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abdicate brand building,” he says. “It comes back to the great Canadian inferiority complex.”

      Sadly, it becomes a self-fulfilling prophecy. Without the premium and protection that brands afford — not to mention the estimated 30 per cent boost they bring to a company’s stock market price — the only other option is to be a commodity. “You are condemned to be second rate,” says Stodart, competing on price instead of market position. And in today’s global market, “there’s always somebody cheaper.”

      Even the Chinese realize it’s a losing proposition. Their national champions have begun acquiring internationally recognized brands like rca televisions and IBM’s personal computer division. China’s leading car maker, Nanjing Automobile Group, has bought the design rights to the United Kingdom’s bankrupt MG Rover Group and plans to make its own high-end brand sedan, which it will sell in Europe and the United States. In 2006, a Chinese brand (telecom giant China Mobile) ranked, for the first time, among the world’s most valuable brands,* coming in fourth after Microsoft, GE and Coca-Cola. Its estimated value: us$39 billion. Beijing-based Longfa Decoration Corp., in an attempt to copy the American franchise model, launched its own furniture retailer, Mermax, in the United States. “We want to provide a full service and create a brand,” said Yan Shihong, the enthusiastic Chinese store manager of its first Chicago location. “It’s the American way, right?”⁴⁰

      Canada, in contrast, seems to have turned the normal evolution from low-cost manufacturer to value-added brander on its head. “We are a component nation,” says Jeff Swystun. “We are a bit like China in the last century going into this century. We’ve flipped it on its head. But China is sick of playing that game. And we need to get real sick of playing that game real fast.” While the no-name, behind-the-scenes nuance may be part of the Canadian character, says Swystun, “it’s not going to allow us to win on the global business playing field.” Instead, it will brand us as “the economy that stands for nothing,” a squirrel in a menagerie of tigers, dragons and elephants.

       CALL CENTRE NATION

      It’s hard to get your knickers in a knot when the economy is firing on all cylinders. For most of this decade, Canadians have basked in the glow of the best economic conditions of the past fifty years, with unemployment at historic lows, companies posting record profits and skyrocketing oil and commodity prices bringing a new sheen of respectability to the loonie. So what if we don’t have brands or that we suck as salespeople? So what if we’re not the Americans’ number one trade partner or that our companies are decidedly domestic? Our gdp per capita is higher than that of Finland, a nation that is supposedly more innovative and competitive than we are, and a shot of vodka will only cost you five dollars here, compared with fifteen dollars in Sweden.

      “Who cares,” asks Andrew Sharp, Canada’s resident productivity guru, if Canada does not have a single bank among the world’s top thirty, or that Scandinavian pulp and paper mills are “five times” more productive than Canadian ones? Pointing to a United Nations survey of world values, the economist noted that Canadians are among the “happiest” people on earth. And who wouldn’t be? Thanks to a combination of sheer luck and relatively little effort, Canadians are among the wealthiest people on the planet. But while most blithely shrug their shoulders and go about their business, some have glimpsed the future; and they are scared.

      “Unfortunately, today I’m nervous,” says Deszö Horváth, dean of York University’s Schulich School of Business. “Canada, by default, not by design, again became raw-materials-oriented as China’s demand for raw materials and energy has created a total dislocation in the world. We can live on raw materials and oil and gas, but it’s going to go down one day, and unless we develop an alternate corporate structure here, we’re not going to be a very successful nation in the future.” Alvin Segal, the chairman of Montreal’s Peerless Clothing, was less sanguine. “We’re a make-believe country, and our make-believe country is falling apart. We can’t compete with the world — we have nothing to offer,” he says. “We’re going on American coattails. We have space galore, we’re too liberal and we’re spoiled.”

      The telltale signs of the country’s stealthy slide, say observers, are all around us. Despite years of respectable, at times enviable, economic growth, foreign investment into Canada has virtually dried up. Dubbed the “canary in the mineshaft” by the Conference Board, Canada’s share of world FDI has more than halved over the past twenty-five years to 3 per cent in 2003— levels not seen since the Great Depression of the 1930s.⁴¹ “No one seems to care (about Canada),” admits a puzzled John Klassen, assistant deputy minister of International Trade Canada’s investment branch. In contrast, the United States remains atop the global charts, second only to the United Kingdom. Its share of NAFTA-bound investment, along with Mexico’s, has grown at the expense of Canada, which has watched its continental take decline by 30 per cent over a decade.⁴²

      For Chris Lindal, executive vice-president of Ontario homebuilder Viceroy Homes, the most damning proof of Canada’s waning allure is China, where a torrent of foreign money has glossed over rampant corruption and political oppression to build gleaming, modern cities that would put Toronto to shame. “This is hugely serious,” he says. “Resource-wise and freedom-wise, we are one of the best countries in the world. So why aren’t we attracting mammoth amounts of capital investment? We are not. Shanghai is. The rest of the world is passing us by in leaps and bounds, and we don’t even realize it.”

      What many Canadians don’t realize is that the dearth of new investment is having a direct effect on their wallets, says Lindal, by helping to hold down wages and sucking the life out of what should be steadily rising living standards. While wages have recently been creeping up on the back of Alberta’s oil boom, Canadians’ take-home pay has been “stagnating” for years under the twin weights of high taxes and low salaries. Personal disposable income has dropped from 80.5 per cent of U.S. levels in 1985 to 67.7 per cent in 2003, according to the C.D. Howe Institute.⁴³ “The economic well-being of the average Canadian,” concluded the td Bank in 2005, “has barely advanced in 15 years.”⁴⁴ Not surprisingly, Canada has gone from having the fifth-highest gdp per capita in the world in 1990 to tenth spot today, surpassed along the way by Ireland, Denmark, Norway, Australia and Austria. Of course, it hasn’t been all downhill — to keep up appearances, Canadians have racked up the highest level of personal indebtedness in their history.

      The relative decline in prosperity is a harbinger for the country’s other major Achilles heel: productivity, or output per worker. A synonym for competitiveness and a driver of living standards, productivity hinges on investment in things like technology, machinery and equipment, research and development, and human capital. Without it, output per worker drops, and so do wages.

      Canada’s productivity has fallen off dramatically over the past half century, sliding from its third-place ranking among developed countries in 1960 to seventeenth in 2004.* Between 2000 and 2005 it grew just 6.7 per cent (and actually contracted in 2006), while in the United States output per worker expanded by a phenomenal 21.7 per cent. The cumulative effect is a Canadian business sector only 74 per cent as productive as that of the United States — its poorest showing since the mid-1950s and a dramatic drop from 1999, when it registered a comparative productivity of 82 per cent.⁴⁵ The lacklustre performance can be measured in dollar bills. The Institute for Competitiveness and Prosperity calculates Canada’s growing income gap with the United States at $8,700 per person or an additional $12,100 in after-tax disposable income per family.⁴⁶ In 1981 the gap was less than half that, and at the current rate of decline Canadians are expected to earn 50 per cent as much as Americans within twenty-five years.⁴⁷

      Some argue that the U.S. “productivity miracle” is a chimera that obscures the cost of competitiveness. In its bid to innovate, offshore and outsource, the United States cut 3.3 million manufacturing jobs between 1998 and 2003, while Canada’s employment swelled as business substituted capital with cheap labour to bolster output. But what was thought to be the triumph of a kinder, gentler alternative is turning out to be a pyrrhic victory.

      The combination of China’s ascendancy and the sudden rise in the Canadian dollar

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