Will Federal Centralization Help the Poor?

Abstract

Dan Usher has recently and provocatively argued that the basis of disharmony in any society stems from ambiguous property rights.1 He gives as the 'prime example' the assignment of powers between federal and provincial governments in the allocation of the surplus from oil production. It is because this surplus has been allocated both to the provincial and to the federal governments that conflict arises. This situation, he argues, is analogous to a house owned by two families with no provision as to how much of the house belongs to each. In this paper we critically evaluate Usher's proposal for reducing the cost of disharmony generated by such ambiguity in assignment of property rights. This proposal involves centralizing the redistributive powers of government at the federal level, where 'redistributive power' is interpreted to mean the ability to transfer income from rich to poor without regard to geography. We also identify and criticize the general normative basis for constitutional reform that lies behind Usher's proposal.