The Next Canadian Century: Building a Competitive Economy
Toronto: Stoddard Publishing Co. Ltd., 1992, 302 pp., $26.95
Amid the twilight of a century characterized by incessant innovation, the world's nations find themselves rising and falling in the turbulent seas of global competitiveness. As a result, many authors have begun anticipating the economic dawn that will greet Canadians in the new century ahead. The Next Canadian Century by David Crane, The Toronto Star's economics editor, is an insightful and readable examination of the Canadian economy.
"Competitiveness" has quickly become a buzzword in the nineties, as nations debate about how to become competitive, with whom, and at what cost. Canadians have increasingly begun to ask themselves and their politicians if our high standard of living can be maintained. Crane's response is an emphatic "Yes." "Our goal should be to transform our economy so that it becomes a knowledge-based, sustainable economy that generates the wealth to make Canada a Sweden of North America, with a strong commitment to social values and public goods." (p.269)
The most insightful indicator of a nation's economic health over the long haul is its level of productivity. The key to higher wages is higher productivity, the classic example being the relentless rise of the Japanese economy since Wold War n. Unfortunately, Canada has had very slow productivity growth the last two decades while experiencing rapidly rising labour costs. Our inability to maintain productivity growth necessitates either increasing deficits as we live beyond our means or a decline in our standard of living.
Crane sees the solution to our productivity malaise through renewing the building blocks of education and training, research and development, and labour-management-government partnership. In each area, he finds that we need to do much more, but we are remaining relatively staid. And some of his illustrations are eye-opening indeed! For example: the average Canadian student spends more hours watching television than time in the classroom; the average Canadian worker received 6.7 hours of formal training in 1988, compared to 200 hours for a Japanese worker; half of all apprentices never complete their training; seventy per cent of all manufacturing firms do not employ a single engineer; half of our total exports are resource-based with little value-added; and Canada has by far the lowest level of research and development among G7 nations.
Canada is confronted by a commodity curse. After decades of prosperity built upon the extraction of raw resources, we are suddenly competing with many low-cost developing nations at supplying the world with resources. Areas such as forestry, mining, agriculture, and fisheries are doubly on the decline because demand is shrinking as advanced economies begin to utilize new materials (plastics, composites, fibre optics). Thus our collective Canadian dilemma: continue to try and compete with Third World commodity producers based on cost and suffer low wages or begin the difficult transformation into a knowledge-based economy with high wages.
Having presented a compelling picture of Canada at an economic crossroad, Crane proceeds to outline his economic blueprint. The key ingredient for the author is the high level of cooperation and consensus found in Europe and Japan: government, business, and labour unions working closely to coordinate industry-wide strategies and training; governments actively funding research and promoting industry centres, for example, Europe's aerospace consortium; companies adopting a longer-term investment outlook; cooperative labour relations and labour assuming a voice in the running of the business enterprise; and a national vision with economic and social goals to aspire to and be measured by.
The core of Crane's vision is for a Canada with a controlled capitalist machine à la Japan and a vast social fabric à la Europe. Is such a hybrid possible? Crane fails to address an even more fundamental question: "Can Canada be a 'Sweden' beside the U.S.?" He states, "Canada must develop a social partnership or consensus that could include the adoption of guidelines or a voluntary incomes policy to contain inflation." (p. 262) In light of North America's adversarial labour relations structure and the heated social contract talks in Ontario, how conceivable is this?
Despite the reality that Europe's social and bureaucratic labyrinth threatens to pull the EC nations into a depression, Crane chooses not to examine more closely the 40-year miracle in South-East Asia. His hope is that the government will stimulate the economy by becoming even larger and more proactive. Given that the bloated governments in the Western world are mainly expanding at the expense of the private sector and unborn taxpayers, this hope is unrealistic. The next Canadian century certainly will be a challenge. Crane's analysis is an interesting but flawed glimpse into the large macroeconomic questions Canadians must begin to address.