Blame the private sector. Blame Trump. At some point, we need to stop finding scapegoats and start blaming the real culprits: governments who create a terrible environment for doing or building business and even worse expectations for the future. And the voters who elect them.
And the voters who elect them. That is spot on. And with just cause i might add . Have you ever seen Canadian voters turn their back on " free" stuff, for lack of a better word. How many times have we heard the government say we are giving you...... They give nothing. We pay for everything.
Let's start first with the Canadian voter. After all, the government, whatever their policies and activities, is there at our behest. While I acknowledge the contribution of world events, we are largely in this situation due to our own choices over many years. Naive passivity and complacency seems to be "core values" of this country..... so much wasted potential.
I am not convinced that the required changes (cultural, institutional, structural etc.) are doable before things go completely sideways. I would expect that there will be much sacrifice ahead for younger Canadians who decide to stay around.
Looking at the historically unprecedented success of the Conservatives vs Liberals and NDP among younger age groups in the last election, I think the youth are starting to realize the issues. Unfortunately, most boomers do not.
The last paragraph really says it all. A group called Build Canada is building dashboards, not actually building any physical...anything. Apartment buildings, roads, power lines, ports, strip malls, warehouses, assembly lines, sawmills, etc. Just more talking about how we *have to* build those things. And this is where our sharpest minds gravitate to. The disconnect is probably the true diagnosis.
I think having good information about the state of the nation is probably quite important for knowing what to do next. I could think of plenty of other areas where talent is wasted. Urban planning for one.
Part 2-any wonder Canada repels capital investment? Layer in significant uncertainty presented by recent court decisions over Aboriginal land rights- see recent WSJ piece on “Land Acknowledgements…” and well…
When investing in projects in this country that can be approved one day and cancelled the next by this minister or that minister, is it any wonder no one wants to invest, spend money in what could turn into a giant black hole? You first indeed!
Great piece Paul. Good to see someone finally recognizing that Canada’s business sector is complacent as compared to international peers. Our business folks need to stop their endless whining about government ineptitude and other excuse-making to justify their failure to grow their businesses. Canadian business leaders need to step up and walk through the doors that have been opened for them. That might be a tad more challenging than pointing fingers.
Jesus, reading people's comments I was despairing that the usual conservative narrative of heavy-handed government and inept government workers was being considered the take-away.
In fact, as you point out, it's the general complacency of the Canadian business sector that keeps the economy relatively moribund, whomever is in power.
What can be done? Reduce the barriers to foreign competition? The Canadian sectorial monopolists and cartels that normally hold sway over our political elites will push back with media campaigns the cost and spread of which no one can match. Can they, at the end of the day be obliged to re-allocate their sizeable assets to Canadian projects? Only if government leaders can negotiate tougher, with greater access to the Canadian market by foreign behemoths as the stick.
But there are risks to the follow-through. Swapping a maple monopolist for an American one might not end well. We may not be any further ahead, And the cost will be de-regulation across sectors - O&G, energy, mining, transport, telecom, IT - that will eventually undermine our quality of life in those ways that current regulations were designed to protect us against.
These times certainly underscore the vital necessity of government leadership by the competent and diligent. Political leaders without subject matter expertise cannot provide solutions. Carney and his coterie seem well equipped to play the necessary hard ball with Canadian fat cats. But will they?
This comment deserves to be not buried far down in the comment section. Canadian big business needs some fear-of-God from foreign competitors, but that’s politically very difficult right now when many of those foreign competitors are going to be American. Is there a way we could let in Asian (but not Chinese, I guess) and European companies sufficiently to make our local oligopolies compete or die?
And hopefully the government will utilize the technical skills of their non-management staff, who have been shut out of the decision making process in favour of a bunch of poly sci grads who are now analysts and managers, but who couldn't organize a bake sale without help.
I get that the Laurentians feel that businessmen should just tough it out and endure all the regulations created to improve the quality of life of our ruling class with a grateful smile, but at some point you should realize that it just isn't going to happen.
Will that be before or after you finish selling our birthright to foreign interests?
After a decade plus of regulatory shackles-the majority of which remain in substance- a corporate/individual tax rate differential favouring US investment, a government which prioritizes electoral regional protectionism, eschewing competition which God forbid would favour consumers with a competitive industry environment and a political class which vilifies the corporations writ large
Except Carney is not reforming the government, nor repealing and fixing all the bad laws and regulations, except for himself and a few of his corporatist buddies.
There is a new unwritten bespoke set of laws and rules for a few "Orwellian" pigs, and the old disastrous stifling laws and rules and government for the rest of us animals.
Carney is not remotely interested in the challenge, except for his chosen few.
Relating to the 3rd last paragraph about the business sector, I'm reminded of the 2007 book "Why Mexicans Don't Drink Molson." It has a lot of criticism for government, but also launches a few broadsides at much of our business class for its historically parochial mindset and unwillingness to seriously explore international markets. We're seeing that now in the desperate hope that things will go back to normal and that the US has been and will always be our best customer, and there's no way this could possibly change.
Sadly, based on personal experience, it is easier to set up and operate a business in most U.S. states, and at a lower tax rate, than just about any jurisdiction in Canada. A medical device startup based in Canada is focusing its sales in the U.S and the U.K. as the Canadian health system has no capacity or ability to incorporate the device into its payment / billing infrastructure. Canada is correctly perceived as rigid and even hostile to entrepreneurs and successful businesses (don't forget the Trudeau tax changes aimed at incorporated professionals and business owners and how those were defended).
Yet Foreign Direct Investment was $96 billion last year - well above the $62 billion it has averaged over the last 10 years? This was driven by mergers and acquisitions and foreign parent companies reinvesting their earnings into Canada? Maybe we just have an un-dynamic private sector that in many cases is protected from competition?
Alberta would like to get its oil to tidewater ports to increase the price it receives for it.
It seems like a straightforward idea that would benefit both the province and Canada.
A pipeline could be built to the coast of British Columbia so that the oil could be distributed to the international market.
The fact that there is very high probability that this idea will never come to fruition is why Canada’s economy is failing and it has little to do do with private sector initiative.
...you can skip it if you take it as read that it's a toss-up whether the TMX purchase will be a loss, or a very small profit after 20 years.
Another pipeline would have higher costs, and the risk of lower prices as we go outward into the electric-car future. The current war may have moved "global peak oil sales" ahead from 2030 by a year or so. After which, prices can be expected to fall below the $60 they were at before the war. It's a strange situation where two wars ending would be a "risk".
The business community can make a decision on the viability of the project.
At present the variables that could affect such a project are beyond their control.
There has to be certainty over issues such as environmental regulation, provincial jurisdiction and aboriginal governance.
Until the government can deal with the political obstacles that face the development of Canada’s economy and until it can shuck the conceit that it is better suited to determine the nature of that economy, the private sector is not going to take the risks created policymakers who create stumbling blocks rather than stepping stones for the country’s enterepreneurs.
The "business community" got two pipelines to tidewater last year and is doubling the gas terminal. I think they know enough to make a proposal. Carney is practically begging them, with the MOU, to at least propose something, like "ditch the tanker ban and get the First Nations on board, and we'll get going" - they could throw down the gauntlet, state their demands.
But David Eby suddenly spoke quite loudly and sharply, for a soft-voiced guy, to Mr. Wells' crowd the other night when he said a pipeline was questionable under private money, but would just go right ahead with public money. I believe he was signalling that the backroom communications are that they won't do a pipeline unless the public funds ANOTHER one, no doubt another $40B, about $1300/taxpayer.
I really believe that's why no proposal has come forward from the "business community", that so recently built so much.
Carney is focused on placating Premier Smith but his ability to deliver on the MOU depends primarily on getting BC’s aboriginal on side as well as the province’s NDP government.
The question is if he is genuinely in favour of the pipeline or is he buying time.
The issue of land claim settlements and the nature of the governance over land ceded will have major financial and security implications for the movement of resources and energy across a myriad of sovereign-minded aboriginal enclaves.
All of these enclaves will be seeking payment for allowing roads, pipelines, power lines, etc. to cross their territory. As well they will be seeking participation opportunity.
The business community has had to deal with these enclaves to get the projects you refer to built.
The aboriginal community has had the opportunity to employ debt financing from government to fund their participation and have little risk compared with their private sector partners.
The governance issue is still outstanding.
If the aboriginal enclaves are successful in their quest for ‘the inherent right to self governance’, laws governing non-aboriginal ownership of facilities built on ceded land would be made by the leadership of each enclave.
Carney is well aware that Canada’s Charter of Rights is likely to be invoked by the aboriginal community and supported by SOC in a manner that private investment will find untenable. The ultimate nightmare for Carney is that BC and Alberta are likely to be driven to exit the Canadian Confederation in order to escape the consequences of being ruled by Constitution that is loaded against their interests.
No note on keeping the 2% defence-spending commitment, perhaps because it's unmentioned in these reports given the promise predated the Carney government. As Canada grows its defence spending to 3.5% and then to 5%, will this use of funds require breaking other promises? I hope that Paul and other journalists will ask this query and track this topic.
I think a lot of the "private sector" blame still comes back to government regulation, or lack thereof.
‘Canadaland’ did a long series on Canada's many oligopolies - like the food store oligopoly, speaking of food inflation. But the telecom oligopoly best shows the lack of private investment: when it failed, right down to the 911 system, and bank machines that depended on Rogers.
Oligopolies and monopolies don't HAVE to invest or innovate. They claim they need to merge to be strong enough to compete in a bigger world, but no company becomes weaker than a coddled oligopoly.
The focus on big is part of the problem. People think the answer is to bring in a shark from abroad as competition, when what we ought to be doing is thinking about how to create conditions where entrepreneurs can create a school of piranhas. And generally they don't need govt to help, just to get out of the way.
Sure. But not AS tight as a market without oligopoly. "Oligopoly" just means "a small enough group to send each other pricing signals without actually meeting in a smoke-filled room". Walmart and Costco are not in business to put Galen Weston out of business, but to make maximum profit. If they are part of an oligopoly, then they would be leaving money on the table to not take advantage of that. Participation is pretty much automatic, done by lower-level staff just watching what prices compete with theirs, and by how much.
"Situated on 500 acres entirely enclosed by fence, Galen Weston Jr and his beautiful wife Alexandra purchased the estate in 2014 from the Eaton family.
It was listed or $18.8 million and includes a 7 bedroom 12 bath 13,000 sq. ft. main house designed by Adam Smuszkowics.
The property also includes servants quarters, a 7 bedroom guest house, 16 stall barn, greenhouse, trout pond and polo fields.
Weston undertook a massive multi-million renovation of the property to bring it up to a standard commensurate with his station in life at the apex of Canadian high society and business."
Not sure what serious point you are making itemizing a successful business family's net worth... Seems a common affliction among Canadians to want to tear down the successful, ignoring the jobs created (directly and indirectly), wealth created for shareholders, taxes paid(again, directly and imdirectly) and the value delivered to the consumer. There are many reasons foreign grocers have not succeeded in Canada ... among them, rigid labour laws, expansive distances between population centres being among them. There are better markets to pursue elsewhere.
Oh, sorry, that was just the top-link contents on a query about "Weston", in reply to the notion they run on tight margins.
Weston selected, of course, for the same reason "22 Minutes" always does: because his firm was convicted of price-fixing with other members of the oligopoly.
The true virtues you attribute to free-market for-profit business, are all much more true of businesses that aren't in an oligopoly, particularly those not convicted of price-fixing.
I would venture to say that no matter which party held power, Liberals or Conservatives the challenges facing the incumbent are monumental to say the least. Possibly insurmountable in this day and age within the context of the geopolitical situation that we now live in.
A lot of talk about having a risk-averse bureaucracy that gets in the way of getting things done. All true. But Canada has a risk-averse private sector too. One that has arguably grown too dependent upon government hand-outs and industrial strategies to drive Canada forward at the speed of need. Wrote as much shortly after Carney's big win in my Substack here: https://substack.com/home/post/p-167057847 Nothing since to yet change my mind.
Blame the private sector. Blame Trump. At some point, we need to stop finding scapegoats and start blaming the real culprits: governments who create a terrible environment for doing or building business and even worse expectations for the future. And the voters who elect them.
And the voters who elect them. That is spot on. And with just cause i might add . Have you ever seen Canadian voters turn their back on " free" stuff, for lack of a better word. How many times have we heard the government say we are giving you...... They give nothing. We pay for everything.
Let's start first with the Canadian voter. After all, the government, whatever their policies and activities, is there at our behest. While I acknowledge the contribution of world events, we are largely in this situation due to our own choices over many years. Naive passivity and complacency seems to be "core values" of this country..... so much wasted potential.
I am not convinced that the required changes (cultural, institutional, structural etc.) are doable before things go completely sideways. I would expect that there will be much sacrifice ahead for younger Canadians who decide to stay around.
Looking at the historically unprecedented success of the Conservatives vs Liberals and NDP among younger age groups in the last election, I think the youth are starting to realize the issues. Unfortunately, most boomers do not.
Our kids and grandkids will pay heavily. No wonder they do not want to have children.
The last paragraph really says it all. A group called Build Canada is building dashboards, not actually building any physical...anything. Apartment buildings, roads, power lines, ports, strip malls, warehouses, assembly lines, sawmills, etc. Just more talking about how we *have to* build those things. And this is where our sharpest minds gravitate to. The disconnect is probably the true diagnosis.
I think having good information about the state of the nation is probably quite important for knowing what to do next. I could think of plenty of other areas where talent is wasted. Urban planning for one.
In fairness a lot of our sharpest minds also go abroad.
They are recruited even before graduation ceremonies.
Part 2-any wonder Canada repels capital investment? Layer in significant uncertainty presented by recent court decisions over Aboriginal land rights- see recent WSJ piece on “Land Acknowledgements…” and well…
When investing in projects in this country that can be approved one day and cancelled the next by this minister or that minister, is it any wonder no one wants to invest, spend money in what could turn into a giant black hole? You first indeed!
Great piece Paul. Good to see someone finally recognizing that Canada’s business sector is complacent as compared to international peers. Our business folks need to stop their endless whining about government ineptitude and other excuse-making to justify their failure to grow their businesses. Canadian business leaders need to step up and walk through the doors that have been opened for them. That might be a tad more challenging than pointing fingers.
Jesus, reading people's comments I was despairing that the usual conservative narrative of heavy-handed government and inept government workers was being considered the take-away.
In fact, as you point out, it's the general complacency of the Canadian business sector that keeps the economy relatively moribund, whomever is in power.
What can be done? Reduce the barriers to foreign competition? The Canadian sectorial monopolists and cartels that normally hold sway over our political elites will push back with media campaigns the cost and spread of which no one can match. Can they, at the end of the day be obliged to re-allocate their sizeable assets to Canadian projects? Only if government leaders can negotiate tougher, with greater access to the Canadian market by foreign behemoths as the stick.
But there are risks to the follow-through. Swapping a maple monopolist for an American one might not end well. We may not be any further ahead, And the cost will be de-regulation across sectors - O&G, energy, mining, transport, telecom, IT - that will eventually undermine our quality of life in those ways that current regulations were designed to protect us against.
These times certainly underscore the vital necessity of government leadership by the competent and diligent. Political leaders without subject matter expertise cannot provide solutions. Carney and his coterie seem well equipped to play the necessary hard ball with Canadian fat cats. But will they?
This comment deserves to be not buried far down in the comment section. Canadian big business needs some fear-of-God from foreign competitors, but that’s politically very difficult right now when many of those foreign competitors are going to be American. Is there a way we could let in Asian (but not Chinese, I guess) and European companies sufficiently to make our local oligopolies compete or die?
CETA was a good idea, and I've seen some research that suggests it's helping.
And hopefully the government will utilize the technical skills of their non-management staff, who have been shut out of the decision making process in favour of a bunch of poly sci grads who are now analysts and managers, but who couldn't organize a bake sale without help.
I get that the Laurentians feel that businessmen should just tough it out and endure all the regulations created to improve the quality of life of our ruling class with a grateful smile, but at some point you should realize that it just isn't going to happen.
Will that be before or after you finish selling our birthright to foreign interests?
I think I've got it. The cost of deregulation might be deregulation. I'm willing to try.
After a decade plus of regulatory shackles-the majority of which remain in substance- a corporate/individual tax rate differential favouring US investment, a government which prioritizes electoral regional protectionism, eschewing competition which God forbid would favour consumers with a competitive industry environment and a political class which vilifies the corporations writ large
Add the sad and infuriating fact that these bozo politicians are all getting a raise on April 1st, a reward for incompetence.
Except Carney is not reforming the government, nor repealing and fixing all the bad laws and regulations, except for himself and a few of his corporatist buddies.
There is a new unwritten bespoke set of laws and rules for a few "Orwellian" pigs, and the old disastrous stifling laws and rules and government for the rest of us animals.
Carney is not remotely interested in the challenge, except for his chosen few.
Relating to the 3rd last paragraph about the business sector, I'm reminded of the 2007 book "Why Mexicans Don't Drink Molson." It has a lot of criticism for government, but also launches a few broadsides at much of our business class for its historically parochial mindset and unwillingness to seriously explore international markets. We're seeing that now in the desperate hope that things will go back to normal and that the US has been and will always be our best customer, and there's no way this could possibly change.
Sadly, based on personal experience, it is easier to set up and operate a business in most U.S. states, and at a lower tax rate, than just about any jurisdiction in Canada. A medical device startup based in Canada is focusing its sales in the U.S and the U.K. as the Canadian health system has no capacity or ability to incorporate the device into its payment / billing infrastructure. Canada is correctly perceived as rigid and even hostile to entrepreneurs and successful businesses (don't forget the Trudeau tax changes aimed at incorporated professionals and business owners and how those were defended).
So true everything in business is easier, less paperwork and less time getting permits.
Yet Foreign Direct Investment was $96 billion last year - well above the $62 billion it has averaged over the last 10 years? This was driven by mergers and acquisitions and foreign parent companies reinvesting their earnings into Canada? Maybe we just have an un-dynamic private sector that in many cases is protected from competition?
Source: Bloomberg quoting StatsCan
"Ultimately, the heaviest responsibility rests with the private sector." The Build report apparently agrees.
Alberta would like to get its oil to tidewater ports to increase the price it receives for it.
It seems like a straightforward idea that would benefit both the province and Canada.
A pipeline could be built to the coast of British Columbia so that the oil could be distributed to the international market.
The fact that there is very high probability that this idea will never come to fruition is why Canada’s economy is failing and it has little to do do with private sector initiative.
That particular idea is actually foundering on cold hard business sense.
https://www.pbo-dpb.ca/en/news-releases--communiques-de-presse/pbo-releases-new-financial-analysis-of-the-trans-mountain-pipeline-le-dpb-publie-une-nouvelle-analyse-financiere-du-reseau-de-pipelines-trans-mountain
...you can skip it if you take it as read that it's a toss-up whether the TMX purchase will be a loss, or a very small profit after 20 years.
Another pipeline would have higher costs, and the risk of lower prices as we go outward into the electric-car future. The current war may have moved "global peak oil sales" ahead from 2030 by a year or so. After which, prices can be expected to fall below the $60 they were at before the war. It's a strange situation where two wars ending would be a "risk".
The business community can make a decision on the viability of the project.
At present the variables that could affect such a project are beyond their control.
There has to be certainty over issues such as environmental regulation, provincial jurisdiction and aboriginal governance.
Until the government can deal with the political obstacles that face the development of Canada’s economy and until it can shuck the conceit that it is better suited to determine the nature of that economy, the private sector is not going to take the risks created policymakers who create stumbling blocks rather than stepping stones for the country’s enterepreneurs.
The "business community" got two pipelines to tidewater last year and is doubling the gas terminal. I think they know enough to make a proposal. Carney is practically begging them, with the MOU, to at least propose something, like "ditch the tanker ban and get the First Nations on board, and we'll get going" - they could throw down the gauntlet, state their demands.
But David Eby suddenly spoke quite loudly and sharply, for a soft-voiced guy, to Mr. Wells' crowd the other night when he said a pipeline was questionable under private money, but would just go right ahead with public money. I believe he was signalling that the backroom communications are that they won't do a pipeline unless the public funds ANOTHER one, no doubt another $40B, about $1300/taxpayer.
I really believe that's why no proposal has come forward from the "business community", that so recently built so much.
Carney is focused on placating Premier Smith but his ability to deliver on the MOU depends primarily on getting BC’s aboriginal on side as well as the province’s NDP government.
The question is if he is genuinely in favour of the pipeline or is he buying time.
The issue of land claim settlements and the nature of the governance over land ceded will have major financial and security implications for the movement of resources and energy across a myriad of sovereign-minded aboriginal enclaves.
All of these enclaves will be seeking payment for allowing roads, pipelines, power lines, etc. to cross their territory. As well they will be seeking participation opportunity.
The business community has had to deal with these enclaves to get the projects you refer to built.
The aboriginal community has had the opportunity to employ debt financing from government to fund their participation and have little risk compared with their private sector partners.
The governance issue is still outstanding.
If the aboriginal enclaves are successful in their quest for ‘the inherent right to self governance’, laws governing non-aboriginal ownership of facilities built on ceded land would be made by the leadership of each enclave.
Carney is well aware that Canada’s Charter of Rights is likely to be invoked by the aboriginal community and supported by SOC in a manner that private investment will find untenable. The ultimate nightmare for Carney is that BC and Alberta are likely to be driven to exit the Canadian Confederation in order to escape the consequences of being ruled by Constitution that is loaded against their interests.
No note on keeping the 2% defence-spending commitment, perhaps because it's unmentioned in these reports given the promise predated the Carney government. As Canada grows its defence spending to 3.5% and then to 5%, will this use of funds require breaking other promises? I hope that Paul and other journalists will ask this query and track this topic.
I think a lot of the "private sector" blame still comes back to government regulation, or lack thereof.
‘Canadaland’ did a long series on Canada's many oligopolies - like the food store oligopoly, speaking of food inflation. But the telecom oligopoly best shows the lack of private investment: when it failed, right down to the 911 system, and bank machines that depended on Rogers.
Oligopolies and monopolies don't HAVE to invest or innovate. They claim they need to merge to be strong enough to compete in a bigger world, but no company becomes weaker than a coddled oligopoly.
The focus on big is part of the problem. People think the answer is to bring in a shark from abroad as competition, when what we ought to be doing is thinking about how to create conditions where entrepreneurs can create a school of piranhas. And generally they don't need govt to help, just to get out of the way.
With the Walmarts and Costcos of the world I thought grocery store margins were pretty tight?
Sure. But not AS tight as a market without oligopoly. "Oligopoly" just means "a small enough group to send each other pricing signals without actually meeting in a smoke-filled room". Walmart and Costco are not in business to put Galen Weston out of business, but to make maximum profit. If they are part of an oligopoly, then they would be leaving money on the table to not take advantage of that. Participation is pretty much automatic, done by lower-level staff just watching what prices compete with theirs, and by how much.
The result:
https://virtualglobetrotting.com/map/galen-weston-jrs-caledon-estate/#google_vignette
"Situated on 500 acres entirely enclosed by fence, Galen Weston Jr and his beautiful wife Alexandra purchased the estate in 2014 from the Eaton family.
It was listed or $18.8 million and includes a 7 bedroom 12 bath 13,000 sq. ft. main house designed by Adam Smuszkowics.
The property also includes servants quarters, a 7 bedroom guest house, 16 stall barn, greenhouse, trout pond and polo fields.
Weston undertook a massive multi-million renovation of the property to bring it up to a standard commensurate with his station in life at the apex of Canadian high society and business."
Not sure what serious point you are making itemizing a successful business family's net worth... Seems a common affliction among Canadians to want to tear down the successful, ignoring the jobs created (directly and indirectly), wealth created for shareholders, taxes paid(again, directly and imdirectly) and the value delivered to the consumer. There are many reasons foreign grocers have not succeeded in Canada ... among them, rigid labour laws, expansive distances between population centres being among them. There are better markets to pursue elsewhere.
Oh, sorry, that was just the top-link contents on a query about "Weston", in reply to the notion they run on tight margins.
Weston selected, of course, for the same reason "22 Minutes" always does: because his firm was convicted of price-fixing with other members of the oligopoly.
The true virtues you attribute to free-market for-profit business, are all much more true of businesses that aren't in an oligopoly, particularly those not convicted of price-fixing.
Sounds like an Aldi or Lidl could be helpful if they could get a toehold.
I would venture to say that no matter which party held power, Liberals or Conservatives the challenges facing the incumbent are monumental to say the least. Possibly insurmountable in this day and age within the context of the geopolitical situation that we now live in.
A lot of talk about having a risk-averse bureaucracy that gets in the way of getting things done. All true. But Canada has a risk-averse private sector too. One that has arguably grown too dependent upon government hand-outs and industrial strategies to drive Canada forward at the speed of need. Wrote as much shortly after Carney's big win in my Substack here: https://substack.com/home/post/p-167057847 Nothing since to yet change my mind.