Wednesday, June 20, 2007

On competitiveness and politics

A few interesting articles were highlighted by Woman at Mile O this morning around the issue of economic competitiveness and health care.

It started with comments by Hillary Clinton, who of course is seeking the Democratic presidential nomination in the U.S. She recently told a union audience that U.S. jobs are bleeding to Canada because heath care costs are so high in the U.S. that Canada’s medicare system is giving us a competitive advantage.

This got autoworker union boss Buzz Hargrove in a snit, who said both countries are losing jobs to overseas imports. The Ontario Liberal government chimed in to, sending Finance Minister Greg Sorbara out to note the economic pressures being faced by Ontario manufacturers.

It seems everyone is trying to paint a bad picture in their jurisdiction (the cynic would say so they can come in and fix it). I think everyone is right though, and everyone is also being a bit selective in their comments. The manufacturing sector in Central Canada and the U.S. is hurting, with overseas imports a definite contributing factor. The high tech sector is on the upswing though and growing strongly, that’s where the job growth is occurring.

I think Clinton overstates her case slightly, I’m not sure jobs are flowing wholesale from the U.S. into Canada. But she is most definitely right when she says Canada’s healthcare system is a competitive advantage. It very much is.

And it’s so often overlooked when the business lobby whines about things like productivity or infrastructure investment, where we compare unfavourably to the U.S. While they’re really just after government concessions and tax breaks they are right, we do have work to do in some areas.

But they nearly always overlook the areas where we do have competitive advantages. Like quality of life. A happy worker is a more productive worker, so quality of life is important to both employees and employers. Like the quality of the public education system, access to recreation and leisure activities, crime and safety. R&D tax credits.

And health care. This is a major issue for both employees and employers. In the private health insurance system of the U.S. many working Americans can’t afford coverage. And to attract talent, many U.S. companies purchase private coverage for their employees, at a huge cost to the business.

In Canada, they don’t have that cost. Employees know they have access to universal Medicare, and the employer doesn’t have to shell out a fortune for it. That is a huge competitive advantage that can’t be understated, Clinton is absolutely right.

A few years ago I was invited down to the Cary, North Carolina headquarters of SAS, the world’s largest privately held software company. It’s founder and president, Jim Goodnight, is a billionaire several times over and with no stockholders to satisfy, the profits are his. But his business success is driven by employee talent, and so he has invested heavily to attract the best.

His Cary campus illustrates many of the challenges businesses in the U.S. face. It is huge and sprawling, and resembles a gated community. In addition to sports fields, recreation centres, theatres and day cares he has even built a private hospital/clinic for SAS employees. As a staunch Republican Goodnight probably wouldn’t put it this way, but in order to attract and retain talent he has had to spend big money, and it’s on things that in Canada, are provided by various levels of government as a matter of course. While there’s other factors that influence where one sets up show, how much money would SAS save were its headquarters in Canada? They wouldn’t need that hospital, for one.

So yes, we have work to do around improving the business climate in Canada. But let’s talk up our advantages too and Hillary is right, health care is a one of them.

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McLea said...

The resource sector is on the upswing though and growing strongly, that’s where the job growth is occurring.


Jeff said...

Of course (much more) there too. No doubt my anti-Alberta bias shining through with the Freudian omission... :)

Woman at Mile 0 said...

I really don't think the US will be able to fix this problem. I have to give it to Hillary though to even be talking about it.

After her husband was elected and she took the lead as they tried to do something about this problem the insurance industry and the Repubs slapped em down hard with big money advertising. US citizens bought it enough to put a stop to any reform. They have such a tight grip I don't see things changing much, not in a meaningful systematic way anyways.

Woman at Mile 0

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