Wednesday Morning Links

Miscellaneous material for your mid-week reading.

- Trevor Tombe highlights how equalization actually works - and how the bleatings of Jason Kenney, Scott Moe and other demagogues would serve only to eliminate anything worthy of the name.

- Mary O'Hara rightly argues that child poverty in the UK and U.S. is an outrage demanding an immediate response - and the same holds true in Canada as well. Alexandra Zannis comments on the need to move from temporary holiday charity to a commitment to human dignity and public support throughout the year. And Al Wiebe writes about his experience of poverty during the holiday season.

- Elizabeth Warren makes the case for a government generic drug manufacturer to ensure that public health isn't at the mercy of corporate rent-seeking. And Mariana Mazzucato discusses the importance of mission-oriented governance, including recognition of the positive role governments can and should play in economic development.

- Meanwhile, Murray Mandryk points out the lack of even a basic maintenance plan at SaskPower as a painful example of a vital public service being neglected.

- Finally, Max FineDay writes that reconciliation is only possible if everybody works toward it - and that there's far too little indication that non-Indigenous Canadians are prepared to put in the effort.

New column day

Here, on how Scott Moe's equalization bluster ultimately shows only that he's more interested in political posturing than responsible governance.

For further reading...
- Gregory Beatty reviews how Saskatchewan's effort to remove renewable resource revenue from the equalization formula was abandoned when Brad Wall decided it was inconvenient to remind the public of Stephen Harper's broken promises, while Murray Mandryk also traced the history in connection with the Saskatchewan Party's leadership campaign. And Tim Cook reported on Lorne Calvert's plan for a constitutional challenge when it was raised.
- The Star-Phoenix' editorial board calls for an adult conversation about equalization. And Daniel Beland, Gregory Marchildon, Andre Lecours and Rose Olfert rightly argue that Moe's attempt to undermine the concept of equalization itself falls far short of the mark.
- Finally, the column's reference to the expected returns from a carbon price are based on this policy brief (PDF) from Dale Eisler, Margot Hurlbert, Jim Marshall and Jeremy Rayner.

Sunday Morning Links

This and that for your Sunday reading.

- Simon Enoch challenges Scott Moe's misleading rhetoric on equalization by pointing out that Saskatchewan could easily afford child care and other programs which Moe criticizes other provinces for funding - if only the Saskatchewan Party hadn't blown the proceeds of a boom on tax slashing and vanity projects.

- Christian Weller examines the results of the U.S.' latest tests of supply-side dogma, and finds that it continues to fail miserably:

On June 7, the Federal Reserve released its latest data on corporate finances, providing the first look at what happened after the passage of the tax cuts.* The supply-side arguments do not hold up; corporations have gotten a lot more money, but that additional cash has not translated into increased domestic investments.
...
(I)nvestments took a back seat in the first quarter of 2018. Capital expenditures equaled 178.6 percent of after-tax profits in that period, meaning that companies borrowed money to invest. This was down from 191.2 percent at the end of 2007. If, in the first quarter of 2018, corporations had invested the same amount relative to after-tax profits as they did at the end of 2017, they would have had an additional $58 billion to spend on manufacturing plants, office buildings, and equipment such as computers, heavy machinery, and trucks.

Yet, rather than investing the money in this way, corporations used it to keep shareholders happy. In the first quarter of 2018, the share of after-tax profits that went to net equity issues—share repurchases above and beyond new share issuances—equaled 37.5 percent, up from 32.7 percent at the end of 2017. This acceleration indicates that corporations spent an additional $12 billion in the first quarter of 2018, for a total of $257 billion, in order to buy back their own stocks. Such a buyback raises the prices of a company’s shares and boosts the wealth of its shareholders.

...
Corporations continue to be awash in money; the 2017 tax cuts just made it a lot easier for them to get that money. Yet the cash is not benefiting the economy in the form of increased investments. It is therefore unlikely that the gains promised by supporters of supply-side economics will trickle down to workers.

- Meanwhile, Jason Joseph offers a theory that nominal economic strength is failing to boost wages in part because workers are afraid to leave their jobs for potentially higher-paying alternatives.

- Susan Lund examines the corporate debt bubble which has been inflating since the 2008 financial crisis. And John Quiggin discusses the false promises - and harmful realities - of the privatization of public services.

- Finally, Jesse Norman offers a reminder that the real Adam Smith - rather than the caricature so often presented by laissez-faire zealots - was fully aware of the need for markets to be genuinely trustworthy, rather than granted blind faith. And Aditya Chakrabortty writes about a course designed to connect the public with the basics of economic theory - and the inability of what's generally taken as a given among corporatist economists to stand up to the lived experience of citizens.

Monday Morning Links

Miscellaneous material for your Monday reading.

- In reviewing Gabriel Zucman's new book, Cass Sunstein discusses the need to rein in tax havens and ensure that the wealthy pay their fair share of the price of a functional society:

(W)hatever your political party, you are unlikely to approve of the illegal use of tax havens. As it turns out, a lot of wealthy people in the United States, Europe, and elsewhere have been hiding money in foreign countries—above all, Switzerland, Luxembourg, and the Virgin Islands. As a result, they have been able to avoid paying taxes in their home countries. Until recently, however, officials have not known the magnitude of that problem.

But people are paying increasing attention to it. A vivid new documentary, The Price We Pay, connects tax havens, inequality, and insufficient regulation of financial transactions. The film makes a provocative argument that a new economic elite—wealthy managers and holders of capital—is now able to operate on a global scale, outside the constraints of any legal framework. In a particularly chilling moment, it shows one of the beneficiaries of the system cheerfully announcing on camera: “I don’t feel any remorse about not paying taxes. I think it’s a marvelous way in life.”
...
In the aftermath of the financial crisis, you might expect that there would be an international crackdown on the use of tax havens, and as we shall see, international attention is indeed growing. But the numbers demonstrate that no crackdown has occurred. In Luxembourg, offshore wealth actually increased from 2008 to 2012 (by 20 percent). In Switzerland, the increase has been comparable; foreign holdings are now close to an all-time high. Disturbingly, the new wealth is coming mostly from developing countries, which poses a serious problem in light of the severe strains on their limited budgets.
...
A strong virtue of Zucman’s book is that it puts a bright spotlight on an area in which significant reforms might appeal to people who otherwise disagree on a great deal. You might believe that the tax system should be made more progressive, or you might believe that it should be made less so. But whatever you think, you are unlikely to support a situation in which trillions of dollars are hardly taxed at all.

- Judith Shulevitz writes that a basic income could be particularly important in extending recognition to the value of work normally performed unpaid by women. And Andrew Jackson comments on the best options to reduce poverty among seniors.

- Gregory Beatty rightly points out (as I've done previously) that Saskatchewan's current problems with equalization can be traced back to Brad Wall's choice to abandon the exact same cause when he first took power.

- Ian MacLeod notes that the Libs' supposed commitments to improved oversight over security and greater power for individual MPs both seem to be undermined by the top-down naming of a chair for a new committee on spying. And their apparent starting point of not thinking much needs to be done with C-51 doesn't bode well for the prospect of anything changing for the better.

- Finally, Murray Dobbin argues that the Libs have an ample mandate to pursue the type of proportional electoral reform supported by a majority of parties - meaning that their most important task is to get the new system right.

New column day

Here, expanding on this post about Brad Wall's sad attempt to beg Justin Trudeau for federal money to make up for his own mismanagement.

For further reading...
- Once again, Wall's call for a bailout was here. And his previous decision to drop any attempt at a sound equalization system at Stephen Harper's request can be traced here and here.
- Meanwhile, the issues where Wall and his government have already tried to block any federal action since the fall election include climate change, pensions and refugees.

On selective equalization

So apparently some unspecified event in federal politics this fall has caused Brad Wall to start demanding money from Ottawa which he'd never have considered seeking before.

Now if only he hadn't trashed Saskatchewan's bargaining position by dropping the court challenge which could have ensured that resource revenues didn't play a disproportionate role in equalization allocations - and all at the request of the Conservative Prime Minister he served at the time.

Monday Morning Links

Miscellaneous material to start your week.

- CJ Werleman writes that the U.S.' inequality nightmare is getting worse even as the public gains a greater recognition of the issue. Nick Kristof recognizes that radically different levels of wealth result in a serious lack of opportunity for anybody who doesn't win the genetic lottery. And Katharine Cukier notes that the type of empathy and generosity all too often lacking south of the border has given her and her family a fair chance at happiness in Canada.

- But Ralph Surette observes that the Cons are going out of their way to destroy any sense of fairness or equality in Canada - as evidenced by their work in eliminating equalization in favour of funnelling money and workers toward the tar sands:

(O)ne thing has changed over time -- now the Canadian government is quite content with this state of affairs, and is even encouraging it. Dumping costs on provinces will help it balance its budget, and favouring Alberta and its powerful oil economy at the expense of everything else is its main game. Having Maritimers in particular leave for Alberta is seen by the Harper government as a solution rather than a problem.
...
Stephen Harper had not campaigned against equalization before becoming prime minister in 2006, instead talking of righting the "fiscal imbalance" he accused the Liberals of creating in a new era of "open federalism." Instead, his response has been unilateral measures that give more to the rich and less to the unrich, capped off by the 2011 decree on health care that gave Alberta an extra $1 billion and taking from everyone else.
...
Maritime governments in particular and the political class generally have for decades now failed to address the issue of equalization and the broader federal role (for example, we flagellate ourselves over the cost of the Yarmouth ferry while the federal government, which used to subsidize that run as an essential service, is now happily absent, and nobody says a word). This may be our real "culture of defeat." Small provinces acting alone control only a part of their political, economic and social reality. The rest is federal. The very idea of Canada as a nation is bound up in in it.

It's time to talk about this again, and stop taking dictatorial edicts lying down.

- Meanwhile, Gary Younge theorizes that the U.S.' cities are becoming engines of progressive change - making for a pattern worth emulating in Canada.

- Mark Burgess reports on the constant growth of the Cons' PR apparatus - as the money spent propagandizing on behalf of Stephen Harper now exceeds the resources available for Parliament to hold the government to account. And Alex Williams points out that there's an even more striking gap in pay and job availability between the PR flacks spinning on the part of the corporate sector, and the journalists who make a profession of seeing behind that surface message.

- Finally, Kathryn May highlights how the Cons are grasping at straws in searching for an excuse to attack public sector pensions.

Friday Morning Links

Assorted content to end your week.

- Linda McQuaig discusses how a renewed push for austerity runs directly contrary to the actual values of Canadians, who want to see their governments accomplish more rather than forcing the public to settle for less:

Their formula for achieving small, disabled government is simple: slash taxes (particularly on corporations and upper-income folk), leaving government with no choice but to cut spending -- or risk deficits and the wrath of Moody's, Ivison, the National Post, etc.

The Harper government, deeply committed to this ideology, has followed the formula closely. It has slashed taxes to the point that Ottawa now collects less revenue (as a proportion of GDP) than it did in 1940 -- before we had national public programs for health care, pensions and unemployment insurance.
...
The real problem right now isn't the deficit, but getting the economy back in shape -- a point even acknowledged by David Dodge, former governor of the Bank of Canada and former deputy minister of finance.
...
Asked in an Environics poll to choose between two views of government, 68 per cent of Canadians selected "Governments are essential to finding solutions to important problems facing the country" while just 27 per cent chose "Governments are more often than not the cause of important problems facing the country."

While the conservative revolution and media deficit hysteria have left us with dwindling revenues, the dream of an activist government apparently lingers somewhere deep in the Canadian soul.

- CBC reports that the Cons' politically-ordered crackdown on public advocacy by charities now extends well beyond the environmental movement - but is still limited exclusively to groups which tend to disagree with their anti-social policies. And Gareth Kirkby looks in detail at how the policy of silencing opposition has affected the work of the charities affected.

- Julian Beltrame reports on Canada's latest job numbers - which show our unemployment rate now exceeding the U.S.', with particularly little employment available for young workers. And David Climenhaga details the absurdity of the businesses a right to indentured labour through the temporary foreign worker program - pointing out that the effect of the program is to suppress wages for everybody for the sole purpose of keeping fast-food outlets open past 3 AM.

- Alexander Ervin and David Woodhouse lament the corporatization of Canadian universities.

- And finally, Matthew Mendelsohn makes an effort to engage in a detailed, fact-based policy discussion with Joe Oliver. Which figures to end about as well as anybody's attempt to speak truth to a broken record.

Saturday Morning Links

This and that for your weekend reading.

- Michael McBane highlights one of the less-discussed changes in the Cons' 2014 budget - as it officially eliminates the federal distribution of health care funding based on provincial need in favour of handing extra money to Alberta:

The Harper government is eliminating the equalization portion of the Canada Health Transfer (CHT) and replacing it with an equal per capita transfer. This means that less populous provinces with relatively larger and more isolated populations will have more and more difficulty delivering more expensive universal health services.

Likewise, provinces with relatively larger proportion of older residents will also be hampered in delivering universal quality care. The move to an equal per capita cash transfer will widen the gap between the have and the have-not provinces and make it next to impossible to maintain national standards in health care.

It is estimated by the Premiers that this one budgetary move will create a funding gap for the have-not provinces of $16.5 billion over the next 5 years. The only province to benefit from this change is Alberta, with its growing, younger population.

- Meanwhile, Andrew Nikiforuk points out one likely result of diverting yet more money into the hands of resource-obsessed provincial governments - as Canada's western provinces are subsidizing fracking compared even to U.S. states (with Saskatchewan the worst offender).

- PressProgress recognizes that we shouldn't trust Tim Hudak's temporary disavowal of part of his anti-worker agenda. And Blacklocks reports that the Harper Cons' cabinet is taking control and ownership of private members' bills aimed to destroy the capacity of unions to organize at the federal level.

- Finally, Chris Selley comments on the Cons' selective interest in protecting human life - including their determination to push drug users toward death rather than treatment.

Monday Morning Links

Miscellanous material for your Monday reading.

- Will Hutton recognizes that an unregulated market can lead to disastrous results for everybody concerned - and that conversely, effective regulation can help to ensure the success of businesses which best meet the long-term needs of their workers and customers:

What the Paterson worldview has never understood is that effective regulation is a source of competitive advantage. If Britain had a tough Food Standards Agency, it would become a gold standard for food quality, labelling and hygiene. British supermarkets and food companies could become known for their quality at home and abroad, rather as "over-regulated" German car companies are, rather than first suspects when something dodgy is going on. Capitalism does not organise itself to deliver best outcomes, whatever rightwing American thinktanks might claim. There has to be careful thought, law and regulation about the obligations that accompany incorporation and ownership, how supply chains are organised and how companies are managed and financed. Otherwise disaster awaits.

- Frances Russell notes that as a result of limited direct federal powers, equalization is the most important means to ensure that entire provinces aren't left behind - making it all the more insidious that the Canadian right is attacking equalization at every opportunity.

- Caroline Fairchild points out a Centre for Economic and Policy Research study on the minimum wage - showing that if it had kept pace with productivity, U.S. workers would make a minimum of $21.72 per hour. But perhaps more jarring is the fact that by at least some accounts, the average U.S. wage level is now lower than that productivity-adjusted minimum wage.

- Mike de Souza reports that Joe Oliver has been well aware for some time of dangerous contaminants spreading from the tar sands to Alberta groundwater. No word yet on Oliver's eagerness to take a tasty drink of the samples involved - but the fact he hasn't been interested enough to withdraw his claims that he'd happily encourage people to consume tar-sands byproducts speaks volumes about his government's lack of interest in healthy water.

- Finally, from the department of people I'd like to hear from more often...

The early surveys show as many as a quarter of those who remembered seeing the (Con's "Action Plan") ads in 2009 took some action, such as registering for a home renovation credit.

But that number steadily declined in 2010 and 2011, and by April 2012 only about seven per cent of people who said they saw the ads did something as a result.

One of the actions described by respondents in last year's survey included "expressed my disbelief."

On cooperative efforts

The reports on fiscal arrangements and health care developed in the lead up to this weekend's meeting of Canada's premiers have both received some coverage. But there are a couple of points worth noting which seem to have been largely neglected so far.

On the fiscal arrangement side, we now have agreement among the provinces as to the effect of the Cons' unilateral changes to health care. And while those paying attention may have known all along, Table A.10.B. neatly lays out how Alberta is receiving $8.3 billion in new health care funding over 10 years while every other province faces cuts ranging from moderate to massive.

So no, the Cons aren't merely cutting back on promised health-care funding. Instead, they're actively diverting health-care dollars away from areas of need toward the wealthiest province in the country.

Fortunately, the premiers do seem to recognize that there's a problem when dollars dictate who has access to care. And perhaps the most striking part of the health care report is that even while discussing "innovation": (which is so frequently a code word for selling off pieces of our health care system), the provinces seem to have formed a consensus on a need for cooperation rather than allowing beggar-thy-neighbour market forces to dictate the terms of access to health care providers (italics added):

It is recommended that Premiers endorse the following Guiding Principles for Health HUman Resource Management:

a) Share Evidence: Provinces and territories should share health human resource labour market information to support effective decision-making.

b) Seek Innovation: Provinces and territories should share leading practices and work closely together on innovative approaches to managing labour costs and reducing competition.

c) Respect Interdependence: Provinces and territories should recognize that health human resource management decisions made by individual jurisdictions may have an impact on other jurisdictions.

d) Make Informed Decisions: Provinces and territories should explore and act on areas of mutual interest and common approaches to health human resource management.

e) Integrate Planning: Provinces and territories should work together to strive for an appropriate supply of health human resources at the provincial and national levels.

Of course, all of those recommendations would be far more easily put into effect if we had a federal government interested in supporting a functioning health care system. But at the very least, they seem to reflect some acknowledgment that gratuitous competition is a problem rather than a solution when it comes to ensuring access to health care - and the same principle would seem to be no less applicable within smaller health-care jurisdictions.

New column day

Here, expanding on this post as to the importance of a functioning federal system as a means of counterbalancing regional declines - and the forces working to limit anything of the sort in Canada.

For further reading...
- Frances Russell also laments the Harper firewall model based on the need for national-level planning and coordination.
- Pat Atkinson notes that Alison Redford's goal of a national energy strategy serves as an ideal case in point.
- Finally, the Florida vs. Spain comparison is drawn from here. And for some bonus Krugman...

Monday Morning Links

Assorted content to start your week.

- Erin nicely challenges Brad Wall's efforts to tilt the playing field against poorer provinces when it comes to Employment Insurance and equalization.

- But I'm not sure we can expect much change to EI in any event. After all, as Dr. Dawg notes, the current Harper-created financing board may be the ultimate non-functioning public agency to reflect the Cons' inclination toward ineffective government.

- Philip Boffey points out that the source of the U.S.' disproportionate health-care costs is precisely its reliance on market pricing that so many are eager to introduce in Canada. And Tom Tomorrow rightly notes that the U.S. health-care system isn't lacking for Wall-style innovation.

- David Akin points out a striking correlation between voting locations and outcomes.

- Finally, Daniel Lick theorizes that Canada spends roughly twice as much on corporate welfare as direct social welfare.

Wednesday Morning Links

Miscellaneous material for your mid-week reading.

- Thomas Walkom puts the Cons' anti-environmental hysteria in perspective by noting how our cabinet ministers are going out of their way to sound like the most fringy of lunatic Tea Partiers:

America’s Exxon Mobil, Britain’s BP, France’s Total E&P, China’s SinoCanada Petroleum Corp. and Japan Canada Oil Sands Ltd. have all asked for intervenor status at the hearings. So has the South Korean conglomerate Daewoo.

But foreigners who support the pipeline aren’t the outsiders that Prime Minister Stephen Harper claims to be worried about. As Natural Resources Minister Joe Oliver explained to CBC television on Monday, these are the good foreign interests.

The bad foreign interests are the ones who help fund environmental critics of the pipeline. Oliver calls these bad elements “billionaire socialists … people like George Soros.”

If this weren’t a cabinet minister talking, it might be amusing. The Internet is filled with conspiracy theorists who view Soros, a self-made Hungarian-American tycoon, as evil incarnate.

The biggest rap against him seems to be that he openly opposed former U.S. president George W. Bush.

In Tea Party circles, this might count as socialism. But when a Canadian cabinet minister uses the term, he sounds — well — nuts.

- Elizabeth Thompson points out that several Lib riding associations are facing deregistration or failing to submit annual returns. But it's worth taking a closer look at which ones are affected: it isn't only longtime dead zones for the Libs that are seeing a complete organizational breakdown, but ridings like the Yukon and Laval—Les Îles which the Libs held until last year's election, or Oakville which they held until 2008. In fact, of the 9 ridings which are deregistered or haven't yet filed a 2010 return, 6 were held by a Liberal MP at least once since the Libs last took power under Jean Chretien in 1993.

- Of course, it's fair to say things have changed since the 1990s. But that also serves as reason to be skeptical of the Libs' preening in Toronto-Danforth: the riding has always been one where the NDP has easily outperformed its general Ontario support levels, and so the fact that Dennis Mills held it when the party support numbers were radically different doesn't look like much of an indicator of future performance when the NDP is holding its own in province-wide numbers.

- Sixth Estate reminds us that if we go out of our way to attack the pension security of our elected officials, that will only increase their tendency to use political power to try to set themselves up to make money elsewhere.

- Finally, Frances Russell points out what may be a more important change than the raw numbers involved in the Cons' health-care diktat to the provinces, as they've also imposed a new per-capita formula designed to make sure that money doesn't flow where it's needed most. And it's worth noting that Brad Wall for one is pushing to make matters worse.

[Edit: fixed numbers in count of ridings.]

Well said

Frances Russell nicely summarizes the outcome if the Cons get their way in decentralizing and defunding social programs:

Decentralism and provincial power appeals to the Canadian right for the obvious reason that the smaller the government, the less powerful and capable it is. Provinces do have the advantage of being "closer to the people," but that is of little use if they have no money to spend on the people, as was the case during the Great Depression. That economic cataclysm spurred the creation of Canada's equalization program, subsequently entrenched in the 1982 Constitution, and designed to ensure all Canadians enjoy reasonably comparable government services at reasonably comparable levels of taxation.

Should Bernier, and presumably Harper, get their wish and cancel all shared-cost programs, replacing them with individual provincial tax points of vastly unequal value, the social and economic devastation in every province, with the possible exception of Alberta, would be calamitous.

(Edit: fixed typo.)

Friday Afternoon Links

- Over the last little while, there's been virtually no media coverage of the emerging stories of police abuse during the G20 summit (and associated protests set to happen tomorrow). So let's give credit to Douglas Bell for breaking the silence - and make sure that this weekend's rallies result in the inquiry the issue deserves.

- Is anybody surprised that the Fraser Institute is celebrating Fact Freedom Day?

- Jeffrey Simpson highlights the real problem with the Cons' $16 billion fighter jet purchase:

Liberals criticize sole-sourcing of the fighter. But this criticism misses the point: Canada doesn’t need this fighter at all, and would be better off spending some of this $16-billion on other defence needs.

We need defence capabilities to defend this country’s sovereignty. We need it to aid the civil power. And we need it to pursue Canada’s interests and values, in conjunction with allies, in troubled parts of the world. The F-35 might be nice to have in the best of all worlds, with unlimited budgets, but it doesn’t fit with Canada’s basic defence needs.

Defence of the realm mostly requires a robust naval capacity, which Canada lacks, and air-patrol capabilities, especially for the Arctic and coastlines, not fighter jets. Do we seriously believe the Russians or someone else are going to launch some kind of air attack against Canada such that we need fighters? If you think so, then go ahead and buy the planes. Otherwise, save the money.

- Finally, Leftdog reminds us of the background to the Sask Party's declaration that it can't fund both highways and health care:

Is this the same Premier Brad Wall who dropped the court case which would have forced Stephen Harper to adhere to Canada's Equalization formula? You know, the formula that calculated Saskatchewan was entitled to over $800 Million as part of our two way commitment to Confederation. Brad Wall's idiotic Right Wing ideology got the best of his potential for logic and told him that ... 'naw we don't need any equalization dollars! We have faith in the unfettered free market!' What a load of crap.
...
When Brad Wall tells you that he has no money for floods, etc - ask him why he abandoned $800 Million Equalization Dollars from Ottawa!

Unequal distributions

Andrew Potter is right in noting that most reporting on the Cons' equalization announcement has buried the lede, as Jim Flaherty's unilateral declaration that he plans to cap increases in future payments based on the movement of the national GDP looks far more important than the single-year numbers which dominated the headlines. But even Potter seems to miss just what the cap means for equalization in general.

Let's go back to the principles underlying equalization that I'd discussed when a cap was first mentioned last week:

(I)t's worth keeping in mind a fairly obvious point: if equalization payments are growing at a particular pace under the formula which the Cons approved, then so too is inequality among the provinces by Flaherty's own terms.

What Flaherty has effectively done is to completely detach inequality among the provinces from any calculation as to how much equalization should be paid. And it's hard to see how one can square that with the purpose of equalization in general.

After all, if the goal of equalization is to ensure at least relatively similar capacity to provide services across the country, then it should make all the difference in the world just how large the gap is between the wealthier provinces and the poorer ones. And if the gap increases for the same amount of economic activity, then there's every reason for more equalization to be paid - which should be possible due to what would presumably be higher tax returns from the wealthier areas (assuming a remotely functional progressive tax system).

But not so under the Cons' plan. So long as Canada's central industrial heartland remains in dire enough straits to deflate national economic performance, the amount of equalization paid will also stagnate regardless of how much more wealth might be accumulating in the "have" provinces.

Needless to say, the Cons would likely have been duly punished at the polls if they'd gone public with their plan to remove the concept of relative equality from the equalization program. And given how quickly they've started in on opening up the field for increased regional disparities, it doesn't figure to be long before the same starts happening among income levels in general.

Unequalized

There wasn't much doubt that the Cons' efforts to clean up their own fiscal mess were going to result in at least some conflict. But Jim Flaherty may have just chosen the one target area most sure to call his government's competence into question:

Finance Minister Jim Flaherty, facing Canada's first budget deficit in more than a decade, said he will limit the growth of equalization payments to the poorer provinces.

Speaking to reporters after the first meeting of Stephen Harper's new cabinet yesterday, Mr. Flaherty said the equalization program, which redistributed $13.6-billion in the current fiscal year, is growing at an unsustainable pace of about 15 per cent a year.

He said he would discuss the subject at a meeting with his provincial and territorial counterparts in Toronto on Monday. While he might be willing to negotiate how tightly to pull the reins, the federal minister made clear his mind is made up on the need to constrain future equalization payments.

"It's a federal program; we will put a limit on the growth of it," Mr. Flaherty said. "This is not something that is discretionary. We must do this, otherwise the integrity of the program will be under attack."

Now, it's worth keeping in mind a fairly obvious point: if equalization payments are growing at a particular pace under the formula which the Cons approved, then so too is inequality among the provinces by Flaherty's own terms.

Mind you, it's far from surprising that regional inequality would be growing: after all, the Cons' economic policies have been based on a steady combination of handouts to already-profitable industries and regions, and neglect for ones in need of support. But it's noteworthy that having gone out of their way to exacerbate regional differences, the Cons are now using the predictable result as an excuse to complain that it's beyond their capability to try to ensure relatively equal service levels.

So who might stand to lose out if the Cons end up attacking equalization? Well, here's the most recent federal information on the subject - with six provinces already receiving what look to be rather substantial numbers in an effort to equalize their service levels with those available elsewhere. And it may only get more interesting: now that even Ontario is reported to be close to receiving payments, the Cons may effectively be telling a strong majority of the country that it should be willing to settle for a lesser service level than that available in the western provinces.

Needless to say, that doesn't figure to go over well either with the provincial governments who would once again see the federal government trying to balance its books at their expense, or with citizens who rightly recognize the need for services to be available on a reasonably comparable basis across the country. And if the Cons really don't see any less damaging means of improving its fiscal position as ideiologically acceptable, then it wouldn't be surprising if the next few steps are enough to set in motion a wave of anger that eventually results in their removal from office.

Losing the blame game

The CP reports on just how thoroughly the Cons' anti-Ontario strategy is backfiring:

The Canadian Press-Harris/Decima poll conducted in the first week of May shows that while Ontarians lay the blame for the poor economy on the door steps of both the federal and provincial governments, when push comes to shove, more choose Ottawa as the bigger culprit.

The survey found that 62 per cent of Ontarians believe the Harper government is not doing enough to help the province from falling into have-not status, whereas only 50 per cent say the same thing about Premier Dalton McGuinty.

If the poll proves anything, it's that the Cons have failed utterly in attempting to inoculate themselves against responsibility for Ontario's relative decline. Instead of shifting any blame onto the shoulders of the McGuinty government, the Cons have at best ensured that both levels of government would be linked to the continued downturn in manufacturing and other key sectors. And the links only seem likely to grow stronger if worse times are in store.

Of course, based on the Cons' latest excuse for an attack on Jack Layton, it looks more and more like the Cons are happy to keep insulting Canada's most populous province to pander elsewhere. But considering that Harper's already-tenuous minority was based on his party managing to win 40 seats in Ontario - many of those by small margins - there's plenty of reason to think the Cons have the most to lose if the battle continues.

On choosing one's battles

Not surprisingly, Brad Wall's "new relationship" with the Harper government apparently means that Wall won't say a word about equalization without Harper's approval. Which means that at best, Saskatchewan can look forward to a smaller amount of federal funding than promised, and with the federal Cons' pro-privatization strings attached.

But for those worried that Wall was refusing to make any decisions for himself, he does seem entirely prepared to take a stand on the vital political issue that is Canadian Idol. That is, at least until Harper instructs him otherwise.