William Watson: No plan is still the best plan

The fundamental laws of the space-time continuum we inhabit have not changed: we simply do not know what the future holds

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As Kevin Carmichael reported over the weekend, former cabinet ministers Anne McLellan and Lisa Raitt are co-chairing a planning exercise by the Business Council of Canada to look into how Canadians want things to develop over the next 30 years. A motivating force apparently is the feeling among many influential people that we don’t have a plan.

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Speaking of her experience in the Chrétien government in the 1990s, McLellan told Carmichael: “The whole notion of government developing an industrial policy and playing a bigger role in the economy was not in vogue at the time, whereas I think now what you see, and probably enhanced and accelerated by COVID, is governments all over the world actually developing plans that look like industrial policy where government plays a much bigger role. It remains to be seen, I guess, whether 20, 30 years from now people will think that development is a good thing. But that is happening …”

A couple of things about that.

First, she is right that industrial policy seems to be back in vogue. But industrial policy never went out of vogue in Canada. It may have disappeared from political rhetoric during the Reagan-Thatcher era and later when governments entered deficit-reduction mode, but our governments have never stopped tinkering with tax rates, cash handouts, tariffs, regulations and any number of other policy instruments to favour pet firms, regions or industries, be it fishing, aerospace, shipbuilding, cars, snowmobiles, dairy, eggs, high-tech, hydro dams, nuclear power — you name it, we’ve had, and chances are still have, a government program for it. Only someone who has never scrolled through the public accounts of our various governments or a roster of government agencies, commissions and boards could possibly believe we have non-interventionist government.

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Second, though predictions are hard — that’s going to be my point — I’m willing to predict that “20, 30 years from now” people will not think re-embracing industrial policy was a good idea.

To be sure, the Conservative party has for electoral reasons decided to ditch the principles it has espoused over the past few decades — espoused but in many instances never enacted or even tried to enact — namely free trade, lower, flatter and simpler taxation, deregulation, fiscal responsibility and modesty of governmental aspiration.

My own guess is that this electoral calculation is wrong. The party’s problem in the past election was not its platform but the fact that it had chosen for leader someone most Canadians had never heard of, a person who, apart from an apparently pleasant personality, photogenic family and ambition disproportionate to his abilities, seemed almost completely ill-equipped for retail politics as it is currently played. It remains to be seen whether they have repeated the error by choosing another leader largely unknown to Canadians, albeit one who is also pleasant and photogenic enough and seems nimbler politically — indeed, politically he may be mainly nimble: in his three recent campaigns, two for the leadership and now one for the premiership, he has run on three different platforms. Whether a good debate performance, which he will certainly need, persuades enough extra voters to entrust him with the top job remains to be seen.

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To go from the 34 out of a hundred votes the Conservatives got last time round to the three or four more out of a hundred analysts say they need in order to win does not really require them to ditch principles that, whatever policy fashion may say, many of their strongest supporters still believe would lead to the best outcomes for Canadians in the long run. After all, the required increment is just one voter in 25 or 30. Any number of things could provide that swing: fatigue with the Liberal leader, an expectations-beating performance from their own leader, twists of fate such as the collapse in Afghanistan, and so on.

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It’s easy to see why activist industrial policy never does go out of vogue among politicians. It’s like playing Monopoly with real money that’s also house money. Hard-earned it may have been, but not by you, and if it all goes up in smoke, there’s no financial loss to yourself. Though a truly big blow-up down the road might lose you your seat, you likely will have retired or moved on to higher or different office by then. You get to cut ribbons endlessly, pour millions of dollars into key ridings, and make new friends all the time, none of whom ever has a bad word to say about you. You may even convince yourself you’re securing your children’s and grandchildren’s economic future so that all your fun is actually for other people’s benefit.

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But the real reason not to trade-in free-market economics for planning and industrial policy is physics. Yes, we’ve been through a lot since the Reagan-Thatcher years but the fundamental laws of the space-time continuum we inhabit have not changed: we simply do not know what the future holds. The iPhone first appeared in 2007, only 14 years ago. There are now two million — 2,000,000! — apps available in Apple’s app store. How people do business has been transmogrified over the past two decades. Who’s to say that or something equivalent won’t happen again? Lisa Raitt and Ann McLellan are intelligent people who doubtless will gather all the information they can. But neither they nor anyone else can see into the future. Their musings about 2040 and 2050 may well be interesting. But those musings and $5 — at the rate prices are inflating — will get you a cup of coffee.

Yes, we should have a plan. Our plan should be to have no plan but to ensure the continued flexibility of the most adaptable and creative social system human interaction has yet generated.

Financial Post

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