You don’t get to to be the “Chevening scholar” studying at the London School of Economics, or a senior fellow with the Fraser Institute or a fellow with the Manning Centre for Building Democracy if you aren’t particularly intelligent.
But when it comes to analysis of the ‘Atlantic Canada’ problem, thes guys, like this John Williamson seem to take off their thinking caps.
Or more accurately, they start acting less like academics and more like talk show hosts and politicians.
Take his commentary on EI in Atlantic Canada in the National Post. Here are some select nuggets and my comments below:
Federal government changes in the 1970s to EI made leisure more attractive by paying richer benefits in areas of high unemployment. The result was predictable: Some people decided collecting pogey was preferable to extra work. It was a rational response to lousy public policy.
The Atlantic provinces can afford such a rich system because workers in the rest of Canada pay for it. EI payroll taxes paid by central and Western Canadians make it possible. These workers transfer more than $500-million in benefits annually to the East Coast. But that’s not the worst part. The Atlantic EI scheme retards job creation by making it more costly for business to hire workers.
Companies that have, in the past, been ready to hire could not find enough workers willing to trade leisure for regular work. This choice is influenced by generous EI payments and explains the paradox of both high unemployment and a labour shortage in the region. As a result, companies invest less in Atlantic Canada or leave in search of more willing workers in New England or central and Western Canada. The result is more unemployment and an exodus of young people to the United States or other parts of the country. It is a vicious circle with less economic growth, more dependency and declining opportunity.
People assume that higher unemployment rates necessitate more EI. But it is worth considering to what degree generous EI has caused chronic unemployment. Indeed, if EI rules were similar across provinces, it would be an incentive for workers in areas with high unemployment to move to locations with more jobs.
Now let me start out with a couple general comments:
1. I am not a big fan of seasonal EI and have been clear about that on this blog. I think the Feds have substituted credible economic development policy and effort with beefed up EI to keep people happy and politians in rural Atlantic Canada have willingly settled for this.
2. What frustrates me the most about these brilliant academics is that they love to blame Atlantic Canada on everything but the real problem. Consider:
They blame Equalization.
They (this guy) blame EI.
They blame oppresive government.
They blame a culture of defeat.
Again, you might be able to see this from the feeble minded or the simpleton that wags their heads while listening to talk show rants but from credible academics? Visiting Professors? Yadda yadda yadda?
It just shows that these guys are human and bring all the biases to the table of any of us mere mortals.
My position on this stuff is simple and well explained on these pages:
Williamson blames EI for a lack of investment, out-migration and what he calls a culture of ‘leisure’. But anyone with even the most basic understanding of the situation realizes that EI is a symptom – not a cause of the region’s economic problems. It may have exacerbated it a bit but these guys make it sound like Atlantic Canada had this booming economy, then imposed this evil EI program and killed the economy. And, watch out! The Liberals and NDP want to do it to the rest of Canada.
Equalization is a symptom not a cause – it might have exacerbated things a bit as well.
A culture of leisure? I don’t even buy that at all. There may be a fraction of the population that would take $10 seasonal job for half year/$5 on EI for half year compared to $8 to work year round but if the economy was strong this would dissapate. You can’t tell me that an auto manufacturing plant in Caraquet wouldn’t get thousands of applicants.
The need for a real economic development think tank in Atl. Canada
It is increasingly clear that the best and brightest academic minds in Canada are not turning their minds to solving the economic development riddle in Atlantic Canada they are using this region as their “what not to do” example for the rest of Canada. This is callous and cynical but true.
We need to have Atlantic Canadian researchers studying these issues from a minimally-influenced ideological viewpoint. AIMS is a credible think tank (in the sense it has Phds) but it is way to ideological to really address the issues.
The real problems in Atlantic Canada are based on a chronic lack of business investment in this region and the fall out from that over generations. The federal government did step in and that ended up with a really bad unintended consequence (giving pogey down here and spending most of the real economic development effort in the Windsor to Montreal corridor).
I don’t entirely disagree with this Williamson except that he is using his analysis to warn the rest of Canada not to become Atlantic Canada. If he had any concern for Atlantic Canada, he would be studying ways to serious redress the business investment paradox here.
At the end of the day, I don’t like Atlantic Canada being used as the worst case scenario by these central and western Canadian academics and ultimately the simple minded media which loves to run superficial analysis and call it insight.