The Impetus for Canadian Industry
Less is more, and it is important not to be wasteful, however, in life, it is also preferable to have more than you need. This is the paradox that we, as humans, are faced with insofar as there is a need to be frugal and fiscal while trying to ensure prosperity and abundance. This logic applies as much to companies as it does governments, and when corporate entities have more than they need, they can afford to divert their capital and resources towards R&D, enabling dynamic efficiency that allows for more efficient ways to cut costs and further generate a surplus of riches with a scarcity of effort. With this being said, a nation will find itself in a position of peril when it finds it has begun to divert too far into investing itself in higher affairs without an abundance of the inelastic goods that are required to sustain our basic needs. This kind of diversion and over-investment in new ways forward can often invert a nation’s hierarchy of needs, putting it in a position where a kind of collective altruism prevails over a sense of collective survival and success.
Recently, many critics of the Canadian economy have come forward, arguing against our dependence on oil and manufacturing, and calling for a rise in pursuing alternative energy and startups in the tech sector. In a recent article on the aptly named journal BETAkit, Allen Lau, the CEO and Co-Founder of Wattpad, recently called for a “second act” in Canada’s economy, emphasizing our tech and entertainment sectors. It should come as no surprise that Lau’s company happens to specialize in those two things, but putting that aside, his opinion piece echoes a recent article written by Andrew Willis for the Globe and Mail on Canada’s serious productivity problem. Willis cites a recent report by the Washington-based Brookings Institute and the Martin Prosperity Institute at the University of Toronto’s Rotman School of Business, entitled “A Path To Prosperity”, prescribing “capital availability, competition, connectivity and technological complexity” as paths to growth forward. The calls for opening the market to new players should come as no surprise either, given that this is a report coming from business grads looking for future fortunes.
There is no doubt that if Canada had its own Silicon Valley, that would help to put it on the map. There is actually something to be said for criticisms like this insofar as they encourage:
- Diverting more capital into R&D
- Diverting more capital into more horizontal dimensions when it comes to having more players in the tech sector
- Exploring the potential of renewable energy to sustain an age of surplus
- Developing human capital and creating the kind of communication technology and culture that gains worldwide renown and a kind of global hegemony.
Where these criticisms fall short is that they undermine the methods of generating the capital required for sustaining the kinds of models they put forward:
- Oil can still be used to generate capital, which can be invested into rapidly researching renewable forms of energy, as is being done in China, which, while having one of the highest rates of pollution in the world, is also pursuing some of the largest scale alternative energy projects in the world.
- Cartelization and monopolization allows for monopoly profits to be maximized, which is another way to generate the capital required to invest in R&D.
- You need mature industries and natural monopolies in the manufacturing sector to ensure that economies of scale are being maximized and to ensure that the price of the new consumer technology is minimized.
Many rapidly growing countries are undoubtedly starting to pursue a model of focusing on developing their tech sector. Whether we look to cities like Singapore or Dubai, or countries like Saudi Arabia or Israel, we can see this model is in play. With that being said, these countries do not implement these models at the expense of having a strong and even nationalized manufacturing sector that produces goods from a wide range of resources. Even when we look to Silicon Valley, we don’t just see a market of smaller firms, but we see major players, like Peter Thiel, who explicitly condemns more competitive models, arguing that monopolization isn’t just desirable for the supplier, but can be preferable for the consumer.
The question is: is Canada taking advantage of its own resources to the best of its ability in order to fund this so called “second act”?
And to those familiar with our current situation in terms of trade-dependency, our reliance on foreign investment, and the current privatization agenda at play: the bleak truth should be obvious.
All of this is crucial in light of the current trade situation with the U.S., as Canada is in a position where it is going to need to start to consider an alternative model of self sufficiency in light of imposing reciprocal tariffs on U.S. imports. In fact, only a few days ago, the Trudeau administration recently called the White House in order to tell them that we will not back down regarding our reciprocal tariffs , however, we will not escalate the situation any further. Putting aside the predictably passive nature of the kind of Canadian aggression that leaders like Trudeau are putting us on the map for, it should also be noted that calling someone to tell them you won’t back down makes you seem desperate to have them come at you (for better or worse). The U.S. has plenty of other trade partners to worry about other than Canada, and we only have ourselves to blame for not expanding the influence of our national enterprise in international trade. Furthermore, until we really start developing our own resources, our own manufacturing sector, and ensure that domestic consumption is encouraged first and foremost, we will be reliant on foreign trade for economic success.
Some conservatives are trying to counter-signal the liberals and conservatives who are reluctantly taking on a more economically nationalist stance in trade, failing to realize that if Trump weren’t imposing his tariffs, these people would be first in line for pushing the T.P.P and NAFTA. The conservatives who turn a blind eye to Trump’s tariffs while condemning Trudeau’s use of tariffs are like conservatives who turn a blind eye to Nixon and Reagan meeting with Mao/Deng and Gorbachev respectively while condemning people like Bill Clinton and Pierre Elliot Trudeau for meeting Jiang Zemin and Fidel Castro respectively. If these conservatives really wanted to counter signal the Parliament, they would be encouraging them to push for economic nationalism in full force, meaning not just tariffs, but: subsidizing domestic manufacturers, nationalizing certain sectors of the economy, growing economies of scale, and establishing natural monopolies.
If these people really wanted us to be more competitive, they would push for controlling the money supply in such a way that it went towards increasing the purchasing power of the Canadian dollar and its competitiveness on the global market, possibly even exercising greater exchange control over the rate of the Canadian dollar. Countries like China, North Korea, and Cuba, which are notable for resisting the international regime of global capitalism, are known for pegging their exchange rates in such a way that is reflective of domestic productivity while further facilitating it. Interestingly enough, in many countries like this, the cost of basics is quite marginal for the population at large, with food being one of the cheapest aspects of the cost of living.
There is something to be said for a poor country that can feed itself over a rich one with too many mouths to feed.
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