The Economics of Federalism

Extract

Some explanation of the origin of this short paper may assist in understanding its content and point of view. It is the result of a study of certain official papers dealing with cases of federal stress. These papers deserve, and indeed demand, careful study by all who exert any influence on government policy in Canada. I refer to (a) A Submission on Dominion-Provincial Relations and the Fiscal Disabilities of Nova Scotia within the Canadian Federation, presented by Professor Rogers to the Nova Scotia Royal Commission Provincial Economic Inquiry (1934); (b) Province of Nova Scotia, Report of the Royal Commission Provincial Economic Inquiry (1934), especially the supplementary report by Dr. Innis, and the memorandum by Professor R. A. MacKay on the “Financial Relations between the Provinces and the Dominion” published in the volume of Appendices to the Report; (c) British Columbia's Claim for Readjustment of Terms of Union presented by the Honourable T. D. Pattullo, the Honourable G. McG. Sloan, and the Honourable John Hart (1934); (d) The Case of the People of Western Australia in Support of their Desire to Withdraw from the Commonwealth of Australia (1934). Though these official papers have led me to try to think through the economic problems, and the economic philosophy, of federalism, the position I take is not new to me. It is simply a development of an attitude towards problems of regional conflict with an attempt to determine what difference exists when the state is federal rather than unitary. My attitude towards problems of regional conflict is exemplified in a paper contributed last year to The Canadian Economy and its Problems, but no reference is there made to the conflict of provinces as such. In view of this approach it may be less surprising if I add to the list of official papers given above one from the United Kingdom; (e) Reports of Investigations into the Industrial Conditions in Certain Depressed Areas of I West Cumberland, II Durham and Tyneside, III South Wales and Monmouthshire, IV Scotland (1934, Cmd. 4728).