Governments in Canada also like to think of themselves as pro-business. They tout their pro-business bona fides by pointing to generous subsidies to favoured firms and extensive government regulations and barriers to internal trade that protect entrenched interests. But such actions are actually the antithesis of supporting capitalism.
Economists increasingly emphasize the importance of culture as the key to sustained economic growth and actually downplay the role of things like education. Friedrich Hayek defined culture as “the transmission in time of our accumulated stock of knowledge.” The economic historian Deirdre McCloskey says it includes “the ideas in the society at large about the businesspeople and their betterments.
Because culture is hard to quantify, economists have traditionally shied away from emphasizing its role in innovation — even as they acknowledged its likely importance. But Phelps and hisdid recently try to quantify the importance of a society’s values in determining its economic growth. Not surprisingly, the U.S. comes out on top, while Canada fares poorly in several of the values that foster innovation, especially accepting competition and encouraging youth to be independent.
Canadians reflexively turn to government to solve their problems, rather than think about how to engage the creative and innovative people who populate the private sector to help find solutions to crises in housing or health care. The economist Randall Holcombe, a former member of the Council of Economic Advisors to George W.