When the President of the most anti-government country on earth and the President of the country that invented dirigisme are converging upon a political narrative, if not a shared policy agenda, something is going on that Canadians better pay close attention to.
Francois Hollande, the newly elected socialist president of France, is defining the early days of his presidency on the issue of income inequality. Barack Obama, who faces a jaded American electorate in a few months, has decided to make income inequality the central issue of his re-election campaign. This amounts to the political equivalent of the alignment of Venus and Mars.
Canada lies, both culturally and politically, in the mid- point of these two planets. And yet oddly enough politicians in this country are saying almost nothing about income inequality.
Hollande has exhibited the most extreme rhetoric and pointed policies on the subject, echoing the language of the Occupy Movement. He has called “the world of finance” his main enemy. The government Hollande leads plans to introduce a variety of tax increases to level things out on what he has termed “the grasping and arrogant rich”. These include wealth, financial transactions and inheritance tax rises. An extra 3% dividend tax on business has been mooted. Planned increases in value added tax by Nicolas Sarkozy, Hollande’s predecessor—which would have hit hardest on low and average earners—are being cancelled, even though the French government desperately needs the revenue (not having balanced its budget in thirty eight years and with a debt GDP ratio of 86%). A new 75% top rate tax on incomes over 1 million euros is expected. Salaries at majority state owned companies, of which there are dozens, will be capped at 20 times the lowest paid worker’s wage, meaning some chief executives could take as much as a 70% pay cut.
All in the name of reducing income inequality. And all quite popular in the land of liberty, equality, fraternity.
But how can an income inequality agenda be popular in America, the land of the free and the home of the brave, a country that likes to present itself as the world’s beacon of unbridled free market capitalism. President Obama certainly thinks it can be. He sees income inequality as the “defining issue of our time”. While Obama’s points are subtler and less overtly “soak the rich” than Hollande’s, the message is pretty clear.
In his State of the Union Address in January the subject of income inequality featured prominently. The president said– “No challenge is more urgent. No debate is more important… We can either settle for a country where a shrinking number of people do really well, while a growing number of Americans barely get by. Or we can restore an economy where everyone gets a fair shot, everyone does their fair share, and everyone plays by the same set of rules.” Building on this theme in April, the president said–“What drags down our entire economy is when (sic) there is an ultra-wide chasm between the ultra-wealthy and everyone else.”
So for Obama, income inequality is bad for the economy, which fits well with America’s basic narrative. And for Hollande and the French socialists, income inequality is an affront to the core French values of egalite and fraternite. Different strokes for different folks.
President Obama has been shorter on solutions to the defining issue of our time than has Hollande, but he has put a couple things on the table. Notable among these are extending tax breaks for America’s struggling “middle class”, by which he means everyone but the top 2% of earners, who drive the income inequality gap so wide in America. And he has expanded tax credits for low income people and put more money into education.
While income inequality has emerged over the past few months as a dominant issue in France and America, the silence among Canada’s politicians on this subject is truly deafening. This is especially puzzling given that measures of income inequality are much worse in Canada than in France. And income inequality in this country is rising faster than it is south of the border.
This week the Premiers gather for their annual confab to discuss the major issues they think confront Canada. Energy, a perennial favourite, is at the top of their agenda. The Premiers would be well advised to spend a little more of their energies on the defining issue of our time.
Month: July 2012
International education the missing piece of Canada’s innovation agenda
When asked why they would want to study abroad, most Canadian university or college students give a variation on the following answer:
“It will broaden my horizons, I will make new friends, and I will have fun becoming a global citizen.”
All great things, all true in their own way – but all miss the bigger picture.
A growing body of literature, much originating in Australia (a country with a very significant international education component to its economy), has made the link between study abroad and national innovation performance. The proposition is simple: when students travel abroad during their post-secondary education years, they participate in an economic process that fuses countries, markets, sectors and people together in a productive exchange of ideas and practices, yielding tangible economic benefits.
In short: they do a lot more than make friends.
The key is social capital – the process of cultivating and deriving economic benefit from new environments, experiences and networks. Literature on the concept directly links it to innovation performance. Societies that are innovative place a high premium on social capital building experiences. Right now, the ability to develop social capital is not a skill that Canadian educators and policymakers seem to prioritize and as a result we are suffering from low innovation scores across the board.
Historically, the flow of the international students has been predominantly uni-directional.
Developing economies – think China, India, Brazil and some African nations – happily send their bumper-crops of young students overseas with the hope that higher standards in education, language proficiency and increased market opportunity will yield long-run, national economic prosperity.
Developed economies compete to attract these incoming students. Canada and the US have excelled at this, and it’s no mystery as to why: international students typically contribute anywhere between $6 and $10 billion annually to our economy. The recent South American tour by Canadian university presidents – accompanied by Governor General David Johnson and AUCC President Paul Davidson – underscores how seriously we take this business (though this has not stopped us losing ground to newcomers in the business, such as Australia).
But, given the benefits of study abroad, isn’t it time we placed greater emphasis on sending our own young people out to increase their own understanding and help them develop global ties? Developed economies need the innovation benefits of study abroad too. Were we to do so, we would be far from the front of the pack. Around 33% of German students study abroad. The figure for France is in the mid-20s – heck, even the United States sends 11% of its students overseas, so language cannot be the barrier.
The figure for Canada? An anemic 3%. Each year, only 50,000 Canadian university, college or polytechnique students travel overseas – a mobility rate that has shown no signs of growth over the past 10 years.
Yes, Canada is one of the top destinations for international students choosing to spend time abroad during their studies. Among all OECD countries, Canada has a stay-rate of 33%, which is 8% higher than the OECD average and means that more students who come to study in Canada, stay in Canada afterwards. But when it comes to Canadian students packing their bags and spending time abroad? We’re missing out – big time.
And what’s incredibly frustrating for Canadian policymakers, NGOs and academics interested in turning these low-mobility rates around is that countless surveys reveal a near unanimous level of support for study abroad. When asked if international education would be something they would pursue, Canadian students respond with a decisive ‘Yes’. Even their parents, university administrators and other members of a student’s sphere of influence sing its praises.
So there’s a disconnect. This tells us two things:
First, something – whether cost, safety, time commitment, quality of education, logistics, or other external or internal factors – is stopping students from fulfilling their study abroad goals.
Second, Canada is failing to leverage the partnerships it has developed as a recipient country for international students. Being among the top study destinations among OECD partners implies an extensive network of partnerships with international institutions and programs. Why are Canada’s educators not better at turning inbound student flows into better, easier-accessed opportunities for their own outbound students?
Both must be addressed.
The federal government has a unique role to play in incentivizing study abroad, whether it be through dedicated funds distributed through existing granting councils, or a simple show of leadership by publicly making international study a national priority.
The good news is that in supporting international education, the government can also stand behind its own stated priorities. Programs and subsidies can be geared towards specific countries and needs. Certainly as Canada pivots to meet Asia’s rise, a cornerstone of our engagement strategy should include exposing more Canadian students to the rapidly developing markets in China, India and South Korea.
Canada must act fast to fit in this missing piece of our innovation puzzle. Without it, we will continue to miss out on the global economies of the 21st century.
Green vs. Growth: the false dichotomy
Earlier this month the UK’s Confederation of British Industry (CBI: the UK’s top business lobbying organization) released a report entitled The Colour of Growth: Maximising the Potential of Green Business.
In Canada we are used to hearing about the conflicts between `green’ and `growth’. This report – authored not by an environmental NGO but by the powerhouses of British industry – argues forcefully that this is a false dichotomy. Indeed, its underlying premise is that green is not just complementary to growth but a vital driver of growth in the UK.
The main messages of the report are that:
- Green means opportunity.
- In order to stay ahead and fully exploit green growth opportunities the UK needs a coherent, consistent and strategic policy framework from government.
- The UK should project an overarching brand in the green economy: government action is critical to this.
- Consumers will only play their role in the green economy if they receive the right facts and consistent government messaging.
- Long-term strategies for energy-intensive industries must be developed. These should be sector-specific decarbonization roadmaps that enable such industries to play a role in the low-carbon transition.
As one commentator put it: `In essence, the CBI is calling for a policy framework that is both simpler and more ambitious – a system of regulation that is streamlined, stable, and sharply focused on giving businesses the confidence they need to invest.’ (James Murray http://www.businessgreen.com).
UK business (or at least a significant section of it) has clearly bought into the economy of the future and is pushing the government to provide the right incentives and enabling environment for innovation and success. What stands out in the report is the need for consistency and predictability in the policy environment.
Would that were all we needed in Canada. Consistency here is sorely lacking (witness the flip-flopping on home energy retrofits and feed in tariffs, battles over electricity prices as well as the far bigger problem of a government that is committed to facilitating ever-increasing fossil fuel extraction while still paying lip service to a 17% reduction in carbon emissions over 2005 levels by 2020). But our problems run deeper. We also lack a meaningful overall commitment to decarbonization, a sensible debate about the facts and opportunities of the green economy, and any shreds of the international credibility that might enable us to develop a green Canada brand (one of the key proposals in the paper written for Canada 2020 by Stewart Elgie and Alex Wood in The Canada we Want in 2020).
Indeed, while the CBI bemoans a lack of green brand in the UK, a report by the American Council for an Energy-Efficient Economy, also released this month, ranked the UK as no.1 overall in energy efficiency (which must enhance the brand somewhat). Canada came a dismal 11 out of the 12 largest economies, beating out only our old foe, Russia. And while the UK is home to over 75% of all carbon market trading desks, our current federal government has firmly rejected the idea of carbon markets in favour of a slower, far less efficient, regulatory approach. (This, in response to the fact that the public apparently has no appetite for carbon taxes: unsurprising if there is neither leadership nor good information on these topics issuing from government.) It comes as no shock, then, that we pick up all those fossil awards and are currently battling for the future of what the European Union would like to designate as `dirty oil’.
The CBI report states that `In trying economic times, the UK’s green business has continued to grow in real terms, carving out a £122 billion share of a global market worth £3.3 trillion and employing close to a million people. ‘ This is real growth in a dynamic market, something that should motivate all politicians in the current environment. Furthermore, a high concentration of UK green exports go to Asia (around 20%, including 12% to China and Hong Kong), a priority area for Canadian trade.
So where do we start? We do have green business in Canada and we are not doing badly in renewables, despite the pro-fossil fuel stance of our federal government. Ernst and Young recent rated Canada as coming 8th (out of 40 surveyed countries) in terms of `renewable energy country attractiveness’ (the UK ranked 5th, China came out top). It cited the Ontario election result and our relative strength in wind, as well as ambitious plans for harnessing wave power in BC, as key factors in this ranking.
When it comes to green investment, we are well behind European countries and the US. Not only have we been at it for a far shorter time, but we also have far less money invested in the green economy. Investeco, Canada’s first environmental investment company currently manages just $35million for over 100 Canadian Investors. Compare with the UK where just this year a government-sponsored Green Investment Bank that aims to release 3bn (sterling) to fund green infrastructure was incorporated.
So now is the time to cash in on the hidden advantage of playing catch-up: we do not need to reinvent the wheel. Let’s start by heeding the CBI’s advice ….just substitute Canada for UK below:
`If we are to capture the full value of the low-carbon transition …. we need to think about what a smarter approach looks like within the context of a broader industrial strategy. We should look to build up and promote UK strengths, identify strategic opportunities and ensure that we have the right institutions and intellectual infrastructure to underpin these activities. In doing so, we can make sure that the UK is best placed to supply – and export – the solutions.’
(The Colour of Growth: Maximising the Potential of Green Business, p.6).