Racing to the Bottom?: Provincial Interdependence in the Canadian Federation.

Paul G. Thomas is a political science professor at the University of
Manitoba and the co-author of Canadian Public Administration:
Problematical Perspectives.

The focus of this collection is on competition among the provinces to attract investment and jobs by engaging in a “race to the bottom,” which means reducing taxes, lowering environmental and labour standards, and keeping minimum wages and social assistance rates low. The contributors are some of Canada’s leading academic scholars in a number of fields of public policy.

When the nine chapters were written in 2005, the provinces of Alberta and Ontario were seen as leading the race to downsize the role of government based upon neo-conservative thinking that worshipped free enterprise and market forces. Much has changed since then, especially during the past year when the severe economic downturn caused even resource-rich Alberta to run a deficit and there was a hollowing out of the Ontario economy, especially the automobile sector. However, these changed and turbulent economic times do not make this book irrelevant.

It contains some good analysis of interprovincial interdependence, competition for economic development, the use of low taxes to entice businesses, harmonization of provincial environmental standards, and the concern of some provinces to avoid becoming a “welfare haven.” The integrating theme of the volume is that across a number of policy fields among the 10 provinces, as well as over time within particular provinces, there is no uniform and consistent pattern of particular governments seeking to gain a competitive advantage by reducing their taxes, regulation, and spending. In short, “racing to the bottom” turns out to be a vivid metaphor, but not good analysis.