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Unpleasant Medicine for Cape Breton—But Maybe It Will Work

July 1, 1990 -

It's still widely assumed in certain circles that governments must fix underdeveloped regions by ladling out shovels full of money. Failure is then seen as a shortage of government funding. A case in point is the depressed region of Cape Breton. Literally millions of dollars have been invested there, but the results are minimal and disappointing. Is there an alternative to the failed government handouts for regions such as Cape Breton?

Leo-Paul Dana and Kevin Hashem, writing in the May 1990 issue of Policy Options (a publication of the Institute for Research on Public Policy), are convinced that it is time for a fresh approach. They critically evaluate the failed make-work projects and government subsidization of unprofitable operations. They point to summer work programs that indeed create much-needed jobs, but also instill bad working habits—there is no incentive to get the job done. Once bad working habits are acquired, they linger and inflict long-term damage. Dana and Hashem write that it would be better to expand existing practical work experience programs so that young people will learn how businesses actually work to produce goods and services for the marketplace.

Millions of dollars the government now pours into money-losing and subsidized operations in Cape Breton should be redirected in favour of profitable ones. Steel production, for example, is a major money-losing project. Present operations should be shut down if they cannot be made profitable and the money invested for alternative uses, say these authors of "Coping in Cape Breton."

They suggest it might be possible to build on the following existing opportunities in this region:

  • There is good potential in the fishing industry if facilities are upgraded and advanced equipment is introduced.
  • Coal production and development should be increased to enable Cape Breton coal to compete in the open market.
  • Forestry production and planning needs to and can be much improved.
  • Tourism is a ready-made opportunity with the right policies and promotions.

 Dana and Hashem realize that their proposals will not be welcomed everywhere. Notably not by those who believe in statist solutions. Nevertheless, their concluding comments are worth repeating because they hold true for all those in the same predicament as the Cape Bretoners. The authors write that a major problem with their proposals is that because various governments have given money to the Cape Bretoners for countless numbers of years, "we have grown dependent on this money and if we don't get enough, we jump up and down until they give us more." They continue:

There is one change that has to take place within all Cape Bretoners and this is a change of attitude. The attitude now is that one in which the government will take care of us and we don't have to do anything for ourselves. This attitude has been fueled by government policies. At one time, Cape Bretoners were independent of the government. We had much more pride in our accomplishments than we do now. It is this pride we must recapture.

To finance these proposals, it will take a massive amount of spending in the initial stages but only a small fraction of the billions and billions of dollars that were wasted in the past.

Sound advice, but will there be enough takers to make a difference in Cape Breton? Or in other regions where our wonderfully endowed and privileged country is yet suffering from the debilitating effects of underdevelopment?