3 Things We Could Do With Our Winning Ticket

Bridge © by >WouteR<

Since I have yet to truly right an article about sustainability for a site that includes the term in its title, I figure the time has come.  The interesting part about a Canadian site based on sustainability is that our current economy is not sustainable.  Not for the long-term anyway.  Our reliance on natural resources to power the rest of us is helping us whether the recent economic headwinds quite nicely.  On the other hand, those resources have a finite supply.

Look Into My Crystal Ball

Now I’m not much a “tree-hugger” in the conventional sense.  In fact my father cuts them down for living.  The ironic thing about the term “tree-hugger” is that environmentalists often get associated with protecting a resource that is renewable.  I’ve never understood this.  We can always grow more trees, and an economy built on wood products might see ups and downs, but one could assume that it would always be a source of some wealth.

The same cannot be said for much of the oil and natural gas wealth found in Canada.  Sure, we are looking at a really good 20-30 year stretch.  I think there is little doubt that the world’s addiction to oil will not suddenly disappear, but what happens when these natural resources run out?  What happens when Canada is merely a huge country, with low density, extremely high infrastructure costs, and large energy needs?

I believe if our material wealth advantage over the rest of the world is to be sustainable then we need to begin planning for this future that is not far off.  I’m not sure that it is at all fair that we currently enjoy such a high standard of living relative to most of humanity, but if we hope to keep it, we must leverage our current advantages and prepare for the future.  If oil won’t always be there, then what?  We used to have a vibrant manufacturing sector, but as we see in the latest news coming out of Ontario, that industry is in severe decline.  While rising oil prices might actually keep more manufacturing jobs at home, I believe that it is inevitable that many of these jobs will continue to go overseas.

Clean Energy – The Popular Answer

So what then is left for us?  How should we be handling this recent natural resource lottery ticket?  Some say we should be investing in clean energy and the associated infrastructure.  This does hold a lot of appeal.  If we currently had the clean energy technology to warrant investment, this would be the obvious choice I think, but as Ontario is learning, throwing money at green energy can be tricky.

In Manitoba we have had a positive experience with hydroelectric energy, but from what I understand, wind power and solar power have proven to be several years away from the needed efficiency.  Nuclear power still has many supporters, and in a country as vast as the Great White North, there might be opportunity to use power plants in areas where there is minimal population, but the PR disasters on the nuclear front have clouded that picture as well.

The Sustainability Hat Trick

So where then do we put our petro dollars?  How should we be investing this windfall?  Our current strategy appears to be, use the money to cut taxes, and increase the size of government through either jail or social programs.  All parties in Canada appear to agree that increasing the size of government is good.  They might spend the money and grow the government in different areas, but they can all agree that it should be spent on programs on one side of the political spectrum or the other.

I think they are all wrong to some degree.  If we want to give Canada a “durable competitive advantage” as Warren Buffett would say, we need to spend the money in three places we know beyond a shadow of a doubt will benefit us in the future: education, infrastructure and paying down the debt.

Boring Old Debt Paydown

Of these, the debt pay down should be the easiest.  A CBC article in 2010 stated that in 2008-2009, 13% of government spending went to debt service payments.  While this is down substantially from the 29.8% level seen in 1996-1997, it still represents a major anchor on the economy.  By freeing up this cash flow, we could position ourselves for a much more aggressive play on sustainable energy when the technology catches up (who wants to bet technology will catch up in a hurry when oil his $300 a barrel?), or we could use it to supercharge my other two “keys to sustainability.”

*Yawn* Infrastructure * Yawn*

Infrastructure is always one of the election promises that gets pushed to the back burner.  Saying you’re going to repair roads and bridges sounds good in a speech, but it doesn’t exactly create catchy headlines, or dominate media cycles for politicians once they are in office.  Building a new bridge or road might get your name out there, but increasing the maintenance budget is not a sexy political move.  This has to change.

The deficit in infrastructure upkeep is well documented.  There is no better guaranteed advantage going forward then solid transportation systems.  Electric cars still have to run on roads last time I checked.  By investing our winning ticket in this area we could give ourselves a  head start (or catch up) in this key area.  The economic payoffs would not be direct (aside from a government stimulus due the jobs being created the indirect spinoffs of having solid infrastructure is huge.

Aren’t Smart People a Good Investment?

Finally, as a guy whose website revolves around educational issues and whose job it is to teach others, I am obviously going to say education is key.  The thing is that a lot of other parts of the world have already figured this out, yet we in North America can’t seem to wrap our heads around it.  In the not-so-distant future economies will obviously be driven by brainpower and innovation.  This is really the only direction for Canada to go if we want to maintain our material advantages.

Investing in education doesn’t mean paying teachers more (we already get paid too much according to supply-and-demand principles – anyone see a lack of teachers?), or re-writing the curriculum for the 10 billionth time.  It means making sure our schools are keeping up with the technological surge.  It means teaching critical thinking.  It includes holding teachers more accountable, and most of all it means trying some new things and seeing what works, as opposed to looking at the same tired cycles over and over again.  Our post-secondary system is world-class, and one mega benefit of this is that we get to poach the best and brightest from around the world, and some of them actually stay here.  Now we just need to invest in the Canadian minds of tomorrow, and we’ll be set.

The incredible spinoffs we would see from investments in these three areas would pay dividends (both financial and non-financial ones) for generations.  Unfortunately, it doesn’t look like they are currently all that high on the priority scale.  Oh well… drill baby drill!

4 thoughts on “3 Things We Could Do With Our Winning Ticket

  1. There seems to be an emphasis on central planning in this post, something I’m surprised to see from you, Teacher Man. :)

    Throwing more money at governments will not necessarily fix the infrastructure problem, as much of that money has been used to inflate salaries, pad contracts, etc… without enough money actually going toward the infrastructure.

    Likewise, smart people are a good investment, I agree, but the government is not the best one qualified to make that investment. You would again see the same sorts of effects where hundreds of millions are spent on administrative salaries, construction of new but not very necessary buildings, and etcetera, and the students will be lucky if they see a direct boost in the quality of education.

    Some money doubtlessly needs to go to these two areas, but it needs to be done with better governance.

    I would also prefer that we put that money to good use and invest it in the future, rather than burn it in the present. How could we do that? Lowering taxes is one good way to do it, but only if the debt is also lowered at the same time. Private investment is the only type of investment that will sustainably create jobs and wealths for the future.

    Allowing the private sector to take more of a role in infrastructure and transportation could make a big difference. In spite of the wrath of Ontarioans, I think we do need more private roads, as spending tends of billions on public roads and allowing them to become completely congested, while diverting money from maintenance because the money can be used to bribe voters and some other politician will have to deal with the problem, is NOT sustainable.

    I’d also like to see more competition when it comes to public transport. Why should there be a public monopoly system, that even worse purports to be a private corporation even though they would not survive without large subsidies? Without competition, you get increasing costs and stagnant or declining quality of service.

    Don’t underestimate the technological trends coming, too. Solar power is improving, and so are other renewable energy systems. There is plenty of solar energy hitting the Earth, and it’s only a matter of time before we are able to build systems that are efficient enough to replace the existing non-renewable infrastructure. If you are looking at direct energy generation and new construction, solar is already nearly there. Each Moore doubling brings us closer there.

    Instead of looking backwards and thinking about how to solve these problems with yesterday’s solutions, I suggest lowering the debt (stop bribing voters with a million different programs and make it simple), lowering taxes, and making Canada a much more attractive place to invest and grow a company. Let many different people come up with the plans and innovate. Making sure our laws are up to snuff will help, too.

    As technological trends completely change the face of education and make renewable energies more affordable, a wealthy Canada will be well-poised to take advantage, through the dynamism and entrepreneurialism of an active and involved private sector.

  2. Haha, that’s me, Mr. Big Government! Who doesn’t love bloated bueracracy anyway? I hear what your saying, and I’m with you on a lot of your suggestions. I really don’t care if the private or public sectors handle the re-investment of our wealth right now, I just know that it should be used to set us up for the future. I especially like your infrastructure proposals. In terms of investing in education, I guess I forgot to illustrate that in my proposal, I would be the “czar of education” that was solely in charge of deploying the money ;) I just think that in an increasingly knowledge-based economy we are going to get clobbered in 30ish years.

  3. I have a ‘revolutionary’, neo-liberal idea – how about public-private partnerships? We tried those in the UK and what a success they are ;)! Also, it is so much more efficient the rail network to be split between over 40 private companies (also separating the rails from the trains) that we have been ‘enjoying’ the ‘greatest’ traspotation system in Europe (and possibly the world).

    More seriously, I actually agree with you; and this ‘planning’ can be done not by directive (as is the old totalitarian way) but by enabling. Governments could provide the broad conditions and platforms for change to occur. As to the sustainability hat trick, I would propose to expand it a bit – the there you mention are undoubtedly important; I would add health as well.

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