Money Has No Country: Behind the Crisis in Canadian Business

Vincent di Norcia is an associate professor of philosophy and business
ethics at Laurentian University.

Shortell’s excellent study of Canadian businesses shows how stodgy and
uninnovative they are. The airlines, an old symbol of nationalism, are
uncompetitive and in hock. Connaught Biosciences, the darling of the
nationalists, ignored the rise of genetics and microbiotics. Its recent
merger with Merieux of France promises more research, because Ottawa
required it. Northern Telecom has become internationally competitive,
but is increasingly American. Most large Canadian firms (especially in
the area of resources), spend only 0.9 percent of their profits on R&D,
while small companies spend 12 percent and medium, 10 percent. In Sweden
and Germany, industry does 73 percent of the R&D nationally, and U.S.
industries do 70 percent; the comparable figure for Canada is a mere 54
percent.

The Reichmanns and the Bronfmans in this country deal in finance and
real estate, not innovation or manufacturing. Under Olympia & York, Gulf
and Abitibi do less research. Canada’s banks may have learned to be
competitive in the North American market, but not without succor from
Ottawa. Despite deep pools of private capital, Canada’s elites do not
invest in research. And the Tories’ obsession with reducing the
deficit ignores innovation. Taxes leave Canada’s elite with their
wealth, but force the middle class into bankruptcy and unemployment.

Canadian banks, capitalists, and governments withdraw funding from
innovative firms like B.C.’s Moli Energy when problems emerge. (In
Moli Energy’s case there were production problems with its light
lithium battery. But Japan’s Mitsui saw the battery’s potential for
the electronics field. They bought Moli for a song.) Indeed, British Gas
bought Consumers Gas and does 10 times the R&D of any Canadian utility.
In that they commit themselves to investment and innovation and add
value to the Canadian economy, foreign investors are often preferable to
domestic ones, Shortell concludes: “We need to become committed to our
work, and to learning and advancing technologically on a long-term
basis.” With governments, Canadian business must “concentrate on
arrangements that benefit all of us.”