The Devil in the Details

Warning: I am about to attempt a nuanced discussion. If you're not the kind of person who likes that, skip directly to the link at the end, and reflect.

Economic stimulus is being hailed as a kind of 'magic bullet' that will save us from the unknown horrors of recession. To be frank, I'm not convinced that a recession in our society would be such a 'bad' event. We are already living well beyond our means and having less might force us to re-evaluate our priorities and live smarter. But that's a digression.

Everyone in the media is talking about infrastructure spending; today the NB government announced its plans. Mostly it consists of building roads with money we don't have. In other words, we are going to pave stuff with money my generation will have to find later. Take a look at this chart from James K Galbraith, grandson of the eminent John Kenneth Galbraith:



It's hard to read, but the chart shows the return for each dollar spent on 'economic stimulus.' The government is the most powerful actor in the economy - they have money and they make the rules, not to mention the power of the central banks they control. So, now they have a choice. They can spend it on food stamps - which would nearly double their $1 investment, or they could issue a corporate tax cut, which would actually take money out of the economy.

You can see that infrastructure spending (such as building roads) is one of the better values, but actually it would be more efficient to extend unemployment benefits. It is highly likely that corporate big-wigs know that this money is about to be shelled out and are lining up to collect their chunk of our tax dollars. The list of projects announced by the NB government will almost certainly be controlled by large corporations - such as those guys at Brun-way, who can't seem to keep the roads around here passable in the winter. The only say regular people will have is whether to apply for and accept a job at a given pay rate. They will have no control over how it is spent.

My question is: wouldn't that money be better spent on addressing poverty issues, such as food, or investing in education? Knowledge is infrastructure, and hiring more teachers, specialists and investing in early childhood education would pay important dividends such as a healthier, better educated citizenry.

It seems bizarre to me - this economic crisis seems to come with the recognition that the government should intervene to help people, but only help people get a job, not help them get a leg up on the things that matter most - education, empowerment and quality of life. The fact that 1 in 6 Canadian children still lives in poverty has been totally lost in the shuffle here, but that's a fact that will be reckoned with as a generation ill-equipped to lead takes the helm. So we've got roads, so what?

And finally, the project list only deals with major cities, in a province that is still almost 50% rural. And in a province where rural industries have taken a pounding in the last few years. What we need is to build rural infrastructure - like a windpower and agricultural co-generation powergrid. Like they've done in Germany, with smashing success. The solution is not to truck all the resources - people and trees and minerals - out of the traditionally rural parts, and send people to work in call centres. We need to find ways to make rural life viable again. And that's going to take creativity and brainpower and dedication.

So, as promised, here's the link for people who skipped the details. Quality of life matters, and in selling out resources and people, we're really selling off our heritage, oftentimes to the lowest bidder. I think we can do better, and we should be trying harder.