Special to The Globe and Mail
Published Friday, Nov. 21 2014, 5:00 AM EST


It’s an economic tale told time and time again. Camera film makers. Video stores. The music recording industry. Perhaps most famously, the Luddites – those textile labourers in 19th century England who protested against the introduction of mechanized looms by smashing them. Many of them failed to adapt to new, disruptive technologies and went extinct.

Next on the list may be the taxi industry. Having enjoyed a regulated monopoly on intracity car transportation for decades, the industry is now on the defence. They’re pushing against a wave of technology-driven cab alternatives that threaten their traditional model.

The source of the taxi industry’s worry is, of course, Uber. Already active in cities around the world, it offers to connect riders with drivers through the use of GPS technology and easy-to-use apps that are downloaded onto smartphones. The drivers use their own personal cars, sidestepping the requirement to attain a taxi license. It’s the perfect example of a disruptive technology that threatens to wipe out an industry unable to adapt.

Taking out half-page ads in newspapers across the country, the Canadian Taxicab Operators Group made their case for maintaining a strong, protected and regulated industry. But the best argument they could muster is that they offer “safe, secure service”– and by implication, they argue that any competitor would be unsafe and unsecure.















Image courtesy The Globe and Mail. (KAI PFAFFENBACH/REUTERS) 

How does the industry believe that they alone are able to offer safety and security? This is the equivalent of the restaurant industry claiming that food trucks are unsafe, or the hotel association asserting that if you use Airbnb, you will surely be murdered in your sleep. (No doubt the restaurant and hotel industries are also displeased with the competition, but at least they don’t play the “safe-and-secure” card in the fight against them). Requiring new competitors to carry the same commercial carrier insurance would be an easy legislative step.

The public is usually unhappy with the regulated taxi monopoly because cabs are often hard to get, particularly on weekend nights and during Christmas party season. But municipal governments have been slow to enact any real change. Adding more cabs isn’t the solution. The problem is the bottlenecking that occurs on the dispatch desk. This is precisely the problem solved with the GPS and app technology.

To their credit, taxi companies are at least trying to stay competitive with their own downloadable apps to connect riders with cabs. But why did this take so long? Had the taxi industry seen the writing on the wall years ago, it would have been the first to develop the app. Instead, they’re in catch-up mode. And judging by the tone of the newspaper ads, it doesn’t seem to be working out for them.

My suspicion is that the taxi industry is less concerned about safety and security than it is about protecting itself. They basically say as much in their newspaper ad. Regulation of the industry is in place so that “the hard-working men and women who drive taxicabs can earn a fair wage.” This self-preservation argument isn’t surprising, but it’s doomed to fail.

Canadians are less interested in preserving jobs for taxi drivers than they are about easily accessible transportation options. This is increasingly important from a public policy perspective because of societal intolerance of drinking and driving. No one wants to see any intoxicated drivers on the road, but that means governments have a responsibility to facilitate better options. Placing someone on hold for more than an hour to get a cab isn’t the way to reduce impaired driving.

There are plenty of examples of natural monopolies in which regulating price and supply are in society’s best, such as power utilities. How the taxi industry has been able to convince governments (and the public) that they too should receive regulated monopoly status is astounding.

Disruptive technologies are the driving force behind economic progress. And adaptability is the key to success when faced with the unwelcomed change. An inability to adapt spells extinction. If the taxi industry’s only strategy to deal with the disruptive technology is to stubbornly argue about safety and security, there may not be much hope for it.

Todd Hirsch is the Calgary-based chief economist of ATB Financial, and author of The Boiling Frog Dilemma: Saving Canada from Economic Decline.

Special to The Globe and Mail
Published Friday, Nov. 07 2014

‘It’s a beautiful place,” she said, “and so energetic.”

The French economist, part of a group of government leaders travelling with President François Hollande, was seated at my table of economists at the state luncheon in Banff. “Young people in France think about your province and they think … anything is possible!” she said in very good English.

Later this week her words came back to haunt me. She was correct: Anything is possible in Alberta – but that can be good or bad. It’s good in the way that with hard work, ambition and positivity, the sky’s the limit in this province. But it’s also possible for economic prosperity to be snatched away in an instant. As oil prices slide lower, that outcome is starting to feel uncomfortably possible.

Alberta is vulnerable to tumbling energy prices, but maybe we only have ourselves to blame. What picture have we painted of Alberta’s economy to the rest of the world?

Another quote this week was not nearly as complimentary as the French economist’s. In Le Monde, a newspaper article covering Mr. Hollande’s visit referred to Alberta as “the Texas of Canada” – and it wasn’t meant in a nice way. The province was criticized for its controversial exploitation of bitumen, and Mr. Hollande was criticized for making Alberta the first stop on his Canadian tour.

There’s no doubt that Alberta’s prosperity is due largely to its petroleum resources. And while improvements must still be made, the oil sands on its worst day is an environmental heaven compared to plenty of other countries on their best days. But rather than trying so hard to convince the rest of the world that our oil is ethical (even though it is) or that they need it (even though they do), perhaps Alberta should try a different tact.

Wouldn’t editors at Le Monde be surprised to learn about Alberta’s cultural industries? That Edmonton is home to North America’s largest experimental theatre festival, The Fringe? Or that Canada’s new National Music Centre is being built in Calgary?

It might raise Parisian eyebrows to know that the University of Alberta’s Campus Saint Jean operates entirely in French, in the centre of Edmonton’s francophone neighbourhood, on Rue Marie-Anne Gaboury. Readers of Le Monde may find surprising the innovative works of the Alberta Ballet or Calgary Opera.

Cultural diplomacy is an underutilized economic tool in Alberta, but other jurisdictions have used it to great effect. This was on display when the Prime Minister of Iceland and other top economic leaders visited Edmonton earlier this year. When asked what Iceland does to promote its economy, the answer was plain. “We promote our artists and we promote our culture. It’s what we are. It’s in everything we do,” said the representative from the City of Reykjavík.

Economically, the purpose of cultural diplomacy is to use arts and culture in presenting a more complete story about your province or country. Alberta cannot compete with France’s cultural institutions, but that’s not the point. The point is the element of interest and surprise.

Everyone knows that when politicians from Alberta give speeches in Toronto or Washington or Paris, they will talk about pipelines (and without question, access to markets is the single most pressing economic issue for Alberta). But there’s nothing surprising in that story. Decision makers in those cities have heard it all before. They know about Keystone XL. They know Alberta is home to the world’s third-largest petroleum resources. They know that Green Peace protesters climbing upon oil rigs are given hot chocolate, not shot to death.

Instead, what if Albertans gave speeches about our arts and culture? What if artists and writers and musicians were part of the tour? That would be a refreshing and probably surprising way to get more positive economic attention.

Life in Alberta is vibrant and multidimensional, even if our economy is a bit too reliant on one single industry. Cultural diplomacy – the ability to take our story to the rest of the world through arts and culture – needs to be our economic trump card.

Can Alberta do it? In the words of the visiting French economist –“anything is possible!”

Todd Hirsch is the Calgary-based chief economist of ATB Financial, and author of The Boiling Frog Dilemma: Saving Canada from Economic Decline.