Matthew Lau explains at Financial Post Forget ‘sustainable and inclusive’: Get back to profit. Excerpts in italics with my bolds and added images
Business community must re-focus its efforts on fulfilling
its real social responsibility: increasing profits
“Sustainable and inclusive growth,” like “corporate social responsibility,” is a loaded phrase. Both are based on subversive policies and ideas, but because nobody wants to be accused of supporting un-sustainability or corporate social ir-responsibility they often go unopposed.
That’s a mistake: both badly need opposing.
Just as preachers of corporate social responsibility advocate a form of socialism, those calling for “sustainable and inclusive” economic growth are proposing government economic planning. When activists say “sustainable and inclusive growth” what they really mean is that they, through the government intervention they invariably recommend, should dictate where economic growth takes place, in which sectors and for whose benefit.
It should surprise no one that the federal government splashes buzzwords like “sustainability” and “inclusiveness” all over its communications in trying to sell its inordinately expensive, not to mention dumb, economic programs to the voting public. It is more difficult to understand why the business community follows the government’s lead in advocating central economic planning and masking it behind “sustainability,” “inclusiveness” and other slick marketing words.
One reason for this unfortunate tendency of the business community may be that government expansion into business has completely blurred the lines between the two. Nor does it help that many business leaders come from government and bring with them far too rosy views of government economic planning instead of — as would be far more appropriate — a clear understanding of the tendency of government officials to act in their own rather than the public interest, the undisciplined wastefulness and inefficiency of government programs and the fatal conceit of top-down economic organization.
Two such business leaders are former federal cabinet ministers Anne McLellan (Liberal) and Lisa Raitt (Conservative), who now co-chair the Coalition for a Better Future. The coalition, which today includes 142 of Canada’s most influential business groups, industry associations, think tanks, and non-profits, was formed in 2021 with the goal of “a more inclusive, sustainable, and prosperous Canada.” Their ordering of the adjectives is telling: “prosperous” comes last. Also telling is Raitt’s declaration that business, government, and community and Indigenous voices must build “a shared economic vision” to achieve this Canada.
Widespread and sustainable economic growth does not come from consolidating
business and government visions, plans, interests and objectives.
The Coalition for a Better Future, McLellan and Raitt recently wrote in the FP, “believes any growth agenda needs to be inclusive and environmentally sustainable in order to be viable.” After correctly identifying the dearth of private-sector investment as one reason for lagging productivity and growth, they go on to propose alarmingly bad solutions. They call Joe Biden’s misleadingly-named Inflation Reduction Act (US $499 billion in government spending, of which $391 billion is on climate change) a “welcome impetus to global climate transition efforts” that is “already siphoning Canadian capital south of the border,” suggesting their preferred way to increase growth and capital investment is for government to sink many tens or even hundreds of billions of dollars more into the global warming project.
Government economic plans should also, according to McLellan and Raitt, include “enabling and incentivizing business to deliver on big projects in key sectors such as critical minerals, clean energy and green manufacturing.” But government dictating which sectors should receive “incentives” invariably directs capital from economically productive uses to relatively unproductive but politically favoured uses — these days, anything involved in “sustainability.” The push for government-guided “inclusiveness” is similarly bad. When people with political power get to decide whom to include as beneficiaries of government-granted economic privilege and benefits, the greatest privilege and benefits invariably flow to … people with political power. This is not a sensible way to help those at the bottom of society.
If there is to be any real productivity growth or economic improvement in Canada, the business community must re-focus its efforts on fulfilling its real social responsibility — increasing profits — and reject government preaching about supposedly “sustainable and inclusive” matters that are in fact mostly unsustainable and economically destructive.
How Well is Government Doing Directing the Canadian Economy?
What’s driving this? A previous blog explained how growth in real per capita GDP is the sum of: (a) growth in output per hour worked (“labour productivity”) and (b) growth in hours worked per head of population (“labour utilisation”). Of the two components, productivity growth is the more important determinant of future living standards because it is limited only by the pace of technological change and the ability of businesses and workers to adapt to it. In contrast, labour utilisation growth has a natural ceiling based on demographics, labour force participation, and there being only so many hours people can or will work per year.
The OECD finds that Canada’s prospects for real per capita GDP growth over 2020-2030 are poor because of feeble expected growth in output per hour worked (labour productivity, see Figure 1b) and a slight drag from hours worked per head of population (labour utilization, see Figure 1c).
Source: Business Council of British Columbia OECD predicts Canada will be the worst performing advanced economy over the next decade…and the three decades after that
Reblogged this on Climate Collections.