The Times and Transcript is running that editorial from the Fraser Institute that has been making the rounds arguing that the massive overuse of the employment insurance in New Brunswick is the reason why the EI programs should not be changed across Canada. The warning is simple. Change the EI system and turn Canada into New Brunswick. That should have Calgarians shaking in their boots.
As I have said before, I don’t like the EI system the way it is currently configured. I think the federal government has used it as a convenient way to avoid looking at any real economic development efforts in …this place. As the economy weakens over time, crank up the EI benefits and forget about any real change. I think businesses (and government) have used seasonal EI to keep their own wage rates low. Someone sent me a letter to the editor from a Teacher Assistant claiming that he uses EI as an income supplement because his salary alone is not enough for him to survive. EI has become a wage subsidy for specific industries and government activities.
But my biggest frustration with Fraser and all the other eminent think tanks in Canada is that they are quick to crap on just about every government effort to deal with the structural economic problems in a place like the Maritimes (Equalization, Atlantic Accord, EI, transfer payments, etc) but never offer any solutions. They never turn their enormous intellectual horsepower to economic development-based solutions for underperforming economies.
We get hundreds of pages of narrative and analysis on what is wrong with EI but a cursory “cut taxes and reduce regulation” as the solution. Or, we get “encourage mobility out of places like New Brunswick” to “places like Alberta”.
I realize this theme is well worn ground on this blog but I feel that it needs to be repeated until it sinks in. The government should, over time, get away from these direct efforts to inject income into weak economies and use a portion of that money to build the infrastructure and value proposition on which a successful economy can grow and thrive.
I don’t know that anyone has recently put an exact price tag on seasonl EI payments but conservatively I think it is in the $400 to $500 million per year in New Brunswick alone. Think about the opportunity cost of that. $500 million per year to pay 60,000 people or more not to work for a certain part of the year.
It’s hugely unproductive and it is not an attractive likestyle choice for the majority of young people. In fact, I would say that in the long term, EI is one of the major drivers of economic decline in a place like Northern New Brunswick. On that point, I agree with Fraser.
by now we know the problems. Let’s turn that intellectual horsepower toward solutions.