There is a new intellectual fashion in the United States called Supply-Side Liberalism.  Basically, the idea is that government’s main role is less about managing aggregate demand and more ensuring the cheapest possible supply of goods and services.  In the US, this approach is rapidly emerging as the new centrist consensus, mainly because the sudden return of inflation as a major economic phenomenon means that all the left bromides about the need to use government funding to stimulate aggregate demand –  a big theme just two years ago – are now completely out of date.  Now, the main economic problem is bottlenecks in production chains and rising costs of certain factors of production, such as land and energy costs; that is, problems of supply rather than demand.  And by wrapping “supply-side” and “Liberalism” in a single portmanteau, there is a rather self-conscious attempt to appeal to bipartisanship.

This argument has come to Canada now in the form of a paper from the Public Policy Forum by Sean Speer and Edward Greenspon entitled The Urgent Case for a Supply Rebuild: Investing in a New Economic Compact for Canada.   Reaction to the paper has been a bit muted (if not outright skeptical, see Paul Wells’ take on the document here).  My take on it is that while the idea is very sensible in principle, the PPF document lacks some specifics, which limits the uptake for lots of people.  Moreover, the politics of this idea are a little different in Canada than in the US.  Here, the governing Liberals understand how to use government to write cheques but are distinctly shaky on literally every other aspect of governing, so it’s tough to embrace a policy agenda that, in some respects, sounds like a critique.  On the flip side, while Supply-Side Liberalism might seem like a slam dunk with a leader like Poilievre who extolls the value of “making more stuff”, the very fact that the PPF has given it a centrist spin (to some degree) makes it tough to adopt for a party that seems bent on wedge-issuing everything to death. 

(Also, frankly, Canadian love for rent-seekers is pretty bi-partisan; hence our continuing love affair with restrictive zoning and dairy cartels). 

But whatever official Ottawa thinks of it, the post-secondary education sector needs to respond to this initiative enthusiastically.  As I have pointed out before, without a political consensus that growth is even possible, there is no political consensus for higher education.  So, any new policy movement which puts growth at its centre is worth supporting. 

BUT – and this is a big but – the sector needs to do so with an open mind as to how post-secondary education can contribute to the elimination of bottlenecks.  Using bottleneck arguments to support the status quo genuinely isn’t going to cut it.   Many of the bottlenecks have very little to do with post-secondary education (e.g. weak port capacity, high land values).  And many of the worthy things post-secondary education wants to do with extra dollars (including most forms of research) have precious little to do with bottlenecks.  That doesn’t mean they aren’t worth supporting; just that they are extraneous to the bottleneck argument.

Here are the things that matter:

• The energy revolution right now is two-fold: it’s about renewables, yes, but it’s also about the possibilities of improved power storage.   We need tens of thousands of workers to make this transition go well.  Universities, and especially colleges, need to make sure that these workers are being trained to avoid a bottleneck in this most important economic sector.

• Across the economy, we need to find ways to avoid skill shortages even though the workforce is shrinking as a percentage of the population.  That probably means making constant lifelong learning an actual working concept rather than – as it often is – a slogan.  It means finding ways to deliver skills upgrading throughout people’s lives in short bursts rather than forcing people into overly long degrees, diplomas and certificates.  And it means the need to focus more closely on the quality of credentials delivered rather than the quantity.

• International education needs to be thought of more coherently in terms of local and national advantage rather than as a crude institutional cash cow.  That requires being pickier about pushing students into specific fields of study.  It also means that, to the extent international students contribute to high housing prices which crimp growth, institutions will need to lay off the international student sauce.

In the longer run, there are other ways that universities and colleges can benefit and contribute to a growth agenda.  But for that to occur, we need governments to believe in growth again and more to the point, believe that growth is dependent on higher skills and research.  Supply-side Liberalism is probably the closest we’re going to get to that kind of ideology this decade.  Higher education institutions can get on board and help make this a working political theory…or they can watch the country drift into a full-on rentierism which treats the sector as an expensive irrelevance. 

It’s up to us.