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When wealth is talked about in this context, it is often described as a pie. "You can't make the pie larger," say politicians. When you're talking about the amount of money in one family's bank account, or the amount available to a government from one year's tax revenue, this is true. If one person gets more, someone else has to get less.I can remember believing, as a child, that if a few rich people had all the money, it left less for everyone else. Many people seem to continue to believe something like this well into adulthood. This fallacy is usually there in the background when you hear someone talking about how x percent of the population have y percent of the wealth. If you plan to start a startup, then whether you realize it or not, you're planning to disprove the Pie Fallacy.What leads people astray here is the abstraction of money. Money is not wealth. It's just something we use to move wealth around. So although there may be, in certain specific moments (like your family, this month) a fixed amount of money available to trade with other people for things you want, there is not a fixed amount of wealth in the world. You can make more wealth. Wealth has been getting created and destroyed (but on balance, created) for all of human history.Suppose you own a beat-up old car. Instead of sitting on your butt next summer, you could spend the time restoring your car to pristine condition. In doing so you create wealth. The world is-- and you specifically are-- one pristine old car the richer. And not just in some metaphorical way. If you sell your car, you'll get more for it.In restoring your old car you have made yourself richer. You haven't made anyone else poorer. So there is obviously not a fixed pie. And in fact, when you look at it this way, you wonder why anyone would think there was.

That won’t happen.

None of these factors, however, can sustain strong growth past 2010 without a self-sustaining cycle of private spending and income growth. Several obstacles stand in the way of that transition. Through to mid-2009 households had lost $12 trillion, or 19% of their wealth, because of the collapse in house and stock prices. That saps their purchasing power and pushes them to save more, especially those nearing retirement. Though they’ll boost their saving only gradually, that still means consumer spending (about 70% of GDP) will grow more slowly than income, after two decades in which it usually grew more quickly. High unemployment will hold back wage gains (see chart); wage cuts are already commonplace. Leaving aside swings in energy prices, inflation, now about 1.5%, will slip to zero and may turn to deflation in late 2010. Deflation drives up real debt burdens, further sapping consumer spending.

The government won’t let any more big banks fail, but the survivors are neither inclined nor able to expand their lending much. Residential- and commercial-property values fell by $8 trillion, or almost 20%, through to mid-2009, impairing existing loans and eroding the collateral for new ones. Regulators are also proposing to raise capital requirements, which will further encourage bankers to turn down borrowers.

the rest of the world isn’t big or healthy enough, and a steeply falling dollar would inflict deflationary harm on others.

The list of roadblocks is depressing, but America will not slip back into recession or a lost decade akin to Japan’s in the 1990s. It did not enter its crisis with as much overinvestment as others, Japan in particular; its population is still growing (Japan’s is shrinking). It took two years to tackle its banks’ problems; Japan took seven. Boom times will be back. Just not very soon.

The R&D focus should be on industry clusters that can leverage the country's natural resource wealth and traditional strengths. Think energy, water, agriculture, forestry, mining and manufacturing that serves vital Canadian needs.

In areas most closely linked to innovation, the progress is equally slow. Mr. Wilson, for example, urged Ottawa to look at creating tax incentives to encourage venture capital and speeding up the commercialization of intellectual property developed in universities.

The to-do list on the path achieving that objective is long. There's overhauling the Investment Canada and Competition acts, opening up the telecom and broadcast industries to more foreign competition, creating a national securities regulator, reforming copyright laws, eliminating remaining internal trade barriers and lowering personal income tax rates.

It may mean that government plays a larger role in some industries while leaving others to their own devices. That, at least, is how other similarly sized economies successfully leverage limited government funds.More study has become an excuse to put off these much tougher, but inevitable, choices.