Someone asked me to comment on the front page story over the weekend about the New Brunswick government assertion that it was strong armed into Confederation back in 1867 and its economic interests have been subject to the focus on central Canada ever since. This is the narrative of a brief to the Supreme Court arguing against a single national regulator.
I have blogged on the issue of the regulator on several occasions and won’t do so again except to say it is a bit of a moot point considering we have only a tiny number of publicly held firms and even fewer that are actively traded (2? 3?). I do like some of the broader industry capacity building done by the securities regulator which would be turfed in a national scenario. In the end, New Brunswick needs significantly greater inward business investment and that can come from IPOs, it can come from acquisition (such as Radian6) and other channels.
The issue of Confederation and New Brunswick outlining in this brief is the position taken by Donald Savoie. In at least three of his books (that I have read), he makes this argument and it seems reasonable to me. Before Confederation, NB’s natural trading partners were New England, the UK and the Carribean. After Confederation trade became east-west within Canada.
There are two arguments. Savoie’s is simple. Look around and ask yourself if Confederation has been good for New Brunswick. The province has never matched the national growth rate in population since Confederation. It has suffered out-migration at a constant clip since 1867 with some short exceptions. Virtually the entire manufacturing base of Canada – with the exception of natural resources – was built in the Windsor-Montreal corridor and much of it funded by the federal government or supported by trade and industrial policies.
It is true the feds compensated for NB’s lack of economic performance by beefing up transfers – this started mostly in the 1950s and was enhanced over the years. But the argument is the feds still underspend on economic development-related things such as R&D and overspend on transfers such as Equalization, EI, etc.
The alternative view (and if you read the comments to the main story you get a flavour) is that Atlantic Canada (and New Brunswick) is some kind of basket case and it would have been a whole lot worse without federal largess. This view implies that New Brunswick was already destined for the economic wasteland and federal transfers is the only reason why the province has the standard of living it has today.
Like all analyses, your view on this will be shaped by personal ideology and history.
As a Maritimer, it is hard to believe that if this region had remained an autonomous ‘country’ that it would have somehow been left behind and would now be the equivalent of a third world country. It is more logical – maybe reasonable – to assume we would have chugged along developing free trade agreements with Canada and the U.S. – maybe some ‘deeper integration’ etc. or maybe Canada or the US would have taken the region over by force at some opportune time. Maybe the region would have kept closer ties to Britain. Who knows?
Newfoundland did not join Canada and still struggled so this view is not a slam dunk although Newfoundland is distinct in many ways not the least of which is its geography.
My view is that this discussion of history is very important and I would like to see more debates and discussions about this because I have always felt that it will be harder to get on a sustained, positive economic track without being clear-eyed about our past and the reasons for our economic stagnancy. I think there is some validity to the dependency theory. The whole transfer system is set up to reward economic stagnancy.
The more cynical among us might even say the federal government needs a weak Atlantic Canada. In one of the first speeches that I heard Jean Cretien make he said that Atlantic Canada was exactly the reason why Canada needs a strong central government. Doesn’t that mean he had an incentive to propagate a weak economy down here?
I don’t know enough of the history nor indeed the philosophy to debate this in a credible fashion. I’m just a writer trying to get broader public interest in taking a new approach to economic development. Some days I feel we move ahead and others we move backwards.
Blaming Ottawa for our woes is a pastime in this region. Savoie talks about grumbling regional politicians as far back as the turn of last century. It didn’t do them much good and I don’t think it will have much effect now.
I still think we could convince a federal government to support a new economic development focus. I think we could get away from this economic development = bank approach that we have seen for almost 30 years. But we would have to be clear about it here first and that step is very hard to take. I talk to people on a weekly basis who – at their core- believe that the only role for government is to dole out grants and loans. They don’t say as much but when someone (i.e. me) raises the fact that the majority of economic development today is matching companies to government funding programs – the response is what else is there?
We need to get the model right and then get the feds to support it. We can’t put the Confederation genie back in the bottle.