Ed Clark is business adviser to the Premier of Ontario
Despite the relative strength of Ontario’s economy, many people feel uneasy about the future.
Global secular stagnation and automation in the work force represent threats to many working- and middle-class employees. Technological change, along with globalization, is making it difficult for wages to increase for the average worker. At the same time, these combined forces are increasing the economic rents that can be extracted by those with scarce capabilities. A widening gap between haves and have-nots ensues.
Is this the economic growth we want?
Ironically, policy makers ask the same question, except their concern is rooted in anemic productivity growth. They worry job creators are not moving fast enough to compete, win and grow in the knowledge economy. We must do more to increase productivity growth, even if this results in increased job losses in the short run.
We can’t ignore the inevitable. Capitalizing on the technological revolution sweeping the world is not just an opportunity – it is an absolute necessity – for the economic growth we need.
But economic growth should not trump fair growth.
Indeed, to secure sustainable growth you need the social cohesion and sense of fairness that comes from ensuring everyone benefits from the modern economy. Conversely, you need economic growth to support fairer income distribution. Ontario must be bold, move aggressively and focus on exploiting our strengths. We have a huge asset – an innovation economy.
The province is well-positioned to be the alternative to Silicon Valley. We must seize this opportunity.
This will require us to produce the science and technology graduates we need. It will also require us to treat immigration policy as a source of competitive advantage. For instance, companies should be allowed to bring in key executives to create centres of excellence which, in turn, will hire many more Canadians.
Governments and large businesses should revise procurement rules that make it difficult for small businesses to compete. Lack of domestic sales opportunities is an impediment for them in scaling up. Being accountable for taxpayer or investor dollars and supporting local business are not mutually incompatible objectives.
In addition, the provinces, the federal government and the financial sector must come together to find new financing models. We have a very traditional investor class – encouraged by tax structures to invest in oil and gas, mining and real estate. A new investor class that is comfortable in investing in the innovation economy is fundamental. We must agree on an action plan to address the financing dilemma of small firms. Traditional businesses remain essential to our economic well-being.
Unfortunately, we are generally not the leaders in adopting and adapting the best technologies and practices of top global firms. This impacts our competitiveness, economic growth and equally important, the creation of well-paid, working-class jobs. We must find ways to encourage our leaders to speed up the journey to the knowledge economy. At the same time, government must find ways to reduce the regulatory burden and eliminate rules which impede change.
Even as we succeed, there will be periods of adjustment for Ontarians.
That is why policy makers must ensure our citizens get the education necessary to secure the new, better-paying jobs created in the knowledge economy and create better transition programs for those affected by technological change. Critically, Ontario’s growth strategy must be a combination of economic, social and education policies.
Premier Kathleen Wynne’s government is making good progress to this end. It has invested in world-class research institutes in cancer, brain science, regenerative medicine and quantum computing. It is addressing our transportation deficit. We have created an enviable supply of STEM graduates which, as a result, has put Ontario on the map for innovation.
Recent expansions at General Motors, Google and Thomson Reuters underscore the competitive advantage of doing business in the province. These firms have chosen us for the business environment we have created. No subsidies or tax breaks were required. This should give us all a boost of confidence.
We know full well the opportunities and challenges that lie ahead. We are realistic about the advantages we possess and the challenges we face.
We are quite capable of creating the future we want. But to do so we must continue to have a sense of urgency which matches the pace at which the world is changing and a fierce recognition that it is a much better place if we all get there together.
This op-ed was based on a speech by the author to the Canadian Club of Toronto on Oct. 17.Report Typo/Error
Follow us on Twitter: