Brian Lee Crowley has an innovative idea for governments hell-bent on cajoling businesses to innovate more: Get out of the way.
By Brian Lee Crowley, May 13, 2016
The new government in Ottawa, like every one of its predecessors in the past 30 years or so, believes Canada is not innovative enough. Scarcely a day goes by without some minister patronisingly explaining why business needs to do more to innovate and how Ottawa will be there to help.
Well here is a radical suggestion. Instead of officials telling business how to run itself, perhaps they might ask themselves what obstacles governments create to innovation and then dedicate themselves to removing them.
Hurt protestations of innocence will be the order of the day in response. Why we would never do anything to obstruct innovation. We love it and want to embrace and nurture it officials will murmur, a hint of a tear glimmering in the corner of their eye.
Scarcely a day goes by without some minister patronisingly explaining why business needs to do more to innovate and how Ottawa will be there to help.
But this charade of innocence can only be sustained by hiding behind the obfuscation of an abstract word--innovation-- that sounds warm and cuddly but means nothing specific. “Innovation” is just a fancy way of describing doing new things or doing old things in a new way. And as soon as you put it that way you realise that all too often a synonym for innovation is “disruption.” And there is nothing politicians hate more than something that upends a world their constituents find quite comfortable.
Uber is a classic example. Exponents of innovation will hail Toronto’s recent grudging embrace of this innovative sharing-economy technology, conveniently forgetting that Toronto, like virtually every other city in the country, has spent years fighting the threat it represents to the taxi industry and their own regulatory power. Toronto may be on board now, but almost every other major municipality in the country is still fighting a rearguard action against the inevitable, raising hugely the cost of an innovation that will benefit consumers, lower costs, give better service, open the market to new competitors and make more rational use of the fleet of cars on the road.
On a strict cost-benefit calculation, politicians should have welcomed Uber, Lyft and others with open arms. Instead they stood po-faced at the city gates, egged on by a tiny but well-organised band of taxi owners and drivers, loudly crying “stop” to the march of history. Most of them are still there. Innovation-friendly indeed.
Now let’s talk about health care.
Health care is one of the largest sectors of the economy and with our rapidly ageing population it is going to expand enormously in coming years. Worldwide it is the focal point for almost every innovative field there is: nanotechnology, management science, diagnostic imaging, biotechnology, brain chemistry and more.
There is nothing politicians hate more than something that upends a world their constituents find quite comfortable.
Essentially the system is run, however, by the powerful established interests within it like doctors and nurses and administered by bureaucrats for whom Rule Number One is never do anything that will embarrass the minister.
Yet every important innovation in health care threatens some powerful vested interest in the system. That’s why international comparisons of health care systems consistently show that Canadians have poor access to the latest technologies. We keep costs low and vested interests quiescent by shortchanging patients, who are far less well-organised than the health professions.
Ironically, this is expensive. If we develop innovative drugs to manage conditions that previously could only be treated through surgery, you can be sure that ministers will complain bitterly about the cost of the drug, but surgeons will still get the same or a growing share of the pie at the negotiating table where the health care pie is divvied up.
In fact innovative technologies are so feared as a cost-driver within the health care system that one background study for the Romanow Commission looking at Canada’s health care system a decade ago came up with the perfect solution based on our history to date. The author opined that the simplest way to control the cost of new technologies was not to use them.
In Canadian health care, which may soon represent nearly a fifth of the economy, innovation must go cap in hand and beg to be allowed to help patients. And in doing so it will be opposed by those in the system whose power and livelihood might be threatened, just like those taxi owners fighting Uber.
This is inevitable in a system where the amount of money available is determined in advance through government budgets. Every innovation accepted is a charge against a fixed pie, meaning established interests may be damaged to accommodate the innovation. And it is those established interests who are the system’s gatekeepers.
It is as if Henry Ford, in his drive to bring the automobile within reach of the average person, had to get his assembly line ideas approved by a government committee composed of buggy makers, stable operators, horse breeders and hay growers.
Hardly a recipe for fostering innovation, is it?
Brian Lee Crowley (twitter.com/brianleecrowley) is the Managing Director of the Macdonald-Laurier Institute, an independent non-partisan public policy think tank in Ottawa: www.macdonaldlaurier.ca.
MLI would not exist without the support of its donors. Please consider making a small contribution today.