Two Different Conflicts in Federal Systems

Where the Canadian government has been successful so far in managing the “conflict of taste” that has led to Quebec’s historic discomfort in the Canadian federation, because the federal government possesses the tools to address that challenge, it does not have the same tools to manage the “conflict of claim” that is creating increased dissatisfaction with Confederation in the West. [...] Because of the difference in populations, significant transfers are required in order to have a material per capita impact on the more populated poorer regions, while the larger, poorer regions can control through their political voting power the size of the transfers they wish to extract from the smaller, richer region. [...] The amount paid to the poor region is bounded by (i) the minimum needed to compensate the poor region to be at least somewhat better off than if it were autonomous; and (ii) the maximum that the rich region is willing to give up before it is in a worse position compared to if it were autonomous. [...] The differences between Central and Western Canada are the basis of much of the discussion below regarding conflicts of taste and claim. [...] Of all the provinces, Quebec has received the largest net financial transfers from the rest of Canada, with the federal government spending more in the province than it receives from Quebec in taxes, partly as an effort to mitigate separatist sentiments in the province.