Jim Milway, Executive Director of Ontario’s Institute for Competitiveness and Prosperity, responds to my blog of November 29th and offers worthwhile research:
“The problem we have with fiscal federalism is that it has taken resources out of Ontario and done little to improve the economic prospects of our have-not provinces. Our system is geared to transferring resources from have to have-nots. The US system - while transferring as much per capita across state lines as we do here in Canada - does not attempt to correct regional disparities. And yet there is much more fluidity in year-to-year state rankings of income per capita than in provincial rankings.
Our system may help equalize consumption of government services, but it doesn't help have-nots move up the ladder.”
Our system may help equalize consumption of government services, but it doesn't help have-nots move up the ladder.”
See our work on this at:”
Their work deserves wide attention. The Institute for Competitiveness and Prosperity has had the courage to open up Canada’s “iconic” fiscal equalization programs and say that we have missed the mark. As impressive, it has actually studied how American federalism works at the same problems.
Canada has relied on fixed, often indexed, top-down formulas for wealth sharing. The US has no one big national policy. Its rather evenly divided and competitive federal political system is constantly winning new allies and constantly responding in ad hoc ways to regional pressures.
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