A stimulus package should be an investment in a new, sustainable economy, not an attempt to prop up an old, dying system.
Last December, as the debates over the stimulus packages were just beginning, I wrote a piece on why the wrong stimulus today could fail us tomorrow. Well, today has become tomorrow and we are being failed.
A stimulus package should be an investment. It should create new industries and markets, it should help create efficiencies and improve productivity; in short, it should help the economy grow in a sustainable manner. In the last depression the government accomplished this by funding infrastructure necessary for the 20th-century economy – things like roads and highways for cars and other modes of transportation, power stations, grids for cities and industry, university buildings for education. Today, we already have much of that infrastructure and – while some of it needs to be renewed – we need to be focusing on what infrastructure is needed for the next economy – the digital economy. That’s how we will rise out of this recession.
So what powers the digital economy? It isn’t coal, steel, or cars (although these things are necessary); it’s data and connectivity.
Data is the plankton of the new economy. It seems plentiful, tiny, and insignificant. But a whole ecosystem of companies, large and small, are emerging to feed off of it and support our next economy. People often fail to recognize that the largest company already created by the new economy – Google – is a data company. Google is effective, rich, and powerful not because it sells ads, but because it generates petaflops of data every day from billions of search queries. This allows it to know more about our society, and sometimes us individually – the merchandise we like, the services we want, the spam we’ll receive, even the likelihood we’ll get sick within the next four months – than we know about ourselves.
Give people access to data and they will use it to become more efficient and to create new services and opportunities. Look no further than the City of Washington, D.C. It made publicly available a database of city collected and created data and asked individuals and companies to publish computer programs and cell phone applications that leveraged this public resource. The result? $50,000 investment in prize money yielded $2.3 million in value. This figure, calculated by the city’s Chief Technology Officer, is the estimated sum of development costs and human resources that would have been necessary for the city to procure or manage the projects. That’s a 4,600 per cent return on their investment in one year. But this is only value accrued by the city. It says nothing of the gas and time saved by commuters who shared vehicles because of the commuter finder or who used the free parking spot locator to locate a parking space in their neighbourhood. Nor does it count the increased level of civic awareness created by applications that allowed people to look up data on zoning, pending building permits, school performance, crime, and other information on their neighbourhood or city block.
Imagine such an initiative at a national level. Imagine Statistics Canada making all its data available freely (since taxpayers have already paid for its creation). As I outlined in a talk to Statistics Canada last year, not only would this make the department more relevant to the public, it could foster millions (and possibly billions) in savings, improved productivity, investment, and new jobs, all for a tiny sum. Let’s pick a truly excessive number, say $100 million (.2 per cent of the stimulus package) and imagine that this would be the cost for Statistics Canada to free all its data, provide it in formats usable for websites, cellphones and applications, and possibly some prize money. Even if such a stimulus were only 10 per cent as effective as Washington’s open data, project it would still yield investments of $460 million in one year. With Statistics Canada data freed up, the industry of data analysis would be revolutionized, becoming both more competitive and cheaper – something all Canadian companies could benefit from. Still more exciting, non-profits, charities, and provincial/local governments would be able to use these data sets to improve their operations. Over a decade, billions in savings, investments, and efficiencies could be accrued.
Compare this to our current course of action. To date a significant piece of our stimulus has been spent on road construction or propping up troubled industries such as logging, newspapers, and the auto-sector. Consequently, this money isn’t about creating new or better jobs, it is simply being spent to sustain current jobs. Maclean’s columnist Andrew Coyne calculates that each auto-job saved cost us just under $2 million. It will take years, if not decades, for such an investment to pay off, if it ever does. Worse still, the Canadian economy will be no more efficient or profitable as a result. While we are at it, we might as well be giving Canadians money to buy land-line telephones to stimulate the telecommunications sector.
Oh, and in case you are wondering, the Americans already give out much of their government data for free and are starting to give away more and more. This is a competitive race we are already losing and only falling further behind.
We need our government to have the vision and creativity to help create our economy for the 21st century. Canada needs a better stimulus, one that is low on carbon, rich on research, and fat on data. So far we are off to an ominous start.