Reviews/Comptes rendus
Gendered States: Women, Unemployment
Insurance and the Political Economy of the
Welfare State in Canada, 1945–1997
by Ann Porter. Toronto: University of Toronto Press,
2003.
The system of unemployment insurance (UI) established immediately following the Second World War
was based on a household income model, reflecting
the notion that a married female was dependent on
a male breadwinner. Married women collecting unemployment insurance were felt to be defrauding
the system. As a result, structures were put in place
to deny some females the same level of benefits and
coverage that were available to their male counterparts. In addition to this, the system supported the
belief that women who were pregnant or postpartum were unemployable, independent of the reason
for their recent job separation. Starting in the 1960s,
and continuing through to the end of the century,
the household income model was replaced with one
in which male and female workers were treated
equally, but “different.” Equal treatment could ensure that workers with similar patterns of employment received equal benefits. Female workers,
however, were more likely than male workers to
work part-time with frequent job interruptions. Limited access to UI benefits to these types of workers,
relative to workers in full-time, stable employment,
meant that women were experiencing “inequality in
results.” Consequently, the mean female worker received less coverage and benefits than the mean male
worker, who worked longer hours in more stable
employment. At the same time, accommodating female workers’ differences led to the establishment
of maternity benefits, which again mainly benefited
full-time employees.
Gendered States is a comprehensive history of
unemployment insurance reform from 1945 to 1997,
placed within the context of a feminist political
economy. The goal of the research is threefold: to
set out a theoretical framework for understanding
the role of gender in the formation of social policy;
to understand how changes to UI have affected
453
women over time; and to document the contributors
and conditions that have shaped UI reform. The
analysis is divided into parts representing the periods 1945–71 and 1971–97.
Part I is a well-structured examination of UI in a
period marked for the expansion of the social safety
net. The author achieves all three of her goals, and
is particularly successful at bringing the experience
of women into the analysis. This part is readable
and will be of interest to historians and policymakers
alike. Part II is more complex, covering a longer
period of intense political, as well as economic activity. The focus is much more on the process of
change than on the experience of women themselves.
In fact, the nexus of state, household and firm that
makes the first part so rich is largely replaced by
movements of political players (including women’s
organizations and industry groups) in Part II. There
is a return to the earlier treatment in the last chapter, which deals with the 1995 UI to EI reform. It
comes at the cost, however, of oversimplifying the
issues surrounding reform at that time.
Part of the problem with Porter’s approach is that
it only deals with the effect of UI policy on a worker
once she has been separated from her employment.
If the gender-based inequality in the UI program
stems from the female dominance of part-time, contingent employment, then the contribution the program has made to create or resolve these structural
employment differences (from either a demand or
supply perspective) is critical to the analysis. Despite this, there is no discussion of the incentives
created by policy (through either payroll taxes or
expected future benefits) on either the type of employment workers find it profitable to engage in or
that firms find it profitable to create. To give an example, prior to 1997 firms were exempt from paying premiums on workers working less than 15 hours
a week. This created an incentive for firms to employ two or three part-time workers in place of one
full-time worker. Likewise, firms in sectors in which
access to UI is part of the workers’ remuneration
package have no incentive to increase the length of
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454 Reviews/Comptes rendus
their employee’s work week, as long as workers
working short weeks have the same access to benefits as workers working long weeks. Specifically,
UI policy changes in the 1990s were directed at reducing the incentives to create part-time employment. Porter stresses that female workers mainly
engage in part-time work because it is the only type
CANADIAN PUBLIC POLICY – ANALYSE DE POLITIQUES,
of work available, and would prefer to work longer
hours. Yet the question of how policy affects their
access to full-time employment is absent in this
work.
M A R I NA A D S H A D E , Department of Economics,
Dalhousie University
VOL . XXX, NO . 4 2004
Reviews/Comptes rendus
Continentalizing Canadian
Telecommunications: The Politics of
Regulatory Reform
by Vanda Rideout. Kingston and Montreal: McGillQueen’s University Press, 2003.
Continentalizing Canadian Telecommunications is
a guide to identifying stakeholders in the process of
telecommunications deregulation. The author’s position is that telecom deregulation was motivated by
Canada’s pursuit of closer trade integration with the
United States, that the process ignored popular dissent, and that resulting changes in cross-subsidies
among telecom services have injured low-income
Canadians. The author’s focus is on identifying the
groups involved in some official capacity in the regulatory process, discussing the motivations of those
promoting deregulation and highlighting the position and constituents of those opposing the process.
Her view is that those promoting deregulation represent a narrow interest while those opposing represent a broader group defending the public interest.
The story unfolds in eight chapters plus an introduction: chapters 1 and 2 provide the historical background, chapters 3 to 6 are mostly a chronological
ordering of the description of the deregulation process with identification of competing interests and
their relative influence, and chapter 7 and the conclusion offer some additional interpretation.
Rideout provides a decent chronology of the process of telecom deregulation, useful to any reader
with a modest interest in the regulatory process generally or in the telecom sector specifically. There is
good detail on the structure of telecom regulation
and its changes, though because the book’s focus is
not strictly on only federal government policy and
regulation, these details are nowhere summarized
systematically. Rideout’s focus is on key regulatory
decisions and she details the positions of those who
made formal submissions or who had formal
standing.
Rideout’s use of sociological theory to describe
changes to policy regimes makes this book less use-
455
ful for a general audience. This approach seems to
substitute jargon for detail. Policy in place after
World War II is described as having been able to
“expand capital accumulation, contain social unrest,
and develop a hegemonic environment of consent”
(p. 31). As a reader without background in critical
sociology, I found this theoretical approach opaque;
those parts of the book read like a doctoral thesis.
Further, this approach does not provide much
explanation of the shifts in the relative power of the
stakeholders that led to a disequilibrium in the
“hegemonic environment of consent” and motivated
policy changes. Rideout identifies changes in regulatory policy as having originated in the US with
the shift in ideology to “neo-liberal regulation” and
imported into Canada through lobbying by multinationals. She suggests further that Canadian policymakers were particularly sympathetic to the views
of academic supporters of deregulation. She does
discuss in some detail dissenting views and identifies groups holding those views.
Rideout seems to completely ignore changes in
communications technology, a significant oversight.
The first major policy change since the Depression
occurred in the late 1960s with the creation of the
Department of Communications (now part of
Industry Canada) and the shift in regulatory power
over telecoms from the Board of Transport Commissioners to the Canadian Radio-television and Telecommunications Commission (CRTC) seemingly
motivated by the federal government’s demand for
a domestic communications satellite system (p. 42),
that is, the introduction of a new technology.
Regarding deregulation, while Rideout does discuss changes in the US regulatory environment in
the 1960s and 1970s and the resultant policy shifts
in Canada they provoked, she does not explicitly link
these changes to need for policy reform in response
to technological change. It is interesting that she
identifies the first major regulatory challenge in
Canada coming from an application to the CRTC
by Canadian National Canadian Pacific Telecommu-
CANADIAN PUBLIC POLICY – ANALYSE DE POLITIQUES,
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456 Reviews/Comptes rendus
nications (CNCP Telecom) to connect its data network to Bell Canada’s public switched telephone
network. Further deregulation occurs as rulings by
the CRTC on various applications to utilize telecom
infrastructure to offer value-added services, like
long-distance; services made possible only due to
continued technological change.
The other drawback to the book is the manner in
which it deals with the fundamental issue for consumers — cross-subsidies among telecom services.
Rideout devotes significant attention to the identity
and arguments of those opposed to deregulation
because she contends that the increase in local telephone rates resulting from Bell’s loss of longdistance revenue, which subsidized local service, has
injured lower-income households. Rideout even argues that the shift of the burden for local calls away
from long-distance revenue is a form of subsidy to
the heavy users of long-distance service (p. 98).
CANADIAN PUBLIC POLICY – ANALYSE DE POLITIQUES,
Rideout offers no direct evidence on the significance
of this injury, and the supporting studies she has cited
are too narrowly-focused. Someone who does not make
long-distance calls, or who does not use any of the
various enhanced services, will have been made worse
off from deregulation unless local phone rates have
declined in real terms, which is unlikely. However,
Rideout gives no evidence as to how large this group
might be. Further, her dismissal of Bell’s proposal for
local service to be charged by usage rather than as a
flat rate per period seems at odds with her classification of a phone as an essential service. The household
with a phone for emergency use only is currently subsidizing the household with the teenager who uses local service intensively. The welfare effects of
regulatory changes in the cross-subsidization of services in telecommunications can only be resolved with
more detail than is outlined in this study.
B YRON L EW , Department of Economics, Trent
University
VOL . XXX, NO . 4 2004
Reviews/Comptes rendus
Trade and the Environment: Theory and
Evidence
by Brian R. Copeland and M. Scott Taylor. Princeton:
Princeton University Press, 2003.
This book is a welcome addition to the economic
literature on trade and environment and an essential
text for anyone teaching on this topic. In this succinct volume, Copeland and Taylor provide a comprehensive theoretical framework for addressing a
variety of issues central to the trade and environment debate. They then go on to provide an empirical test of their theory and arrive at provocative
conclusions regarding how trade liberalization and
growth are likely to impact the environment. This
book will be of interest to academics and policymakers alike.
Copeland and Taylor organize their book around
the three channels through which trade liberalization impacts the environment: the composition, scale
and technique effects. These channels can be summarized as follows. Trade liberalization induces
countries to produce and export goods in which they
have a comparative advantage. Accordingly, countries with a comparative advantage in dirty goods
should, other things being equal, see their industrial emissions rise when trade is liberalized. This
is the “composition” effect of trade. Trade
liberalization will also have “scale” effects. Both
because trade allows countries to take advantage of
scale economies, and because resources are allocated
more efficiently in open economies, trade liberalization should also raise the scale of economic activity. And if output and emissions move in
lock-step, then this scale effect should raise total
pollution. Finally, there is substantial evidence that
trade liberalization not only raises output but also
incomes. Raising incomes in turn raises demand for
normal goods such as environmental quality. And
although environmental quality can’t be bought on
eBay, citizens can demand that their governments
supply it via stricter environmental regulations and
cleaner production “techniques.”
457
Of these three effects of trade liberalization, the
composition effect has been the most studied and
perhaps the most misunderstood. Observers often
point to the disparity in environmental standards
between rich and poor nations and claim that this
gives poor countries a comparative advantage in
dirty goods production. This gives rise to the Pollution Haven hypothesis: weak regulation in poor
countries will drive polluting industries to developing nations, and trade liberalization will exacerbate
this problem. One of the things that Copeland and
Taylor do so successfully with this book is remind
readers that there are cross-country differences other
than just environmental regulations that also influence comparative advantage. Most notably, comparative advantage also depends on factor
endowments: if you have lots of capital, you are
likely to export capital-intensive goods. This is particularly important in the case of industrial pollution, as many pollution-intensive industries are also
capital-intensive industries. And it is the rich, highly
regulated countries that have much of the capital.
Moreover, as abatement costs are small compared
to other production costs, weak environmental regulation is unlikely to overturn the more traditional
determinants of comparative advantage. This is
borne out in the empirical portion of their book.
Copeland and Taylor use panel data on urban sulphur dioxide concentrations across countries and
over time to examine the impacts of openness on
trade patterns and the environment. Regarding the
composition effect, they indeed find that factor endowments dominate regulatory differences, rendering resource-rich countries like Canada the most
likely to see the composition of their output become
more pollution intensive with trade liberalization.
Should we conclude then that further trade liberalization will make Canada a dirtier place to live?
No. Recall that change in the composition of industrial output is just one of the channels through which
trade liberalization affects the environment: there
are also scale and technique effects. One of the most
provocative results of Copeland and Taylor’s em-
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458 Reviews/Comptes rendus
pirical work is their finding of a very strong technique effect. They calculate a technique elasticity
of between –0.9 and –1.5. This elasticity is interpreted as follows: if incomes rise by 1 percent but
all other variables remain constant, then sulphur
dioxide concentrations should fall by between ninetenths and one and a half percent. Conversely, their
estimates indicate that the elasticity of pollution
concentrations with respect to the scale of economic
activity is comparatively small, between 0.1 and 0.4.
Interpreted, this elasticity suggests that simply scaling up economic activity by 1 percent (but holding
industrial composition and policy constant) should
raise concentration levels by between one- and fourtenths of a percent. Putting these estimates together,
Copeland and Taylor conclude that free trade will
be good for the environment in many countries: although the composition effect may cause rich countries to substitute toward dirtier industries, increased
demand for cleaner production techniques should
dominate. When pollution policy is flexible, and
follows the preferences of its citizenry, then pollution levels in both rich and poor countries should
ultimately fall with trade.
CANADIAN PUBLIC POLICY – ANALYSE DE POLITIQUES,
Copeland and Taylor also contribute to the lingering debate over growth’s impact on the environment. They provide a full chapter exploring the
theoretical underpinnings of the income-growthenvironment relationship. They follow up by
employing their elasticity estimates to argue that
whether growth harms the environment depends on
how much that growth is biased in favour of dirty
industry. For example, if countries grow by accumulating factors of production most useful in producing clean goods, like knowledge, then both the
composition and technique effects will promote a
cleaner environment. But if income growth is instead fueled by industrial capital accumulation, then
Copeland and Taylor’s estimates suggest that the
environment will instead deteriorate. In short,
whether income growth helps or hurts the environment depends on the underlying source of that
growth.
CAROL MCAUSLAND, Economics, University of California Santa Barbara
VOL . XXX, NO . 4 2004
Reviews/Comptes rendus
In the Long Run We’re All Dead: The
Canadian Turn to Fiscal Restraint
by Timothy Lewis. Vancouver: University of British Columbia Press, 2003.
Everyone knows the frustration of reading an author who is struggling to master an analytical framework that exceeds his or her intellectual capacity.
Timothy Lewis’s In the Long Run We’re All Dead:
The Canadian Turn to Fiscal Restraint presents the
opposite spectacle, in many ways more painful: an
evidently capable mind bent on applying a paradigm
that ultimately dooms his attempt to illuminate the
subject.
Lewis’s exploration of federal budgeting in
Canada from the mid-1970s to the late 1990s was
motivated, he says in his preface, by a conviction
that “an adequate account of deficit’s disrepute required much better theorizing and deeper
historicizing than analysts had provided.” “Theory
that could allow us to understand immediate events
was notable only by its absence” Lewis charges, and
goes on: “One reason to historicize deficit finance
was to reveal the contemporary contempt in which
fiscal deficits are held as historically contingent
rather than objectively necessary.”
Readers familiar with the powerful intellectual
tools economists and political scientists bring to fiscal policy analysis, or with the fashionable
postmodern deconstructionism that makes much of
the discourse inside universities an object of amusement outside them, may encounter these words with
suspicion. And rightly so: the journey they launch
through an interesting and important period turns
out to be peculiarly uninformative.
Lewis’s opening chapter, “Fiscal Politics,” begins
with Keynes’s dictum that the power of vested interests is exaggerated compared with the gradual
encroachment of ideas, and proceeds — with no
apparent irony — to argue that interest-driven politics shape not just the result but the terms of de-
459
bates over budgetary policy. Chapters 2 and 3 begin
the narrative, covering Canada’s pre-World War II
experience and the first postwar quarter-century.
Chapter 4 deals with Trudeau, Mulroney gets chapters 5, 6, and 7, and chapter 8 deals with deficit
elimination under Chrétien. Chapter 9, entitled
“Maynard Where art Thou?” looks ahead to the
gradual dissipation of neoliberalism, and speculates:
“If circumstances emerge in which these ideas once
again serve political ends, we can imagine the beginnings of a process by which Keynes might be
gradually disinterred from his Canadian coffin.”
If a lack of theories to understand Canada’s recent fiscal history inspired this book, it is natural to
ask how much further ahead in this respect readers
will be by its end. If by theory one means a model
that highlights essential elements of human behaviour and makes predictions that past or future evidence could potentially falsify, this reviewer’s
answer is “not much.”
Problematically, Lewis’s definitions of
Keynesianism itself are derivative, and often conflict: whether Keynes’s followers would run surpluses during periods when demand is outrunning
the economy’s productive capacity, for example, is
never clear for long. (Some more precisely
demarcated frameworks get as rough treatment:
readers are told, for example, that monetarism — a
line of analysis whose essential feature is the presumption of stable relationships governing the
economy’s demand for money — is about tax cuts.)
His account of interest-based ideology’s role in determining policy is similarly elastic. The Mulroney
government, implementer of free trade, the GST and
sectoral deregulation, is such an archetype of
Thatcherite neoliberalism that its non-budgetary
policies dominate the middle 50-odd pages of the
book. Yet Lewis’s paradigm apparently accommodates Mulroney’s failure to balance the budget as readily as it would have accommodated success — hardly
a convincing demonstration of analytic power.
CANADIAN PUBLIC POLICY – ANALYSE DE POLITIQUES,
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Lewis is clearly uncomfortable with the strong
“subjectivist” positions held by many opponents of
deficit reduction. He stresses that budget numbers
and other measures of fiscal position are concocted
to serve political ends. Yet close by, he presents economic measures relating to national income, the labour force, and productivity growth with no such
warnings. Passages such as those describing how
interest payments were crowding out other elements
in Ottawa’s budget, the ways mounting debt can affect expectations about future programs and taxes,
and deficit reduction’s role in bringing about lower
interest rates, are all lucid. But, as though on cue
from an academic advisory team, the postmodern
jargon soon crowds in again, leaving no room for
the economic theories that might support or refute
these interpretations, nor for the public choice theories that might help explain how it all came about.
A related problem is the remarkable narrowness
of Lewis’s historical context. Heavy state borrowing, currency debasement, and default are as old as
recorded history and as widespread as the inhabited
globe. Canada — notwithstanding the province of
Alberta’s default in the 1930s, an episode Lewis
ignores — is remarkable for its governments’ relative reliability in honouring their obligations. An
exploration of fiscal history that starts on the intellectual side with Keynes, and draws selectively from
the experience of a country where unmanageable
government borrowing has been rare, will tend to
make light of the orthodox fiscal thinking Keynes
reacted against, and underestimate the force of the
arguments against letting public debt grow consistently faster than taxpayers’ willingness and ability
to service it.
CANADIAN PUBLIC POLICY – ANALYSE DE POLITIQUES,
The environment became less congenial for
chronic debtors after the late 1970s, partly because
governments everywhere were borrowing heavily,
and inflation and defaults again entered common
experience. People who see their savings disappear
in loans to heavily indebted governments tend to
lend more carefully and demand higher interest rates
the next time. Lewis makes passing reference to the
peso crisis in describing fiscal policy during the mid1990s, but the writings of Canadian political scientists on such matters as the roots of secessionist
pressure in Quebec and the rise of the Reform Party
dominate the account. One reference to, say, Argentina would have added much to his attempt to make
sense of the environment that supported fiscal consolidation in Canada.
Canadian fiscal history, of course, is a work in
progress, and the final chapter of this book, in which
Lewis looks ahead, encapsulates this reviewer’s frustrations. A framework that accommodates just about
any facts gives little guidance about what may happen next. With Canadian governments unwilling to
talk straightforwardly about the long-term result of
health-care budgets that persistently outpace the tax
base that finances them, Canadians’ tolerance for
chronic deficits will likely be tested before long. My
guess is that a casual conversation with Timothy
Lewis over a beer would yield some insightful
speculations about the outcome. An attempt at formal analysis would need a different paradigm to do
the same.
WILLIAM ROBSON, Senior Vice President and Director of Research, C.D. Howe Institute
VOL . XXX, NO . 4 2004