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The Progressive Economics Forum

Meilinomics I: The Little Boats

The following is an excerpt from Dr. Ryan Meili’s new book, A Healthy Society: How a Focus on Health Can Revive Canadian Democracy.

There’s a family that comes frequently to the West Side Clinic; we’ll call them Lucas and Annie. Hardly a week goes by that I don’t see them in for a medical visit or just hanging out in the waiting room. They both have chronic medical conditions; he’s had some trouble with the law; they’ve struggled with addictions. They can be friendly and charming, and they can be absolute pains. One of their daughters, Jaelynn, got sick a couple summers ago. Nothing too serious, but it required some specialist visits and more frequent follow-up with our clinic.

That was the summer we first started to see a new kind of homelessness in Saskatoon. The shelters at the YWCA and the Salvation Army were always full. There were more tents in the parks by the river. And in the mornings at West Side there was a line-up for the waiting room because people needed to have a place to hang out all day when they weren’t welcome in the shelter or at the house where they were couch-surfing. Lucas got picked up for missing parole and had to spend thirty days behind bars. With him unable to contribute, and rent getting raised, they lost their apartment.

Annie would get a room for a week at the Y, or they’d convince a cousin to let them stay on the couch for a few days. Despite being hobbled with arthritis, she’d walk for hours with Jaelynn each day in search of an apartment. When Lucas got out, they tried going to his home reserve, but the housing there and in the town nearby was full as well. Despite all this transience, they kept up pretty well with their own medications, didn’t end up using again, and got Jaelynn to all her appointments. She was improving quickly, and didn’t need any serious treatment. However, after a few months back and forth in temporary housing, Social Services decided that they were not doing a good enough job of parenting and Jaelynn was apprehended into foster care.

Aside from the madness of trying to help children out of poverty by taking them away from their parents, this story illustrates an essential point. While the newspapers were talking about Saskatoon’s housing boom, many families were going bust. The truth is that when the tide rises, especially if it does so quickly and wildly, the littlest boats get swamped.

This type of story is distressingly common. Economic growth across Canada has not been equally distributed. The gap between the rich and poor continues to grow, with the top forty per cent of earners experiencing real increases in wealth, and the bottom sixty per cent actually losing income relative to thirty years ago.Canada’s income inequality is worsening more quickly than it is in our historically less equal neighbour, theUnited States. This has happened in Saskatchewan as well, with the wealthiest ten per cent of families earning more than the bottom fifty per cent combined. With prices rising along with wealth, the purchasing power of the average family is falling despite economic growth.

This is not fair. It also costs way too much — in social services, in lost productivity, in lost lives. The question isn’t whether we can afford to do something about it. We can’t afford not to. The question is, what can be done? How can a government act to change this? It’s hard for political leaders, caught up in the glitter of boom times, to put on the brakes. This is especially the case when the prevailing orthodoxy is that since growth is good, then more growth, faster growth, is ideal.

Opening the Toolbox

There is a vocal group of economic thinkers who claim that what must happen is for government to get out of the way. If we simply allow the rational behaviour of people seeking their own interests to run free, then we will all benefit. The invisible hand will sort it all out. It’s a pleasant notion, this idea that if people simply follow their own desires everyone’s lives will improve. Unfortunately, that is like trying to reach your destination by heading in the opposite direction. People following their own wants cannot meet everyone else’s needs. Growth, unless deliberately directed, results in the concentration of wealth among the few and increasing poverty among the many. The hand of the marketplace is not only invisible, it is also blind. It needs the guidance of our goals as a society.

We need to change the way we talk and think about the economy. A shift away from measuring our societal success by purely economic criteria could allow us to do so. The economy is an essential tool for reaching our goals of full health for all, but it is not the goal itself. Once we realize that, once we put the economy in its proper place as a tool, once we treat it as neither a force of nature beyond our control nor our ultimate goal, then we can start to use it wisely. That opens up all sorts of possibilities.

Economic management has been characterized, with great variation in the degree of each, by two main approaches, laissez-faire vs. state-involved. The former is characterized by a lack of regulations and minimal taxation, the idea being that economies function best unhindered and that external corrections are inherently damaging; somehow, if trade were truly free, if the invisible hand was given full rein, all would be well. The latter assumes that, since the purpose of the economy is its usefulness as a tool to reach societal goals, society should take control; if we plan and design well, all will be well. It is characterized by subsidies and regulations, often determined less by economic purposes than by political ones as politicians seek re-election. In such a system where supply, demand, and consumer choice lose their corrective force, we see stultification of growth and innovation, rampant corruption, and economic decline.

As tends to be the case, when we are presented with polar opposites, the truth is somewhere in between. The worst systems have been those in which either approach was taken as dogma.

The principles to preserve here are:

1. allowing space for innovation and growth (and failure and rebuilding) in a way that encourages entrepreneurship and hard work.

2. creating a system that is fairly and usefully regulated, allowing for citizens and companies to participate confidently in the economy.

3. identifying goals for the economy beyond its own proliferation. This returns us to the notion of meaningful outcomes. Just as in patient care, if we are looking to build a healthy society, we must know what that means.

The economy is not just any tool. It’s the principal form of interaction in public life, and much of private life. But it is not that life. The first suit jacket I ever owned was a hand-me-down I wore to my med school interview. It didn’t fit me very well and still doesn’t. But in the pocket is a piece of paper with a quote from the Renaissance physician Paracelsus that I hoped, and still hope, would guide me in my decisions as a doctor:

If the physician understands things exactly and sees and recognizes all illnesses in the macrocosm outside man, and if he has a clear idea of man and his whole nature, then and only then is he a physician. Then he may approach the inside of man; then he may examine his urine, take his pulse, and understand where each thing belongs. This would not be possible without profound knowledge of the outer man, who is nothing other than heaven and earth.

Just as we are so much more than the mere workings of our organs, our lives are so much more than the workings of our economy. The World Health Organization definition of health as full social, mental, and physical wellbeing seems to me an apt description of what our real goals are our meaningful outcomes.

Having understood that we have health as our goal, the question is, how do we work with the economy to reach that goal? The economy is a tool to make our lives better. If it fails to do so, we’re not using it right. How can we use it more wisely?

The evaluation of any economic strategy (be it intervention or observation) must include not only the question, “Will it work?” but also, “For what (and whom) will it work?” In what way will it affect the economy, and will that effect be in line with our real goal, a healthy society?

This allows government to take the most important step: to see the economy as the vehicle we use to reach our goals, and economic policy as the toolbox that is key to maintaining the vehicle. We must not be the proverbial men with hammers to whom every problem resembles a nail. This is where you get into trouble — when tax cuts or tax increases, privatization or nationalization, become the approach taken to every problem. The appropriate role of government in different industries at different times is one of active intervention or benign neglect. What is needed throughout is not a fixed ideology, but attention and intention, especially in times of growth. If we understand what we want out of our economy, then we’ll know how to manage it. If we use the tools wisely and appropriately to produce meaningful outcomes for the needs of the time, then that management will be effective. If not, the vehicle begins to drive us.

Enjoy and share:

Comments

Comment from L Huberman
Time: April 21, 2012, 6:07 pm

In skimming this post point 3 stands out:

“3. identifying goals for the economy beyond its own proliferation. This returns us to the notion of meaningful outcomes. Just as in patient care, if we are looking to build a healthy society, we must know what that means.”

I find both the political left and right blindly promoting economic growth (‘proliferation’). And I do not hear anything around truly meaningful work from the left in Canada ie: night shift work is seriously unhealthy, yet many unions call it ‘good work’ if it simply pays well. Far too many Canadians work irregular shifts, unnecessarily (producing consumerist garbage, far too many cars etc.). And Canadians work too many hours – both paid and unpaid overtime, multiple jobs etc. And we have an official 44 and 48-hour work week in several provinces which no one is addressing. These work-weeks are outdated by 100 years and unions and the NDP do not say anything about it, let alone make it a policy priority for the health of Canadians (it would also make Canadians more ‘productive’ to not work such long hours). These are just some of the ways I see both the left and right in Canada together contributing to an unhealthy economy for Canadians and their families. The multi-billion dollar auto bailouts to further entrench an unhealthy car culture (they are producing muscle cars in Brampton right?) was supported by all the major political parties and unions, when far more forward-looking and healthy economy/society approaches are desperately needed.

Comment from Brandon L
Time: April 22, 2012, 8:23 pm

“Canadians work too many hours – both paid and unpaid overtime, multiple jobs etc. And we have an official 44 and 48-hour work week in several provinces which no one is addressing”

I share this concern, Why our we working longer, for goods & services? Is this because collapsing prices, deflation?

“With him unable to contribute, and rent getting raised, they lost their apartment” Unemployed get destroyed by raising prices. Minorities work even longer for goods & services.

Remarks from MikeB Time: April 20, 2012, 11:12 am “It seems our standard of living can only go so low and we already have some making a choice between food and lodging.”

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