Trends in industrial policy: the ongoing debate

Le Canada et la Nouvelle Division Internationale du Travail/Canada and the New International Division of Labour. Edited by DUNCAN CAMKRON Canada Can Compete! Strategic Management of the Canadian Industrial Portfolio. By JOSEPH R. D'CRUZ and JAMES D. FLECK MITI and the Japanese Economic Miracle: The Growth of Industrial Policy, 1925–1975. By CHALMERS JOHNSON The Industrial Policy Debate. Edited by CHALMERS JOHNSON Trade, Industrial Policy, and Canadian Manufacturing. By RJCHARD O. HARMS Trade, Industrial Policy, and International Competition. By RICHARD C. HARRIS. Toronto: University of Toronto Press for the Royal Commission on the Economic Union and Development Prospects for Canada. 1985. Pp. xvii, 167. $14.95 (paper).     

English Question or Union Question? Neither has Easy Answers

While devolution has provided a stronger political voice for Scotland, Wales and Northern Ireland since the late 1990s, it is only in the past few years that English public opinion appears to have become exercised by the lack of similar arrangements for England. The renewed debates over the character of the Union after the Scottish independence referendum reveal a desire for ‘fair treatment’ of England within a Union conceived as a partnership of equals. At the same time, numerous proposals have been made for devolution of power within England, reflecting long‐held concerns about the territorial hegemony of London. Solutions to the former issue include English votes for English laws and an English Parliament. Solutions to the latter include city‐regions, strengthened local government, the first of these appears to be the government's preferred route, in the light of the recent ‘Greater Manchester Agreement’. However, none of these ‘solutions’ can count on being implemented.     

Public choice: “Yes Minister” made it popular,but does winning the Nobel Prize make it true?

Abstract: This paper discusses the influence and validity of public choice economics, which uses the traditional methodology of self-interested utility-maximizing rational choice to explain the behaviour of voters, politicians and bureaucrats. Public choice authors view the democratic political system pessimistically, fearing that politicians, interest groups and bureaucrats will collude to expand government activity, which will benefit these three groups but harm the public at large. Thus, public choice writers are supporters of the conservative agenda of balanced budgets and reduced government spending. The article shows how the successful British television series “Yes Minister” draws much of its inspiration from the public choice model and how this is reflected in the behaviour of the key characters in the series. It is argued that the series has been effective at popularizing the model. Finally, the article critically reviews the recent Canadian public choice literature, and finds that it uses the marginal voter hypothesis tautologically, that many tests of the validity of the public choice model have been methodologically sloppy, and that public choice writers could have profited from an interview methodology in attempting to explain public policy outcomes. Sommaire: Cet article analyse l'influence de l‘école du “choix public” en économie laquelle utilise la méthode classique du choix rationnel fondé sur les intérêts personnels et la maximisation de l'utilité pour expliquer le comportement des électeurs, des politiciens et des bureaucrates. Les auteurs, tenants de cette école, sont pessimistes à l’égard du régime politique démocratique car ils craignent que les politiciens, les groupes d'intérêt et les bureaucrates se concertent pour accroître les activités gouvernementales à leur avantage mais au détriment du grand public. Ces auteurs favorisent donc un programme politique conservateur prônant l‘équilibre budgétaire et la réduction des dépenses gouvernementales. L'article montre comment le feuilleton télévisé britannique “Yes Minister”, qui connaît un vif succès dans le monde entier, s'inspire du modèle “du choix public” et comment le jeu des principaux personnages en est influencé. On affirme même que le feuilleton a contribuéà populariser ce modèle. L'auteur critique enfin les derniers ouvrages canadiens sur le choix public et estime qu'on utilise l'hypothèse de l’électeur marginal de manière tautologique et, par ailleurs, que de nombreux tests sur la validité du modèle du choix public laissent à désirer au niveau de la méthodologie. Les auteurs du choix public auraient eu intérêt à recourir à la méthode des entrevues pour expliquer les décisions gouvernementales.     

World War Two crown corporations: their wartime role and peacetime privatization

Abstract. This paper discusses the rationale for establishing the World War Two crown corporations and the subsequent decisions after the war about their retention or privatization. The government was ideologically supportive of crown corporations and they were established in situations where public ownership was a more effective policy instrument than regulation. The wartime crown corporations were active in providing national security and security of supply, and acted as a yardstick competitor in various segments of the munitions industry. The characteristic of crown corporations making them preferable to regulation was that they were more effective at monitoring the private sector and ensuring policy coordination between the public and private sectors. Most of the crown corporations were terminated when the focus of public policy shifted to peacetime production. However, they were retained in areas which remained government priorities (weapons production, housing, uranium refining) or which C.D. Howe felt could be commerciaIly viable (synthetic rubber). The article concludes by contrasting the privatization of the aircraft industry with that of Research Enterprises, which produced radar and optical equipment. In the former case, the industry was successfully restructured by means of alternative policy instruments. In the latter, the government completely lost interest, which set back the development of Canadian expertise in optics and electronics. Sommaire. L'auteur de cet exposé examine le bien-fondé de la création des sociétés de la Couronne durant la Deuxième Guerre mondiale et les décisions de I'après-guerre concernant leur maintien ou leur “privatisation”. Idéologiquement, le gouvernement éait en faveur des sociétés de la Couronne et cellesci furent créées dans les cas où la propriété publique était un instrument de politique plus efficace que la régulation. Ces sociétés de la Couronne établies pendant la guerre le furent pour protéger la sécurité nationale et assurer les approvisionnenients, ainsi que pour instituer la norme concurrentielle dans les différents secteurs de l'industrie des munitions. La caractéristique des sociétés de b Coorannc qoi ies faisait préférer à la régulation était qu'elles permettaient one surveillance plus efficace da secteur privé et qu'elle assuraient la coordination entre Ies sectcurs public et privé. La phipart de ces sociétés cessèrent d'exister lorsque la politique publique se recentra sur la production du temps de paix. On les conserva cependant dans les domaines de priorités gouvernementales (production d'armements, logcment, raffinerie d'uranium) et là où C.D. Howe jugea qu'elles seraient commercialement viablcs (caoutchouc synthétique). Les auteurs concluent par une comparaison entre la “privatisation” de l'industrie aéronautique et celle de Research Enterprises qui fabriquaient des appareillages radar et de l'éqnipement optique. Dans le premier cas, l'industrie fut restracturée avec succès au moyen d'autres instruments de politique. Dans le second, le gouvernement se désintéressa complétement, ce qui retarda le développement de l'expertise canadienne en optique et électronique.     

Public services and local government: the end of the principle of ‘funding following duties’

Recent attention to local government finance in England has focused on the substantial cuts in grant funding during the 2010–15 Parliament. However, the newly introduced Business Rates Retention Scheme, which links the distribution of central funding to business rate revenue raised in each local area, constitutes a historically significant disjuncture in the funding of English local authorities. Since the nineteenth century, with the exception of one short period, funding of English local government has followed statutory duties set by Parliament, a principle which underlay a variety of central control and audit regimes throughout the twentieth century. The new system breaks that link, implying a rejection of responsibility for local services by central government. This plays into demands for greater ‘autonomy’ currently emanating from local authorities, but this may not be a panacea for the stretched financial situation that many of them are experiencing at present.