Last Friday, a paper that I prepared on the BC economy was released. I hope readers will find it of interest. The paper can be found at:

http://www.scribd.com/doc/30728436/Looking-Forward-The-BC-Economy-at-a-Crossroads

The paper was prepared at the request of the Leader of the BC Official Opposition, who wanted a background study and analysis of the economy. My only conditions in agreeing to do so were that I have sole control over the content and that it be made publicly available. It was also used as a background paper for a conference convened by her on Friday.
The paper is largely a diagnostic. I want it to contribute to to a better understanding of the BC economy, as a necessary prerequisite for having a literate discussion about policy. I thus deliberately do not address specific policy measures to any significant degree.

I hope that readers will come away from reading the paper seeing that there are real concerns about the BC economy and the way that it has developed over the past few years. I also hope that it acts as a cautionary tale to those who hold many of the conventional wisdoms about what contributes to improved productivity, investment in research and development, and a transition to higher value activity. The proponents of the favourite themes of the last few years in BC – lower taxes and de-regulation – appear to have paid little or no attention to what has actually been happening. If they had, one would think they would show a bit more modesty in their claims. The truth is that BC has been a laboratory for their favourite ideas, but is lagging badly in all of the referenced measures. By way of interest, the problems I identify are substantiated by a paper just released by the BC Business Council, which for instance shows BC (shockingly) to be the only province in Canada for which business productivity dropped from 2003 and 2009.

I hope the paper will encourage some good discussion. And I hope that reading it and other papers will incline the academic and other purveyors of established ideas to be at least a bit more modest and to develop bit more of the healthy skepticism required of a good analyst.

The BC Government has announced that the BC Utilities Commission will no longer have jurisdiction over electricity projects the government deems to be for export. This is to block the Commission from ruling on the run-away private hydro projects that the government has embraced in a desperate bid to bring some investment activity to the province.

This is irrational public policy. There is only one electrical system. The Commission’s mandate is to ensure that BC consumers are not burdened with costs not needed to supply power to BC homes, businesses and industry. The reason the government doesn’t want the Commission to rule on them is because the projects require BC electricity consumers to subsidize the export of power from them. The government has insisted that BC Hydro buy the power from these projects on a subsidized basis. The subsidy comes from BC Hydro, which in turn must get it from the rates it charges.

This is something the Utilities Commission could never agree to. It amounts to imposing a loss on BC consumers to line the pockets of the owners to the private projects. That is not smart regulation. We should support de-regulation if it is smart policy. When it is not, it should be opposed. This is clearly such a case.

As some may have noticed I have not posted anything here for some time. I have been busy with other writing, supervising graduate students and marking papers. However, I am back and will try to be a little more regular with postings.