Friday, November 30, 2018

First Rate Country with a Fourth Rate Business Class

A few times in this space I have made the statement in the title of this post when describing Canada.  I go into detail of what I mean here.

This was brought back to my mind again in the past couple of weeks because of the ongoing "crisis" in Alberta and the announced closure of GM plant in Oshawa.  Both are situations that demonstrate the lack of vision, courage and business acumen of the Canadian business class.

The situation in both places has been well documented in other spaces so I will not go into great detail about them here.

The business community and many conservative commentators in this country look longingly at the dynamic US economy and would like to be able to create such an economy here.  They point to the low personal and business taxes and less regulation in the US and state that if Canada were to follow that path Canada could have an economy like theirs.

The situation in Alberta and Oshawa puts paid to that assertion.

First, the Tar Sands were only developed because the Federal government of Pierre Trudeau spent a tremendous amount of federal money to move the development along.  No private business in Canada would take the risk in attempting to develop it themselves.  Contrast that with the US.  The rise of shale oil in the US market, which has contributed to the depression of the price of Alberta oil, was exploited by private businesses with private money.  Little or no public funds were used.  I dare say that if the Tar Sands had been located just a couple of hundred kilometres below the 49th parallel they would have been exploited by private industry, without any public funds, and the companies that exploited it would be pulling the stuff from the ground and shipping it for processing at processing plants and refineries that they owned, not to establishments in another country that they did not own.

Second, it is more than even money that nothing developed in Canada will replace the GM plant after it closes.  Maybe another car company, from another foreign country will decide it is a good space to build their cars, but if that does not happen that site will be largely abandoned.  No Canadian company will have the vision or the courage to take advantage of that space. 

The US economy is the way it is because entrepeneurs who are not adverse to taking risks are pervasive in the economy.  Many more fail than succeed but enough succeed to sustain that economy and help it grow.  Contrast that with the Canada, where the business class is the exact opposite of their American counterparts.  Canada could eliminate all taxes and regulations and the Canadian economy would still not be as dynamic as the US economy because the Canadian business class would not have the courage and motivation to take advantage of it to leverage the windfall into increased economic activity and greater wealth.

As I have stated in this state before if the Canadian business class had any kind of business acumen Canada would be punching well above its weight in the international economy.  We are blessed with a tremendous bounty of natural resources and an educated and capable work force.  A business class that could actually live up to that name would have taken full advantage of these two facts long ago to make themselves and Canada much wealthier than they already are.  They would have allowed the Canadian economy to realize its full potential and we would all be much better off as a result.

Alberta and Oshawa further proves that this is a pipe dream.  

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