As Thunder Bay’s leaky pipe saga continues with lawn after lawn being dug up to replace service lines likely corroded by the addition of sodium hydroxide as a lead mitigation strategy, one might indeed be hard pressed to find a silver lining. However, one is surprised that the more pollyannish members of City Council have not seized on the obvious boost to Thunder Bay’s economy from the ample work being generated for plumbers, hardware purveyors, asphalting and landscaping companies – not to mention city employees – from the continual calls to replace interior plumbing and service lines. Indeed, one is astounded that there has not been an economic impact tally of the boost to the city’s GDP from all the construction work and at a bargain basement price with respect to city coffers.
For a modest investment in sodium hydroxide of only several hundred thousand dollars a year over approximately three years – probably not more than $1 million - there have been thousands of homes that have had to incur thousands of dollars in repairs. If one assumes only a modest 3,700 affected households (based on the current membership of the Thunder Bay Leaky Pipe Club Facebook page) and assumes an average of $5,000 in spending for each, why the direct spending impact is already just shy of $20 million dollars. The economic multiplier is an astounding value of 20 – something unheard of in municipal economic impact circles and the likely recipient of an Economic Development Commission Powerpoint presentation or two at the next NOMA meetings.
It would appear that Thunder Bay City Council and Administration have been inordinately clever embarking on a massive urban infrastructure renewal program and doing it for a pittance. Indeed, they have not even had to borrow as the stimulus spending in question has been provided directly by affected households or their insurance companies. The constant parade of diggers in many neighborhoods across town has given new meaning to the term shovel ready infrastructure projects and the demonstrable associated benefits of increased employment and income.
Indeed, this is the ultimate Keynesian aggregate demand stimulus activity. It does not matter if the spending is needed or not, as long as it occurs, it can stimulate aggregate demand and create employment and boost income especially if there is involuntary unemployment. Involuntary unemployment is when a person is willing and able to work at the prevailing wage as opposed to voluntary unemployment which is something members of City Council are more likely familiar with. The benefits of building projects was noted by Lord Keynes himself when he noted in his General Theory that “Pyramid-building, earthquakes, even wars may serve to increase wealth, if the education of our statesmen on the principles of the classical economics stands in the way of anything better.”
Of course, it is unlikely that City Council deliberately embarked on this as a Keynesian economic stimulus program given that they probably do not know what Keynesian means. Indeed, upon stumbling across the term, they probably hear “Canesian” and think it is some type of descriptor of a program at the 55 Plus Centre on Red River for senior citizens who when afflicted with ambulatory difficulties make use of a pole-like device for vertical as opposed to fiscal stabilization purposes.
However, if they are interested in expanding their understanding and implementation of Keynesian policy, they might heed Lord Keynes when he wrote: “If the Treasury were to fill old bottles with banknotes, bury them at suitable depths in disused coalmines which are then filled to the surface with town rubbish, and leave it to private enterprise on well-tried principles of laissez-faire to dig up the notes again...there need be no more unemployment…the real income of the community and its capital wealth also, would probably become a good deal greater than it is.” One is surprised city workers are not dropping off bottles of cash for burial when water service lines are repaired so that affected homeowners can then dig them up again and generate yet another round of spending stimulus.
So, there you have it. Thunder Bay truly understands the power of private enterprise and individual initiative as well as Keynesian aggregate demand policy. That is perhaps why Thunder Bay City Council after discouraging a private solution now finally wants to harness private enterprise to build its multi-use turf facility. The economic activity it has generated via the Leaky Pipe Expenditure Stimulator has generated enough of a boost to GDP and the tax base to now support a private sector turf facility option.
