Economic report a mixed message
The latest report from Ottawa’s Advisory Council on Economic Growth is an odd document.
It foresees a world in which almost half of Canadians will have lost their jobs to automation. Yet it spends much effort trying to figure out how to encourage more workers to compete for this diminishing number of jobs.
Like the council’s first report in October, this one walks a fine line between market economics and activist government.
It wants private capitalists to lead the way but it also wants government to both guide and backstop their efforts.
In that sense it hearkens back to the Asian successes in state capitalism — like Japan in the 1980s or China today.
The report, released Monday, makes a bow to inclusiveness, repeating the Liberal government’s mantra that the wealth from globalization must be more equitably shared.
But it doesn’t exactly say how this can be achieved.
Like Finance Minister Bill Morneau, who set up the council to advise him, the report takes as given that precarious work — or what it calls the “gig economy” — is the new reality.
It assumes that nothing can be done to reverse the trend to precarious work, although it does note that some of the ill effects may be countered through regulation.
The only real hope, the report says, is to encourage innovation in the economy writ large while at the same time constantly retraining workers to adapt to the dizzying effects of change.
Indeed, at heart, the council’s prescription is a familiar one: selective deregulation, government subsidies to business and publicly funded retraining for workers caught in the crossfire.
The subsidies would come in many ways. Right now, for instance, governments buy goods and services based on which suppliers can give them the best quality at the lowest price.
The report would change the rules of procurement to have governments use their buying power in a “strategic” manner to “test and validate Canadian innovative solutions” — even if the products or services involved were more expensive.
And it would have government subsidize so-called innovation marketplaces where businesses could try to sell new ideas to one another
Upon which areas of the economy should the government focus?
The report identifies eight, running the gamut from agriculture to tourism, from finance to energy, from mining to advanced manufacturing.
For reasons that are never entirely made clear, the report focuses on agriculture.
It concludes that Canada could sell more “protein” to the world if the transportation system were better, if more food processing were done domestically and if supply management in the dairy sector were scaled back or eliminated.
However, the 14 business people and academics who make up the council saved most of their enthusiasm for innovation. It’s a vague concept that is easy to laud. And laud they did.
But along the way, they casually laid a few political landmines, at one point calling on government to look seriously at setting up a Quebec-style national child care program that would allow more mothers to enter the workforce.
Since Justin Trudeau’s Liberals spent much of the last election campaign arguing against exactly that, this was rather a cheeky recommendation.
Similarly, the report called on Ottawa to raise from 65 the age at which Canadians are eligible for full Old Age Security and Canada Pension Plan payments.
The council apparently felt that these notoriously paltry stipends are enticing the elderly poor to avoid gainful employment.
Given that the Trudeau Liberals just finished lowering the official retirement age from 67 to 65, that recommendation too is likely going nowhere. Which is perhaps just as well.
While contradictory at times (it says at one point that Canada can no longer rely on commodity production and then at another that it should) the report is not foolish.
It will probably inform Morneau’s thinking as he prepares his next budget.
But in a world in which jobs are already being decimated by automation, encouraging more people to enter the labour force before the innovation revolution works its reputed magic can only suppress wages. Is that what we want?