Deficit Reduction in the Far West: The Great Experiment

David Robinson is an associate professor of economics and dean of the
Faculty of Social Sciences at Laurentian University.

Politicians on the left and right, historians, and policy analysts all
know they should read this book. The good news is that they will
probably enjoy it.

Saskatchewan, Alberta, and British Columbia all faced massive deficits
in the early 1990s, and all attacked their deficit crisis in the
mid-1990s. The result was a wonderful “natural experiment.” To take
advantage of this “experiment,” Paul Boothe and Bradford Reid
assembled a team of economists and political scientists from four
western universities. The result is probably the most focused and
satisfying conference volume I’ve ever reviewed.

As Reid shows in an article that should have followed the introduction,
Alberta, Saskatchewan, and possibly British Columbia had “structural
deficits” entering the 1990s. Collapsing resource prices were suspects
for all three provinces. When Stephen Easton, Richard Harris, and Abu
Islam look at revenue and expenditure estimates by the provincial
governments, however, they conclude that the deficits are probably not a
result of year-to-year errors in forecasting resource revenues. On the
other hand, David Cushman and Robert Lucas, using a completely different
method, conclude that resource prices do account for a large part of the
deficits in Alberta and Saskatchewan, while British Columbia was dragged
down by Canada-wide recessions. Even hindsight isn’t 20/20 in this
case.

In my favorite article, Roger Gibbons shows how the political cultures
of the three provinces affected events. Given remarkably different
ethnic, religious, and economic histories, governments faced different
political constraints. Paul Boothe then describes the surprisingly
similar economic policies that emerged, and Richard Plain looks in
detail at health-care reform and its impact on both health status and
the budgets in the three provinces. The final essay by Christine de
Clercy assessing the political strategies in each province is almost a
handbook on implementing change.

You do not need a degree in economics or politics to follow the
arguments, although there are pages and pages of tables. You do need to
watch out for mislabeled tables and clumsy graphs, but these are minor
criticisms.