From: cbbrowne@csi.uottawa.ca (Christopher Browne)
Subject: The Problem of Federalism (was Re: The partition of Quebec)
Organization: Dept. of Computer Science, University of Ottawa
Date: Tue, 17 Nov 92 03:55:13 GMT

In article <schuck.721856976@sfu.ca> Bruce_Schuck@sfu.ca writes:

> cbbrowne@csi.uottawa.ca (Christopher Browne) writes:
 
> >In article <schuck.721856976@sfu.ca> Bruce_Schuck@sfu.ca writes:
 
 
> >Well, here's a causality chain:
> >1) Quebec separates
> >2) CSQ cuts off trade with Quebec
> > This has the result:
> >3) Ontarians whose jobs depend on imports from Quebec find their jobs
> >at least disrupted.  If they're not lucky, the jobs may be lost
> >altogether.  This means that:
 
> I sincerely doubt Ontario couldn't buy goods and services cheaper from
> the US. There's no doubt goods from Quebec are going to be more
> expensive.

I seriously doubt that prices would get THAT uncompetitive.  If the
Quebec goods get "too expensive", then there will be a corresponding
devaluation of Quebec's currency, which would effectively bring the
prices back down to a more competitive level.

You're missing one of the most important essentials of trade and
economics; prices are something that gets negotiated.  If the price is
too high, then people don't buy.  If people don't buy, there is excess
supply.  If there is excess supply, the price goes down.

It's all about supply and demand.  If there's an imbalance, then prices
will tend to change to equalize them.  Supply "too high" --> prices fall.
Demand "too high" --> prices rise.  Prices "too high" --> Demand falls,
supply rises.  Prices "too low" --> Demand rises, Supply falls.  First
year economics.

The implications of your statement are that "The prices of goods from
Quebec will be so high that nobody will buy them."  If that's the case,
then nobody will buy them.  And Quebec goes bankrupt.  And everything
becomes available at "firesale prices."

The theories taught in upper year economics courses concerning trade and
monetary policy ASSUME the principle of "market clearing."  Everything
that's made gets sold.  To someone.  It may be that it's the clearance
warehouse that gets it.  But goods don't simply get ignored by everyone.
(At least, not in a REASONABLY healthy economy.)

If a manufacturer in Quebec finds that their prices are so high that
nobody will buy the goods, then they will:
a) Go out of business (stop manufacturing)
b) Get whatever value they can out of the inventory they have.  If this
means selling at a loss, that IS better than just tossing it into the
St. Lawrence River.
Even under this most extreme situation, the goods DO get sold.

The only case under which they NEVER get sold is if the goods are
USELESS, and have NO intrinsic value.  This has been fairly common in
some of the former Soviet Union and satellites.

You must have skipped some economics lectures...

> >>Not always, although I would sure like it if Ontario offered to do
> >>something for BC that wasn't beneficial for Ontario. I can't think of
> >>any examples.
 
> >If "Ontario" did something for BC that wasn't beneficial for Ontario,
> >the provincial government that did such a thing would probably not get
> >re-elected, since the mandate of the government of Ontario is to look
> >out for the interests of Ontarians, (and more often, for the interests
> >of the government of Ontario).
 
> So why are you getting on my case about looking out for BC's best
> interests?

There's three aspects to it:
1) The BC provincial government looking out for its own best
interests.
2) The Canadian government looking out for BC's best interests.
3) The Ontario provincial government looking out for the interests of
BC.

The mandate of the BC government is clearly to look out for BC.  The
mandate of the Ontario is similarly to look out to Ontario.

The mandate of the Canadian government is much more murky, since BC
isn't the only group of people that the Feds are responsible to.

BC isn't the responsibility of the government of Ontario, either
legally, or morally.  You may be clear on that (If you weren't before,
it should be quite clear now :-)), but some of your postings suggested
some confusion.

If we're all clear on it now, then the issue should certainly drop.

> >What you maybe should be thinking of is rather the issue of the
> >FEDERAL government doing something that's bad for Ontario, and good
> >for BC?
 
> Never been done in my memory.

Possible; BC hasn't traditionally been one of the places whose
well-being I monitor carefully.  You'd be more likely to know than I.

Was there never a Federal program that provided assistance uniquely to
BC?  That would surprise me greatly, but being in BC, you should know
best.

> >>On the other hand, if a tariff barrier was set up between Ontario and
> >>Quebec on goods and services the other provinces can or do produce,
> >>then tax revenue and jobs would stay in Canada, not go to Quebec.
 
> >How, precisely, does a tariff barrier keep a job in Ontario?  It
> >increases the cost of goods in CSQ, and reduces overall production,
> >and throws away the economic principle of comparative advantage.
 
> I sincerely doubt goods will be cheaper in Quebec. Ontario will be
> able to buy anthing Quebec produces cheaper in the US.

You said that before; I already disagreed.  You haven't dealt with the
issue of comparative advantage.  It's the principle by which trade
between you and I may be to our mutual advantage, even if you're better
at EVERYTHING than I am...

You haven't disagreed with the assertion that goods in CSQ would get
more expensive...

Hmmm... If prices go up by 15% in CSQ due to separation, and prices go
up in Quebec by 15% due to separation, the relative price levels remain
equal, don't they?

If it becomes cheaper for Ontario to buy from the US, the forces that
make that true would probably have the corresponding effect that it
becomes more expensive for people in the US to buy Ontario goods.
That's not very good for Ontario; and since this would adversely affect
the value of the Canadian dollar, it would adversely affect BCians, even
if they never trade with Eastern Canada...  So long as we have a common
currency, our fortunes are at least partially tied together...

> >Not a bad way to look at it, although I'd suggest that it IS easy to
> >interpret it (rightly OR wrongly) as trying to "force Quebec out."
 
> >A common statement about things political is that "It's not
> >enough to avoid the FACT of <evil>, it is also necessary to avoid the
> >APPEARANCE of <evil>."
 
> >Unfortunately, the propositions you suggest do have the APPEARANCE
> >that they could be ultimata intended to be rejected.
 
> Tough.

Which is roughly equivalent to saying "If you accuse us of forcing
Quebec out, we won't deny it."

> >>Over 40% of BC's exports go to Asia. I'm not sure of the Canadian
> >>figure , but I know it's much lower. Asia is wide open for Canada, but
> >>Ottawa barely knows it exists.
 
> >Then this shows that there are some business people that should be
> >travelling to Asia.  It's not Ottawa that would be doing the trading -
> >they're just supposed to make an environment that's reasonably
> >amenable so that Canadians can take advantage of the trading
> >opportunities.
 
> Ok...so you don't think Ottawa should be promoting trade with Asia.
> Why not?

The system is set up so that if people want to, they can trade with
Asia.  If increasing trade with Asia is beneficial, then people are
pretty stupid if they don't bother to take the opportunities that are
there.

I'm not particularly saying "Ottawa should not promote trade with
Asia"; I'm more saying "I can't think of much that Ottawa can do that
others can't do better."  I can think of some things that are being
done for trade in general, and a few things that might be tried.

What do YOU think that Ottawa should be doing to promote trade with
Asia?

There's two major branches of government here:

1) The legislators - The House of Commons.
I think that by the participation in things like GATT, they've done
their part to promote world trade in general.

Are you proposing that they make laws to "force" people to trade with
Asia?

If you can think of some particular legislative problem that needs
fixing in order to permit more trade with Asia, I'd be glad to hear
about it.  And I'm sure that Michael Wilson would like to hear about
it too, as Trade Minister.

2) The bureaucrats
These are the administrators that try to make sure that the programs
that Parliament sets up are run according to the appropriate
legislation.

It might be a neat idea for some diplomats to run some sort of "trade
mission" to introduce Asian businesspeople to Canadian businesspeople.
I'm sure it's happened before, and will happen again.

It's also probably quite profitable for some of these businesspeople
to arrange such things themselves, perhaps doing it more cheaply, and
keeping the governments sometimes fumbling fingers out of it.

Do you have some other idea as to how Ottawa can encourage more trade
with Asia?

These are the sorts of things which the Federal government tends to be
at least reasonably good at.

What else are you expecting them to do?  Set up Crown Corporations
to do business with Asia?  Send pamphlets to businesspeople around
Canada saying "Why don't you try selling to Asia?"

What do you think the Federal government SHOULD be doing to encourage
trade with Asia?  I don't think that there's much that they CAN do
beyond what I've mentioned above.  Of course, the reductions in
tariffs over the years have been VERY helpful, and this is something
for which Parliament has been at least in part responsible.

I can't think of anything much else to add that the Feds could
sensibly do.  If you can't add any ideas to this, then it's not too
useful to continue the discussion on Asian trade.

If I have no ideas as to what should be done, and YOU have no ideas as
to what should be done, and nobody else has any comment, then there's
no proof that there is anything that the Feds CAN do to increase
trade.

I think that the responsibility now lies in the hands of individual
Canadians to take advantage of any trade opportunities, either in Asia
or elsewhere.

> >The House of Commons is set up on the basis of representation by
> >population.  To represent low-population provinces in the same way
> >that larger provinces are represented would go against this basis.
 
> Obviously you don't know the meaning of *federal*.
> In a federal system, the people are equal in one House, while the
> provinces or states are equal in the other.

Not according to the dictionaries I have; it doesn't mention anything
about the fashion in which powers are distributed, beyond the facts
that:

a) The constituent political units surrender their individual
sovereignty, but
b) Retain individually residual powers of government.

The thread that goes through the various definitions is the fact that
the various refer to a "strong" central government.

One of the other definitions suggests that a federation is one in which
"power is distributed between a central authority and a number of
constituent territorial groups."

While the presence of two "houses" (Senate/Commons) may be a fairly
common feature of federal systems, it is NOT a distinctive.  It is
rather a feature commonly inherited from the British parliamentary
system.

Great Britain does NOT have a federal system, despite having both the
House of Commons and the House of Lords.  Theirs is known as a
"unitary" government, since there is only one seat of authority.

I suggest you check your dictionary again.

Mel Hurtig's encyclopaedia (which is about as Canadian as it gets, and
he's hardly a biased Easterner.) bears this out as well.  (The
dictionary is American, and is somewhat biased towards the US form of
federalism.  It pretty much agrees, though.)

Federalism has NOTHING to do with the senate - but rather has
EVERYTHING to do with the relationship between the power sharing system
between the provincial governments and the central government.

> >To do this would mean that votes in small provinces would count more
> >than votes in large provinces (population-wise).  This would mean
> >that, for instance, a vote in BC would be worth twice as much as a
> >vote in Ontario.  This is contrary to the principle that all Canadians
> >ought to be equal.
 
> The principal of federalism concersn the equality of the provinces as
> well. As long as we don't have a EEE Senate, we have a dysfunctional
> federal system. Canada was created by the coming together of Provinces.

No, the principle of federalism concerns the relationship between
provincial governments and the federal government.

If provinces feel that they do not have enough control over their
affairs, then that is changed (federally) by changing the relationship
between provinces and the central government.  It is NOT enough to
change the nature of the central government.

>Please consider:

> >Provincial governments already exist.
> >They are intended to represent their individual provincial regions.
 
> >If you want to reduce the influence Ontario and Quebec have over the
> >aggregate, Canada, what is simpler:
 
> >1) Redesign the federal government so that Ontario and Quebec are
> >weaker?
 
> I understand the naked greed for power that prevents Ontario and
> Quebec from allowing a true federal system. Thats why BC voted 2 - 1
> against the CA.

It's already a "true federal system."  Nothing that anybody can do
will make it into a "more true" federal system.

It has nothing to do with greed for power - it IS a federal system,
and that's about all that can be said.

Perhaps the powers given to provinces and the central government ought
to be changed - any other sort of change does not relate to
"federalism."

Perhaps the dictionaries in BC have a different definition of
"federalism" from dictionaries in the rest of Canada.  Perhaps nobody
thought to look.

> [lots of drivel justifying Quebecs and Ontarios greed omitted]

Seeing as how it suggested an option that would multiply BC's power
over its affairs, you may be ignoring it a little too fast...

I was quite happy with the example - the numbers are certainly open to
question, but I thought they at least open some discussion on how
power OUGHT to be distributed in Canada.

I made up the numbers using guesses, and didn't adjust anything to
make it fit any particular conclusions.

Sounds like you never got to the line that proposed a way that BC
could have 5 times as much power as it has now.

The thing that I thought was one of the beauties of the analysis was
that it showed something of how, in a federal system with a strong
central government, some constituencies could wind up being
chronically underrepresented.  That's certainly true of the Western
provinces of Canada.

The problem of Western underrepresentation is inherent to the federal
system, when there is something like the "powerful Central Canada."
It is not merely an abberation relating to some problem with the
Senate - it IS inherent to the federal system.

If you don't want to accept that assertion, you can choose to deny its
truth.  That does not disprove the assertion, nor does it prevent it
from being true.

> >(If it bothers you that Ontario has more power than BC, does it also
> >bother you that the USA has more power than BC?  If not, then more
> >likely than not, you're prejudiced against Ontario, and NO solution
> >could please you.)
 
> Try using an example that fits. Does it bother California that Rhode
> Island has the same # of Senators?  Not really, because the principle
> of equality of the states is understood in the US.

Like it or not, Ontario has greater economic clout than BC, because
there are more people and companies here.  The presence of economic
clout has nothing to do with "the greed of Ontario" - it has to do with
the fact that the factors that create economic power are present in
greater quantity here.

Similarly, the USA, having an extra 250 million people, and more
economic activities, has even greater power still.  The USA doesn't
feel particularly disadvantaged by the fact that they aren't
represented in Canada's Senate or Parliament - I suppose that makes
them irrelevant to you.

> >>I though the whole CA was designed to make Quebec feel more welcome at
> >>the expense of BC. It's too bad there never seems to be a national
> >>crisis if the Western Provinces feel unwelcome.
 
> >Yes, it's too bad.  Unfortunately, that's a function of the fact that
> >there are smaller populations and economies in western Canada than
> >there are in Quebec.

> Western Canada combined has the same population. And 2 out of the 4
> provinces contribute to equalization, while Quebec is just welfare
> case. I think the *contributors* should have more power.

Well then you should be looking for yet another system in which your
representation is based on the quantity of taxes that you pay.  That's
NOT a democracy, and is NOT likely, despite the fact that it could make
some sense.

There were some political battles way back in which people said "No
taxation without representation."  That's pretty much how Canada came
into being.

Margaret Thatcher got the axe by trying to implement what amounted to
a "poll tax".  What you're talking about requires some form of "poll
tax."  You'd find that rich people might agree with you - but not too
many poor people.

The idea is pretty antithetical to democracy...  Democracy may have
some problems, but the alternatives tend to be even MORE amenable to
abuses than democracy.

If you can propose mechanisms by which the idea could actually be
implemented, maybe we'd find out either
a) A neat new idea that ought to be used, or
b) Just why it can't work.

I think b) is FAR more likely.  If you can come up with a
counterexample, then perhaps you ought to go into politics, because
you'd have to be the greatest genius in the modern political world.

> >So long as there are more people and dollars in Quebec than there are
> >in BC, Quebec will have more influence on interest rates than BC.
> >That's not a moral issue - it's a simple statement of fact.
 
> Thats why we shit on the CA. Thats a simple statement of fact.

If that's why BC voted no, then you're never likely to get pleased by
anything that happens.  And more importantly, you'll never succeed in
actually getting anything that you want.

Why?
1) "Quebec is bigger than BC" is a stupid reason for BC to vote "NO".
If that fact is sufficient to make someone vote "NO," then the person
must not be thinking very much.

2) Political systems "reward" stupid decisions appropriately; if you
vote stupidly, and the vote IS effective, you WILL be hurt.  Nobody
needs to dislike you.  Nobody needs to set up any agenda against you.
(Although it's possible that THAT can happen too.)  The events that
result from the stupid decision will be punishing all by themselves.

Do you resent the fact that Quebec has more people than BC?
Do you resent the fact that since there's more of them, ceteris
paribus, (all other things remaining equal) their bank accounts add up
to more than the total bank accounts of BCers?

That is why the actions in Quebec have more effect on interest rates
than the actions of BCers.  No moral right or wrong is involved with
this.  It's simple first year economics.  If you don't understand
THIS, then maybe you ought to be a little more careful about the
economic claims that you make.

If you do resent the facts of Quebec's influence on interest rates,
then you really ought to resent the USA even more, because they've got
10 times the people Canada has, and at least 10 times the savings, and
hence have a LOT more influence on interest rates than even Quebec and
Ontario put together.  Despite their tremendous power, they don't have
any right to vote in Canadian elections.  And Canadians don't have any
right to vote in US elections.  Maddening, isn't it?

Hating Ontario or Quebec won't solve anything.

Two years ago, I got involved with the Grad. Student Council at my
university.  Highly illuminating experience.  Lots of "politics."  Lots
of people involved with whom I COULD have violent disagreements about
matters running from political preferences to sexual preferences.

If, as one person out of 50, I allowed myself to get "imbalanced," I
could have concluded that I had no way of influencing these diverse
people.

I spent last year on the Board of Directors of this organization.  By
trying to deal with everyone in a "reasonable" fashion, even when we
had things to disagree about, things did get accomplished.  I was quite
happy to see the organization survive the year - there were some SEVERE
internal problems, due to people holding onto "untenable" positions,
trying to FORCE their view on the organization.

By being willing to at least TALK to disputing parties, I was at least
able to help keep things from going down the tubes.

After this experience, I have clearly seen that people that actually
get off of their behinds and DO something can have influence totally
out of proportion to their "support."

The only time that in the theoretically "democratic" process that
ANYONE ever actually voted FOR me was when I was temporarily installed
in a vacant executive position (It was a BAD year...).  Nobody actually
voted for me when I decided to go to council - I asked around in my
class if anyone objected, and nobody objected.  I was one of three
board members acclaimed to their positions.  And by the end of my time,
I'd had SIGNIFICANT influence on the organization, including
redesigning the budget format and process in a way which successors
have kept unchanged.

There's still people there that I could have disagreements with - but
by putting the disagreements aside and choosing to actually GET
SOMETHING DONE, things got done.

People like to talk about politics that wouldn't know a political
process if it walked up and bit them.  Similarly, everybody thinks they
know economics, and forget that due to something called "equilibrium",
economic processes very often have effects opposite to what was
intended or expected.

470 lines.  It's not short anymore.

-- 
Christopher Browne                |     PGP 2.0 key available
cbbrowne@csi.uottawa.ca           |===================================
University of Ottawa              |  The Personal Computer:  Colt 45
Master of System Science Program  |  of the Information Frontier
Newsgroups: can.politics