Friday, June 15, 2007

Economics, Society and the Environment

Canada is perceived as a country that enjoys economic and natural wealth that supports a just society with equity and fairness paramount. Unfortunately, Canada is falling further behind the United States in what is becoming known as the "productivity gap". The Conference Board of Canada recently referred to the country as "a land of mediocrity". Why? A lack of innovation. So much so that this "failure to innovate" is undermining the economy. You can sign up to the Conference Board and download the full 154 page report. How does this impact the environment and other issues? Here are some quotes from the Globe and Mail article about the report.

"In health care, Canada does well at saving people from the flu and pneumonia, but performance on infant mortality and death from diabetes is weak.

Since Canada's health-care system is geared toward resolving urgent needs, little innovative thinking is done on how to prevent illness, the report says."
"But Canada fares miserably in the areas of innovation and environment, earning a D grade in both categories.

While Canada's air and water quality are high, and protection of biodiversity is solid, our level of waste generation and our battle to curb climate change are rock bottom, the report says.

Again, the lack of creative thinking to solve these problems slows progress, Ms. Golden said. And so it's no surprise that in the innovation category, Canada ranks 14th out of 17 countries - 'an alarming portent for the future.' "

My interpretation of the headlines and news stories associated with this report. Canada is not that great in health care, despite what Michael Moore might say, and is unimaginative in solving health issues. Canada has abundant natural resources but they will not last forever and all that happens is they are extracted and sold. The environment will suffer due to an inability/unwillingness of government to take the lead on the issue or foster a regulatory regime that will stimulate innovation to solve the problem. All this because the population is generally comfortable because doing nothing doesn't make things worse. This quote from the Globe and Mail article says it all:

" 'Canadians are complacent and generally unwilling to take risks," the report scolds. 'This culture holds Canada back.' "

In Canada just under 20% of the population works for the some level of government or providing public goods (health care, education etc) if you take the total labor force as 16 484 300 and public sector employment at 3 148 702. I'm sure this has a material impact on the economy and innovation which by extension impacts the environment. Government can be inefficient which does not help the environment and since the public sector represents a significant portion of GDP then any waste impacts the economy and the environment. The public sector must take the lead in participating in the solution and stimulate employees to be part of the solution. The alternative is to step aside and foster innovation by using measures, like a carbon tax, to provide economic consequences for inefficiency and waste. With government at 20% of the economy I can imagine what they'll choose.

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