Monday, June 30, 2008

Results of the first ever MIT Sloan sustainability survey

MIT Sloan completed its first ever sustainability survey. Here are highlights from the survey:

  • 25% said they have examined a potential employer's environmental record;
  • 60% said this record would not affect their current job search, but 75% said it will become a more important factor in the future;
  • 93% said the sustainability movement will create opportunities for jobs, services and products;
  • 75% said there needs to be clearer guidelines of what makes a sustainable business;
  • 50% said they plan to start their own business and 80% of them said they could maintain the bottom line in their business with sustainable biz practices; and
  • More than half surveyed said they have switched brands to environmentally safe products in last six months.

Here is the original press release:

“Green” principles influence personal life, but not job search, MIT Sloan survey finds

But once established, environmental factors assume greater importance, say MBAs

CAMBRIDGE, Mass., May 2008-- As they leave their Cambridge campus and seek or begin jobs across the globe, MIT Sloan MBA students say that while being “green” is important in their personal lives, a firm’s record on sustainability is not a decisive force as they ponder employment opportunities early in their careers, according to a survey conducted last month.

Only about a quarter of the nearly 400 graduate students responding to the survey said they have actually examined a potential employer’s environmental record; about 60 percent said they were more concerned with securing a position than taking such a record into account. But that could change as the MBAs become more established in their careers, with more than 75 percent saying a company's environmental record and commitment to sustainable business practices will likely become a greater factor.

“Realistically, a firm’s environmental performance isn’t too important right now,” said Garrett Dodge, an Indiana native who is seeking employment in consumer technology or innovation. “I think it would be an issue if an employer was notorious for its environmental record. A poor environmental record is also indicative of a firm that may lack judgment in other areas, such as human resources or accounting. Clearly, that kind of firm is not the place to start a career.”

The MIT Sloan survey found that while 93 percent of students feel the sustainability movement creates a strong opportunity to create jobs, services and products, 75 percent of respondents believe that clearer guidelines are needed as to what actually constitutes a green or sustainable business.

Like other respondents, Dodge said he is more likely to incorporate green principles in his daily life. “I do pay more attention to environmental issues in my personal life because it is easier to make changes,” he said. More than half of the students surveyed said they have switched brands in the last six months for a product that contains all natural ingredients, and about half prefer to purchase environmentally friendly products.

About half of all respondents plan to launch their own businesses, and nearly 80 percent of them believe they can maintain their bottom line while minimizing their impact on the environment by starting their business with sustainable business practices in place. Erica Morgan Sims said she plans to start a business as an affordable housing real estate developer. “I never anticipated having green design as part of my model,” says the Michigan native. “I thought affordability and green development were fairly incompatible, but now I see it as a potential cost advantage.”

The survey was conducted from April 2 to 15, 2008. Of 376 total respondents, 57 percent have found job, 28 percent are still looking and 15 percent already were employed before enrolling at Sloan.

For over fifty years, the MIT Sloan School of Management, based in Cambridge, Massachusetts, has been one of the world's leading academic sources of innovation in management theory and practice. With students from more than 60 countries, it develops effective, innovative, and principled leaders who advance the global economy.



Thursday, June 26, 2008

Competing in a Transforming Economy

Summary of IRI Webinar on IRI's Times & Trends report, "Competing in a Transforming Economy"

This summary was written by Theodore Sutherland
Edited by Ted Chan

The webcast also summarized the current trends in the economy and how manufacturers and retailers can adjust their strategies to survive and prosper in a challenging global economy. The presenters explained the decrease in frequency of shopping trips due to recent surges in fuel prices as well as food prices. As a result of these factors and specific data gathered, they concluded that consumers’ main priority now is value in their purchases. Recent research shows that supercenters and dollar stores are becoming the popular destinations as it is possible to get larger sizes.

This in turn is, in the first time in 25 years, leading to food hoarding as prices of food are expected to further increase. Consumers are also looking out more for private labels as opposed to brands. Consumers are also buying fewer healthy, organic and fresh products as they are more expensive and their buy power wanes. Instead, the trend has been to eat more at home using the basic cooking ingredients as a replacement for pre-prepared package food. IRI’s research has also shown that the recent checks from the government are being used primarily for grocery shopping and other essentials.

Aside their eating habits, consumers’ daily rituals are also changing in terms home practices such as personal grooming. With this information, the researchers advised that companies adjust their company strategies to compete more on price, but focusing in on delivering value as they do it.

More information can be found online at the IRI website.

CreativeLedge.com starts to get the word out...

Some publicity for a fascinating side project I've been working for with a highly skilled mixed media artist named Bob Barancik.

I like how I'm described, an "Internet whiz".

"Zito isn’t the only one in Maine harnessing the powers of the Internet for creative fusion. Maine residents Bob Barancik and Amy Blake recently developed CreativeLedge.com, the online front for their Long Island studio in the middle of Casco Bay. For several years, Barancik and Blake have hosted the CreativeShare gathering on nearby Peaks Island, aimed at releasing inventive energies, allowing for artistic networking, and basically enjoying the company of other creative types. Now, they hope that CreativeLedge.com, which they made with the help of an MIT Internet whiz named Ted Chan, will promote the same type of interdisciplinary collaboration, on a larger scale."

We rolled out some of the core features of CreativeLedge.com last month, but we're still planning and plotting how we're going to make it a true haven for artists to come together and create. Early on, we focused this project on creating some buzz for the inner circle of CreativeLedge collaborators, but now we are realizing this project has the power to bring a lot of people together for the sake of artistic endeavours.

It's great to take on a project every now and then that you wouldn't otherwise do.

Here's a video called Mundo Caliente, a creative response to global warming as an example of the type of work the collaborations at Creative Ledge are creating.


Monday, June 23, 2008

McKinsey on Open Innovation

Here's consulting giant McKinsey's latest article on open innovation. An interesting read for anyone who hasn't gotten deeply involved yet. I don't think I'd recommend it for anyone who has been in the community - it's more overview type stuff. Shows how this is starting to become a mega-trend though.

McKinsey on Open Innovation

Thursday, June 19, 2008

Habitat for Humanity partners with a solar company

From the same wishes-to-stay-anonymous friend who feeds me some of the most interesting tidbits from the solar and green construction industry:

"Looks like Habitat for Humanity has a partnership with a solar design firm in the Phoenix area to donate systems to some of their houses. Good to see another example of convergence between affordable housing and green building (in theory the two should always be tied together)."


Click here to see the article.

Celebrating the Celtics championship like drunken idiots

Here is a video I took of some solid human beings acting rioting after the Boston Celtics won their 17th world championship. This is taking place on Canal Street about twenty minutes after the end of the game. My camera didn't pick it up too well, but right at the beginning you can see a guy throwing a sign post through the window.



Here it is from the flip side:



About 30 seconds later, a police officer showed up. I didn't get a shot of it, but one last guy threw a sign through the 90 Canal Street window and got tackled by police officers. He was the only one out of about 15 people who participated in that act who got in trouble though. There are lots of other shots on YouTube if you want to check out.

As a mildly trained social psychologist (I have a degree anyhow), it's fascinating to me why people are actually looking to break things and riot. I saw people just grabbing random street signs and shaking them. I saw a guy jump on top of the Mix 98.5 radio station SUV and roll over the top of it. I saw a MBTA bus full of riot officer. Some of it seemed like a rave (especially with the drummer playing the upside down duck sauce buckets and the entrancing Beat LA chant). And some of it seemed straight out of Lord of the Flies.

The City of Boston has had a lot of practice with this, so they did a decent job moving people out of the neighborhood once things started getting out of hand. One thing I don't understand is why they don't put outhouses since just about every corner you could see drunken revelers peeing (see the Gary Zerola story, then multiply by 100,000). Well, actually, maybe I know why - I'm sure they'd get tipped. I'm pretty sure there's nothing worse that being in a tipped outhouse.

I guess the NBA "Celebrate with Dignity" campaign didn't reach these guys.

Wednesday, June 18, 2008

Trends in Global Supply Chains

This summarizes a talk by Jacques Roy, Director of the Logistics and Operations Management Department at HEC Montreal as part of the Canadian Leadership Orientation for North American MBA Students sponsored by ACSUS, HEC Montreal and the University of Ottawa Telfer School of Management.

Trends in Global Supply Chains

Roy’s discussion focused on some recent trends in building improving global supply chain management. He discussed four specific trends:

Use of Time-Sensitive Strategies Based on Collaboration

Collaborative Planning , Forecasting and Replenishment (CPFR) is a new paradigm where suppliers and retailers are collaborating to improve forecasting and optimize the replenishment of product. Many of the new strategies are focused around trying to get everyone in the supply chain to collaborate and integrate to improve forecasting, reduce uncertainty and increase products.

Quick response is a strategy using just-in-time strategies to the retail sector. This means shorter order cycles and information is available in real-time. The typical retail supply chain has an advanced design cycle and a lengthy manufacturing and shipping cycle. Roy pointed at Zara as an example of quick response strategy that is creating a competitive advantage. Zara is a popular case at business schools these days. They produce garments locally in Spain, replenish quickly using truck and air shipments. It takes 10 to 14 days to design, produce and deliver its products to retail stores, compared to 3 to 4 mounts for its competition. Zara is swapping higher production and transportation costs for lower inventories and greater flexibility to react to consumer demands.

Increasingly Complex Customer Demands

Customers are increasingly demanding reductions in cycle time, more reliable on-time delivers and a wider variety of products and packaging. At the same time, demands in quality have only gone up. Dell is an example of a company that has done well in creating a supply chain system that satisfies the diverse customer preferences.

Another good example is the systems designed to mix custom paint colors and finishes in-store. This is constantly evolving. Said Roy, “As soon as we think a product is standardized, some new customer demands changes that.”

Impact of Global Sourcing

Lower production or purchasing cost comes with challenges. There are increased transportation, warehousing and inventory costs. The response time can slower which may require higher inventories. Risk is also much higher. There are challenges getting deliveries on time, and quality is a challenge.

Gateways are increasingly congested as well, complicating matters even more. Another interesting trend is that the distribution center, once thought to be a thing of the past, are being opened. The reason for these distribution centers is because of increased outsourcing requiring higher inventories.

Lead time variation studies: Canada: Minimum – 10 days or less, Maximum- 30 days
China: Minimum: 1 – 3 months / Max – 3 to 6+ months

Only 42% of Canadian companies reported a profit as a result of outsourcing production to China. Those who have realized a profit have several things in common. They have gone over to China and spent a lot of time working to ensure quality. They tend to use air shipments more. Finally, they have found other ways to keep inventory low.

Third Party Logistics

Value-added distribution centers are increasingly popular. They may do pick and pack, labeling, kitting, special packaging or co-manufacturing. They may also play a key role in reverse logistics, dealing with returns. The 3PL market in the US has grown from around $10 billion in 1990 to around $120 billion in 2007. Interestingly, Deutsche Post is one of the biggest players. They are bigger air freight in terms of revenue than UPS or FedEx. They also own Exel, one of biggest 3PL providers.

More on this in a later post as are visiting Groupe Robert, a major trucking and 3PL provider tomorrow, and Port of Montreal tomorrow.

Good ad, or just not safe for work?

You be the judge. Everyone's trying to be viral and desperate OEM phone makers will do anything to sell their version of an iPhone clone.

There's a lot of folks saying this ad is kind of creepy. But for me, on the web, it work right up to the end when Moms calls in...



Check out this link to see what else is getting buzz. At least as of today, there are some pretty odd ones on there...you wonder if a couple of them just got randomly linked by major news sources...

http://www.viralvideochart.com/





Monday, June 16, 2008

Global Green's Platinum Certified Building

My friend who wishes to remain anonymous passes this on from Los Angeles:

"At the Global Green event I went to in LA on Saturday, they talked about how their organization built the first energy-efficient homes in New Orleans following Hurricane Katrina. It's pretty amazing that with all the other constraints surrounding building a home in a hurricane-ravaged area, that they were still able to get LEED Platinum certification (which is MUCH harder to get than LEED Gold, which is the next level down). Granted when you have Gorbachev as the spearhead of your organization to raise money cost clearly isn't a concern, but it's still a pretty cool idea."

Check it out, pretty neat:

http://www.globalgreen.org/press/releases/2008_05_15_visitorsCenter.htm

Tidbits about the US-Canada trade relationship

Continuing on the theme of the importance of the Canadian trade relationship with the United States, here are some interesting facts and figures:

  • $250 billion US goods bought by Canada in 2007 - 70% of the trade is done by truck
  • Every 1.5 seconds a truck crosses the US Canadian border
  • 7 million US jobs are supported by trade with Canada
  • 15,500 companies in the US are Canadian owned
  • For every $1 in goods China buys from the United States, Canada buys $4.
  • More cars made in Ontario than the US (the share health care expenses borne by the company are a big part of why Canada can be more competitive
  • The US exported more goods to Canada in 2007 than the 27 nations of the European Union ($249 billion versus $247 billion in the US. There are 33 million people in Canada and 494 million in the EU.
  • Ontario is the 4th largest trading partner of the US (after Canada as whole, China and Mexico). The trade is almost $900 million per day.
  • Canada’s CDP was $1.53 trillion Canadian in 2007, while the US was $13.8 trillion.
    45% of the population of the greater Toronto area was born outside the US
  • Canada’s defense expenditures are relatively low while the US spends close to 50% of what the entire world spends on defense by some measures.
  • Mexico is the source of the most illegal immigrants in the United States. Canada is second!
  • Autos are 25% of goods that cross the border, but we don’t really sell cars to one another. Canada and the US are really making cars together. This is included in some “trade” numbers though.



Wednesday, June 11, 2008

Fist bumps are totally American! Go Obama!

Yes, I know this blog is usually filled with neatly sectioned paragraphs about macroeconomics, NAFTA and open innovation models.

So folks are saying the strangest things about Barack Obama's fist bump with his wife. They're saying it's a black thing, it's a gangster thing, it's a tribute to terrorists...some are saying it's somehow un-American. People will try anything to play on conservatives fear these day. Anyhow, see below for evidence that Barack's fist bump is totally kosher.




I only met Warren Buffett once, but he gave me a fist bump. Who's more white and represents American capitalist ideals better than Warren Buffett? To me, you don't even need to scroll any further, this is conclusive evidence that Obama's just one step ahead of the curb.




And here's our old friend Dick Cheney giving one to the camera. Is he even still alive?



And here's Manny and Mike Lowell sharing their special moment. And Dice-K contributing his special Japanese blessing. No, I don't know what he's doing either.




This baby knows where it's at:




Click here to see how to fake the pre-fight fist bump of respect and then humiliate yourself for all time by not even knocking the guy out.




I'm pretty sure she would do a better job than the UFC guy:



Here's Harry Connick, Jr., a 2nd generation American mediocre performer:



Maybe it an un-American terrorist act after all. Although Hideki is doing a better job than Dice-K.





Feel free to add your own fist bumps in the comments sections. Time for me to get back to paperwork...

PS No, I couldn't find any Jews fist bumping, which would have proved that Israeli national security is safe in the hands of Barack Obama. I welcome a submission. But other Hideki Matsui, I couldn't find any evil doers fist bumping either.

Is unethical behavior to blame for gas prices?

http://money.cnn.com/2008/06/11/news/economy/gas_poll/index.htm

This poll indicates that 62% of Americans are blaming unethical behavior by companies and other industry players for high gas prices. While no industry is perfect, firms and countries controlling resources aren't obligated to continue to supply Americans with cheap gas if the economics don't make sense.

I guess people still don’t realize that gas is cheap at $4 a gallon. A gallon of gas is the same (less around here) than a gallon of orange juice. The poll doesn't have real insight except to point out Americans continue to be naive about gas prices.

I hold to my view that the gas price shocks are good. They will reduce long-term demand and demand efficiency from consumers and producers of petroleum based products.

Also, there is a massive amount of venture capital flooding into clean energy technologies. This is a fantastic thing. If industry players are acting unethically, their gain will be short-term. Allowing energy prices to remain this high is resulting in new technologies that will eventually replace oil. If it is a strategic move, it may not be a wise one for those who have vast oil reserves. Perhaps that's why you see Saudi Arabia more willing to come to the bargaining tables than others. The Saudis like the idea of a global economy dependent long-term on their oil resources because they don't see themselves running out anytime soon. They want steady and moderately high oil prices. Just low enough to keep out new technologies and just high enough for them to continue to get ridiculously wealthy.

Maybe it’s hurting the economy a bit, but long-term, this is accelerating the change that is necessary.




Thursday, June 5, 2008

Groupe Robert: Leaders in Best Practices for Third Party Logistics

This summarizes a talk by Claude Robert, CEO of Robert Transport as part of the Canadian Leadership Orientation for North American MBA Students sponsored by ACSUS, HEC Montreal and the University of Ottawa Telfer School of Management.

By Ted Chan

The theme for this leg of the Canadian Leadership Orientation program in Montreal has been supply chain management and third party logistics. Thursday morning’s first talk was given by Claude Robert, CEO of Groupe Robert. Groupe Robert started off as a trucking company, but it takes care of the now it takes care of many aspects of the logistics required for supply chain management. Besides supplying truck, trailers and flatbeds, this means warehousing and other inventory services, information systems and other services. Robert transports items ranging from the little L’Oreal samples you get in the department store to 50,000 pounds of steel and other commodities from Western Canada. Robert is a 3rd generation family business, founded by Claude Robert’s father. Claude’s three children are now all working in key roles within the firm.

Some key points Robert touched on:

IT Systems in Logistics Management

One of the sources of competitive advantage for Robert is an internally built warehouse management system that is scalable and flexible while being compatible with customer systems (SAP and others). The company plans to continue to invest in technologies, shifting from satellite focused strategies to ones using Blackberries and more intuitive tools. Robert says the return on investment from management can be massive. UPS has changed their routing so that trucks can only turn left (this help avoid accidents. Their upgraded system also greatly reduces the miles required to arrive at the destination, saving on fuel costs and reducing their carbon footprint.

New trucks are equipped with CPUs to track truck performance. The trucks are also equipped with driver fatigue systems. The system monitors eye movements and can make noises and even shut down safely. There are also sensors that track incidents (such as the truck getting cut off or being in an accident) and keeps videos of these incidents.

Railways versus Roads

Robert feels railways aren’t nearly as efficient as people make them out to be. He says many of the graphs and statistics about how efficient railways are deceptive because they assume the rails are running full. According to Robert, a recent studied showed these trains were 56% empty when they move, whereas with trucks that is rarely the case. Groupe Robert’s strategy has been to focus on shorter routes where trucks are far more efficient than trains. Their focus is operating on a 500 mile radius from Montreal, Toronto and Detroit (if you draw the three circles, they touch one another).

Risk Management, Competitiveness and Fuel Prices

Groupe Robert has elected not to buy future. They use about 100 million liters of diesel fuel per year. Instead, they use a fuel surcharge into their contracts to hedge fuel price risk. Southwest has been in the news having hedged fuel at $51 per barrel of oil.

Robert is a contrarian on fuel prices. He feels oil producing companies are going to force prices to stay high by controlling supply. Similar to many others, he feels alternative energy and public transportation strategies are the only escape.

An interesting point Robert emphasized is how fuel costs are going to hurt Asian exports. Robert pointed at the doubling of container shipping costs as fuel prices have gone up. This makes Asian goods considerably less competitive.

Overall, Robert sees the trucking industry as a struggling industry due primarily to a sustained increase in fuel costs. Robert sees themselves positioned well with their technology and logistics focused. Clearly, they have succeeded because they focus on value added services, allowing them to avoid being a commodified product for which the inputs (fuel and truck drivers) are only getting more expensive. Said Robert, “Our most demanding customers are our best customers. Their demands make us better and in the long run more competitive.”

Tuesday, June 3, 2008

The US-Canada Economic Relationship - An American Perspective

This summarizes a talk by Earl Fry, Professor of Political Science at Brigham Young University as part of the Canadian Leadership Orientation for North American MBA Students sponsored by ACSUS, HEC Montreal and the University of Ottawa Telfer School of Management.

The Canada-US Economic Relationship – An American Perspective

Earl Fry, a professor focused on the US-Canadian relationship at Brigham Young University gave an interesting talk on the integrated nature of the US and Canadian economies focused on the trade relationship. Obviously, the economic integration between the US and Canada is massive. There are 200 million 2-way border crossing per year. Over 21% of total US exports went to Canada in 2007 (12% to Mexico). 16% of total US imports came from Canada. This is the largest bilateral trading relationship in the world, though China passed Canada recently as the largest supplier. The US-Canada trade totals $1.5 billion in daily 2-way trade. In 2005, US foreign direct investment was $235 billion, providing 1.1 million jobs. Canadian FDI in the US was $144 billion that same year, so the relationship clearly runs both ways. Affiliates of US companies accounted for 10% Canada’s GDP.

Current State

Fry sees much of Canada as doing extremely well currently despite the current downturn caused by the roiling of the US financial markets. Newfoundland, Alberta and Sasketchewan are all doing very well. Currently, Ontario and Quebec, manufacturing bases aren’t doing as well – this is due in great part to the rising Canadian currency, which is hurting the manufacturing bases there. Overall though, the economy has done well. It is the only G7 economy that has been running a surplus. However, Fry sees much of this as commodity related, and like Peter Hall mentioned yesterday in talk, could be cyclical.

Border

Clearly one major issue throughout the week so far has been the thickening of the US/Canadian border, where so much of this vital trade runs through. Fry feels that it has been thickened too much. Technology and process are essential to solving this problem. He pointed to the demoing of a ID card being tested at the Canada/British Columbia border, and off-site pre-transport checks as an examples.

Fry thinks that one possibility is a North American border alliance where once you enter Canada or the US you can move freely between the two borders. If the Europe can pull it off, why couldn’t North America? This doesn’t seem likely in the near future however, given the siege mentality the US has after 9/11. The American leadership will likely continue to feel that they must keep national security in their own hands.

Tourism

Canada’s #1 source of foreign tourists is the US. This is a major problem this year. With the weakness of the American dollar and high gas prices, many Americans are staying home. 2008 is the 400th anniversary of Quebec City, and they were an example of one city expected a lot of tourism this year that is going to be disappointed barring a sudden and unexpected turnaround in fuel prices. From what I’ve seen, Canada has embarked on an extremely ambitious tourism marketing campaign. There was a massive setup in the Back Bay of Boston last week, right down a VIA Rail train car and photo opportunities with a fully uniformed Mountie. I’m not sure if this push was planned or is an additional expenditure to prop up some local Canadian economies in what promises to be a very tough year.

Energy Security

Oil and America’s energy security is an important part of this relationship. The US imports 60% of its oil, with Canada as the top provider. Canada is also a major supplier of hydroelectric power. The US produces about 5% of the world’s oil and produces 20%. Canada ranks 6th in the world in oil production overall. Due in great part to oil, Alberta exports 86% of its provincial exports to the US. Generally, it doesn’t strike me that that most people are aware of this relationship. Many of the speakers this weekend, such as Frank McKenna, former Canadian Ambassador to the United States, and Gary Mar from the Province of Alberta say this is generally a good thing. Many US energy sources like Nigeria, Venezuela and the Middle East are far less stable and we hear much more about them. Said Fry, “They don’t worry about revolution in Canada.”

Financial Regulations

One of the challenges is integration in financial services. Canadian financial regulations are at the provincial level which makes it more difficult to work with the SEC. This is one of the challenges of federalism. Fry believes that going to one standard across the country would make it much easier. Fry says they have begun talking about that. Fry expects there will be a number of takeovers of US companies by foreign firms in the US.

Foreign Policy

The countries work together without always agreeing with the US on foreign policy. Canada didn’t support the Vietnam War, and clearly they have a different policy on Cuba, for instance. While Canada favors multilateralism, the US has acted unilaterally in a number of cases. Especially recently, this has drawn the ire of Canadians. According to Fry, a recent Pew poll said 60% of Canadians did not feel the US was a force for good in the world. Hopefully, this issue will be solved by our November election. The Canadian government has to tread lightly given the dependency of its economy on the US.

NAFTA

Fry’s view is that NAFTA has been imperfect but it has been a positive force in driving increased trade, direct investment and enhancing supply chains. It has also increased the cross-border movement of professionals, which I imagine enhances the quality of the overall labor market in all three economies. One theme throughout the conference has been North American competitiveness. The view of most of the speakers here is that NAFTA is a positive force in driving the ability of the United States, Mexico and Canada to effectively withstand competition from rapidly growing regional economies in the rest of the world.

Monday, June 2, 2008

Michael Ignatieff on Canadian Values

This summarizes a talk by Michael Ignatieff as part of the Canadian Leadership Orientation for North American MBA Students sponsored by ACSUS, HEC Montreal and the University of Ottawa Telfer School of Management.

The first talk of the Canadian Leadership Orientation was given by Michael Ignatieff about Canadian values. Mr. Ignatieff is a member of parliament for Etobicoke-Lakeshore, and the Deputy Leader of the Liberal Party of Canada. He has an undergraduate degree in History from University of Toronto, and he received his PhD in History from Harvard. Mr. Ignatieff’s talk discussed Canada’s values and the structure of government that has contributed to the “liberal consensus” that exists.

First, Mr. Ignatieff framed his talk by discussing the nature of how a nation’s legal systems codify the value system of people. This is not necessarily a universal set of values, but what is encoded in Canadian institutions to reflect how issues were decided to a certain extent. Systems of politics must find ways to get closure and these are some areas where Canada has reached different conclusions with regards to the United States:

  • Interestingly, in Canada, the government has no authority to take human life.
  • In Canada, a women’s right to choose is considered a settled issue. Abortion is legal in Canada.
  • Medical care is right, not a privilege in Canada. This is a moral choice that the Canadian political and legal system has made. While universal health care mandated by the judicial system sounds appealing, this is exceptionally expensive, eating up more than 50% of budgets in some provinces.
  • Conversely, bearing arms is a privilege, not a right in Canada. Within this interpretation, this is a heated issue similar to the way it in the US.
  • Equal rights extended regardless of sexual orientation. There are full marriage rights accorded to gay and lesbian couples.

Beyond these liberal stances, Canada has a preservationist approach towards minority groups. There are provisions for preservation of the French language, along right to educate in whichever language parents which to educate their children in. A number of laws reconcile individual and group rights but create complicated issues about schooling. The laws protect the Francophone minority through the majority of Canada, and the English speaking minority in Quebec.

Aboriginal groups also have cultural and language rights that must be respected. Overall, Canada can be thought of as much less “assimilationist”, due to both philosophy and the constitutional structure and treaties that formed their government. Mr. Ignatieff feels Canada, because of its large size and dispersion of people, must have a strong government that contributes strongly to unity by building rails and connecting people, yet the charter of the Canadian government tends to allow distinct cultural identities to remain distinct.

Another interesting point Mr. Ignatieff made was with regards to the intermingling of religious belief with political discourse. For some reason, religion is considered more personal in Canada. According to Mr. Ignatieff, it is more difficult politically to invoke religion to justify one’s position. This is especially in contrast to the United States, of course. Very interesting to hear this as someone who doesn’t follow Canadian politics day-to-day.

Mr. Ignatieff concluded his talk by discussing whether these values are distinctively Canadian. Mr. Ignatieff mentioned a paper that he wrote of a few years ago about the “narcissism of minor differences”. At the end of the day, Canadians aren’t that different from Americans, he argues. Rather, Canadians take a certain pride in the differences and see themselves as more progressive. However, at the same time, the government in many ways isn’t as progressive. For instance, the Canadians have trouble pulling off ambitious projects. Globally, Canadians are perceived as more moderate, more liberal and generally kinder with regards to human and cultural rights. These values are very similar to many European countries, but the way Canada has arrived there is very different. I’ll add Massachusetts to that mix as well!

Macroeconomic keys to the evolution of Canada's economy


This summarizes a talk by Peter Hall, Chief Economist of Export Development Canada as part of the Canadian Leadership Orientation for North American MBA Students sponsored by ACSUS, HEC Montreal and the University of Ottawa Telfer School of Management.

The Canadian economy has evolved into one of the world’s most competitive. How has the structure of the economy evolved to place it in this position? Peter Hall, the Chief Economist for Expert Development Canada, focused his talk in four areas: inflation control and monetary policy, free trade, productivity and fiscal management.

Inflation Control and Monetary Policy

The context was that Canada was in a period of stagflation in the late 1970s and early 1980s. To control this, monetary policy was tightened. A protracted recession followed, but the medicine worked and inflation was controlled. Hall mentions that the adoption of these inflation targets was key to stabilizing the Canadian economy. There are some current debates about price targets or lowering the target inflation rate to 1%. Hall praises the leadership of the Bank of Canada in this area. Globally, Canada is looked to as a model in monetary policy.

Opening of surplus labor in China and creation of lower priced goods has been an important factor in controlling inflation globally. As that ends, countries and businesses need to consider how to keep prices under control. Another interesting point that Hall mentioned was that every $10 movement in oil prices moves to a 3 cent change in Canadian currency price.

Free Trade

In 1994, NAFTA was put into place. This was a major structural development that forms a key basis for Canada’s export Canada. International trade has always been a key component of Canada’s growth, even historically going back to the era of beaver fur trading. Prior to the free trade agreements, Canada’s trade to GDP ratio was 50%. Now it is closer to 70%. It actually peaked at around 85% during the high-tech boom. As the dollar has eroded, it has been very difficult to deal with the 8% to 9% currency valuation increase every year. Increased competitiveness and efficiency is essential in this type of environment. 85% of exports used to go to the US, now it is 79%. Share of trade with emerging markets has risen substantially.

Fiscal Management

In the early 1990s, the government was heavily saddled with debt and the country was closing in on 100% debt to GDP ratio. Hall points to this as a magic number where underwriters get very nervous. Canada moved to clean-up this fiscal policy and generate surpluses soon afterwards. Canada now produces substantial surpluses and has been paying down debt and in some cases lowering taxes. Debt to GDP ratio sat at around 28% at the end of 2007, a substantial improvement.

Productivity Growth

Canada’s productivity growth has been solid and steady, but not explosive at 2.5% to 2.8% in recent years. However, compared to the United States, it has been slower. America has been able to harness the rest of the world to make itself efficient. According to Hall, the US leverages of the comparative advantage and surplus labor, freeing up American workers to focus on higher paying jobs. Canada’s productivity growth is partially slowed by the integration and training of less skilled labor into the economy. This is especially the case in the industry, where marginal labor is being inserted to extract energy from lower grade sources, which weighs on the sources.
Other interesting points:

  • Hall believes that commodity prices are too high and that there’s a bubble coming. When the losses start to hit, the amount of investment assets erased to zero could be massive and be as big a catastrophe as the sub-prime crisis.
  • Hall perceives the venture capital industry in Canada as much more risk-averse. High tech companies go to the US because of venture. His company actually has equity group. He worries that about certain critical mass and then a bigger fish swallows them. He sees it as a scale issue.
Overall

Canada’s fate is intrinsically tied to the US and world economies as a major exporter. Hall’s view contradicts the view that markets are decoupling and perhaps more resilient. While there’s clear evidence of a slowdown affecting the rest of the industrialized world, it was surprising to some that a major recession didn’t kick in. However, in Canada, the slowdown is evident. Hall see Canada as a “canary in a coal mind”. He says “If the US catches a cold, we catch the flu.” However, Canada has a major economic stimulus package so consumers will feel some protection from the decline. However, exports are in a major slump. 9 out of 13 sectors are looking at major declines (many in double digits).