At a moment of rapid change in the global economy, the Liberal government is intent on crippling the industries and entrepreneurial mindset we need to succeed.
Imagine that you wake up in the morning and decide that you want to buy some new shoes.
Why did you make that decision?
Was it the ad for shoes you saw online a week ago? Was it your shoes getting dirty and you noticing they looked a bit tattered while cleaning them? Was it you noticing a colleagues shoes and deciding you wanted to one-up them? Was it your shoes/boots getting damaged on a worksite? Did you have a formal event to attend that necessitated new shoes? Did you want to look good for a date?
Whatever it was, the reason for you waking up and deciding that you would buy some new shoes was likely impacted by a myriad of things, none of which another person could have perfectly predicted ahead of time.
Now, that is just one very small and inconsequential decision.
Consider all the other economic decisions you make every day. Consider how complex all of that becomes.
Then, consider that you make those decisions day after day after day.
Then, consider that you are one of just 40 million Canadians, and that everyone else’s decisions and choices have a ripple effect that ultimately impacts you as well.
How can such immense complexity be managed?
By not trying to manage it.
The price system is simple, and that is what makes it able to handle complexity.
Prices convey a massive amount of information without you needing to actually understand any of it. All you need to know is whether you can afford a product or not.
Back to the shoe example.
The price of a shoe conveys the costs of the raw materials required to make it, the cost of extracting and refining/processing those raw materials, the price of shipping those raw materials, the price of paying the people who process and ship it, the price of designing the shoe, the price of manufacturing it, the price of shipping it to the store, and the price of paying the employees at the store. And, I’m almost certainly leaving something out there. It is immensely complex, yet it’s all boiled down to a simple number.
Decentralization
Boiling down this kind of complexity into a simple number requires a largely decentralized system.
Any one person – or organization – would go crazy trying to predict when each individual Canadian wanted to buy a shoe.
Trying to set the price of shoes in a centralized manner would also be disastrous, as it would be incredibly difficult to account for the rapid changes of consumer preferences and material costs. For example, cowboy boots could surge in popularity because of a popular TV show, our could decline in popularity if there is a leather shortage that costs prices to rise above what many are willing to pay. Letting prices go up and down with supply and demand is the best way to ensure resources are efficiently allocated, and the price system allows that allocation to happen without any one person or organization being in control.
The Knowledge Problem
Here we come to the “The Knowledge Problem” in central planning. Many attempts have been made to centralize control over national economies. Yet, those attempts invariably result in far worse outcomes than allowing prices to fluctuate.
American economist Don Lavoie explained this problem quite effectively:
“Comprehensive planning, the classic doctrine of planning advocates, seeks to achieve economic coordination without relying on the contention of separate decision makers with one another; it thereby deprives itself of access to one of the most important sources of knowledge exhibited by these kinds of orders. Just as in biological competition, there is the ‘information bearer’ function of DNA, so in the society of Tradition, this function is further served by such developments as language and culturally acquired techniques and habits. In the society of Market, profit and loss signals are added to this array. In the society of Planning, there is no new information bearer and those of the Market are discarded. It is this lack that gives the knowledge problem argument its force.”
“No advocate of planning has yet indicated a workable medium, analogous to the insects’ pheromones or the scientists’ journals or the market’s money prices, through which the interdepartmental rivalry [between a planned economy’s different departments] could generate a level of social intelligence that exceeds the individual intelligence of its participants.
The function that prices play in a market is a cognitive one. It is to reduce for each decisionmaker the otherwise overwhelming number of technologically feasible ways of producing things to the relatively much smaller number that appear economic—that is, appear to more than repay their costs. Without the guidance provided by price signals, each producer is likely to engage in a project which, were it the only goal of society, could probably be carried out (technological feasibility) but which, since it is not the only goal, finds itself running out of scarce resources used up by other producers (economic infeasibility). Price movements convey the more or less accurate knowledge of the relative scarcities, the values, of all the factors of production to those who calculate potential and actual profits with them. Yet the only force that tends to pack this scarcity information into prices is the degree of the tug exerted on prices from various directions by multitudes of competitive bidders. Each is committing himself, and either his own wealth or that which it is his responsibility to manage, to his own assessment about where future profits are to be found.”
The Digital Age
All of this has become even more true in the digital age.
The speed at which consumers can express and act upon their preference, and the speed at which companies must adapt to those preferences continues to increase at what feels like an exponential rate.
Companies and industries that fail to adapt often simply fail.
For example, at each step of the shift towards a more digitized economy and information space, much of the Canadian media has resisted this change and sought to enlist government ‘help’ in standing against the tide of innovation.
Predictably, that has been a disastrous approach.
But again, the market was taking care of this.
As many legacy outlets struggled, a new wave of Canadian content creators and independent media outlets have emerged, responding to the demands of consumers and adapting to the new ways in which people interact and communicate.
This was great news for both the Canadian economy and for the deeper issue of free expression in this country, because it meant a vibrant and diverse media ecosystem was being built that would help Canadians not only tell our stories but also deepen our connections in other nations in what is an increasingly inter-connected world economy.
Further, a key point must be made here: This was not a partisan issue. Many left-leaning independent media outlets – not dependent on government funding – have also emerged in Canada. There are pro-Trudeau, pro-government media outlets that have successfully adapted to the changing media and information landscape. After all, since there is demand for left-leaning, centrist-leaning, and right-leaning media perspectives – as well as a demand for those who claim to have no bias – a Canadian media eco-system that was aligned with consumer preferences would have space for all of those perspectives.
And again, that is exactly what was happening.
Additionally, many non-political Canadian content creators have thrived online, building audiences far beyond Canada.
The government could have simply done nothing, and free expression, innovation, and entrepreneurship was poised to thrive in the new era.
Instead, they tried to ‘help,’ and are in the process of destroying it all.
Bill C-11 & C-18: An unmitigated disaster
In the wake of the news that Canada – using authority imbedded in Bill C-11 – would start regulating podcasts, ExpressVPN is now encouraging Canadians to use their service in order to ensure ongoing access to a wide range of content. It’s the kind of warning you would expect to see regarding a country like China or Russia, not Canada:
“If the bill comes into effect without any major changes, for the average Canadian—in the short term—there may not be a significant change. You may see more Canadian shows and songs appearing on your favorite streaming platforms. YouTube is also currently the only social media platform that comes under the scope of the bill, so you may expect to see more Canadian content featured on the platform, too.
In the long term, however, the bill may limit what content Canadians can access. For example, it’s unlikely that streaming services like YouTube, Netflix, and Spotify will suddenly start investing in Canadian shows more than they’re doing currently, or hire more Canadian actors, because of the bill. They also probably won’t suddenly change their algorithms to promote Canadian content. Instead, the threat of fines may deter these platforms, instead urging them to invest in other markets. This means that Canadians may ultimately have access to fewer shows, movies, videos, and music than they had before.”
By using a VPN, Canadians can make it appear they are in a different country, and thus access content without the restrictions that are likely to be imposed in Canada. Some are already doing this to access news on Facebook.
Again, the fact that this is happening in Canada should be setting off alarm bells among all Canadians who value free expression and open access to information.
As if that’s not enough, it looks like Bill C-18 is going to result in Google pulling all news links from their service in Canada:
“We continue to have serious concerns that the core issues ultimately may not be solvable through regulation and that legislative changes may be necessary,” Google spokesperson Shay Purdy said by email Oct. 6.
“While the regulations seek to ‘provide clarity about the application of the act,’ they unfortunately create greater uncertainty, by attempting to transform the mandatory bargaining model set out in the Act into more of a levy model,” Google Canada said in a statement Oct. 6.
“The result of this exercise is a hybrid model that captures the worst of both worlds, imposing the obligations of a levy without providing any of its certainty, and requiring Google to absorb all of the responsibilities and costs associated with negotiating agreements and disbursing funds while eliminating any flexibility in actual arrangements,” the company said.
“The timing problem remains, potentially putting Google in a position of having to suspend links to news content,” according to the statement.”
Let’s be very clear about what this means. Without traffic from Google and Facebook, a significant number of independent media outlets and local news outlets will simply collapse financially and disappear.
Legacy outlets will be in an even worse financial position than they were before, as they will also be deprived of additional traffic/ad revenue and will either collapse or become completely dependent on the government.
There is now zero debate over the impact of the legislation. It is an unmitigated failure in every way.
Legacy outlets who expected a big payday will end up with less.
The once-surging independent media landscape is on the brink of falling apart.
Canadian content creators – many of whom collaborated with growing independent outlets – will be hit by both C-11 and C-18.
There will be fewer Canadian voices both in our own country and around the world, and those voices that do remain will be much more dependent on the government, which will lower their appeal.
Horrendous timing, and no second chances?
There would never be a good time to impose C-11 and C-18.
But now is certainly the worst time.
At a moment when our economy is incredibly feeble (per capita income is declining), at a time when young Canadians in particular are losing hope, and at a time when businesses, industries, and countries that fail to keep up rapidly fall behind, the Liberal government is choosing to decimate innovative content creators and media outlets, ruin the livelihoods of countless entrepreneurial young Canadians, and keep our country locked into a centralized, government knows best approach that will cause us to fall rapidly behind peer nations.
Canadian entrepreneurship was already on the decline:
“Entrepreneurship is declining in Canada as economic pressures spur a drop in the self-employment rate, according a new report from RBC Economics.
The uncertainty of the pandemic, strong labour markets and soaring inflation “have sped up a decades-long decline in the self-employment rate,” according to the research published on Thursday.
These conditions have made entrepreneurship less enticing for Canadians, RBC’s report said, with the self-employment rate hitting 13.1 per cent this year, down from around 17 per cent pre-pandemic.”
As noted by BNN Bloomberg, the affordability crisis certainly isn’t helping:
“Canada’s lack of housing affordability and high cost of living likely make paid employment a more attractive option, as small businesses owners come up against more challenges, the report said.
“These businesses face higher rents, higher capital costs, and must pay higher wages while consumer activity wanes,” it stated.”
Returning to The Knowledge Problem
And here we return to the ‘knowledge problem’ we discussed earlier.
The government is trying to control and dictate what should happen in an economy that is massively complex, ever-changing, and chaotic.
Imposing control is impossible.
What is possible however – and not in a good way – is to simply ruin our ability as Canadians to successfully adapt to the way in which the economy is changing. And that is exactly what the government is doing. Once you fall behind, it is incredibly difficult to catch up, so if Canada blows our chance to adapt to the digital economy now, we may not get another one.
You’ve surely noticed how everything the government does when it comes to C-11 and C-18 only makes things worse. They are in way over their heads, and are trying to deal with something that is far too complex for them to understand. So, they flail around, make demands, accuse others of bluffing, and then proceed to further destroy an industry and should be central to Canada’s long-term success.
Free expression and economic prosperity in decline
The federal government causes inflation, blames inflation on grocery stores, and then dictates prices to those grocery stores.
The federal government steps in to ‘save’ legacy media and instead expands their own censorship powers while demolishing a growing independent media/content creator ecosystem that was doing just fine without state intervention.
The federal government tries to mask our declining standard of living with massive population increases that only further exacerbate many of our underlying economic challenges.
Over and over again, when the government should step back and stop trying to ‘fix’ everything, they only deepen their level of intervention and try to impose control.
The fundamental impulse driving the Liberal government is deeply at odds with Western democracy. Indeed, the Liberals increasingly appear to be fundamentally illiberal.
Who will want to build a business or invest in Canada when they see how easily the government can ruin it? Who will see Canada as a nation of creative and diverse voices when the government continues to try and narrow the bounds of free expression?
While Canada still remains a relatively free nation, and while our potential wealth remains immense, that is no guarantee of future success.
Rather, if we remain on our present course, the future of freedom of expression and the kind of economic innovation that is required to remain prosperous looks incredibly bleak.
And that’s why Bill C-11 & C-18 can’t be repealed fast enough.
Spencer Fernando
Photo – YouTube
