What Creates Wealth?

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I am thrilled to see an economist and policy adviser frame wealth creation in Canada in terms of creativity, and not commodities. What Creates Wealth? According to Todd Hirsch and Robert Roach,

Economic wealth isn’t created by oil and gas molecules in the ground, nor by an auto assembly plant. It isn’t created by tax credits or subsidies. It isn’t even created by economic development programs. Wealth starts with one thing: an idea.

Hirsh and Roach in their new book The Boiling Frog Dilemma argue that Canada in the 21st century is at risk of falling behind internationally. We need to seriously “up our game” in terms of creativity, innovation, risk taking, entrepreneurialism, cosmopolitanism, community, and re-thinking environmental stewardship—or risk becoming economically irrelevant on the global stage.

I agree. I think Canadian policy makers have been fixated on innovation in R&D, and we need to expand the scope on how we think about creativity and innovation

Hirsh in a CBC radio interview says, “We can’t rely on the same trading patterns and the same economic structure that has served us so well for the last hundred years or so.” He argues that the reason Canada hasn’t been as forward-thinking and innovative as other countries is because we haven’t had to try that hard to maintain our robust economy, thanks to our powerful trading partner south of the border.

“We’ve never had to learn how to market ourselves, not like other countries have had to do,” Hirsh explained.”We got quite rich and quite well off just by exporting [resources] to the United States.”

However, the centre of the global economy is shifting from the United States eastward. Canada can’t compete with Asia’s technological innovation and cheap labour. But Hirsch says that’s okay. He points to other western countries as examples Canada can follow, such as Scandinavia, Australia and Israel, who are thriving during this global shift by exploiting what Hirsch calls their “creative energies.”

“What’s powering those economies is not resources, necessarily, but applications of creative ideas,” Hirsch said. Canada can easily do the same, by shifting our understanding of what creates wealth. It’s not natural resources, it’s knowledge-based ones. “We should be focusing on what creates wealth,” Hirsch argued. Canada could become a leader in exploring how resources are extracted, or become a leader in environmental technologies. The choice is up to us. We just need to start looking forward and planning for the future.

So, how does Canada do this? According to Hirsch, we can start by talking about it, and by building a community that shares and supports creativity. “An idea someone has in isolation, rarely, flourishes,” he said. “It’s only when you are in a community of people talking about ideas, talking about business ventures, talking about new products or new things we can do, that’s important.”

Listen to the CBC radio interview about the Boiling Frog Dilemma

Read a chapter from The Boiling Frog Dilemma

Buy the book at Amazon

We need to build communities to enable new channels for learning, creating, innovating, risk taking, and exporting. Examples include learning labs, meetups, unconferences, hackathons, and product camps.

Read ROI on Creativity: Ideas are the Currency of the New Economy