Saturday, 14 December 2013

Government Investment in the Technology Sector

You all regularly read Mike Moffat and are aware of his opposition to Ontario Premier Wynne's announced investment in Cisco, right? If not, fix that will you?

While I don't necessarily agree that “this easily ranks as the worst public policy of 2013” I do agree that it is a horrible policy that will not do anything to decrease unemployment. And I also think this is one of those times over-the-top hyperbole helps make the case.

Harris Berton attempted to challenge Mike's argument. The gist of his rebuttal is that this will help grow "jobs in export sectors that can sustain the service sector."  I.e. High wage earners will spend their money locally, thus sharing their wealth with the service sectors they spend their money in. I agree with that principle, but disagree that directly investing in Cisco will help achieve that goal.

The ICT (Information and Communications Technology) sector is a growing sector on it's own. It is hard to run any company without utilizing ICT professionals as consultants or permanent employees. ICT professionals are now as essential to any organization as accountants and lawyers are. It is this central truth that is ignored when "growing a knowledge economy" is discussed. It is assumed that ICT professionals only work for the Blackberrys, Nortels, Microsofts and Ciscos of the world. The reason those companies exist is because consumers and businesses are increasingly dependent on technology to conduct their daily affairs. Any economic growth automatically increases investment in ICT.

Ironically, focusing on wooing Cisco relies on the traditional bricks-and-mortar employment model, the very model ICT is slowly destroying, and a model Cisco's technology in particular is utilized to destroy. The benefits of technology is that where you choose to live can be completely independent of where the result of your labour is realized. Hewlett Packard is the most famous ICT vendor that adopted a decentralized labour model. As an example, the engineers that collaborate on designing and support HP's storage solutions are located all over the world. They do not all work out of the same office in one city. Process that for a second. Realize that a team of highly-skilled professionals no longer have to work in the same building, they no longer need to reside in the same country. And then realize that Cisco is not run by stupid people tied to old employment models. They will use this agreement entirely to their own benefit, and when the 10 years is up, who is to say any jobs created will remain in Ottawa or Toronto? 10 years in ICT is a very, very long time.

What we need to realize is that we want high-income employees to live in Ontario. We don't necessarily want their employer to be located in Ontario. Employers relocate on a regular basis, it is the talent that says behind. We need to foster a competitive talent pool that companies want to hire, regardless of where that company is located. And ICT enables that exact employment model. While there will continue to be bricks-and-mortar type organizations that will locate in Ontario, convincing ICT organizations to stay within that model is a fools errand. And Cisco is not run by fools. Our Governments on the other hand....

If premier Wynne truly wants to increase ICT investment in this province, she needs to invest directly in creating the competitive talent that firms need to employ. Make the firms come to us, rather than hoping that the talent follows the firms. Because under that logic, anyone willing to move to Ontario to work for Cisco is just as willing to move away when Cisco leaves. We should focus on encouraging firms to hire Ontarians, not on making Ontarians wanting to work for Cisco.


Ken Breadner said...

Catelli, as usual you have opened my eyes. Wynne really needs to read what you have written here. So do many people our age and older. (You're of an age with me, but I swear my mindset is still rooted in the last century, and I think I'm far from alone.)
The perspective you have given here is novel to me and yet inevitable upon reflection. While I hear all the time about just how place-proof employment is getting, I hadn't really internalized it until I read this blog...

Catelli said...

Thanks Ken,

Funny thing about how this post evolved, that wasn't the point I set-out to make. The argument just started to create itself as I joined one thought to another. The draft I had in my head went in another (lesser) direction entirely.