CHINA STATISM STRATEGY CREEPS IN.

As Canadians struggle to wrap their isolated economic heads around the $300-billion exploding Canadian COVID-19 fiscal imbalance, along comes a new report from the Public Policy Forum that asks Canadian policy-makers to launch a massive post-pandemic state-run industrial strategy program.

Released this week, “A Challenge-driven Industrial Strategy for Canada” is the second in the think-tank’s New North Star series spearheaded by former economic advisers Sean Speer (Conservative) and Robert Asselin (Liberal), with help from Royce Mendes (bank economist).

Here’s a one-sentence summation of the “challenge-driven” industrial strategy proposal outlined in the report: The Canadian and global economies have performed magnificently through most of the past four decades of trade liberalization, globalization and market-driven growth, therefore it is now time to abandon those successful policies and adopt a new economic model based on the top- down economic policies imposed by the Chinese Communist Party (CCP) in China.

In others words, Canada should now import from China what is fast becoming one of China’s biggest exports: state economic planning and control. According to the Speer/ Asselin/mendes report, “The Chinese government has been ahead of the United States in particular and Western countries in general in terms of implementing a deliberate industrial strategy in order to develop comparative advantages in the intangibles economy. It has worked.”

China’s rise, they say, is due to the Communist Party’s adoption of a state- driven “alternative to democratic capitalism.” China’s rise is allegedly due to its ability to use state planning to dominate the new global paradigm that’s taking shape around the “intangibles economy.”

No space here to get into the nature of the intangibles economy, except to say that apparently the world is shifting away from a tangible goods- producing model and toward a new technology- driven model in which corporations produce thoughts and software and data rather than things. As a result, corporations today tend to be valued more on the basis of their technology than their investment in plant and equipment.

But even if one accepts that the market economy has fostered a transition to more intangibles and fewer tangibles, it does not necessarily follow that a new Chinese Communist- style national economic strategy is needed. Which may explain why the Speer/asselin/mendes paper depends heavily on references to a long line of anti-free-market economic thinkers to support their conclusions.

First they go after the free-market policies of the past 40 years, dropping the names of Ronald Reagan and Margaret Thatcher ( the Reagan-thatcher “ethos”). They dismiss the 1985 Canadian Royal Commission on economic growth headed by former Liberal finance minister Donald Macdonald as a piece of antiquarian economic thought. The Macdonald commission supported privatizations, free markets and free trade. Canada thrived. But while the Macdonald plan “served Canada well” for three decades, say Speer et al., 2020 is a different time that requires dismissing all that neo-liberal Milton Friedmanism.

Throughout the Speer/asselin/ Mendes paper lie references to a slew of anti- globalization books, commentaries and assessments that are part of the burbling leftist anti- capitalism that is sweeping the academic and media world. Cited authorities include The Entrepreneurial State by Mariana Mazzucato and ( indirectly) The Corruption of Capitalism by Guy Standing, which portrays Goldman Sachs, Uber and just about any owner of assets as part of a “rentier capitalism” that oppresses workers. Standing’s work has been championed by Martin Wolf at the Financial Times, which has recently become a bastion of anti-capitalism.

It turns out that the basis for much of the Speer/asselin/ Mendes paper has at least one foot dangling in the neo-marxist side of the great ideological divide over the role of government in the economy — inequality is growing, the rich are getting richer, and the financial/big-tech economy is rigged.

To overcome all this alleged failure of free market, free trade and globalization policies ( and despite the massive 40 years achievement of such policies) Speer et al. provide a sketchy outline of how their new “challenge-driven industrial strategy” would function in practice.

First we need some typical consultancy advocacy gobbledygook to get the strategy ball rolling. “An industrial strategy would focus on a mix of policies, including financing research and development, taxation, innovation, intellectual property, procurement, regulatory and human capital, to build comparative advantages in key parts of global supply chains. It is about creating a coherent strategy to build domestic productive capacity in the new sources of wealth, opportunity, and in turn strategic relevance in the new geoeconomic environment.”

Got that?

As to which key sectors to target, the Speer/asselin/ Mendes paper provides few suggestions. It rejects the idea of “picking winners” and instead proposes that state planners dedicate themselves to spurring “domestic technologies and commercial applications” in three key areas: climate change, smart cities and an aging population, with maybe some military work to create a kind of U. S.- style military- industrial complex.

The COVID-19 pandemic story has been patched into the paper, including via two footnote references to a Foreign Policy magazine survey of experts who are said to agree that the pandemic “will change the world forever,” therefore supporting the need for a new industrial strategy.

One of those foreign policy thinkers, however, is Stephen M. Walt at Harvard University. He said the pandemic will cause a further retreat from globalization and increase the power of national governments. Such moves “will create a world that is less open, less prosperous, and less free.”