John Robson: The Feds’ Green Dreams Touted at WEF Are Detached From Reality

Canada's Minister of Finance Chrystia Freeland (L) and Latvia's President Edgars Rinkevics attend the Ukranian Breakfast on the sidelines of the World Economic Forum (WEF) meeting in Davos on Jan. 18, 2024. (Fabrice Coffrini/AFP via Getty Images)

Commentary

Many people are deeply worried about Canada’s weak economic performance. But in Davos for the World Economic Forum our Deputy Prime Minister Chrystia Freeland said don’t worry, be happy, we’re an investment magnet because: “Canada is absolutely determined that decarbonization for us, will mean more jobs, more growth, more manufacturing and we recognize, government needs to play a role to make that happen.”

Green dreams are made of these. But what actual evidence exists for this rosy view?

There’s a lot to be said for the gloomy one. Veteran economist and commentator Jack Mintz just wrote in a Financial Post column, “Canada’s abysmal productivity growth has been the subject of countless studies.” And C.D. Howe Institute chief executive William Robson warned last November that “Business investment is so weak that the stock of productive capital per worker in Canada – the buildings, tools and software they use – is falling.”

OK, he’s my brother. But facts are facts. So what facts underpin Freeland’s contrary view? If she were some random heckler it wouldn’t matter. But she’s also Canada’s finance minister, and a featured Davos guest, because many important people share her approach.

Incidentally, the WEF is a magnet for conspiracy theories. But Freeland wasn’t plotting behind the scenes. She was rallying support and, presumably, inviting comments. So here are mine.

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For starters, she didn’t say “Canada is convinced.” (Or even “The Canadian government” for nitpickers.) She said “determined,” a red flag about placing more emphasis on motives than methods.

Such a faith-based approach is remarkably common. But I still want to know where such a plan has actually worked, because if other such visionaries have been confounded by practical problems we might well be too.

Over at the Climate Discussion Nexus we’ve repeatedly cited “The Manhattan Contrarian” Francis Menton’s calls for a “demonstration project” before going all-in. Instead, as he warned in October 2022, “There is no such thing anywhere in the world as a functioning demonstration project that provides full energy to an economy of any size without reliance on fossil fuels, and using only carbon-emissions-free sources like wind, solar, hydro and/or storage. There isn’t even a demonstration project that supplies just the electricity sector of any economy (typically about 25-35% of final energy usage)” or “anything remotely close.”

There are of course firms that show a nominal profit, and alternative sectors that show impressive growth, because of lavish subsidies. But for these technologies to “work” on a grand scale, they must manage to create more wealth than they consume creating it, the very definition of genuine “profit.”

Naturally companies will flock to Canada to build, say, EV battery plants if our governments, say, sweeten the deal by $32 billion and get photo ops. But unless the factories generate $32 billion in value above their break-even point, Canadians as a whole are losers. And an entire economy can’t subsidize itself.

I won’t dwell on Freeland’s “more jobs,” as though toil not wealth were the purpose of economic activity, because it’s such a common delusion. But what about her sugar-plum “more growth, more manufacturing”?

In Germany the once-fabled Energiewende had the opposite effect. Indeed the entire European Union is experiencing a scary manufacturing decline due largely to high energy costs. And at this point it’s not unfair to address to Freeland the jibe “How would you know?” because her administration has presided over a dramatic deterioration in Canada’s already disappointing economic performance, not a resurgence.

As my brother wrote in November, “Historically, Canada’s stock of business capital… grew consistently faster than Canada’s work force... Since 2014, however, the virtuous circle has turned vicious. Business investment in Canada plummeted in 2015 and 2016, and has been feeble ever since.”

Even if it was just bad luck that it started right when Justin Trudeau became prime minister, the data still don’t suggest that he and his associates would know how to stop it. Especially since Freeland isn’t touting some bold new approach, but business as usual.

Which brings me to “we recognize, government needs to play a role.” Recognize implies an empirical observation of dramatic successes of socialism, or at least aggressive industrial policies, around the world historically or even the last few decades (in case it took trial and error to get it right). Where?

The Canadian government is certainly playing “a role,” with spending doubling since 2015 even after subsiding from its pandemic peak. Yet very little in its operations is working even tolerably nowadays, from procurement to housing to tracking student visas.

As for energy, utilities in western Canada recently begged people not to use power because it was so cold, with the wind and solar of green visions unable to function. So how can Freeland make her Davos pitch without blushing?

It’s a sweet dream. But it’s untethered to waking reality.

Views expressed in this article are opinions of the author and do not necessarily reflect the views of The Epoch Times.