Behind the Cod Curtain
Leslie Burke and Leo Brander
Canada ran its east coast fishery in much the same way the Soviet Union ran its economy – and it should be no surprise that both shared much the same fate.
That’s the conclusion of the two senior Department of Fisheries and Oceans (DFO) economists who prepared the most recent entry in the AIMS Commentary Series, “Behind the Cod Curtain: Perspective on the Political Economy of The Atlantic Groundfishery.” Leslie Burke, Regional Director of Program Planning and Economics at Maritime DFO headquarters in Halifax, and Leo Brander, Chief of Economic Analysis in Halifax, argue that the “fundamental similarity” between east coast fisheries management and the Soviet Union “derives from the fact that common property was the underlying basis of both ownership systems.”
“In the former Soviet economy, decisions about what to produce were dictated by central planners. Market signals, “incentives or penalties transmitted through prices and costs to yield profits or bankruptcy,” were not present to draw the factors of production (labour and resources) to where they were most needed. Society was built upon a philosophy so preoccupied with the distribution of wealth that its creation, which would have provided a higher standard of living, was neglected. In Canada, the state played a comparable paternalistic role in planning and controlling the fisheries.
Burke and Brander show how this management system on the east coast created a vicious circle of dependence, overcapacity, over-exploitation, community immobility through incentives that work against the best interests of workers, communities and the fish stocks themselves.
Just as the collapse of the Soviet economy revealed planners’ ignorance about the true value of goods and labour, the collapse of the groundfishery exposed “a false economy based on fish,” they say.
To give but one illustration of the false economy, in areas where groundfish species predominated, workers in the Atlantic fishery derived more than half their reported income not from fish, but from government transfers such as Unemployment Insurance. To solve the problem of misallocation of resources and ensure a viable industry for the future, Burke and Brander propose two critical policy changes.
Firstly, direct and indirect fisheries subsidies must be phased out, including capital subsidies for both harvesting and processing which have contributed to massive overbuilding in the fisheries and subsidies to labour, which have distorted labour patterns in the fisheries.
Nonetheless, Brander and Burke say that those in the industry must be helped through the transition phase to a non-subsidized world, but even this holds a danger for the future.
“The current set of temporary assistance programs must be designed to ease the transition to another way of life, in spite of the difficulty of doing so. The danger is that these programs will come to be accepted as another part of the country’s natural resources as have UI, make-work and similar programs in the past.”
Second and even more fundamental, Burke and Brander say the common property problem must be addressed. A common property regime creates incentives to fish as fast and as much as possible with little regard for conservation. The benefits of an individual’s overfishing go to the individual while the damage is shared by all harvesters.
Burke and Brander recommend moving to a regime either of individual property rights in the fisheries, though a system which allocates quotas to individual fishers who then own these quotas, or a fisheries managed at a local level through allocations given to small well-defined groups or co-operatives.
Burke and Brander’s comments point in the same direction as Elizabeth Brubaker’s earlier AIMS commentary series paper, “Making the Oceans Safe for Fish.”
Brubaker, who focuses on environmental questions, argues for the establishment of robust property rights in the fisheries to better protect fish stocks. Property rights would give individual harvesters a stake in conserving stocks, unlike the common property regime, she argues.
The views expressed are those of the authors. They do not necessarily reflect the policies of DFO. The paper was written to encourage public discussion about improving the fishery. Burke and Brander’s paper first appeared in the Dalhousie Law Journal, volume 18, number 1. Both “Behind the Cod Curtain: A Perspective on the Political Economy of the Atlantic Groundfishery” and “Making the Oceans Safe for Fish” may be ordered through AIMS.