Hugh McGillivray 7/7/26 Hugh McGillivray 7/7/26

Culture of Extraction

Let’s stop calling Canada’s innovation crisis a "commercialization gap" or "risk aversion." Those are polite euphemisms for a concrete reality: Our economic system is built for extraction, not cultivation.

Historically, our markets were designed to extract raw wealth; timber, minerals, oil, to benefit a small, protected class of legacy gatekeepers. Today, that same extractive framework has simply pivoted to intellectual property, talent, ideas, and technology.

We don't have a lack of innovative spirit, or hard work or perseverance. What we have are strata of wealth that have internalized an entitlement to profit, managing a system that skims the value off new ideas while actively suppressing the disruption that true scaling brings.

Why Canada Can’t Compete with China

Hint: It’s not that we’re unable to.

Historically,

our markets were designed to extract raw wealth; timber, minerals, oil, to benefit a small, protected class of legacy gatekeepers. Today, that same extractive framework has simply pivoted to intellectual property, talent, ideas, and technology. We don't have a lack of innovative spirit, or hard work or perseverance. What we have are strata of wealth that have internalized an entitlement to profit, managing a system that skims the value off new ideas while actively suppressing the disruption that true scaling brings.

If you look beneath the surface of our lagging productivity, the real structural bottlenecks become obvious.

Growth is Only Allowed If It’s Captured

Our system loves the rhetoric of investment and tech growth, but only if it stays within a controlled arena. Since true innovation is disruptive, dynamic tech expansion must either be immune to established systems or be subject to control by them. They welcome new opportunities only if they can be funneled through existing channels of capture, ensuring the quiet elite profits before the creators ever do.

Across multiple major industries, the major players can be found using their influence to prevent the competitive abilities of smaller or more innovative companies. In housing, the construction industry has been influencing local regulations to enforce restrictions that are killing the economy. Energy monopolies actively suppress small module technologies in favor of massive power plants. In telecommunication, major companies actively suppress technologies that would dramatically reduce the costs to consumers. In banking, while the rest of the world adopts FinTech and open banking, Canada has controlled it and snuffed it out.

It’s not an isolated quirk, but a blueprint.

The Innovation Envy

There is a distinct cultural friction in Canada in which we praise the abstract concept of innovation, but resent individual, localized success that happens outside the approved networks. It creates a corrupted prisoner's dilemma where bold execution is actively disincentivized. If you build something transformative, the structural pressures are designed to make you fail, hit a regulatory wall, or capitulate.

Can we even avoid looking at our health industry in that lens? How curious is it that all major investments happen in city hospitals while rural emergency rooms close for the weekend? Although the concept of adapting health-centric professions to long-term care and chronic disease care occurred nearly twenty years ago, it wasn’t until certain unions collaborated with universities to come up with Nurses Aids that the pressing issue was addressed at all. Innovation somehow gets contained within the only structures and groups that can’t generate it themselves.

The Brain and Asset Drain by Design

Because our financial apparatus is rigged to protect established asset ownership and real estate over high-risk tech ventures, we don’t fund our own future. Instead, we incubate incredible talent and research at the public expense, only to watch it get extracted. Startups hit a ceiling and are forced to sell their intellectual property to foreign buyers or legacy domestic oligopolies who buy them just to park the technology and kill the competition.

It’s now considered common sense that patents are a scam, for the simple reason that large companies can afford to abuse the system using the expense of legal proceedings against patent-holders. Our interprovincial trade barriers, to no one’s surprise, systematically suppress the abilities of small companies to scale up and grow, favoring large companies who can afford to negotiate compliance. That same problem allows global corporations to use Canada as a taxpayer-funded R&D playground. They simply buy the small companies that grew up on our dime and can’t scale up further.

There are many words for that, but “cynicism” isn’t one.

What China Does Right

China has been swift to recognize that competing globally requires real competitiveness. It is not that Chinese business is immune to the same problems Canada is experiencing, but only that they are not permitted to compromise the nation’s economic goals through protectionism and illicit use of regulations. They are allowed to profit, just not allowed to restrict the opportunities of others, or ignore the needs of the nation. No patent-bullying. No weaponizing the courts. No trade walls on competitive startups. No bypassing regulations.

The Reality Check

This is where the usual accusations of communism get thrown around, but when the discussion is placed back in the proper context, those complaints sound like protesting too loudly. It’s not “Free Market Capitalism” anymore, so let’s stop pretending. The same companies paying for that cheaply opportunistic dialogue have reaped immense benefits from operating in Canada, and simply don’t want to pay anything back. Here’s the thing: That’s not merely an ethical concern; It’s killing any hope that Canada will be able to compete in the future.

Ask the question: Does that tiny number of elite Canadian companies believe they can compete- with CHINA?

Not without the rest of Canada they can’t. This “neijuan”, this “involution” as the Chinese call it, will have Chinese companies laughing all the way to the Chinese bank- at Canada.

The impulse to build, create, and grow remains intact across every region of this country. The problem is the heavy weight of an economic strata that believes extraction is their role. Any accurate appraisal of competitiveness is going to mean a hard left turn toward anti-protectionist, anti-monopoly, pro-regulatory maintenance of the “free market”. Anything short of that means Canada loses.

Canada doesn't need to learn how to be innovative. We need to dismantle the gatekeeping networks that treat our brightest minds and best ideas as raw resources to be harvested. Until we confront the reality that our system rewards value capture over value creation, our tech ecosystem will continue to be a feeder system for other nations' economies.

#TechPolicy #EconomicProductivity #CanadaBusiness #VentureCapital #SystemicChange #Innovation

Hugh McGillivray 7/6/26 Hugh McGillivray 7/6/26

Small Businesses and Repression

There's a posture a lot of small business owners have settled into without quite choosing it: keep your head down, look out for your own account, treat the guy two doors down as a rival by default even when you're not really competing for the same dollar. Call it opportunistic capitalizing, a poise of every operator optimizing their own patch, alone- or worse: Small towns competing with each other within small regions.

A Convenient Pose: Local Biases and ‘Common Sense’ attitudes used against local small business communities.

‍There's a posture

a lot of small business owners have settled into without quite choosing it: Keep your head down, look out for your own account, treat the guy two doors down as a rival by default even when you're not really competing for the same dollar. Call it opportunistic capitalizing, a poise of every operator optimizing their own patch, alone- or worse: Small towns competing with each other within small regions.

‍It's not a character flaw. It's the sensible output of a culture that's been quietly training people toward highly opportunistic socializing for decades now; networking as transaction, community as optional overhead, cooperation as something you do only once the math clearly favors you. Given that climate, the lone-operator pose isn't cynicism. It's the socially safe default. Nobody gets mocked for guarding their own turf.

Here’s where it gets structural instead of descriptive

There is a concern worth addressing, however: Here's where it gets structural instead of just descriptive. That pose doesn't stay a private coping strategy. It drifts into a sort of crowd equilibrium. When enough operators adopt it, it stops looking like a choice and starts looking like common sense, just the way things are around here. Once it's common sense, it's self-enforcing. The operator who proposes real coordination, like shared promotion, shared data, a joint front against outside competition, reads as naive, or running an angle. The norm polices itself.

‍This is a Prisoner's Dilemma in miniature- but skewed. Individually rational defection, repeated across a whole business community, produces a collectively worse position than cooperation would. Everyone can see it, and nobody moves first, because moving first is the socially unsafe act. Cooperation is still the result, but they’re cooperating to ensure nobody local gains an advantage. ‍

Here's the part that makes it more than a local curiosity. The equilibrium would be a wash if every competitor played by the same atomized rules. They don't. The national and global players eating local market share aren't lone operators but coordinated capital, doing what local and regional businesses should be doing as well: Shared marketing infrastructure, pooled data, unified discovery and search presence, supply-chain leverage that no single independent shop can match alone. The big players face zero internal coordination problems. They import the very cooperation that local business has ‘normed-out’ of its own playbook. They are literally using local competitiveness against local businesses.

‍The national and global players eating local market share aren't lone operators but coordinated capital

So it isn't a fair fight, and it was never going to be. It's a coordination mismatch dressed up as a competence gap. The story that gets told afterward, that "the big guys just do it better", is a cover story for a structural condition, not an explanation. None of which means independent operators have to give up the autonomy they cherish: That's the whole point of running their own shop. The fix isn't less independence but a thin shared layer underneath it. It’s something that lets separate businesses show up together in the places people are actually looking, without anyone answering to anyone else. Not a co-op, not a chain but, just enough shared infrastructure to stop bringing atomized tools to a coordinated fight.

‍Worth noting: Pieces of exactly that kind of layer have already taken shape in the West Kootenays. It’s a regional discovery infrastructure built for exactly this asymmetry, rather than another platform with a sales pitch attached. Whether or not it's the whole answer, it's evidence the equilibrium isn't as fixed as it feels from inside it.

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— Bondcraft

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Hugh McGillivray 5/31/26 Hugh McGillivray 5/31/26

Job Cuts Excused by AI

Though AI is obviously a ‘bandwagon’, we can all see that companies have not merely jumped on it, but fully rejoiced in their leaping. Instead of a sober appraisal of a new technology, they went full Leaping Lanny Poffo, metaphorically reading bad poems about the jobs they were about to cut before getting into the metaphorical ring. Then the rationales rang out: It was about modernization, Market corrections, redundancies, restructuring, and operational shifts.

The Pirate Code and the Paintbrush: How AI Will Finish What Shareholder Primacy Started, And Who Survives It

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A Familiar Pattern Moving Fast

Unfortunately, layoffs are not a new thing, and it is to wonder if anyone believes the standard excuses anymore. “Talent Mismatch” is a poor use of jargon when a company simply fails to train who they have for what they need, as is “getting lean” after hiring too many staff or “prioritization of capital” when spending payroll on stock buybacks. Let’s recall that we also have decades of reports of catastrophic management practices burning the economy every year. It is not as though the market has faith in either the Stock Market, or the “C-Suite” in any given sample of it. When companies turn so immediately to layoffs and claim it’s because of AI, it just sounds like nobody knows what they are doing- or they do and it’s worse.

It is equally clear that AI is not a simple or unidirectional catalyst. What imitative executives seem to miss is that AI may offer a distinct competitive advantage to modern labour in this old negotiation. Those employees that lose their jobs may not need to return and, if they choose to, can demand concessions- and the company may have to pay up. Layoffs without a solid business case were always bad policy, and now there’s a tool that helps employees see that in real time. It’s a dynamic that was not created by AI but only exposed by it. This fancy new tool is revealing the weaknesses of the narratives that used to drive major economic shifts.

Layoffs are billed as good business sense,

when the reality is that they often reflect a dialogue with a very specific audience. As such, the headlines we hear about them are moving according to rhetorical dynamics that hide the real transaction to soften a stock market response. It turns out that market reaction is merely another facet of the rhetoric; A major aspect of which is that the shareholders are often institutions such as pension funds, mutual funds and others. Those institutions are responding to measurement profiles of their own, upon which the managers of them depend for their own security. The logic supporting all of that has removed all ownership, leaving a horde of interests who have no real stake and may ‘jump ship’ without penalty.

Profits, in that discussion, are less of a goal than a rhetorical pain-point, a demand that acts as leverage in a negotiation between an employee and investors who may have no vested interest at all.

The addition of Artificial Intelligence into that negotiation may not be a complication so much as an energizer of agents already in play. It may not be the ingredient that cuts jobs but merely the method by which this “Pirate Code”- dialogue “Take what you can- Give Nothing Back!” finally goes off the rails and causes real pain.

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The Drift Nobody Voted For

Back in the day, Henry Ford was considered visionary for creating the conditions where his workforce drove his vehicles. It made good business sense to have a prosperous labour force because they could then spend their money on company goods and services. We would wonder, then, what happened because it is to think that business people came around, either suddenly or gradually, to a position of openly viewing labour as expendable goods doesn’t add up. At no point did any cabal of ‘corporate overlords’ convene and decide “what we need is a new sociopathic philosophy of business where we treat employees like cattle.” What happened was more structural and sub-rhetorical. An equilibrium of sorts was established with an antisocial narrative.

First and most importantly, the dialogue about it took on a life of its own among a portion of business leaders who were distinct from Henry Ford in many ways. They were not like him but enjoyed enough similarity to support varying degrees of narrative likeness. They were not ‘movers and shakers’ but could talk a good game. They couldn’t build, but they could invest. Individually they were inconsequential but as a crowd, they could have immense influence.

Secondly, dialogue that began from Henry Ford’s visionary stance of “They can have whatever color they want, as long as it’s black,” degraded both naturally and through the influence of the ‘Leaping Lannies’, those imitative executives who had no such vision. It drifted from a detailed and technical business practice to a general attitude expressed by bumper-sticker logic like, “Gas, Grass or Ass, Nobody rides for Free”. From Ford’s expert business acumen, realizing a return on an investment, the dialogue became a narrative informing this other cohort that they had achieved a special status.

Leaping Lanny Poffo. img from Pro Wrestling

And then, around 1970, someone codified that narrative as faux-economic policy. Milton Friedman’s rather offensive dismissal of obligations to the society one depends on for profit was clearly adopted as a normative attitude without much debate. His argument that “business” as a whole cannot be said to have responsibilities set the stage for a dialogue controlled by a crowd of investors who were owed a return but who owed nothing in return. From there it is no mystery at all how the attitude toward employees went from a ‘drift’ to a full ‘plummet’.

You can track that deranged negative progression through the language we used to take for granted. Workers went from being “hands”- actual body parts- to being roles and finally clinical diagnostic terms in a debate about profits and losses. So objective. So clinical. It was dialogue made specifically to inform people of their status: Things that may be of use. No longer sources of immense profits because of the money they spend, employees were now burdens that simply cost money to train and upkeep.

That drift becomes the rationale for rewarding executives for leaning on draconian measures as performance, for being less capable. That drift would also become the 'buy in' for advancement into the C-Suite since those people would choose others most similar to themselves. Once disdain for subordinates becomes the operational culture, the selection pressure inverts. Competence in developing people, building institutional knowledge, retaining talent; those skills become invisible at best, suspicious at worst. The executive who invested in his team looks soft, while the one who cut 15% and hit a quarterly number looks decisive.

So the C-suite gradually fills with people whose primary skill is performing toughness in the language the board already speaks. They’re selected for signaling how unsentimentally they are focused on shareholder value. The morbid part is the competence paradox it creates. Executives may be genuinely skilled in their chosen field, but what they must exhibit to remain in the room is navigating the selection environment that produced them. Reading rooms, managing up, knowing when to cut and who to protect: That's not nothing but, those skills are internal to the system. They produce careers instead of good business.

And because they select for similarity on the way up, the institutional memory of what functional management even looks like gets progressively shorter. By the third generation of this selection cycle, you have C-suites that have never actually seen healthy organizational development modeled. They don’t miss what they’ve never witnessed.

‍The most dangerous animal in any institution is the man who has read everything and understood nothing, because he will defend his ignorance with popularity and crowd acceptance.

The Intellectual Licensing of Extraction

The most dangerous animal in any institution is the man who has read everything and understood nothing, because he will defend his ignorance with popularity and crowd acceptance. In a functional system, the difference between the task and the purpose of the task is understood, which exposes the fairly harsh irony here: The drift referred to above is based on an intellectual premise from the 1970’s that doesn’t entirely miss the mark. On top of Milton Friedman’s pothole of intellectualism was a piece about Agency theory by Jensen and Meckling in 1976. The paper suggests that the difference between the owner’s interests and that of managers hired to make decisions on their behalf will ultimately incur unacceptable costs. People will take advantage of owners, in other words.

It’s true, obviously, but openly disguises the fact that such an environment was created by the people now complaining about it. They created the environment they are now suggesting is susceptible to corruption. They created the conditions that reward corruption, then cried out that corruption was in the air, making managers out to be the villains. It also disguises the habit of shareholders inflating themselves as “owners”. Company owners, we might observe, can’t jump ship if the CEO doesn’t bow deeply enough to them. Friedman explicitly gave them an ‘out’ by explaining that the ship isn’t a person anyway, and the Captain owes them first.

What has happened then, is that this “Pirate Code” in the form of philosophical premises have become a pivot-point of crowd equilibrium. Accepted as something that is simply understood by all, it is an unconscious influencer across all dialogues that are relevant to economics, work, jobs, politics and more until it is the fabric of our culture. No more debate about it is necessary because anything remotely contrary can be dismissed with single-word slogans, like “socialism”. The singular crowd that could find value in such a watered-down ethic as this “pirate code”, has managed our narratives to one single outcome: extraction.

Take what you can: Give Nothing Back!

As we begin wondering how AI will throw a wrench in that plan, we will stop wondering why we are hearing about “the dangers of AI”.

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The Paintbrush Problem

As I’ve said elsewhere, AI is a fancy paintbrush. It’s a chatty word processor. It’s a really great Swiss Army Knife. It’s a tool and, as such, no more useful than the human who uses it. Without a user, AI is inert and of no value. Used properly, it is a powerful multiplier of skills you already have, or a means of growing them. The caveat is that, like knowledge itself, AI requires discipline. Without those skills, AI is just a powerful multiplier of the slop it is given. Which is why some companies who rushed into layoffs are quickly discovering that they needed those employees after all.

It’s the part where Sun Tsu would- Well, according to legend he would cut off people’s heads until they listened to him and did what he instructed. Maybe he’s not the best example, but I think he would remind us that mistaking the map for the terrain is a path to defeat and dishonor. I suggest that knowledge is best described as “holding a sword in stillness”: Knowing what NOT to do with it is sometimes more valuable than using it.

The same can be said for employees. Even those without any investment in training but years within the company have a bank of institutional knowledge that is hard to replace or replicate- something executives are expected to understand. Even ungifted employees, armed with AI and enough experience, will know what questions to ask and what answers to seek; For example, how to translate that institutional knowledge into profits.

AI requires the kind of thinking that is often disruptive, though: Systems thinking, contextual reading, higher-order pattern recognition, personal sovereignty, and integrity. In other words, it needs all the qualities that have been systematically devalued since the 1980’s. That is where AI threatens to become a quasi-revolutionary influence because it offers advantages to users with those natural gifts and skills, without any promise of control. It is a nearly pure disruptor. The question must be asked how that disruption maps on to the accelerating pattern.

‍ ‍Knowing what NOT to do with AI is sometimes more valuable than using it.

The Acceleration

The inflection point where the acceleration really began could be placed at the publication of the Jensen Meckling article in ’76, but I tend to think that was just the announcement that signaled what the game was- and make no mistake: Shareholders were the audience for that article. The point at which the game took on a serious, manic quality was the Dot Com Bubble. That was when real money began to look realistic to this cohort, where before it never was. After Enron, and then the Housing Bubble, the idea that others were making really were cashing in took root. The drift began in earnest. The payoffs became more realistic while threat of consequences faded, even as the potential damage became more severe.

It explains the motives of the ‘pirate code types’ better than simple rapaciousness. They really need to soak up as much raw capital as they can, as much raw power as they can to win at a game that gives them a feeling of exclusivity. The logic is simple crowd dynamics and competitiveness. As the crowd grows, it increases the volume of distinction needed to “win”. That’s the manic boom and bust dynamic at play. The South Sea Bubble, Tech stocks, Mark to Market Accounting, Artificial housing price bubbles, and not finally, the subversion of the White House: These are strategized extraction assaults, when they are not simple theft.

They are following a pattern that is as familiar to the rest of us as it is invisible to them. The change is that AI has reduced the cost of accurate information and increased access, basically disrupting control of the ‘Pirate Code’ narrative. The correction that follows will be faster than the old news cycle.

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Who Survives and Why

It makes the predictions about AI easier. The ‘Pirate Code types’ will attempt to use AI to eliminate any dependency on labour, or to enforce a corporate hegemony in which labour is desperate for their benevolence. However, piracy also follows a predictable pattern. In the colonial era it was an expression of competition between very large, very powerful rivals who couldn’t afford an overt conflict, or at the very least found it cheaper to avoid. Once those powers extracted what they could, those pirates were hunted down and hanged to avoid any embarrassing scandals. I expect that pattern to hold firm in our time as well, with the hangings more metaphorical than real.

The shareholder extraction dynamic has the same preconditions for resolution as colonial piracy, and the crowd equilibrium is already shifting in favor of stable nations. China, for example, has demonstrated with finality that innovation, especially in production, makes any narrative of corporate sovereignty sound pretentious. What country can you move your factory to if you are simply unable to compete? In Canada, political parties that were recently touting separatism are back-pedaling fiercely now that financial stability is in the air. What country is going to take in ‘players’ who once so loudly proclaimed themselves pirates?

The swift adoption of AI for antisocial purposes will quickly run its course as companies realize that individuals and labour, through the insightful use of AI, can adapt faster than them. Smart money will follow intelligent use of AI, leading to a re-arrangement of shareholder priorities in the long-term. In the short term, this looks like fewer companies doubling down on extremely high-salary, high value positions for skilled users of AI. The rest of the pirates will settle for shrinking shares of the growing market for undifferentiated creative output.

Financially stable countries are now, or soon to be the currency of success. Two outstanding questions remain: Who among the ‘pirate code’ shareholders is going to turn on the others first? Because that is how the pattern unfolds. Survival will be about having a home in a stable economy somewhere and those places can afford to refuse sociopathic investors. And: Who will be the first brave soul to suggest that Canada and the US can innovate their way into competitive positioning without hysterically sacrificing employees?

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