Part 2 - Private vs Public
In part 1 of this article on the “invisible hand theory” of Adam Smith, I covered the incredible contribution of SME’s (Small and Medium-sized Enterprise) to the Canadian economy and the urgent need of Canada to help Canadians work, invest, build, innovate, and export.
Successful businesses are judged by their profitability, their cash flow and the ability to invest capital in a sound manner while continually innovating. To achieve these goals, they fundamentally need to manage their employees and their customers well. Keeping employees productive and engaged and their customers coming back. I over simplify by saying “happy employees = happy customers = happy profits ... and happy profits should result in good R&D and innovation too.
With these equations in mind, how does private business compares with public (government) business?
On the employee side, labour disputes do not indicate “a happy workforce”. Canada has seen its strikes increase with the Post Office (2025), Air Canada (2025), the Teachers (2025), Federal government and CRA (2023), port employees in Vancouver and Montreal (2024 - 2025) are just few examples. I have not heard of strikes at Amazon, Walmart, Costco, Apple, Microsoft, Canadian Tire, RBC, Thompson or for that matter any of the small and medium size businesses in my community.
On the profit side, government does not aim to make a profit but should aim to have a balanced budget. The Canadian Federal budget has been in deficit for years, and most provinces with 2 exceptions are also in deficits. Canada's national debt is growing, with the combined federal and provincial net debt reaching over $1.6 trillion in 2024, equating to over $38,000 per person. A new record!
Businesses fail or more simply put, go bankrupt when they run out of cash. Governments do not usually run out of cash since they “print it” and can find somebody to lend them. Obviously, exceptions have happened and it might surprise you that many countries that went bankrupt include Argentina, Brazil, Greece, and even Germany and Russia.
Is it not better for our government to stay in their lane and oversee the economy rather than getting into business directly?
Private enterprise excels at innovation, efficiency, and meeting consumer demand driven by profit. Government is best at providing public goods, ensuring social welfare, stability (like defense/justice), and addressing large-scale society needs where profit isn't the motive. Private firms are agile and responsive to market changes, whereas governments focus on broad public interest and essential services.
It is never too late to change and Canadians need to act with urgency. Just few years ago, Italy changed course and reduced its deficit from 8% of GDP to 3%. Inflation dropped from 12% to 1%. Unemployment fell from almost 8% to 6%. Italy has no resources by comparison to Canada. We need to be smart by shrinking our government size and building SME’s with “the invisible hand economics”. Fresh, young and wise leadership is needed.
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