How public services strengthen the economy

With teachers and students now going back to school, much of the province seems to be breathing a sigh of relief. But I’m not convinced we’ve made any substantial ground when it comes to understanding the important role education and other public services play towards both social and economic wellbeing in this province. The Premier’s commitment to taxpayers that improvements to the education system will not cost us indicates she does not see public sector spending as meaningful investment.

But if we look at what has been happening in other parts of the world, we might realize that “the crisis in the economy may provide us with an opportunity to justify public sector investment in key areas that support the wellbeing of families and wider communities.”¹ (p. 10, emphasis added). In fact, again and again, research shows that “spending cuts to public health care, education, and other public services … have a strong negative effect on overall economic performance” (p. 10).

The reasons for this are fairly simple, and may be made clear if we start thinking about the economy as a verb instead of a noun. It is not something that exists outside of us; rather it is a process we all generate with our participation.

So when governments respond to recessions by tightening purse strings, citizens are forced to pick up the slack and do the same – the economic burden doesn’t disappear, it is simply shifted onto families. In such a situation, people have less time, energy, and money to participate in social and economic life. As a result they become more isolated, and mental and physical health also begin to suffer. This creates a higher demand on social safety nets precisely when services decrease. It also leaves people with less, so economic activity is stifled.

Instead, when governments respond to economic hard times by supporting people – through education, health care, and other social services – we become stronger, more connected to each other, and more capable of working and participating in social and economic life. Evidence shows that places that respond to recessions by investing in public services actually recover more quickly.

We don’t have to choose between supporting the public sector and economic prosperity: investing in the public sector is good for our economy.

A good jobs plan for BC would enhance the public sector – particularly supporting jobs in health and human services. It would replace the current trend towards temporary, resource-dependent jobs with a commitment to maintaining stable, permanent jobs that contribute to societal wellbeing. Creating and maintaining public sector jobs can foster our social and economic wellbeing by ensuring the quality of vital gap-reducing social services, and by building a strong and stable workforce in BC.

The question of where the money will come from has already been answered succinctly in a number of other posts and reports. A more progressive tax structure could greatly benefit British Columbians with increased income tax for only the top one percent.

We have the capacity to strengthen our economy in ways that are equitable and sustainable. In order to do so, we must recognize the public sector as an asset – not a barrier – to achieving social and economic wellbeing in BC.

1. Bjornholt, M. & McKay, A. (2013). “Advances in feminist economics in times of economic crisis.” In M. Bjornholt & A. McKay (Eds.). Counting on Marilyn Waring: New advances in feminist economics. Bradford, ON: Demeter Press. Pp. 7-20.

Topics: Economy