Western Separation

[Argus]

The recession was officially over in 1991. The previous major one was over in 1981. Mulroney had the benefit of the long recovery between those. The unemployment rates were something he should have done something about instead of exacerbating the situation with his fiscal policies and hanging on to Reagan and Thatcher's Monetarism tail.

<{POST_SNAPBACK}>

A recession isn't over because you say it is. And there's no way you can have interest rates in Canada at 5% while they're at 10% in the US. No one would be investing in Canada and money would be drained south of the border. There is very limited means available to combat economic problems anyway, especially when we're so reliant on the situation south of the border. When the US economy recovered, ours recovered, and not before. There wasn't a single, solitary thing the Liberals did after being elected that influenced the economy in any favourable way.

[Toro]

The recession was officially over in 1991. The previous major one was over in 1981. Mulroney had the benefit of the long recovery between those. The unemployment rates were something he should have done something about instead of exacerbating the situation with his fiscal policies and hanging on to Reagan and Thatcher's Monetarism tail.

<{POST_SNAPBACK}>

As for what the Tories should have done, if you are saying they should have dealt with the deficit, the Tories should have cut deep but the public hollered when they tried. The Canadian public wasn't ready to deal with the deficit in the 1980s. The Canadian Left screamed well into the late 1990s that deficit reduction was part of the "Right-wing, Corporate Agenda." Martin closed the deficit in part to fairly significant spending cuts. In that sense, Chretien was "more right-wing" than the Tories.

As for "monetarism", what are you saying? The core theory of monetarism is that the money supply should not grow faster than the real economy over a business cycle. In monetarism, "inflation is always and everywhere a monetary phenomenon." That's pretty now accepted, with variations, as standard economic thought today

[kimmy]

Young people are also the most likely to do stupid things without regard to the consequences and leave the mess for the adults to clean up.

I am the last guy to argue that young people make decisions more based on emotion rather than sound reasoning. What's that old W. Churchill gem? something like "anyone under 30 who isn't a liberal has no heart, anyone over 30 who's a liberal has no brain". What is interesting to me is that young people are tending to side with seccession rather than the liberal policies of Eastern Canada. Whether or not young people can make correct decisions, change often starts with them in the streets and on the campus.

I think it's always been assumed that as more and more people from the east move to Alberta, and more and more immigrants come here, a pan-Canadian nationalism would become the dominant outlook as people who carry old grudges become by far the minority. And that Alberta pride and so-on were notions carried by older people that would be replaced by pan-Canadian nationalism in younger people. So I think probably the most interesting thing about the survey is that that it seems to refute that theory.

There are a few possible scenarios for Canada's break up, among them B.C, AB. and Sask uniting when Quebec leaves.  Or Alberta even joining the US.

I think joining the US would be a disasterous mistake. I think it's been pointed out that in the US, resource royalties go to the federal government, not the state government. No matter how disgruntled people become with the Canadian federal government, it seems to me that it's still better than the idea of joining the US. Giving up an 11-figure revenue stream for the sake of making a political point strikes me as being self-destructive.

-k

[Guest eureka]

This is an excerpt from one piece on Monetarism.

What happened? Monetarism was tried in Great Britain during the 80s, under Margaret Thatcher, and it proved to be a disaster. For almost seven years, the Bank of England tried its best to make it work. According to monetarist theory, the British economy should have enjoyed low inflation and high stability. But in fact, it went berserk. The economy sank into a deep recession, while lead economic indicators zigged and zagged. Although inflation came down, this was at the price of rising unemployment, which soared from 5.4 to 11.8 percent. Between 1979 and 1984, manufacturing output fell 10 percent, and manufacturing investment fell 30 percent. (5) Eventually production recovered to a respectable 2.8 percent growth, but it became clear that high unemployment was a permanent feature of the British economy. Eventually, the Bank of England came under overwhelming pressure to abandon monetarism, which it did in 1986. The experiment was such a failure that not even conservatives abroad wish to repeat it.

This essay would be of more interest to you, Toro, than to me. I am not an economist. However, the references to "money aggregatessuggest to me that some of it is in line with your thinking. Everything I have read - not that much, though - would say that history is not on your side.

Note, particularly, "Political Monetarism."

Political

Monetarism

[Guest eureka]

Political]political monetarism

Don't know why the other did not show as a link, Try again

[August1991]

[Clearly, this thread title has been hijacked.]

The text you quote eureka, if anything, supports the argument that "monetarism" now orients the policies of western central banks.

Thus a look back at the intellectual battle lines between "Keynesians" and "Monetarists" in the 1960s cannot help but be followed by the recognition that perhaps New Keynesian economics is misnamed. We may not all be Keynesians now, but the influence of Monetarism on how we all think about macroeconomics today has been deep, pervasive, and subtle.

Same Link As Above (but this one works)

The author is a New Keynesian to boot.

[Toro]

What's really happened over the past 20 years is that the gap between monetarism and Keynesianism has closed. There's no question that government spending plays in important role in the economy. What Keynes wrote back in the 1930s - and he was correct - is that government can have a tremendous effect on the economy when aggregate demand collapses, as it did during the depression. But it has also become pretty clear that when aggregate demand is healthy, government spending is inflationary (if its not checked with tightening monetary policy as someone pointed out earlier). That is the core of monetarist fiscal thought. The two aren't incongruous. I truly doubt that if Keynes had been alive today, he would have been saying to increase government spending in the 1990s. In fact, what Keynes argued was that government should expand spending during recessions and cut back during expansions. The problem with how fiscal policy was conducted from the 1970s into the 1990s was that governments made little or no effort to balance the budget let alone go into surplus as Keynes argued. Instead, it was spend, spend, spend.

Eureka, what monetarism argues is that wealth cannot be created artificially by inflating the money supply in the long-run. It only creates inflation. But that doesn't mean you cannot use monetary policy to grease the economy in the short-run. Milton Friedman has argued that the 1929-1933 Depression was mainly caused by exceedingly tight monetary policy (and the Smoot-Hawley trade tariffs). He said rather than tightening monetary policy, the Fed should have eased. He's correct. Where Keynes and Friedman differ philosophically is that Keynes argued that government should increase aggregate spending while Friedman said that spending wasn't necessary and that interest rate cuts would have done the trick. They are both correct. Fast forward to today and you'll see that both have been the policy of George W. Bush.

As for you link on the British economy, in the 1970s the UK was bailed out by the IMF and was grinding to a standstill when Thatcher was elected in 1979. That was not because of any lack of natural resources (Japan has no natural resources BTW) but rather because the bloated government was throwing monkey wrenches into the gears of the market economy. Britain has been the most dynamic economy of the big European economies (France, Germany, Italy) over the past 20 years because in part of the reforms undertaken by Thatcher - which are drastically needed in Germany and France today. With any restructuring, its always going to be painful, as it was under Thatcher.

[Mad_Michael]

There was a time when Canadian tolerance and patience did not extend to oppression and injustice. We fought against those things.

I would just like to see that spirit of the last generation come back into Canadian life. It seems that this really is the "Me" generation that does nothing but cry about its own wants.

BANG!! That's the sound of hitting the nail right squarely on the head.

Agreed from this redneck 100 percent.

<{POST_SNAPBACK}>

The 'Greatest Generation"? The ones who have milked our system to the max for their own benefit and profited from every possible lucky break? (Real Estate & CPP specifically). Are those the ones you are praising?

Credit where credit is due, but lets get the facts straight first.

Btw, what happened to this thread discussion? Seems lost and wandering all over the place.

[Leader Circle]

Back to the topic.

According to the SPA website, the 2004 totals of equalization payments that were never returned to Alberta was $9.3 billion.

Transfer payments to Ottawa 2004

[Mad_Michael]

Back to the topic.

According to the SPA website, the 2004 totals of equalization payments that were never returned to Alberta was $9.3 billion.

Transfer payments to Ottawa 2004

<{POST_SNAPBACK}>

But what's the point here? It is already a long established fact that Ontario and more recently, Alberta, pay more to the Federal Government than they receive back in Federal government services. No one disputes the fact of this in general (except Quebec separatists who need to ignore such facts to make their argument).

So what's the point? Ontario has paid large surpluses to Ottawa every year going back to about 1920. The existance of this fact does not constitute or produce a conclusion of separation.

[Riverwind]

According to the SPA website, the 2004 totals of equalization payments that were never returned to Alberta was $9.3 billion.

That figure is extremly suspect because it does not say how they calculated the amount of 'money not returned'. It is easy to inflate such figures by over estimating the amount 'paid' by Alberta and under estimating the benefits received. Quebec seperatists are masters at this kind of financial deception - they actually believe that Quebec pays more into the federation than it receives!

[Mad_Michael]

According to the SPA website, the 2004 totals of equalization payments that were never returned to Alberta was $9.3 billion.

That figure is extremly suspect because it does not say how they calculated the amount of 'money not returned'. It is easy to inflate such figures by over estimating the amount 'paid' by Alberta and under estimating the benefits received. Quebec seperatists are masters at this kind of financial deception - they actually believe that Quebec pays more into the federation than it receives!

<{POST_SNAPBACK}>

And the SPA has no reason to want to inflate this figure right?

Even still, Alberta does generate a surplus. How big or how small it is, isn't all that important.

[kimmy]

According to the SPA website, the 2004 totals of equalization payments that were never returned to Alberta was $9.3 billion.

That figure is extremly suspect because it does not say how they calculated the amount of 'money not returned'. It is easy to inflate such figures by over estimating the amount 'paid' by Alberta and under estimating the benefits received. Quebec seperatists are masters at this kind of financial deception - they actually believe that Quebec pays more into the federation than it receives!

Well, if people take Dalton McGuinty's $23 billion figure for Ontario's "fiscal gap" at face value, you'd have to assume the corresponding "fiscal gap" for Alberta would be larger *per-capita*, for obvious reasons.

-k

[Mad_Michael]

Well, if people take Dalton McGuinty's $23 billion figure for Ontario's "fiscal gap" at face value, you'd have to assume the corresponding "fiscal gap" for Alberta would be larger *per-capita*, for obvious reasons.

-k

<{POST_SNAPBACK}>

Dalton McGwinty hasn't shown any basis upon which a prudent man might take his word at face value.

Indeed, Dalton has gone out of his way to establish the fact that you can't trust a word that he says.

And as I've noted above, the precise amount of Alberta's federal surplus is mostly irrelevant. What I'm interested in is how the existance of said surplus (of whatever amount, real dollars or per capita) is understood to be some kind of reason or justification for separation. That's the logical jump that escapes me.

[August1991]

[Leader, thanks for bringing this thread back on topic.]

That figure is extremly suspect because it does not say how they calculated the amount of 'money not returned'. It is easy to inflate such figures by over estimating the amount 'paid' by Alberta and under estimating the benefits received. Quebec seperatists are masters at this kind of financial deception - they actually believe that Quebec pays more into the federation than it receives!

The figures presumably make estimates of payments to residents of a particular province and revenues raised from those residents. It has to add up to zero in the end. And while we're on the topic, I have never seen statistics on inter-provincial transfers by private organizations, in particular banks.

But in the case of government transfers and purchases, the issue here is not whether my province comes up with a plus or minus when all is tallied. The issue really is whether taxpayers in Alberta and in Quebec, for example, are getting value for their money. That is, does the federal government make decisions that are in their interest. From Mirabel through the sponsorship scandal, from the NEP to the CF-18 contract, from nuclear energy to the auto industry, the evidence is that it doesn't. This is the failure of Canada's federal state.

The sense among many people in Quebec, and I suspect in Alberta too, is that the federal government takes decisions that are irrelevant or contrary to their interests. In the case of Quebec, many people believe that bureaucrats and politicians in Quebec would take better decisions than bureaucrats and politicians in Ottawa. It's a perfectly defendable argument.

I have the suspicion that if Ottawa had fewer decisions involving Quebec, it would probably make better decisions for the rest of Canada, and Western frustration would be less severe. IOW, Canada's federal government needs to be re-organized.

[Riverwind]

Well, if people take Dalton McGuinty's $23 billion figure for Ontario's "fiscal gap" at face value, you'd have to assume the corresponding "fiscal gap" for Alberta would be larger *per-capita*, for obvious reasons.

I do not doubt that a purely mathematical exercise of calculating the costs vs. benefits for Alberta and Ontario would show a net loss, however, such calculations do not/cannot take into account the intangibles that come with being part of a larger entity such as greater clout at the negotiating table wrt trade disputes and labour mobility and free flow of goods and services within the country.

For example, Alberta's beef producers still had access to the Ontario and Quebec market after the BSE cases because Ontario and Quebec are part of the same country. A separate Alberta would have lost that benefit.

[Riverwind]

The sense among many people in Quebec, and I suspect in Alberta too, is that the federal government takes decisions that are irrelevant or contrary to their interests.  In the case of Quebec, many people believe that bureaucrats and politicians in Quebec would take better decisions than bureaucrats and politicians in Ottawa.  It's a perfectly defendable argument.

Not really. Americans don't seem to have the same problem with a system that is almost identical. Sure Americans will gripe about federal gov't waste but that does not translate into 'we would be better off on our own' arguments.

I believe that the difference exists for a number of reasons:

1) The 'big fish small pond' syndrome. There are 10 Canadian provinces compared to 50 US states. This makes individual provincial leaders more important than they actually are.

2) Military spending and patriotism. The US federal gov't doles out huge amounts of money for military projects that are often used for regional pork. These projects are frequently as badly mismanaged as HRDC but because they don't attract as much criticism because spending money on the military is patriotic and unquestionably a federal jurisdiction.

3) Canadian naivity. Americans know that breaking up a country is nasty business and therefore do not entertain any fools that might suggest it is an option. That means Americans can focus on the real problems instead of pipe dreams about how separation would solve all their problems. Canadians, unfortunately, have let the idea of separation become part of the national psyche. This simply generates a class of professional whiners that make problems worse by criticising any attempt to fix the problems within the current institutions.

[Mad_Michael]

The sense among many people in Quebec, and I suspect in Alberta too, is that the federal government takes decisions that are irrelevant or contrary to their interests.  In the case of Quebec, many people believe that bureaucrats and politicians in Quebec would take better decisions than bureaucrats and politicians in Ottawa.  It's a perfectly defendable argument.

Not really. Americans don't seem to have the same problem with a system that is almost identical. Sure Americans will gripe about federal gov't waste but that does not translate into 'we would be better off on our own' arguments.

I believe that the difference exists for a number of reasons:

1) The 'big fish small pond' syndrome. There are 10 Canadian provinces compared to 50 US states. This makes individual provincial leaders more important than they actually are.

2) Military spending and patriotism. The US federal gov't doles out huge amounts of money for military projects that are often used for regional pork. These projects are frequently as badly mismanaged as HRDC but because they don't attract as much criticism because spending money on the military is patriotic and unquestionably a federal jurisdiction.

3) Canadian naivity. Americans know that breaking up a country is nasty business and therefore do not entertain any fools that might suggest it is an option. That means Americans can focus the real problems instead of pipe dreams about how separation would solve all their problems. Canadians, unfortunately, have let the idea of separation become part of the national psyche. This simply generates a class of professional whiners that make problems worse by criticising any attempt to fix the problems within the current institutions.

<{POST_SNAPBACK}>

Excellent post Sparhawk.

[August1991]

What does the US have to do with this? Is it really relevant what the US federal government does or doesn't do?

My point was that when the Canadian federal government undertakes projects, they too often appear in Quebec as foreign intrusions, irrelevant or contrary to local interests. If Quebec bureaucrats or politicians had made the decisions, the projects would have been workable.

The sad result is that in ROC, there is a perception that "Quebec gets everything" and in Quebec, there is a perception that the "federal government is stupid". The money just gets wasted. Mirabel is a classic example.

Quebec operates its own pension plan, separate from Ottawa, and this has been very successful within the sharp confines of a tight knit society.

Radio-Canada, for all intents, is a Quebec operated organization - again, very successful within Quebec society.

Many people feel that if Quebecers paid their federal taxes to Quebec City instead of Ottawa, the money would be spent more closely to the needs and desires, using instititutions that are more appropriate. They would get more bang for the buck, and have no need for federal transfer payments.

This does not mean that Ottawa bureaucrats and politicians would take no decsions for Quebec. The decisions would be shared differently than they are now - as indeed we share pension and State TV decsions.

[Riverwind]

What does the US have to do with this?  Is it really relevant what the US federal government does or doesn't do?

Too many people think that just because they say the system is 'broken' enough times then it must be true. That is what has happened in Quebec - generations of separatist propaganda has convinced many Quebequers that mishandling of money by the provincial government is normal yet mishandling of money at the federal level means the system is broken.

I brought up the US to point out that every so-called 'problem' with the federal system in Canada exists in the US - the only difference is the attitide that Americans have towards the problem. In other words, more could be accomplished if people simply changed their attitude and put the problems into the proper perspective. No where is this more true than inside Quebec.

Whatever jealousies that may exist towards Quebec which is a distinct society are certainly not going to be solved by breaking up the country. In fact, the economic chaos that would follow any such break up would like turn latent resentments into out right hatred. For better or for worse, the best thing we can do is work on making the existing system work better - whether through an elected senate or PR or something else.

[August1991]

I brought up the US to point out that every so-called 'problem' with the federal system in Canada exists in the US - the only difference is the attitide that Americans have towards the problem.

Canada and the US differ in many ways but surely on this issue, devolution of powers to Quebec, the difference is stark.

As much as I admire the US or other countries, I am always cautious in drawing parallels.

That is what has happened in Quebec - generations of separatist propaganda has convinced many Quebequers that mishandling of money by the provincial government is normal yet mishandling of money at the federal level means the system is broken.

It doesn't take separatist propaganda. They need only look around. Federal decsions in Quebec are usually bad decisions. This is not wilful nor is it even incompetence. The decisions are bad for the simple reason that Ottawa is not part of Quebec society.

In other words, more could be accomplished if people simply changed their attitude and put the problems into the proper perspective. No where is this more true than inside Quebec.

By that logic, Canadians should change their attitude to the US and put their differences in perspective.

[Riverwind]

It doesn't take separatist propaganda.  They need only look around.  Federal decsions in Quebec are usually bad decisions.  This is not wilful nor is it even incompetence.  The decisions are bad for the simple reason that Ottawa is not part of Quebec society.

What you are doing is focusing on the high profile but relatively insignficant blunders like 'sponsership'. In fact, the most significant federal decisions over the last decade like balancing the budget and reducing taxes have only had a good effect in Quebec.

In other words, more could be accomplished if people simply changed their attitude and put the problems into the proper perspective. No where is this more true than inside Quebec.

By that logic, Canadians should change their attitude to the US and put their differences in perspective.

If you mean to say that Canadians should stop villifying the US then I agree completely.

[Mad_Michael]

Canada and the US differ in many ways but surely on this issue, devolution of powers to Quebec, the difference is stark.

I should think Canada and the USA differ greatly here. In Canada, all powers not delimited belong to the Federal level. In the USA, all powers not delimited belong to the States.

As a general rule, US government runs against the US constitution - which is why so many Americans oppose it. In Canada, this arrangement does not defy the Constitution and thus there isn't a groundswell of opposition.

As much as I admire the US or other countries, I am always cautious in drawing parallels.

Indeed. I agree.

[Argus]

And as I've noted above, the precise amount of Alberta's federal surplus is mostly irrelevant.  What I'm interested in is how the existance of said surplus (of whatever amount, real dollars or per capita) is understood to be some kind of reason or justification for separation.  That's the logical jump that escapes me.

<{POST_SNAPBACK}>

Speaking as someone from Ontario...

I would say that the difference is that while Ontario pays more than its share it also gets a huge say in how the country is run - not as much as Quebec, of course, but still, it has a lot of influence. Alberta, so far as I can see, has little or no influence. Their opinions are largely discarded, their social beliefs jeered at and ridiculed by the urban elites who control the country and its media and academic circles. Someone said earlier in the thread that unlike Quebec Alberta was not a distinct culture. Distinct from what? I'd put it to you that the culture of Alberta, the attitude, the general belief in self reliance and robust sense of personal freedom and responsibility is as different from what you find among the media and political elites in Ottawa/Toronto/Montreal as the English French divide.

[Black Dog]

Alberta, so far as I can see, has little or no influence. Their opinions are largely discarded, their social beliefs jeered at and ridiculed by the urban elites who control the country and its media and academic circles.

I had no idea that there was a correlation between Alberta's material wealth and the validity of its social beliefs. As for "urban elites": that describes more than 2/3 of Alberta's population.

I'd put it to you that the culture of Alberta, the attitude, the general belief in self reliance and robust sense of personal freedom and responsibility is as different from what you find among the media and political elites in Ottawa/Toronto/Montreal as the English French divide.

If only it were true. However, that is less Alberta's culture as Alberta's enduring myth. For example, why is a culture with such a "robust sense of personal freedom" also on eof the most socially restrictive parts of the country? As far as other myths go, sure Albertans believe in responsibility and freedom from regulation...until times get tough, in which case Albertans are always right there jostling for their spot at the trough. Finally, when it comes to "political elites", you don't have to look much further than the insulated pashas under the dome of the legislature.