US governments flatlined real per capita education spending only briefly — from 1992 to 1994 — and let health care spending rise modestly over the same period. As soon as the economy recovered, education spending increased every year from 1996 onward, as did health care spending. In Canada, the post-recession story was dramatically different. Real per capita education spending fell each year from 1993 through 1997; the drops were so steep and the reinvestment so modest that spending in 2003 was actually lower than it had been a decade before. Health care spending, on the other hand, decreased modestly between 1993 and 1997, then shot up every year at a pace equivalent to that of the US.
Essentially, we took ourselves from a position of strength to one of weakness. Few Canadians are aware that until 1995, this country enjoyed the world’s highest level of per capita public investment in education, higher even than the amount spent by our much richer neighbours to the south (though, to be fair, Americans make a much higher private investment in education than we do, so their total investment is higher).
Contrary to popular belief, Canada is not rich primarily because of its resource base or its health care system. Many countries have natural resources, and quite a few have health coverage that rivals Canada’s, but until 1995 no one kept up with us on education investment. Our beloved health care system lost its lead in public spending in 1995, but regained approximate parity with the US in 2000 and has maintained it ever since. In contrast, by 2002 Canadian education spending had fallen a full 17.5 percent behind that of the United States. In Ontario, Mike Harris turned the 4 percent advantage in per capita spending he inherited into a 25 percent disadvantage by the time he resigned in 2002.
In 1993, there was one full-time faculty member for every 18.8 students in Canadian universities. But by 2005, that ratio had deteriorated 23 percent, to 24.4 students. During the same period, the equivalent ratio across US public universities (excluding private universities, which have significantly superior ratios) improved from 15.2 to 14.8 students per faculty member. This is new. Those who graduated from Canadian universities before 1995 simply don’t know what the university experience is like today. They imagine it’s like it was in their day. It isn’t. Heather Munroe-Blum, principal of McGill University, notes that universities across Canada have striven to minimize the cuts’ impact on students, but says, “You can only do so much before quality and accessibility begin to suffer.” U of T’s Prichard concurs: “The undergraduates are really the big losers here. Our principal response to the Harris cuts, in the short term, was higher tuition. Unfortunately, the new funds from undergrads did not improve quality for them; the money just mitigated the damage. Students were right to feel abused.”
The blame for the disregard we’ve shown for education over the past decade and a half doesn’t lie merely with financial pressures. The Canadian political system has a deep bias toward consumption. Broadly speaking, public expenditures can be broken into two fundamental buckets: investment in building future prosperity, and consumption of current prosperity. When the government funds scientific research or doubles the capacity of the Windsor–Detroit border crossing, it is making a long-term investment in future prosperity. That double-width tunnel or bridge costs billions now and offers little immediate benefit — its value is spread out over the next fifty years. The same holds for scientific research. Rarely does the money invested benefit its funders in the first year. But its long-term upside is gigantic.
For any advanced economy, the biggest investment in future prosperity is education. Putting a student in a classroom has zero current economic benefit. In fact, for late-secondary and post-secondary students, education is a big negative. It keeps potential workers out of the workforce and sticks them in a classroom, where they must be supplied with an infrastructure, educators, and so on. What could be a worse short-term deal? But education is the best investment in future prosperity in the world.
To appreciate this, consider wages, which serve as a proxy for productivity (because an organization can’t stay in business if it pays a worker more than the value he or she produces). In Canada, the average salary for someone with a post-secondary degree is $58,767 a year — 50 percent greater than that of the average high school graduate, and 69 percent greater than that of a high school dropout. In educating themselves, citizens therefore become much, much more productive, which pays tremendous dividends to society in the long run.
The consumption of current prosperity, by contrast, provides a large benefit today but does little to enhance our fortunes in the future. Helping the disadvantaged among us to afford shelter and sustenance is a good example. We can fund welfare for poor families and special buses for disabled workers because we are sufficiently prosperous today. Such expenditures are the mark of a good and caring society.
The largest consumption of current prosperity by governments around the world is health care. In Canada, because we are wealthy, we can provide this service at a high level, which improves our quality of life. Of course, not all health care is consumption — there is obvious future benefit in getting an injured worker back on the job, or fixing a baby’s heart so she can become a productive member of society. However, the bulk of health care costs, including the increasing proportion spent on elderly Canadians in their retirement, represents pure consumption.
History shows that we can’t trust our politicians to be forthright about the balance they will strike between consumption and investment. The electorate is easily swayed by those who offer more in the here and now, so politicians have a strong incentive to emphasize spending over investment. The Ontario electorate loved being told the Common Sense Revolution would not touch a penny of health care spending. No politician of any stripe told Canadians that, as of 1993, we were going to make a historic shift away from investing in future prosperity to intensify consumption of current prosperity, but that’s precisely what our leaders did. It must fall to the electorate to push for better balance, because elected governments have huge incentives to favour consumption of current prosperity.
