By Bernie Miller
Economics and public policy have lacked a unifying, people focused objective. Committing to an overriding objective of promoting opportunities for the well-being of all citizens could be our best economic development policy.
This paper is intended to assimilate and generate knowledge about new ways of approaching the question of how to achieve inclusive economic growth and improved social well-being. It is rooted in Nova Scotia, with its unique history and culture, but may provide useful insights and lessons for many jurisdictions.
In many western, liberal democracies politics and systems are fragmented, dealing with parts of the whole but rarely the big picture. There has been less attention paid to integrating and unifying principles, or policy directed at the functioning of the entire, interdependent social system. A government wide commitment to well being would provide a unifying focus.
Canada’s constitution links well-being, economic development and essential public services in section 36(1) which, in part, says: Parliament and the legislatures, together with the government of Canada and the provincial governments, are committed to (a) promoting equal opportunities for the well-being of Canadians; (b) furthering economic development to reduce disparity in opportunities; and (c) providing essential public services of reasonable quality to all Canadians.
Surprisingly, little attention has been paid to what this part of Canada’s supreme law intends for Canadian society.
The case will be made for advancing and measuring well-being as the central focus of public policy, rather than the prevailing focus on cost/benefit analysis and pursuing economic policy singularly focused on economic outputs and GDP based measures, with a hope that government will, through the political process, allocate the expected fiscal dividend of economic growth for redistribution or expanding the social safety net through essential public services. Well-being is left out of this equation. That does not appear to have been the intention of the framers of the Constitution.
How to achieve economic growth and well-being will be explored. Would policy priorities change if governments were to design policy and programs to improve well-being of the entire population rather than primarily pursuing targeted economic policy outcomes like GDP or productivity growth?
The absence of a unifying approach to our economic systems and approach to governing appears to have contributed to declining levels of trust in governing institutions. In Nova Scotia, a large majority (approx. 73%) of citizens have expressed a lack of confidence in government.
Nova Scotia is not alone. In a broader international context, the weaknesses, fissures, and loss of trust in long-standing institutions and systems have been decades in the making. The loss of trust was clearly manifest in voter behaviour in the UK and US in 2016, where in one case voters cast ballots against their collective economic interests and, in the other, elected an outsider to public policy, a person totally ill-equipped for the role of President.
In the ensuing years, loss of trust and social cohesion have become matters of broad concern at a time when global crisis and conflict are on the increase. While for a while less visible in Canada and Nova Scotia, the loss of confidence that the system is working for the benefit of all citizens is a dangerous trend that, left unaddressed, will lead to a populist backlash and disintegration of systems and society.
No society can exist for long without an economic system of some sort. The economy is not a self-contained, self-regulating autonomous and external system. Linear thinking has it that if we just have a strong economy, other issues like poverty, health care, housing or inclusion will just work themselves out as the rising tide lifts all boats.
The last 40 years has shown us progress does not “trickle down” from an autonomous, strong, and growing economy. The economy does not exist outside of our social world, it exists by human choices, to serve human needs, not the other way around.
During this 40-year period, Nova Scotia felt only the secondary waves of global change as a peripheral economy that had not yet built up a large industrial base to be lost through globalization. It experienced neither great gains nor catastrophic losses. The now reversed but formerly persistent pattern of outmigration that dated back the 1920’s was stemmed only briefly over the last century and its top-rated resource industries—pulp, paper, lumber, and fisheries– lost what little luster they had when exposed to global competition and the need for cost cutting.
As a part of North America that did not go “all in” on industrialization or large corporate globalization—having only 68 companies with 500 employees or more—Nova Scotia and its Atlantic confreres are in a unique position.
In 2020, the onset of COVID-19 accelerated certain trends and brought into sharp focus many of the conflicts, problems, gaps, and contradictions of the rapid globalized and technology fueled economic growth path the so-called developed world was on, and Nova Scotia aspired to be on—these problems, conflicts and contradictions make the world less sustainable, less equal, and more fragile.
Moses Coady, the charismatic leader of the Antigonish Movement in the 1920s and 1930s, during an earlier crisis of capitalism, claimed that what was done -–or could be done—in Nova Scotia was “small enough to be workable and large enough to be meaningful.”
Nova Scotia appears to now attract people for quality of life. The long era of trying to attract corporations with public subsidy to provide jobs for people has been supplanted by an approach that can attract people with jobs, essentially cutting out the intermediary corporation.
Further, adopting new policy approaches to help foster a new stakeholder-oriented capitalism with new business models that create shared value, including social enterprises, and create opportunities for shareholder and social value may present a better path for Nova Scotia.
Public policy change is needed. The arc of history does not bend naturally towards progress. An invisible hand, of the market or of God, does not bring about progress. Policy choices bring about progress.
Progress requires a defining ambition other than just “economic growth” or “fiscal balance”. New and better ways to improve well-being are needed, catalyzed by committed public policy choices aligned with s.36 of the Constitution Act, 1982 including a well-being focused economic policy are needed to achieve social well-being for everyone.
Economic Development Policy: The Way We Were
Economic development policies that existed for a different time and different needs require substantial change.
Despite its inclusion in section 36 of the Constitution Act, 1982, it is not a widely accepted proposition that the goal of public policy should be the pursuit of well-being for all members of society. In fact, for much of the last 150 years “pure” economic growth, not social well being, has been the preeminent measure of progress.
Traditional economic development policy privileged the corporation over the citizen. Profit growth for firms is presumed to be good for citizens. To the extent citizens are considered it is in their capacity as consumers or workers, rarely as the human at the center of the economic system.
The conventional view was the rising tide of a growing economy would lift all boats. The usual economic narrative was the economy creates the tax base (thus the importance of GDP), making the fiscal position of government dependent on the state of the economy, in this way the state is the servant of the economy.
The prevailing paradigm has government using its tax revenue derived from a growing economy for social welfare programs for those left behind by the rising tide, either due to their own fault or circumstances
This is reinforced by feedback loops which inhibit change. To illustrate, since the 1960s much economic development programming intended to improve well-being of Nova Scotians have assumed the “dignity of a job” was all that was needed to improve well-being in Nova Scotia. Political leaders frequently pronounced, “The best social program is a job.”
Accordingly, much economic development programing has been focused on culminating with a “jobs announcement”. A job announcement typically is reported in the media as a positive thing, thereby creating a positive feedback loop.
Due to path dependency, certain policy approaches may be at risk of being locked-in but by giving legal meaning to constitutional norm calling for a government commitment to well-being it may support governments in choosing a new path.
A constitutional commitment is just a starting point. The United States is constitutionally dedicated to the pursuit of happiness but has historically measured its success by its levels of economic growth and military dominance. Despite its founding myths of equality, it has become a very divided and unequal society. Public policy and its constitution are not aligned. Currently, well-being or happiness is not the driving narrative. Yet, in 1814, in a letter to an English correspondent Thomas Jefferson had proudly computed the happiness of America compared to the English, “In England, happiness is the lot of the aristocracy only: and the proportion they bear to labourers and paupers you know better than I do. Were I to guess that they are four in every hundred, then the happiness of the nation to its misery is one in twenty-five. In the United States it is eight million to zero or as all to none”. (Quoted in Freeland, Plutocrats (2012))
Nova Scotia has followed a different and unique historical path and can chart a course to a better future from a different, if less financially wealthy, starting point.
Well-being in Nova Scotia has a distinctly different history than our economic history. Nova Scotia, as a society, may in fact be closer to the ambition of measuring and achieving inclusive social well-being than many others who are perceived successes in a GDP growth driven paradigm. Data shows Nova Scotians are more inclined to measure success in nonmonetary terms than many other Canadian provinces.
The quest for happiness, well-being and a better life is not rooted solely in economic growth. In Nova Scotia, people are measured as happier than other more successful economies even though it has not had the economic success expected from traditional economic measures. This is generally true of the provinces across Canada; the “have nots” have more self assessed happiness, social cohesion and life satisfaction according to National measures of life satisfaction. This is not to gloss over the disparities that exist within the region, only to say, in comparison to other parts of Canada, the Atlantic Region in the aggregate has had a higher measured quality of life indicators.
What was different about our history and demography that may have contributed to this?
The L’nu or People of the Dawn, the Algonkian Mi’kmaq who first habited Nova Scotia brought with them a communal culture that placed high value on social bonds and community. They lived in a non-hierarchical society that respected a creator and had a reciprocal relationship with nature. The indigenous communities of what is now Nova Scotia lived in coastal communities and seasonally migrated to winter camps, sustaining their societies through hunting, fishing, gathering and sharing.
Mi’kmaw life was centered on the extended family, as families established and informed community values. Lineage and hereditary status were generally used to determine leadership, while each village chief was guided by a council of elders consisting of family representatives who had distinguished themselves in sharing of sacred gifts and in hunting, storytelling, healing, production, or warfare. According to St FX anthropologist Dr Jane MacMillan, “From time immemorial, Mi’kmaw legal principles and consciousness evolved in response to the necessities of survival, subsistence and getting along”
Although the Mi’kmaw rituals reinforced ideas of how to live well in the community and to take up one’s responsibilities, balance and peace was not always maintained. Dr MacMillan observed, “Disputes broke out between family and community members and among groups when the balance between local tribal communities and their natural resources were disrupted…When problems arose, families intervened to produce solutions and responsibility for managing wrongdoing remained with the parties involved.”
Europeans were first attracted to the region by fishing and in the 17th century some of the first attempt at settlement ensued. After 1604, the Acadian settlers built an agricultural base and participated in a trading economy for about 150 years before being expelled by the British military beginning in 1755.
In 1604 Acadia, as it then was called by Europeans, was a hinterland, agrarian society which, by most historical reports, possessed a generally good quality of life for residents despite numerous political and commercial disputes relating to monopoly concessions granted from France, though one needs to be cautious to separate the fictional “land of Evangeline”, from the actual history.
The Acadian period was marked by peaceful coexistence with the Mi’kmaq. While rife with political intrigue and infighting among elites, the Acadian era is generally noted for innovation and creativity in farming practices, community cooperation and freedom from scarcity. In fact, Government policy expressly focussed on well-being in the early days of settlement with the famous Order of the Good Cheer, a social measure to alleviate isolation and maintain community during long winters. According to Samuel de Champlain:
“We spent the winter very joyously and of good times, due to L’Order de le Bon Temps that I established here, which each person finds beneficial for their health and more beneficial than any sort of medicine we could have used.”
(emphasis added)
It was also noted by Champlain the Sagamore, or chief Membertou and “Indians” of all ages and both sexes were often present and “were treated as equals”.
By 1677 European settlement was picking up pace in Acadia, by then called Nova Scotia. When they heard stories about how wonderful life was in France it puzzled the original inhabitants. One Mi’kmaq elder is reported as saying, “You reproach us, very inappropriately, that our country is a little hell compared with France, which you say is a terrestrial paradise. I beg you to believe that all miserable as we seem in your eyes, we consider ourselves much happier than you in this, and we are very content with the little we have.”
From 1713 for over 150 years Nova Scotia was a colony in the vast British Empire and was exploited for resources to enrich the mother country and powerful interests in England during an era of mercantile economics. During this same era Nova Scotia became settled by German, Swiss, Scottish, English, and Irish lower classes and the colony developed its own elites, principally Halifax-based military, clergy, merchants and political leaders.
By 1749 however the British Town of Halifax was formed as a military garrison at K’jiputuk, the Big Harbour. In 1749 and 1750 about 3,500 settlers arrived from among the poor of England and protestant settlers from France, Germany and Switzerland. At this stage, Nova Scotia became noteworthy as a place with poor quality of life. In fact, it was derisively called Nova Scarcity by the soldiers who had the misfortune of being stationed in Halifax.
By 1755, especially after the expulsion of the Acadians, the British military had a hard time provisioning their soldiers due to an absence of enough domestic agricultural output. For this reason and to assert control of now vacant Acadian settled lands and to secure their position, the policy response was to encourage resettlement of the now vacated Acadian farms, to develop agriculture which could meet the needs of the Garrison and start to settle the vast area claimed by Britain.
While the Planter settlers brought with them values and customs from New England, they were usually second sons of no accumulated wealth. Nevertheless, many were able to prosper occupying lands originally developed by the Acadians.
Joseph Howe, during an 1830 ramble through eastern Nova Scotia, noted the prosperity of Truro, a village then of “about sixty or seventy houses of various sizes and structures, to the most of which are connected small fields and gardens—some enclosed very tastefully by little white rails” which included the “hospitable cottage of Mrs. Miller”:
“Perhaps there is not to be found in the province a finer Agricultural district than that included within these bounds—nor one, which, for natural fertility, high cultivation- and industrious and systemic tillage, could be offered with more pride to the notice of a stranger, as a specimen of our eastern country” (p.130)
However, others were not so privileged, and the seeds of racial and generational inequality were sown early during the British imperial era. The Mi’kmaq continued to be marginalized. Black Loyalists were denied land grants from the King and were relegated to poor lands with limited prospects, such as the rocky, inaccessible district around Birchtown in Shelburne County.
The colonial era generally served interests outside of Nova Scotia. In its latter stages shipping, fishing and lumber brought some local prosperity and wealth to the region, though for most of the years of British Colonial rule much of the population of province was living at a subsistence or impoverished level. Colonial policy was not especially focussed on the well being of residents of Nova Scotia, especially the Mi’kmaq who were pushed to the margins, black Loyalists who came to Nova Scotia after the American Revolution, maroons from Jamaica who came as labourers for the British as well as the castaways from European societies, clannish Highland Scots, and poor Irish, in particular.
There were great disparities in distribution of wealth and well-being, with the few elites having higher living standards, adopting the lifestyle of lesser British aristocrats and many others living on a different end of an extreme spectrum. That said, colonial settlers were often escaping even greater deprivation, poverty, and discrimination in Europe; so, for many families, immigration was a step up. Migration further displaced the original and earlier inhabitants, exacerbating their poverty and harming their cultural foundations.
For the original inhabitants, cultural degradation accompanied exploitation. Many subtractions erased parts of a previous way of life. Imposing a mercantile economy on a differently organized society, with a communal nature and different values eroded previous cultural institutions, but not completely.
As British sentiment for colonies began to wane in the mid-19 century, Nova Scotia embarked on a nation building path, joining Canada in 1867 on what was widely considered within Nova Scotia to be unfavourable economic terms.
By 1867 Nova Scotia became a part of a larger industrializing Canadian economy in an emerging global economy, but prosperity and growth were fleeting and by the 1920s Nova Scotia was set back, as a declining back water and hinterland for a centralized industrial Canadian economy.
This outcome was deliberately shaped by the National Policy intended to spur industry in central Canada. Later it was Canada’s new agricultural and natural resource driven national economy that weakened prospects by drawing young Nova Scotians (and some not so young) and incoming immigrants to the west of Canada.
Those that prophesied second class citizenship within Canada and poor socioeconomic prospects for Nova Scotians were generally proven right in the first century and a half after Confederation.
Over 150 years later in 2020, Ontario has 1083 corporate head offices. Nova Scotia’s head office count was 63. At the time of Confederation, Nova Scotia had proportionally more head offices than anywhere else in English Canada including the head offices of all major banks and insurance companies. Canadian head offices moved west to Montreal and then Toronto. Now, Nova Scotia has only 68 private sector organizations that employ more than 500 employees in Nova Scotia. During the time Stephen Harper was the Prime Minister of Canada a steady stream of young Nova Scotians moved to Alberta to work in the natural resources sector.
Nova Scotia was, and remained for 150 years, more rural than urban and was considered “underdeveloped”. As the resource economy waned in the early 20th Century with lumber, fishing and farming becoming primarily subsistence occupations and later with the collapsed Cod fisheries, communities throughout Nova Scotia—especially outside of Halifax–were left with seasonal low wage tourism, the service economy and government transfers.
One of the principal justifications given for Nova Scotia joining Confederation was to industrialize and have access to a National Railway, John A. MacDonald’s celebrated National Dream. In the last half of the 20th century a short-lived industrial expansion linked by rail to the rest of Canada sputtered along, favouring some communities and harming others.
Manufacturing based industrialization having slowed since the 1920s, substantially ended—except for tires, supercalendered paper, processed lumber, pulp, and processed fish— by the eighth decade of the 20th century. This result was accelerated by an era of neoliberalism, technological change, globalization, and trickle-down economics which took hold after 1980. The value of jobs in the manufacturing sector to the economy also declined as offshoring, automation and cost cutting eliminated many well-paying jobs.
Nova Scotia did not handle transitions well. Many economic policy efforts failed. The 1920s were a particularly dire time for Nova Scotians. Rural depopulation and abject poverty were the order of the day for many, especially rural Nova Scotians. Black Nova Scotians and Mi’kmaq were pushed even further to the margins and outmigration was rarely an option. It was only the postwar emergence of the welfare state that lifted many out of poverty.
In the industrial era, resources and factors of production, in the view of many, held little promise in Nova Scotia. Nevertheless, Nova Scotia pursued an industrialization by invitation strategy focused first on transplanting manufacturing, then on being a “back office” for large multinationals and hedge funds/Banks/financial services businesses and call centers for hire knowing it was “likely to result in considerable waste of resources over long periods of time and a concomitant depressed psychological state of the people” when it ultimately failed to bring economic growth comparable to other regions, as Dalhousie economist John Graham warned in 1963.
Nova Scotians experienced a very brief economic resurgence of industrial growth in the 1960s and, in some parts of the province, well into the 1970s however as the era of globalization took hold, the 40-year era that followed was likewise unsatisfactory for the socioeconomic prospects and economic well being of many Nova Scotians. Nova Scotia and New Brunswick, in a symbiotic race to the bottom, ranked as the weakest economies with the lowest wages.
As globalization advanced, people, wealth and capital left the regions and economic elites, mostly outside of Nova Scotia, consolidated power and influence. This phase of the post-industrial era is shifting again and may have ended in Nova Scotia prior to the onset of COVID-19 on March 13, 2020.
Nova Scotia’s policy became path dependent and fixated on restoring industrialization and preserving manufacturing, by propping up steel and coal and, in a desire to quickly replace what was being lost and subsidizing transplanted industry in service roles (call centers) or back office (business process outsourcers). In tourism, the marketing brand was of an antimodern place which time forgot, of honest, hard working rural folk, but not the place for innovation or discovery—much less economic growth.
Nova Scotia was, during the 20th Century, regularly characterized as a low-income, “have-not” jurisdiction because of its lack of resources, capital and skilled, wage based industrial labour. One Prime Minister also attributed it to a “culture of defeat”.
During the decades after 1980 the entire Atlantic Region was regarded by the rest of Canada as weak due to lagging economies, at least as measured by conventional GDP terms. The period from 1990 to 2015 was marked by economic out migration (a sure sign of lower economic standards of living) and the response was more economic policies focussed on marginal productivity and transplanting jobs. In fact, as explored below out migration because of relatively poor standards of living was a dominant feature of Nova Scotia’s history from at least 1920 until 2015 because of poorer relative standards of living measured by lower GDP per capita, low wages and high poverty levels.
Despite it all, for those that stayed when measures of life satisfaction (or well being) are compared on a National basis Nova Scotians, on average, consistently rate their level of life satisfaction much better than those that left for Toronto, or the West. In fact, typically happiness is highest in Newfoundland, and declines from East to West. This has been described as “the paradox of unhappy growth”. As Angus Deaton observed in 2006, “Surprisingly, at any given level of income, economic growth is associated with lower levels of life satisfaction.” There is no clear explanation of “the paradox of unhappy growth” but a good guess may be that in periods of rapid transformation, the volatility and perception of risk makes everyone more anxious.
We are once again in a period of transition. The COVID-19 global pandemic has accelerated change. Aspiring for well being or happiness, rather than solely economic growth should be part of the recovery plan for Nova Scotia.
That the economic system exists to benefit people and enhance well-being has been absent from the discussion and economic policy approach.
Nova Scotia’s overall approach resembled that of many of the economies left behind, which economic historian David Landes called “backward economies.” The approach is noteworthy for its frequent effort at forced growth and emulation, government intervention and excessive use of subsidy. Its record is one of low growth and poor outcomes.
Landes noted a pattern – one evident in Nova Scotia’s development – the bigger the gap between economic performance and possibilities, the more the State will assume the responsibility for economic growth and intervene to promote growth.
If the State intervenes inefficiently, it is more likely to retard rather than enhance growth.
So, fundamentally, if economic development policy is directed at making a material change in the province’s ability to create wealth and achieve social progress and well being, in the period from the 1920’s the second decade of the new millenium the impact of federal and provincial economic development policy in Nova Scotia was underwhelming and did not achieve what would be considered a successful outcome – material changes in the province’s ability to equitably create and share wealth for improved well being of its citizens.
Policy singularly focused on economic development did not work in the sense it did not reduce regional economic disparity and did not change the population trajectory in Nova Scotia, and if anything had a detrimental impact on well being.
So, what policy lessons can we draw from this historical overview about what causes economic growth and social well being?
At the beginning of the third decade of the 21st-century policy makers in Nova Scotia have a chance to build on recent success and chart a new course leading to well-being and inclusive and shared participation in the economic benefits of growth derived in new ways, with fewer adverse trade-offs.
An Example of Public Policy Favouring Economic Growth in Priority to Community Well-Being
An example of how public policy privileges economic growth over social well-being can be found in the different ways in which public policy regulates the for-profit corporation as contrasted with the non-profit corporation.
If we look far enough back, we see that at its origin, early exchange and economies were more focused on sharing and giving than taking. This was evident in Mi’Kma’ki before European contact. Altruism was rewarded with status and hoarding with ostracization in early cultures.[1]
Corporations and capitalism and their contribution to progress and well-being have been intertwined since the mercantile age, if not before.
In his text, The Moral Consequences of Economic Growth (2005) Benjamin Friedman posed the question, “Are we right to care so much about economic growth as we clearly do?” His book examined how economic growth—or stagnation—affects the moral character of society.
He argues that rising living standards, broadly experienced, makes a society more open, tolerant and democratic. He draws a link between growth and well-being but concludes the market itself will not provide this outcome and it is the role of public policy to bring about “the economic well-being of the broad majority of [a] nation’s citizenry”. (p.435)
The societal benefits of commerce have been a central argument for industrial development and liberal economic thinking since the 1700s. Scottish philosopher David Hume—a friend and confidant of Adam Smith—wrote in a 1754 essay, “ In times when industry and the arts flourish men are kept in perpetual occupation, and enjoy, as their reward, the occupation itself, as well as the pleasures which are the fruits of their labour…The more these refined arts advance, the more sociable they become.”
Hume no doubt influenced Adam Smith who had to reconcile his theory that man acts primarily in his own interests with the cooperative needs of society. In addition to the Wealth of Nations Smith wrote The Theory of Moral Sentiments which expounded on the cooperative nature of capitalism. Humans had to work together for a complex economy to develop and such daily engagement was thought to strengthen the bonds of trust, established common purpose, and fostered mutual understanding.
Eventually, business organizations and corporations were formed as the nexus for economic activity of humans through which essentially cooperative activity would create societal value through the market. Corporations were initially to serve multiple interests, not only one group—the capital investing shareholders—to the exclusion, and ultimate detriment, of all others. This came later.
In the seventeenth and eighteenth centuries before the advent of modern capitalism, corporations existed but they were not vehicles for private capital investment; the original Charters granted to form corporations—usually to form trading monopolies–were granted in the service of a public purpose and would be revoked if public purposes were not achieved (bearing in mind the narrow focus of public purpose usually meant only enriching the state or the monarch or pacifying elites, and through the monarch public purposes were to be achieved).
Corporations are a social construct, a legal fiction. Corporations, as we know them today, came into being with the English Companies Act of 1844. This Act allowed the founders of corporations to define their own purposes (rather than rely on a Royal Charter). Power of control passed from government through Charters to the courts through corporate law and was ultimately for the benefit of the capitalist, the investor.
In a landmark case called Solomon v. Solomon & Co Ltd, [1896] UKHL 1, shareholders were accorded limited liability which, in effect, shielded the personal assets of shareholders from the consequences of their corporate behavior. This had a significant impact on corporate morality and ethics. Owners could be shielded from harms caused by the company.
This corporate law change encouraged risk-taking that many have said enabled the rapid acceleration of the Industrial Revolution and the Industrial Age.
Capitalism ran rampant, and wealth was accumulated among the “nouveau riche.” Monopolies and cartels emerged. The term “Robber Baron” was coined and used as time passed to describe the heroes of early capitalism.[2] Inequality, exploitation, and social unrest was the product of this gilded age. Ultimately, after a world war, the economy collapsed with the Great Depression, which was triggered by the stock market crash of 1929, caused, in part, by excessive risk-taking.
While the economy recovered with rebuilding in the immediate post-World War II era, by the 1970s the view that the sole purpose of a corporation is to maximize profits took hold – and that there is one class of corporation – a “for-profit” enterprise – whose sole purpose is to use every available (legal) means to maximize profit and returns to shareholders regardless of social consequences. Another type of organization–the nonprofit–was relegated to a different tier of importance to society and regulated using onerous funding contracts, legislation, and taxation policy. Nonprofits are typically linked in western thought to community organizations and philanthropy to protect and help the needy, not to enhance general well-being.
In the neo-liberal era deregulation of corporations became a focus that remains to this day. “Red tape reduction” is embraced broadly and politiciains never miss the chance to get out a big pair of scissors and cut a band of red tape—the perfect Photo-op to show you’re serious about being “open for business”. The evils of bureaucratic overreach in the domain of for-profit corporations is almost beyond democratic contestation. However, the memo never reached those who regulate the non-profit sector where hierarchical control of day-to-day activities of community impact organizations is a regular feature.
In the modern corporate world, CEOs are handsomely rewarded for enhancing corporate value (i.e., generally interpreted to mean profit or increased selling value of capital stock) to shareholders of for-profit corporations. If they fail for a quarter or two to do so, they are often shown the door.
Other enterprises – not-for-profits, charities, and others – are often run by lower paid Executive Directors, have limited funding sources—government grants, charitable giving, and own source revenues– and, as part of the social sector, are not generally seen as being as relevant to society as the private sector. This is a social, economic, and policy choice.
A Focus on Well Being: The Way We Could Be
There is ideological resistance to prioritizing and measuring well being and making it the overriding goal of public policy.
A well being orientation would lead to major changes in policy and society. The general idea that government should improve both the economic and social well being of citizens is a generally accepted aspriation in liberal democracies. However, in practice and policy certain “proxies” such as GDP per capita, physical health (or access to health services), educational attainment such as PISA scores have become the way in which the objective of improving well being have been measured.
In the Anglo-Saxon parts of the world, in the 18th and 19th Century the question of well being was an important topic of philosophical discussion. Jeremy Bentham suggested societies should orient themselves to policies and programs that produce “the greatest happiness for the greatest number”.
John Locke, who was influential among the authors of the US constitution, suggested “the highest perfection of intellectual nature lies in a careful and constant pursuit of true and solid happiness”.
Adam Smith in his The Theory of Moral Sentiments recognized the role of happiness in society as follows:
“…the care of the universal happiness of all rational and sensible beings, is the business of God and not of man. To man is allocated a much humbler department, but one much more suitable to the weakness of his powers or the narrowness of his comprehension: the care of his own happiness, of that of his family, his friends, his country.”
Other parts of his thinking took prominence, but it is noteworthy the father of modern economics saw that economics should consider happiness, that is what people enjoy or that which improves their well being. This inclusion of happiness in the main thought processes of early economics waned in future centuries when people’s feelings and desires were deemed outside the realm of economics.
According to American philosopher John Rawls (1921-2002), “A society is a cooperative venture for mutual advantage.” John Rawls was a contemporary social philosopher. In his Theory of Justice Rawls concluded in a pluralistic society we are not able to build a single comprehensive doctrine to guide us. His fundamental principle was “justice as fairness”. He asserts humans have an innate sense of fairness, meaning we have a concept of social justice and the capacity to conceive of the common good (likely because of our social and biological evolution).
Rawls version of the “social contract” is one we would individually agree to under a “veil of ignorance.” Specifically, in his thought experiment, if we were working out a social contract without any knowledge of whether we would have endowed privileges in such a society—ethnic, gender, ideological, physical, intellectual, religious advantages, or disadvantages—what sort of society would we agree to put in place?
In the economic realm, Edmund Phelps built on Rawls’ theme, writing:
“A society seeks and builds an economy to provide mutual benefits for its citizens . . .[and] an economy is good if, and only if, it permits and fosters the good life.”[3]
In the intangibles or knowledge economy, with cloud-based computing and IT technologies where there is no fixed and necessary “locus of production” the migration decision becomes less a pure economic choice and more of a response to the question of how to achieve a better quality or more meaningful life—in other words, a good life.
Brining things back to Nova Scotia, the modern history of Nova Scotia has, until 2015, been a persistent story of outmigration. Migration out of Nova Scotia had historically been in the theoretical box of “economic migration” — those who left were in search of work or are drawn to another place by a high demand for labour (e.g., Fort McMurray).
This type of migration is driven overwhelmingly by economic need. However, in the knowledge and intangibles economy one of the significant societal changes accelerated by the Covid-19 pandemic is work and employer location have been decoupled. For the first time in a century we are witnessing significantly increased in migration to Nova Scotia. The increase may be proportional to whether Nova Scotia continues to be seen as a jurisdiction with superior quality of life. A provincial policy orientation to increase well being then should become, critically, the cornerstone of economic development policy and economic development and social well being truly become two sides of the same coin.
This is an area where quality of life intersects with fiscal, economic, and demographic imperatives. A policy focus on well being, quality of life and placemaking has the potential to achieve much better outcomes than path dependent past approach to economic development.
When historians look back on 2020, it is entirely likely that the most significant impact may be how it changed workforce and labour mobility. This has profound implications.
A first step to achieve a more unified approach to public policy would be to recognize we measure fiscal sustainability to the last dime, we regularly measure and forecast GDP growth using conventional measures, yet rarely is public policy informed by measures of human well-being. We should. The choice is not “either/or”. It is not to suppress GDP growth to enhance human flourishing. It is not to sacrifice fiscal prudence, to recklessly spend on welfare programs for the “undeserving”. It is not a “dilemma” or a “trilemma”.
It involves bringing into the decision-making equation—possibly for the first time in modern policy processes—a human well-being perspective. If we were to “de-privilege” GDP growth and asked each of the following four questions in making public policy choices, we would vastly improve our approach:
- Does it enhance social well-being?
- Does it harm or regenerate the environment?
- Does it create shared economic value?
- Can we afford to do it based on the costs and benefits?
Of course, implied in the last question, after the first three are addressed, is: Can we afford not to do it?
This is not a call to make policy decisions in the absence of evidence-based policy analysis or reckless fiscal management, rather it is a call to privilege human well-being of all as the ultimate objective of public policy. To pre-empt an obvious but flawed objection, moving beyond GDP growth to measure well-being does not mean to “suppress” GDP or the tax base. To “de-privilege” is not the same a suppress.
It does not require polarities, or “either/or” choices. It does, however, require that policy makers and political leaders alike begin to “de-privilege” GDP growth and fiscal sustainability as the pre-eminent political objectives and balance them with human and environmental objectives, especially now that it is apparent that the old system contains the seeds of its own destruction. The Collaborative systems embedded in society would be where economic growth and fiscal sustainability occurs.
It is possible, probably essential, that human and social well-being, environmental sustainability, and fiscal sustainability are prioritized to exist harmoniously in a growing economy.
[1] Posner, “Utilitarianism, Economics, and Legal Theory” The Journal of Legal Studies 8.1.1979 (103-140), and Herskovits, Economic Anthropologie: The Economic Life of Primitive Peoples, 1965.
[2] Josephson, Matthew. The Robber Barons. New York: Harcourt Brace & Co., 1934.
[3] Phelps, 288.
