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Having co-authored a book about the history of Ontario’s 407 ETR up to 2005 and having watched its evolution since then, I feel obligated to comment on its latest development, the Ontario Government’s announcement yesterday of Highway 407’s Eastern extension. Almost everything about the announcement was predictable, and I will explain why.

Given its battle with the current concessionaire (Highway 407 International) about tolling, the province was expected to retain control of the extension, set service standards, determine tolls, and receive revenues. Given Ontario’s large deficit, the province might have been tempted to do what the Harris Government did, namely auction off the right to toll the highway for a considerable period of time and use the proceeds to pay down this year’s deficit. But having criticized Harris so sharply, even fiscal exigency would not justify the Liberals emulating him.

The consortium selected to build the highway includes the Spanish toll-road company Cintra Concesiones de Infraestructuras, which is the key player in Highway 407 International. While I do not know who the other bidders were, this should come as no surprise. The Government wanted the transponder system on the Eastern extension to be interoperable with that on the rest of the highway, which gave Cintra an advantage. Further, the opening of the Eastern extension will generate some additional traffic for the rest of the highway, which would give Cintra an incentive to make a more attractive bid than the competition.

I note further that, while the government will be making annual payments to the 407 East Development Group General Partnership, as it is called, the project will be financed by BMO and Desjardins. If the Ontario government had financed the project, it would not have counted against Ontario’s debt because the costs will ultimately be recovered through tolls. My guess is that Cintra can now borrow at better terms than the Ontario Government, which is a reversal of the situation in 1995 when Highway 407 started.

Setting tolls on Highway 407 East gives the Ontario Government a chance to shame Highway 407 International by charging less per kilometre, a difference which will be clearly visible on every user’s monthly invoice. Perhaps Highway 407 International will try to justify this by arguing that there is less traffic volume on the Eastern extension. The flaw in that argument is that the concessionaire doesn’t differentiate its tolls by location anywhere on the current highway. On the other hand, if eliminating the deficit is still a priority in 2015, when the extension is to open, the Government might be tempted to set higher tolls to contribute to that objective.

Finally, the last unsurprising aspect of the announcement was the silence from the Opposition. The Liberals’ decision to maintain control and set tolls left no room for criticism from the NDP. The Hudak Conservatives, not wanting to call public attention to the unfortunate legacy of the Harris Government’s 1999 privatization decision, also said nothing.

While every aspect of the latest episode in the Highway 407 saga was entirely predictable, it does at least reflect organizational learning, and that’s always a good thing.

This will be my last post for a few weeks. I will be in Australia giving some lectures in Canberra and Melbourne on my two long-standing research interests, innovation and narrative. Expect me to break radio silence in mid-June.

I’ve just watched one of Obama’s first campaign ads and an attack ad sponsored by the Senate Republicans. I’ll show how both fit into my four quadrant narrative framework, and speculate about whether each will work.

The Obama campaign ad is a one-minute distillation of the Obama campaign’s seventeen minute core video “The Road We’ve Travelled.” The ad starts with the calamitous economic situation before Obama took office – timing that was made very clear, and added that “some said our greatest days were behind us.” Since Obama took office, the ad tells us that “the auto industry is coming back, firing on all cylinders,” “America’s greatest enemy was brought to justice by her greatest heroes,” and 4.2 million jobs have been created. America is coming back. The ad concludes affirming that “you don’t quit and neither does he.”

There is an essential difference between this ad and “The Road We’ve Travelled.” The latter emphasizes the decisions Obama made such as bailing out the auto industry and authorizing the attack on bin Laden. This ad eschews presidential agency entirely, illustrated most clearly when it focuses on the Navy Seals who carried out the operation against bin Laden rather than the president who ordered it. Can we ascribe this narrative choice simply to avoidance of a complex message? Or do the ad’s creators assume that the audience need not be reminded of presidential decisions? I think there is another explanation: the ad’s creators chose to base their narrative on the mechanism of identification. The ad sets up a parallel between the struggling American middle class and the president who, with persistence and determination, is fighting on their behalf.

The “I’m fighting on your behalf” message failed miserably when adopted by Al Gore, but he was campaigning in what was perceived to be a prosperous time and could never make clear whom he was fighting against and why. But these are very different times and the nature of the struggle is much clearer. The ad thus represents the heroic public sector fable, juxtaposing national economic renewal with political renewal for a deserving president.

The Republican ad starts with the look and feel of an Obama campaign ad, so much so that it begins flashing a disclaimer that it was paid for by the Republican senatorial committee and was not authorized by President Obama. It starts by celebrating a president who brought us together, and then shows clips of Tea Party rallies. It then celebrates the end of dependence on American energy, and then shows a clip of Obama, together with former Brazilian President Lula Da Silva and current Brazilian President Dilma Roussef, expressing America’s desire to be involved in the development of Brazil’s offshore oil reserves. It juxtaposes the words “a president who will not rest” with photos of Obama golfing and fishing. And it proclaims “a president who consults with key decision makers,” and shows Obama together with Paul McCartney and his current sidemen but shows Obama saying he hasn’t had time to meet with the President of BP about the gulf oil spill. The ad then refers to the great challenges of a generation and shows Obama revealing which team he will support in the NCAA basketball finals. It concludes by contrasting Obama’s commitment to cut the deficit in half with Joe Biden stating that the government must spend more.

The ad comes across as satirical, but it introduces the themes that will be used in the more vitriolic attack ads that are sure to come. The first is hypocrisy, in that Obama promises one thing but ultimately does the opposite. The second is the corruption of celebrity, as Obama is seen enjoying golf, fishing, and basketball and schmoozing with entertainers.

Like the Democrat’s ad that elides the president as decision-maker, the Republican ad attacks Obama’s policies only tangentially, focusing its criticism on his personality. The implicit narrative is that of the lower left cell in the four quadrant narrative matrix. The country is suffering but Barack Obama is having a grand time enjoying the perks of being president.

Will this line of attack work? There are a variety of responses to the accusation of hypocrisy: it wasn’t Obama who chose disunity, but rather the Tea Party that chose discord; while energy self-sufficiency is a desirable goal, imports from friendly neighbours like Brazil (or Canada, for that matter) always help; and a temporary rise in the deficit is the consequence turning around the American economy.

I think there is widespread recognition, particularly in a republic that vests the offices of head of state and head of government in one person, that the president is a celebrity, and, to use Bill Clinton’s idiom of choice, necessarily “lives large.” Living large, however, does not necessarily mean living corruptly. Nor does it make it impossible for voters to identify with the president. I am, therefore, not convinced that Obama’s “living large,” at least as portrayed by the Republican Senatorial committee, will negate the feeling among voters that he understands, in a deep and emotional sense, their struggles. Furthermore, Obama has the advantage that Mitt Romney’s “Richie Rich” background and demeanour will lead many voters to conclude that he does not, even superficially, understand their struggles.

At this point in the campaign we are beginning to see how each side searches for the high ground and tries to push the other onto the low ground. Between now and November there will be a variety of events, in particular further indications of the performance of the American economy as well as the potential for an escalating economic crisis spreading from Europe, that will have great impact on the outcome. The challenge for each side will be how to integrate both pleasant and unpleasant surprises into its basic narrative.