I think Canada at 150 should address certain “inefficiencies” that plague our capitalist market economy including the two issues herein below.

1) The use of “cash paper money” is at the root of a monstrous underground economy that does not contribute taxes and unfairly burdens other taxpaying Canadians … it is at the root of illegal campaign financing that warps the democratic process and corrupts our elected representatives … it is at the root of the drug trade that poisons our youth and other criminal activity that so often leads to murder and violence in our communities. In our electronic age, why do we need cash paper money ? Can we not eliminate cash paper money and all its evils by doing business in a more transparent and accountable fashion with debit cards or credit cards only ?

2) The Bank of Canda’s low interest policy during the past decade or so was intended to make the purchase of a home more affordable. But in the end, the lower cost of borrowing has been offset by surging real estate prices (that have outstripped general inflation and average increases in salary) and made housing even less affordable for the average Canadian and especially young Canadian families. The surging prices have amounted to a vast transfer of wealth to vendors, speculators, and developers that did relatively little to earn such spectacular gains. What can our government do to discourage speculation, prevent “bubbles” in real estate and make housing more affordable ? Should capital gains continue to benefit from such a favourable tax treatment ? How do we make real estate transactions more transparent and real estate prices more stable ? Do we need to better educate buyers of real estate ? Why don’t we at least force vendors and listing brokers to disclose the previous price paid for a property … so potential purchasers are better informed about any recent “flipping” of the property and so they are in a better position to assess the market value of the property for sale ?

James D. Smirnios
Montreal

Canada is a huge country geographically, but small in population. Our competitive advantage is in the highly educated and motivated people in this country who have a world (literally) of experience to draw upon.

Knowledge based industries, whether software, hardware, biotech, greentech or life science are key to our future. But as the Conference Board of Canada has stated regularly in it’s annual Report Card on Canada, our biggest problem in Innovation is that we don’t take our ideas and bring them to market as products efficiently.

I recommend 5 major steps to change that over the coming years:

1. Fully utilize the skills and abilities of the Canadian workforce
2. Fix the financing issues for entrepreneurs
3. Match technologists with experienced Product Management and Marketing resources early on
4. Create a national culture that celebrates innovation
5. Resource industries can no longer be the primary focus of Canada’s international trade strategy

You can read the details here: http://www.bit.ly/aJHvXH

The full URL is

http://onproductmanagement.net/2010/03/25/canadas-innovation-gap-part-3/

Saeed

I disagree with you in many points, with all respect.
If we look at the history of industrialization and development, we will discover that many rich countries used protectionism against foreign competition. The UK itself used this policy against the US, when the US wanted to spread and become independent in 1900. There is a very famous book about protectionism called: The Bad Samaritans. Even South Korea used protectionism too. In fact, all the developed countries did.
Many people also think that we live in a pure capitalist system, where there is a division between government and private business or what we hear nowadays non-governmental intervention. If we think this is true, then we should ask ourselves about the welfare system, social assistance, social insurance,…..
The government is always present, the only difference in my point of view, is that there is less government now than a couple of years before.

I do agree with you in a couple of points, especially making Canada a kind of distant and independent from the US. The Canadian rapprochement to the US during the Harper government did really harm Canadian reputation overseas. I noticed that when I went on a 5 months trip to Africa and Europe last year. Canada should avoid being part of those countries that have to clean the US mess in a war, after the US starts it and leaves. Our troops went to Afghanistan based on a peace mission and their job was to monitor the events. Now our troops are in a war against Taliban. We do not need to be involved in war because we are scared of being isolated. Switzerland and Austria were war neutral countries during WWI and WWII and they are just fine. Isn’t Switzerland still one of the richest country in the world?
I do not think that we can distance ourselves from doing business with the US because they are our closest neighbours and we have common interests. I suggest personally that we should control and monitor these relations by having an eye on our government and its activities. We should require more transparency from the Canadian government.
If we want to advance things and improve the environment, car industry, trade, and education, then we should implement the required infrastructure over a plan of a couple of years. We cannot afford to talk about solutions without being active towards them. A big problem that we have in Canada is that we rely only on experienced or rich (or both) politicians instead of relying on both. we need very educated and reliable politicians that are educated at higher levels and not: you can make the job because you are qualified enough or you are experienced, or even because you know somebody. We need to put more academics in the provincial and the federal parliaments and give them enough money to do a good job, instead of giving them less and handing over the job to business people that do not care about their wages so much but they are there to defend their own interests and not those of the Canadian people.

I think competition is a real problem. Every one is responsible: those who are importing for more benefits and those who are consuming for consumption. The question is: how to make everybody happy?
We cannot. The only think I suggest is that taxed on imports should be raised relatively on companies because we export many things that we do not really need. On the other hand we cannot blame people for being cheap and shopping at Walmart.
Another thing that I learned from living in other countries is the system itself has faults. For example, cell phones are amazingly expensive in Canada in comparison with Europe. Why? Because in order to compete against the service providers you have to be a Canadian citizen, a hurdle that does not allow foreign companies to do business in Canada, but to totally protect those who have the monopoly. The loser is the Canadian consumer. In this case only the government can change the situation by intervening, changing the law of competition, and looking for the interests of people and not only businesses.

Just as the British East India Company lobbied the Courts of English Kings to go to war to ‘protect’ their trade routes, Texas Big Oil lobbied the US government to ‘protect’ their profits by warring with Iraq.

Now we see the “Tea Party” twits in the US who think they are like their forefathers who dumped taxable tea into the harbour. That tax was imposed at the request of, you guessed it, large global traders usurping government authority to eliminate smaller regional competitors. The current tea partiers have been coerced by corporate interests, into thinking government is the issue.

Canada at 150 is at a crossroads. A choice must be made – the same choice which must be made by every generation: Are we willing to put ourselves out a bit to maintain democracy?

Democracy is more than voting from time to time – it is equality of opportunity, it is freedom from coercion, it is exercisable human rights.

Like it or not, direct or indirect, the goal of the proponents of NAFTA and the WTO movements is the elimination of functional democracy and the retirement of respect for human life. For those who don’t believe, – check out the agreements and their dispute resolution processes. No more resorting to Canadian courts – the World Bank decides issues. In private.

Recent precedents in North America have altered the concept of “eminent domain” to include the ability to gain higher taxes from land use as a reason for expropriation. It’s not for a highway or a hospital you lose your home it’s to let a corporation build a high-rise condo.

I could go on…

As a former executive in the Public Service of Canada in the economic and regional development area, I along with many of my colleagues wrestled with the issue of Canada’s lagging performance in innovation and productiviity for most of the 35 years of my career. The Conference Board of Canada has documented this lagging innovation performance annually since the turn of the 21st century.

But rarely did we succeed in setting the innovation policy table for a truly bold move forward. Among other things, the political will to do so has been too tepid and temporary. A trully boldmove is needed now more than ever as Canada faces growing competition from around the world to master and command the heights of the knowledge-based global economy. Just think for a moment about the rise of India and China in this context. We collectively must throw off the old paradigm of relying on harvesting and shipping our raw natural resources abroad underpinned by an undervalued currency. This is a complacent posture that both the private and public sectors in Canada continue to strike to the detriment of the standard of living for current and future generations of Canadians.

I have come to one overarching conclusion: we face a systemic cultural problem in Canada which requires a major change in mind set and behaviour in both business and government. That problem is the failiure to inculcate innovation at the centre of all business models and public economic development policies. Research and development is but one aspect of innovation but tends to be given inordinate focus in government industrial policy and priorities. Too many companies ignore R&D as a key component of competitiveness. As Peter Drucker put it so succinctly decades ago, business hs but two main functions, namely, innovation adn marketing.

Innovation in business needs to be an integrative function owned by corporate leadership and not just the purview of the head of the R&D organization. Innovation needs to be treated as an intrinsic and strategic investment process in the futurity of companies rather than treated simply as an operating expense to be adjusted by the rise and fall of sales.

To send the right behavour-changing signals and set the right and sustained fiscal framework, the current tax system’s focus on the scientific R&D tax incentive should be drastically reformed, enlarged, and extended to all three sectors of our economy to encourage so as to support all major elements of the innovation process. Innovation encompasses more than R&D (concept generation and testing). It includes ongoing competitive market research and verification testing, process development and piloting of production runs to assure cost, quality and doability at scale, related staff skills training and development, and market development initiatives including partnering/ sales channels selection outside Canada . Many of these activities are not eligible under the present R&D tax credit yet are essential to the success of commercializing innovation which entails costs that rise exponentially from the initial R&D costs incurred to achieve proof of concept. Also, to attract multiple rounds of venture capital to SMEs , the new innovation tax credit must be sharable in the same way that current mining, oil and gas resource exploration and development investment tax credits are.

With this universal Innovation Investment Tax Credit, government can reduce and even eliminate a number of funded R&D programs that amount to billions in annual funds. It could reposition the NRC’s Industrial Research and Development Program, and DFAIT’s Program for Export Market Development to provide technological and market advisory services which they both were initially set up to do. The government should also work closely with the private sector’s financial services sector including accounting firms, management consulting firms, and venture capital investment firms as well as business schools to imbed the new tax-supported innovation culture deeply within the psyche and behaviour of Canada’s current and future generations of business leaders.

I don’t intend to pitch this bold move as a silver bullet or panacea. The pace of change in the knowledge-based economy is just too high to think in such terms. However, the failure to make this bold move will only serve to accelerate Canada’s continuing downward trend to a state of chronic deficits and deteriorating standared of living and quality of life. That is a vision of Canada 150 that no thinking Canadian wants or wishes to see come to fruition.

Gerry Cooper
Public Polilcy Advisor at Large