All’s not lost, Ontario. The future is green, not black – by Thomas Homer-Dixon (Globe and Mail – April 7, 2012)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

Thomas Homer-Dixon is director of the Waterloo Institute for Complexity and Innovation and CIGI Chair of Global Systems at the Balsillie School of International Affairs in Waterloo, Ont.

Ontario, we’re told, is Canada’s new rust belt. The high dollar is pummelling the province’s exports. Big manufacturers are fleeing. The Liberal government is slashing spending to maintain the province’s credit rating. And to top it off, it’s wasting money promoting green energy. There’s just one problem with this pop wisdom: It’s largely nonsense.

Ontario certainly faces huge challenges. Its main trading partner – the United States – is only now emerging from the economic doldrums that followed the 2008-09 financial crisis. And since that crisis, the world economy has been struggling with depressed consumer demand, wary investors and aggressive deleveraging by households, businesses and governments.

Ontario wasn’t ready for this new reality. From the early 1990s to the mid-2000s, a weak loonie made Ontario’s products artificially competitive outside Canada, so companies deferred investment in new factories and technologies. Then the dollar soared, partly because of Canada’s relative fiscal probity and partly because the world wanted Western Canada’s resources. Ontario’s manufacturers were caught in a low-productivity trap.

Add in an aging population with rising health costs, the flight of talent and capital to the West, and a decline in the skills of immigrants, and who wouldn’t be gloomy about Ontario’s prospects.

But hold on. Isn’t it possible that this challenge is exactly what Ontario needs? Societies and economies never undergo deep change without powerful incentives, and powerful incentives usually come in the guise of crisis.

Ontario has formidable assets. Its population is big, diverse and well-educated. Most of its people live in a relatively compact region that has very good, albeit sometimes tired, infrastructure. This region thrusts downward into the United States, providing close geographic proximity to the giant economic hubs of the U.S. Midwest and Northeast. And the city of Toronto has a phenomenal concentration of business acumen and financial capital. In fact, as a financial centre, it ranks third in North America and ties with Sydney, Australia, for 10th place globally, just behind Zurich and ahead of Frankfurt and Paris.

But in a world in economic turmoil, Ontario’s most important asset – its network of excellent public universities and public colleges – is often overlooked. The province has one of the planet’s densest concentrations of institutions of higher education. If effectively employed, it could help Ontario pivot to confront the global economy’s long-term trends.

The most important of these trends is a multi-decade shift from fossil fuels to carbon-free energy. The shift will accelerate as oil becomes harder to produce and climate change worsens. Once climate change really starts affecting people’s lives – when it cuts world grain production, for instance – people will demand action. The action will come in the form of regulations and taxes that raise the price of carbon fuels.

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