Geoscience Reference
In-Depth Information
shown by a large number of contributions that explain why the United States
is a welfare laggard.
1
But the Canadian experience points to the existence of
other factors that may lead the units of a federation to alter institutional design
and renounce, through an amendment, their constitutional veto capacity on a
national program for unemployment insurance. The history of the emergence of
the Unemployment Insurance Act (1940) is the history of a failure, the ultimate
failure to preserve the welfare provisions established under the British North
America Act (1867), in particular the Act's resort to local and provincial relief
and charities as the optimal layer to deal with a problem, unemployment, that
was viewed as an individual issue. The unemployed were so because of “some
fault of their own” and, hence, society should apply the criteria of “less eligibil-
ity,” which implies caring just for those obviously unable to fend for themselves
(e.g., war injured). Such a view was shared by liberals and conservatives during
the 1920s and early 30s and was generally abandoned by the late 30s. Given
the magnitude of the Depression, one could see the Canadian response as a
natural one: such a shock must necessarily lead to pooling resources. But then
why did the United States take a different route?
According to the model developed in this topic, given the institutional sim-
ilarities between the two federations, what determines the institutional design
of social security is the scope of risk sharing between regions. More precisely,
the theoretical model points to four potential keys to understanding the diver-
gent paths between Canada and the United States: income inequality between
regions, the size of the dependent population by region (1
), the extent to
which the level of dependents' mobility homogenizes this ratio across regions,
and the incidence of risk associated with specialized economic activities (
−
α
δ
).
Similarly uneven in both countries, the geography of income hardly explains
the institutional divide in response to the Depression. Indeed, in terms of
income, wealthier Canadian provinces had incentives to prevent a centralized
system of unemployment insurance. Yet they did not. In turn, some of the poor-
est American states worked, successfully, to prevent a national program that, in
pure income terms would benefit them. The key must lie elsewhere, namely, in
the different balance between the scope of interregional economic externalities
(primarily the level of dependents' mobility) and the extent to which specific
regional economies shape the geography of preferences with regard to public
insurance systems. The remainder of this chapter develops this claim in detail.
In light of the argument in this topic, there are two possible alternatives. The
first one would be to argue that the two systems of representation were actually
quite different by virtue of the fact that Canada has a parliamentary system
and has a more centralized party system. The second alternative would contend
1
See Noble (
1997
); and Quadagno (
1994
). Incidentally, the consideration of the United States
as a welfare laggard must be treated with caution. This label is only applicable to the second
half of the twentieth century. Lindert (
2004
) offers estimates of the extent of redistributive
social spending for 1910 and 1930, concluding that Continental Europe does not outperform
the United States in the first half of the twentieth century. See also Skocpol (
1992
).
