Once again the Province of New Brunswick is examing the implications of the urban/rural division of the population. There has been a profound trend of migration from rural to urban areas over the last 50 years or more. It could even be argued that this trend dates to before the industrial revolution.
As long as I have been aware, which is either a long time or not long at all depending on who you are, governments have been attempting to stem or reverse the flow of people from rural to urban areas. There have been a myriad of plans, initiatives, studies, programs, and whatnot all intended to keep people from relocating to “The City”. Given that we’re still talking about the issue, it is safe to say that we haven’t found a workable program yet.
The current round of discussion began when it was suggested that some mills in the province be allowed to go out of business instead of receiving government support. Essentially, the proposal is to end an on-going subsidy to various forestry sectors. Those who oppose the idea have stated, rightly so, that this is equivalent to allowing many of the communities to die. This statement, of course, is designed to elicit an emotive response from the populace.
I spend a lot of time trying to teach my student to cut through rhetoric and examine issues critically. The simplest way to do this is to ask “Yeah, so?”.
Yeah, so? Why should be convinced that we need to subsidize the existence of each and every rural community in the province? Remember, I’m an economist, I see the world in terms of costs and benefits.
1) Tradition and History: by preserving our existing rural communities we preserve a link to our rural heritage.
2) Way of Life: rural living has a great many things to recommend it.
3) No Relocation Costs: Moving is costly, both financially and emotionally.
4) Low Crime: there are relatively few violent crimes committed in rural areas, and population density seems to be an indicator of crime rates in North America.
These are all real benefits, though many are not financial. (Surprising that an economist can talk about non-financial benefits, eh?) The interesting thing to note is the majority of these benefits are all captured by the few people living in rural community receiving the subsidy. Very few 0f these benefits accrue to those who must pay the subsidy.
1) Opportunity Cost: Funds could have been used for a number of other programs. This includes popular programs like Health Care.
2) Service provision is more costly: By providing the required services to a widely scattered population we make those services more costly.
3) Environment Impact: Rural communities tend have high environmental impacts per person. By maintaining the same population in diffuse communities we increase the damage we do to the entire environment. Particularly in terms of green house gases.
These costs tend not to be born by the individuals receiving the benefits, but are paid by those already living in cities.
The question New Brunswickers need to ask themselves is very simple. Do we want to continue to have those in the cities subsidize those in the rural regions?
Of course this begs a larger question. Should Canadians continue doing this on a national scale through equalization payments?