National Equalization

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Equalization (the taking of wealth from a successful province and giving it to one that is not as successful) is a major sore spot in Canadian politics. The "Have" provinces get really POed when the "Have Not" provinces take our money, enjoy a higher standard of living than we do, and then criticize us for making the money that they took in the first place!

Does a program similar to equalization take place in the US? Or elsewhere in the world? Thoughts? I have a few theories on how the US system is better set up to deal with this sort of horse****, but I wanna hear from the rest of you folks.

 

Not that I have heard of. It sounds like a pretty crappy way to go though. We already pay Federal Taxes, so they allocate that money to whatever they want. But if they were to take some of the State taxes we pay and turn them over to Arkansas and not improve our roads and schools, I would be PISSED!

 

Happens around here as well and I am somewhat torn. On the one hand I do think that the wealth should be spread evenly but on the other hand I see no point in pouring money into dying parts of the country. If a business can't support itself it generally fails and if a part of a country loses its population and employment oppurtunities there is only so much the rest of the country can do.

 

In Finland municipalities that are on surplus subsidize the ones that do deficits. Usually it's about the cities supporting the rural areas and south supporting north. Finland is not a federal country though so it's not quite the same. Subsidies exist on the EU level too though, in form of different development subsidies that are allocated to the poorer EU countries in order to bring them up to the level with the rest of the union.

 

To a certain degree, I suppose that you could say that it happens in the US by default when some states get more money back from the federal government than they send to the fed govt in taxes, though I wouldn't describe this as an intentional process of "equalization".

However, IIRC, in the state of New Hampshire, there's a statewide tax that exists to "equalize" school district funding between "property rich" (mostly in southern NH) and "property poor" (mostly in northern NH) communities, since schools are primarily funded by local property taxes.

 

You see, here in Canada, one thing we do is measure how much money the federal government takes from a particular province in federal income taxes (and likely in other taxes like our Goods and Services Tax). Then we look at how much money the Federal government spends in that province. The discrepency is how we determine the equalization.

There are many provinces who receive TONS more than they put in, and others who get next to nothing for the investment. Where I live, many people (like myself, for one) believe that to help out another province for the short term (10 years or so) is fair -- after all, we are all in this together! -- but to be subsidizing another province for over 30 years is utterly ridiculous. They need to start pulling their own weight. What's even worse here is that we have no serious analog to the US senate, wherein each province is equally represented. We only have the Rep by Pop lower house, and so Alberta in particular feels treated like a "hewer of wood and drawer of water", serfs labouring mightily to support the elites in the East, who are more than glad to be generous with other people's money (often for the purpose of buying votes.) Then they go and criticize how we do things (the whole oil sands thing -- it's not nearly as dirty as its opponents make it out to be, and the Canadian opponents in particular should watch their mouths, as it's that very "dirty" money that finances their infrastructure.)

 

In the US we the federal government uses a number of things to determine how it spends money. One of which is on a per capita or per user basis, though that isn't the only way I believe it is one.

What you are talking about in terms of subsidies reminds me a bit of "shared revenue" at the state government level were money is sent by the state government to various communities.

This may mean that the state government receives money from suburbs (wealthier communities) and certain urban areas and sends it to rural and urban areas that aren't doing so well.

Though I treat some of the "contributors" of money as parasites off of larger urban metroplexes.

Suburbs and developers thereof already receive subsidies in the form of road building funds which make suburban property easier to develop and inhabit-this is done with public money.

The people settling those suburbs may be moving from areas where they grew up using infrastructure that was maintained with city (often property) taxes that is now becoming due for repair or replacement. So a generation of suburban inhabitants has often used local infrastructure when is was in good condition and then moved way in time to duck paying for its repair.

Also the cities provide economic centers where the suburban dwellers initially found employment so in a sense the city provided a situation that helped develop their employment and they move away from it and take the money they are now receiving with them.

Also, at least in parts of the US here, there are a number of factors that limit moving to the economically better off and encourage a lack of economic diversity within a locale.

For example, some areas have put in codes that limit new construction to large scale (with large yards to boot) single family homes. Thus construction for smaller and lower income housing (such as people who cannot afford a McMansion) is discourage by law. The money required to facilitate moving as well as the purchase of a automobile to live in a area that is car dependent (many suburbs in my area have little, if any, public transit) also factors out people who may be living paycheck to paycheck.

In general I see suburbs as being built with at least some taxpayer money so that they can pull people with money out of the larger neighboring community where that money is made.

This leads to places of concentrated wealth and, as moneyed individuals move out of a neighborhood, places of concentrated poverty. The concentration of each means that the social problems that local governments tried to address become harder to deal with at a time when money (from taxes on a formerly mixed income population) becomes harder to come by.

In sum I see suburbs as trying to use or pull away the nicer/moneyed parts of a local community/society and duck the responsibility of dealing with anything else.

 

One somewhat similar situation is what happened in Germany after reunification in 1990. The states of former West Germany had to pay a special reunification tax to help the states of former Eastern Germany modernize their economy and infrastructure. Some former West Germans really didn't like this.

I'm not sure if that tax has ever been repealed, someone from Germany, please help with this info.

 

The 'Solidarzuschlag', or 'Soli' i.e. solidarity tax. It is still in power. It is unpopular, but the economy in the East is still considerably poorer than in the west, and if one lets this fester that will lead to unrest which will be exposited by populist far right or far left. The 'Soli' IMO beats either going ever deeper into debt, civil war and rebuilding the wall.

In a greater sense, the EU is about that as well. Germany is one of the countries that pay in considerably more than they get in return, beneficiaries have been the East European countries bit also countries like Greece or in particular Ireland. The late boom in Ireland was largely funded with EU subsidies, and I have always found it a little ungrateful that Ireland in the past nevertheless pursued pro-US and EU sceptic policies, biting the hand that feeds them, but alas, this is politics, and the last economic crisis amusingly brought to Ireland a hitherto unknown enthusiasm for Europe. I guess being broke does that. At last, what Germany gets out of that is safety and stability, and a free market for its products.

 

In general, I have no problem with subsidizing a hurting area provided that it shows benefit. For example, if the money helps solve the problem, or at least maintains the area through a finite rough patch, then it can be useful and helpful to everyone. It's when that subsidy doesn't actually help any, when the recieving area is going to be needing it for generations untold that we get a problem of dependance and leeching. In smaller areas (like suburb-urban areas) subsidies may also help redistribute a leeching of wealth from one to another, but that's a very particular issue.

 

A similar thing happens with the school districts in Maryland too, although that is done even down to the county level. Each county is it's own school district, and it spreads the money out evenly between all the schools in the county, even though there are wealthier and poorer areas in all counties. This is especially true in the larger counties like Baltimore County. The southern portion of the county is by the city, and is mostly urban, whereas the northern part of the county is mostly farmland and quite rural. I imagine this is quite common throughout the country as most states have both urban and rural areas.

 

Ditto.

It'd be difficult to class Ireland as Eurosceptic, we've always come pretty much top of the EU approval surveys. The Lisbon treaty would never have passed in a lot of the other countries, we were just unique in allowing a vote on it. Of course, it's easy to be positive about a relationship which involves the others giving you pots of money .

 

Yeah, I seem to remember Ireland not being particularly happy when someone in Brussels suggested that they don't need the cohesion fund money anymore .

 

Actually, pplr, there are other reasons this occurs... such as not wanting to stress limited water resources with too much development. It's not always about wanting to keep out poor people. Sometimes it's about other things...

Wow. It's all a great conspiracy to make poor people poorer.

Ya know, people actually have the freedom to live where they want to live, at least within their means. And if wealthier people don't want to live in a stinky, dirty, overcrowded city, who the hell is the government to tell them otherwise?

 

Two words: 'Zoning Laws'.

Zoning laws aren't a bad thing, and it has to do with a thing American conservatives dread - socialism - no, I was kidding, I mean the common good. And such laws are cooked up by local governments that are elected to represent their local constituents, don't forget that. As for telling people where they are able to build as opposed where to live - that's how a democratic system even in a republic works.

That luxurious stance of yours is something only a citizen from a country with vast areas can afford to have. In places like Europe space is a limited resource that has to be managed, and the US just happens to have a lot of it, reducing the need to management. Count yourself lucky. But even here in Europe, much like in America, people can move freely to where they want to live or work (even more so I suggest as we can freely move to other EU countries if we wish to). As far as the accusation that the government is telling people where to live and where to not live is concerned, it neither appears to reflect American or European realities.

What Euros are not completely free to do is to build where they wish to. On the other hand, the result of that freedom to build where one wants to is the vast American suburban sprawl. That isn't without its own problems. The extensive land use leads to long lines of communication, long supply lines, reduces available arable land, and seals land, leading to problems in the disposal of heavy rains, leading to floods and so forth. It leads to an inefficient and redundant infrastructure.

As far as land use is concerned America is inefficient. American lifestyle is only possible with cars. Unless you're living in a great city like New York, if you don't have a car you will probably have great difficulty to even go shopping and the like. Take the cars away, or have oil becoming prohibitively expensive, the suburban American way of settling will be unsustainable. That means, the current way depends on the maintenance of the status quo. If that changes, there will be severe structural problems. It is an open question to which extent America is structurally prepared for the future.

For those interested: Urban Sprawl Repair Kit: Repairing The Urban Fabric

 

Ragusa, you may not realize this, but most of the US has extensive zoning laws as well. It's not nearly as 100% here as I imagine it is in Europe, but those that don't have them often wish they did. No one, not even the poor, want their home to suddenly be next door to a noisy manufacturing plant spewing out 'regulated' toxic fumes. In places without zoning laws, that can happen.

 

Given the sheer size of the American suburban sprawl these zoning laws can't be particularly restrictive.

 

It's all a matter of what zones you allow what in. We just zone big suburban areas.

 

...or, more to the point, we allow large swaths of land to be zoned as suburban areas. Unless you live in a big city (where space really is at a premium), our zoning laws really aren't that restrictive. This is a very short-sighted way to do things, though, as it is not sustainable in the long term. Our population continues to grow, there are less fossil fuels each year, and our need for arable land will continue to increase....especially since we are draining the Ogallala Aquifer faster than it can recharge. The Ogallala Aquifer is responsible for about 27% of our irrigated land.

 

Yeah, water politics in the US are becoming more and more of an issue, and unfortunately most politicians aren't looking long-term, but rather just to their next election.