A few months ago, the Public Policy Forum released an intriguing paper by Robert Asselin and Sean Speer called A New North Star: Canadian Competitiveness in an Intangibles Economy.  For various reasons, I never quite got round to reviewing it at the time, but it’s worth examining because once we get over superclusters (please, let’s all get over superclusters), the country is going to be looking for some new organizing framework for innovation and growth policy. I suspect that this “intangibles” lens might be it.

So, what is an intangibles economy?  According to the authors, it is one that favours intellectual property over physical assets.  This is not simply an updating of the formulations from the late 80s/early 90s, where we talked about “knowledge economies”, “knowledge workers” or weirder terms like “symbolic analysts”.  Those concepts covered the role of human-embodied knowledge and talent – skills, competencies, aptitudes, etc.  Now we’re talking about how capital has been altered, because more of the services we consume are digital, and digital products require very little in terms of physical capital to create or distribute.   This is not a new idea: it is probably best expressed in Jonathan Haskel and Stian Westlake’s excellent Capitalism Without Capital, which I reviewed back here.  Basically, you should think of A New North Star as a set of suggestions as to how Canadian public policy can rise to the challenges Haskel and Westlake described.

After a tour d’horizon of the policy challenges presented by the intangibles economy (one which probably lingers a little too long on some of the more gee-whizzy and possibly over-credulous talk about Artificial Intelligence), Asselin and Speer get down to a set of policy recommendations for responding to an intangibles economy, which they helpfully divide into three categories.  The first of these is a good old-fashioned competitiveness regime: enforce competition, internal free trade, a level playing field on tax, etc.  No argument here, all good stuff we should be doing no matter what. 

Second is a bunch of policy measures specifically concerning making Canadian companies better at competing in a world where the main products are data and intellectual policy.  Some of these seem like no-brainers: clearer and better data governance laws (also a Haskel/Westlake suggestion), ensuring government procurement rules can accommodate new firms and innovative products (the health sector in particular is a bit of a nightmare on this front), and reviewing the Competition Act to make sure it is fit for purpose, given broad trends in Intellectual Property.  

Less convincing is the call for a new IP and patent strategy, in order to keep these “in country”.  It’s not 100% clear what they are calling for here but one presumes it is things like patent pools, which briefly gained some notoriety a few years ago when the Harper government decided to let all of Nortel’s patents leave the country during its bankruptcy proceedings.  I’m not convinced by patent pools as an effective policy tool for Canada: it seems they only work where you have a lot of companies in the same field doing ground-breaking work (the value of the patents in the pool is, in part, a function of the number of firms in the pool) and there just aren’t that many fields like that in Canada.  More ominously, the paper seems to suggest putting restrictions on the ability of Canadian universities to partner with foreign firms in technology development, recommending that funding be diverted from higher education institutions towards domestic firms to ensure that the fruits of R&D expenditures stay in the country (which, fine, except that it’s not really clear that many Canadian companies actually have the means or desire to do much R & D, so where does that leave science?).  This is a file to watch – I could see this becoming quite a threat to institutions over the next few years.

The final set of recommendations are basically on the human capital implications of the intangibles economy, or as they put it, “Sustainable Humans”.  Unfortunately, these are in many ways the weakest set of recommendations.   Most of them are about widening attainment – an agreeable thing in and of itself, but there is nothing specifically “intangible” about these recommendations.  And maybe more problematically, a lot of them are either small-ball (“establish mentoring systems for international students”), motherhood statements, (“place greater emphasis on early childhood education in indigenous communities”), vague to the point of unhelpfulness (“use public funds to catalyze a constellation of training providers to test different models for demand-driven skills training”), or stuff that is happening anyway (“establish new individualized accounts with a combination of tax preferences and public subsidies to support lifelong learning, professional development, and skills training”).  Nothing really visionary here.

I don’t blame Asselin and Speer for any this: frankly the higher education community has been sluggish in thinking through how its own activities actually impact the knowledge economy other than through the magical formula, recited relentlessly by Universities Canada, the U15, et al, of Money for Research à A Miracle Occurs à Innovation!.  While this is clearly hogwash, it clearly seems to appeal to politicians, so universities keep peddling it despite (as far as I can tell) how this line of argument provokes a fair bit of eye-rolling among university presidents themselves.  Unfortunately, it gets in the way of real productive thinking about this issue.  And that’s a problem because this is an issue for which the higher education really should try to get ahead of the curve.  Speer and Asselin seem well disposed to our community: but if the higher education community doesn’t give them – or their colleagues in the ranks of senior Conservative and Liberals (respectively) good ideas which are not transparently self-serving, the community is going to find itself in a great deal of trouble, soon.

Could we do a better job in business curricula?  Could we do a better job of working out which parts of humanities curricula support better labour market outcomes and double down on them?  Could we do a better job understanding the relative contributions to growth of elite education vs. “everyday” undergraduate education?  We can – and should.  And we should be prepared to adjust institutional pedagogy as a result.  Because if we don’t, people with far less understanding of the system will come and try to do it for us. 

Takeaway: this higher education community needs to build on this report, not ignore it.   Failure to do so could have really negative repercussions for both the sector and the country.