Four Trillion-Dollar Industries the Canadian Government Could Invest In
I want to follow up on my recent post, suggesting that rationally planning for the future might not be such a stupid idea after all, by turning to the next obvious question: How could we plan for the future? What ideas should take priority? Where do we want Canada to be in 100 years? 1000 years? How can we help make sure it gets there?
Back in high school, my chemistry teacher sometimes tossed out what he called guaranteed ways to become a billionaire — problems which would definitely make you a lot of money, if you could figure out how to solve them. Today I want to do something similar for the country. I’m going to speculate about some areas of economic activity which could, if Canada invested in them early and substantially and had some luck in its results, net us enormous benefits, probably in the trillions.
I didn’t just pick “trillions” because it was a big number. Right now, the largest economic priority of the Harper regime is investing in making the Albertan oil sands economically profitable. Everything else, from Canada’s international reputation to our faltering manufacturing sector, is being risked on the gamble that the oil sands will pay off. If the oil sands do continue to pay off, we (and by “we” I don’t actually mean us, I mean the increasingly foreign owners of the oil sands) will enjoy revenue in the many trillions of dollars. So basically I’m proposing areas where we could potentially make as much as we do from the oil sands, but only if we channel enough resources and effort into researching them now that we will be in a position to reap payoffs from them years down the road.
At the same time, these are not pie-in-the-sky notions about dream economies. In 100 years’ time, we will not be making a penny from the oil sands, either because we’ve run out of exploitable oil or because we’ve run out of purchasers for the oil. Over the same timespan, there will arise vast demand for several new types of products which right now the world economy is unable to produce at any price. Someone is going to attempt to supply revolutionary new products and services: either we sell them, or we buy them. The reasoning is fairly simple. It’s better to be the exporter than the importer.
Investing seriously in any of the following would probably require somewhere $20-$30 billion per year. For a country the size of Canada, this is easily affordable.
Pharmaceuticals
If you want to know how far we’ve come as a society, a good place to start is mortality statistics. In 1900, 1.7% of the American population died in any given year. At least one-third of those deaths were from bacterial infections, and of the top 10 causes of death, five (pneumonia, tuberculosis, diarrhea, nephritis, and diphtheria) were types of infections. A century later, the death rate had dropped roughly in half. The single most important reason for this decline is the decline in deaths from bacterial infections. Then, tack on all the lives saved through surgery, chemotherapy, etc., none of which would be possible without antibiotics.
In 25 years’ time, antibiotics as we know them will be largely useless because of growing bacterial resistance. We’ve reached the point where this will happen, regardless of careful rationing. The successor to antibiotics will achieve two things. First, the people who develop it will be able to exact enormous profits from it (although they will have to be careful not to get too greedy, because in the face of mass death other countries will soon start calculating that flimsy patent laws are less important to them than the survival of their citizens). Second, the people who use it will save an even greater sum in the loss of productive people to simple ailments, from earaches to skin infections.
Right now, Canada has very little in the way of an actual national medical research industry. Our pharmaceutical strategy is so decrepit that at the moment we’re not even able to supply our own hospitals with necessary drugs. The research field has been largely ceded to American and European companies, which means that in the future, we will be reliant on foreign companies to set prices for everything from new cancer treatments to the post-antibiotic equivalent of penicillin (at a time when penicillin no longer works).
The cost of investing in medical research essentially depends upon how much medical research we want to conduct. However, the U.S. National Institutes of Health has a budget of about $30 billion per year. This, or something like it, would be quite affordable. It’s not even just about the direct profits from sales, though: we also have to think about the hundreds of billions of dollars per year which will be lost as people succumb to currently treatable infections once antibiotics are a thing of the past.
Large-Scale Alternative Energy
Between solar panel company bankrupties in the U.S. and controversial wind farm plans in Ontario, we appear to be heading into a closed season in the alternative energy sector. Here’s the thing, though: at some point within the next century, Canada’s booming fossil fuel sector will be completely shuttered. It will happen no matter what the price of oil is tomorrow, or a year from now, or in two decades. It will happen for one of three reasons: we finally regulate fossil fuels to prevent climate change; someone invents a cheaper alternative; or, we run out of recoverable reserves. One of these will happen. So we may as well plan for what we’ll do the day after that.
The obvious solution is to make Canada a leader in the energy technologies which will replace fossil fuels, allowing us to be well-placed for the inevitable economic transition, regardless of why it occurs. We could, for instance, pour money into developing new and more efficient solar panels. Or we could invest in fusion power. Recent estimates suggest that with $100 billion and a couple of decades or sov, a research program could develop an economically viable nuclear fusion reactor. We have the money, and we certainly have the time. Instead of buying the F-35 and the navy’s new ships, we could have become the world leader in fusion power.
This is still a gamble, of course. It could all go nowhere. Or it could work, but someone else could get there first. Still, fusion power would exponentially extend our energy supply. It would do so very safely, without either the pollution and carbon emissions of the fossil fuel sector or the radioactive hazards of the current nuclear power industry. And Canada could be the world leader, if we wanted to be. In any case, whatever happens, it’s going to require more leadership than a handful of tax credits and a few million-dollar grants.
Currently Canada is many steps behind in this area, but it is not too late. A large-scale government-directed strategy could help us catch up. For the time being, we can still assemble enough capital to draw away highly skilled workers from other countries undergoing severe austerity measures to help jump-start the Canadian research program. If we really want to be an “energy superpower,” this is not a competition we can afford to lose.
Geoengineering
Since it’s increasingly clear that our government is not interested in preventing climate change, it’s high time we started thinking about mitigating it. I’m not in favour of this. Prevention is cheaper, safer, and less likely to fail than after-the-fact attempts at reversals. But there are a variety of geo-engineering schemes, and if any of them are ever going to be implemented, the people who’ve developed and constructed the equipment for the schemes in question are going to make a mint.
The cost of geo-engineering is likely to be extraordinarily high, perhaps prohibitively high, and there really will be no way of knowing whether it will work, have drastic unintended consequences, or simply do nothing at all until long after it’s too late. That’s exactly why I don’t favour this as a solution to climate change. But it’s still worth investing in — either because a foolish and risk-loving government thinks it’s really Plan A, or simply because a prudent and risk-averse government wants to have a backup Plan B. And in the event that geo-engineering schemes are ever implemented, Canada won’t be the only government willing to pay for it.
We could, however, have a research sector which has produced and marketed some core elements of any such scheme. And once our world has tipped over the precipice we’re currently poised on, people are going to line up to pay handsomely for a workable solution, if one exists.
Space Travel
With the recent announcement of an asteroid mining pilot project, space travel isn’t quite the 1960s-era pie-in-the-sky waste of money that many people have come to think it is. And despite grumbling to the contrary, space research is still comparatively cheap. NASA’s budget is only $19 billion a year. If nothing else, Canada could very easily have its own NASA. A NASA that didn’t blow its budget on useless space shuttles incapable of getting out of low orbit.
Current events suggest that within the next century space travel beyond Earth orbit will become commercially viable for private corporations. This industry will require a large workforce of exceptionally well-educated scientists and engineers. No country is currently capable of providing that reliably; the American sector is under-funded and in tatters, while its education system is besieged by creationists. We could build our own industry, in part, by poaching their experts. European space research may not survive the current fiscal crisis. This will leave China as the leader.
Canada cannot compete toe-to-toe with China. If, however, any off-planet industry ever begins, whoever runs that industry is eventually going to become unbelievably wealthy. It wouldn’t hurt if Canada had at least a few small niches secured for itself.
None of these schemes is a sure money-maker. If they do have a return on investment, it won’t happen for decades or longer. None of them can be undertaken by the private sector without massive government assistance. But even if we tried and failed, the worst-case scenario would be that we’d spent billions of dollars creating the most highly-educated and knowledge-based workforce in the entire world. I assume such a workforce would be able to find other productive opportunities, even if the flagship research projects ultimately didn’t pan out.
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Dan Schubart
Given humanity’s record of going off on a meander when there’s serious business to attend to, I would caution about embarking on most of this. Space Travel under current conditions has no “EROI”, is expensive and largely a distraction. Geo-engineering is what we’ve already done to our living space, with many unintended consequences. We are as yet incapable of ensuring that what we geoengineer will actually make improvements, making this a risky, as well as expensive undertaking. Pharmaceuticals might be promising, but a longer-term and more productive initiative would be to build an inclusive society that stresses health rather than the treatment of sickness, prevention rather than cure, and redresses the lack of control over the chemical soup we’ve come to live in. Alternative energy is the winner, along with community building for reductions in the amount of energy it takes to live a rewarding and fulfilling life. Retool for increasingly local production, and build goods so that they last, stand up to realistic usage and are, wherever possible, can be repaired. Make complete recyclability (in extremis) a requirement. A lot of this may not be feasible in terms of classic economics, but when we stop throwing money at Lockheed Martin Marietta et al, when we stop building 100 sq. meter houses for childless couples, then fill them with single use goods made from non-renewable materials shipped from thousands of kilometres away, we’ll have lots of wealth to work with. The difficult part is the transition: I attended a discussion of support for young parents a decade or so ago, wherein studies strongly indicated that the support for children (and their parents) from conception to entry into kindergarten produced a manifold reduction in policing, legal and carceral costs. The rub is that it takes a generation of cleaning up the current generation’s mess to get to the reductions. I suspect the same applies to many areas of human endeavour, and getting the pharaonic fixation out of our solutions is a start.
Sixth Estate
Dan — Well, you’re right in the sense that plenty of smaller initiatives would be worthwhile for building a better society. That wasn’t really my point here. My point was that if we want to sink a sizeable portion of Canada’s finances, reputation, and human resources into a fairly speculative but probably worthwhile industry, there are a range of alternatives with much greater long-term significance that the oil and gas sector that the current regime is hell-bent on.
To that end, saying it is “not feasible in terms of classical economics” is sort of to miss the point. It may not be feasible in terms of what can be supplied by an unregulated free market. It would, however, be quite feasible through a mixture of regulation and incentives (taxes, tax credits, etc.). Most of these would essentially be required in order to build an actual knowledge-based economy, several segments of which I described here: in order to have a highly educated workforce, we need, well, highly educated and motivated people. Which begins with genuine investment in childcare and education — not, as I have repeatedly stated before, experimentation and tinkering around the edges as imagined by groups like the Fraser Institute.
Regarding pharmaceuticals — yes to prevention, but at some point within the next few decades we will need a replacement for antibiotics. Not just some tinkering with the current antibiotics, probably: many entirely new types of anti-bacterial drugs to overcome growing resistance. On a slightly longer time scale, it’s a reasonably safe bet that we will begin reaching the point where our knowledge of genetics makes genuine treatments of, say, cancer very possible. At the moment, Canada would be importing the benefits of any revolutionary medical advances, presumably at fabulous cost and therefore perhaps not at all within the cash-strapped confines of our public health system. Investing money in the pharmaceutical sector doesn’t, of course, guarantee that we’ll be the ones to make the major breakthroughs in the future. But it means we might, and in the meantime, we’ll have created a large number of well-paying knowledge-sector jobs.
Sometime within the next couple of centuries, space travel either will have a massive return on investment, or our civilization is pretty much done in anyways through resource exhaustion. So I’d say it’s worth putting money into. Of course, we’re so far behind on this front that it may not matter anyways.
I don’t think what I’ve described counts as “pharaonic vision,” because it doesn’t eliminate the need for everything from proper public education to proper resource conservation. I’ve made the case for such things before on this blog. In particular I’ve been greatly disturbed by the recent wave of shills and columnists in the media who’ve taken the rise of shale gas as a signal to announce that “peak oil” was a myth and that resources are effectively infinite. This is plain foolishness, nothing I’ve said here will change that, and consequently we need to retool our society to stretch out our remaining resources.
That’s only one part of the agenda, though. The second part is where we expect to get the income to finance such a society. Pouring resources, reputation, and people into the fossil fuel sector, which is the current government’s strategy, ensures two things: first that we make the climate problem worse, and second that we invest more and more heavily into an industry which will at best be around for only a few decades. We need something better.
Forgot to add:: Yes, geo-engineering is idiocy. I think I made plain my views on this subject. Nevertheless, it’s increasingly clear that we’re not going to bother preventing climate change. I still favour doing that. The sooner carbon emissions cease, the less radical geo-engineering will be necessary. But in the meantime, the damage is accumulating, and we should give at least some serious thought to what we would do in a worst-case scenario.
Sixth Estate
Incidentally, I just tried to leave a comment at your blog and it demanded I log in first, which I don’t think I can (?). Is this deliberate?
If it is, I have no problem with it, but I thought I’d comment on your thoughts regarding the future of the media.
Gloria
All of you are wrong.
There will be no trillion dollar industry’s for Canada. This country will be a large state, in the U.S. Harper is eagerly making it easier for Canadians to shop in the U.S. This loses billions in revenue for Canada. The U.S. has been pulling out their factories from Canada, costing hundreds of lost jobs. G.M. is the next to go to the U.S. Everyone must have noticed, how much Harper gave a damn? Even though Canada sunk millions into G.M. Caterpillar is gone. Aveos, Bombardier gone.
Oil will be the only economy, Harper will have left. That’s the way he wants it. Canadians must have heard, Alberta is the west, the only province Harper is interested in. The other western provinces, just don’t exist.
BC is only mentioned because, we are terrorists for opposing the Enbridge pipeline and the dirty tar tankers, destroying our beautiful province. BC gets all the risk of ruptured pipes and the spills from the massive tankers….However, Joe Oliver has said, we BC citizens are the terrorists.
As they said, if Harper gets his so called majority, we can kiss Canada good-bye. Do people see nothing wrong in, Harper’s speech in New York…at the council of Foreign Relations? This was Sept 25/2007. Watch out for those secret border talks of, Obama, Harper and Calderon’s.
Sixth Estate
Okay, well there’s that option too. But I’m not prepared to surrender my country just yet.
Purple Library Guy
As to the antibiotic replacement . . . I read once that shortly before the collapse of the Soviet Union, there was a hospital there doing therapy using bacteriophage viruses. The advantage there was that the viruses adapted just as fast as the bacteria they ate. The disadvantage was that the little buggers tended to be quite specific, so you needed to know exactly what someone had before you could really treat it . . . but you know, I’m kind of positive about knowing what you’re treating anyway.
Never heard much about them since . . . one suspects the hospital lost funding in the nineties and nobody’s done much with the concept since.
I agree with the general point. Heck, solar and wind keep dropping in price; solar is more expensive but dropping faster, a less mature technology. What with all the thin films and stuff, at some point solar power is going to be cheaper than oil–or at least, cheaper than tar sands oil, which costs quite a bit to extract even before you start totting up all the externalities they’re allowed to ignore.
Sixth Estate
Yes, I’ve read about that before. My suspicion is that that sort of development was much more expensive in the 1980s and therefore not cost-effective. At some point, between growing knowledge of the genome and declining utility of antibiotics, that might become one of the options for the future.
Dan Schubart
Sorry about the commenting. I guess I never visited the settings for the comments. It’ll be interesting to see what happens now that the necessary login has been dropped.
sushi
Surely the way forward for this country is to continue to celebrate the war of 1812.
If we can blow 50 million on gazebos it shouldn’t be that difficult to spend 4 billion on pompous costumes, fireworks and personal reminiscinces.
Sixth Estate
Dan — No need to apologize. I just thought I’d ask to make sure.
Sushi — Yes, I’m sure you’re right. And after the War of 1812, we can celebrate the anniversary of Vimy. And then on and on, down the line of insignificant contributions made to various wars by Canadian troops. Surely the future of the Canadian economy lies in memorializing our newly re-militarized past!
Wes
Now I know Nuclear Energy is a very touchy subject in Canada but there are safe alternatives!
Liquid Fluoride Thorium Reactor (acronym LFTR; spoken as lifter)
This is a safe nuclear technology that wasn’t called off the bench of emerging atomic technologies in the 50′s as it did not satisfy the two needs of the USA… a) Generating electricity, b) proliferation to plutonium to create atomic bombs.
That is right, the fission proccess of Thorium power generation is highly proliferation resistant.
Its waste also boasts 1/300th the half life of the infamous Uranium LWR’s and “Yellow Cake”.
Google, India, and China are al researching this technology and I predict within the next 30 years India will break though in this feild and with the mass reserves of thorium they have will become ome of the richest countries in the world from selling power to surrounding nations like Thailand, Myanmar, Pakistan, Vietnam, Malaysia, China and Cambodia.
Sixth Estate
Wes — I think that’s possible too.
You may want to check your facts on the thorium fuel cycle though. As I understand it, yellowcake is created during uranium ore processing — it’s not a waste product.
More to the point, if thorium reactor waste has a half-life only 1/300th as long as uranium reactors, that would actually make it much more dangerous. The longer the half life, the safer the waste.
ktron
Wes – there’s no need to go nuclear. At best, nuclear is a pulp-sci-fi wet dream – at worst, well, it’s already repeatedly shown some of it’s devastating down sides.
Hit re-start – ignore the petrochemical industries mythologies and learn about permaculture. Permaculture makes production of liquid sunshine easy and cost effective, enabling a completely decentralized energy structure with very simple storage and transportation requirements. It could even liberate the north from dependance on southern energy. If the Brazilians can do it, so can we.