Jim Balsillie: Canada needs a revived Economic Council to thrive in the 21st century

The Globe and Mail | | Feb 5, 2022

GDP per capital US versus Canada - Jim Balsillie:  Canada needs a revived Economic Council to thrive in the 21st century

It’s been 30 years since Ottawa disbanded the body that helped it set a clear economic agenda. It needs a new one to help Canada adapt to a competitive high-tech world

In a thoughtful essay published last summer, the writer Lauren Dobson-Hughes made a compelling argument that recent crises – including COVID-19 and Canada’s retreat from Afghanistan – have not only exposed the country’s deeply dysfunctional institutions, but also revealed our bureaucracy’s profound limitations on performing even its most basic duties, such as implementing a payroll system for public sector employees, updating privacy legislation or designing a shipbuilding program.

“We are ill-equipped, floundering, and as the Brits would say, not fit for purpose,” she wrote. “We built our systems, structures and cultures for a different time. They are now failing us, and fast.”

The same can be said for institutions and structures responsible for designing Canada’s contemporary economic strategies. Politicians of all stripes worship at the altar of innovation, with visits to Silicon Valley and photo ops with entrepreneurs, but the devotion is a facade. Public-sector departmental structures and policy-makers are proving incapable of dealing with the opportunities and challenges afforded by the Information Age.

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If the past two decades of various economic growth councils, blue-ribbon commissions, and “non-innovation innovation” strategies have proven anything, it is that inside Ottawa there is a dearth of expertise on the issues that accompany our transition to a knowledge-based and data-driven economy.

This step begins with rebuilding the Economic Council, an institution the government disbanded in 1992. This new, restructured council would provide the federal government with the research required to establish a long-term policy agenda designed to advance our country’s competitiveness.

As a country, we are falling behind. All signs point to our failure to design strategies that would allow us to prosper in a new, knowledge-based economy. The Organization for Economic Co-operation and Development (OECD) has dire projections for the Canadian economy, while the average salary is dropping, weakening an already endangered middle class.

Canada is still navigating with outdated maps - Select Quotes

Rather than investing in public sector institutional capacity to keep up with changes in the global economy, the Canadian government became dependent on a rotting practice of outsourcing its own work to costly, controversial and unaccountable consultants and in the process giving birth to the so-called “shadow public service.”

Despite a highly educated population and public investments in R&D, Canada has consistently been a large net importer of intellectual property, or what economists call the “innovation trade” balance.

“For most of the past 40 years Canada has been in a ‘bad equilibrium,’ wherein real wages have essentially stopped growing” states a recent research paper by Public Policy Forum fellow Don Wright. “Government policy, consciously or unconsciously, has sustained the resulting low-wage-low-productivity model of competitiveness, hence keeping Canada in the bad equilibrium.”

The World Bank’s 2020 report says Canada is losing ground in terms of GDP per capita, directly affecting purchasing power of the average Canadian, with the current average salary of US$43,242 down from the peak US$52,635 in 2013.  Canada faces a shrinking share of that income and wealth.

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But the gaps in our government’s capacity to understand the contemporary economy are much wider.  It is long past time to acknowledge that we don’t have a critical mass of expertise and analytical muscle inside our civil service.

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