I've been reading others thinking along these lines (I find Cory Doctorow and Scott Galloway talk about these themes in an entertaining way). Here's where I think we go wrong from a policy point of view: we tend to elect governments that promise 'good paying jobs for the middle class' and the easiest, fastest way, highest-profile way for them to deliver is to support, subsidize and attract large companies capable of generating lots of 'showcase' jobs quickly. So, government pours money into projects that promise to create good paying jobs, and then is motivated to create a business environment designed to support the companies they've now aligned themselves with to keep those jobs and investment here.
Ultimately, the government gets captured because it's tossed millions (or billions) of dollars into projects for the promise of good-paying jobs and it needs to see returns in a fairly short timeframe.
I think the role of government is to maintain competitive, dynamic and trustworthy markets. That means regulation, including anti-trust and competitive legislation, that keeps lots of entrants and lots of competition. Doing so will make the market more dynamic (which is good) which means job stability might be less (which isn't so good if you are the one impacted). The answer is to develop good programs to help people make the transitions between opportunities -- which can mean retraining and relocation. That's actually good both for workers and the economy over the long term as people shift to places where there are actual opportunities.
That would also require a change in mindset for workers -- recognizing that you are more likely to have to shift from job to job and that you might not be able to find the next opportunity where you are currently living ... which has impacts on housing too.
Now, I'm not saying getting this policy mix is easy -- it's not. It's a lot more like trying to create a really interesting, competitive sports league, where you want to keep each team competitive, allow winning teams to get rewarded, but not so much so that they become unbeatable. It would mean looking at 'sunset' industries and focus more on helping people transition to the next thing and less on propping up inbumbents.
It's very different than the 20th century model, which focused a lot on attracting foreign direct investments (the branch plant economy) where landing a big auto plant would then generate several thousand good-paying jobs and a whole network of suppliers, reliably for decades. I think that model doesn't really work anymore -- the big value in modern companies is data and IP and that tends to accrue value at the head office, not at the 'branch plant' where work can be automated and companies can get governments to compete on subsidies.
My stance on most of this is very much the same as yours - however, I really don't believe our government will ever actively work against those with vested interests in the way things are, unless their influence is blunted by something quite extreme, such as a commercial and/or residential real estate crash, or even a general economic crash (which, let's face it, anything substantial in real estate would cause, here). It's been something of a theme throughout my last three posts on my Substack.
I think something tumultuous must happen first, for our own government to change course, which is currently firmly set on maintaining the status quo. That's because they don't believe the problems you describe are real; they truly think the problem is populists stirring up trouble by stating there are problems.
There’s one more, very significant, “ring” not mentioned: the Canadian public - or at least, the 67% that own their own home.
How so? They are happy to keep their inflated real estate market gains courtesy of the principal residence tax free status, and woe betide the politician that tries to take it from them!
One could also mention other related market defeating tax policies enjoyed by the wealthier portion of the Canadian public: reduced taxation of capital gains, personal/corporate integration of income taxation (thereby implicitly valuing the cost of incorporation at zero, in spite of its state-granted advantages), and most obviously: TFSAs (it’s right in the name!).
(Note that one could easily negate the effect of inflation on multi year gains by adjusting the cost base for CPI. The 50% capital gains exclusion rule is simplistic and predates ubiquitous personal computers, which can make such an adjustment a trivial task for even the most active investor.)
I read this as an penetrating and lucid argument that people like Poilievre distill to “get rid of the gatekeepers”.
Despite being a huge personal fan of TR and what he accomplished pretty much through sheer force of will, in addition to there being no Canadian TRs on the horizon, he also didn’t have to deal with Canadian Federalism.
The dairy lobby is a key cog in the Quebec national political regime. The telecoms lobby is a key cog in the GTA political regime. The oil lobby (now a pariah) is a key cog in Alberta’s.
It’s going to take one hell of a deft politician to throttle those interests and still gain (or retain) office. And there’s simply no one like that present.
The problem ultimately here is Quebec, namely Quebecois business culture and the protectionist mercantilism that is bred into the core of the Quebecois culture. It's the fear of economic disruption and the craving of insularity and ultimately economic mediocrity over risk for growth and prosperity. English Canada but who are we kidding, the Ontario Laurentian Elite have rolled over and given in to the point it's now hurting our kids and their future.
To keep Quebec on board the Canadian project both Bell and Air Canada by law are not allowed to move their HQ from Montreal. Both are heavily protected to the extent they are too big to fail. To keep Quebec in Canada we have Cancon, Bill C18, the dairy and poultry protection racket, banking industry protections, even bilingual language laws, let alone more and more. What Kadysh share is that Canada has given too much to Quebec's elite class.
Quebec obviously wants to go the protectionist big brother dirigiste route that is anathema to the 21st Century society let alone the Anglo culture.
We in Canada are going to have to make some hard choices ahead, now that interest rates won't allow the money printing machine to go into overtime anymore. Do we choose unity of Canada at all costs but decline, or do we choose economic and social dynamism and let the Canadian unity cards fall where they may? Because make no mistake, lifting the myriad economic and social protections, mostly designed for Quebec, will open up a new unity crisis.
A refreshing change in perspective and an interesting assignment for all of us interested in delving further into the subject. Thank you Nick and also Mark(in the comments) for the discussion.
The overarching problem is protectionism, and the subsequent lack of competition from foreign producers.
This is best seen in the air transport, telecommunications, broadcasting, and financial services (including banking) sectors. Foreign ownership is strictly limited and foreign control is not allowed. The result is predictable. Canada is a relatively small national market, with limited capital markets, and consequently few producers. These producers lack economies of scale and so have higher costs of production, than if they were integrated into larger market blocks.
A good example is retail financial services. Canadian investors face fees (mutual funds, insurance products) that are much higher than their American counterparts. But the Americans are not allowed to sell their lower-cost products here.
Supply management: The federal government is fighting tooth and nail to limit imports (and competition). And so on.
In passing, the Commissioner of Competition reports to the Minister of ISED, not directly to Parliament. This seriously limits the Commissioner's independence. We have seen more than one report on a merger, where the analysis strongly pointed to one conclusion, but suddenly the conclusion came to the opposite conclusion. It looked as if a different hand had written the conclusion.
The funny thing about a lot of these problematic Canadian oligarchies is that they're products of Canadian governments trying to get somebody else to pay for a desired policy objective. It started with using the Canadian Pacific railway as a mechanism to connect the country and drive western settlement, and continues today with the effort to get internet giants to subsidize Canadian news with bill C18. We didn't want to pay dairy subsidies but also wanted to protect the industry, so supply management was introduced so we could pretend it didn't cost anything. Airlines and telecom providers are given favorable treatment because the government wants to extend services to small or remote communities that otherwise wouldn't justify it.
Ending these oligarchies and putting the free market in charge would allow the distortions to resolve, but I think it would be accompanied by an even more intense populist backlash.
As Mussolini said, Fascism is better described as corporatism, the unity of government and big business. We're there, with the federal Liberals actively creating this.
We need a change of government and not to the CPC. We need an NDP government to make these changes.
The righties call the Liberals leftists but fact is Canada has 3 Conservative parties. The PPC. the CPC, & the LPC. Just look at the LPC decisions. Almost always for the company.
I’m currently caught in a rage inducing problem with “Rogers” due to the Shaw merger and my family was treated to a rant about oligopolies tonight and how the merger never should’ve been allowed had crtc and the competition bureau actually done it’s job. I still don’t understand why the merger was approved.
What would you do about situations where we hobble Canadian oligarchs only to wind up with US oligarchs and we would then have even less clout? Say goodbye to Rogers, say hello to Verizon. We might save money on dairy products by ditching supply management while the US subsidizes farmers with other methods.
Introducing more competition is a worthy goal but it wouldn't be simple.
The US has robber barons by the bushel, and we can't lay a glove on them. They would no doubt be delighted to help us create more competition in Canada but don't expect them to give us a fair deal on softwood lumber while they're at it.
The Liberals are not capable of doing anything to fight the vested interests--and I'm not sure the Conservatives are any better. Which makes me very, very uneasy.
What NIMBY sentiment do you keep referring to? Here in the GTA, we’ve been on a massive building book for over a decade. Building tiny shoe box sized condos for foreigners who want to use canadian real estate to launder their cash.
I've been reading others thinking along these lines (I find Cory Doctorow and Scott Galloway talk about these themes in an entertaining way). Here's where I think we go wrong from a policy point of view: we tend to elect governments that promise 'good paying jobs for the middle class' and the easiest, fastest way, highest-profile way for them to deliver is to support, subsidize and attract large companies capable of generating lots of 'showcase' jobs quickly. So, government pours money into projects that promise to create good paying jobs, and then is motivated to create a business environment designed to support the companies they've now aligned themselves with to keep those jobs and investment here.
Ultimately, the government gets captured because it's tossed millions (or billions) of dollars into projects for the promise of good-paying jobs and it needs to see returns in a fairly short timeframe.
I think the role of government is to maintain competitive, dynamic and trustworthy markets. That means regulation, including anti-trust and competitive legislation, that keeps lots of entrants and lots of competition. Doing so will make the market more dynamic (which is good) which means job stability might be less (which isn't so good if you are the one impacted). The answer is to develop good programs to help people make the transitions between opportunities -- which can mean retraining and relocation. That's actually good both for workers and the economy over the long term as people shift to places where there are actual opportunities.
That would also require a change in mindset for workers -- recognizing that you are more likely to have to shift from job to job and that you might not be able to find the next opportunity where you are currently living ... which has impacts on housing too.
Now, I'm not saying getting this policy mix is easy -- it's not. It's a lot more like trying to create a really interesting, competitive sports league, where you want to keep each team competitive, allow winning teams to get rewarded, but not so much so that they become unbeatable. It would mean looking at 'sunset' industries and focus more on helping people transition to the next thing and less on propping up inbumbents.
It's very different than the 20th century model, which focused a lot on attracting foreign direct investments (the branch plant economy) where landing a big auto plant would then generate several thousand good-paying jobs and a whole network of suppliers, reliably for decades. I think that model doesn't really work anymore -- the big value in modern companies is data and IP and that tends to accrue value at the head office, not at the 'branch plant' where work can be automated and companies can get governments to compete on subsidies.
My stance on most of this is very much the same as yours - however, I really don't believe our government will ever actively work against those with vested interests in the way things are, unless their influence is blunted by something quite extreme, such as a commercial and/or residential real estate crash, or even a general economic crash (which, let's face it, anything substantial in real estate would cause, here). It's been something of a theme throughout my last three posts on my Substack.
I think something tumultuous must happen first, for our own government to change course, which is currently firmly set on maintaining the status quo. That's because they don't believe the problems you describe are real; they truly think the problem is populists stirring up trouble by stating there are problems.
There’s one more, very significant, “ring” not mentioned: the Canadian public - or at least, the 67% that own their own home.
How so? They are happy to keep their inflated real estate market gains courtesy of the principal residence tax free status, and woe betide the politician that tries to take it from them!
One could also mention other related market defeating tax policies enjoyed by the wealthier portion of the Canadian public: reduced taxation of capital gains, personal/corporate integration of income taxation (thereby implicitly valuing the cost of incorporation at zero, in spite of its state-granted advantages), and most obviously: TFSAs (it’s right in the name!).
(Note that one could easily negate the effect of inflation on multi year gains by adjusting the cost base for CPI. The 50% capital gains exclusion rule is simplistic and predates ubiquitous personal computers, which can make such an adjustment a trivial task for even the most active investor.)
I read this as an penetrating and lucid argument that people like Poilievre distill to “get rid of the gatekeepers”.
Despite being a huge personal fan of TR and what he accomplished pretty much through sheer force of will, in addition to there being no Canadian TRs on the horizon, he also didn’t have to deal with Canadian Federalism.
The dairy lobby is a key cog in the Quebec national political regime. The telecoms lobby is a key cog in the GTA political regime. The oil lobby (now a pariah) is a key cog in Alberta’s.
It’s going to take one hell of a deft politician to throttle those interests and still gain (or retain) office. And there’s simply no one like that present.
The problem ultimately here is Quebec, namely Quebecois business culture and the protectionist mercantilism that is bred into the core of the Quebecois culture. It's the fear of economic disruption and the craving of insularity and ultimately economic mediocrity over risk for growth and prosperity. English Canada but who are we kidding, the Ontario Laurentian Elite have rolled over and given in to the point it's now hurting our kids and their future.
To keep Quebec on board the Canadian project both Bell and Air Canada by law are not allowed to move their HQ from Montreal. Both are heavily protected to the extent they are too big to fail. To keep Quebec in Canada we have Cancon, Bill C18, the dairy and poultry protection racket, banking industry protections, even bilingual language laws, let alone more and more. What Kadysh share is that Canada has given too much to Quebec's elite class.
Quebec obviously wants to go the protectionist big brother dirigiste route that is anathema to the 21st Century society let alone the Anglo culture.
We in Canada are going to have to make some hard choices ahead, now that interest rates won't allow the money printing machine to go into overtime anymore. Do we choose unity of Canada at all costs but decline, or do we choose economic and social dynamism and let the Canadian unity cards fall where they may? Because make no mistake, lifting the myriad economic and social protections, mostly designed for Quebec, will open up a new unity crisis.
A refreshing change in perspective and an interesting assignment for all of us interested in delving further into the subject. Thank you Nick and also Mark(in the comments) for the discussion.
The overarching problem is protectionism, and the subsequent lack of competition from foreign producers.
This is best seen in the air transport, telecommunications, broadcasting, and financial services (including banking) sectors. Foreign ownership is strictly limited and foreign control is not allowed. The result is predictable. Canada is a relatively small national market, with limited capital markets, and consequently few producers. These producers lack economies of scale and so have higher costs of production, than if they were integrated into larger market blocks.
A good example is retail financial services. Canadian investors face fees (mutual funds, insurance products) that are much higher than their American counterparts. But the Americans are not allowed to sell their lower-cost products here.
Supply management: The federal government is fighting tooth and nail to limit imports (and competition). And so on.
In passing, the Commissioner of Competition reports to the Minister of ISED, not directly to Parliament. This seriously limits the Commissioner's independence. We have seen more than one report on a merger, where the analysis strongly pointed to one conclusion, but suddenly the conclusion came to the opposite conclusion. It looked as if a different hand had written the conclusion.
The funny thing about a lot of these problematic Canadian oligarchies is that they're products of Canadian governments trying to get somebody else to pay for a desired policy objective. It started with using the Canadian Pacific railway as a mechanism to connect the country and drive western settlement, and continues today with the effort to get internet giants to subsidize Canadian news with bill C18. We didn't want to pay dairy subsidies but also wanted to protect the industry, so supply management was introduced so we could pretend it didn't cost anything. Airlines and telecom providers are given favorable treatment because the government wants to extend services to small or remote communities that otherwise wouldn't justify it.
Ending these oligarchies and putting the free market in charge would allow the distortions to resolve, but I think it would be accompanied by an even more intense populist backlash.
As Mussolini said, Fascism is better described as corporatism, the unity of government and big business. We're there, with the federal Liberals actively creating this.
We need a change of government and not to the CPC. We need an NDP government to make these changes.
The righties call the Liberals leftists but fact is Canada has 3 Conservative parties. The PPC. the CPC, & the LPC. Just look at the LPC decisions. Almost always for the company.
I’m currently caught in a rage inducing problem with “Rogers” due to the Shaw merger and my family was treated to a rant about oligopolies tonight and how the merger never should’ve been allowed had crtc and the competition bureau actually done it’s job. I still don’t understand why the merger was approved.
" It would certainly be tumultuous"...you said a mouthful there which is why it's not going to happen ...'Teddy' is dead.
What would you do about situations where we hobble Canadian oligarchs only to wind up with US oligarchs and we would then have even less clout? Say goodbye to Rogers, say hello to Verizon. We might save money on dairy products by ditching supply management while the US subsidizes farmers with other methods.
Introducing more competition is a worthy goal but it wouldn't be simple.
The US has robber barons by the bushel, and we can't lay a glove on them. They would no doubt be delighted to help us create more competition in Canada but don't expect them to give us a fair deal on softwood lumber while they're at it.
The Liberals are not capable of doing anything to fight the vested interests--and I'm not sure the Conservatives are any better. Which makes me very, very uneasy.
What NIMBY sentiment do you keep referring to? Here in the GTA, we’ve been on a massive building book for over a decade. Building tiny shoe box sized condos for foreigners who want to use canadian real estate to launder their cash.
Amen to that!