The Paul Wells Show - Hoodwinked by Big Paderno

Episode Date: November 6, 2024

Canada is full of corporations consolidating market power, from grocery stores to internet providers to movie theatres. And people are starting to notice.  Sometimes it’s obvious, and sometimes less so. Paul was surprised, for instance, to find luxury cookware brand Paderno at Canadian Tire – until he realized it’s one of many brands that Canadian Tire owns.  In their book The Big Fix, Vass Bednar and Denise Hearn talk about how markets in Canada became increasingly dominated by a handful of huge companies, why it harms us, and what to do about it.  Season 3 of The Paul Wells Show is sponsored by McGill University’s Max Bell School of Public Policy.

I want to say a word about the people who are supporting this podcast. McGill University's Max Bell School of Public Policy is committed to the research, teaching, public outreach, and practical advocacy of sound public policy, grounded in a solid understanding of the overall policy process, with all its imperfections and limitations. With their one-year intensive Master of Public Policy program, they teach a principle-based design of policy solutions to important problems. Learn more at mcgill.ca slash maxbellschool. Welcome to Consumer Choice in Canada, Winston Smith thought as he took another swig of victory gin and lit another victory cigarette. This week, the early trust busters called these companies like octopus, right? And they used to create these great early drawings of the octopus

tentacles sort of going into every fragment of your existence. Two policy wonks on competition in Canada, which is one more wonk than you're going to find down at the policy store. I'm Paul Wells, the Max Bell Foundation Senior Fellow at McGill University. Welcome to The Paul Wells Show. Welcome to The Paul Wells Show. Suddenly, competition is a hot topic in Canada. I keep reading articles and books about how few choices we have as consumers, how much it feels like we're getting railroaded by the companies that are supposed to offer us selection and competition.

Whether it's groceries, banking services, or even the movies we see and the concerts we go to, it feels like Big Brother is making most of the decisions for us. At a time when costs have been rising, that matters more than ever. The best book I've read about all this is The Big Fix by political scientists Fass Bednar and Denise Hearn. In only 100 pages, it goes into more detail than you could have imagined about all the ways successful companies manage to avoid real competition, while government struggles to keep up.

Bednar and Hearn make a good case that the Competition Act, which took 15 years to pass in the first place, is nowhere close to being up to the task of pruning back the forest of market unfriendly behaviors. They say the whole federal government is going to have to work hard to give ordinary people their rights back. I have to say, the thought of any government trying to do that doesn't fill me with optimism. Vast Bettner, Denise Hearn, thank you for joining me.

Thank you, Paul. Thanks for having us. One of the many interesting charts in your book is one that tracks online uses of competition-related language. Why it's interesting is it confirms an impression I had, which is that suddenly everyone in Canada is talking about competition. Why on earth would they be talking about competition? Suddenly, everyone in Canada is talking about competition. Why on earth would they be talking about competition? I think a lot of people started talking about it in the pandemic when we sort of saw a growing mistrust of firms, right?

And accusations of greedflation and more attention to pricing fluctuations and kind of escalations. So I have to wonder if the pandemic kind of accelerated our conversation in some way. Denise and I kind of joke that people are often talking about corporate power and how they experience it, but they're not necessarily using like the technical language that the Competition Bureau might set up a Google alert for, right? No one's talking about Section 92 of the Competition Act, but they are talking about how much it costs them to travel with their cell phone or that there are less chips in their Pringles can, stuff like that. Okay, I should tag voices because our listeners don't have video. No, keep some mystery.

That's Vas Bednar, who is the Executive Director of McMaster University's Master of Public Policy and Digital Society program. Denise Hearn, down at Columbia University, how did you and Vas start working on this project? So Vas and I had collaborated a few times already, actually, on competition-related matters. I think we maybe unofficially met on Twitter, started following each other, had a sort of mutual admiration for each other's work. And I am Canadian, but I live in the US now and had been working on antitrust and competition policy stuff here. And, you know, these circles are pretty small. There's only a handful of us that, you know, we're writing about, thinking about working on competition policy stuff in Canada. And so that's how we got connected. And then the book's origin was basically that McGill-Maxbell Public Policy School had been given an endowment to pick an author once a year to write about something that was substantial for

Canadian economic policy. And the first book was on climate change. And then the director, the former director, actually had read my previous book, The Myth of Capitalism, and thought, wow, Canada also could really use a competition book. And, you know, he thought, well, the two best people to write this book are Denise and Bass. And so that's how we were selected and took on this project together. It's funny, because one place we could talk about lack of competition is in public policy philanthropy, because I am the Max Bell Foundation Senior Fellow at the Max Bell School. Congratulations.

I'm here to talk to you about your Max Bell lecture, which is published on Sutherland House, which is also my publisher. Self-preferencing, baby. Everyone's doing it. And you start to discover sort of anti-competitive practices under every leaf and pebble once you start reading this book. One of the early cases that you discuss is Cineplex, my neighborhood movie house, and it turns out just about everyone else is in Canada. Talk about the Cineplex case and then give me some indication of what it represents for Canada's economy. Yeah, so Cineplex is really fascinating. It's kind of one of the hidden monopolists in our backyards coming to a theater near you.

It has about 75%, if not a little bit more, of the theater cinema, movie cinema, movie theater market share in Canada. But it's not just the size of the company, it's how they can control and influence access to film for all sorts of movie theaters. And previously, we hadn't really considered how does a movie get to a movie theater? maybe that's my own like naivete or I missed some sort of lecture or class but I kind of thought like an independent cinema like I'm here in Hamilton right now it would be the Westdale theater kind of down the street really had autonomy right that selecting a film was like going to blockbuster used to be for us but it's not cineplex is able to exert a particular

control where it influences distribution in that regard. So it can kind of hoard some of the best, most profitable releases for itself. It can delay access for other movie theaters or bar them from getting it at all. It can also force them and sort of say, you can only get the Paul Wells movie if you also play the Vas Bednar movie that nobody wants to see. And Cineplex has been in the news recently, right, for a drip pricing case where the Bureau said, actually, you are engaging in false misleading advertising because you have to pay $1.50 to book your movie ticket online. And that goes to your earlier question, like, why are people always talking about competition? Maybe

they are saying the word competition more often, but, you know, some people are talking about how annoying or kind of deliberately mischievous and misleading it is to force you to pay an extra $1.50, right? The Bureau said that the price that Cineplex was advertising was fundamentally unattainable online. The second, or actually now this is the third kind of intriguing element of Cineplex, is it's kind of experimenting with surge pricing, which I think we all love to hate for good reasons. But with some theatrical releases, they've added an extra dollar or two at opening weekend, right? And you could argue that privileges the film. You could also argue

it privileges them and sort of penalizes loyal movie fans who want to kind of help make that opening weekend profitable. I'm sure I'm missing a lot, so I will turn it to Denise, but we found when we kind of got deep in the creep that Cineplex initiated some antitrust work before the Competition Act even existed. So it was at the provincial level. And it's because they were disappointed that a company named Cineplex Odeon, if you remember those, was kind of the monopolist of the day. So back to what does it show us?

Other than access to markets, sometimes there's an element of everything old is new again, where we've kind of been talking about these issues for quite some time. So one of the issues that you discuss is companies that are becoming sort of tentacular and... That's a good word. Yeah. That's such a good word. Tentacular? We're stealing that. Yes. It comes from the Latin. It means many tentacled.

Well, the early trustbusters called these companies like octopus, right? And they used to create these great early drawings of the octopus tentacles sort of going into every fragment of your existence. So to Vas's's point, like, you know, everything old is new again in so many ways. And then it gets to the point where simply opening up some of these fields to new entrance to, you know, enable greater competition, first of all, is difficult to envisage. And secondly, it doesn't seem like it would get to the root of this complex problem. That's exactly right. I mean, one of the projects I helped initiate was called Access to Markets.

And we spoke to entrepreneurs in every industry imaginable. We spoke to farmers. We spoke to independent pharmacists. We spoke to high-tech Silicon Valley entrepreneurs. We spoke to CEOs of multi-billion dollar public companies that were going up against the Googles and the Metas of the world for patent infringement and so on. And what was fascinating is that despite the real political differences, despite the sector specific differences, everyone could sort of identify one gatekeeper in their industry that was making it

incredibly difficult for them to grow and scale their business or was actively throttling their business in some way. And that is one of the key things that we want to bring forward in the book, because when we think about productivity, we think about innovation, we think about, you know, the kind of future growth prospects of a country that comes from new business formation, you know, new job growth that comes from new innovations, being able to reach the market. And there's many things, of course, that go into commercializing IP and making a business successful. But if you can't even access markets, like first you have to access capital, which is hard enough. And then if you can't access markets in ways that allow you to grow and scale your business, it's going to be really challenging. So we think that that is a

core component. And also to your point, you know, when more of the innovation or more of the kind of entrepreneurial ecosystem is controlled by just a handful of players, like how does a startup compete with an everything company? How does a startup compete with an everything company? How does a startup compete with Amazon that has free cashflow that it can pull from its 12 different business lines to plow into ever expanding, you know, sets of industries and experiments. And they've got a whole corporate venture capital team and all of that. So it's, it does make it more and more challenging. And that's why we do think that in certain instances, the kind of real structural sledgehammers are needed to break open markets

where regulators need to be much more interventionist and maybe actually break up, you know, a company or two, structurally separate them and so on to kind of get markets back, like unlock them, you know, from these kinds of strangleholds that some of the businesses have on them. Paul, I, I would say I'm kind of the meme Lord of the book. Sorry. I know you want to ask us a different question. And Denise is kind of always reminding me, like, don't speak in memes and like internet lingo and like micro root yourself. But I want to tell you one, which is, okay, what is this from? You think, you know, but you have no idea. Like, what is that? Is that just a cliche? That's from something, right? Like a game show or something? I'm not sure. I am not sure where it's from. Okay. But that's something we're trying to

bring through with the everything companies that we talk about are Canadian and are in our backyard and are so familiar to us that it's almost comforting, right? We know these stores, we trust them, we think we understand. So for example, we talk about Canadian Tire. Of course, we talk about Loblaw. We talk about The Bay, right? We talk about TELUS. And these firms have evolved in such fascinating and important ways that the quote-unquote big fix of just adding one more competitor or bringing in a foreign competitor isn't going to reshape or dent the structural realities of how the firms have evolved. I'll be Googling, you think you know, but you have no idea.

I just did, Vass. It's from... Okay, thank you. The power of a co-author, the power of a co-author. It's from some sort of MTV show from the early 2000s called Diary. Perfect. Perfect. Deep cut. Thank you. One thing that encourages this phenomenon of thinking you know and having no idea is that a lot of the products that are sold in some of these retail outlets that have a bunch of different brand names are actually emanations of this tentacular mother organization, if we can put it that way. In other words, they're stocked themselves with stuff that make it look like

there's an active market going on, but they actually own all the product lines. Absolutely. That's what we remind people sort of is the illusion of rivalry and a way that we feel we're pantomiming competition in the country where firms know that this is happening, but they're not necessarily going out of their way to be super proactive to disclose to us which brands they own. Now, sometimes they do, right? Some are very familiar to people. For instance, the No Frills No Name brand is kind of iconic, right? That highlighter yellow, the black letters. But other times it's, I don't have a word that's as good as tentacular, but it's just like a little bit sneakier. And again, it obscures that one

company owns that marketplace and operates within it, creating a particular cost and disadvantage to other retailers that are jostling for shelf space. I mean, we were truly amazed at like, you know, that discovery for us when we were researching. I had no idea that Canadian Tire has 30 different private label brands as an example. So like when you go into Canadian Tire, you know, a huge percentage of the stuff you see there is stuff that they own. All three tool brands, including the battery that powers them, right? Like at all three price points. I was pretty impressed that I could get Paderno, the excellent cookware brand at Canadian Tire. And then I was a little less impressed. I own Paterno.

Yeah. Canadian Tire owns Paterno. That's... Yeah. We've outed you. Big Paterno got to you. Yes, that's right. I am a slave to Big Paterno. How did it get so bad? Here, let me substitute or propose the impression I get from reading your narrative, which is that these companies are just moving far faster than government's ability, or to some extent, government's interest in keeping up with what they're doing. Part of the historical rationale we found, and this is like recent history, so I'm using that word creatively, towards this push towards private label brands

was actually as a way to buffer or buttress companies against Amazon. The business rationale that was offered is, you know, we have to create ways for customers to come only to us. Despite the growth of e-commerce, despite, you know, globalization and kind of the world at our fingertips to kind of click and shop online. That's part of the origin,

but I think it's harder to account for the consumer's blindness and lack of appreciation for that. Well, and maybe, I don't know if you were asking like the bigger kind of question beyond just private labels, how did we get in the totality of the tentacular mess? We do point to a few things, one of it being really paradigmatic in the sense of, you know, that for the last 40 or 50 years, we've been under this sort of neoliberalist idea that the best thing that government can do is take a hands-off approach, get out of the way, cut the red tape, and not see itself as actively shaping and creating the conditions of commerce through effective regulation, you know, effective legislation, market making. You know, the state makes markets. Companies don't exist without the state. They're given their right to operate. And so part of it is that, and that we've had kind of really weak regulatory regime in Canada where we haven't blocked that many mergers. Historically, our competition bureau has never blocked any mergers. Thankfully, Vast and I see that changing, which is, it's an exciting time to have this book out and to be in conversations because we do think that there's a moment of opportunity.

And just to keep it wonky, you know, around 1998, 1999, same time I was watching that much music show or VH show that I think thinking that I knew, but I had no idea. Permissionless innovation was an explicit policy direction, right? It wasn't just the unspoken kind of vibe. That was the direction that the U.S. direction, right? It wasn't just the unspoken kind of vibe. That was the direction that the U.S. took, right? So to grow tech companies, we literally were like, let's look the other way, close our eyes, see what happens, hope for the best, because we want to innovate so badly. And now I think everybody, every regulator is forced to reconcile with that and kind of understanding new challenges, new challenges that data-driven companies bring up, right? What it means when the price of something is your privacy, but you're getting something for free. Like these are

newer questions that are interesting and sort of captivating, but certainly characterize not just where we are in competition, but kind of the tech lash and the end of that techno-optimism that saw some great gains, specifically in the U.S. too. I know I'm jumping back and forth across the border a little bit, but do you think this explains why Silicon Valley has been so bullish on Trump? Because whatever else he would do as president, as we speak, we don't know whether he will be president again. He sure doesn't have the attention span to go after a lot of these practices. Well, what's interesting is that actually there's more sort of bipartisan alignment in certain aspects of the antitrust agenda than is appreciated. And Trump actually initiated

some of the big tech antitrust cases under his presidency. So he filed the first case about going after Facebook. I think they also filed a Google case that the current administration has carried forward. So conservatives also want to break up big tech. They might have different motivations. They think they're censoring conservative voices as an example. But you have seen also in the U.S.,

what's interesting is we have what's called like a federated approach where state attorneys general can bring antitrust cases so they can also bring cases under the federal laws. And you've seen numerous multi-state coalition cases where you have bipartisan support to go after, you know, particularly tech, but also agriculture and pharmaceuticals and so on. So there's actually a lot of cross-party alignment. And, you know, J.D. Vance, Trump's running mate, has voiced his support for Lena Kahn and said that he thinks that she's, you know, one of Biden's best decisions and best appointments. and said that he thinks that she's one of Biden's best decisions and best appointments. So the easy lines of the past are not as true anymore. There's a complication in this area because it's populist to go after concentrated corporate power and you can have populism on the left and you can have populism on the right. And so sometimes they intersect in interesting ways. So let's hop back over the Canadian border into Canada. Where's the natural political market

for the kind of sustained full court press against anti-competitive acts in the Canadian context? I mean, I'm thinking of what we've seen recently and what we saw when grocery prices were a substantial source of political grief for the federal liberals, we had Francois-Philippe Champagne sort of exhorting the grocery chains to be nicer and pleading for some other entry into the market from outside the country and with, as far as I can tell, nothing to show for it. Are the Liberals or the Conservatives making the kind of sounds that you would find encouraging on this file? You know, we are very encouraged. I wonder if where the parties differ is on their, you know, framing and the diagnosis of the problem. But we see, you know, alignment and support. And as

Denise mentioned, cross-partisan support for recent legislative changes to the Competition Act. So over the past couple of years, there's been lots of, you know, very important, some minor, some major changes to this one core piece of legislation that Denise and I are sort of being greedy monopolists about and saying this is just the beginning of work. It's not the end. Uniquely, I mean, the conservatives do have a shadow minister for competition, Ryan Williams. That's unique, right? Though you do see Pierre Polyev talk about government-protected oligopolies more often than you hear him talk about gatekeeping in the sense of, you know, a digital marketplace behavior. In the last budget from the Liberals, we saw a whole chapter basically under the frame of fairness for every generation

starting to look at pricing fairness and junk fees and affordability, focusing on telecom and groceries. And then we've seen some pretty interesting proposals from the NDP as well, proposals from the NDP as well, right? So yeah, in terms of where the natural home is, I think part of the opportunity for Canada is that we haven't taken advantage of our federalist structure to kind of ask more and demand more from the provinces and other orders of government in terms of identifying tangible and practical interventions. Just today, the Competition Bureau is advising against pharmacy benefit managers. I know before I had like pop culture references, and now it's like this is Bass's like intellectual home is shining through. But I mean, Quebec is the only province that says insurers need to be more, have more distance and be more divorced from

insurers. You shouldn't have exclusive agreements or kind of integration. Ontario is consulting on that. Is that one decision in and of itself revolutionary? Is it going to remake Canada's economy? No, but it's part of the direction of us being very clear and taking positions on what's appropriate and what's not to kind of prevent the powerlessness that we see increasing in many sectors of Canada's economy. The title of your book kind of does double duty. The title of the book is The Big Fix. It talks about a widespread phenomenon of fixing prices and fixing markets to the advantage of incumbents, but it also proposes at the end a series of measures that

would fix this situation. What would you advocate to get us out of the mess that we seem to be currently in? Can I say that it also does triple duty? Holy cow. It's tentacular. Yeah. Because one other little thing we wanted to kind of throw in there is that we tend to hear these quote unquote big fixes so often in conversation, whether it's adding a foreign competitor or ending supply management of our dairy products. And, you know, Vas and I sort of think like these are not the big fixes that they're made out to be. And so our fix really is this notion that you can't leave it up to consumers. You know, they can be great for sort of surfacing problems where they exist. whole of government approach, not just the competition bureau, but every ministry taking their own sense of responsibility for making sure that markets are functioning well. You know, that doesn't mean more red tape. Side note, Bass and I had like found out when we were researching that red tape, because I was like, where does this, where does red tape as a phrase even come from? And we found out that out that you know hundreds of years ago that they actually used to bind important documents with red thread to signify that these were really

important files that needed to receive immediate attention and so we found it ironic that it was like actually an early government intervention in streamlining and it was like an efficiency enhancing way of making decisions that now has come to symbolize just like bureaucracy. But anyway, so we're not advocating for that. What we want is, you know, is every ministry and every province seeing itself as part of this solution because, you know, every ministry has its own sectoral expertise. They understand the kind of deep structural components of their industry. And what we saw under, again, under that executive order in the U.S. was that they created a competition council where the heads directives that each agency had to take on that was part of, okay, how are we going to make sure that you're considering competition when you

do your policies and that you're actively using the full remit of your statutory authority to go after anti-competitive practices where they exist. And we want to see something similar in Canada. That's our biggest of the big fixes. But, you know, Paul, I know you appreciate journalism and you have this incredible career, but we're hopeful, and a couple of people have, like, scoffed at us for this, and I get it, that with more dedicated reporting on corporate power in Canada,

that that's part of democratizing the future, right? That's part of better policy responses. And, you know, people sort of say, oh, you know, there's no resources here or Canada is so much smaller. But increasingly, it is journalism that is helping propel really responsive policy changes. A little story in the Halifax Examiner from last year about Sobeys disciplining a tenant, Dollarama, and imposing a restrictive covenant and saying, yeah, you can be in our real estate because it's a grocery store, but also a real estate company, but you can't sell bread. A lot of Chris Haney's work at the Globe and Mail has driven some recent investigations and policy work on pharmacy and insurance

elements. So we want to put forward how much that's a part of the future and that we haven't had enough of it in the past to kind of make these issues top of mind and help translate and speak about them. You'd need there to be political advantage in a much more aggressive government action. Because the kind of stuff you're proposing, where every minister thinks of themselves, at least partially, as a minister of competition, and where there is stuff like a citizens assembly on competition, where a freestanding, non-governmental body

keeps generating suggestions on this, that's a whole sea change from the Canada that we're living in now. I mean, I had Alexander Posadzki on last year to talk about a fantastic book, Rogers versus Rogers, about infighting in the Rogers family. And the background source of drama

in the whole thing is is this was all happening while they were waiting for regulatory approval for the huge Rogers-Shaw merger. But it was fake drama because in a million years, the government was not going to block the Rogers-Shaw merger. Not for lack of trying, right? Commissioner Boswell really went to the wall for that, not for lack of trying. I mean, look, Paul, some of, what do you say, sea change? I mean, I think it's about riding the wave, right? If Deputy Prime Minister Chrystia Freeland can deliver on minimizing or eliminating junk fees in banking, that's a competition win. When the CRTC mandates more access to broadband infrastructure.

That's a competition win. But Canada's not talking about these things in that way. We're not packaging it. We haven't reasserted our vision for what the role of the state is in making and keeping markets free and fair. Again, to those provincial wins, they're modest in and of themselves. But in aggregate, I do think they're powerful. If I can shout out Quebec for a second, because I already mentioned that province. They're the only province that mandates per unit pricing on labels, okay? Is that revolutionary? No. But it really helps people. It helps them

when they price compare. Increasingly, sometimes the price of like the jumbo version of detergent or whatever is actually more expensive than the smaller version, which is counterintuitive, right? Again, these are small things, but they go back to restoring trust because the trust between consumer or citizen and corporation is so low right now and so fragile that it also kind of spills over to our mistrust of the state for its inability to police us and sort of protect us from not just big companies abusing their dominance, but these newer or just more ubiquitous business practices that disadvantage you and I. You're right about one thing, which is that Pierre Pauliev senses political advantage in standing up for the little person against the behemoth. That is a long way away from the sort of, or at least in affecting that posture, we'll see whether

Pauliev government would follow through. But that's a long way from the old, what's good for General Motors is good for the USA attitude that has sometimes been popular in conservative circles. He's almost the opposite. He only ever goes to Bay Street so that he can insult whoever invited him to Bay Street. And that suggests a political sensitivity to where the advantage is. And then, yeah, it's sort of like, can you turn that political talking point into a structural agenda that

actually delivers those wins for people? Right. And that's, that's kind of where the rubber meets the road. And to your point, you know, it's not always politically expedient to go up against, you know, the largest, most powerful, most deep pocketed interests in the world. In some cases, it requires a real vision for what you're trying to accomplish through doing that. And, you know, I think Vassa and I also try to say, like, we're not against big companies. And we don't think that scale is necessarily a bad thing. But, you know,

certainly in Canada, we've had an above average sort of exemption for our largest incumbents. And in some cases, they're protected by regulators, you know, protected under the sort of national champions idea. And our core contention is like, is that going to produce the kind of economic gains for Canada into the future? And is it also going to position us well internationally? And we don't think so. There's a whole agenda here that you can also kind of have multiple wins at the same time where you're delivering better outcomes for consumers and workers while also, you know, spurring more innovation, kind of unleashing markets in different ways through this agenda. But, you know, we have to hear those talking

points actually become like a real policy agenda before, you know, anyone should be convinced that that's the stance. What are the stakes for individual consumers and citizens in this fight? I think people often point to price. It's a very important entry point to these conversations. But again, when we're discussing or debating price, we are fundamentally talking about power and market power. To the extent that we can expand and kind of recalibrate the competition conversation a little bit, I think we'd be careful to include workers and also entrepreneurs in that kind of set, right? So workers can be unnecessarily constrained by market power, their mobility,

their wages, their ability to organize. Entrepreneurs are disadvantaged by their inability to access markets or capital, as Denise was saying, and kind of fundamentally deterred, or they can be kind of vaporized through a killer acquisition that looks awesome on paper and makes a headline and then kind of removes competition, you know, minimizes it. In terms of what's at stake, I would point to that anchor that Denise mentioned as well, right? Public anchor kind of at a boiling point. Ira Wells said it really well. Who is that person related to you? I heard they were cousins. Is that a Froomer? Okay. So distant, distant is cousin. Is that a Frumer?

Okay. He's a distant cousin. He's also on Sutherland House. Oh, my gosh. Look at us. Well, he said it really nicely, I thought, in a recent Walrus piece where he said we're entering this new era of consumer anger. And it's kind of like where is it going to go, right? How do you make it productive? So in terms of what's at stake, I think freedom is a really important frame in terms of choice, in terms of mobility, in terms of access. I think our pride as Canadians is sort of cannot get away from, right? Even people who were part of the

viral Loblaw Reddit, Loblaw is out of control, found themselves forced to go to their drugstore or one of their supermarkets. So sometimes in how numbers show up, right? We take, though people can kind of, what is the cliche, vote with their dollars, we see that people, there's an inevitability or just a stickiness, but that doesn't mean that people are doing so with any sense of joy or choice. Yeah, it's sort of hard with this area because there's no one thing you can point to, but it's sort of death by a thousand cuts, right? Where it's like, you know, we all feel the squeeze in different ways. We feel that trust eroding as Vass is saying, and there's no one

sort of quote unquote enemy here. And we're not into making enemies, but what we're saying is when the structural incentives are such that the quality of our participation in markets is constantly eroding little bit by little bit by little bit, that's where you do start to see these more aggregate outcomes of like that distrust in institutions, that polarization. And, you know, this is absolutely tied to those sentiments. And I think, you know, Lena Kahn says it well when she says, when she talks about freedom, she says, you know, the way that most people experience freedom is how they show up to work every day and how they interact in marketplaces. Like economic freedom is a core component, if not the most important component of how we experience freedom day to day.

And when that freedom is constantly curtailed or, you know, squashed or whatever the term is, that's what kind of affects our, or even our identity and our sentiment of like waking up every day in this country and, and wanting to participate and feeling like there either is or is not a social contract that works for us. So I do think that these issues, like they show up in big and small ways, but the kind of aggregate outcome is a pretty serious one, I guess. big and small ways, but the kind of aggregate outcome is a pretty serious one, I guess. I also think the situations you describe help provide answers to some other longstanding riddles in Canadian politics and economics. Like why is investment consistently so low in Canada and why is innovation consistently so low?

And arguably it's because the country's kind of divided between people in organizations that have no need to invest or innovate and people and organizations that see no point in trying to invest or innovate because the deck is stacked against them. Yeah. I mean, it surprised me to learn that the entrepreneurship rate has declined by 50% over the last 20 years in Canada. There's like 100,000 fewer entrepreneurs. And, you know, Vas and I say, like, there's many reasons for that. Of course, we've got an aging population and cost of living is higher, so you can't maybe save to start a business. But certainly what you're describing in terms of why even try, I think is part of it. I think Vas also did some research or co-authored a piece with someone

who had done research showing that Canada's, the average age of our firms is like 145 years old or something crazy. Or 122, sorry. 122 years old is the median age of a Canadian company publicly traded, top 15. And then in the US it's like 45. So you have these old dinosaur firms that are not

incentivized to disrupt themselves to innovate. They're old, they're bureaucratic. And yeah, they're really disincentivized from doing anything to rock the boat. And so we do think that that's a feature that's particularly Canadian. And, you know, that's what we're interested in trying to disrupt. It's kind of grimly hilarious. I've spent 30 years covering governments promising the economy of tomorrow. Right. It's not here yet. Hey, thank you both Vas Bednar and Denise Hearn for taking the time to talk to me about this tentacular mess.

The title of the book is The Big Fix, How Companies Capture Markets and Harm Canadians. Thanks for joining me. Thanks so much for having us, Paul. Thanks, Paul. Thanks for listening to The Paul Wells Show. The Paul Wells Show is produced by Antica. My producer is Kevin Sexton.

Our executive producer is Stuart Cox. Laura Reguer is Antica's head of audio. Thanks to the Max Bell Foundation for their support and to all of my new colleagues at the Max Bell School of Public Policy at McGill. If you subscribe to my sub stack, you can get bonus content for this show. If you subscribe to my Substack, you can get bonus content for this show as well as access to my newsletter. You can do that at paulwells.substack.com.

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