“One size fits all” economic policy doesn’t work for modern Canada
One economic policy doesn’t fit anyone well
Photo: Bruce A. Stewart
By Bruce A Stewart
The rise of the West to equal and start growing past Ontario is creating a strain.
Just because Dalton McGuinty, Ontario’s Premier, took umbrage at what he called policies to suit Alberta, didn’t mean there wasn’t an element of reality underneath it all.
The problem is the country has one economic policy, but it needs more than one.
If you make most of your economy from resources, a strong Canadian dollar is a good thing.
If you make most of your money from services and manufacturing in international supply chains, a weaker dollar helps keep your sector vibrant when your trading partners aren’t doing so well.
But, just as Greece and Germany, two very different economies, have to share one monetary policy, so too do Canadian provinces.
We see this in many other ways. City versus city. City versus rural area.
Take a look at Northern Europe. All doing well. Some countries are in the Euro, others are not — and Norway’s not even a part of the European Union.
In fact, Norway’s doing quite well outside the EU, Sweden and Denmark well inside the EU but outside the Euro.
Their policies are tailored to the kinds of economies they have (all different).
Finland, which is in the Euro zone, has been having the toughest go of it.
We’re used to the idea that one currency, one policy, is how you do things.
Maybe it’s time to think about that.
We don’t have what the Europeans have — a single market nationwide. Only three provinces ever lowered their barriers to each other: Alberta, BC and Saskatchewan.
On the other hand, we do have what’s not working so well for the Europeans: a single currency and a single interest rate.
We also have something they don’t: a single fiscal policy. (It’s called the federal budget and tax system.)
The possibility exists that we’d be a lot better off with Alberta dollars and Ontario dollars — and a true single market in goods, services and labour.
We’re probably not going to get that discussed, much less implemented.
But it’s something we need to solve. Just like Australia does, another country being torn apart between resource economies and manufacturing/service economies.
They try to solve it by using their GST for equalization: Australian states get the GST monies, but not in proportion to what’s collected.
Better than our way? Not necessarily. But we’re not even talking about it.
We just snipe across the provincial boundaries.
That does no one any good.
Meanwhile the seams continue to stretch a bit more.
Bruce Stewart is a consultant, educator and philosopher with a passion for public affairs currently located in Toronto. He is well known across the Internet for his blogs on management (Getting Value from IT) and social affairs (Just a Jump to the Left, then a Step to the Right) and for his daily stream of commentary on Facebook, Twitter and Google+. You can reach him at bastewart.toronto@gmail.com.
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