National Post

The times they really have a-changed

- Terence Corcoran will return in September

In this summer of nostalgia — Apollo 11, Woodstock, Abbey Road — an economist is driven to historical data, to be precise a short Statcan study titled “Income growth per capita in the provinces since 1950.” Written by economists Josh Gutoskie and Ryan Macdonald, it summarizes a new set of long-run estimates of per capita provincial product and income.

To paraphrase Bob Dylan (from 1963, actually, not 1969) the times they really have a- changed. When Dylan prophesied in that song that “The loser now will be later to win” he probably didn’t have Newfoundla­nd and Labrador in mind. But Statcan’s tables show that our easternmos­t province, 10th out of 10 in 1950 in relative real income per capita, by 2016 had risen to fourth.

And it had risen big. In 1950, just a year after joining Confederat­ion, Newfoundla­nd and Labrador’s per capita income was only 40.2 per cent of the Canadian average — substantia­lly less than half. By 2016, however, it was 100.7 per cent, i. e., just above, the Canadian average. A lot of people knock oil these days. Most Newfoundla­nders are not among them.

And it’s not just a case of some other province being booted way down as Newfoundla­nd rose. In 2016 the lowest relative real income per capita was Prince Edward Island’s, not at Newfoundla­nd’s old level of 40 per cent of the Canadian average, but rather at 75.4 per cent.

The range of relative incomes is a lot narrower now than it was then. In 1950, the endpoints of the distributi­on were Newfoundla­nd and Labrador’s 40.2 per cent of the national average all the way up to Ontario’s 123.0 per cent — a range of fully 82.8 per cent. By 2016 incomes varied from P.E.I.’S 75.4 per cent to Alberta’s 132.3 per cent — a span of just 56.9 points.

The reason the gap closed has to do with another of Dylan’s laws: “The slow one now will later be fast.” If you look at growth rates of real income per capita since 1950, Newfoundla­nd, P. E. I., New Brunswick and Nova Scotia are all above the national average of slightly more than two per cent. By contrast, Quebec, Manitoba, B.C. and Ontario ( in descending order) are all under it. The two very slowest- growing provinces over this period were Ontario and B.C., which had been top dogs in 1950, at 123.0 and 116.5 per cent of Canadian average income, respective­ly.

I was a little surprised to learn that in 1950 Alberta was as high as third in terms of real per capita income — though that was three years after the Leduc oil discovery, while the province’s per capita income was only 95.9 per cent of the national average.

In 2016, of course, Alberta had risen to first overall in terms of per capita income, Ontario was down to third and British Columbia, the former number two, had fallen all the way to fifth ( though, interestin­gly enough, its income per capita was still a tad above the national average). Second after Alberta in 2016 was Saskatchew­an ( at 112 per cent of the national average) and third was Ontario ( at 101.2 per cent). Schadenfre­ude — relishing other people’s misfortune­s — was first identified in Germany but it might as well be spelled “schadenfre­ude-eh,” we Canadians are so good at it. Seeing the former top-dog — Ontario — pushed down to number three, with income barely above the national average, has warmed hearts from the Ottawa River eastward and the Lake of the Woods west.

Despite Dylan’s rule of thumb about laggards catching up, my home province of Quebec has fallen from fifth in 1950 to seventh in 2016, and, despite the general convergenc­e, from a relative income of 86.1 per cent to 85.6 per cent. It’s tempting to ascribe this relative decline to whatever one doesn’t like about Quebec politics — and there is usually a lot not to like about Quebec politics — but in fact the real driver behind the growth numbers, as the Statcan economists emphasize, has been “hydrocarbo­n extraction.” If you exclude Alberta, Saskatchew­an and Newfoundla­nd and Labrador, the standard deviation of provincial incomes — the most common measure of their spread — has fallen virtually in a straight line since 1950. But with these three provinces included, the convergenc­e isn’t nearly so strong. To be fair to Quebec, its (hydrocarbo­n-free) growth rate over the period was only a hair less than the Canadian average.

You can’t mention interprovi­ncial difference­s in incomes in Canada without equalizati­on coming to mind. The youth wing of Quebec’s governing Coalition Avenir Québec is looking for a way to get Quebec off equalizati­on. Quebec’s premier has been right to respond that under the current system, which is enshrined in the constituti­on, the only way to do that is to raise Quebec’s economic level, which he has every motivation to do: higher incomes and more jobs never being bad for political incumbents.

At the same time, Alberta complains about the unfairness of equalizati­on. Maybe the system is unfair, maybe it’s not. But when your income per capita is a third above the national average — or at least was in 2016 — you’ll find the national audience is not very receptive.

That spelling again is s-c-h-a-d-…

YOU CAN’T MENTION INTERPROVI­NCIAL DIFFERENCE­S IN INCOMES IN CANADA WITHOUT EQUALIZATI­ON COMING TO MIND.

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