菲沙研究所-加拿大摇摇欲坠的商业活力和落后的创新（英）-2021.9-54正式版

2021Canada’sFalteringBusinessDynamismandLaggingInnovationPhilipCross2021•FraserInstituteCanada’sFalteringBusinessDynamismandLaggingInnovationbyPhilipCrossContentsExecutiveSummary/iIntroduction/1LaggingInnovationinCanada/4CapitalisminCanada/7CreativeDestruction/9Rent-SeekingintheCanadianEconomy/11FormsofRent-SeekinginCanada/16eLongHistoryofRent-SeekinginCanada/23Rent-SeekingandCanada’sPoliticalStructure/27BroaderMeasuresofBusinessMalaise/30Conclusion/35References/37Abouttheauthor/45Acknowledgments/45PublishingInformation/46SupportingtheFraserInstitute/46AbouttheFraserInstitute/47Purpose,Funding,andIndependence/47EditorialAdvisoryBoard/48fraserinstitute.orgCross•Canada’sFalteringBusinessDynamism•iExecutiveSummaryCanadadisplaysmanyofthesamesymptomsofbusinessmalaiseevidentinEuropeannations.RealGDPgrowthoverthepastdecadewastheslowestsincethe1930s,produc-tivityhasstalled,andreducedcompetitivenesshashamperedourabilitytocapitalizeontradedeals,allofwhichhavecombinedtolowerourshareofglobalGDP.Canada’ssluggisheconomicgrowthintheyearsbeforethepandemicreflectsalackofinnovationandweakproductivitygrowththathaspersistedfordecades.eprolongedslumpcannotbefullyaddressedwiththecurrentapproachofpoliciestargetingspecificsectorssuchashightechnologyorgreenenergy,orspurringresearchanddevelopmentinthehopeofboostingoneormoreofthesevariables.Worsewouldbeaccedingtotheendlessrequestsfromspecificgroups,industries,orfirmsforfavoursinthenameofjobcreationorhigherincomes.Instead,Canadaneedsaroot-and-branchre-examinationofitspublicpolicymixanditscommitmenttomarkets,competition,andcapitalism,withthegoalofcreatinganenvironmentmoreconducivetogreaterbusinessformationandinvestment.ComparedwiththeUnitedStates,Canadapossessesfewerofthesocietalvalueslinkedtotheinnova-tionanddynamismthatdriveeconomicgrowthoverthelongterm.elackofvaluesthatsupportinnovationandbusinessdynamismalsoisevidentintherelianceoffirmsongovernmentstoprotectthemfromcompetitioninthemarketplace.eresultingweakgrowthencouragespoliciestargetingthedistributionoverthecreationofincomes,whichaggravatestheshortfallofgrowth.ToomanybusinessmodelsinCanadaarebasedongovernmentsusingathicketofregu-lations,patents,tariffs,occupationallicensingrules,restrictionsonforeigninvestment,andprice-fixingtoshelterfirmsfromcompetition.esetoolstoobstructcompetitionaretooeasilysuppliedbygovernmentsinCanada’sdecentralizedfederation.eout-comehasbeenasignificantlossofbusinessdynamisminCanada,resultinginourlead-ingcorporationsbeingshuntedfromtheglobalstagewhilelowerratesoffirmentryandexitsignalaslowdownintheprocessofcreationanddestructionthatisfundamentaltoaninnovative,dynamiceconomy.Aneconomicdevelopmentmodelwheregovern-mentscatertotheinterestsofindividualfirmsandspecificindustriesultimatelyistheoppositeofonethatpromotesentrepreneurshipandbusinessgrowth,notleastbecauseitunderminesthepublic’sfaiththatincomesareearnedandnotgrantedandthatcap-italismcangenerateinnovationsthatbenefitCanadaasawhole.fraserinstitute.orgesuccessoftheUnitedStatesinmaintainingahighrateofinnovationdemonstratesCanada’slaggingperformanceisnottheinevitableresultofstructuralforcesthatarehardtocontrol.eyaremoretheproductofgovernmentpoliciesandsocietalattitudesthatarewithinourcontrol.However,Canada’sinnovationpolicycontinuestomistakenlyfocusoninputsofknowledgeintheerroneousbeliefthateducation,science,researchanddevelopment,andgovernmentsubsidiesfuelinnovation,despiteampleevidencethattheydonothaveasignificantimpact.fraserinstitute.orgCross•Canada’sFalteringBusinessDynamism•1IntroductionInitsrecentreviewoftrendsinglobalbusiness,eEconomistnotedthatfirmswithAmericanheadquartershavebeenabletomaintaintheirplaceamongtheglobaleliteinresponsetotherisingchallengefromChinesefirms,whileEuropehasgenerallyfailedtokeepup.esetrendsarereflectedinglobalGDP,wherethegrowingshareofChinahasbeenlargelyattheexpenseofEuropeannationsandnottheUnitedStates.Startingin1978whenitbeganintegratingintotheglobaleconomy,China’sshareofGDProsefrom1.7%to17.4%in2020.1

AlmosttwothirdsofthisincreasecameattheexpenseofthefivelargestEuropeannations,whoseshareofGDPfellfrom24.0%to14.5%,whiletheUSsharewaslittlechangedat24.7%in2020comparedto27.2%in1978.CanadabelongsinthesameclassasEurope,asitsshareofglobalGDPshranksteadilyfrom2.5%in1978to1.9%in2020,whileitsleadingfirmsarenolongerworldclass.Moreover,CanadahasfallenbehindformanyofthesamereasonsasEurope.WhiletheUShas“aculturethatexaltsentrepreneurs”andits“politicssupportscreativedestruction,”Europesuffersfrom“corporatemalaise”(Economist,2021a,2021b).ismalaiseexhibitschronicslowgrowth,poorlyfunctioningmarketsforkeyindustries,fewerstart-ups,highinternalbarrierstotrade,afractureddomesticEuropeanmarket,andonerousregulations,allofwhichcreate“alessfavourablebusinessenvironment”(Economist,2021a).EveryoneofthesehandicapsappliestoCanadaasmuchastoEurope.eresulthasbeenaretreatofCanadianfirmsfromtheranksofgloballeaders.eFinancialTimes’listoftheworld’s100leadingcompanieshadonlyoneCanadianfirmin2020(Shopify),atestamenttowhatoneanalysthascalled“Canada’svanishingcorporatetitans”(Kirby,2021).Smallercoun-trieslikeDenmark,Sweden,Spain,andSouthKoreaallhaveatleasttwocompaniesonthislist.Fortune’s100fastestgrowingcompaniesintermsofrevenueandprofitsshowsasimilartrend.In2009,sixCanadiancompaniesmadethelist,butthatnumberfelltozeroin2015and2015,onein2016,andonlytwoin2018(GlobermanandEmes,2019:14)eNobel-winningeconomistEdmundPhelpsandhiscolleaguesconfirmedthatEuropehasfallenbehindtheUnitedStatesininnovationandgrowth.eirdiagnosisofwhatailsEuropeappliesequallytoCanada,including“theriseofcorporatismanditssetofstiflingregulationsthatmakeitmorecostlytooperatebusinesses,consumerprotections,licensingrequirements,andtheprotectionoflong-livedpatents”(Zoega,2020:108).e1.edataoncurrentdollarGDPinUSdollarsarefromtheWorldBank,2020.efivelargestEuropeancountriesareFrance,Germany,Italy,Spain,andtheUnitedKingdom;theyaccountforovertwothirdsoftheGDPproducedintheEuropeanUnionandtheUnitedKingdom.fraserinstitute.org2•Canada’sFalteringBusinessDynamism•Crossoutcomeisthattheserulesandregulationsservethespecialinterestsofproducersratherthantheinterestsofconsumers,thereverseofwhatisbestforCanadians.Underlyingthesechangesisashiꢀinvalues“inwhichprotectionofthevestedinterestsispriori-tizedoverinnovationandrisk-taking.ecorporatistsdonotapproveofuncertaintyanddisorder,somethingthatisingrainedinadynamic,innovativeeconomy.Instead,whatisvaluedisasteadyriseinconsumptionandleisurebroughtoutaboutbygradualgainsinefficiency”(Zoega,2020:108).Canada’seconomyisincreasinglyriddledwithinstitutionalcharacteristicsandprocessesthathinderthecreativedestructionthatisfundamentaltothegrowthofinnovation,pro-ductivity,andincomes.Rent-seekinghasalonghistoryinCanada,encouragedbycentralCanada’sdominanceofthefederalgovernmentandourhighlydecentralizedpoliticalstructurewhereweakprovincialandlocalgovernmentsenactpoliciesthatfavourtheentrenchedinterestsofproducersoverconsumers.Canada’sfirsteconomicblueprintwastheNationalPolicyoftariffprotectionformanufacturers,mostlyinCentralCanada.Tentativemovestoopenportionsoftheeconomytofreetradeinthe1980sand1990swererewardedwithincreasedproductivityandhigherincomes.AꢀerfreetradewiththeUnitedStatesbegan,manufacturingproductivityinCanadaroseby“aspectacular1.0%peryear”(Trefler,2001:2)However,largeportionsoftheeconomyremainedfullyorpartiallyshieldedfromforeigncompetition,notablytelecommunications,banking,broadcastingandotherculturalindustries,andlargepartsoftransportationandagri-culture,oꢀenaꢀerinvokingthecanardthattheirexistencesomehowisfundamentaltoCanada’sidentityandsovereignty.Worse,evenastariffscamedown,otherbarrierswereraisedtoprotectestablishedinterests—includingoccupationallicensingrequirements,intellectualpropertyprotections(suchaspatents),regulations,andrestrictionsonfor-eigntakeovers.eresulthasbeenapersistentandpronouncedslowdownofbusinessentryandexits—symptomaticoffalteringcreationanddestruction—lessinnovation,negligibleproductivitygrowth,andanaemicincreasesinrealGDPandincomes.ispublicationexaminesCanada’sdecliningbusinessdynamismandincentivestoinnovate.econsequenceofthishasbeentheonsetofaformofmalaiseinthebusi-nesssectorasreflectedinchronicslowgrowth,fewerbusinessstart-ups,anddwindlingbusinessinvestment.Pervasiverent-seekinginCanadiansocietynotonlylowerseco-nomicgrowthbutalsoencouragesaharmfulfocusonzero-sumincomeredistributionthatfurtherdampensincomecreation.eonlysolutionistoenableandpromotemorecompetitionandarenewedcommitmenttothosevaluesthatsupportinnovationandultimatelycapitalisminthelongterm.22.erelationshipbetweeninnovationandcapitalismissodeepthatDeidreMcCloskeysuggestsusingtheterm“innovism”inplaceof“capitalism”(McCloskey,2010:76).fraserinstitute.orgCross•Canada’sFalteringBusinessDynamism•3Cultivatingthevaluesthatstimulateandrewardinnovationwouldleadtotheoppositeofgovernmentsfavouringparticularfirmsandcoddlingspecial-interestgroups,practi-cesthatarenotpro-businessbutanathematowellfunctioningcapitalism.isispartlybecauseindulgingrent-seekingencouragesbusinesstoaskformoreprotectionandhand-outs,whichfurtherunderminestrustthatbusinesspeopleearntheirincomesfairly.ejealousyandenvythatthisnurturesamongthepublicisthenusedtojustifyincreasingtaxesonhighincomesandcorporations,whichfurtherdepressesgrowth.eonlytrulypro-businesspoliciesarethosethatfostercompetitivemarketsandproduceamorelevelplayingfieldforallfirmsthroughreducingregulatorycontrols,cuttingtaxes,remov-ingtariffs,reininginoccupationallicensingrules,encouragingstart-ups,andboostingbusinessinvestment.Suchwidespreadreformscanonlyhappeninacountrythatsharesvaluesthatsupportbusinessdynamismandprivate-sectorinnovation.Canadatodayisalongwayfrombeingsuchanation.fraserinstitute.org4•Canada’sFalteringBusinessDynamism•CrossLaggingInnovationinCanadaEconomicgrowthinCanadahasbeendeceleratingfordecades.Itnowtrailsthegrowthofourmajortradingpartners:annualrealGDPgrowthpercapitainCanadaslowedmarkedlyto0.35%onaveragebetween1970and2013,mostlybecauseCanada’saver-agetotal-factorproductivitygrowthof0.16%wasthesecondlowestintheG7(Bojilov,2020a:42–43).Mostofthisslowdownhasitsorigininlagginginnovation.Whileinter-nationalcomparisonsaꢀer2013arenotyetavailable,weknowCanada’srecordontotal-factorproductivityremainedabysmal,withessentiallynogrowthbetween2009and2019despitehavingtheadvantageofnotbeinghamperedbythebankingcrisisthathamstrungtheUnitedStatesandmanycountriesinEurope.Furthermore,Canadaimportstwothirdsoftheinnovationtakingplaceinitseconomy,implyinghomegrowninnovationgrewbyacumulative0.11%from1970to2012,theworstperformanceofanyG7nation(Bojilov,2020b:73).Homegrowninnovationisdefinedas“innovationgeneratedbyagiveneconomyonitsown”asopposedtoinnov-ationsoriginatingabroadandimportedintotheeconomy(Bojilov,2020a:49).Mostofthedeclineinhomegrowninnovationhappenedaꢀer1990,withadropof1.11%inthe1990sfollowedbyarecoveryofonly0.36%inthe2000s.Whileproductivityinmanu-facturingdidrise“spectacularly”inthedecadeaꢀerfreetradewiththeUnitedStateswasadopted,thebroaderslumpininnovationmayreflectthatbusinessinvestmentinCanadalaggedsubstantially,risingonly15%involumebetween1988and1996com-paredtoagainofa74%intheUnitedStates(Trefler,2001:28).However,thefailureofproductivityinCanadatorespondbettertotheadoptionofmajorpolicyinitiativessuchasfreetrade,inflationtargets,andtheGoodsandServicesTaxremainsapuzzleforeconomists.DonDrummondfirstdrewattentionin2011tothepuzzlethat“despitemostofthepublicpolicyagendathatwasputforwardtoimproveproductivitybeingimplemented,productivitygrowthinthiscountrysince2000hasactuallydeterior-ated”(Drummond,2011:3).Hespeculatedtheproblemoriginatedinthebehaviouroffirmsatthemicrolevel.isisagoodexampleofwhatomasSowellmeantwhenheobservedthat,when“intellectualshavetheoriesthatdonotfittherealworld…theyconcludethatitistherealworldwhichiswrongandneedschanging(quotedinRiley,2021:196).Forexample,themovetofreetradeinternationallywasoffsetbyexemptinglargesectorsofCanada’seconomyandbyerectingotherbarrierssuchasrequirementsforoccupationallicensingandrestraintsoninterprovincialtrade.ispaperarguesthatCanada’sweakrecordoninnovationandproductivityhasmoretodowiththewordsthantheactionsofpoliticiansandthewillingnessofgovernmentstoaccommodaterent-seeking.fraserinstitute.orgCross•Canada’sFalteringBusinessDynamism•5WhileinnovationoriginatinginCanadafellaꢀer1990,homegrowninnovationinsomeothercountriessoared:notably,theUnitedStateshadcumulativegainsofover6%perdecadeandtheUnitedKingdomwasnotfarbehindat4%(Bojilov,2020b:71).Canada’spoorperformanceinhomegrowninnovationaꢀer1990putsitinagroupwithFrance,Germany,andItaly,allofwhichpostednetdeclinesbetween1990and2010.Withhome-growninnovationdryingupinEuropeandCanadainrecentdecades,theUnitedStatesremainedtheglobalengineofinnovation.Whiletheinformationtechnology(IT)indus-tryledUSinnovation,IThasnotdriveninnovationinotherindustries.Inretail,forexample,itwasWalmart’smodeloflowcostsandpricesthatrevolutionizedthelandscape.ValuesareimportanttotheabilitytoinnovateemainfindingofPhelpsandhiscolleagues“isthatpeoplefromallwalksoflife,notjustscientistsandlabtechnicians,possessinbornpowerstoconceive‘newthings’,whetherornotscientistshaveopenedupnewpossibilities…ewholenationmightbeonfirewithnewideas”(Phelps,2020a:5).evaluesmostconducivetoinnovationinclude“trust,thewillingnesstotaketheinitiative,thedesiretoachieveonthejob,teachingchildrentobeindependent,andtheacceptanceofcompetition”(Zoega,2020:105).Othershadwrittenabouttheimportanceofvalueslongbeforetheywererecentlyquantified.Forexample,inherBourgeoistrilogy,DeidreMcCloskeyarguedthatgrowthtookoffineighteenth-cen-turyEuropeasaresultoftwoideas:first“theideasintheheadsofentrepreneursforthebettermentsthemselves(theelectricmotor,theairplane,thestockmarket);andtheideasinthesocietyatlargeabout

thebusinesspeopleandtheirbetterments”(McCloskey,2016:xvi).MaxWeberlongagoarguedthatprotestantvalueswerefoundationaltocapitalism.PolicymakinginCanadacontinuestofocusoninputsofknowledgeandnotculturalvaluesinafutileattempttoboostinnovation.Canadianpolicymakersclearlyhavefallenunderthespellofwhatiscalledscientism—“thebeliefthatscientists,equippedwiththetoolsofscience,moreeffectivelyadvancethefloweringofnewproductsandmethodsthandothediffuseandpoorlydirectedinitiativestakeninafreeenterpriseeconomy”(Phelps,2013:142).Canadaexcelsatmanyofthepresumedinputsintoinnovation,suchasR&D,fundingforscienceanduniversities,andgenerousgovernmentsubsidiesforinnovation.eproblemisthat,whilemoreeducation,science,andresearcharebeneficial,“theseelementsarenottobeconfusedwithinnovationpolicy”(Breznitz,2021:63).edamn-ingresult“isthatsince2007,themoretheCanadiangovernmenthasinvestedtaxpayers’moneyintryingtospurinnovation,thelessCanadianprivatebusinesseshavedoneso.Canadaeasilywinsthewooden-spoonawardfortheworstinnovationpolicyamongallthedevelopedeconomies”(Breznitz,2021:62).GovernmentattemptstoboostinnovationhavenotpaidoffbecauseCanadiansocietydoesnotsubscribetoenoughofthevaluesthatincubateandchampioninnovation,preferringinsteadtoprotectincumbentfirmsandretardthereallocationofcapitalandlabourfromdecliningtoexpandingindustries.fraserinstitute.org6•Canada’sFalteringBusinessDynamism•Crossetraditionalviewineconomicsthatinnovationcanbecontrolledbygovernmentcalibrationofitspresumedinputs(suchasspendingonresearchanddevelopment)isgivingwaytoabroaderviewofthesocialandculturalcontextinwhichinnovationflour-ishes(Cross,2020).Innovationisassociatedwithculturalvaluessuchasindependence,self-expression,thewillingnesstocompete,andaninclinationtotaketheinitiative,showingthat“valuesandbeliefsmatter,includingthevaluesandresultingattitudesinstilledinchildrenandsociety’sattitudestowardinnovators,whichdictatewhethertheyareadmiredorenvied,andwhetherthecreativeindividualsreceivesupportfromtheircommunitiesorattemptsaremadeatrepressingthem,tonameafewexamples”(Zoega,2020:107).RecenthikesinCanadatotaxesonbothcorporationsandhigh-incomeearn-erssuggestswearemoredisposedtoenvythantoadmiresuccessandthatwedonotencouragecreativepeopleandfirms.WhilebusinessleadersintheUnitedStatessuchasthelateSteveJobs,BillGates,andWarrenBuffettareoꢀen-admiredfigures,itishardtonameanyCanadianbusinessleaderswhohavesuchiconicstatus.Canada’sabysmaltrackrecordoninnovationreflectsalackofthoseculturalvaluesthatencourageinnovation.Canadafaredpoorlyinsurveysofthevaluesthatsupportinnov-ation,especiallytheacceptanceofcompetitionandteachingchildrentobeindependent(Zoega,2020:113).isiswhynoonetodaydescribesCanadaasanationonfirewithnewideas.eimportanceofvaluestoinnovationandgrowthisdemonstratedbyAlberta,whichhasachievedsuperiorgrowthwhiledemonstratingthemostpro-innovationvaluesandpoliciesinCanada(Cross,2021).ispapermakesthecasethatthevaluessharedbymostCanadiansencouragerent-seekingbyfirmstoshelterthemselvesfromcompetitionratherthancompetingthroughinnovation.ItisnoteworthythatCanadianvaluesremainsodifferentfromthoseofAmericans.Despitebeingsituatednexttotheworld’sleaderininnovationandhavingconstantexpos-uretoUSculturalvaluesthatencourageinnovation,Canada’svaluesremainsignificantlylesssupportiveofinnovation.Beyondalowercapacitytoinnovate,thepersistenceofdifferencesinCanadianandAmericanvaluesdespiteCanada’sreadyaccesstoAmericanbroadcastingandsocialmediaimpliesthatourculturalindustrieswronglydiagnosedinaself-servingmannerthethreatposedtooursovereigntybyconstantexposuretoUSmessages.AstheGlobeandMail’sTVcriticJohnDoylewrotein2017abouttheCBC:“itisdangerousforthepublicbroadcastertothinkofitselfasdefiningthecountryanditsculture…itdoesnotdefineCanadaortheculture.Nobodydoesthat.ecountryistoomercurial,shiꢀingandhappilyshapeless—it’sanideawithmanyhistoriesandcul-tures”(QuotedinTarasandWaddell,2020:145).Apparentlyourculturalindustriesdonotunderstandhowculturalvaluesaredeterminedandpropagated,implyingtheycanofferlittlehelpinprotectingCanadianvalues.fraserinstitute.orgCross•Canada’sFalteringBusinessDynamism•7CapitalisminCanadaedifferencebetweenCanadianandAmericanvaluesisreflectedinhowpoliticallead-erscommunicatewiththebusinesscommunity.ManyUSpoliticianstalktobusinessinawaythatapparentlyisunthinkableinCanada.McCloskeyhaslongmadethecasethatthemannerandthewordsasocietyusestodescribeitsbourgeoisarecriticallyimport-ant.FormerGeneralElectricCEOJackWelchrecountsmeetingwiththenPresidentTrumpattheWhiteHouse,saying:“I’vebeencomingtothisplacesince1980andI’veneverseenanythinglikethat.eycansaywhattheywantabouthim,butIdon’tknowifanypresidenthasbeenmorepreparedtositinthatroomandtalkbusiness.Itwasliketalkingtoapeer,notapolitician”(Sims,2019:131–132).Trump’sactionswerenotalwayspro-business,notablyhisproclivitytoraisetariffsorpunishindividualfirmsthatoffendedhimpersonally.However,hiswordsandhisadoptionofkeypoliciessuchasreformingthecorporateincometaxandreducingregulationsclearlystimulatedbusi-nessinvestment.Beforethepandemicstruckin2020,businessinvestmentintheUnitedStateshadrisenby15.5%injustthreeyears,afasterratethangainsof23.4%and22.5%duringtheeightyearsoftheBushandObamaadministrations.OtherUSpoliticiansworkhardtocreateabusiness-friendlyenvironmentwithoutcater-ingtospecificfirmsorindustries.Eisenhowerexclusivelyappointedbusinesspeopletohiscabinet(includingthePresidentofGeneralMotorsasSecretaryofDefense)withtheexceptionofhisSecretaryofLaborwhowasheadoftheplumbers’union,leadingeNewRepublictocharacterizethecabinetas“eightmillionairesandaplumber”(quotedinLeuchtenburg,2015:341–342).PeteSessions,aRepublicanmemberofCongressfromTexas,recentlyopenedavirtualconferencebythanking“everyoneinthefreeenterprisesystem”(CanadaStrongandFreeNetwork,2021).ItisunimaginablethatapoliticianinCanadatodaywoulddemonstratesuchadmirationforbusiness.ManyCanadianpoliticalleadersseemtowantwhatPikettycalled“capital-ismwithoutcapitalists,oratanyrateastatecapitalisminwhichprivateownersnolongercontrolledthelargestfirms”whendescribingFrance’seconomy(Piketty,2014:138).Capitalismwithoutcapitalistsis,ofcourse,anincongruity.InhishistoryofAmericancapitalism,JonathanLevyemphasizestheimportanceofcapitalists,because“[i]nacap-italisteconomytheremustnotonlybecapital.eremustbecapitalists—theownersofcapital,whoarechargedwiththecriticaltaskofinvestingtheircapitalwhenandwheretheylikeandthusjump-startingthecapitalisteconomicprocess”(Levy,2021:xvi).However,havingcapitalistsimpliesacceptingcertainthingsthatseemanathematotheprevailingsentimentamongpolicyelitesinCanadatoday,suchasadistributionoffraserinstitute.org8•Canada’sFalteringBusinessDynamism•Crossincomeunequalenoughtocreateincentivestoachieveandexcelandthefreedomtodeploycapitalinvestmentwhereitearnsthehighestreturn,includingresourceextrac-tionandpipelines.Canadaseemstogrudginglyacceptentrepreneursandcapitalismwhiledoingeverythingpossibletothrowsandintheirgears.Whilecapitalismwithoutcapitalistsisnotpossible,socialismisachievablewithoutstateownershipofthemeansofproduction.Whatleyarguesthatsocialismalsoincludesstatecontrolovertheoperationsandnotjusttheownershipofanenterprise.Allowingpri-vateownershipbutdictatingorregulatingthedetailsofhowabusinessfunctionsisthesameasgovernmentcontrol.isisexemplifiedinCanada’shealth-caresystemwhereprivateownershipofdoctor’sofficesissubjecttotightstatecontroloftheiroperationsandrenumerationsince“thestatedictateswhocanenteraclinic;whomdoctorscansee;whomustbereferred;whatkindsofcaremustbeoffered;whatnotesmustbetaken;whatnotesmustnever

betaken;datatoreport;andhowtoreportthedata”(Whatley,2020:61).isechoesLudwigvonMisesobservationthatsocialistandplannedecon-omies“wanttomaintainprivatepropertyinnameandinlaw,butinfact,becausetheysubordinatethepowerofdisposingtoStateorders,wanttosocializeproperty,[andthus]aresocialistsystemsinthefullsense”(quotedinWhatley,2020:256).ecom-pletecontrolgovernmentsexercisedduringthepandemicoverwhenandhowmostbusinessesinCanadacouldopenandconductbusinessshowedthefullpowergovern-mentscanexertoverfirms.fraserinstitute.orgCross•Canada’sFalteringBusinessDynamism•9CreativeDestructionCreationanddestructionarebothfundamentaltoinnovation.Everysuccessfulinnov-ationdestroysapartofsomeotherbusiness,eitherdirectlybywinningpartofitsclien-teleorindirectlybysyphoningoffcustomers’purchasingpower.Asaresult,entrenchedinterestsareadeptatusingprocessesandinstitutionstoblockchangeandpreservethestatusquo.Governmentistheinstitutionmostoꢀenusedtopreserveestablishedinter-estssinceithasatitsdisposalanextensivearrayof“regulations,grants,loans,guarantees,taxes,deductions,carve-outs,andpatentextensions”(Phelps,2013:314).Governmentsalsohavetheabilitytoconferspecialadvantagesonfavouredincumbentstocreatearti-ficialscarcityandrentsanderectbarrierstotheentryofnewfirms.Barrierstoentrycomeinmanyforms,includingmonopolyrights,occupationallicensingrequirements,restrictionsonthenationalityofinvestors,subsidiestoestablishedfirms,andprivilegedaccesstogovernmentcontracts(Geloso,2021:18).Creativedestructionisvitaltothedynamismofcapitalism.Conventionalmeasuresincludetheturnoveroffirmsandtheentryandexitoffirms.Simplyassumingthatourleadingcompanieswillendureandcreatejobsandincomesinthefutureisnottenableintoday’sglobaleconomy.IntheUnitedStates,theturnoveroffirmsamongindus