- Andrew Jackson writes about the opportunities missed when governments restrict their economic policy to propping up the corporate sector, rather than seeking to innovate directly in the public interest:
The received wisdom among economists used to be that governments should just set broad “framework” policies such as low taxes, less regulation, and fewer barriers to trade. It was up to the private sector to decide what and where to invest. Anything smacking of hands-on “industrial policy” was to be avoided.- Meanwhile, Matt Bruenig examines the alarming level of wealth inequality within the boomer generation - particularly when home equity is set aside. And the Economist discusses how automation is restricting the availability of employment while exacerbating inequality.
Rejecting this dogma, the influential UK economist Mariana Mazzucato argues that government leadership and public investments are critical to building innovative economies. She has shown that publicly funded research well in advance of immediate commercial opportunities as well as direct support for strategic corporate investments have been central to the growth of innovative capacity.
Here in Canada, traditional hands-off policies have signally failed to boost our weak record of innovation. In that context, an expert business panel appointed by the Harper government called for more public investment in venture capital, and a shift in emphasis from tax measures to direct government support for strategic private sector investments.
The government may have listened to Mazzucato on the pivotal role of public investment in boosting innovation, but they have not heeded her advice to consider long term public equity stakes so as to reward taxpayers when these investments pay off, and to anchor footloose investments.
While the federal government is indirectly taking a stake in some new venture capital investments through BDC, the intent is very much to exit early in the game once a company goes public rather than to remain for the long haul. So the government shoulders the risk but does not benefit from the long-term payoff.
To conclude, the innovation agenda marks another incremental turn away from “framework” economic development policies. But the shift is unlikely to be transformational unless it is scaled up and accompanied by a greater role for long-term public investment in the knowledge-based economy.
- And that represents a problem in multiple policy areas, as Lana Payne highlights the connection between happiness, equality and social trust.
- Chantal Hebert points out how the Trudeau Libs are showing nothing but disdain for the concept of Parliamentary accountability. And the Globe and Mail criticizes Trudeau's plan to eliminate any chance for MPs to respond meaningfully to a majority government's whims.
- Finally, Roy Romanow discusses the how our health care system can be both more efficient and more compassionate by focusing on prevention, rather than responding only to diseases and injuries once they've already arisen.