Our knowledge-based economy can’t afford to be smug

Posted on March 7, 2011 in Policy Context

Source: — Authors:

TheGlobeandMail.com – news/commentary/opinion
Published Monday, March 7, 2011.   Todd Hirsch

For decades, North American manufacturing has been in upheaval due to the forces of globalization. Thousands of traditional blue-collar jobs are vanishing because of lower costs in Asia. Union representatives understandably call on politicians to “level the playing field.” But even these advocates know that a lot of these jobs cannot be saved.

At the same time, millions of other workers click on their laptops and begin their working day. These are the ones who went to university. They have service-sector jobs. They are, as they like to call themselves, the “knowledge-based” economy. They’re smart, young and smug in their job security. The problem is, their jobs are far less secure than they know.

The titan of all knowledge-based New Economy service-sector jobs – the financial sector – is suddenly under threat. With the announced proposal to merge the Toronto and London stock exchanges, thousands of high-paying financial services jobs in Toronto could be gone.

The smugness isn’t limited to the Bay Street whiz kids, though. Resource-rich Alberta is smug in believing America has no choice but to buy its oil. And while it’s difficult to see what options U.S. motorists have at the moment, any time a seller believes the customer “has no choice,” it’s bound to end badly.

Globalization is no longer just about factory jobs moving to Asia. It’s affecting everything – resources, banking, high-tech services, the whole shebang. Everything is getting bigger, faster and cruelly cost efficient. Fibre-optic cables spanning the continents have made geography irrelevant.

The knee-jerk reaction from terrified governments is typical: Protect domestic jobs from foreign takeovers. With the proposed TMX-LSE merger, the talk from some government quarters sounds eerily similar to the Canadian Auto Workers and other protectionist voices: “We need to protect Bay Street workers and protect our strategic industries.”

Similarly, our governments promote the oil sands because, unlike other oil exporters, Canada respects human rights, environmental standards and the judicial system. This is all true, but, in the long run, it’s unimportant if the customer doesn’t care and ends up buying less of it anyway.

All of the hype around knowledge-based economies and our abundant resources misses the point about globalization. Financial services jobs can just as easily be done in London, Tokyo or Frankfurt as in Toronto. Americans don’t need to buy our oil if they can find ways to shift to natural gas, which they possess in abundance, or reduce energy consumption altogether. That change could come faster than any of us would care to know.

This leaves Canada with two unappealing choices: Fear globalization, protect jobs temporarily, dig in our heels on traditional resources – and isolate Canada as a very small fish in a very big pond. Or embrace globalization and all its terrifying consequences, and allow Canada to be a global leader in new services and industries.

The first choice is unattractive for obvious reasons. But the second choice is unattractive because we don’t know precisely what these new services and industries will be. That’s the challenge of globalization: Go out and create opportunities that didn’t exist before. Build industries that don’t yet have Standard Industrial Classification codes. Train Canadians for new jobs that don’t even have names. Complement our traditional resources with alternative energy systems that the world will beat down our door to buy.

In 1950, the term “human resource specialist” didn’t exist. In 1980, “web designer” wasn’t an option at high-school career day. And in 2030, Canada will be home to all sorts of occupations that would sound just as crazy to us in 2011.

Globalization isn’t going away, and it shouldn’t. Its benefits to the enrichment of human life around the world have far outweighed its costs. But the sooner Canada embraces the possibilities of globalization, the further ahead of the curve we’ll be in creating the yet-unnamed jobs and industries of tomorrow. They’re out there waiting for Canada’s creative minds to invent.

Todd Hirsch is a Calgary-based senior economist at ATB Financial. The opinions expressed are his own.

< http://www.theglobeandmail.com/news/opinions/opinion/our-knowledge-based-economy-cant-afford-to-be-smug/article1930604/ >

Tags: , , ,

This entry was posted on Monday, March 7th, 2011 at 11:50 am and is filed under Policy Context. You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response. Pinging is currently not allowed.

Leave a Reply