“The facts are clear: Canada, and Canadians, are competitive,” Finance Minister Bill Morneau wrote in the Financial Post recently.

“Canadian competitiveness raises CEOs’ ire,” ran the headline in Friday’s Financial Post. “Canada faces a competitiveness challenge that the nation must address with ‘tremendous urgency’,” moaned Royal Bank CEO David McKay in another story. Magna CEO Don Walker was reported complaining government policies were “making it increasingly difficult to remain competitive.”

And not only CEOs. Politicians are getting in on the act: “We’re losing our competitiveness.” Manitoba Premier Brian Pallister told Bloomberg News. Also academics: “Canada must play the long game to fix its economic competitiveness,” advised a recent eyeglazer in the Globe. Not to mention that splendid three-hander on the subject last week, also in the FP,

 On one level, then, we can relax. When it comes to worrying about our “competitiveness” we can compete with the best in the world. There’s a genuine issue or two buried in the mix. But it tends to get lost in all the self-interested corporate whining.

People who maunder on about international “competitiveness” tend to be speaking of many different things, when they are not speaking of nothing at all.

McKay’s jeremiad touched on such diverse matters as skills training, infrastucture, clean energy, and “smarter global access.” Walker was upset about rising electricity costs and restrictive labour policies.

All of which are legitimate concerns, but none of which have anything to do with our competitiveness as a country. The reason for this is simple: Countries don’t compete. Companies do.

The relationship between countries that trade with one another is better described as co-operative than competitive, part of a global division of labour that, like its domestic counterpart, raises everyone’s living standards (though not necessarily raising everyone’s equally).

It is impossible that a country could find itself permanently unable to compete, across all industries. Comparative advantage is one guarantee of that: even if country A’s costs are higher than country B’s for everything, it still pays each to specialize in its area of comparative advantage. (The classic, if dated, analogy: A lawyer who can type faster than her secretary should still leave the typing to him.)

But the clincher is the exchange rate. Whatever a country’s competitive position at a particular rate of exchange between its currency and another’s, it will be very different at another rate. If Canada were unable to compete with a 90-cent dollar, it surely could if the dollar were to fall to 75 cents,. This is why simple comparisons of costs between countries are meaningless: they are all hostage to the exchange rate.

Devaluing your currency is not much of a competitive strategy, of course — effectively, it amounts to a national pay cut — nor can it be a substitute in the longer term for the hard work of raising productivity and reducing costs.

But raising productivity would be an important policy objective even if we were the only country on Earth. Runaway electricity costs or crumbling infrastructure are undesirable, not because they make us uncompetitive, but because they make us poorer. Or, what is the same thing, they require us to compete via a lower exchange rate than would otherwise be the case.

The question, then, is not whether we can compete, but how: as a high-productivity, high-wage country or a low-productivity, low-wage one; at a relatively high exchange rate, or a relatively low one.

When it comes to worrying about our ‘competitiveness’ we can compete with the best in the world. Of course, for individual companies it’s a different story. At any given exchange rate, some will be able to compete internationally and some will not. The higher the exchange rate, other things being equal, the higher a company’s productivity will have to be, relative to its rivals, to survive.

An important way to cut costs and raise productivity is by investing in machinery and equipment, and an important source of investment capital is from foreigners, and an important deterrent to foreign (and domestic) investment is the rate of tax on investment returns. Investors can and will take their capital elsewhere if they can earn a higher after-tax return there than here. So it’s valid to worry about the competitiveness of Canada’s tax rates; devaluing the currency will not save us here. Taxes, after all, are collected as a percentage of profits, which is to say the excess of revenues over costs. Should the exchange rise or fall, it will inflate or contract the value of each in the same proportion.

It’s also valid to make comparisons of costs across countries, so far as short-term movements in the values of their respective currencies can be taken out of it. For example, by comparing costs based not on current exchange rates, but the rates that would result in “purchasing power parity,” i.e. where a representative basket of goods and services would cost the same in different countries, it’s possible to see whether the cost of a given good or service is relatively high or low.

It’s on this basis that it’s possible to observe, as many studies have, that Canadians pay among the world’s highest prices for, say, wireless telephone service, as they do for domestic air travel, and for investment management fees. What’s common to all three industries? They all operate as oligopolies, protected from foreign rivals by legislated restrictions on foreign investment; competition in each is, as such, a relatively sedate affair.

Canada has too much of this sort of thing: supply management is another example. The effect of these limits on domestic competition, moreover, is to make their beneficiaries less competitive abroad. Competitiveness, like charity, begins at home.