Few doubt that the Canadian economy requires a new prescription. The former clerk of the Privy Council opined this week on “why we can’t seem to get things done in Canada anymore.” When Bank of Canada Senior Deputy Governor Carolyn Rogers — someone who knows her words have economic consequence — tells a business audience that “it’s an emergency — it’s time to break the glass,” concerns have reached a new intensity.
Ms. Rogers’ comments follow a recent RCMP report that warns economic unrest is likely to result in policing challenges. “The fallout from this decline in living standards will be exacerbated by the fact that the difference between the extremes of wealth is greater now in developed countries than it has been at any time in several generations," the CBC quotes the report as saying. “Emergency,” “civil unrest,” and “incontinence.” Different metaphors, yet all urgent calls for a new prescription.
Before analysing the prescriptions on offer, it may be useful to parse some of the categories involved in the process of productivity. I often use intellectual, social, physical, and human categories in order to understand how capital combines to produce results.
Productivity starts in the intellect — with an idea. Someone proposes a better solution for a problem, for example, or a way to make a better mousetrap. But going from an idea to tangible reality requires social capital. It takes a set of relationships that enable people and institutions to work together. That brings us to physical capital, involving risk and resources. This includes the dollars required for the start-up costs, the equipment and paycheques needed to fund the initiative before generating enough sales revenue to make it sustainable. But none of this works if we don’t have human capital, the specific skill sets and capacity for the task.
But there is an important fifth sort of capital that is every bit as important and often not adequately accounted for. I think of it as cultural capital. It is the spirit that shapes how people work together. It’s whatever is in the room that enables a group to say “let’s go for it; we can do it” rather than “it’s possible but too risky to pursue.” It’s the connective tissue – the muscles – that enable the other categories of capital to do their thing. When exercised properly, these muscles will be in shape and able to lift an enterprise toward economic success. Usually this gets translated into terms like innovation, entrepreneurship, or competitiveness – terms that are meaningful but difficult to measure precisely.
The Canadian economy is down on the couch, suffering the indignities of whatever ails it. Might I suggest that a remedy likely requires a trip to the drugstore that involves at least four purchases?
First, we need something to settle the digestive system to stop the immediate problem. Economically speaking, this means deregulation and figuring out how to get our economic systems working correctly.
This would include things like the zoning and building permit processes. (It has been 19 years and counting that we have been waiting to put a shovel in the ground on Ontario’s Ring of Fire project, which would provide strategic minerals for EV batteries among other things.) The prime minister this week acknowledged the need to get the temporary foreign workers (TFW) program “back under control” now that TFWs have ballooned from 2% to 7.5% of the population. There are all sorts of system questions this and other workforce-related issues raise about why there is such a skills mismatch between available workers and job vacancies.
Second, we’ll head to the vitamin aisle. Our four areas of capital require supplements for a healthier balance. There is no easy answer to our weak capital investment performance by international standards. It will take adjustments in education, tax policy, intellectual property law, and regulation of oligopolies – to name just a few of the more common concerns cited. A study by the C.D. Howe Institute suggested that encouraging the development of larger firms would help Canadians compete better internationally.
While there is a lot of work for governments to do, our economic multivitamin shouldn’t only cover government activity. A better pill would also look at what governments should not do (or should stop doing.) It is striking how many business groups advocate solutions that primarily consist of government programs.
Incontinence needs not only a go-forward solution but also requires some immediate clean-up. We need to deal with the unpleasant mess that our condition has produced. This ties to the fifth sort of capital – the cultural capital that is much more intangible.
How do we create an environment where the innovative light bulbs of our creative population get translated into economic productivity, which improves our standard of living? How do we create optimism among a younger generation that expects things to be worse, that feels cheated by seemingly out-of-reach home ownership, and whose promised post-educational prospects have proved to be more fiction than fact?
That brings us to the fourth drugstore purchase – a bit of mood-boosting chocolate. In terms of economics, this means a signature initiative – a narrative-changing project. When the Bank of Canada cries, “Emergency – break the glass,” we know that tinkering won’t do the job. We can’t just buy the technical necessities required to resolve our economic incontinence. Come home with something special so that when you are asked what you got at the drugstore, you change the narrative to a happier story.
That fifth sort of capital comes from the resolve that you have after a few days of not wandering too far from home. “Sickness is over – I’m going to get healthy” is the result of proper diagnosis and medicine but it is also a resolve.
Stomach meds, nutrients, clean-up supplies, and a resolve to get better. Most of us have made trips to the pharmacy to deal with physical ailments that required a similar combination of remedies. Perhaps it’s time for the Canadian economy to make a similar trip.
There have been a few weeks of political theatre surrounding the April 1st implementation of an increase to the Canadian carbon tax. Clarke Ries’ missive in The Line argues that the point of consumption taxes, whether they involve carbon, traffic congestion or anything else, is to change behaviour. For the carbon tax to have any point, “Someone has to lose.” So, the real issue according to Ries is whether the government is up for the “cage match with Canada’s working class” because it is inevitably the working poor who will end up paying the greatest price.
Nurturing Trust
Ed Waitzer is a former chair of the Ontario Securities Commission. Rob Wildeboer is the executive chairman of a public company (and a Cardus board member.) Both are lawyers who know something about rules and regulation. That makes their Financial Post op-edarguing that “maintaining a strong, effective corporate culture is more important than most of the ‘best governance practices’ encouraged or required by regulators” all the more compelling.
Liberalism's Dutch Roots
David Brooks's review of Fareed Zakaria’s book Age of Revolutions frames liberal history in the context of “a foundation of commitments and moral obligations that precede choice,” such as “our obligations to our families, to our communities and nations, to our ancestors and descendants, to God or some set of transcendent truths.” Zakaria’s book puts into context the current “authoritarian moralist” as well as vote-buying strategies, and argues that if the next chapter of liberalism is to be a positive story, “we will also have to make the spiritual and civic case for our way of life.”
Towards a new Canadian Policy on the Middle East
Irwin Cotler and Noah Lew penned a thoughtful, four-part proposal as a framework for a Canadian policy response to the Middle East conflict. It’s a sober-minded condemnation of the “new authoritarian ‘axis of evil’ led by Iran, Russia, and China” which is exploiting the Israeli-Palestinian conflict “to further their destabilising agenda.” It calls for balance in holding both Israel and Hamas to similar standards of accountability and aims to address the on-the-ground Canadian realities of citizens with relationships and loyalties to those on either side of the conflict. The authors note the need to oppose “the perverse incentives that feed the cycle of hatred and violence in the Middle East.”
Normalising Suicide
A recent editorial in the British newspaper The Times(behind paywall) argues that euthanasia will “within a decade or more be seen as a normal road for many to take, and considered socially responsible—and even, finally, urged upon people…. It will be a healthy development.” Social media brought this to my attention along with a blog by Noah Smithwho appears to be in favour of euthanasia in principle but alarmed by this argument. Canadian journalist Rupa Subramanya also documents a trend “of people across the West choosing to end their lives rather than live in pain.” She cites the evolution of a euthanasia culture that is resulting in a “kind of suicide contagion.” The latter part of The Times editorial is behind a paywall, but the 800+ available words make the troubling point abundantly clear.
MEANINGFUL METRICS
Human Flourishing and Religious Service Attendance
The Global Flourishing Study involves surveying the same 200,000+ individuals who come from 20+ “geographically and culturally diverse” countries to better understand the ingredients of human flourishing. (Canada is not included in this study.)
It shows that in 17 out of 20 countries reported, there is a statistically significant, positive correlation between human flourishing and those who attend religious services (at least once per week), versus those who never attend. Future releases promise to dig deeper into the impacts of different religious traditions in different settings. To put these results in context, being employed has an overall 0.22 positive impact, making religious attendance more significant than employment as a factor in flourishing in almost every country.
TAKE IT TO-GO
Eclipsed
The path of this ”to-go” story will be overshadowed by the total eclipse of the sun that will cross North America on Monday. Not to throw shade at my Cardus colleagues based in the Hamilton office, but at least for a few minutes Monday afternoon, they will be totally in the dark.
Think-tankers are in the business of shedding light on dark topics so it only makes sense that these events require the calling of a state of emergency. But after a few minutes of stargazing and lunar humour, I have every confidence that emergency will last only a few minutes, the degrees of sunshine heat will combine with the degrees hanging from their walls enabling think-tankers to return to their moonday assignments, and we will all be none the worse for wear.
Whether or not you are in the eclipse path, I hope you have a good week. If it all goes the way we’ve planet, look for us in your inbox next Saturday morning!
Until then.
We Have a Winner!
Mine's a Steak, Medium-Well Done
Thank you to everybody who took part in the recent 'Insights Ambassadors' competition we ran. Welcome to those of you who are new readers thanks to the competition.
I'm pleased to announce that we have a competition winner! Cindy from Chilliwack will be joined by Ray and three of her friends for an in-person Insights discussion and meal on April 24th. Well done, Cindy!
