bout de papier, Vol. 21, No. 4 (2005) — Winter 2005 // Hiver 2005, pp. 26–28
This article has been adapted from the author’s introduction to a collection of essays in honour of Sylvia Ostry. Annotation and references to other contributions to the book have been omitted and the text has been edited for length. This version appears in bout de papier with the kind permission of the author, to whom we express our thanks.
man the polwad derives from many sources, of which intelligence is only one. Personality, energy, a sense of history and timing, a network of relationships, all of these contribute to allowing creative and new ideas to take root in a busy world in which quick policy hits are the norm and lasting influence the exception. All of these qualities have had a bearing on Sylvia Ostry’s legacy and continuing output, as I hope to demonstrate in these comments. That she is still a vital force in the world of ideas suggests there is much more to come.
Sylvia, as she is universally known in the higher reaches of policy circles, having conducted con brio successful careers in academia and in the Canadian public service, burst onto the international stage as the head of the Economics and Statistics Department of the OECD, 1979-83. There, she brought her rapier intellect and a sense of pizzazz to bear on the previously staid if highly regarded business of OECD economic analysis and forecasting. If the forecasts strayed off target, Sylvia could always explain after the fact why this had proved so and why it mattered. I never once saw her in a defensive mode over past misjudgments. She made economics exciting, not just for the media but also for policy makers. Her allegiances were to the discipline and to better policy.
In 1983, at the request of Canadian Prime Minister Pierre Elliott Trudeau, she initiated the penultimate phase in her career (before returning to academia) as the most senior adviser on international economic relations and trade matters to several Canadian prime ministers (assuming a variety of titles between 1983 and 1989). It was at this point that I was fortunate to be assigned to work for her, initially as a bureaucratic drone within the foreign service and, later, as our mutual confidence grew, as her “Boy Friday” on international institutional matters, particularly those relating to the G-7. It is hard to describe the sense of excitement she created about her on such ostensibly dry matters. She reveled both in clear thinking and in creative chaos. She objected to being described in a major international paper as a leader among “counterculture” economists because, of course, she was a very serious economist. But her style was subversive of bureaucratic logic, and she was adored by the international media who would, at press conterences, serenade her with her past policy pronouncements (Policy Overshoot! they would chant, quoting her — with reference to the G-7’s all-too-successful attempts in the mid-1980s to manipulate exchange rates).
Silvia was a product of her time and place: the inter-war years and Winnipeg. Before the First World War, her parents, originally from Odessa and Danzig, had joined so many others in Winnipeg’s fabled Jewish community, carrying with them a fierce attachment to education and a strong interest in the arts. Though the Depression largely wiped out her father financially, there was never any question that her brother and she would be deprived of a university education. In those years, Winnipeg’s outlook was intensely international. The Winnipeg Free Press published much more world news than its Toronto rivals. Why? The cosmopolitan immigrant community for one, perhaps, though the grain trade probably had more to do with it.
Sylvia was minded to study medicine as it was then the most demanding university course. She sailed through pre-med, but in medical school itself was taken aback to find the curriculum intellectually tedious. Visiting her brother at Queen’s University in Kingston, she realized there was another world, other possibilities, including Ph.D. studies. Her fond parents allowed her to drop out of med school, while its head saluted her departure by asserting that she was “the best example of why we don’t want women in medical school.” She chose economics at McGill as “something to do.” From McGill, she traveled to Cambridge for her Ph.D. on a Commonwealth scholarship, joining Girton College (the first women’s college there and a seed-bed of many distinguished careers, although, as Sylvia notes, sited on the fringes of the University, so as to avoid contamination of Cambridge by women!). She leapt into the emerging field of development economics, writing her thesis on the first Indian five-year plan, comparing it with Soviet planning and finding it distressingly similar. She then thought of working for the UN on development issues, but was told in New York that women were not readily accepted as professionals in developing countries. Faute de mieux, but not for long, she became a professor at McGill.
Joining the public service at a senior level, she helped generate and benefited from the Trudeau-era insurgency against staid Ottawa thinking and methods. Her stint as head of Statistics Canada (then recognized as the foremost statistical agency in the world) allowed her to reflect on the relationship between information and policy, and engage in a number of quasi-academic exercises rooted in her agency’s unrivalled data. period as Deputy Minister of Consumer and Corporate Affairs introduced her to the intersection of micro-economics and law, in fact the basis of a market economy. And her years as head of the Economic Council of Canada gave full sway to her various research interests.
But it was her years as head of the large and admired Economics and Statistics Department of the OECD that transformed her into an international actor. She recalls being on the verge of turning down this opportunity when, as so often in her life, her husband, Bernard, himself an eminent and intelligent public servant, intervened to insist that she give it a shot. And what a shot she gave it, capitalizing on the leeway provided to her by then-longtime OECD Secretary-General Emile van Lennep, increasingly a curmudgeon, but a smart one with a strong sense of what the OECD could do best. At the OECD, she became increasingly interested in micro-economic factors (at a time when Keynesian macroeconomic perspectives were all the rage) and the supply-side (which was not yet known as such). Indeed, she focused increasingly on structural rigidities well before they became topical.
On return to Ottawa nearly four years later, she was offered various senior public service jobs but chose the apparently more junior one of Deputy Minister of International Trade having become convinced of the systemic importance of international trade and investment issues for prosperity in Canada and beyond, thus launching the last phase of her public service career, one that was to achieve significant results at the international level.
“he debate in the mid-1980s over the forms and scope of international economic policy cooperation among the major powers was an intense one. Characteristically, Sylvia was deeply involved, with strong views. She believed that, in spite of the laws of unintended consequences and of overshoots in performance due to affirmative mutually-reinforcing policies, “coordination” of economic policy among the G-7 (and some other major nations), of the sort embodied in the 1985 Plaza Accord on exchange rate and other imbalances was desirable. But she was unsentimental about the challenges:
There are significant advantages to be derived from policy coordination … If more… potential benefits are to be realized, progress will be required in several areas: government policy-making needs to be modified in ways which will ensure a better harmonization of domestic and international issues; regular interaction among ministers and officials … should be strengthened; and the international monetary and trade institutions should be reinforced and adapted to the new realities of global interdependence. The basic problem is one of timing. There are two clocks ticking: the clock of rapidly accelerating economic linkage and interrelationship and the clock of domestic multilateral decision-making It would be foolish to anticipate early synchronization, but perhaps not unduly sanguine to hope for some diminution in difference between them.
Twenty years after she and Michael Artis expressed these views, and at a time of significant international current account and other imbalances, they remain completely apposite.
Sylvia’s understanding of the interlinkages between fiscal, macro-economic, micro-economic and competition policy informed her concern that Canada (a habitually complacent nation with respect to its economic advantages and performance, made comfortable by its access to the vast US market) should invest more in innovation:
Access to markets and competition are necessary but not sufficient conditions to maintain and improve Canadian competitiveness … Trade policy must be accompanied by appropriate macroeconomic policy, the chief determinant of the cost of capital. So fiscal policy is also a key part of international policy. But, in addition… so are a range of other government policies which impact on innovation. In domestic terms, .. the single most important determinant of competitiveness is intangible investment in R&D and human capital. In this respect, there are many disquieting signs that Canada is slipping badly in the international race… Since a major new form of technology transfer is international networking among firms and a basic condition for joining a network is significant in-house R&D, there is a clear and present danger of Canada slipping further in international competition. We must get our own house in order if we are to continue to play our traditional international role.
Sylvia’s interest in game theory came together with many of the research projects she conducted during her years as a senior official and thereafter. She draws on gaming to illuminate one of her most recent vectors of policy inquiry, transparency in international trade policy.
The policy process of trade is usefully conceived as a game played on two levels, involving negotiations among interest groups, or stakeholders, at the national level and negotiations among country representatives at the international level. In trade policy, for the United States and the European Union, one could plausibly argue that the negotiating strategies are largely determined by domestic constituents. Yet there has been almost no empirical research on the subject of the national process and its inter-relationship with the process at WTO headquarters in Geneva…. The profound transformation of the multilateral trading system and other definitive changes in the political economy of trade policy since then makes the concept of a two-level game today far more complex than it was at the end of the 1980s. Indeed, given the spread of regional trade agreements the game often involves three levels, further increasing the complexity of the process.
The policy implications of such analysis have interested Sylvia even more than the conceptual and theoretical aspects.
Sylvia’s capacity for synthesis across disciplines often narrowly stove-piped in the academic world continued to influence policy long after she left official office. As I noted some years ago, her contribution to the review of Canada’s Foreign Policy in 1994-95 vastly exceeded in acuity and relevance virtually all of the Parliamentary and Government boilerplate on international economic and trade policy —remaining today a more useful historical reference than anything produced on these issues by official sources, not least because of its concision and its affirmation of how Canada could and should do better. He six years Ispent working with Sylvia, on and off, were the most formative of my professional life. From her, I learned that total commitment to one’s ideas could shift policy not just domestically but also internationally. She taught me that there is more than one way to advise senior politicians: while they may be loath to read briefing books, most are addicted to the media, scouring it for references to themselves. In this way, Prime Ministers and other leaders not infrequently encountered and adopted ideas of Sylvia’s that they had been unwilling to absorb through more bureaucratic means.
Her professional integrity occasionally brought her into conflict, sometimes lively conflict, with political staffs, although only rarely with politicians themselves (a number of them quailed at the prospect of a substantive duel with her). She always gave her best advice, no matter how inconvenient politically – and sometimes it was inconvenient, particularly on matters of domestic trade protection. The conventional wisdom was that she was not a “team player” and she acknowledges today that she found sorting through her loyalty on the one hand to her ideas and on the other to government solidarity “very difficult.”
She worries that the space that existed in the 1970s and 1980s for public servants to provide fearlessly their best advice may no longer exist in a public service where expediency has become the rule of the game. Indeed, she pays tribute to the Cabinet Secretaries (and heads of the public service) of that era, Gordon Robertson and Michael Pitfield, for backing her up and encouraging genuine debate over key policy issues. She was clear on the potential breakdown of the multilateral trading system under the onslaught of regional arrangements aggravated by the perverse effects of globalization (not least, the emergence of the anti-globalization campaign). This made her views unpopular with those who saw bilateral trade deals as the answer to Canada’s economic vulnerabilities. She accepted the defensive need for bilateral agreements but nonetheless worried greatly about their impact on the integrity of an open global trading system (that we all claimed to support). Her seniority and professional eminence provided some protection, but ultimately it was her intellect, energy and commitment that generally won the day (or sustained her when she went down fighting!). Her cosmopolitan outlook, reinforced by her years at the OECD, never squared with the world-view of many in Ottawa but greatly enriched the advice available to Canadian prime ministers and helped shape their own world view and influence.
One of Sylvia’s most unsettling characteristics, from the perspective of officialdom, was her egalitarian spirit. She treated and spoke to prime ministers exactly as she did to her driver, in the sense that she respected both and was interested in their views. That said, she thought prime ministers were worth improving to the extent they were willing. Some of their acolytes thought this approach lacked appropriate respect, but it always seemed to me the reverse: she was always busy learning and growing intellectually herself and she assumed that all others, particularly the powerful, would wish to do likewise.
That said, she inspired a degree of terror within Canadian officialdom. Many fled from the prospect of sitting through an erudite disquisition on micro-economic theory or another abstruse Ostry enthusiasm of the moment. Others were perplexed over her limited interest in management and in some of the “low” policy issues (fish, anyone?) that are so vital to Canada’s domestic constituencies. Most feared of all was her magisterial indifference when confronted with lesser necessities of bureaucratic life in Ottawa (for example, fighting for staff or resources). That she wrote most of her important texts herself from start to finish without requiring the input of many levels of officialdom was seen as slighting by some, daunting by others and humiliating by a few. In brief, very much a rara avis in Ottawa, a town devoted in large measure to the cult of conformity. That she continued to smoke unchallenged in all settings long after the government had banned the practice in its work-sites (thus creating non-governmental zones wherever she moved!), only reinforced her redoubtable reputation for most and her fabulousness for some.
Fortunately, Sylvia has a huge sense of fun and very catholic interests beyond the office: opera, musicals, films (always films), reading (elite, and if that was not available, popular journalism, the latest novels and much non-fiction), clothes (generally on the cutting edge). I once saw her and Margaret Thatcher in deep discussion on the margins of a reception. As I approached (shamefully, to eavesdrop), I realized that they were comparing notes on a ripe television serialization they had both taken in recently with obvious pleasure. Sylvia’s involvement in the world beyond economic and trade policy was critical to the perspective she brought to bear on these topics, even as it confounded more humourless devotees of these disciplines. As well, her joy in family life and her pride in her two sons humanized this daunting intellect.
In a perceptive and generous appreciation of Sylvia published recently, former Canadian foreign minister Barbara McDougall touched on Sylvia’s reputation for government infighting. In truth, she was not particularly good at Ottawa power games. She used to form her positions on trade and international economic relations on the basis of ideas and a sense of what was good for the world (not necessarily for Canada in isolation). She was thus not well equipped on all occasions to defend her corner against those whose agendas were Ottawa-centered and turf-oriented. But she is prominently remembered while many of her former antagonists are forgotten. In order to “deliver” on their issues, she and other idea-driven servants of the state have to endure the small-mindedness and futility of much of the manoeuvring that characterizes bureaucracies in political capitals, and they understand this. Not surprisingly, she prevailed much more often than not because of the strength of both her ideas and her commitment to them.
Over time, Sylvia has grown more concerned over the inequities inherent in international relations that often seem amplified within multilateral institutions. While the principle of a level playing field receives endorsement at every turn, rich countries have not hesitated to undermine the prosperity of poorer ones (sometimes the very poorest) through their own, often predatory, subsidy schemes, particularly in relation to agriculture. She understood before most others that the antiglobalization movements would tap into a wellspring of sympathy for such avoidable gross injustices. It is such insights she carried with her into meetings of the Group of Thirty, a select gathering of leading economists, at their quarterly meetings.
A glance at her recent publications says much about the searching nature of her mind, constantly in quest of connections that may have been missed by conventional wisdom. In the 1990s, she became interested in and led a stimulating Council on Foreign Relations working group on the links between technological innovation, productivity and trade, thus investigating an important nexus in international economic relations well ahead of its time. She continues to break new ground in discussion of these issues. Her in-depth knowledge of the evolving nature and role of multinational firms has benefitted many expert publications and is also available to the general public, building on the work of such MNC study pioneers as Raymond Vernon. The issue perhaps most closely associated with her, and on which she has published the most in recent years, relates to the institutional architecture of international economic and trade relations, on which both her expertise and personal experience is nearly unrivaled. Having started her research life in the labour economics field, she has moved far and wide since, straddling the disciplines of economics, law and international relations. The breadth of her intellectual quest and the relevance of her findings to so many disciplines reward a renaissance sensitivity and a first class mind.
For all of these qualities, we are all in her debt. Floreat Sylvia!
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Originally published in bout de papier, Vol. 21, No. 4 (2005) — Winter 2005 // Hiver 2005, pp. 26–28. Read the rest of this issue →
