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The Progressive Economics Forum

Debating Interprovincial Trade

Over at the Macdonald-Laurier Institute, Robert Knox has tried to rebut my rebuttal of his C. D. Howe Institute paper. (I am still waiting for a rebuttal of my rebuttal of his more recent Macdonald-Laurier Institute paper.)

Knox’s post sheds light on how his side of the debate sees the issue. But I begin with the least illuminating lines:

Mr. Weir says that proponents of open trade are preoccupied with identifying barriers.

Actually, Mr. Weir is obsessed with lists and examples of barriers.

I have never accused self-styled “proponents of open trade” of being preoccupied with identifying barriers. On the contrary, I have noted their continual failure to identify barriers. I am not obsessed with lists and examples of barriers, but with the lack of such lists or examples.

Naturally, Knox’s post does not provide any. He does not even try to defend his paper’s three examples, which I had debunked. Instead, Knox offers the following:

He [Weir] says that there are no trade barriers between Canadian provinces. Of course there are.

Canada is a federation and provinces have the authority to regulate. Every time governments regulate, including the Federal government, it could and often does interfere with economic activity.

This analysis is correct, but constitutes a wildly broad definition of interprovincial trade barriers. Regulations certainly can “interfere with economic activity.” To determine whether a regulation should be implemented or removed, governments must weigh the positive purpose it serves against any undesirable loss of economic activity.

However, Knox and company aim to short-circuit such cost-benefit analysis. They want a legalistic process to label some provincial regulations as “trade barriers” and strike them down on that basis, regardless of whether a regulation’s benefits exceed its costs.

Canadian courts already have the constitutional authority to strike down genuine provincial trade barriers. But Knox casts his net so wide as to include all manner of provincial regulations that might have a negative side-effect on some economic activity that happens to cross a provincial border.

There are economic arguments against certain regulations. Advocates of deregulation should have to make those arguments, and respond to the counterarguments, rather than pretending that the debate is about interprovincial trade.

Finally, Knox takes on the concern that automatic mutual recognition produces a race to the bottom:

Occupational standards are the skills, knowledge, and abilities required for an occupation. If occupations are the same so are occupational standards. [But certification requirements] are not always the same since a person can acquire their skills, knowledge and abilities in different ways.

A person either has the basic skills, knowledge, and abilities for an occupation or they do not so there are no higher or lower standards.

At the risk of confirming my alleged obsession with examples, let’s consider one. Some provincial governments require a university degree in social work to be employed as a social worker. Other provincial governments do not.

It may well be possible to acquire the skills, knowledge and abilities needed to be a social worker without completing a university degree. On the other hand, requiring a social work degree may be a reasonable way for a government to ensure that its social workers have at least achieved some defined level of skills, knowledge and abilities.

In Knox’s world, a social worker in province A without a degree should have a right to be employed in province B, even if it requires a degree. If province B has to accept social workers without degrees from province A, it cannot reasonably require that its own residents complete degrees to qualify for the same jobs. The consequence of this approach is that no province would require social work degrees.

Maybe that would be a good outcome. But it seems to me that a provincial government should be able to decide, based on the available evidence, whether or not a university degree will be required as a credential for social workers. It should not have to accept applicants without degrees simply because some other province does.

Perhaps it would be good for governments to agree on a common national standard for social workers, as they have for many other occupations. But Knox and company explicitly reject this sensible approach. They want lawsuits.

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Comments

Comment from Marc Lee
Time: July 24, 2010, 1:57 pm

I wonder if Knox would consider differences in municipal by-laws to be barriers to trade …

Comment from Erin Weir
Time: July 25, 2010, 3:55 am

I guess those would be intra-provincial trade barriers.

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