It is the Policies in Atlantic Canada That Need the Attitude Adjustment

Atlantic Canadians are neither lazy nor defeatist. Instead, the region suffers defeatist policy. But, things can change quickly.

Fifteen years ago, even the Irish thought Ireland was stuffed with lazy defeatist people. It was a northern Europe backwater, peopled by folks who wouldn’t work – witness the high unemployment rate – and by businesses that couldn’t do business. The economy was in the tank. Then, policy changed. Today, Ireland is Europe’s most vibrant economy.

Atlantic Canada has suffered nearly 40 years – two generations – of bad government policy and a corrupting flood of federal money that makes it appear the region is chock-a-block full with lazy folks who blame others for their problems while waiting for the government cheque.

Business, workers, and regional governments all look to Ottawa to solve their problems. People, even of good faith, can interpret this as laziness or defeatism.

When workers call on governments to “save” jobs with government money, to many it seems like demanding handouts. Elsewhere in Canada, jobs disappear all the time and new jobs are created. This “churning”, replacing low productivity jobs with high productivity ones, makes economies rich. Efforts to stop this churning in Atlantic Canada hold back the economy and look like defeatism – the view that the region can’t create new jobs.

Business, too, is at the trough. Some Atlantic businesses are world-class, but studies show that many are horribly inefficient and lack ambition. They pay their workers less than businesses elsewhere. Often, they have more modern equipment because of government grants. Yet, in international comparisons, Atlantic products are frequently over-priced and of poor quality.

How do such business survive? Government grants and contracts. They are often highly profitable, though they would be incapable of functioning any place that wasn’t awash with government money.

To outsiders, this suggests laziness and defeatism. But these businesses are expert at polishing their political contacts and harvesting government grants and contracts. They work hard at it. Government money has crowded out entrepreneurship and nurtured “grantepreneurship,” as one study, ironically government-sponsored, put it.

Similarly, studies show that an employment insurance (EI) sub-culture has evolved in Atlantic Canada. According to these studies, whole communities and families take EI payments as a right and will not seek or accept full-time work.

That looks lazy. It isn’t. It’s what one economist called “a rational response to an irrational policy.” If government wants to give you money, you might as well take it. Once you come to believe that money is yours by right, then you’ll fight tooth-and-nail to keep the cheques coming.

Provincial governments are also at the trough, witness Nova Scotia’s bizarre demand that it keep all its offshore revenue and get equalization too. This is eating your cake and having your neighbour’s too.

Atlantic Canada can break from its past. In the mid-1980s, Ireland had Newfoundland-like levels of unemployment and a lower standard of living. Years earlier, Ireland had opened up higher education so all could attend. All that meant was that thousands of highly-educated Irish left “defeatist” Ireland for employment in England or the United States.

Then the Irish cut government dependence by slashing government, far more brutally than either Margaret Thatcher or Ronald Reagan. Today, just 15 years later, unemployment is effectively non-existent. Ireland’s standard of living is now twice that of Newfoundland’s.

Some people, who never bother with the facts, credit European Union subsidies. The amount of money flowing into Ireland from the EU was less than a tenth of that flowing into Atlantic Canada from federal programs, even when you subtract out all the federal taxes paid by Atlantic Canadians. By the subsidy argument, Atlantic Canada, not Ireland, should be the economic powerhouse.

It’s good policy, not outside subsidies, that makes the difference.

Atlantic Canadians are not lazy or defeatist, but the region’s entrepreneurial drive has been defeated by bad government policies. High taxes squash the rewards of hard work and entrepreneurship. Where entrepreneurship exists, it is often directed to finding ways to dip into the buckets of government money around the region.

What Atlantic Canada needs is not a revolution in attitude but a revolution in government policy to release the region’s untapped potential.