Ottawa’s innovation hand-holder
Should the Harper government’s appointment of Jim Balsillie as part-time, bargain-priced chairman of Sustainable development Technology Canada be taken as satire, cynicism or lunacy? does installing a dyedin-the-wool, davos-attending small and large “l” liberal send a clever signal that the Conservatives think that SdTC is a crock? Or do they imagine that appointing the former co-CeO of rIM (now BlackBerry) might give this agency credibility?
Certainly, the Conservatives have to keep up their smiley faced green credentials because of the dangers of President Obama’s stubborn Canute-ism, but while SdTC may make political sense, it makes none in terms of generating jobs and wealth.
Public policy wonks endlessly bemoan the fact Canada has a relatively low level of innovation “despite” one of the most generous r&d regimes in the world. What about replacing “despite” with “because of.” A powerful case has been made (especially by British academic Terence Kealey in his excellent book, Sex, Science & Profits) that government r&d “support” in fact retards innovation by driving out the private version and promoting rent-seeking.
SdTC ventures into a lower circle of interventionist hell because it was created by the Chrétien Liberals twelve years ago to promote “clean” technology. The natural tendency of capitalist technology is always toward more energy-efficient and less-polluting equipment, but the implicit claim of sustainability is that the market is going too slowly, and in the wrong direction. What is needed is more wise government.
Imagine dragon’s den, only instead of having entrepreneurs investing their money, you have bureaucrats investing yours, with constant interference from vote-obsessed politicians.
The one area in which government has successfully promoted technology is weaponry and defence, but such technology is a necessary evil, and tends to be a sinkhole once it becomes part of industrial strategy via “smart” procurement. Nobody supports dumb procurement, but once you start loading other policy objectives onto the specs, there is virtual-
Balsillie makes a puzzling new figurehead for SDTC. Why not Kevin O’Leary?
ly no limit to the potential political interference and economic damage.
At least military equipment has a clear purpose: killing your enemy before he can kill you. Clean and green technology has no such clear objective. SdTC has, under the Conservatives, moved more toward supporting oil sands and pipeline technology, but oil and pipeline companies do not need government support.
SdTC – like most government support for r&d and venture capital — is based on varying degrees of political cynicism, but indubitably bogus logic and misleading metaphor. The bogus economic logic lies in the claim that since the “social rate of return” on r&d is higher than the private rate, there is too little r&d. This is claimed to represent a “market failure.”
In fact, all this assertion does is restate the essence of Adam Smith’s Invisible Hand: that those producing for the market promote a greater good that is “no part of their intention.” In an extensive market, the social return to every form of successful activity is greater than the private rate. On that basis, the entire market is one gigantic failure.
Meanwhile, the social rate of return is only greater on successful innovations. The key point is that the government has no idea which one’s these will be. Hence the idea that a government agency might hold innovators’ hands as they cross a “valley of death” is misleading because there is no guarantee there are profitable uplands at the end of the journey. Indeed, not only does the government not know if uplands are there, it doesn’t even know in which direction to go.
When it chooses a direction, it usually relies not on technologies of the future but technologies of the past, as with wind solar, and electric cars. Or else it gives money to established companies to pursue technologies that they either wouldn’t have, or, just as bad, would have anyway.
The Conservatives may be cleaning house at SdTC, but its ventures are either doomed to failure, or amount to corporate welfare. In that regard, therefore, it wouldn’t matter who was chairman, but given that Mr. Balsillie has been a stout supporter of pretentious policies, from complaining that rIM wasn’t given special access to Nortel assets, to being on the uN Secretary General Ban KiMoon`s High Level Panel on Global Sustainability, it seems he might be the man for the job after all. My choice would have been Kevin O’Leary.