Category Archives: Economics

Captains of Local Government Plotting New Course?

A recent conference of municipal planners and politicians in Victoria revealed a suprising undercurrent of sustainability radicalism

 

 

Fifteen minutes in, the discussion on “Engaging Your Community in Sustainability Initiatives” turned unexpectedly—and suddenly, everyone became much more engaged. The Capital Regional District, currently trying to engage politicians and the public in its own Regional Sustainability Strategy, would do well to take note.

It wasn’t that the first speaker that February morning in the Victoria Conference Centre had been boring. In fact, the delegates to the Federation of Canadian Municipalities’ “Sustainable Communities Conference” attending this forum—about two hundred of them—had seemed quite attentive. Satya Rhodes-Conway, an alderperson from Wisconsin, had spoken with thoughtful bubbliness about local governments taking the lead on making buildings energy efficient, handing out cameras to schoolkids to document a city’s most unappealing areas to walk, and giving mini-grants to non-profits to do education and outreach. “If you engage the people,” she’d said, “they will make it happen.”

Then Sevag Pogharian started talking. Immediately, bursts of raucous laughter and spontaneous applauding were ripping off the veneer of polite optimism we’d all evidently been holding onto. Continue reading “Captains of Local Government Plotting New Course?” »

Forget Chickens; Invest in Eggs

Our general belief that jobs are created by businesses needs a little refinement

 

When Mayor Dean Fortin began proposing a gradual reduction of the business tax rate in Victoria relative to the residential rate, he argued it would help protect and create jobs. In resounding endorsement, the Canadian Federation of Independent Business agreed it would help companies “hire more staff”. A feature in the Greater Victoria Chamber of Commerce’s “Business Matters” magazine, “Local Government’s Role in Business Prosperity”, similarly endorsed this idea.

When federal finance minister Jim Flaherty announced the Conservatives’ latest corporate tax cuts, he explained that this would allow Canadian businesses to “create jobs”.

When the Smart Tax Alliance coalition of BC businesses came out swinging in defence of the Harmonized Sales Tax, chairman John Winter’s primary argument was that the eased tax burden on businesses would help them “create jobs”.

When discussing the Wisconsin state government’s now infamous efforts to squash public sector workers’ rights while giving tax breaks to corporations, Kevin Gaudet, national director of the Canadian Taxpayers Federation, explained on CBC radio that even in times of public financial crisis we should be cutting taxes for businesses because “they’re the ones that put in place the jobs that people get paid for”.

It’s a statement that constantly re-emerges in federal proclamations and provincial debates, local community discussions and dinner-table arguments: Businesses create jobs. The phrase has spread throughout our culture like a viral “meme”, the term evolutionary biologist Richard Dawkins coined to describe ideas, beliefs, symbols and other cultural information being passed around like genes between breeding rabbits. Continue reading “Forget Chickens; Invest in Eggs” »

The Health Care “Crisis” Con

While journalists help the Liberals drum up hysteria, health spending has actually remained relatively stable for decades.

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It was one of those articles that makes me think, “Wow, I’ve been so stupid.”

I love reading those.

We’ve all heard alarms about health care gobbling 40% of BC’s provincial budget. Our Liberal government asserts that, at current growth rates, health care will be mainlining 100% of BC’s budget by 2040. You can’t help but start screaming with the expanding mob, “More cuts! De-fund Viagra! Privatize! Unplug the elderly!”

But The Tyee‘s Will McMartin analyzed thirty years of BC health budgets and completely dispelled such claims. It’s worth the read (I checked the numbers); however, McMartin’s central point was simple: Don’t forget the BC Liberals have repeatedly cut taxes and the budgets of most other ministries. ­The end result in a quick analogy: While the government spent $2 on health care and $8 on other ministries decades ago, today government spends a bit over $2 on health, but barely more than $3 on all other ministries. That’s the primary way health care has gone from taking 20% of the budget to taking 40%.

McMartin contrasts this by calculating health care spending as a percentage of gross domestic product (GDP), a more common standard for comparing public expenditures across governments and decades. GDP represents the overall economic activity and tax base from which a government can draw for funding public services. Government data show BC’s health spending has fluctuated steadily around 5-7% of GDP since the mid-80s (See here, especially page 106, table A 3.5, and the GDP numbers here). Essentially, relative to our overall economic strength, health spending now is in line with where it’s always been. So, while we can still improve our health care system, clearly, we needn’t be acting as if we’re having a financial near-death experience.

This eye-opener made me wonder, ‘How is it I’ve read innumerable hysterical articles about BC’s health care budget, and have never heard this simple counterpoint?’ (According to the Canadian Institute for Health Information, as a percentage of GDP, BC is actually at the lower end of spending nationally. See here and here for details.) Intrigued, I revisited how local media have handled the issue the past two years.

Most coverage was typified by Rob Shaw’s Victoria Times-Colonist news story: “Health care continues to devour money and accounts for 42 per cent of the entire $40-billion budget,” wrote Shaw. He quoted Premier Gordon Campbell: “[I]t’s really important for people to understand that the costs of our health-care system are staggering, frankly.”

No other point of view on health spending was quoted. While Shaw seemed guilty of simply lazy journalism, others seemed more manipulative—or manipulated.

T-C staffer Jack Knox wondered how much we’ll “shovel into the gaping maw” of health care’s “ever-growing, insatiable appetite”. Interestingly, he related health spending to GDP, but only in one specific context: “Health spending has been outstripping the economy for decades…” Knox wrote.

I soon spotted this imprecise but alarmist refrain reappearing ad nauseum like a Republican talking point on Fox TV. No articles cited BC’s low health spending relative to GDP; however, many roared menacingly about the high growth rate of BC’s health spending relative to GDP.

“[B]etween 2001 and 2005, public health expenditures have grown faster on average than total revenue…” wrote public administration professor emeritus Jim Cutt in an opinion article about the approaching “financial brick wall”.

T-C news columnist Les Leyne parroted the same idea being spun by BC’s previous Liberal health minister: “Abbott said health spending grows twice as fast as the GDP and has done so for 20 years…”

It does sound terrifying. And it’s terrifically misleading. That’s because the growth rate for health spending is relative to a much smaller dollar amount than the growth rate for GDP.

Why is that significant? Well, if I spend $5,000 on consumer goods this year, that’ll be 400% more than five years ago. In that same time, BC’s GDP increased by a measly 17%. So now ministers and journalists are crying, “Rob Wipond’s increases in frivolous spending have been outstripping the increases in productivity of BC’s entire industrial base thirty times over! Stop Rob Wipond before he consumes the whole province!”

Sound absurd? You bet. Rob Wipond’s consumption still represents just 0.0000025% of provincial GDP.

To abandon ludicrous comparisons, then, and examine the numbers: BC GDP was $79.35 billion in 1990 and $197.93 billion in 2008, an increase of 150%. Meanwhile, BC health spending was $4.4 billion in 1990 and $14 billion in 2008, an increase of 218%. And that slight (hardly “twice as fast”) difference in growth seems significant, until we calculate that it merely means health spending was 5.5% of GDP in 1990 and 7% in 2008—within its normal fluctuation range. Much of that recent rise isn’t due to health spending increases, anyway, but GDP drop-offs after Wall Street meltdowns.

Spinning the tale the other way, though, the BC Liberals make it sound like they’ve been dramatically increasing health care funding. And in the atmosphere of crisis, they can justify privatization—something they’ve shown a propensity towards with hospital and nursing home operations, facility ownership etc.

What’s staggering to me personally is how I fell for such bafflegab for several years. I console myself that, when I actually write about a topic or take a political stand, I do some research first. But now I’m disturbed about what other illusions I have yet to dispel.

Though I guess that makes us humble, and not quick to parrot what anyone tells us. And that’s a good thing, isn’t it?

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Originally published in Focus, August 2010.

Sorry, Computers are Not “Green”

Is the world becoming greener, or are some of us just becoming more prone to seeing it that way?

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You’ve heard of “green-washing”, where companies make their products sound more ecologically friendly than they are. Well, I keep seeing something more insidious: green-tinted glasses.

Green-washing is propaganda; it’s easy to spot and dispel. Like ads BP runs about its commitment to environmental responsibility, while the largest, most unprepared-for oil spill in North American history spreads from their Gulf of Mexico well.

But green-coloured glasses are a personal choice. And once you’ve put them on, you don’t see anything’s true colours anymore.

I got thinking about this when I received emails from a government employee and a university administrator with similar signatures: “Think about the environment before printing this email.”

It reminded me of several companies who’ve been bothering me to switch to electronic billing because it’s “green”.

And I thought, ‘Seriously?’ Continue reading “Sorry, Computers are Not “Green”” »

Reshaping Victoria’s Economy for a Sustainable Planet

An expert panel discusses how our municipal government could help build a more economically vital and ecologically resilient community

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There have long been gaps between the vision most of us have for a socially responsible, environmentally “green” Victoria, and the high-priced, unbridled growth towards which the dominant economic forces in this region steer us. This gap was identified in city staff’s own analysis of Victoria’s Official Community Plan (OCP), and grows wider daily through disagreements over everything from new condominium high-rises to mega-yacht marinas.

In sustainable governing parlance, such gaps can ideally be bridged by making all development decisions with equal consideration for economic, social and environmental impacts, or “triple bottom line” accounting. Unfortunately, in its current OCP consultation process covering issues like urban design, energy and emissions, local food sustainability, and economic development, the City inscrutably failed to request that its economic discussion paper provide any triple bottom line analyses (see “Visioning Our Future or Our Pipe Dream?” in May’s Focus). Yet, obviously, economic decisions frequently drive bulldozers right through the most beautiful of our food sustainability and urban design dreams.

So Focus and Transition Victoria recently brought together an expert panel to brainstorm how the municipal government could help transform Victoria’s economy and economic decisions to be more in line with the social and environmental values which our citizens have overwhelmingly given voice to over the years. Continue reading “Reshaping Victoria’s Economy for a Sustainable Planet” »