Lang: Why Ottawa won’t come to grips with Canada’s productivity problem

Dispiriting but likely correct even without the exacerbation by ill-designed immigration policies (knew Lang when he worked in Deputy PMs office in the late 90s):

…Three reasons spring to mind for why Canada has done so little on the productivity front.

First, federal policy change is often driven less by the importance of the issue and more by a sense of urgency – it’s the classic dilemma: urgent crowds out the important. Unfortunately, long-run economic decline is never seen as a matter of urgency in government. It is the quintessential boiling-frog problem.

Second, persistent productivity weakness suggests deep-seated structural problems in the Canadian economy. You can’t meaningfully get at that without paradigm-shifting policy change. That entails risk, and all governments are masters of risk aversion. The irony here is that over the years the federal government has routinely chided Canadian business for insufficient investment in R&D, inadequate pursuit of foreign markets and weak entrepreneurialism, all of which boils down to risk-taking.

Third, when governments do get down to discussing innovation, the regional political imperative rears its head. Meaning innovation policies, especially spending programs, are usually designed to confer benefits on all regions of the country, seriously diluting their impact.

All previous federal innovation reports have tripped over some or all of these three hurdles. And this will likely continue. When the next government comes along, expect either indifference to Canada’s productivity crisis, or yet another study and report into the problem, which will be largely ignored. Then turn the heat up one more notch on the frog in the pot.

Source: Why Ottawa won’t come to grips with Canada’s productivity problem