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A pump jack draws oil from the ground near a hydraulic fracturing operation near Bowden, Alta., Tuesday, Feb. 14, 2012. (Jeff McIntosh/Jeff McIntosh for The Globe and Mail)
A pump jack draws oil from the ground near a hydraulic fracturing operation near Bowden, Alta., Tuesday, Feb. 14, 2012. (Jeff McIntosh/Jeff McIntosh for The Globe and Mail)

Richard Poplak

Innovate or die: How Canada is courting long-term failure Add to ...

For policy wonks, this season’s equivalent of tween thriller The Hunger Games is a book called Why Nations Fail: The Origins of Power, Prosperity and Poverty. The pundits are giddy about its mixture of deep historical context and forehead-slapping common sense. Authors Daron Acemoglu and James A. Robinson, economists by day, insist that functional political institutions lead to successful economic institutions, and not the other way around.

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Antagonizing libertarians, geographical determinists and the Ottawa chapter of Atlas Shrugs Rulz! alike, the authors claim that any smart economic policy will necessarily arise from an inclusive political system, where all is governed by rule of law, property rights are protected and hard work is rewarded by a paycheque subsequently taxed.

So far, a gold star for Canada (and a dunce cap for China) – until we slam into the following statement: “Sustained economic growth requires innovation, and innovation cannot be decoupled from creative destruction, which replaces the old with the new in the economic realm and also destabilizes established power relations in politics.”

Uh-oh. Welcome to the truth north strong and free, gentlemen: That would be the country where the Conservative government has bet the farm – and the factory, and the next-gen Internet start-up – on the fact that the resource-extraction sector, by which I mean Alberta, will power growth for the foreseeable future.

How foreseeable is this future? No two wonks can agree whether this gamble is smart, stupid or just meh. But take a random poll in one of Canada’s proliferating casinos: If you don’t want the house to fleece you before your first drink, it’s best to spread around your bets.

We’re in splendid company. Several weeks ago, I conducted an interview at the State House in Kinshasa, Democratic Republic of the Congo (the only accurate word in the country’s name being, of course, “Congo”). The special adviser to the President emphasized how vital the resource-extraction sector is to the country’s future. Twenty-four trillion bucks of awesomeness – the richest country on the planet – and everybody wants a piece: Dig, scrape, chop and watch the gross domestic product growth rate hit the stratosphere.

At present, the DRC boasts 3,000 kilometres of tarred roads. Its major cities have no road or rail links. Its coffers are empty. Its political institutions could generously be called nascent. Rule of law is a joke. Patronage is the presiding political ideology. There is, however, a desire to put half a century of banana republicanism and conflict in the rear-view mirror and join, say, Cambodia as a country on the rise.

To that end, one of the most desperate, least advanced countries in the world has come up with a plan that looks exactly like Canada’s.

Big picture? Canada is un-developing. I’m not suggesting we leave our oil, gas and potash languishing uselessly in the ground. But the Conservative government is so overrun by special interests that we’ll all soon be working for the mining sector, if we aren’t already – 10 million square kilometres of frozen hinterland reconceived as the Yorkshire of George Orwell’s The Road to Wigan Pier.

For the Conservatives, the 21st century has become an inconvenience. In forthcoming budgets, brace yourself for line items such as subsidized beaver traps. The government’s Victorian propriety – the dusted-off portrait of the Queen hanging behind the desks of officialdom; the injection of monarchist ésprit into our armed forces – now seems less like ideologically motivated nostalgia and more like what your high-school English-lit teacher would call foreshadowing.

Innovate or die, Why Nations Fail says. Resource extraction, and the oil sands in particular, cannot be the ends: They must be the means to support innovation in other sectors. In Kinshasa’s State House, this is understood dimly. On Parliament Hill, it would be breaking news.

They should ask the Ontarians flooding into Alberta from the OxyContin belt what it feels like to have no Plan B. Finance Minister Jim Flaherty has ripped into Queen’s Park over its vast deficit and its spendthrift ways, but replace “manufacturing” with “resource extraction,” and there’s zero difference between how the federal government is behaving now and how the country’s newest have-not province behaved in times past.

The oil sands themselves are a technical marvel; wringing every last drop of goop from every last grain of sand is truly a wonder of the world, the product of a long-forgotten politician’s incredible prescience. But it won’t last forever. We need a dose of creative destruction. We need a Plan B.

What would Messrs. Acemoglu and Robinson make of modern-day Canada? They would see a nation of Marty McFlys, squeezing into the DeLorean to head back to the future, where there is oil and pine aplenty, and pelts fetch a heck of a price. Why Nations Fail? Try Why Nations Fritter Away Centuries of Development for Short-term Expediency. Clunky title. No happy ending. Lots of dead beavers.

Richard Poplak is a Canadian writer currently based in Africa.

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