There’s a lot more to the economy than simply business

Posted on in Governance Debates

NationalPost.com – FP Comment
July 17, 2014.   William Watson

The Department of Finance this week announced the make-up of its Economic Advisory Council for the coming year. It has 16 members, who will be paid $1 plus expenses. Financial Post columnist Jack Mintz is one of the 16, which is hardly surprising. Jack is one of the best, and best-known, policy economists in the country.

What is surprising is that he is the only professional economist on the Economic Advisory Council. Almost all the rest are presidents and CEOs. Five are from the financial world, broadly defined. Three are heads of diversified companies (Paul Desmarais, Jr., of Power Corporation, Jim Pattison of the Jim Pattison Group, and Nancy Southern of ATCO and Canadian Utilities). One’s in retail (Bonnie Brooks of Hudson’s Bay). And the rest are from mining, brewing (Andrew Oland of Moosehead), auto parts and “outdoor luxury apparel” (Dani Reiss of Canada Goose Inc.).

The Economic Advisory Council’s chair is Janice MacKinnon, former Saskatchewan finance minister, who is much more sensibly centrist than her NDP pedigree would suggest. But although her experience has effectively given her a Ph.D. in applied economics, her real Ph.D. is in history (the loyalists), not economics.

Nothing against any of these fine people. And congratulations to them all for serving their country for just $1 a year — though in truth when the finance minister calls to ask for advice nobody ever says no. I’m sure most would happily cover their own expenses, too.

If we were talking about the finance minister’s “Business Advisory Council,” this would be an outstanding group. On a business advisory council you want the titans of Canadian industry —and maybe also, thinking out of the box, a few failed business people, too, to tell you how things can go wrong.

But it’s not the “Business Advisory Council.” It’s the “Economic Advisory Council.” Business is key to the economy, obviously. But there’s a lot more to the economy than simply business.

To begin with, there’s all us consumers. I’m assuming the 16 members of the Advisory Council do sometimes engage in consumption. But when they’re giving their considered opinion about what’s best for the Canadian economy, which do you suppose will dominate: their 24/7 struggle to make their businesses thrive? Or their occasional trips to Wal-Mart? (Assuming, that is, Messrs. Desmarais, Pattison, Oland and so on have ever been to Wal-Mart.)

Another group conspicuous for its absence is Canadian workers. We on this page are resolutely opposed to class warfare. And most evidence about the earnings of the “1%” confirms, even Thomas Piketty agrees, that we’re all workers now. (As Margaret Thatcher put it: “Aren’t I working class? I work jolly hard, I can tell you.”) Still, in any group tasked with advising on the operations of the entire economy, workers who aren’t in the top 1% should probably have at least one spokesman.

Who will speak for consumers and workers on this Economic Advisory Council? Looks like Jack Mintz is going to have to take on that whole burden. He’s professionally well-equipped to do so, even if 15 to 1 isn’t a very fair fight. The key perspective a practicing economist brings to the table is that while doing business is an honourable pursuit that can throw off benefits for everybody, what’s good for business is not always good for the economy. Economists have understood that since Adam Smith observed that “People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.” Unfortunately, it’s not clear most business people understand it.

To be sure, a couple of the non-economists on the Council have associations with the market-oriented, competition-favouring Fraser Institute — Peter Brown is currently chairman of its board and Nancy Southern received its Founder’s Award in 2013 — so they’re presumably well aware that businesses will often try to hobble competition, albeit invariably in the name of “Canadian competitiveness.”

But worrying about whether policies are good for the country as a whole, and not just one section or sector, is what economists do 24/7. Which is why Jack Mintz, for all his talent and vigour, shouldn’t be the only practicing economist on the Economic Advisory Council.

< http://business.financialpost.com/2014/07/17/william-watson-theres-a-lot-more-to-the-economy-than-simply-business/ >

Tags: , , ,

This entry was posted on Friday, July 18th, 2014 at 10:01 am and is filed under Governance Debates. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

Leave a Reply