At the beginning of the 1900s, our Prime Minister, Sir Wilfred Laurier, predicted that the twentieth century would belong to Canada. Some may argue that this prediction did not pan out in the manner that he had envisioned, but today few are as bold as Dr. Sherry Cooper, Chief Economist at brokerage house, Nesbitt Burns in Toronto in making a similar prediction about our economic future in the new millennium.
In her book, "The Cooper Files", Dr. Cooper explains that with the advent of the Internet, the global economy has entered into a new economic cycle that is poised to last for the next fifty to sixty years. Her thesis is that we are in a period of transition from the Old to the New Economy.
The old economy put a premium on physical assets, natural resources, bricks and mortar plants and inventory. During its run from post World War Two to the late 1990s, Canada became known for its abundance of rocks and logs and a nation capable of building a low technology manufacturing sector around them.
The New Economy, she argues, will be built around information and communications technology and their application to all aspects of our lives.
The World Wide Web has been open for commercial use for only five years, but already it has revolutionized the business model. Within the next five years, we can look forward to an estimated one billion people throughout the world accessing this technology with ease and confidence. The Internet will become the infrastructure for all sectors of the economy, the central nervous system of the digital world, and she predicts, any business without an Internet strategy could well become a business out of business.
The new economy will focus on intangibles, particularly intellectual capital, innovation, ideas, patents, proprietary software and technology. The emphasis on ability, and the relatively small proportion of the labour force that creates inordinate value will force companies and countries to compete with each other to develop and keep homegrown talent. When it leaves, it cannot be easily replaced.
In country after country, income tax reductions have spurred economic growth. It can happen here as well and not jeopardize our social safety net at the same time.
Canada has the capability to spawn great technological success stories (Nortel Networks, being one very obvious example), but must do more in the years ahead.
Economists have already identified several key high-tech hot spots where a cluster of thriving players, start-ups, talent and venture capital have come together to make waves in the New Economy. Ottawa, the Technological Triangle of Kitchener-Waterloo, Cambridge and Guelph, Ontario, Toronto, Montreal, North Vancouver, Calgary and Halifax all boast a convergence of universities, technologies and corporate pioneers.
However, as Dr. Cooper so aptly points out, our corporate income tax rates are among the highest in the world, our capital gains rates are uncompetitive and our personal tax burden is the heaviest among the G7 nations.
We have overcome these obstacles for the time being but must consider whether we can continue to grow without significant changes to our income tax regime. She strongly asserts that the answer to this problem can be found and offers alternatives that cannot be ignored.
The global shift in the economy will cause dislocation, conflict and uncertainty. A careful reading of this book will assist the reader to better understand how this period of immense change will affect us all and how we might prepare ourselves for it.
Copyright © 2000: Allen Futerman and
Associates. All rights reserved.