Ontario, once a manufacturing powerhouse, has been steadily losing well-paying factory jobs, devastating working families and their communities.

Do economists and policymakers have to think harder about what innovation and globalization mean for the stability of society, and how we make sure that large numbers of people are not left behind? “We do need to think about that a lot more,” economist and entrepreneur Ben Atkinson conceded in an interview.

“Since the crash of 2008, inequality has become extreme, and the people at the bottom of the ladder look up and can barely see the people above them, because they are so far away,” said Atkinson, who holds a PhD in economics from the University of Alberta and specializes in international economics, as well as in the area of industrial organization and competition policy.

“We need to figure out how to help them lessen the inequality, so they don’t feel so left behind,” the economist said of working people suffering in the age of disruption.

“Technological advancement and change cannot be stopped,” Hassan Yussuff, president of the Canadian Labour Congress, acknowledged in a telephone interview. “It’s going to continue, in my view. But I think the reality is that government has to consistently labour at the effort on how we get the public policy right to ensure that our citizens do not fall victim to the changes that are happening.”

According to the labour leader, public policy must play an important role in the economy if places like Brockville are to hold on to manufacturing jobs. “I think for too often the governments have let the economy operate without any kind of levers on it.” And he contends that this lack of government engagement has contributed to “the devastation in places, like Brockville.”

“I used to service Brockville as a union rep, at one time, so I know pretty well all the manufacturing jobs that used to located there,” Yussuff said of the city of 22,000 that was once a vibrant manufacturing centre. “At one time they went to Mexico and at another time they went to other places around the globe,” he said of the migration of manufacturing jobs from Brockville to low-wage jurisdictions outside of Canada.

According to the Mowat Centre, an independent public policy think tank at the Munk School of Global Affairs and Public Policy at the University of Toronto, Ontario lost 300,000 manufacturing jobs between 2004 and 2014.

Impact on workers

The effects of technological innovation will be felt in a variety of industries as the pace of technological change accelerates, Yussuff warned. As jobs are automated, fewer people are going to be needed to do those jobs, he added.

“It is certainly going to displace a lot of people,” he said of innovation. “The bigger question is that we don’t know where people are going to land in terms of new jobs.”

Atkinson agrees that technological innovation “definitely creates winners and losers” in the Canadian economy. “The more highly skilled workers tend to benefit most from the innovation.”

“When we’re in a globalized economy, as the economy becomes more and more open, workers who are in lower-skilled jobs or jobs that can be automated, they tend to lose out from it, because you can get robots to make cars, or you can go to Mexico where they have more of a comparative advantage for that. And so they are going to lose out,” the Calgary-based economist explained.

The workers who possess high skills “that developing countries can’t match” will be “the ones that are going to win from it, because they are going to grow,” stated Atkinson, who left a tenured teaching position at Mount Royal University to help launch Convergex BI Analytics and Consulting for Social Enterprise, where he is the vice-president of research.

Although some people propound trade protectionism as a way to shield the manufacturing sector from foreign competition, economists tend to dismiss that policy prescription and instead advocate making the transition to the new economy.

“I believe that is what the federal government and the Ontario government are now doing with GM,” Atkinson said of the response to General Motors’ decision to shutter its Oshawa plant in 2019. “Rather than trying to get another bailout, they’re saying we are going to help these auto workers transition to somewhere we have more of a comparative advantage.”

Failure of the elites

In his new book, which analyzes the political phenomenon of political populism, former Canadian prime minister Stephen Harper observes that “gains from new technology and globalization may be even less broad-based than in the past.”

Harper writes in Right Here Right Now: Politics and Leadership in the Age of Disruption that in industrialized nations, the costs of disruption “have been born disproportionately by working-class people,” causing millions of them “to question whether it is all worth it.”

According to the former Canadian leader, some trade deals are bad, because they hurt working people. And he asserts that “economic and political elites” have been blinded by free trade orthodoxy.

Is Harper correct? Have the elites failed to adequately consider the impact of free trade agreements on working-class and middle-class workers. “I do believe that,” Atkinson replied.

“Because people who are free traders, particularly academics and experts, we tend to focus on the ideal and say this is where we should go,” the economist continued. “And a lot people don’t really consider the harm it causes. We just look at the net benefit overall in the long run, and we don’t think about what is going to happen along the way, who is going to get hurt along the way.”

When told of Harper’s thesis, Hassan Yussuff sounds surprised. “Well, he’s correct, and I think he’s part of the problem,” the CLC leader said. “And I’m glad he’s able to acknowledge not only the elites’ [failure] but his own failure as a former prime minister of the country.”

In addition, Yussuff said that “the reality is that once companies were able to access Mexico as a place for production without tariffs to ship their products to Canada, a lot of manufacturing fled Canada and the U.S. and moved to Mexico.”

“After 20-something years, how do you address that trend?” Yussuff said of the flight of manufacturing to Mexico. And he said it is uncertain how the new United States, Mexico, Canada Agreement (USMCA) will work in terms of the enforcement of the deal’s labour provisions and auto wages.

Future of industry

Can the de-industrialization of Ontario be reversed?

“No, I don’t think it can be reversed,” Atkinson answered bluntly. “It can be slowed down, as it has been with the bailouts over the years, but as we’ve seen with GM recently in Oshawa, they are going to leave regardless.”

Conversely, the leader of the CLC holds out hope that Ontario’s manufacturing sector can be saved from the destructive forces of globalization and innovation. And he supports his position by citing the example of Germany, an industrialized country that maintains a “very high manufacturing base.”

What needs to be done to help workers hurt by globalization and innovation?

Instead of “choosing winners and losers” when it comes to companies, Atkinson said, the federal and Ontario governments “need to step in” and set up job retraining programs that give tax credits to businesses that hire new workers and train them, as well as giving tax credits to those companies that send current workers to acquire additional skills.

According to the head of the Canadian Labour Congress, there are a number of ways to help workers meet the challenges of the new economy. “One, I think, in regards to the skills levels that Canadians specifically have, we have a big gap in the country,” Yussuff said.

For example, he says literacy remains a problem among Canadian workers. “Not enough people have the basic skills to get retraining,” he asserted. “So we have got to figure out a better way how we are going to get basic skills to start with — if we are going to have lifelong skills as they continue to adapt and deal with the changes that are happening in the job world.”

Second, “there needs to be stronger commitment in terms of income support for people when they are going through this [retraining],” Yussuff said. “For most people, income support from [Employment Insurance] is not really adequate.”

What does the GM plan to close its Oshawa plant say about globalization?

“It says that we are not going to keep the kind of jobs we had in the auto sector that we had decades ago,” Atkinson replied. “They are not going to come back. And we just need to accept that globalization is here. We can’t unscramble the egg.”

Follow Geoffrey P. Johnston on Twitter @GeoffyPJohnston.