Posted on 05/18/2010 7:25:12 AM PDT by SeekAndFind
If the European Union wants to endure, perhaps its architects should look at how Canada keeps disparate regions together in one union. One of the magic ingredients, as we Canadians know only too well, is equalization payments — i.e. transfers of income from the richest to the poorest provinces – specifically, from Alberta and Ontario (although Ontario is faltering) to the Maritimes and Quebec.
Does the EU have the same capacity to make equalization payments? It would seem not. The Germans, who pay their taxes, are quite disenchanted about supporting Greek citizens, who, by and large, avoid taxes and have more generous social programs (e.g. 57 as the retirement age for civil servants versus 67 for civil servants in Germany).
Yet financial markets are skeptical of the current approach to dealing with spendthrift EU members — which involves bailout packages conditional on austerity measures. Those austerity measures look like they will keep a lid on economic growth in the spendthrift countries, which means little improvement in the ability to repay the loans when they come due in a few years. So, financial markets are still worried about debt defaults.
If debt default occurs and spendthrifts like Greece leave the EU, they will have their own currencies – and they will let them depreciate against the euro to boost exports to the EU. This is how they will stabilize their debt problems. But what this means for the core group of EU is that they still end up having to “finance” the spendthrift’s turnaround through the migration of jobs, industries and living standards to the wayward EU members.
Instead, the core EU group could provide income transfers to the periphery to establish a floor below which their economies would not be allowed to deteriorate as they adjust to living more within their means. Do away with excessive pay and benefits in the public sectors but help smooth the transition. If some compromise along these lines can be arranged between have and have-not EU members, the end result would be to maintain the EU. And the core members could still keep on selling goods and services to the fringe members; they wouldn’t have to transfer jobs and industries.
That’s the way it works in Canada, more or less. I’m not saying that it is right or wrong, better or worse. Indeed, some have made the case that it is the wrong way. A radio talk show host pointed out just this morning that Quebec’s social programs are more generous than the rest of Canada’s (e.g. public day care available for $7 per day) and Quebec civil servants can retire at 62. Yet, he said, Quebec gets $8 billion a year in equalization payments.
I’m not saying the core EU members have to also be similarly overly generous in their transfer payments to ensure the survival of the EU. Perhaps Canada needs to realign regional redistribution of income, especially with Ontario struggling. But it cannot be denied that, so far, the system of “equalization payments” has been instrumental in keeping Canadians under the same roof.
--- Larry MacDonald is a former economist who manages his own portfolio (such as it is) and writes on investment topics for Canadian Business, Globe and Mail, MoneySense Magazine, Investopedia.com and other publications. He also writes a daily finance blog for Canadian Business Online
Not hard to do if you don’t have to pay for your own self defense. Add that little nugget into the budget and things get dicey.
Take away the china bubble and those plaid clad clowns ain’t so rich.
Not a good example. Canada was born from one unified culture and political tradition. “Transfer payments” are then just a normal part of Government of a unified and culturally common people. The example Quebec prove this point - and you can see how now twice in the last 30+ years Quebec nearly declared itself sovereign.
what we really need is a system which provides a means of dumping (as in bums’s rush) a sh!tbird/marxist dictator(s) when the unthinkable happens, without waiting for the next November(s) that may never come and/or its citizens (not occupants) to wake up!!!!!!!!!!
Semper Waiting!
Dick Gaines
aka:
Gunny G
**********
what We really need is a system which provides a means of dumping (as in bums’s rush) a sh!tbird/marxist dictator(s) when the unthinkable happens, without waiting for the next November(s) that may never come and/or its citizens (not occupants) to wake up!!!!!!!!!!
Semper Waiting!
Dick Gaines
aka:
Gunny G
**********
Exactly what is Greece going to be exporting in such huge quantities to Germany if their currency falls then?
I’m curious as to how you have come to the conclusion that Canada was born from one unified culture and political tradition. Pre or post 1760?
From what I understand of Canada’s model, it is this...
- the bulk of the population lives in Ontario and Quebec, and comprises a giant leeching sponge with ever growing demands for welfare benefits.
- Quebec has the additional feature of being an aggrieved minority group, much like our hispanic Reconquistas, feels that they are “owed” reparations.
- on top of this they have flung open the doors to more or less unfettered immigration, causing a massive influx from the third world, 90% of whom have settled in Metro Toronto.
- Plus the Eskimos (excuse me....Inuit) have been given their own ethnic grievance welfare stated called Nunavut.
- Manitoba and Saskatchewan are mirror-images of Minnesota, being governed by holdover early 20th. century Socialist parties, sort of like the DFL party on steroids.
- the Maritimes are like the most backward parts of Mississippi or Arkansas, with a very low per-capita income and massive welfare dependency.
- British Columbia is like a bolt-on part of Seattle, with some service industries, import docks, and timber to the extent that the Enviros allow it to be harvested.
- All of the wealth is being generated by oil and mining activites in Alberta, the Northwest Territories and the Yukon.
- People in the productive areas like Alberta greatly resent all of their wealth being drained away to pay for welfare programs, mainly to prop- political constituencies in Ontario and Quebec.
- People in Quebec keep toying with the idea of independence, except that they realize that an independent Quebec would crash and burn economically within 30 days. So they hang on, looking for clever ways to press their demands while continuing to tap into the national umbilical cord.
- No matter how upset people in other regions of the country become, Ontario always carries the day, due to their overwhelming electoral numbers.
THIS is a model for Europe, or anybody else?
As a former BC kanuck, western canadians have already knew about the equalization payments to the mafia boss: Quebec. This has always been the dirty little secret behind the true “unification” of canada.
Except for Quebec (and native peoples), Canada has historically been British through-and-through - language, culture, religion, law.
Issues between Quebec/Francophones and the rest of Canada have existed for centuries, which is why even in Federal Canada and with 200+ years to work at it, there are still issues - and that is why the idea of “transfer payments” is hardly a solution to solving EMU problems.
Alberta and Newfoundland are of British origin but they differ form the rest of Canada,mostly because Newfoundland wasn’t Canada till 1949.
New Brunswick much like Maine and Vermont was originally settled by Acadians which still leaves ties with the border.
As for Quebec,they are a bunch of French Catholics who were more then glad to sell out their own.If they harmed the British empire,it wasn’t because they choose to,it is because their mentality was poison to it.
I
I don’t disagree with your conclusion that transfer payments are a horrible idea. They’ve kept Canada from having a broad based, diverse economy in all provinces (ie. the Crowsnest Pass rates).
However it’s a leap to say that Canada has been British through and through. Even today, the two provinces of Ontario and Quebec comprise 60% of the entire population of Canada, and in times past it was even higher. In Canada, common law is practiced in the English speaking provinces, but Quebecois jurisprudence in private law is still based on civil law.
And despite 2 centuries of attempts to assimilate Quebec into the rest of ‘British’ Canada, she still overwhelmingly speaks French, reveres Quebecois culture, and is overwhelmingly Catholic.
The concept of being British through and through doesn’t pass muster.
A story for you: In the ‘50’s Bishop LaFleche was giving a sermon on a Sunday morning to his Quebecois parishioners on the topic of becoming assimilated into the English language and culture of greater Canada. He said, acrimoniously, to the gathered faithful “By all means speak English! But speak it badly!”
I think we agree. 200+ years of trying to get along with Quebec and there is still friction - which doesn’t give a lot of hope to EMU - that’s why I said “except for Quebec.”
Originally from Vancouver. You?
Yep. Believe it or not, I was raised in Battleford then migrated eventually to Couver’ with my family starting at grade school. My GF is also with me from Calgary.
So whenever the Flames and Canucks visit the Kings (which is 20 minutes away from Hollywood) , we make sure to get the best seats LOL!
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