Like The Hub?
Join our community.
Join

Malcolm Jolley: Five New Year’s resolutions for writing about wine

Commentary

I am sure I recently heard a news report on the CBC that explained Canadians (or possibly Americans) had stopped making New Year’s resolutions because we (they) had become wise to the fact that they are rarely realized. I cannot find the source, and the memory may well be false. Or it might be a projection, since I am hard-pressed to remember when I last made a genuine resolution to do something differently as the calendar turned. This changes now!

The school holidays in Ontario mean that, as I write at the turn of the year, we are still taking it easy, family-style, until the 9th of January. I fancy myself like René Descartes exiled in wintry Holland: I am staying with in-laws in the damp and drizzly Grey County countryside and prone to self-reflection. My cogito ergo sum moment is to resolve to do better in this column, and I have the following five ideas about how to do it.

More people

The French came up with the idea of terroir, that a wine had what the American wine writer Matt Kramer called “somewhereness”. This worked well for the French, whose somewheres included Bordeaux, Burgundy, and Champagne, and has been copied by all the other somewheres where wine is made. But surely, the most important thing about any somewhere is the people there.

Contrary to the Natural Wine Taliban (TradeMark pending), wine does not make itself, and the story of the people who make the wine is the real story of the wine. It’s easy to forget this and get caught up in geography, climate, grape variety, cellar equipment, or whatever else and forget about the minds that make the decisions about what ends up in the glass. I resolve to do better at this and bring The Hub readers more interesting stories about interesting people making interesting wines. Maybe it means less how and more why.

More books

The best “work” I had this year was reading Andrew Jefford’s book, Drinking with the Valkyries. If Revenue Canada asks you, I bought the book to write the Hub column about it a few weeks ago; you know, for professional reasons. That it was an absolute pleasure to read, and write about, is simply a happy coincidence… Though in all seriousness, Jefford’s writing reminded me how much my thinking about wine has been shaped on the shoulders of giants like him, and Kramer, Lynch, Olney, Robinson, and others.

There are giants in the making too, writing now and shaping how I think about wine just as much. An overlooked privilege of wine writing is, I think, that those who practice it are forced to intermingle at tastings and press trips. It’s a pleasure to meet the author of a book (in this case about wine) and discover the person who wrote it is as interesting, if not more, than what he or she wrote. I resolve to take advantage of these meetings, past, present, and future to tell Hub readers the stories of others who write about wine, and why.

More food

The story of wine, as it spread from the Southern Caucasus across the Mediterranean Basin and to the shores of the Atlantic, is the story of culture and food. Wine is food, say the French, and they mean it. In North American culture, wine is a drink too, which is fine, but a sip is always better with a nibble, even if it’s just an olive or a potato chip.

I resolve to try harder and more frequently to place wines in their context at the table, especially a Canadian table at whatever time of year we happen to be in. While wine is a pleasure unto itself, it’s also an enhancer of other pleasures, not least gastronomic. The Italians say one never grows old at the table. I will try and remember that wine’s foremost place is there.

1000s of original stories. 100s podcasts for your listening pleasure. Customizable email newsletter. Help make The Hub happen by making a $5, $10 or $15 donation.

More New World

I am grateful for the liberty my editors at The Hub grant me with regard to the subject of these columns. But, with freedom comes the danger of complacency. Looking back, I see my bias, and great love, for the wines of Western Europe. I will confess to a particular fondness for the wines of Italy, and could likely write 50 columns a year just on that subject. But I am not a hedgehog and wish to be much more of a fox.

The world of wine is vast and holds pleasures from all corners of the Earth between the 30th and 50th latitudes. In my old job, my advertising clients were wine importers who represented wineries from across the globe. I resolve to get back in touch with them, and also to follow my own nose, to find out what’s interesting in the Antipodes and South America. Watch out for a report from Argentina, where I plan to be in February.

More Canada

I know we are also in Le Nouveau Monde, but as Thomas Bachelder says, Canadian wines are a bit “Trans-Atlantic”, because of our cooler climate (however hot it gets in the Okanagan). I am with Heather Reisman: my wine world definitely needs more Canada. 2022 was my year of re-engagement with the geography of wine, but most of that happened in Europe. It’s only late in the last year that I began to think about getting back to Niagara and seeing what’s happened on the ground in the last three years. And then, there is Beautiful British Columbia, which is making some of the most exciting wines in the North American West. Stay tuned.

What else? If you would to see more of something or other in these columns this year, please get in with me through The Hub at editorial@thehub.ca.

Robert Asselin: Refocusing the debate on industrial policy

Commentary

Noah Smith, an economist whose commentary I always find original and insightful, wrote a great commentary earlier this week on why China’s industrial policy has been mostly a flop. His main argument—which I very much agree with—is that throwing a lot of public money at firms is the wrong and ineffective way to do industrial policy. 

The current debate around—and the application of—modern industrial policy is a topical and consequential one. As far back as April 2020, in “A New North Star II“, Sean Speer and I argued the Washington Consensus that emerged in the 1980s—centered on “free” markets, liberal trade, and open capital markets—was going to be challenged in a significant way by growing geopolitical rivalries and an increasingly intangible economy. Three years later, the policy debate in most Western countries is now not about whether industrial strategies should be adopted or put forward, but how big these public investments should be.

To us, though, the issue was never about how much we should spend, but rather how we ought to spend. In a late 2021 paper, for instance, we argued for significant institutional reforms to Canada’s science and technology architecture including a new agency with a specialized staff and a high degree of autonomy so as to minimize the risks of bureaucratic inertia and political capture.  

Are you enjoying The Hub? Donate $5, $10 or $15 to support a 100% Canadian perspective on the big issue of the day and get a charitable tax receipt.

The urgency to for Canadian policymakers to adjust their thinking to these new economic and geopolitical realities has only been heightened. The passage of the Inflation Reduction Act and the CHIPS and Science Act in the U.S. last spring was a game-changer. With investments cumulating nearly USD $460 billion, it is, in constant dollars, almost double what the U.S. government spent in the 1960s on the entire Apollo space program. With the U.S. also in discussions with key allies to restrict semiconductors exports to certain markets, it’s clear just how much the new geopolitical rivalries are reshaping economic policymaking and the global trading system. Technological innovation and national security are now inextricably linked. 

In a recent Wall Street Journal op-ed, JP Morgan Chase & Co.’s Chairman and CEO Jamie Dimon—one of America’s strongest champions of free enterprise—wrote:

Global trade will necessarily be restructured so that we don’t rely on potential adversaries for critical goods and services. This will require more ‘industrial planning’ than America is used to—and we must ensure it is properly done and is not used for political purposes…Most developing countries would prefer to align economically with the West if we help them solve their problems. We should develop a new strategic and economic framework to make ourselves their partner of choice.

Dimon’s warning is prescient. It is an unfortunate reality that the historic philosophical debate on the role of the state in the economy is being used by some as a policy and political wedge. After all, markets and governments are not operating in two distinct parallel universes. The demarcation between state intervention and laissez-faire is rarely clear-cut. 

I would argue, for example, that an aggressive economic immigration strategy is a very effective industrial policy instrument. Talent nurtures innovation and innovation increases productivity. It’s a rising tide that lifts all boats. But very few would think about economic immigration as an obvious case of government overreach in a market-driven economy. Every country needs and has an immigration policy and its outcomes are a reflection of policy choices rather than spontaneous forces.

The debate on industrial policy is thus not about whether we need a lot of government intervention or no intervention at all. Instead, it should be about its effectiveness: that is how industrial strategies are designed and what policy instruments are used to achieve them

From my perspective, this is where governments fall short. 

The legitimate and valid arguments against industrial policy

1. Lack of clear objectives: Too often governments confuse industrial policy with the politics of “job creation” or “regional development” or any number of priorities that detract from core goals of innovation and productivity. Political capture is an obvious danger and politicians will often be tempted to promote industries of their liking and influence outcomes to their political favour.

Unless we set higher productivity and economic competitiveness as clear goals for an industrial policy, vague objectives are bound to yield underwhelming results. In a recent Public Policy Forum paper I argued that the modern application of science and technology is the new frontier of economic competitiveness and, as a consequence, Canada needs to urgently rethink its science and technology architecture. In a recent speech at MIT, U.S. Commerce Secretary Gina Raimondo presented a clear, concise, and comprehensive articulation of the American game plan that starkly defines its economic priorities:

We believe there are three families of technologies that will be of particular importance over the coming decade: first, computing-related technologies, including microelectronics, quantum information systems and artificial intelligence; second, biotechnologies and biomanufacturing; and third, clean energy technologies.

2. Overreach and overregulation: Overshadowing market dynamism and entrepreneurial impulses harm economic outcomes. An economy that is overregulated is bound to be less competitive. As the Obama administration’s Strategy for American Innovation rightly noted:

The true choice in innovation is not between government and no government, but about the right type of government involvement in support of innovations. The private sector should lead on innovation, but in an era of fierce global competition, governments can and should play an important enabling role in supporting private-sector innovation initiatives.

Creating the right macroeconomic conditions conducive to capital formation is paramount. This includes the regulatory environment and tax policy.

3. Implementation and execution: At a time when we witness governments struggle to deliver the most basic services for citizens—renewing a passport, receiving health care, etc.—it is only fair to ask whether governments have to ability to formulate and deliver industrial strategies that can be effective. The design and implementation of policy instruments (such as tax incentives, R&D funding, and demand-side levers such as public procurement) requires a degree of sophistication and thoughtfulness. When the right structures and incentives are put in place, the evidence shows that success is possible

The shaky arguments against industrial policy

If some arguments against industrial policy are valid, others are easier to dismiss. 

1. The free-market argument: There is a somewhat romantic and prevailing view amongst certain economists, columnists, and policymakers that market fundamentalism—laissez-faire economics inspired by a caricature of Adam Smith’s “invisible hand”—is supreme. Under this ideological bent, free markets’ “efficiency” is everything we should aim for. The problem, of course, is we all know markets have never really been “free” and “efficient”, nor will they ever be in the future. In his BBC Reith Lectures in 2020, Mark Carney offered a powerful demonstration of how market fundamentalists have failed to recognize that the economy isn’t “deterministic.” As he astutely pointed out, in any given market competition is never perfect, and consumers and market players are not rational actors. Markets are always constrained and shaped by regulations, competition policy, or tax policy, and, yes, by trade and industrial policy. 

I underline this not to undermine the value of economic theory, but to infuse some pragmatism in the current conversation on industrial policy. To state the obvious, the idea that the market is always right is fundamentally flawed. If this was true, as Carney rightfully observed, it would have been easy to prevent the great financial crisis of 2008 that caused millions of Americans so much economic hardship.

2. Industrial policy is central planning of the economy (the China model): Another common criticism of industrial policy is that it consists of “central economic planning” and even amounts to essentially adopting the Chinese model in Canada and elsewhere. Yet in liberal capitalist economies, even if industrial policy is solving for market failures (e.g., climate change) or prioritizing national security issues (e.g., biomedicine or semiconductors) the ultimate investment, innovation and production is still being driven by the private sector. In China, by contrast, there is essentially no private sector in China. Everything is state driven. The comparison is absurd. 

3. Industrial policy equals “subsidies”: As I expressed up front, I agree giving subsidies to private firms is the wrong way to do industrial policy. But there is a certain intellectual laziness—or a fair amount of bad faith—by those who keep portraying industrial policy exclusively as “subsidies”. An equivalent assertion would be to say tariffs equate trade policy. It’s one (mostly negative) feature of trade policy but it’s not all of it. When I think about industrial policy and where it needs to go, I reflect on the immense economic successes of the Apollo Program, the ARPA model of funding breakthrough research in the United States, and the Fraunhofer institutes in Germany. I think about South Korea and what they did in advanced manufacturing or how the Netherlands, a country about half the size of New Brunswick, became an ag-food powerhouse.  

These are compelling models of public-private collaborations that have yielded significant productivity enhancement for national economies. Policy design and policy instruments matter a great deal. A May 2022 OECD paper on the effectiveness of certain policy instruments used in industrial strategies concluded that some are quite effective. 

4. Governments don’t know how to pick winners: It’s certainly true that they don’t at the firm level. But people adopting this line of argument miss the larger point: yes, the sectoral composition of an economy matters a great deal. 

As our economy suffers from a chronic lack of productivity and our trade deficit is in danger of becoming structural, the capacity of our economy to produce goods and services becomes paramount. Canada has become a services/real estate economy. We have lost significant manufacturing capacity since the 1970s. In 2020, for instance, residential investment represented 37.2 percent of gross fixed capital formation.

In Potato Chips, Semiconductor Chips: Yes, there is a difference, Rob Atkinson makes a strong case for that not all sectors are equal when it comes to industrial policy. His main point is that some industries, such as semiconductor microprocessors (computer chips) can experience very rapid growth and reductions in cost, spark the development of related industries, and increase the productivity of other sectors of the economy. There are, in other words, certain sectors or productive capacities that are worth having in one’s economy and justify using public policy in order to cultivate. As Atkinson puts it: “In essence, spillover effects from computer chips make potato chip manufacturers more efficient. In addition, jobs producing computer chips have higher productivity and require a higher skill level and thus pay more than jobs producing potato chips.“

As for the trade deficit, by the time the pandemic hit, Canada had recorded 11 consecutive years of current account deficits. As David Dodge stated in a PPF paper: “The current account deficits can also be seen as the inevitable product of Canadians and their governments choosing to borrow to maintain a high level of private and public consumption rather than finding ways to generate national income through added production.”


The question then becomes: how best can a government support these types of advanced and more productive industries? I agree subsidies to firms is not the way to go. This is why focusing on how you translate public R&D into economic outputs must become a clear economic imperative.

Again, the examples of the Netherlands in ag-tech, Germany in advanced manufacturing, and the United States in defence and space in fostering industrial public-private R&D at scale and commercializing speak volumes. I have argued elsewhere that Canada needs, as a key component in an industrial strategy, a modern incarnation of what used to be corporate labs—where industrial research done in collaboration between governments, universities, and businesses led to real innovation at scale in the economy. 

In his new book, Slouching Towards Utopia, economic historian J. Bradford DeLong writes:

What changed after 1870 was that the most advanced North American economies had invented invention. They had invented not just textile machinery and railroads, but also the industrial lab and the forms of bureaucracy that gave rise to the large corporation. Thereafter, what was invented in the industrial research labs could be deployed at national or continental scale. Perhaps, most importantly, these economies discovered that there was a great deal of money to be made and satisfaction to be earned by not just inventing better ways of doing old things but inventing brand-new things.

A final point: democratic governments are bound to make decisions on what they believe is best for the voters they are elected to represent. Our parliament has passed net-zero legislation. We’ve effectively set a political economy goal that markets alone won’t solve for because of the uncertainty and the risks involved. One can argue, I suppose, that we shouldn’t set such political economy goals and that what we produce, buy, and sell should be left fully to market forces. But no economy in the world operates that way or has ever operated that way.

And so, from time to time, we are going to have political economy goals that go beyond what the market will produce on its own. In these instances, we need to think carefully about how to incentivize the market to do what is required for the public good. That will necessarily involve some form of industrial policy.