On Jan. 27, we'll see a new federal budget, and with it a promised economic-incentives program that, it is hoped, will provide a much-needed infusion for our somewhat anemic economy.
Most of us, I think, are a little frightened about all this. It's hard to hear predictions of a national deficit in the multi-billions of dollars and not wonder what we are going to get for our money.
Anyone who has bought a house knows the sinking feeling in the stomach that comes with signing a mortgage debt of thousands (sometimes hundreds of thousands) of dollars. We can, however, still that apprehension with the understanding that we are acquiring an asset in the process. We are buying a future, and if that takes incurring the carrying charges of interest, well, that seems like a reasonable price to pay. Just so long as we get a house with a sound roof and a view that doesn't include swampland.
To many of us who work in the front lines of Canada's health-care system, the relationship between deficit, debt and social infrastructure is very much like that of home owner and mortgage. In the past, health-care and social workers have seen governments talk about balancing the books and eliminating the debt without recognizing that a social deficit — one that has both a human and fiscal price tag — is often being created without much discussion.
Now that Canada is facing the prospect of choosing to spend instead of scrimp, we are hoping that we might get to re-shingle, so to speak, our social roof.
What is the best way to do this? Can we justify spending money on health care, education and social support when so many in core Canadian industries (manufacturing and forestry, just to name two) are hurting?
Traditionally, one measure that has been used is the revenue multiplier. This is a measure of the amount of production in all sectors of a nation's economy that is necessary for any given industry to produce a dollar of sold goods.
Making a car, for example, requires a workforce and raw materials machined in-house, but it also requires specialized parts that aren't made in the same factory as the car. Production of these is often outsourced to other shops. Each of these shops has similar tributary shops further upstream in its production line.
The more "outsourced" an industry is (that is, the more that other industries provide input for its production) the higher the revenue multiplier will be. The argument is that higher revenue multiplier equals greater economic importance.
This is a pretty seductive idea. After all, if our theoretical car factory above buys from many industries, then it can be said to support many industries as well. What is good for the factory, it has been argued, is good for each of its suppliers. The revenue multiplier has been used to calculate how much a proposed economic stimulus might impact the rest of the economy.
Is this true, though? Can we really just look at inter-connectedness (which is all the revenue multiplier really measures) and translate that directly into economic and social well being?
Philip Cross and Ziad Ghanem published on this subject in the Canadian Economic Observer in 2006. Their article notes that even though the revenue multiplier of an industry might be high, the impact of supporting that industry on the Gross Domestic Product might not be as impressive.
For example, revenue multiplier calculations show that among the industries with the highest multipliers are those such as agriculture, manufacturing, forestry, and transportation — fairly traditional industries that are clearly suffering right now. However, when Cross and Ghanem ranked industries in terms of the impact of added investment on the Canada's GDP, the "top 10" changed fairly dramatically.
More bang for the budgetary buck?
Top of the list? The finance, insurance and real-estate sector. Second, however, was education. Non-profits were third. In the top half of the list were industries such as retail and wholesale, government itself, administrative services, professional and technical sectors and, squeaking into the top half, health care.
And at the bottom? Mining, transportation, forestry, construction … and last, manufacturing.
Measured by impact on GDP, investing in higher level industries such as education, technical and knowledge workers, and yes, health care seems to make a lot more sense, particularly when you consider that many of these core traditional industries were suffering before the bottom fell out of our economy this fall. If your only interest is fiscal, logic dictates writing cheques to universities, not auto plants.
Are fiscal outcomes the right measurement, though? Indices such as the Genuine Progress Index (introduced to Nova Scotia in 1997) and the Canadian Wellbeing Index (2005) attempt to assess not whether we are more financially productive, but whether we are actually better off. Proponents point out that "crime, war, pollution, tobacco smoking, and car accidents all cause people to spend money — and so they all increase the GDP" (this from the GPI Atlantic website).
Perhaps if we choose to spend our way out of this recession, we should ask not (just) how this will affect the fiscal bottom line, but also how our spending can genuinely improve our society.
So what does the GPI or CWI measure? Living standards, population health, personal time use (how frazzled are you today?), community vitality, education and environmental quality — in other words, the quality of home, health and recreation opportunities for individuals, the safety and health of our cities, the knowledge and sophistication of our population and the clarity of our air and water.
Now, I know that some of you are going to label me (correctly) as a lefty, but I can relate to those kinds of spending more than, say, a bailout for the tar sands.
On Tuesday, I would like to see Ottawa invest in health. I don't mean that we should be limited to the notion that "health equals more doctors and nurses" (although more of each are badly needed); I mean investment in a more inclusive, holistic sense that addresses items that affect our GPI more than our GDP.
When our young people face a marketplace with lower employment, give them subsidies for secondary education. Let them sit out the recession in classrooms, training for the jobs that will be there two years from now. Support construction projects, but only those that enhance our communities, like building low-cost housing and improving our recreational facilities.
Let's hire people to care for us in roles that we have not adequately supported before. Yes, in health care, but also in such areas as early childhood intervention, elder care and child care. There are a lot of child-care workers who could be employed across this country if only our government would wake up to this issue. Paycheques for child care workers will buy houses, cars, groceries and support local businesses just as readily as those from any other sector.
In a way, the economic turbulence around us represents an opportunity. This is a legitimate chance for us to stop paying down the mortgage for a while, and focus instead on renovation. In the talk about supporting industry, let's not forget those that provide us with genuine social progress. If we are going to spend this money, let's spend it wisely. Let's at least build a house we can be proud of, and not just paper over the cracks.
Brett Taylor is an associate professor of pediatrics and emergency medicine at Dalhousie University. He works as an emergency paediatrician and researcher at the IWK Health Centre in Halifax. He is in the process of obtaining a Masters in Health Informatics, also through Dalhousie. His website for parents is available at www.thevirtualpediatrician.com.