Wednesday, May 02, 2012

A Healthy Society - Chapter 3 Discussion

Chapter 3 of Ryan Meili's A Healthy Society focuses on the effect of income - both in total and in distribution - as a determinant of health. But while there's plenty of material deserving of further discussion, I'll point to his comments on the place of taxation and government spending as particularly worth some additional analysis:
One example of a toolbox approach to economic management, one that reaches for the proper tool at the proper time rather than a one-size-fits-all approach, is the proper use of taxation policy. Taxation levels that impede economic development are unwise. That much is apparent. However, the notion has been taken to ridiculous extremes, with taxes falling in times of rapid growth for short-term political gain, disrupting public services and costing us money in the long term. What we need is the intelligent embracing of complexity rather than blind adherence to ideology and the approaches of organizations like the Canadian Taxpayers Foundation, who act as though (as Prime Minister Harper famously stated in 2009) all taxes are bad taxes, and all collective investment is a bad deal.

The fact is that most of us save money by paying taxes. Comparing use of public services to income, the majority of Canadian families use far more in public services than they pay in taxes. For example, families earning $80,000 a year use approximately half that amount in public services. This is due in part to the progressive nature of our tax system, which charges a higher percentage of tax to those with higher incomes. It is also due to the bulk bin principle; the more you buy, the less it costs. Imagine if each of us needed to pay directly for health care, roads, fire protection, snow clearing...the list goes on and on. Taxes, properly used, are each of us chipping in a small amount to buy something we need at a far better rate than any of us could get alone. The result is a great bargain on things we really need.
Now, I don't think anybody this side of Neil Reynolds can argue with a straight face that small incremental increases toward the tax levels that have predominated over the past 50 years would meaningfully impede economic development. But after several decades of constant talk of reducing government involvement in any form of economic activity, I'll suggest it's well worth spending some time to consider the question of what additional types of investment might be subject to the "bulk bin" principle.

There have been at least a few examples which have already been subject to debate in recent years, including recycling at the municipal level, prescription drugs at the provincial and federal levels, and the availability of broadband Internet access (particularly in rural areas). But should we be looking at, say, building retro-fitting as an ongoing bulk purchasing opportunity (rather than merely an occasional form of stimulus)? Can we treat social housing as an area where the "bulk bin" principle should apply as the basis for significant additional investment, justifying greater action as a matter of efficiency rather than merely doing the bare minimum to relieve concerns about social needs? And what other areas are there where the sheer purchasing power of a government is likely to bring us substantially better value than we're able to secure wandering into an unregulated market on our own?

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