Political economy 101

I had the opportunity recently to attend a panel discussion on Saskatchewan’s shift from a have-not to an almost-have province. It included the remarkably spry ex-Premier Alan Blakeney, from Bridgewater, who’s as bright, articulate, engaging and secure in his judgment as he has even been; Janice MacKinnon, the NDP finance minister of the 1990s, one of the increasing number of champions of “the third way in the NDP”; and John Richards, the provocateur with a sparkling analytic turn, once of Waffle fame and currently working in Bangladesh.

The most compelling debate was between MacKinnon and Blakeney. MacKinnon defended the decline she oversaw in the ‘90s of oil royalties to the Saskatchewan government. Her defence, to an audience of more democratic socialists than you’d find in Toronto NDP meeting, was she was concerned with the business climate of the day and believed that giving oil companies a better deal would create more jobs, retain young people in the province and generally provide an income tax base sufficient to meet the rising costs of health and education.

Blakeney argued that when you have natural resources as valuable and limited as oil, potash or uranium, you should hold out for much higher returns to provincial coffers. He held that such resources are taxed at much higher rates elsewhere; that energy companies would continue to develop the resources; and that where they wouldn’t, the Province should move to develop them itself.

A demanding royalty structure, he contended, adequately covered the costs of a responsibly governed social welfare net, heath care and educational system, and secured for the people of the Province more control over their destiny in a quickly globalizing world.

MacKinnon’s NDP, under the leadership of Roy Romanow, arguably laid the groundwork for Saskatchewan’s current mini-boom. But if a more Blakeney-like strategy had held fast it might have done this and more.

What does it mean here?

What value might this debate have for Nova Scotia? To begin, we might wish to identify those resources that Nova Scotia has in which we have a natural advantage from those that might offer a competitive advantage, and from those that are in tight competition with the rest of the world.

The list of the first sort is short. We have the prospect of moderate oil and gas resources with a degree of certainty that they will be in high demand globally at least until the middle of the century.

We have some modest mineral deposits. We have ports, but these don’t quite meet the test of our criteria, as shippers have other ports from which to choose.

We have a fishery that’s closer to meeting the criteria, though it is profoundly internationalized, apparently beyond our control.

We have water, but treating it as an exportable commodity may well leave us high and dry.

We have well established and highly regarded small undergraduate universities, but their advantage is competitive, not natural. We have some of the most appealing locations for the retirement of Canadians tired of the city, though this too is a competitive advantage. We have wind and tidal power and we have some of the most beautiful, un-commercialized ocean front in the world.

So far this might lead us to some initial conclusions. Rodney MacDonald should take the lead of Danny Williams, becoming much more demanding in dealings with the Harper government and with international natural resource firms.

We need to harness our wind and tidal power in a new, demanding and strictly regulated arrangement with Nova Scotia Power. And we should protect vigilantly the natural integrity of our coastline, resist homogenizing commercialization while facilitating access to its unique experience.

If these steps meet resistance from globalizing forces, we may need to revisit the idea of the Crown corporation. We need to nurture those sectors that hold a competitive advantage and tease those being overrun by globalized market forces to niches where they may also enjoy a competitive advantage.

Though simple in analysis, this is not an easy agenda. Whether or not Rodney is finally ready to dig in is, of course, an open question.