The sale of Connaught BioSciences stands at the centre of so many different ideological and emotional cross-drafts that the resulting squall is unlikely to die down for some time. It has thrown up every known economic prejudice and nationalist myth, a whirling mix of classical mercantilism, high-tech romanticism, and Mussolini-style corporatism.
The simplest of these is the pure nationalist concern that Canada is losing part of ''our'' heritage. It doesn't matter that ''we'' don't own it, nor would any amount of foreign money be adequate compensation. Connaught, in this view, is something like the Mona Lisa: priceless, and immobile.
Even if Connaught occupied the ''storied'' place its admirers have reserved for it in Canadian economic history, this would be a poor argument for marking the firm off limits to foreign investors in its present enfeebled condition. But its supposedly glittering record is largely fiction. Connaught did not develop insulin, much less discover it, despite countless journalistic assertions to the contrary. Banting and Best merely chanced to be working at the University of Toronto at the time. Connaught learned how to make insulin from an American firm, Eli Lilly, after its own efforts at development failed. The insulin it now sells is made in Denmark.
Most arguments for blocking any foreign takeover stray uncertainly beyond this into a hazy attempt at industrial strategy. One always senses underlying this a feeling that we ought to have such a strategy just for the sake of having a strategy: leaving the matter to private investors seems so, so . . . untidy.
INDUSTRIAL SNOBBERY
This is reinforced where ''high-tech'' is concerned by a sort of advanced industrial snobbery, in which it is imagined that the only fit endeavors for a country of Canada's breeding are knowledge industries. Resources are for Neanderthals, services for pansies; robotics is the field for gentlemen.
This is absurd. If hewing wood and drawing water paid well enough, it would be of no economic benefit to dainty around with pharmaceuticals. Pumping oil for a living hasn't hurt Kuwait any - nor, for that matter, Alberta. If drug research can be carried out less expensively or more effectively elsewhere, it is in Canada's interest to produce other things and trade for it instead.
Where the case for retaining Canadian control of Connaught is presented in terms of real economic returns, it reflects a series of increasingly questionable assumptions: First, that research-and-development-intensive industries are necessarily advantageous; second, that biotechnology is an especially high- growth example; and third, that Connaught is well placed to lead the way in this sector.
In fact, there is no evidence of any correlation between high overall levels of R & D and rapid economic growth. Britain, for example, spent far more than Japan on R & D as a percentage of gross domestic product all through the 1970s, with meagre results. Biotechnology, for all the claims advanced for it in the past decade, has yet to yield much in the way of commercial payoffs, and still accounts for less than 1% of the world pharmaceuticals industry. Connaught is an insignificant player with no new products and an antiquated technology.
In any case, if it is true that private Canadian investors have failed to grasp the exciting future opportunities Connaught offers - that is, that the interests of Connaught shareholders have become so divorced from the interests of society at large as to justify depriving them of their right to sell to the highest bidder - then that case has yet to be made. It is not enough simply to wave one's hand and mutter vaguely about ''strategic'' industries and ''long-term, high-risk'' investments. Capital markets are there precisely to assess those risks.
I am aware of the work of economists such as Paul Krugman in the area of acquired comparative advantage, in which subsidies and protection for high-tech industries might be justified on solid economic grounds. But the conditions necessary for such principles to apply, as with earlier theoretical curiosities like the ''optimal tariff,'' are so rare and unlikely as to make the theory useless as a practical guide to policy.
The problem is that, while the economists who advance such theories are wise enough to circumscribe them with the appropriate hedges, their disciples in the media take their ideas and run away with them. Just because you attach the words ''high-tech'' to an industry, it does not mean that the economic laws that govern it have been suspended.