Saturday Morning Links

Assorted content for your weekend reading.

- Brendan Haley discusses how the role of government should include both a concerted effort to innovate, and a proper share of the benefits when that innovation proves successful:

To reinforce her argument, Mazzucato provides detailed histories of some of our most important innovations. She finds that throughout modern history, government has been integrally involved in directing the economy, undertaking basic research, and nurturing new technologies into the market when the private sector found it too risky to touch them. Only after governments have subsumed much of the risk do private entrepreneurs do their bit, though they often take all the credit and make off with most of the money. The most entertaining example of this practice is her review of the state's integral role in the development of the information technologies that Apple later packaged into the iPod, iPad, and iPhone.

Mazzucato worries that the current relationship between public and private entrepreneurship is a parasitic one, whereby the private sector captures the benefits of public sector work, and the public sector becomes captured by private interests. This makes it difficult for the state to play its socially valuable role of kicking off new rounds of innovation. She calls for a symbiotic innovation relationship where private entrepreneurs can continue to play their important role in commercializing innovative technologies. The place of the state, she argues, must also be recognized and given its due. Thus Mazzucato advocates for mechanisms to ensure the state receives a share of the financial awards from the innovations it helps create.
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Today, there is a special need for the Canadian government to play a more activist role. First, because the private sector is having difficulties finding the new technologies that will direct the next stages of economic progress. Corporations are holding onto hordes of money instead of undertaking new investments (the "dead money" problem), and heavily indebted consumers precariously support economic growth. The second reason we need a more activist government is because, as Mazzucato argues, the state has always been involved in leading important structural shifts in the economy. Such a structural shift is required to introduce the green technologies needed to dramatically reduce carbon emissions.

- But of course, our current slate of right-wing governments is going out of its way to try to sell their own incompetence as evidence that government can't serve the public interest - with the Cons' jobs grant debacle apparently offering a prime example.

- And both Katie Hyslop and Vaughn Palmer comment on Mary Ellen Turpel-Lafond's report which found tens of millions of dollars spent on child and family services structures without actually serving children or families.

- OPSEU provides some answer as to what we should instead be pursuing (in the course of discussing the role of income as a key determinant of health):

Social inequality on this scale not only denies kids considerable opportunity in life, but leaves society worse off by denying capable individuals the ability to contribute at a much higher level.

Dunn says by the age of four the average child from a low socioeconomic background has heard 32 million fewer words than children born to professional parents. That makes a big difference in early childhood development.

Canada lags behind other countries in addressing these significant inequalities. The good news is we can learn from those who have gone before us.

Dunn says the solution lies in more inclusionary housing, more affordable housing, wrap-around cross-sectoral care, and more dense urban design that can accommodate better public amenities – including transit.

 - And finally, Barrie McKenna also takes note of the corrosive effect of inequality in Canada:

Large swaths of the country are missing out as well. There is now evidence of growing regional and postal code disparity, exacerbated by the disproportionate growth of financial services, commodities and real estate. More than half of the rising share of income that flowed to the top 1 per cent between 1982 and 2010 went to just two cities – Calgary and Toronto – according to a newly released study by economists Brian Murphy of Statistics Canada and Michael Veall of McMaster University.

The two cities are home to just 20 per cent of Canadian taxpayers. And unlike many other wealthy countries, tax policies have become less effective at reducing inequality in Canada over the past two decades, according to the OECD. That’s due to lower marginal tax rates, fewer tax credits for low-income workers and enhanced savings incentives that go mainly to higher income earners, including RRSPs and tax breaks that favour capital gains over earned income.

In the workplace, many workers have less bargaining power now than at any time in their careers, a consequence of declining unionization, persistent labour surpluses and increased foreign competition.
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Why should Canadians care? It isn’t just a question of fairness. It’s about the long-term health of the economy, and society.
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(G)reater inequality may make financial crises more likely as lower income-earners borrow more and save less in a race to keep up with the lifestyles of those at the top. The massive run-up in Canadians’ ratio of household debt to income in recent years suggests many families are chasing a dream they can’t afford.

Inequality is also linked to poorer health outcomes and higher rates of crime and social unrest. Even in Canada, low-income earners are less likely to have a family doctor and to seek early treatment for medical problems.

The result: poorer health for those at the bottom of the income scale – a trend that can exact a heavy economic toll through lost productivity and higher health care bills.