The uneasy case for equalization payments

Abstract

Attention to the problems which social science addresses tells us a great deal about the nature of the Canadian economy and the national identity, about not only material realities but also Canadian values.Values are ever present in the lexicon of economics. They penetrate economics at a level of vocabulary, perceptional selectivity, definition of the problem, choice of subject matter, rationalization and normative certitude. Values serve as a filtration system governing the formulation and evolution of ideas. They can take the form of some notion of human nature, a partial theory knowledge or a specific conception of reality. Whatever form they take, values determine how scholars order the world around them. Of course -- as the books under review demonstrate -- at any one time a plurality of values exists and these values compete in the formulation of theory, the direction of public policy and our understanding of the immediate and distant past.The six works under review are diverse in both method and scope. Diversity is part of the Canadian condition. Indeed -- as Robin Neill has demonstrated in his classic study -- the history of Canadian economic thought is one of contradiction, paradox and heterogeneity.(f.1) The fact that the Canadian nation is made up of five distinct regions, each displaying its own pace and pattern of economic growth, has contributed to the assortment of competing economic discourses and paradigms. Yet such variance need not be problematic. On the contrary, states the intellectual historian A.B. McKillop, our national identity is based on the existence of diversity.(f.2)Despite their differences, the books under review are similar in the matters to which they attend. Two books analyze the nature of the debt and debt discourse (albeit in very different ways). Two others -- utilizing dissimilar methodologies -- attempt to account for the role of innovation and invention in economic growth. A fifth questions the value of the quintessentially Canadian programme of equalization payments while the sixth seeks to understand the economic and political forces involved in the recent neo-conservative transformation of Canadian society.In the first section of this review, the choice of subject matter, the arguments of the authors, as well as the political-valuational judgments that colour their reasoning, will be identified and compared. In the second and third sections, a closer examination of some of their metaphysical preconceptions will be undertaken, specifically of the authors' perceptions of human nature and conceptions of reality. The last section is dedicated to an analysis of methodology and the role of the historical method in economics.The Matters to Which We AttendEach way of ordering -- or interpreting -- postmodern life starts with an implicit or explicit decision about priority. When dealing with economic phenomena the tendency in the discourse of social science has generally been to pick one main topic of interest and regard the rest as secondary, indeed, epiphenomenal. To do so is to manifest one's perception of what things are good, important, and desirable in the world.Three of the books under review deal with public finance. In The Uneasy Case for Equalization Payments, Dan Usher calls into question the belief that equalization payments from Ottawa to the provinces redistribute income, increase GNP and further equality. He uses arithmetical examples to illustrate the potential inequalities (Part II), inefficiencies (Part III) and inequities (Part IV) in the existing system. Having made his case, Usher concludes that the subsidization of have-not provinces is not necessarily beneficial to the poor nor is it necessarily favourable to general prosperity. Indeed, it is just as likely, Usher maintains, that intergovernmental transfers have simply shifted income from one group of affluent people to another, with little -- and only incidental -- benefit to the poor. …

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