shouldn’t try and impede this free flow of labour in any way.

When I respond by saying how come the same principle doesn’t apply to tax revenue, natural resources royalty revenue, investment, etc.  they response is someone different.  In that case, we are told, provinces need to jealously guard their revenue/royalties, etc. from those pikers down in the Maritimes.

This doesn’t make sense to me.  Policies and efforts that lead to even faster depopulation in this region will only exacerbate the need for more Equalization and transfer payments.  Shouldn’t these think tanks be advocating for a beefed up Equalization program to offset?

No, this isn’t about one big happy family at all.  This is is about emptying out our population and cutting off any efforts to transfer wealth from strong economies within the country. 

It’s a bit hard edged but maybe that’s what happens when economists get to run the place. 

If AIMS issued a 10 point policy paper tomorrow that advocated everything they stand for (cutting equalization and EI, forced migration of those from weak economies to strong ones, etc.) but also turned their intellectual horsepower towards a serious economic development solution in the weaker economies, we would have the basis for a serious conversation.  As it is right now, to misquote Captain Renault in Casablanca “the conversation is a trifle onesided”.

7 thoughts on “One big happy family

  1. These guys are politicians, NOT economists, thats something that has to be remembered. Economists don’t make public policy, because economists know they can’t predict the future. But we’ve had that discussion before.

    If you REALLY want to stump these guys-and you can’t (there’s a reason they don’t give public talks, and AIMS put a blog that lasted for a total of ONE blog), then it would be easy to pull a star trek on them. There was an old Star Trek episode about a robot or something that self destructed because its program couldn’t handle the inherent illogic of its programming (or something like that).

    Anyway, if you recall, AIMS and the business press were ecstatic when New Brunswick announced a big round of tax cuts. “Wonderful” they said, “whadda province” the business press claimed. And now, in carefully guarded phrases, they talk about the NDP in Nova Scotia who claim to want to “live within their means”-which of course refers to deficit spending. “Great” they claim.

    In New Brunswick, of course, like most provinces, the province is facing a huge deficit. Part of that deficit, of course, is due to lower taxes. So here’s the rub-which is better (or worse)-lowering taxes? Or deficits? It’s no big surprise that now that the deficits have come out AIMS and others claim they are ‘just part of the business cycle’ and the only concern is that governments actually due something to stop the bleeding.

    But thats a perfect example of the inherent inconsistencies they expound. What made me laugh outragiously is that AIMS now has at their site a page explaining ‘what they are’. They aren’t ‘right wing’ or ‘left wind’ (duh), they aren’t ‘business friendly’ or ‘corporate friendly’, they are just nice people who want to help.

  2. “when economists get to run the place.”

    …perhaps if the ‘economists’ had a track record of being right, or a reasonable set of peer-reviewed data to back up their views, that would not be quite so bad. AIMS is a propaganda organ and their aim is not to improve life for Canadians in any particular region but to increase the amount of discretionary income for the wealthy.

  3. “So here’s the rub-which is better (or worse)-lowering taxes? Or deficits? ”

    They go hand in hand. Grover Norquist was the first to realize that to cut social spending (and thus shrink gov’t to a point you can drown it in a bathtub), you first cut gov’t revenue. Once you’ve cut gov’t revenue through tax cuts, it becomes political suicide to substantially restore previous tax rates.

    Now, given the reduction in tax rates, deficits become larger. At this point the think tanks will begin to tell us that we must “live w/in our means” and that social spending must be reduced.

    By 2012, the provincial government plans to eliminate $380 million in government revenue. If we thought this budget was unkind to social spending, wait until 2011 and 2012.

  4. Canada is one big happy country and people should move freely around from places where there is limited or no work to places where there is lots of work. Government, they say, shouldn’t try and impede this free flow of labour in any way.

    I guess there will always be that “not so level playing field” argument that our manufacturing heartland, Ontario, will always engage in as they believe they have suffered significantly from generous transfer payments to have not provinces over the years.

    Although, it’s funny, they are a “have notter” with old industries that are suffering, not to mention, senior officials there are looking for more EI money to flow into the cities. Talk about irony.

  5. “…people should move freely around from places where there is limited or no work to places where there is lots of work.”

    Just another thing on this (which is counter to my usual rants). Typically I would be all for the free flow of goods and individuals, but in some instances, this practice has hurt industry and the long term growth of regions all over the country (yes, even in places like Calgary, Regina and Vancounver). What has happened over the years is that business, workers and executives have become fixated on short term gain/profits (and in the case of industry, have shied away from risky long-term investments which have been the key to real innovation over the years). Plus, global enterprise has become horizontally integrated with the increased practice of merging multi-nationals — which form conglomerates that tie together totally unrelated businesses.

    Much of this type of thinking has led business to curb their spending and investment on worker training as they don’t see the point of investing in an individual that will be gone quickly (and end up with another company — maybe even a competitor). Moreover, as those at the top of the conglomerates were removed further and further from the actual going on (production), they concentrated on investment decisions that would result in short-term success. In other words, careers were quickly made or broken on the basis of the company’s bottom line quarter to quarter.

    So you can understand why loyalty to such companies remains low, even in times of economic slowdown. I guess what I’m saying is that the flow of workers (commuters) will remain low in our region (and elsewhere) if this is not addressed. Which is why I thought it was nice that the “self-sufficiency” document mentioned the need for NBers to commute from rural to urban areas — where the so-called opportunities lied. But until NB enterprise identifies that many of these conglomerates just aren’t attracting the right workforce (other the uneducated, seniors and students), then we will always be stuck with missing out on real opportunities — opportunities that satisfy a labour force that no longer exists in this province.

  6. Patrick, that’s actually not true, or at least not necessarily true. The analysis is right, once the government has less money they use that as an excuse to cut social spending. However, the politics is not accurate at all.
    First, no politician campaigns on ‘higher taxes’, but campaign policies are largely irrelevant now, as should be perfectly obvious. Here in ontario the McGuinty government did like NB and raised taxes-calling it a ‘health premium’, they won a second mandate by even larger than the first-and that’s without subsequently lowering taxes.
    Second, if you look at the actual evidence in the US, there have been just as many passed referenda at the state and local level calling for increased taxes as there have been for so called ‘tax limits’. In Maine there was the attempt to tie tax increase to GDP growth-that failed. Although it is once again being pushed (as are opposite policies).
    Third, that is a popular myth because MEDIA like lower taxes and know that you can’t very well champion lower taxes just for THEM. So when a party or politician comes along saying anything else, they immediately start getting bad press.
    This is VERY obvious in New Brunswick. It should be mentioned that people are generally opposed to generic tax increases because they never know where the money will go. That’s why in Maine when tax increases are mandated, they go directly to a specific policy. So its no surprise that if you say ‘increased taxes’ in New Brunswick, immediately people think “why should I pay more to bail out Atcon and friends?”
    Much of that is also due to the fact that almost half the population know longer even takes part in the political process. In New Brunswick, you obviously don’t raise taxes on people earning, say, 40 grand or under. Those people are just getting by. You can even lower their taxes to help spur the economy. Where the liberals show their colours is lowering taxes on corporations and high income earners. A judge earns over 200 grand a year, and this tax reduction will help them save even more. How does that help the economy? And corporations, again, are not in an expansive mood, so the tax policy MAY have made sense three years ago, certainly not today.
    The population actually supports higher taxes-so long as they get the services from them. Just look at how much momentum there is for national health in the US, and people KNOW that gets added on to tax.
    But its true that that is the governments ‘plan’, and its very true that if people think it looks nasty NOW (and its worse than nasty, its just never in the media), then just wait. That’s why its imperative to get politically active NOW, before New Brunswick looks EXACTLY like it did in 1920.

  7. I think Patrick is outlining the right-wing game plan. It may not always work, but it has appeal in the data-free environment of the mainstream media.

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