Chickens going down the road to roost

I have reported on these pages over the years about studies from Calgary and Ottawa-based think tanks arguing that the solution to Canada’s problems is more labour mobility.  There was one study out of Ottawa that went further and recommended the government provide incentives for people to move from places like New Brunswick to Alberta. 

In a single variable universe, I guess that might make sense but we live in a multi-variable reality.  Over the past 15-20 years all four Atlantic Provinces have witnessed fairly significant net out-migration- more moving out than in. 

As wished by the think tanks, that has pushed down the unemployment rates – probably not as far down as they would like but they are at record lows.

But I said then, and now, what about the law of unintended consequences?  These economists and gurus forgot about the impact of this out-migation.   They must have assumed, for example, that the cost to provision public services would decline porportionately to the out-migration.

But that’s not how it works.  The cost of health care, for example, has been rising in New Brunswick about the same pace as in the fast growing populations of Ontario, BC (not as much Alberta).    There isn’t a one-to-one correlation.

So, essentially, we have just forced more of the social costs of NB on taxpayers in Alberta, BC, etc. (many of whom are ex-New Brunswickers). 

I warned back then you can’t have it both ways.  It is very hard to have a national commitment to equivalent levels of public services in every province unless you have some parallel economic development commitment.  That’s not to say that places like New Brunswick will ever grow at a same pace as a place like Ontario (it hasn’t happened in 300 years) but we need better calibration over time between tax/revenue generation and the cost of public services.

So what happens now? 

I have to reiterate that the wheels aren’t falling off the bus.  New Brunswick will chug along but these macro-factors will  inevitably hit us. 

I guess my final point here is that it would be nice for these think tanks to come to the conclusion (as I have) that the national agreement breaks down without a baseline of economic growth in the regions. 

I think the accelerate migration from poor to rich provinces model hasn’t achieved what they thought it would.  There may be better labour market equilibrium but there is significantly increased dis-equilibrium in many other areas.

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