HESA

Higher Education Strategy Associates

Category Archives: Innovation

May 24

Innovation Policy: Beyond Digital and Cleantech

So, earlier this month, federal Innovation Minister Navdeep Bains wrote an op-ed in the Toronto Star which lays out, as clearly as possible, where the current government’s thinking is with respect to Innovation policy.  Some of it is good, but some of it is dreck.

Let’s start with the good stuff :

“Innovation is fundamental to our continued growth and job creation, and it’s impossible to predict where and how disruption will happen. It can be in a start-up garage in Vancouver, a mine in Saskatoon, or a fishery in Saint John.”

Ok, so the mining in Saskatoon reference is a little odd (there’s exactly one mine in the city, a salt mine which straddles the city limits) , but that aside the Minister seems to understand that innovation (that is, the act of creating new business processes so as to add value) is something that needs to happen economy-wide.  And it’s something that needs to be bred into companies’ DNA.  So far, so good.

What’s a bit disturbing, though, is how quickly Bains goes from “this is something everybody needs to do” to “we’re going to be great in digital! We’re going to invest in cleantech!” and other forms of highly sector-specific boosterism.  Now, I get that governments want to be seen as leading us all towards the industries of the future and reaping the political rewards of said leadership, but man there is some serious cognitive dissonance at work here.  You can’t simultaneously believe that innovation policy is an economy-wide thing and then start babbling about how you plan to plough money into specific sectors.

Bains seems to have difficulty distinguishing between “innovation policy” and “innovation sectors”.  There is a difference.  Innovation policy, as Dan Breznitz underlines here, should focus on helping new technologies and business models flourish.  By definition, this policy has to be economy-wide, because these new technologies and models don’t exist yet.   “Innovation sectors” is a jargon-y term (used much more in Canada than elsewhere if Google is any guide) meaning roughly “sectors which attract a lot of venture capital”, or in practical terms: ICT, cleantech and biotech.

To be fair, Bains isn’t alone: most governments in Canada have this problem.  This is why so many of their innovation policies are scarcely more than “Digital! Cleantech! Woo!”  And there’s nothing wrong (in principle) with in trying to promote digital or cleantech sectors.  But we have to come clean that doing so is industrial policy, not innovation policy.  Similarly, Science policy is not innovation policy.  Neither is growth policy, and neither are policies promoting entrepreneurship.  They all feed on one another. They all (in theory) can complement one another, but they are different.  And if you confuse them the result will be bad policy.

Like I said, pretty much everyone starts their innovation policy with “Digital! Cleantech! Woo!”  And universities and colleges are complicit in this because that’s the easiest way for them to get their hooks into whatever flood of money is going to come out of government when innovation talk gets going.  But the mark of good innovation policy is the extent to which it transcends this kind of simplistic formula.  Here’s hoping the Liberals figure out how to do this in the next few months.

May 18

Canadian B-Schools and Economic Growth

If there is one thing university Presidents desire, it is to be useful to society – and preferably to the government of the day, too.  After all, post-Humboldt, universities exist to strengthen the state.  The better a university does that, the more it will be appreciated and, hopefully, the better funded it will be.  So it has always struck me as a bit odd how little universities (an business schools in particular) have really done in order to help work on the causes of Canada’s perennially sluggish economy.

Canada’s fundamental economic problem is that outside the resource sector, companies struggle to reach scale.  Outside the oligopolistic telecoms and banking sectors, we are a nation of small and medium businesses.  Judging by the party manifestos in last year’s elections, many people like things that way.  Small businesses are good and deserving of lower tax rates, big businesses are bad and deserve to be taxed more heavily. 

The problem with this little story is that it is simply wrong.  Big businesses are crucial to innovation and hence to economic growth.  Big businesses are the ones that have the money to invest in R & D.  They are the ones that can make long-terms commitments to training employees (if you don’t think firm size plays a role in Germany’s ability to sustain its apprenticeship system, you aren’t paying attention). People may be rightly cautious about the power of capital and its influence on the political process; but that doesn’t mean we shouldn’t encourage the formation of large companies in the first place.  Ask the Swedes: their social democracy would never have existed without very large companies like Volvo, Saab and Ikea.

And so the key question is: why don’t we have bigger domestic companies in Canada?  Oh sure, we have the occasional behemoth (i.e., Nortel, RIM) but we don’t seem to do it in a non-ephemeral way, or do it across the board.  And when our companies do start getting big, they often sell out to foreign companies.

We can point fingers in a whole bunch of directions – one favorite is a lack of appropriate venture capital.  But to a considerable degree, it’s a question of management.  Universities like to talk about how they are teaching entrepreneurship but getting people to start businesses and getting those businesses to grow are two very different propositions.  We seem not to have a lot of managers who can take companies from their first million in sales to their first ten million in sales, or to take our businesses out of the Canadian context and into a global one (if you haven’t yet read Andrea Mandel-Campbell’s Why Mexicans Don’t Drink Molson, on this subject, do – it’s revealing).   And for that matter, how is it that our venture capital industry still seems more comfortable with mining projects than life science or biotech?

Can it be – say it softly – a question of education?

We pretend that success in innovation is a function of prowess in tech.  But to a large degree, it’s a function of management prowess: how can staff be better motivated, how can processes be changed to add value, how well can business or investment opportunities be spotted.  Might it be that the education of our business elite doesn’t include the right training to do these things? 

To be clear here, I don’t really have any evidence about this one way or the other.  No one does.  But if I were a university president, or a business dean, it’s a question I’d be asking myself.  Because if there’s an economic conundrum that needs solving its this one, and if there’s any way in which universities can contribute, they should.

May 03

Disturbing Portents for the Liberal Innovation Policy

Allow me to draw everyone’s attention to a piece last week in the Huffington Post called “How the Liberal Party Plans to Innovate the Way We Innovate”.  The piece was written by a Liberal-connected PR/GR flack named Greg MacNeil who works at “public affairs” (read: lobbying) firm Ensight Canada.

MacNeil starts by asserting that “following Budget 2016, it is clear that when it comes to the innovation agenda, the government’s intentions are substantive”, which is nonsense: the budget simply introduced a price-tag ($800 million for some tech clusters) and some placeholders.  He goes on to state: “the challenge in the past has always been that the various funding and program buckets have been siloed across government. The Liberals are changing that. This new one-window approach will make it easier for organizations to navigate the system and access the information and funding they need. The government believes that this approach can help expand the pre-existing innovation sector in Canada and subsequently grow jobs and investment.”

Question: Does anyone actually believe that the problem with innovation in Canada is that there is no one-stop shop for federal funding?  That the reason firms don’t spend their own money to innovate is because it’s not easy enough to suck money out of the federal bureaucracy?

Question: Does the phrase “innovation sector”, and the implication that innovation isn’t something that happens right across the economy, give you the screaming heebie-jeebies?  Could there possibly be a stronger signal that the government thinks of innovation only in terms of new product innovation?

More from MacNeil: “This innovation strategy will also play a major role in Canada’s multilateral and bilateral relations. Until now, Canada has been one of only a few G7 countries without a specific innovation strategy in place. Many other western countries not only have innovation strategies, but are regularly updating them on an annual basis”

Question: “one of only a few”…out of seven.  Doesn’t sound particularly out of the ordinary to me.  And why on earth does this matter to our foreign relations?  If we’d at any point wanted to put more money and effort into international scientific collaborations, we’d have done so by changing rules on council funding, not developing strategic plans.

MacNeil: “By coordinating these efforts, the government hopes that it will be better positioned to take on serious global issues impacting Canada and our allies in areas like climate change, the arctic and cancer research. Further, it could afford us an opportunity to invest in areas where we would be true pioneers, like quantum computing, as opposed to competing in areas that are already dominated by foreign countries.”

Wait – allies?  Are we only collaborating with NATO countries now?  “Invest in areas where we could be true pioneers as opposed to competing in areas already dominated by foreign countries”?  Interesting approach to industrial policy I suppose – but how does collaborating with other countries give us an advantage in blue ocean sectors?  By definition, wouldn’t our partners get a leg up in these areas, too? 

There is so much to question in this little tract: like, why is an external GR flack trial-ballooning innovation policy ideas on behalf of Liberal Ministers?  Why would anyone think a little bureaucratic rationalization would have an effect on innovation levels in the economy?  Do the Liberals really think that Canadians cannot successfully innovate and compete in areas where companies in foreign countries already work – that we can only “win” if no one is competing against us?  Do they have even the slightest sense that innovation is about more than new inventions?  And why – oh dear God why – does anyone think it is acceptable to write an entire article about innovation policy without ever using the words “firm” or “company” once?

If this really is the basis for the new Liberal innovation plan, we all ought to be very worried indeed.

April 12

Going Overboard on Basic Research?

I’m getting some worrying vibes from the new federal government.  It’s nothing I can directly put my finger on (other than some annoying Ministerial tweets last week which seemed to claim that any money put into PSE infrastructure is ipso facto about “innovation”) but I get the sense that the new government is in danger of making some real mistakes with respect to innovation policy.  Specifically, I’m worried that in the rush to repudiate the Harper legacy in all things science, they may end up with an innovation policy that takes us back to the naïve 1990s.

What do I mean by this?  Well, in the late 1990s, when the Chretien government began seriously investing in research (after having initially slashed the bejesus out of it in the 1995 Budget), their rationale went something like this: growth requires innovation, research is the wellspring of innovation, therefore:

      $ to universities for research → a miracle occurs → productive high-tech economic future

And on that not very sophisticated basis, billions were spent.

Now, without denying some good came from this, I think it’s fair to say that this is a pretty limited view of how innovation works.  For one thing, there’s an implicit suggestion that innovation is about “new discoveries” being turned into “new products”.  And while that is one type of innovation, it is far from the only one.  What about process innovations or business model innovations, to name but two?  Why focus on the “big breakthroughs” when so many incremental innovations are possible?  Why focus on only one part of the value chain (and possibly not a part Canada is particularly good at) when there is value in so many others?

To put this more bluntly, to assume that basic research is the only type of research an innovation policy should fund is crazy.  Serious countries understand this.  It’s the reason, for instance, that Germany, besides funding its universities and the Max Planck institute, also funds the Frauenhofer Institutes, which is one of the world’s greatest performers of applied research.

Over the course of the last few years there have been many complaints that the Harper government focused too much on applied research.  True, all granting councils (but especially CIHR) were pulled in the direction of having grantees justify their funding in terms of “immediate benefit” and finding commercial co-partners, etc, and for the most part this idea of injecting some “appliedness” into basic research funding was bad policy.  But the fact is that the actual amount we spend on research which is exclusively applied in nature – that is, Frauenhofer type-stuff, or programs like the Industrial Research Chairs – is actually pretty small.  The revamp of the National Research Council was a stab in a Frauenhofer direction – albeit a somewhat clumsy stab, with over-inflated expectations of quick success.  But now even that’s been thrown into question, the revamp now “suspended” pending the outcome of a review of the government’s review of its basic science policies. 

To be clear, it’s not that the government has yet made any definitive false steps.  But rhetorically it seems to be backing itself into a corner in terms of thinking of innovation exclusively in terms of basic research plus maybe funding some exciting business/university co-location spaces (an idea which I think we could also describe as being less-than-fully-baked, as I explained back here.  That would be a bad mistake.  What Canada needs is a full-spectrum innovation policy, one which doesn’t put all its eggs in the new discoveries/new products basket. 

Or, to put it another way: yes to basic research, but stools need more than one leg.

January 29

Asleep at the Switch…

… is the name of a new(ish) book by Bruce Smardon of York University, which looks at the history of federal research & development policies over the last half-century.  It is a book in equal measures fascinating and infuriating, but given that our recent change of government seems to be a time for re-thinking innovation policies, it’s a timely read if nothing else.

Let’s start with the irritating.  It’s fairly clear that Smardon is an unreconstructed Marxist (I suppose structuralist is the preferred term nowadays, but this is York, so anything’s possible), which means he has an annoying habit of dropping words like “Taylorism” and “Fordism” like crazy, until you frankly want to hurl the book through a window.  And it also means that there are certain aspects of Canadian history that don’t get questioned.  In Smardon’s telling, Canada is a branch-plant economy, always was a branch-plant economy, and ever shall be one until the moment where the state (and I’m paraphrasing a bit here) has the cojones to stand up to international capital and throw its weight around, after which it can intervene to decisively and effectively restructure the economy, making it more amenable to being knowledge-intensive and export-oriented.

To put it mildly, this thesis suffers from the lack of a serious counterfactual.  How exactly could the state decisively rearrange the economy so as to make us all more high-tech?  The best examples he gives are the United States (which achieved this feat through massive defense spending) and Korea (which achieved it by handing over effective control of the economy to a half-dozen chaebol).  Since Canada is not going to become a military superpower and is extremely unlikely to warm to the notion of chaebol, even if something like that could be transplanted here (it can’t), it’s not entirely clear to me how Smardon expects something like this to happen, in practice.  Occasionally, you get a glimpse of other solutions (why didn’t we subsidize the bejesus out of the A.V. Roe corporation back in the 1960s?  Surely we’d be an avionics superpower by now if we had!), but most of these seem to rely on some deeply unrealistic notions about the efficiency of government funding and procurement as a way to stimulate growth.  Anyone remember Fast Ferries?  Or Bricklin?

Also – just from the perspective of a higher education guy – Smardon’s near-exclusive focus on industrial research and development is puzzling.  In a 50-year discussion of R&D, Smardon essentially ignores universities until the mid-1990s, which seems to miss quite a bit of relevant policy.  Minor point.  I digress.

But now on to the fascinating bit: whatever you think of Smardon’s views about economic restructuring, his re-counting of what successive Canadian governments have done over the past 50 years to make the Canadian economy more innovative and knowledge-intensive is really quite astounding.  Starting with the Glassco commission in the early 1960s, literally every government drive to make the country more “knowledge-intensive” or “innovative” (the buzzwords change every decade or two) has taken the same view: if only publicly-funded researchers (originally this meant NRC, now it means researchers in university) could get their acts together and talk to industry and see what their problems are, we’d be in high-tech heaven in no time.  But the fact of the matter is, apart from a few years in the 1990s when Nortel was rampant, Canadian industry has never seemed particularly interested in becoming more innovative, and hence why we perennially lag the entire G7 with respect to our record on business investment in R&D.

You don’t need to buy Smardon’s views about the potentially transformative role of the state to recognize that he’s on to something pretty big here.  One is reminded of the dictum about how the definition of insanity is doing the same thing over and over, and expecting a different result.  Clearly, even if better co-ordination of public and private research efforts is a necessary condition for swifter economic growth, it’s not a sufficient one.  Maybe there are other things we need to be doing that don’t fit into the Glassco framework.

At the very least, seems to me that if we’re going to re-cast our R&D policies any time soon, this is a point worth examining quite thoroughly, and Smardon has done us all a favour by pointing this out.

Bon weekend.

January 04

Innovation Buzzword Bingo

Morning all.  Regular service will pushed back one week to January 10th, but I couldn’t let the Globe op-ed “Southern Ontario Should be an Innovation Cluster, Not a Farm Team” by three Ontario university presidents (McMaster’s Patrick Deane, Toronto’s Meric Gertler, and Waterloo’s Feridun Hamdullahpur) go without comment.

The article reads like someone set out to fill a buzzword bingo card.  Words like “supercluster”, “resilient”, “enhancing interaction”, “external connectivity”, “cluster-building infrastructure”, and “entrepreneurship ecosystem” all duly make an appearance; hell, there’s even a reference to Michael Porter.  And while none of it is wrong, exactly – clusters are good, infrastructure never hurts, etc. – the six actual policy proposals the presidents lay out in terms of creating an innovation cluster are mighty thin.

1)  Invest in organizations that drive local economic development and quality of life, from civically minded governance bodies to cultural institutions.

In what way does this proposal differ from what governments already do?  Do governments everywhere not invest in cultural institutions and things that drive local economic development?  Are there things governments should stop doing in order to prioritize these things?  And how might one distinguish good from bad investments in cultural institutions?  When should the spending stop?

2)  Co-ordinate investments in research areas with both the highest success rates and strongest growth potential, from regenerative medicine to quantum science; from advanced materials to environmental technologies.

Co-ordinate how?  How is “success rate” measured?  Or “growth potential”?  Is this actually a plea to prioritize CFREF-type programs over granting council funding?  Or perhaps it’s a plea for granting councils to become more focussed in their funding?  A lot more detail should be here before anyone signs on to this principle.

3)  Ensure that our immigration rules make us a destination of choice for high-potential individuals.

think this is a plea for government to streamline immigration procedures, awkwardly phrased.  And, yeah, streamline away.  Can’t hurt.  But generally speaking, being a destination of choice has more to do with economic opportunities in a country than the state of its entry visa system.

4)  Turn taxpayers into equity partners and give the public a share of the upside.

Equity partners in what?  New companies?  Like Mariana Mazzucato wants?  Can anyone name a single successful innovation cluster where this happens?  Try to imagine how the public sector would behave if it had an equity stake in companies.  Imagine what it would do to pick or favour winners in order to maximize share value.  Imagine the pressure to “save” or “bailout” losers.  Imagine the chaos that would surround the decision to ever try to sell shares.  This is a half-baked nightmare of an idea, one which would effectively impose a form of Peronism on any emerging tech sector.  Does anyone truly believe this would make tech companies more successful?  Please.

5)  Support firms that can scale up by connecting them to successful mentors, addressing gaps in our venture financing systems, and leveraging public procurement strategically.

Can anyone point me to a single study that links firm size to quality or quantity of mentorship?  No?  OK, then.

6)  Inculcate a culture of risk-taking that rewards rather than penalizes failure, which fosters adaptability and learning from mistakes.

Can anyone point me to a single instance anywhere of a government successfully inculcating a culture of risk-taking in business?  No? Ok, then.

Like I said before, it’s not so much that these ideas are wrong (well, apart from the taxpayer equity stuff) as that they are painfully unspecific.  It’s great that universities are now at least couching their requests for more research funding in the context of an acknowledgement of innovation ecosystems, and not simply relying on the absurd formula of: $ for university research –> Black Box where miracles occur –> Innovation!

But in practice most of these recommendations either are not particularly workable or vague to the point of  being unhelpful.  Better innovation policy is going to require a lot more than this.

December 08

Innovation Ecosystems: Promise and Opportunism

We sometimes think of innovation policy as being about generating better ideas through things like sponsored research.  And that’s certainly one part of it.  But if those ideas are generated in a vacuum, they go nowhere – making ideas spread faster is the second pillar of innovation policy (a third pillar – to the extent that innovation is about new product-generation – has to do with venture capital and regulatory environments, but we’ll leave those aside for now).

Yesterday, I discussed why the key to speeding up innovation was the density of the medium through which new ideas travel: basically, ideas about IT travel faster in Waterloo than in Tuktoyaktuk; ideas about marine biology travel faster in Halifax than in Prince Albert.  And the faster ideas travel and collide (or “have sex” in Matt Ridley’s phrase), the more innovation is produced, ceteris paribus.

Now, although they don’t quite use this terminology, the proponents of big universities and big cities alike find this logic pretty congenial.  You want density of knowledge industries?  Toronto/Montreal/Vancouver have that.  You want density of superstar researchers?  U of T, McGill, and UBC have that (especially if you throw in allied medical institutes).  That makes these places the natural spot to invest money for innovation, say the usual suspects.  All you need to do is invest in “urban innovation ecosystems” (whatever those are – I get the impression it’s largely a real estate play to bring scientists, entrepreneurs, and VCs into closer spatial proximity), and voila!  Innovation!

This is where sensible people need to get off the bus.

It’s absolutely true that innovation requires a certain ecosystem of researchers, and entrepreneurs, and money.  And on average productive ecosystems are likelier to occur in larger cities, and around more research-intensive universities.  But it’s not a slam dunk.  Silicon Valley was essentially an exurb of San Francisco when it started its journey to being a tech hub.  This is super-inconvenient to the “cool downtowns” argument by the Richard Floridas of this world; as Joel Kotkin has repeatedly pointed out, innovative companies and hubs are as likely (or likelier) to be located in the ‘burbs, as they are in funky urban spaces, mainly because it’s usually cheaper to live and rent space there.  Heck, Canada’s Silicon Valley was born in the heart of Ontario Mennonite country.

We actually don’t have a particularly good theory of how innovation clusters start or improve.  Richard Florida, for instance, waxes eloquent about trendy co-working spaces in Miami as a reason for its sudden emergence as a tech hub. American observers tend to attribute success to the state’s low tax rate, and presumably there are a host of other possible catalysts.  Who’s right?  Dunno.  But I’m willing to bet it’s not Florida.

We have plenty of examples of smaller communities hitting tech take-off without having a lot of creative amenities or “urban innovation strategies”. Somehow, despite the lack of population density, some small communities manage to get their ideas out in the world in ways that gets smart investors’ attention.  No one has a freaking clue how this happens: research on “why some cities grow faster than others” is methodologically no more evolved than research on “why some universities become more research intensive than others”, which is to say it’s all pretty suspect.  Equally, some big cities never get particularly good at innovation (Montreal, for instance, is living proof that cheap rent, lots of universities, and bountiful cultural amenities aren’t a guarantee of start-up/innovation success).

Moreover, the nature of the ecosystem is likely to differ somewhat in different fields of endeavor.  The kinds of relationships required to make IT projects work is quite different from the kinds that are required to make (for example) biotech work.  The former is quick and transactional, the latter requires considerably more patience, and hence is probably less apt to depend on chance meetings over triple espressos in a shared-work-environment incubator.  Raleigh-Durham and Geneva are both major biotech hubs that are neither large nor particularly hip (nor, in Raleigh’s case, particularly dense).

It’s good that governments are getting beyond the idea that one-dimensional policy instruments like “more money in granting councils” or “tax credits” are each unlikely on their own to kickstart innovation.  It’s good that we are starting to think in terms of complex inter-relations between actors (some, but not all of which involve spatial proximity), and using “ecosystem” metaphors.  Complexity is important. Complexity matters.

But to jump from “we need to think in terms of ecosystems” to “an innovation agenda is a cities agenda” is simply policy opportunism.   The real solutions are more complex. We can and should be smarter than this.

December 07

H > A > H

I am a big fan of the economist Paul Romer, who is most famous for putting knowledge and the generation thereof at the centre of  discussions on growth.  Recently, on (roughly) the 25th anniversary of the publication of his paper on Endogeneous Technological Change, he wrote a series of blog posts looking back on some of the issues related to this theory.  The most interesting of these was one called “Human Capital and Knowledge”.

The post is long-ish, and I recommend you read it all, but the upshot is this: human capital (H) is something stored within our neurons, which is perfectly excludable.  Knowledge (A) – that is, human capital codifed in some way, such as writing – is nonexcludable.  And people can use knowledge to generate more human capital (once I read a book or watch a video about how to use SQL, I too can use SQL).  In Romer’s words:

Speech. Printing. Digital communications. There is a lot of human history tied up in our successful efforts at scaling up the H -> A -> H round trip.

And this is absolutely right.  The way we turn a patterns of thought in one person’s head into thoughts in many people’s heads is the single most important question in growth and innovation, which in turn is the single most important question in human development.  It’s the whole ballgame.

It also happens to be what higher education is about.  The teaching function of universities is partially about getting certain facts to go H > A > H (that is, subject matter mastery), and partially about getting certain modes of thought to go H > A > H (that is, ways of pattern-seeking, sense-making, meta-cognition, call it what you will). The entire fight about MOOCs, for instance, is a question of whether they are a more efficient method of making H > A > H happen than traditional lectures (to which I think the emerging answer is they are competitive if the H you are talking about is “fact-based”, and not so much if you are looking at the meta-cognitive stuff.  But generally, “getting better” at H > A > H in this way is about getting more efficient at the transfer of knowledge and skills, which means we can do more of it for the same price, which means that economy-wide we will have a more educated and productive society.

But with a slight amendment it’s also about the research function of universities.  Imagine now that we are not talking H > A > H, but rather H > A > H1.  That is, I have a certain thought pattern, I put it into symbols of some sort (words, equations, musical notation, whatever) and when it is absorbed by others, it generates new ideas (H1). This is a little bit different than what we were talking about before.  The first is about whether we can pass information or modes of thought quickly and efficiently; this one is about whether we can generate new ideas faster.

I find it helpful to think of new ideas as waves: they emanate outwards from the source and lose in intensity as they move further from the source.  But the speed of a wave is not constant: it depends on the density of the medium through which the ideas move (sound travels faster through solids than water, and faster through water than air, for instance).

And this is the central truth of innovation policy: for H > A > H1 to work, there has to be a certain density of receptor capacity for the initial “A”.  A welder who makes a big leap forward in marine welding will see his or her ideas spread more quickly if she is in Saint John or Esquimault than if she is in Regina.  To borrow Matt Ridley’s metaphor of innovation being about “ideas having sex”, ideas will multiply more if they have more potential mates.

This is how tech clusters work: they create denser mediums through which idea-waves can pass; hence, they speed up the propagation of new ideas, and hence, under the right circumstances, they speed up the propagation of new products as well.

This has major consequences for innovation policy and the funding of research in universities.  I’ll explain that tomorrow.

October 07

Party Platform Analysis: Science and Innovation

In the platform analyses I’ve done so far (for the Greens, the Conservatives, the NDP, and the Liberals), I’ve focused mostly on the stuff around student finance.  But in doing so, I’ve left out certain platform elements on science and innovation, specifically from the Liberals and the New Democrats.

There are some pretty broad similarities between the two parties’ programs, even though they package them somewhat differently.  Both are long on promises about process.  The Liberals will appoint a Chief Science Officer; the NDP will go one better, and appoint an Office of the Parliamentary Science Officer AND create a Scientific Advisory Council to the Prime Minister.  Both promise to “unmuzzle” scientists; both promise to bring back the long-form census (which I personally find irritating – shouldn’t we at least try to move into 21st century with an administrative register?).  Both promise to make government data “open”; additionally, the Liberals promise to ensure their policies are “evidence-based”.  The word “independence” shows up a lot: Liberals want to give it to Statscan, without actually specifying what the word means; the NDP want to restore it to the granting agencies, without specifying what the word means.  They also want to re-establish scientific capacity in government, but apparently aren’t allocating any money for it, so you know, take that with a grain of salt.

The differences, such as they are, are about where to spend the lucre.  The Liberals have set aside an extra $600 million over three years for an “Innovation Agenda”, which will “significantly expand support to incubators and accelerators, as well as the emerging national network for business innovation and cluster support”.  This, apparently, is meant to “create successful networks like the German and American partnerships between business government and university/college research”.

Genuinely, I have no idea what they are talking about.  Which German and American programs?  The Fraunhofer institute?  The Tories already did that when they converted NRC to an applied research shop.  As near as I can tell, this seems to be innovation-speak for “let’s give money to middle-men between academia and business”.  Which is not promising.  I mean, even assuming that early-stage commercialization is the real bottleneck in our innovation system (and where’s the evidence for that, evidence-based policy guys?), why is this the right way to go about fixing it?  Weren’t the Centres of Excellence for Commercialization and Research supposed to do the same thing, albeit from another angle?  Shouldn’t we – you know, wait for some evidence about what works and what doesn’t?

The Liberals also are promising another $100 million over three years to the Industrial Research Assistance Program, which would normally make me want to tear my eyes out, but apparently it’s all going into something that is meant to mimic the US Small Business Innovation and Research Program, which does tend to get high marks.  But, significantly, there is not an extra cent for educational institutions, and not an extra cent for the granting councils.

The New Democrats, on the other hand, are talking much smaller sums: $105 million over four years to “support researchers in post-secondary institutions”.  A helpful NDP staffer has clarified for me that this actually means money to the granting councils, which would make the NDP the only party to commit to more council funding.  That said, unless inflation dips below 1% (unlikely, but not impossible), that amount is not enough to cover inflation.

So, take your pick here.  On non-financial aspects of their policies, the two parties are essentially singing off the same sheet.  Financially, the Liberals have more money on the table, but none of it appears to be heading to institutions.  The NDP has a much smaller package, which will benefit researchers via the granting councils, but not by a whole lot.

Back next Friday with a final summary of the election and higher education.

October 06

Party Platform Analysis: The Liberals

Two quick things at the outset.  First, this will only look at the Liberal’s Monday announcement on student financing.  Tomorrow, I’ll look at their science/innovation policy in conjunction with that of the NDP, which apparently released a similar platform in conditions of complete secrecy last week.  Second, in the interest of full disclosure: I was asked by the Liberals to comment on a draft of their platform a few weeks ago.  I did so, as I would have for any party had they asked.  Judging by what I see in their platform, they took at least some of my comments into account.  So bear that in mind when reading this analysis.

The main plank of the Liberal announcement is that they are planning to increase grants for low income students by $750 million, rising to $900 million by the end of the mandate (which more than doubles the total amount; however,it’s not clear if this increase includes alternative compensation to Quebec… if it does not, add another $200 million).  The Canada Student Grant for Students from Low-Income Families (CSG-LI) will rise in value from $2,000/year to $3,000/year, and the Canada Student Grant for Students from Middle-Income Families (CSG-MI) will rise in value from $800 to $1,800.  The thresholds for both will be increased, meaning more students will receive the low-income grant, and more students with incomes in the $80-100K family income range (precise values not set, but this looks like about what they are going to do) will receive the middle-income grant.  In addition, the Liberals propose raising the repayment threshold (i.e. the level below which borrowers in repayment are not required to make payments on their loans) from just over $20,000 to $25,000.  It’s unclear what this would cost (take-up rate is uncertain), but a good bet would be somewhere in the neighborhood of $100 million.

So, a $1 billion promise.  Except the Liberals are promising that this will all cost the taxpayer… nothing.  And the reason for that is that the Liberals have decided they will axe the education amount and textbook tax credits (something I, and, others have been suggesting for many years – for instance here).  Now, I actually don’t think this will quite cover the entire spending bill, but it will be within $100 million, or so (basically, it will cover the grants, but not the loan threshold change).

However, what this means is that the plan creates winners and losers.  The value of those federal tax credits for full-time students is $558/year (for part-time students it is $168).  Everybody will lose that amount.  For those who currently receive the CSG-LI, and those who receive CSG-MI and remain in the CSG-MI bracket after the thresholds move, the extra $1,000/year the Liberals are offering means they will be better off by $442 (but they will also benefit by getting the entirety of their $1,000 sooner in the form of grants, rather than delayed in the form of tax relief).  For those in the CSG-MI moving into the CSG-LI category, the net benefit will be $1,642.  For those who currently do not receive grants, but will now become eligible for CSG-MI, the net benefit will be $1,242.

So there are winners.  But there are losers, too.  Families with incomes over $100,000 (or so) will simply be out that $558.  And part-time students, who are ineligible to receive CSGs, will also be out $168.  But this is what happens when you try to do big policy without spending (many) additional dollars.  And there’s always the risk that they will come under political fire for “raising taxes”, which is arguably what cutting tax credits amounts to.

So, full marks for creativity here: these policies would make the funding system somewhat more progressive (in a slightly quirky way).  And full marks for putting out a backgrounder that makes it clear that these moves will create costs for provinces (their co-operation will be needed in order to raise the loan threshold) that need to be mitigated, even though the Liberals are vague on how this will actually work.

But it should be noted that by their own claim (which, as I said above, is probably not quite true), Liberals are choosing not to invest another dime in the sector, which puts them last among political parties in new spending commitments.  As pleasing as the re-arrangement of inefficient subsidies is, wouldn’t it have been better if they had added some funds on top of it?

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