No Easy Answers

This column was first published in the April 2016, Friday AM All Month in Salmon Arm.

You’ve heard the joke about the Trivial Pursuit game for economists, right? 500 answers for every single question. I often think about this joke when a budget is presented. 

Of the 2016 federal budget, many will say (in fact, have already said) that the wrong buttons were pushed and the wrong levers were pulled and if the new government really knew what it was doing, we wouldn’t face a deficit.  But that’s a bit like assuming any of us really know what combination of tactics will spark the economy. Previous budgets certainly haven’t cracked that code. Still, I would be wary of those who know better without proposing workable solutions. 
 
What we know for sure is that we’ve been in a historically low growth economy since 2008. We also know that oil prices are low and when we rely on those royalties to pay for government services, we’ll see a decrease in revenue. When facing a decrease in revenue in government, there are really only four options. Spend less (cuts to services), charge more (increase taxes), borrow (deficits) or find efficiencies (we don’t talk about this one as much as we should; there is always room to increase productivity, share resources and reduce waste). 
 
While we also watch the up ticks and down ticks of the stock market, we need to realize that relatively speaking, very few companies are on the stock market. They are there because they needed capital the banks couldn’t (or wouldn’t) lend and they stay because of the equity their company keeps and the money they can make for shareholders.
 
I never want to be the one to decide who works hardest and who contributes most to an economy. Do we reward risk, results or efforts? I do, however, suggest that we really need to have that talk. We like to think our tax system is based on risk. We reward those who take it because they benefit those of us who don’t. Ironically, in a low growth economy, we are rewarding low risk with profit and high risk with loss. 
 
Perhaps it’s the nature of risk we need to revisit as well as the nature of capital. There are different kinds of risk and different kinds of capital. Each works in its own way and works best when they are considered in relation to one another. It’s a complex question. There are no easy answers. Only easy criticisms. 
 
As a self employed person, I like to think I have taken a risk. One that rewards me personally and rewards my community and its economy. Does that risk discount my relative contribution to the shared assets we all need to live and work? Public infrastructure, education and health, among many other common societal needs, cost money that is raised through taxation. What is a fair share? 
 
But like risk and capital, not all businesses are alike. Micro business (fewer than 5 employees) constitutes 80% of business and we can’t be treated like big business. There are not the same expectations of big business concerned with share value. It’s an important distinction to make and one we ignore at our peril. Small business is not solely focussed on profit and shareholder value. It’s about self-employment, multiplier effects and community capacity. How do we measure that accurately? 
Questions such as these will make for interesting discussions at the upcoming Respect Lives Here: The Economics of Happiness workshop being held on Wednesday April 13 at the Log Building at Pierre’s Point. Local business owners and community leaders will explore the nature of an economy of well being, where more than one kind of capital is considered in the equation. The full day workshop is $20 and includes lunch. More information can be found at www.plan-be.ca
 
Of the 2016 budget, I will say that while no one ever said with glee “Hooray, let’s borrow MORE money”, if the middle class is to have more disposable income as a result of the child tax benefit, then, micro businesses who sell goods to consumers or to other small businesses, it’s likely that relative increase in income will help the economy. If we are to invest in the maintenance and repair of infrastructure, it’s likely the construction industry will benefit as will the economy. If we are to reduce the amount of debt our young people face by pursuing post secondary study, it’s likely to increase their disposable income upon graduation which, in turn, will boost the economy. 
 
But what do I know? If studying economics teaches you anything, it’s that all you ever learn is how little you know. But learn we will. Criticize without alternatives, maybe not. At least not yet. There’s too much work to do. 
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