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Entrepreneurial gap

By Daniel M. Ryan
web posted April 28, 2008

One of the oft-noted differences between Canada and America is the relative dearth of Canadian entrepreneurship with respect to that of the United States. There are several reasons advanced. Common on the left is the cartelization-of-the-economy argument: Canada's business class functions in part as a ruling class, which squeezes out any rising business talent through various machinations. This argument tends to be backed up by statistics interlaced with anecdotes illustrating the supposedly cabalistic nature of Canada's upper class. A version of it even crept into high-school economics classes: the unit on "interlocking directorships."  The full-bore edition claims that Canada's upper crust has a lock on the big banks: they advance easy credit "no questions asked" to one of their own, but stoutly deny any to a newcomer.

This argument used to be quite popular, but has since faded. As more and more Canadians of undistinguished background become rich, its prima facie credibility fades. It's harder to insist that Canada's "ruling class" has formed a closed circle with today's rich lists than it was in, say, 1958. Peter C. Newman's latest look at Canada's "establishment," Titans, presents the old money as having largely faded back into the woodwork, if not into the shirtsleeves. This picture is not consistent with a ruling class that holds onto power, pelf and position at all costs. 

Thus, any revival of such an argument would have to present the new rich as part of a larger cabal, which operates in a venue far different from the private schools and exclusive clubs. Interestingly, the Canadian left's cartelization argument could be retooled by left-libertarians who insist that the cabal's hub is the government. As the old-boys' connections with the government faded, a new political class moved in and seized the ward-boss reins. It is this class, so the theory would go, that stifled and still stifles entrepreneurship in Canada. I've yet to see someone present this retooled alternative, but the potentiality exists because it would build on the still-remaining echoes of the older Canadian leftism.

On the other hand, the left's argument is becoming supplanted in popular political culture by one from the right. According to this explanation, Canadian growth in entrepreneurship is stifled by the same means that economic growth itself is: high tax rates and counterproductive regulations. The right's argument has a commonality to the Left's because both anoint a group of baddies. The right, though, centres upon: meddling politicians; obstructive, subconsciously anti-entrepreneurial, and empire-building bureaucrats; and "the professionalizers of jealousy," or various left-wing groups. The right's argument differs from the left's because it features no cabal: the governmental hobbling of business occurs because government officials and governmentally-connected "public citizens" are simply responding to incentives. The politician's incentive is to stay elected, by any means practicable. The bureaucrat seeks a rise in pay and prestige. The left-wing lobby groups want clout and a sense of accomplishment.

In answer to the question "why would all these groups pick on businesspeople?", reference is made to the relative dearth in numbers of the business class, and the average Canadian's disinclination to identify with its members. The question's answer builds upon a simple head-count. Business can't swing the votes, and business freedom is an unpopular cause to lobby for: the link between the unshackling of business and general prosperity isn't well known. It's also not that easy to explain past people's faction-sensing radar, which adds the other difficulty. Right-wingers who push this explanation tend to be partial to educative lobbying, so as to make the connection between less intrusive government and greater prosperity clear. This lobbying tends to avoid the stigma of "business apologetics" by also taking up the cudgel for deficit reduction and reduction of taxes on the person. It is in this way that lowered taxes are presented as a general interest, not just as a special one.

This argument still speaks because Canadian taxes are still high, but it's as self-reversing as the left-wing argument. As more right-wing lobby groups and foundations appear, and the more influence they gain, the more the bad guys will wilt away into stock villains. The right-wing argument has a shelf life too; the day is foreseeable when the "liberal bureaucrat" becomes as much a caricature as the "rapacious old boy." People do change with the times…even the baddies.

In addition, it does not explain why entrepreneurship in Canada was so subdued back in the days when taxes were low, regulations were nonexistent, and laws were few. Despite its own holes, the left-wing argument does.

(I'm not going to deal with the liberal argument, which claims that a rising entrepreneur needs both money from and the authority of the government to succeed. It's really an updated "O.H.M.S." argument, and one that hasn't survived auditor examination.)  

Another explanation, one that isn't circulated very much when Canadians' gazes turn to the navel, is the cultural one. In order to see what it is, a glance at the entrepreneurial culture is needed.

Entrepreneurs come in many shapes and sizes, but they have one character attribute in common: they're action-oriented. They also tend to see a taste for complaining, except for customers' complaints, as a sign of an unbusinesslike attitude. All the success manuals for would-be businesspeople mention this point; many emphasize it. Howard Ruff is fond of putting it this way: "No-one is a failure unless he gives up (and blames someone else.)" In entrepreneurial-success culture, Blamers are anathema.

This crucial facet of entrepreneurial culture might very well explain why Canada's entrepreneurial circuit is relatively sparse compared to that of the U.S. We Canadians have a soft spot for complainers, probably because of our more politically centered culture. As a nation, we can't absorb the more American point of view which states that a complainer is a mere windbag, or that a Blamer is just fond of hearing himself talk. Since the Canadian political system is responsive to complaints, and Parliamentarians in opposition are expert at making them, the idea that a complainer is just a time-waster is somewhat unusual to us.

Thus, the eschewing of complaints and blaming, which is almost de rigueur in American entrepreneurial culture, doesn't kick in up here.

Ironically, this point explains why entrepreneurship and bureaucracy have grown alongside each other. Big Government gives Canadian entrepreneurs something to complain about!

Deciding which culture is "better" really requires a value judgment, because of a side consequence of the more American disdain for complainers. In an entrepreneurial, action-oriented culture, complainers tend to be shut up by "why don't you do something about it? Or better yet, why don't you just do something instead of sitting around yakking off?" This folkway tends to turn a complainer into a figure that's well known to American culture but somewhat foreign to Canadian culture: a busybody.

That's the trade-off inherent in a switch to a more businesslike culture in Canada. The complainer claque would go, but the busybody circuit would grow. The debbil we know would be replaced by the debbil we largely don't. ESR

Daniel M. Ryan is a regular columnist for LewRockwell.com, and has an undamaged mail address here

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