Growing our economy requires cultivating an entrepreneurial mindset, not grandiose plans for more government spending, writes Philip Cross in the Financial Post. Below is an excerpt from the article, which can be read in full here.
By Philip Cross, September 17, 2020
Governments first looked to boost innovation to reverse the slowdown of economic growth that began in the 1970s, convinced that innovation could be manipulated as easily as they could dictate the short-term course of the economy. It turns out they don’t do either very well. At first, policymakers targeted the supply of innovation inputs such as research and development, science and education. This focus reflects the view of most economists that innovation serves mainly to reduce costs and raise productivity.
However, a broader perspective reveals that the essence of innovation is the commercial success of new products and processes. Unfortunately, economics has comparatively little to say about this type of innovation, and public policy has largely ignored it.
More recently, there has been a growing realization that emphasizing the supply of inputs into innovation is not enough. The demand for innovation also needs to be addressed. While this corrects the over-reliance on the supply side of innovation, the problem is more than a deficiency of demand from the business sector.
Years ago, business guru Peter Drucker pinpointed the flaw in the current Liberal government’s attitude toward business and innovation. Its infatuation with high tech is fruitless because, “A policy that promotes high tech and high tech alone — and that otherwise is as hostile to entrepreneurship as France, West Germany and even England are — will not even produce high tech. All it can come up with is another expensive flop, another supersonic Concorde; a little gloire, oceans of red ink, but neither jobs nor technological leadership.”
The hostility that Prime Minister Justin Trudeau radiates toward the oil and gas industry, pipelines, pharmaceuticals and a range of other types of businesses is not lost on the investment community here and abroad. The hypocrisy of cynical appeals for investment in Canada just to bolster the government’s job-creation claims, while refusing to cultivate a welcoming environment for entrepreneurs, is transparent to the business sector.
The need to prioritize innovation has never been more pressing. The unique nature of the 2020 pandemic means entrepreneurs can help bring it to an end through new treatments for COVID-19, or vaccines. Beyond medicine, innovation will have to play an even larger role for a full recovery of the economy from its government-mandated coma.