When teaching public policy, I often describe choices along a continuum.
Take the high cost of food in Canada’s North.
At one end, government could do nothing and leave northern residents to absorb the higher cost themselves. Moving along the income support continuum, it could provide increasingly generous income supplements to low-income households. At the far end, it could provide enough additional income to compensate fully for the difference between northern and southern food prices.
Those are all variations of the same policy. We change the amount of assistance in line with income support solutions
But good policy analysis should always ask another question: Could we do something different that had similar results? Income solutions can almost always solve high-cost issues but are not always the best way to deal with problems of cost variability.
Instead of compensating people for high northern food prices, why not intervene in the system that produces those high prices? Government could subsidize transportation, distribution and suppliers sufficiently to bring the prices of essential goods much closer to those paid elsewhere in Canada.
That suggestion can sound radical. Why should government interfere with the actual cost of delivering something? Shouldn’t consumers pay what it costs?
Canada has been answering that question for 175 years.
Buy a stamp. Mail a letter across the street. Then mail an identical letter from a remote community in Newfoundland and Labrador to Whitehorse.
The cost of providing those two services is obviously not the same. One letter may travel a few hundred metres. The other must pass through an enormous transportation and sorting network spanning thousands of kilometres.
Yet we don’t charge the second customer twenty times as much. We charge the same postage rate.
Nobody finds this remarkable yet why does it seem that so many would reject a solution for food that we freely accept for sending mail?
That is because Canada long ago decided that postal service was not simply another commodity whose price should reflect the precise cost of serving each individual customer.
It was part of the infrastructure and identity of being Canadian.
Geography and volume would affect the cost of providing the service, but it would not determine the price Canadians paid for it.
That is an extraordinarily important policy principle.
We universalized the additional cost of distance rather than imposing it on the person who happened to live far away.
And it worked.
Imagine applying strict market pricing to the postal system. Rural and northern Canadians would pay substantially more for mail because they are more expensive to serve. Urban residents living beside sorting facilities would pay less. That’s exactly what we did before 1851 and it was extremely costly.
We could defend that system in terms of surface fairness but we would reject it both politically and economically.
We decided instead that a Canadian address is a Canadian address.
That should make us think differently about high costs of food in the North.
A litre of milk does not become more nutritious because it travelled farther. A loaf of bread does not become more valuable because an airplane carried it. Yet residents of remote communities can face extraordinary prices simply because the physical cost of getting necessities to them is high.
One of our conventional responses is to look at the consumer and ask how much additional income they need.
But perhaps we are looking at the wrong end of the transaction.
The postal system suggests another possibility.
Don’t compensate people for the consequences of geography and low volume. Equalize some of the costs created by geography and lack of volume.
This does not mean every northern price must be identical to a Toronto supermarket price. Nor does it mean government should indiscriminately subsidize everything shipped north. There would have to be decisions about essential goods, eligible communities, transportation, competition, retailer accountability and ensuring that subsidies actually reach consumers through lower prices.
Those are difficult design questions. But they don’t invalidate the principle.
Indeed, Canada already accepts the principle in numerous areas of public policy: national transportation systems, telecommunications, health care and public services routinely contain mechanisms through which expensive-to-serve places are supported by the larger community.
The postage stamp simply makes the idea wonderfully visible.
It also illustrates something important about policy analysis.
Sometimes the most interesting choice isn’t somewhere between doing nothing and doing more. Sometimes a Goldilocks solution (not too cold – not too hot – just right) can be the best solution.
It is doing something different.
If food costs twice or ten times as much somewhere because Canada is an enormous country, perhaps the only question shouldn’t be how much more money we give poor people to buy it.
We settled that question for the postage stamp generations ago. Perhaps the remarkable thing isn’t that we might apply the same principle to food.
It is that doing so still sounds radical.