Measures That Matter and The Misguided ‘Productivity’ Scorecard

• cutting costs to be ‘competitive’ with wage-slave countries, 
• attracting more foreign investment (read: takeovers), 
• investing in ‘commercialization’ instead of imagination and creativity (not sure what we would then have to commercialize),
• writing more scientific articles and registering more patents, 
• tax cuts for corporations and rich investors (we all know how well this has worked in the US), and 
• deregulation (so we can have more Enrons, WorldComs, Arthur Andersens, and then knee-jerk Sarbanes-Oxleys when corporate crimes rise in response). 

With ‘ideas’ like this — I’ve debated often with those at the Conference Board, and they’re sloggers, mostly competent but short on imagination and critical thinking — it’s not surprising that we rank low in innovation.

So what should Canada do?

Well, for a start, we should change how we define and measure ‘productivity’. As I’ve explained before, corporatists have (for self-serving reasons) got economists, the media and others (including, alas, the Conference Board) equating productivity with corporate profit margins, or, as they put it, the amount of ‘output’ (revenue) per unit of ‘input’ (salaries and other costs).

By this measure, Canada’s ‘productivity’ is lower that in the US for two important sociological reasons: We work significantly fewer average hours per week, and our participation rate (notably the number of two-income families) is significantly lower. Is this something we should define as a problem? Only, I would suggest, if you’re a corporate shareholder, trying to squeeze more work out of more workers for lower wages.

Take these factors out of the equation, and our ‘productivity’ is directly comparable to that of the US. And this is despite the fact that the 70% of larger Canadian companies that are owned by foreigners invest an average of one third less in infrastructure and R&D in their Canadian subsidiaries than they do in comparable-sized domestic operations. Go into most Canadian ‘branch’ plants and warehouses of companies with US parents and you can see almost immediately how shabby they are. They get the cast-off systems, equipment and software of the foreign parent. They get antiquated, badly laid-out facilities. They get the management rejects from head office, people who frequently make colossally dumb decisions with zero knowledge of the Canadian marketplace.

What’s astonishing is that despite this, they consistently outperform the head office country’s plants in quality — Canadian auto plants, for example, are routinely rated among the best in the world.

I used to think that, for that and other reasons, we should prohibit foreign control over Canadian businesses, and ban foreign ownership of Canadian land and resources. I’m still not sure that wouldn’t be a good idea — it’s tough to make economic decisions in the best interest of Canadians when foreign-owned businesses dominate the Canadian economy (and campaign contributions to Canadian politicians).

But there’s a more effective approach that the Conference Board and other non-thinkers never seem to broach: Supporting Canadian entrepreneurship. Drucker realized that entrepreneurship is the principal driver of innovation, and that innovation (not profit margin) is the driver of real productivity. It’s all about meeting needs more effectively. It’s about making stuff that works, and is durable, not how cheap you can import throwaway crap. Canada has, by global standards, a reasonably entrepreneurial culture, but we’re losing the propaganda war to the corporatists who think cost reduction is more important than quality, sustainability, and enterprise.

Until we can change the language of ‘productivity’ to something that contributes to the well-being of Canadians instead of the size of corporate dividend cheques flowing quickly out of the country to foreign shareholders, the bozos in political office and the media will keep blathering on about this absurd ‘productivity’ and GDP bullshit, and not recognize the urgent need for (and huge potential ROI from) a major public investment in Canadian-owned enterprise. This investment should be focused on three things:

1. Education: Not MBA courses that purport to teach ‘leadership’ and ‘strategic management’, but down-to-earth, hands-on,continuous education programs in how to research, establish and operate sustainable Canadian enterprises that meet real human needs, give Canadians meaningful work, allow us all to do what we do best, and bring an end to chronic underemployment.
2. R&D and Infrastructure: Grants, plus tax incentives, specifically for research and for clean, sustainable facilities, equipment and technology, with a catch: the recipients must be 100% Canadian owned and managed, and cannot sell the fruits of this investment to foreign buyers (that’s in violation of the abominable NAFTA, but never mind).
3. Environmental Sustainability: A major funding and legislative commitment now to create a healthy society and environment. The David Suzuki Foundation has written the blueprint:
1. Generate genuine wealth: Expand the narrow goal of economic growth to the triple-net objective of genuine wealth and well-being (ecology, economy, and equity).
2. Improve production eco-effectiveness: Increase the effectiveness of energy and resource use by a factor of four to 10 times.
3. Shift to clean energy: Replace fossil fuels with clean, low-impact renewable sources of energy.
4. Reduce waste and pollution: Move from a linear “throw-away” economy to a cyclical “cradle-to-cradle” economy.
5. Protect and conserve water: Recognize and respect the value of water in our laws, policies, and actions.
6. Produce healthy food: Ensure food is healthy, and produced in ways that do not compromise our land, water, or biodiversity.
7. Conserve, protect and restore nature: Take effective steps to stop the decline of biodiversity and revive the health of ecosystems.
8. Build sustainable cities: End urban sprawl in order to protect agricultural land and wild places, and improve our quality of life.
9. Promote global sustainability: Increase affluent nations’ contribution to sustainable development in poor countries.
10. Introduce fiscal reforms: Shift taxes to promote sustainable and to discourage unsustainable production and consumption, and eliminate perverse subsidies that enable unsustainable business practices to be hugely profitable and which discourage innovation and inhibit competition from small enterprises.
11. Respect all life on Earth: Institute and change laws and regulations to respect all life on our planet as sacred, not treat it as mere human ‘property’.

A Canada that accomplishes the eleven objectives in this sustainability blueprint (Suzuki says it can be done in a generation) will be the envy of the world. How we would measure up by the corporatists’ yardstick of ‘productivity’ if we made all three of the investments above (financed substantially by a tax shift and a reduction in war and ‘defence’ spending) is hard to say. But no one will care, because we’ll be investing in Canadians’ well-being, instead of in a morally and creatively bankrupt and unsustainable economic system. We’re way overdue replacing ‘productivity’ and GDP with measures that matter.