We need to spend big on education
Presidential aspirant Donald Trump, it has been noted, is a vulgarian. Judging from his past pronouncements, he is a boor, a misogynist, a narcissist, an ignoramus; and possibly, based on his foreignpolicy prescriptions, unhinged. But he is not stupid.
On the contrary, the loquacious billionaire is in some respects extremely clever. His economic policy, such as it is, is a blend of fantasy and isolationism that he summarizes as “America First.” Should he ever implement this vision, even partially — be it by scrapping the North American Free Trade Agreement or extorting protection money from allies such as Japan and South Korea — the result would be chaos. But his message is also exquisitely crafted populism. That is why he resonates.
For the underlying driver of Trumpism is not primarily xenophobia. That is a symptom of something deeper, as evidenced by numerous surveys showing his support is strongest among older, white, lesseducated males, the American demographic that has lost the most, and stands to lose still more, from globalized trade.
Income inequality in the United States has, in recent years, hit levels not seen since the late 1920s, with the top one per cent of earners holding more than 23 per cent of national income. That translates into thousands of lower-skilled jobs in heavy manufacturing, formerly held mostly by men with high school educations, shipped off to countries where unskilled labour costs less — such as China, India, Indonesia or Brazil. This and related trends have been explored in-depth by economists such as David Autor, Michael Veall, Emmanuel Saez, Miles Corak and Kevin Milligan.
In Canada, the level of inequality as reflected in income distribution is about half that in the United States and, in fact, has been abating since 2006. The trend globally, though, is toward greater inequality, because the economic forces that have primarily driven it — automation and offshoring, leading to greater polarization of education, skills and thus income — are not reversible.
Indeed, automation appears poised for another transformative leap, through artificial intelligence and three-dimensional printing-based manufacturing. The potential effect on the labour market of, say, self-driving transport trucks or household goods stamped out by consumers at home, has yet to be fully understood. It’s difficult to imagine, though, how it could mean anything but much greater job losses for the less-skilled.
Former Liberal prime minister Paul Martin, who for years has championed aboriginal education reform, citing both social justice and the fact the aboriginal population is both the youngest and fastest-growing in Canada, puts it this way: “You can’t turn your back on globalization, and people who think you can, fail to understand that the greatest problems we face are international. There’s no such thing as a local disease. There’s no such thing as local climate change. There’s no such thing as local acidification of the ocean off someone’s shore. Eventually, it’s going to be off your shore.”
Martin adds: “Don’t kid yourself. You can’t turn back the clock.”
And here’s where it gets interesting. If you accept that globalization is irreversible, and that trade is the fundamental driver of economic growth, leading to higher living standards across the board — a fact that is not in serious dispute anywhere, the ululations of Donald Trump and his socialist doppelganger, Bernie Sanders, notwithstanding — then progressive politics require that the rising tide of isolationism, nativism, protectionism, anti-globalization, be turned back. Martin calls for renewed interest in, and support for, the institutions that have long supported internationalism, such as the World Trade Organization, as well as newer structures such as the Group of 20, which he helped found.
But he also advocates for a much greater investment in education, particularly technical education, tailored to help older workers displaced by globalization, as well as young people entering college and university. “We have barely scratched the surface of what has to be done,” he told me in a recent interview. “Our technical schools need to be much stronger. And we need more co-op programs.”
Liberalized trade, Martin adds, can’t be sold simply based on the principle that lower tariffs and greater commercial links create growth that ultimately benefits everyone: “If you are talking about a free trade agreement that is going to change the nature of my job, then you had better at the same time be telling me how people who have my kind of job are going to be retrained to take advantage of the free trade agreement.”
This thinking has adherents across the spectrum of Canadian policy thinking. Derek Burney, former diplomat, staunch free-trade and pipeline advocate, and a senior strategist in Brian Mulroney’s Conservative government, sounds a decidedly moderate note when it comes to inequality in the United States, and its relationship to Trumpism and anti-globalization generally.
“The fact is that (U.S.) middle-class incomes have been stagnant for a decade or more,” Burney says. “On top of that you’ve got the issue of Wall Street versus Main Street. The average worker sees Wall Street as getting the benefits, whereas they don’t get any. Resentment against the establishment is real.”
Though Martin and Burney come at the problem from differing political perspectives — the latter has been sharply critical of the Trudeau government’s “softly, softly” approach to pipeline development — their suggested remedies are not dissimilar. “I would double the number of co-op students in our universities,” says Burney, “And I would do it in one year.”
The McGuffin of Finance Minister Bill Morneau’s first budget — that being the glittering prize that is ardently sought by all characters in a drama, but never seen or found, except perhaps at very end — is innovation. A federal innovation strategy is still ahead, the budget says repeatedly — to be determined, following the nowcustomary round of consultations with individuals, unions, civil society organizations, think-tanks and the like.
Coming from a party that rocketed to power on the promise of renewed growth, it’s a startling omission, or admission, of a policy void; or perhaps another deliberate expression of this government’s tentative, gun-shy approach to any notion that smacks of free-market capitalism that might remind voters of Harper-era Conservatism.
Either way, the budget poses a question: what should a Canadian innovation policy look like? How would it be framed?
What follows is a modest proposal. It requires setting aside the velvet glove, in favour of an approach both more frank and more ambitious; the whole-hearted embrace of freer trade and the infrastructure that supports it, backed by simultaneous massive investment in and reform of education, that would make all prior efforts in this area look like dabbling.
It isn’t enough, put simply, for a nominally progressive government to redistribute income by boosting taxes marginally on the upper 10th percentile of earners and lowering them marginally for the other 90 per cent, even if that is the ultimate outcome of Liberal tax changes. There must be job growth, and it must be private-sector job growth, assuming not everyone can enjoy the benefits of a highwage, public-sector career.
In Canada, an exportdriven economy, that means more trade — the more liberal, the better. But how to sell this to workers in the sectors that stand to lose, and to a public increasingly suspicious of globalization, particularly after the super-rich worldwide have been outed in the Panama Papers as taxavoiding free riders?
To be fair, Budget 2016 does address education and training, to a point. There are measures to make student grants more generous and accessible, and loans more affordable, particularly for low-income families.
There is $165 million in additional funding in fiscal 2016-17 for a youth employment strategy, over and above $339 million previously announced, apportioned over three years. And there is, in a single paragraph buried on page 72 of the budget book, $73 million over four years for new co-op placements, to be guided by business labour needs.
When set against the scope of the emerging economic problem, such measures seem piecemeal and egregiously timid, however.
A truly bold strategy — and the Trudeau team has long prided itself on that quality — would not for a moment shy away from the fact that Canada’s continuing prosperity depends overwhelmingly on stimulating exports.
A bold strategy would further acknowledge that agreements such as the CETA, the Canada-European free trade deal, which has yet to be ratified in Europe, and the Trans-Pacific Partnership, now at serious risk of not passing the U.S. Congress, are critical to future Canadian prospects. A bold strategy would likewise acknowledge that some industrial sectors faced with lower-cost global competition — dairy farming and auto-making, to name two — will eventually see job losses, and put ambitious, generous programs in place to help workers in these sectors begin re-training for new jobs now, based on labour-market needs.
And of course, Canada’s scattershot, darts-at-a-wall 20th-century approach to higher education would have to go. It might be phased out through a system of incentives, essentially offering free tuition to students who show the best marks, say the top 15th percentile, in fields that are most in demand, including engineering, business and applied science, and the skilled trades.
This would be extremely expensive, some would mutter, and they would be correct. But this is not a government averse to spending, last I checked. Budget 2016 is replete with state-sponsored kindness and well-meaning interventionism, to the tune of a $30-billion deficit.
Surely more than a paltry $18.5 million a year should be devoted to creating, if you’ll forgive the cliché, the jobs of the future, given how very much is riding on the outcome? An innovation strategy is an education strategy. Prime Minister Justin Trudeau, a teacher by profession, seems a likely candidate to implement such a strategy. So, where is it? And who will lead it? Time’s a-wasting. Canadians have been accustomed to prosperity. But there’s no guarantee our future will look like our past.
CANADA’S SCATTERSHOT, DARTS-AT-A-WALL 20TH-CENTURY APPROACH TO HIGHER EDUCATION WOULD HAVE TO GO. — COLUMNIST MICHAEL DEN TANDT IT ISN’T ENOUGH TO REDISTRIBUTE INCOME.