Canada’s economic policymakers will be busier than usual over the next couple of months, for reasons that have been well–documented. Fortunately, two of the year’s most important Canadian business books can be read in just a couple of hours, making them perfect in-flight reading for jaunts to Washington, Mar-a-Lago and other centres of American power. 

The two books are Fleeced by Bay Street insider Andrew Spence, and The Big Fix by Denise Hearn and Vass Bednar, a couple of policy wonks at Columbia University and McMaster University, respectively. 

As a bundle, they wipe away decades of dust and grime that have obscured a clear view of Canada’s frustrating struggle to create a dynamic economy. Read them back-to-back and you see the economic system we created has a fatal flaw. Our ancestors embraced free markets, but failed to heed Adam Smith’s warning about what business people might do if they obtain too much market power. 

“People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices,” Smith wrote in The Wealth of Nations. “Though the law cannot hinder people of the same trade from sometimes assembling together, it ought to do nothing to facilitate such assemblies, much less to render them necessary.”

Canadian policy has facilitated too many such assemblies, and the cost-of-living crisis and the historic collapse in productivity are manifestations of those choices. Misguided notions of economic efficiency and stability reinforced a natural tendency to oligopoly, cementing a structure that dulls competitive forces and favours short-term profits over long-term investment. 

It’s probably not an accident that increasing industry concentration has coincided with higher prices, a slump in entrepreneurship and a productivity crisis. Smith’s famous “invisible hand” is guided by a competitive impulse that in Canada has been dulled by monopoly and oligopoly. 

Hearn and Bednar map what happened. Guided by the belief that size would lead to efficiency, and efficiency would result in lower prices, policymakers and regulators offered little resistance to mergers and acquisitions—Hearn and Bednar report that no merger application has ever been blocked, and between 1923 and 2024 only three were ordered to make adjustments to preserve competition. 

The federal government rewrote the competition law last year. The next big company that tries to “buy growth” will have to do more than hire an economist to show regulators how economies of scale could theoretically result in lower prices. The amendment is significant, but it won’t fix what Hearn and Bednar call “corporate kayfabe,” the term professional wrestling uses to describe the fake competitions they stage for its fans. 

There are a lot of places to buy groceries, but almost all of them are owned by either Loblaw, Empire or Metro. Walmart and Costco make the grocery business cutthroat in some markets, but all those satellite brands create an illusion of choice that doesn’t really exist. Same for telecommunications. Concentration tends to spread to adjacent industries. All the grocers were allowed to buy pharmacy chains. The wider scope helped protect the margins of their parent companies during the pandemic, but did little to offset the surge in food inflation. 

“Everything” stores such as Canadian Tire crowd their shelves and websites with brands they own, soaking up more of the country’s supply of disposable income for themselves. That means there’s less demand for the entrepreneurs who develop better pots than Paderno, better tools than Mastercraft and better outdoor gear than Woods. 

Hearn and Bednar end with a bundle of recommendations. I think anyone with an interest in Canadian economic policy should buy the book, so I’ll refrain from getting into them, but I’ll share one: block some mergers. Rogers’ takeover of Shaw Communications and Canadians’ frustration over food inflation have made competition a political issue. Yet RBC was allowed to buy HSBC Canada, and National Bank plans to purchase Canadian Western Bank. While politicians fret over food prices and overage fees, the banking oligopoly keeps getting stronger. 

Spence’s book shows why Ottawa’s competition crusaders need to take their fight to more fronts. Fleeced is a prosecutorial takedown of the companies that dominate the top of the mountain from someone who has worked for two of them. 

A lack of competition has let Canada’s biggest banks book profits that resemble those of growth companies, although without anywhere near the same level of risk as a company such as Shopify. Spence argues convincingly that the banks throttle relatively risky small-business lending, while churning government-backed mortgages and harvesting outsized fees on everything from chequing accounts to mutual funds. 

“None of this bodes well for Canada,” Spence wrote. “Bank financing at current magnitudes is simply insufficient to finance the economic vitality necessary for Canada to have the robust and competitive economy we all covet.” 

Spence’s book is important because it offers a counter narrative to the story Ottawa and the banks have been telling themselves for years about why a lending oligopoly is in the public interest. The setup, they say, is necessary for the financial stability that has spared Canada from the crises that plague the U.S. and Europe. Perhaps, counters Spence, at the expense of a sufficient supply of credit for the entrepreneurs who push economies forward. The productivity crisis suggests Canada’s fixation with banking stability has come at the cost of economic stagnation.

We needn’t abandon stability to generate growth. Canada is good at banking supervision and our regulators could be staffed up enough to keep an eye on a greater array of lenders. 

To generate more competition, Spence suggests accelerating the adoption of open banking rules and completing the overhaul of payments infrastructure. These moves would level the playing field for upstart financial companies, but each has been delayed for years. Fintechs have their suspicions about Ottawa’s lack of urgency. 

Donald Trump’s return might prompt a rethink. Canada’s leaders are panicked because the economy is too fragile to withstand a trade war. The oligopolies are the cause of some of that fragility. By following their own growth incentives, they drained the rest of the economy of its vitality. A minority has been making that case for a long time. Trump’s tariff threats make it undeniable. 

Kevin Carmichael is The Logic’s economics columnist and editor-at-large. He has spent more than two decades covering economics, business and finance for outlets including Bloomberg News, The Globe and Mail and the Financial Post, where he also served as editor-in-chief.