Tag: soft budget constraints

This article argues that Newfoundland politics operates on a barter system where natural resources, silence, and access function as currencies of exchange. In a province burdened by soft budget constraints and fiscal fragility, these non-monetary forms of leverage replace cash and policy as the real drivers of political decision-making. By framing silence as a commodity, resources as bargaining chips, and access as controlled capital, the piece explains why resets and megaprojects repeatedly fail while the same exchange system endures. Read More...

Newfoundland keeps cycling back to “the next big project” because of path dependency (how ideas, institutions, goals, and infrastructure lock in repetition) and soft budget constraints (bailouts that reward risk). Muskrat Falls shows the pattern: a 2005 cable promised 2015 power, but delivery came nearly a decade late at double the cost—while dissent like Brad Cabana’s was sidelined. The new Churchill Falls MOU repeats the trap: external leverage, political optics, and deferred accountability, unless governance reforms and hard budget rules break the cycle. Read More...