Jock Finlayson receives Honorary Degree, Doctor of Laws from Royal Roads University (with speech)
Message from Greg D'Avignon
On November 4. 2014, Royal Roads University presented an Honorary Degree, Doctor of Laws to Jock in recognition of the exceptional work he has done, through his career and his various board appointments. His work for over 20 years in BC has informed good public policy, encouraged healthy debate and his role as a strong communicator and business advocate.
As noted in the University statement “Finlayson’s insight into economic policy has benefited the entire province. He translates complex economic concepts into applied knowledge for the benefit of government, business owners and residents of British Columbia”
To this we congratulate Jock not only on this honour, but on the contribution he makes every day on our behalf to the Business Council members, the economy and the public’s understanding of business through the work he does at the Council.
Thank you, Jock, for your continued thought leadership and your contribution to not only the Council and its members, but to British Columbia.
Remarks by Jock Finlayson, Royal Roads Convocation Ceremony, November 4 (Check against delivery)
Chancellor Strandlund, President Cahoon, University Governors and graduating students, families and friends.
Let me begin by offering congratulations to today’s graduates. You have successfully completed masters, undergraduate, and certificate programs in a range of disciplines, including several fields of business management, leadership, human resources, and tourism. I can still vaguely recall the sense of accomplishment upon finishing my own post-secondary studies many years ago. It’s a wonderful feeling, and I hope you will look back on it fondly.It is a pleasure to be here today. When I look back at some of those who have preceded me as recipients of an honorary degree from Royal Roads University, I can only confess my surprise at having been selected. It is humbling indeed to realize that previous honorees include former Bank of Canada Governor David Dodge, distinguished public servant Ted Hughes, former BC Premier Mike Harcourt, and Canadian business leader Elyse Allan. There can be no doubt that this is the finest club I have ever been asked to join, and I am very grateful for the opportunity.
Although I have not had a chance formally to study at Royal Roads, I do know something about the University. You have an interesting and storied history, as one of a handful of Canadian military colleges, evolving to the current position in the top tier of the country’s most innovative and unique post-secondary institutions.
Two features of Royal Roads in particular stand out.
One is the University’s orientation toward applied research, including inter-disciplinary work. This is an important differentiator in the Canadian university marketplace. The contemporary academic research enterprise embodies powerful incentives that favour increasingly narrow subject matter specialization. While that model undoubtedly has helped to advance human knowledge, it often works against the sharing of knowledge across disciplines, and even more so with the wider, non-academic community. It also tends to reward the intensive investigation of small-scale problems and minor intellectual puzzles.
The truth is that our world also needs smart people to devote their time and energy to big problems, and to issues that matter to citizens, policy-makers and private sector decision-makers. Collectively, society also benefits from academic inquiry that is directed at finding solutions to practical, real world concerns. To my mind, all of this creates a compelling case for applied and interdisciplinary research of the kind that Royal Roads is known for.
A second defining characteristic of Royal Roads is the commitment to accessible learning, with a particular focus on those already in the workforce. This is hugely important in a world (and a country) where the population is gradually, but inexorably, getting greyer, and where many more people need and want to upgrade their skills and credentials during the course of a working career that may stretch to four decades or longer.
A Few Personal Learnings
American business icon Warren Buffett once observed that, “Someone is sitting in the shade today because someone planted a tree a long time ago.” I like this quote, because it indicates that one of the world’s foremost investors is convinced that history matters. At a time of rapid-fire technological change and seemingly diminishing attention spans, it is easy to lose sight of the true foundations of our social and economic well-being. Canada’s prosperity reflects not just the efforts and ideas of today’s entrepreneurs, workers, managers, and policy-makers, but also the wise investments made in the past to create and grow great companies, to build essential physical infrastructure, to expand education and improve skills, and to create the social supports that speak to the values of a caring society.
The legacy of the past, what some social scientists refer to as “path dependence,” is not only relevant at a macro or society-wide level. It also affects us as individuals. Serendipity, or what might simply be called good fortune, plays a surprisingly large role in human affairs. Our life paths and personal achievements depend, in important ways, on the actions of others, and also on random events. This has certainly been true in my case.
To begin with, I was born in 1955, in the very middle of the privileged baby-boom cohort of Canadians, a group who have experienced neither war nor deprivation. I benefitted from being part of a middle-class family that encouraged and valued education. At university, I found great professors and intellectual mentors who nurtured my twin interests in academic scholarship and practical research. Early in my professional career, I gained insight into what makes Canada tick, thanks to regular and intensive exposure to senior level decision-makers in both the government and business sectors. For almost thirty years I have had the advantage of working with smart and committed people who shared my interests and in some cases became friends as well as colleagues. A few years ago I was fortunate to be appointed to the Board of Directors of the Bank of Canada, the nation’s central bank. This experience left me with a deeper and more practical understanding of monetary policy and the Canadian economy – and of where Canada sits within the changing global economy. It also afforded a ring-side seat to the global financial crisis and recession that took the world by storm in 2008 and 2009 -- and to the disappointingly slow and bumpy economic recovery that has followed in its wake. Above all, I am grateful to have had a life partner, my wife Marlene, who combines an incisive intellect with a kind and generous heart.
One thing I have learned from these experiences, and from many of the people I have encountered in my adult life, is the value of an open mind and a balanced perspective. Like many of you, I have opinions on many matters in the domains of the economy, business and public policy; but I also recognize how little I know, and I embrace the reality that others possess insights that elude me. As I have gotten older, the words of philosopher Bertrand Russell increasingly ring true to me: “The whole problem with the world is that fools and fanatics are always so certain of themselves, while wiser people are so full of doubts.”
Taking Stock of Some Trends
Looking back from the vantage point of someone who spent many years in university and then worked as an analyst, adviser and research manager within the business community, I can only reflect on the trends which have re-defined the Canadian business landscape during my career. Consider that quite a few of the largest companies that drove our economy in the early 1980s have disappeared or been absorbed into other enterprises; Nortel, Noranda, Inco, Eaton’s, and MacMillan Bloedel are examples. Whole new industries have arisen, often based on technological innovation, while others have dwindled. In both Canada and other advanced economies, far fewer people are now directly employed in manufacturing, even as sectors like health care, education, finance and scientific + technical services have added jobs at a rapid pace. Job security and stability have declined for many employed people. Canada’s population and workforce have become considerably more diverse, mainly due to one of the world’s highest immigration rates. One quarter of current BC residents were born outside of Canada; ten years from now the figure will exceed 30%.
There are two other specific trends I would like to highlight here.
The first is the expanding role of women in our economy and workforce.[1] In my view this counts as the single most consequential socio-economic development of the past fifty years. As more women have entered the formal labour market, completed post-secondary education, and followed the path of entrepreneurship, the productive capacity of Canada’s economy has been augmented, and average household incomes have risen. Indeed, a large share of the overall increase in Canada’s gross domestic product and in total market income since 1970 is attributable to rising female labour force participation. Today, women constitute almost half of the country’s workforce, up from 37% in the mid-1970s. Last year six in ten women in Canada were employed; in 1976, the comparable figure stood at 42%.
It is true that, despite gains in educational achievement, many working women are still clustered in relatively low-paid occupations. This serves to dampen average compensation for female job-holders collectively; it also helps to explain the continued male/female gap in average hourly pay. But as we look to the future, the impressive advances that women continue to make on the education front will be felt across the labour market. By all measures, women are out-performing men in raising their level of what economists refer to as “human capital.” It is well-known that girls are doing better than boys in school. For more than 15 years, women have made up a majority of university and college enrollments in Canada. They also comprise a growing fraction of both current post-secondary students, and of recent graduates in a range of degree programs that often pave the way to high-paying jobs – including management, finance, accounting, law, and the health professions. Women are also making inroads, albeit more slowly, in engineering and computer-related disciplines.
There is more to be done, particularly in the business community, to establish an environment that enables women to reach their full potential in the workplace context. But we should acknowledge the progress that has been made, and celebrate the fact that women can now aspire to and attain positions of leadership in our enterprises, public institutions, professions, and legislatures.
A second trend that has influenced the Canadian economy and business community during my career is globalization, in all of its various dimensions – the explosion of cross-border trade in goods and services, rising international capital flows, the global fragmentation of production processes, and the movement of ideas and knowledge across national boundaries. Since the 1950s, international trade has grown significantly faster than global output or production – meaning that most countries, including Canada, have become more exposed to international markets and to external competitive forces, and seen a noticeable rise in the ratio of trade to their overall gross domestic product (GDP). International capital flows – foreign direct investment, cross-border lending, and other forms of international portfolio investment – have also increased steadily over time. The education sector has also gone global, with more foreign students enrolled in post-secondary institutions in countries like Canada, the US, Britain and Australia, and universities like Royal Roads establishing partnerships with institutions based in offshore jurisdictions to deliver their programs.
Interestingly, the globalization of both production and financial market activity has decelerated since 2008, leading some analysts to conclude that a six-decade period of progressively greater globalization may be coming to an end.[2] One sign that a shift may have occurred is the re-shoring or repatriation of certain types of manufacturing back to North America, hinting at a reversal of the previous pattern of relentless production offshoring to China and other low-cost Asian economies.[3] There is also evidence of reduced cross-border lending in the banking industry, as some large banks retrench and re-focus on domestic markets. It is too early to say whether the long post-World War Two process of global economic integration has run its course or is simply taking a pause, but the issue will bear watching by policy-makers and business decision-makers in the years to come.
What Lies Ahead?
As today’s graduates continue with or launch your careers, what are the economic and business forces that will influence your own choices and prospects? This takes us into the realm of speculation, but let me close by sharing a couple of thoughts on the future you may encounter.
One thing we can say with great confidence is that population aging will continue to affect the economy and labour market, not just in Canada but across much of the world. With the oldest baby-boomers having reached the age of 65 in 2011, a generational retirement wave is now firmly upon us, and it is about to gather force. While it is true that some baby-boomers are working past the “normal” age of retirement (university professors are a prominent example), in Canada most people actually leave full-time work before they turn 65.
So even in a world where potential economic growth is likely to be slower than in the past, many more organizations will be stepping up hiring to replace the burgeoning ranks of retiring employees. In addition to the loss of particular skills, and of people in leadership level positions, thousands of companies and public sector organizations alike will be grappling with the erosion of institutional memory and the loss of tacit knowledge associated with the exodus of long-serving staff. Business leaders understand the risk. Talent acquisition, retention and development are now top-of-mind issues for most of the executives I work with. It is true that, since 2008, the job market has been quite challenging, particularly for recent post-secondary graduates and other young adults. But I believe the situation will soon shift to the advantage of those seeking new jobs or promotions, as several hundred thousand baby-boomers leave the Canadian workforce in the next five years. Many of you may be tempted to bid them good riddance.
A second prediction concerns the controversial but important topic of inequality. The debate over inequality and the related issue of socio-economic mobility is with us, and it is not about to fade away. Since the early 1980s, many relatively affluent countries have experienced greater concentrations of incomes and wealth in the top 1%, 5% and 10% of households. The basic trend is most pronounced in the United States and Britain, but the forces propelling inequality – including technological change, globalization, and the rising economic premium accruing to entrepreneurial talent and to certain types of higher education -- are also being felt in Canada and other advanced countries. According to The Economist magazine, real median wages have stagnated in half of the advanced industrial economies since the year 2000 (it should be noted that Canada has done better than most on this measure).[4]
Going forward, the risk is that economic growth and increases in economy-wide productivity will deliver few gains in real incomes for large proportions of the working-age population. Over time, a society that fails to share the fruits of economic growth on a broad basis is likely to underperform on growth itself, and it may also become more prone to financial and policy instability. This is a scenario that should trouble business leaders as well as policy-makers.
The good news is that Canada has been able to forge a society with a fairly high degree of economic mobility across generations, meaning that someone born into a lower-income family has a decent chance to acquire an education and achieve a higher economic status as an adult.[5] This, I believe, is something we should seek to hold on to, in the face of economic and technological forces that may continue to push in the opposite direction.
Concluding Remarks
Royal Roads has succeeded in making a post-secondary education both more accessible and more relevant to you and others who have chosen to pursue their studies here. You have worked hard to complete your degrees and certificate programs. Today, there are some who appear to doubt the value of a post-secondary education. I am not among them. The preponderance of data and other evidence shows that people with university and college qualifications do better than those without, across a range of economic and social metrics, including incomes, employment levels, unemployment rates, and health status.[6] University education changed and enriched my life, and I strongly suspect the same will be true for you.
It has been a privilege for me to spend time with you this afternoon, to share my thoughts as you graduate from Royal Roads, and to accept, with gratitude and appreciation, this honorary Doctorate of Laws from the University.
[1] See Statistics Canada, “Changes in the Occupational Profile of Young Men and Women in Canada,” April 2014; and Martin Turcotte, “Women and Education,” Statistics Canada, December 2011.
[2] RBC Global Asset Management, “Wither Globalization?” Economic Compass, August 2014.
[3] Boston Consulting Group, “The Shifting Economics of Global Manufacturing: How Cost Competitiveness is Changing Worldwide,” BCG Perspectives, August 2014.
[4] Special Report on the World Economy published in The Economist, “The Third Great Wave,” October 4, 2014.
[5] For a US-Canada comparison of trends in mobility, see Miles Corak, Chasing the Same Dream: Economic Mobility in the United States and Canada, Pew Charitable Trusts, January 2010.
[6] For a recent review of the Canadian data, see “Skills and Higher Education in Canada,” prepared by Daniel Munro, May 2014; available at www.Canada2020.ca. A summary of the evidence for the United States can be found in Jason R. Abel and Richard Deitz, “Do the Benefits of College Still Outweigh the Costs?” Federal Reserve Bank of New York, Current Issues in Economics and Finance, Volume 20, Number 3, 2014.