[narrator]

One problem with other countries is there is an industrial oligarchy that can't get shake itself out of the "The Innovator's Dilemma." Disruption is not considered valuable. The Russians have two aircraft design bureaus Sukhoi and MiG to help somewhat in preventing stagnation, but it would be impossible for a SpaceX to come out of nowhere in Russia like it did in the U.S. Elon even went to Russia in the early SpaceX days to buy an old ICBM and they told him to screw off.[1]

One related anecdote. I read somewhere a while ago about how Apple had a lot of internal security, even between teams. They said the reason for that is that if someone in the iPod department found out about the iPhone they'd realize the threat to their career and work to undermine it.

[1] https://www.inverse.com/article/34976-spacex-ceo-elon-musk-t...

[treespace88]

In almost all other countries the rich use the government to keep competition out. All under the banner of national pride.

In Canada we lock out all foreign investment in lots of areas.

[908B64B197]

I never understood why Canada would restrict international players from disrupting sectors like telecom (a commodity really) but didn't seem to have any problem with Airbus taking over the CSeries program for almost nothing.

[the_duke]

OT, but:

> but didn't seem to have any problem with Airbus taking over the CSeries program for almost nothing.

This is actually a somewhat amusing to bring up in this context, because US protectionism is what made that happen.

Boeing tried to kill off the C-Series by getting the US administration to impose 300% (sic!) import duties because ... it threatened US jobs. Airbus was targeting the program aggressively as well with tactics like price matching, so the CSeries was already struggling before that.

Bombardies only viable way out was to join a partnership with Airbus (which got 50.1%), so the planes could be manufactured in their Alabama plant and it could be positioned within the Airbus product range instead of competing.

The partnership was forced move, and quite a big middle finger to Boeing. The alternative would have probably been just shutting it down.

[908B64B197]

Bombardier already had a huge backlog of orders and the program was getting profitable. Since the tariffs were later ruled illegal, why not simply get the government support to weather the storm?

Could you imagine the French letting Dassault, Airbus or the US government letting Boeing fail?

[throw0101a]

> disrupting sectors like telecom

Perhaps the government doesn't like foreigns tapping Canadians' communications? The NSA listens in on its own citizens with the coöperation of the US telcos, so what chance would foreigners have?

* https://en.wikipedia.org/wiki/Room_641A

* https://en.wikipedia.org/wiki/PRISM_(surveillance_program)

As a Canadian I would certainly like more competition, but I can certainly see the reasoning.

[jollybean]

Telecoms are protected sectors in the same way that Banking and Entertainment are, they are strategic industries, and 'wire tapping' while somewhere on the list of issues, is down the list.

Canada's position on foreign ownership and trade is fairly consistent with norms in advanced countries, and fairly liberal, probably more so than most nations.

Non-market forces also play a huge role in this, for example, irrespective of what the auto-trade policies actually are between the US and Japan ... the Japanese would simply never allow US firms to compete on equal terms there.

Cultural factors, some more systematic and institutionalized than others, provide enough impetus that they represent at least as much of an issue as anything agreed upon formally by trade representatives.

[908B64B197]

> Entertainment

Never understood putting barriers and quota on entertainment (as well as government subsidies). Companies like Disney and Marvel both made billions simply by making content people want to watch. Canada is pretty much free to export its content anywhere and sell it. Why not simply compete?

[jollybean]

It's interesting to even fathom that someone would put cultural domain issues entirely within a capitalist context.

There are two fundamental reasons that content everywhere is subsidized and protected. They are of course related.

First, more obviously is the cultural aspect. The things we believe, the stories we tell, are part of our identities. With critical mass and investment those stories some will take root.

It's a little bit of a myth to suggest that a small creative team just 'makes something' and it goes big. This does happen, but generally speaking, it takes a machine. Many layers. 'Taylor Swift' should be thought of as a 'Brand and Production Company' - as opposed to a person.

You'll find that almost all truly creative endeavours are at least partly communitarian. The ballet exists only because Louis XIV, the most powerful man in the Western Hemisphere, personally created it.

Almost all such endeavours have a purely creative component, it's actually more rare than not that those works are purely commercial. The creative world is in constant tension between 'art and money'. You often hear famous movie stars say 'One for Me, One for the Studio' hinting at that.

Some cultures are stronger than others (aka European), and some have more of a critical mass in terms of audience (aka Indonesia), some have both (aka Japan). Some have contiguous histories of relative sovereignty (aka Thailand), some the opposite (aka Laos, Tibet) and so varying levels of support and protection are needed otherwise a lot of it would just evaporate.

Most countries provide fairly significant tax advantages etc. for creative works.

Second, is the fact that creative works on the commercial side, like anything, are an industry with similar kinds of underlying components and critical masses.

In that context it's a little bit glib to say to a group of people in a little region for example to 'compete' with a massive established industrial base. Whatever the industry.

Hollywood is big enough, has several very institutionalized layers of production, incredible degree of hyper-specialization (i.e. you will find more 'kinds of trades' and people who are really good at it there, than anywhere in that field). That includes access to capital, legal frameworks, specialized talent, workers guild specialization, harmonization with government (i.e. getting locations), talent agencies, distribution channels and relationships with Netflix etc..

This extends to the rest of the 'support' aspects of the industry like bookings on talk shows, morning shows, cover placements in magazines, media dockets etc.. It's all professionalized and mostly corporate.

Marvel films, in particular are a really good example of this - they are not particularly good films, but the production quality of them is basically '1st rate' at every turn, from writing, production design, direction, story narrative, the immense production support, post-production / effects, marketing.

Once you add in language and cultural barriers, i.e. the fact that a movie about 'Captain America' will have a strong enough audience domestically, with some acceptance abroad, and you have insurmountable competitive advantage. (Nobody is going to watch a film about 'Captain France', or 'Captain Japan' - or rather, many fewer).

The only other place that can compete really is the UK, which has many of those same foundational advantages, plus a long history of 'popular theatre' and especially the BBC which exists in part as a systematic support / lynch-pin under the auspices relevant to Point #1.

Canada, pound for pound, actually punches above it's weight relative to the US in a lot of production aspects. The new Dune film is Denis Villneuve, and his 'posse' of creatives are from Montreal. In some ways, it's a 'Canadian-led' film, but that just happens to be talent, it's not really part of the industrial base. Villneuve exists because Quebec strongly supports creative endeavours (and FYI for every Villneuve, there are 10 you've not heard of, 50 who never really had support or a shot, and 1000 who tried and failed).

FYI there is actually a lot of film production in Toronto/Van/Montreal, but mostly the 'labour' bits of production, not the choice roles.

The raw economics of entertainment, in the short run, optimize like anything else. Take a 'Large Open Economy' and put it next to 'Small Open Economies' and you'll see consolidation hugely disproportionately in the 'Large' economy, which is where all the talent, surplus, and good jobs end up.

Entertainment happens to be at least one sector, where due to 'Point #1' (i.e. culture), there's wide recognition of the need to support it via non-market forces, so at least there's that. But really the same applies to any sector.

If we really think that we should just all enjoy Marvel and Netflix - and that's that - well then all of that is fine - but it's such a hugely narrow aspect of creative output.

Finally, the true globalization of the industry has seen the biggest budgets move towards ever dumber films. Fast and Furious, Transformers ... they have to appeal not not just to 'working class Americans', but to 'the global working class' which is barely literate, and of course they're from diverse cultures so there's a lot less to draw upon for cultural reference. 'Transformers' , 'Godzilla' etc. are basically giant action sequences and that's it. Of course that's totally fine - but they suck up the budget and attention of other potential works, which don't get made. So ironically, this problem has manifested itself even for the 'Large Open Economy'.

For your reference, here are quotes from a few dozen industry luminaries on that subject [1]. It's a good read.

[1] https://www.nytimes.com/interactive/2019/06/20/movies/movie-...

[fomine3]

There's no import tariff for importing cars in Japan, and regulations aren't special (except Kei cars) but US cars aren't sold well (Except Jeep?). It's just because US cars/brands aren't attractive or not practical in Japan market (or Japan market is not attractive for US makers to invest). German cars are somewhat sold well despite expensive and not more practical (There's no Autobahn, max speed is recently increased 120km/h from 100k in new highway) compared to domestic cars.

[908B64B197]

> Perhaps the government doesn't like foreigns tapping Canadians' communications?

As if foreign countries needed to actually own the infrastructure to tap it [0]. All they need is to have employees inside with double allegiances [1] [2] [3]

[0] https://www.theglobeandmail.com/politics/article-canada-now-...

[1] https://www.bloomberg.com/news/features/2020-07-01/did-china...

[2] https://nationalpost.com/opinion/john-ivison-csis-right-to-w...

[3] https://www.justice.gov/opa/pr/former-raytheon-engineer-sent...

[project2501a]

> (a commodity really)

you mean a utility, right?

[908B64B197]

Both really.

Once a location is served by more than one provider, it becomes a commodity (who can sell packets the cheapest).

[bpye]

In many locations, essentially once you get outside of major cities, it is not economical to run more than one line to each property - telecoms often ends up a monopoly, similar to power distribution or water supply. You can lessen the effects by having the physical infrastructure owned by a different entity to the service provided - like in the U.K. with BT Openreach for example, and in that case maybe the service is a commodity - but I don’t think the infrastructure ever really is.

[midasuni]

Wireless, satelite, cable in own ducts, fibre through sewer.

There’s multiple ways to deliver ip packets to a property in the country.

A better solution could be to have ducts to run whatever owned by the council and available on a RAND basis - sane way roads are, but it’s not essential for competition.

[InTheArena]

Canada did prop up this program for quite a long time. It never achieved its sales goals. Moreover the money that they dumped into it was ruled illegal by the WTO. In true Trump fashion the White House overreacted and put 300% tariff to kill the program. Airbus rescued the program.

[908B64B197]

> Canada did prop up this program for quite a long time.

Like every other aerospace company

> It never achieved its sales goals.

Looks like they have years of backlog. And the whole program is profitable. They landed Delta as their North American launch customer.

> Moreover the money that they dumped into it was ruled illegal by the WTO

Wasn't it overturned?

[jollybean]

The comment about 'Canada blocking foreign investment out' is basically not correct.

Also, Telecoms, Banking and Communications are protected industries in every country, Canada is not special there.

If Canadian Telecoms Bell, Rogers and Telus went up for grabs, and even if Canada realistically had the same access to US markets - do you think Telus would be buying AT&T? Or the other way around?

It doesn't matter 'how well run' Canadian telecoms are (I don't think they are, but even if they were) - or how poorly US firms were run. The 'big' would eat the 'little'.

All of the 'good jobs' in Telecom like network planning, research, anything related to R&D, executive management - would go to the US. Canada would be left with 'Customer Service' and some local marketing.

There wouldn't really be that much gain for anyone, the net 'savings' would be marginal, and then, you'd be left with the Canadian government trying to regulate giant behemoths the size of entire sectors of the Canadian economy without much leverage.

That sector is verticalized with Entertainment and so with Bell, would go a whole bunch of TV / Cable stations etc.

Then AT&T/NBC would even more effectively be able to push their own programming, guests (who promote films, books, sports) and further push down anything remotely local towards hegemonic products.

So aside from the not-so-obvious economic advantages, there are quite a few externalities to worry about as well.

America in particular likes to push the concept of 'Free Markets' - because it has tremendous advantage in that context.

'Just Open Your Economy!' is the strategy of a 'Giant Economy' telling 'Little Economies' that 'We Will Devour Everything Of Value'. It's essentially a form of economic colonialism.

Adam Smith isn't exactly wrong, there can be many benfits to both sides, Canada has this kind of 'Gilded Cage' situation wherein it can maintain a very high standard of living by being next to the US, but it comes at the cost of losing the ability to do almost anything exceptional that in any way competes with the US.

The EU is not as unbalanced and they have different national constituents, with longer history and more potent foundational industries. Tiny Sweden makes Jet Fighters (!) which comes out of their cold war Air Force history of independence and a formerly relatively giant Air Force.

That America can have guys like 'Elon Musk' + Space X is a function of a few things, but at very least, it's scale.

The US is a huge market and only certain things can only be done at that scale. Most small countries do not have competitive automakers. Space X is essentially dependent on US Government contracts, at least indirectly.

Second, it's 'much bigger than it's peripherals'. This means that the US sucks all the talent and capital from neighbouring states into it's systems.

Think of the 'Silicon Valley' as not an 'American' place - think of it as an 'International Zone' that happens to be in the US. A 'super cluster' with a giant critical mass of talent.

Right now, arguably due at least partly to the inherent advantage that the Euro gives to Germany - Spaniards, French, Italians etc. are moving to Germany at considerably greater rates than in the other direction. That's where the industrial base will grow jobs from. Peripheral European states that don't manage to found their own competitive sectors will turn into places like Alabama and Louisiana where the talent vacates before it can establish into critical mass.

Third, another major artifact is inequality. Low-end jobs in American don't pay well, and they don't get benefits. The surpluses to the high side of the pyramid are huge. But when you take into consideration the 'off the books' economy, it's massive. California has almost 3 Million undocumented citizens, who are more likely to be young, more likely to be workforce participants, almost entirely working at the lowest end of the labour pool, and definitely earning far sub-minimum wage. Every manual activity from planting, to picking, to trucking, to food preparation and cleaning - everything but the 'front facing stuff' is often fulfilled by people 'off the books' and the consumer and corporate surpluses from that are gigantic. Add to that the downward pressure on wages ... and basically you have a giant wealth transfer machine with enormous surpluses floating into the hands of those with middle to upper class incomes.

Just consider what all of the US stats would look like if we accounted for those jobs, at those wages. What would GDP/capita start to look like, GINI coefficient, other measures of inequality and % 'uninsured', voting rights.

I'm not making a political comment here, it's a problem and a paradox, but pointing out the material advantages to the non-serfdom population.

This excess free cash-flow both on an individual level and corporate level enable so many things to happen, it's hard to fathom. It's so common in America for individuals to have hobbies i.e. drones, cars, travel, tech etc. that are 'really expensive', beyond the reproach of the middle class in other nations.

Relatively cheap energy, wide open spaces and relatively cheap land, especially compared to Europe for example, again, this has all sorts of 'unseen surpluses'.

So those are just a few of the differentiators and of course, there are so many more, it's complicated.

[908B64B197]

> The comment about 'Canada blocking foreign investment out' is basically not correct. Also, Telecoms, Banking and Communications are protected industries in every country, Canada is not special there.

... So they do block international investment. Therefore, the comment is correct.

> Second, it's 'much bigger than it's peripherals'. This means that the US sucks all the talent and capital from neighbouring states into it's systems.

Choosing innovation has the side effect of attracting talent. Other countries can simply compete on perks to retain their talent! I recall Musk, in an interview, saying that he felt going to Stanford was a better use of his time than military service for the (then apartheid) regime.

> Think of the 'Silicon Valley' as not an 'American' place - think of it as an 'International Zone' that happens to be in the US. A 'super cluster' with a giant critical mass of talent.

And yet it's very much in America. And every time you are hearing "the Silicon Valley of X" it's someone trying to sell you something...

[api]

I've come to believe that the most important quality of capitalism isn't markets or some super-human intelligence that markets somehow possess, but simply the ability to bypass stagnant incumbents, entrenched interests, and bureaucracies.

In other words the most critical quality is permission-free innovation.

In all other systems from feudalism to socialism to communism there generally is just one department or agency responsible for each thing, and it's usually either the state itself or some state-blessed entity with an enforced monopoly. If that entity does it's job well, that's great. If it doesn't, tough shit. Nobody can go around it.

This is also why I disagree with market purists about anti-trust. If a private company gets so huge that it is able to occupy an entire market niche for a prolonged period of time, it's important to do something to either break it up or incentivize other entrants. A private company allowed to remain super-dominant in one sector for too long starts to look and behave like a Soviet bureau.

[mlindner]

> This is also why I disagree with market purists about anti-trust. If a private company gets so huge that it is able to occupy an entire market niche for a prolonged period of time, it's important to do something to either break it up or incentivize other entrants. A private company allowed to remain super-dominant in one sector for too long starts to look and behave like a Soviet bureau.

I would say that if a private company gets so huge and can control an entire market niche for a prolonged period of time, they will inevitably stagnate which leaves them open to competition. The biggest problem issue for such private companies is not that they can control entire market segments but that they can lobby the government for regulations that permanently entrench themselves by making competition illegal in some way. The regulations are almost always done in the name of safety (if we don't regulate this then new unsafe entrants who don't follow all our internal practices could enter the industry and kill people). So they get government regulations created that exactly follow the company's own internal regulations. That both accelerates the company toward stagnation (they can no longer update the regulations) and also puts up walls for new competition as the new entrants can't innovate if they have to follow all the legacy processes.

That further gets trade unions/teamsters involved who learned to follow those regulations in trades schools and further act to restrict any improvement as it would kill their jobs.

Them being a monopoly in and of itself is not a problem, as long as we can prevent them from putting up barriers that would protect themselves from competition once they stagnate.

[ianai]

Actually the US declared they were willing to spend money for commercial space flight at the end of the shuttle program. They literally said “I’m a demander for a good/service” and entrepreneurs got to work.