Today I want to talk about economic stimulus and what that is likely to look like for universities and colleges.

To be clear, the $100 billion plus in money which has gone out the door so far in emergency benefits, wage subsidies, and various other programs, is not stimulus.  What we are doing now is – in the words of the excellent Jennifer Robson – more like inducing a medical coma; keep the patient (the economy) in a kind of low-functioning stasis while preventing greater harm.  One simply cannot stimulate the economy if most people are sitting at home.  Stimulus comes later, once everything re-opens.

There is a long tradition that “stimulus” needs to involve a lot of spending on infrastructure.  There are, in theory, three reasons for this:  it creates jobs, it increases the long-run productive capacity of the economy, and it makes people feel good.  That last one shouldn’t matter but does politically.  A lot of the shine around infrastructure spending in Canada comes from the way Jean Chretien rolled it the country’s first major modern national infrastructure project in 1994, where he described its usefulness by explaining “When you see  buildings being built and trucks moving, you feel good and you spend money”.  (charitably, Chretien was alluding to Keynes’ “animal spirits” and the way programs lift consumer confidence). 

Since then, it has become an article of faith that whenever there is a recession, there shall be an infrastructure program.  It is, at heart, a subsidy aimed at the construction sector.  However, because so much of the first (Chrétien) infrastructure expenditure ended up doing things like building hockey arenas or snowmobile clubs (neither of which are particularly known for their virtues in modernizing the economy), the later Harper and Trudeau stimuli had a definite “knowledge” component. Subsidizing the construction industry was core, but there was a veneer of modernization because a bunch of the money would be spent on university and college campuses (hence the nearly-identical Knowledge Infrastructure Program and Strategic Infrastructure Funds of 2009 and 2016).  So, as soon as COVID hit and the economy started to tank, every Government Relations shop in the country started working out how their campus could get a Piece of the Action.

Before we get into the post-secondary dimension of this, it’s worth thinking about whether this logic of infrastructure makes any sense in the context of the present crisis.  I am not convinced.  It certainly remains the case that infrastructure is a good way to expand the productive capacity of the economy (though this is true throughout the economic cycle, not just in recessions), however, it is not particularly obvious that infrastructure is a particularly good job creator.  This isn’t the 1930s: infrastructure isn’t masses of dudes out with picks and shovels: it’s a relatively small number of people using expensive sophisticated machines which are usually not made in Canada, meaning that a big chunk of the stimulus leaks out of the domestic economy. 

Moreover, this is an atypical recession in that it is services (and hence women) that are most heavily affected, rather than manufacturing/construction/utilities (and hence men, the more usual pattern).  So, given that this is a “she-cession”, is infrastructure really where you want to put your big bucks?  Also, infrastructure takes awhile to get going.  Government will ask around to find projects that are “shovel-ready”, but this is nothing more than a convenient fiction.  The feds’ last infrastructure program was supposed to be about “shovel-ready projects”, and a good half of it didn’t end up getting done until 2018, when the economy was peaking again.  Put all this together, and there’s good reason to suggest that maybe other types of government spending might be more efficacious in this recession.

(It’s not an either/or, of course.  One can spend on infrastructure and other things.  I’m just saying maybe infrastructure shouldn’t be the first tool out of the box).

Meanwhile, given that governments are clearly going to go down this route to some extent, we need to think about how institutions should play this game.  I think some of the potential optics are not good: for instance, how hard should Manitoba institutions look for new physical infrastructure when their budget to even maintain existing services is getting pared to the bone.  But even in other provinces with economic policies less pre-Keynesian (pre-Cambrian?) than Manitoba, an infrastructure program is not without problems.  Just go back to the aftermath of the last recession, when the Harper government built new research facilities across the country, while granting council budgets were slowly but steadily eroded.  This was not a sensible use of resources, and we need to guard very heavily against it happening again.

I would argue that what we need is joined-up policy when it comes to “knowledge infrastructure”.  Sure, spend some money on buildings.  But combine it with pro-growth research policies, too.  For instance, I think I could make a pretty good case that funding graduate students is more efficient in terms of creating short-term employment than is “infrastructure”, and it also has a substantial capacity to improve future productivity – that is, if some of our graduate programs could get over the idea that they are exclusively training students for academia and instead focus on how to make them productive for a wide variety of careers, many of which may be in the private sector (an area in which MITACS has been doing stellar work for over a decade now).

Now it’s not widely understood outside institutions and the granting councils themselves, but to a very large degree “research funding” means “funding graduate students”, so there is a logical link between infrastructure funding and research funding.  The problem is that politically the output of research is “discoveries” because that’s the way several generations of university lobbyists have positioned it.  But if we think about research with more of a “training/growth” angle and less of a “discovery” angle (let alone a “publications” angle), the whole political economy of research changes – and frankly becomes a whole lot more palatable from a funding perspective.

But this requires institutions to rethink framing graduate studies to a considerable extent.  Can institutions do it?  I hope so.  If they don’t, it’s going to lead to some very sub-par outcomes for institutions and researchers alike.

Stay safe, everyone.