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While travelling in Australia, I repeatedly saw Citigroup’s latest advertising campaign, which readers can access on Citi’s website (citigroup.com) or its YouTube channel. The ad is intended to “change the story” – a term used cynically in the movie Wag the Dog – from Citi’s current perilous state to its glorious history.

Citigroup’s precursor, the First National City Bank of New York, is now 200 years old. The one-minute ad reminds us of its history of “supporting people, ideas, and innovations that make things better.” Specifically, the ad mentions the first transatlantic cable (1866), the Panama Canal (1904), the Marshall Plan (1948), the ATM (1978), and the Space Shuttle (1995). The ad attempts to reframe the banking business from merely lending money to actively supporting ideas. And many of the ideas that Citibank was supporting had their origins in the public sector.

The ad’s writers are too clever to leave the story floating in the domain of big ideas and big innovations. They begin with the question of why should Citi’s anniversary be of interest to you, the audience. The penultimate image in the ad shows a young woman opening a Chinese bakery, hardly a big idea. But the intent is to create identification between the big ideas Citi is proud to have supported during its history and everyday small business lending. The ad concludes with the message that “the next great idea could be yours.” This desire for widespread identification is likely the reason that the ad didn’t show more avant-garde ideas, such as web or biotech start-ups.

The ad drives its story with two recurring motifs. It uses a catchy upbeat eight-note theme from beginning to end, introduced on keyboard and repeated in the strings. It uses an image of a young woman riding a bicycle three times: first a bicycle courier, second a young woman bicycling through the ruins of post-war Europe to illustrate the Marshall plan (an iconic image I’ve seen before), and finally the young woman rides up to her bakery on a scooter. The musical theme and the visual image together create a sense of forward motion and dynamism. That the bicycle rider was female, combined with the person using the ATM being black, was intended to communicate a message that the contemporary Citigroup is a more diverse institution than its precursor First National City Bank of New York.

The YouTube channel tells us that this video has been watched over one million times. It has gone viral because it is pleasing, optimistic, even inspirational. It is yet another illustration of the heroic fable, but in this case there are three heroes: the bank, the innovators of the past who succeeded in part because the bank supported their ideas, and finally the innovators of the future, no matter how small their innovations might be.

While watching the ad, you can forget about Citibank’s problems as a bank that has been deemed too big to be allowed to fail, but that is too over-extended to be able to succeed. A powerful narrative has the ability to “change the story,” and Citigroup’s story-tellers have done just that – at least temporarily.

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.

On final exams I always try to challenge students by including one or two questions that require them to apply what they have learned in new and different contexts. I had two such questions in this year’s public management class. The first began with Industry Canada’s recent termination of the Community Access Program that provided funding for rural Internet access. A small town that had benefited from the program must decide if it should attempt to keep the public use computer room at the local library open using its own resources. The second imagined that one of Canada’s chartered banks had “bet the bank” on Spanish Euro-denominated bonds and, as a result of a fictitious Spanish decision to leave the Euro zone and resume using the peseta, the bank would have to write down more than half of its capital base, and could no longer meet its reserve requirements.

The first question dealt specifically with a township in Ontario cottage country. The township was funding a public access computer room in the local library with a $60,000 grant from CAP and $20,000 in user fees, assessed at $ 1 per hour. The township’s year-round residents have income and education levels below the Ontario average, while its cottagers are much wealthier and more highly educated. The $60,000 grant represented less than 1 percent of the township’s budget. The alternative to library-based Internet is relatively expense satellite-based service, provided by either Rogers or Bell. The student is to imagine him/herself as a recent MPA graduate who works as township manager, and is asked to do a policy analysis for township council as well as design a public consultation process.

My first question of the students was what the objective of the program should be. A limited objective – essentially that of the CAP program – would be to provide Internet service for rural residents who have no other broadband access. The existence of satellite service would justify the township confirming Industry Canada’s decision by not replacing CAP with its own resources. A more ambitious objective would be to contribute to the quality of life in the township by ensuring that it maintained broadband Internet access. The latter objective is comparable to the justification some larger cities have given for putting in place infrastructure making the entire city a wi-fi zone. The essential point is that how you envisage the goals of public policy will influence your solution.

While some students were explicit in setting out the more ambitious objective, almost all the students chose to try to keep the computer room open with municipal resources. The facts of the case made that relatively easy. One alternative would be to pay for it with a small increase in property taxes. Because cottage properties are major contributors to the tax base, cottagers as well as locals would be paying for the computer room. A second alternative would be by increasing user fees. That could be done through a form of price discrimination, for instance selling low-price annual or seasonal passes (say $ 50 for the year) and increasing the single visit fee from $1 per hour. A third approach would be to look for a private sector partner who might be willing to pay some of the cost in return for the marketing opportunity.

The consultation question mentioned that the township manager’s report would be discussed and recommendation voted on at the township council meeting, but left open other forms of consultation, making clear that cottagers, as property owners, had the right to vote in municipal elections. I was disappointed that most of my social media-savvy students didn’t suggest posting the report on the township website well in advance of the meeting, encouraging online discussion, or facilitating an online town hall meeting.

The financial crisis question assumed that the Spanish government made a dramatic announcement of the currency conversion on New Year’s Eve, which happened to fall on a Friday. It froze all Euro deposits in Spanish banks and would convert them to pesetas when business reopened the following Tuesday. It also suspended payment of interest on Euro-denominated Spanish bonds and intended that, when the bonds were converted to pesetas and payment resumed, bondholders would take a 75 per cent haircut. The one Canadian chartered bank that had invested so heavily in Spanish bonds was National Bank, which has traditionally had a stronger regional Quebec focus than the others. The facts of the case were presented in a New Year’s Eve phone call from Bank of Canada Governor Mark Carney to Prime Minister Harper. The student, cast as an adviser to the Prime Minister, was asked whom the Prime Minister should consult in formulating a response and posed three options: extending massive loans to keep National Bank afloat, temporarily nationalizing it, or trying to find another chartered bank to take it over. Finally, the student adviser was asked to outline how a decision would be announced and write the first paragraph of the speech or media release.

I expected that the Prime Minister would initiate secret but widespread consultation with the Government’s economic advisers (Bank of Canada, Department of Finance, Superintendant of Financial Institutions); with the banking industry and with National Bank itself; with knowledgeable sources on the ground in Spain, say the Canadian ambassador; and, given National Bank’s profile in Quebec, with the premier or Finance Minister of Quebec.

All the options are unpleasant. Bailing out the bank will be very expensive, even if the Bank of Canada monetizes the debt. Clearly, the management of this bank has made some major mistakes and deserves to be replaced or closely watched. Micro-management of business is not something that would appeal to the Harper Government, whether exercised as part of a temporary nationalization effected through purchase of equity or as conditions for a loan. A merger raises the question of which other bank would want to merge with the now-crippled National Bank. It might well be that the only way a merger could be achieved is if the federal government assumed the toxic assets. A merger also poses the problem of reducing competition as well as eliminating a Quebec-based financial institution, which the Government of Quebec would oppose. In effect, National Bank’s bet on Spanish bonds has given the Canadian financial system a gift of a huge lump of burning coal that, one way or another, will come to rest in the federal government’s lap. From the Harper Government’s viewpoint, a loan with numerous conditions attached is probably the least bad alternative.

Given the consequences major investments by Canadian banks in toxic overseas assets would have for the Canadian financial system and indeed Canadian society, one wonders about the Bank of Canada’s ongoing closed-door consultations with, and moral suasion upon, the banking system.

Because the matter is not yet a national crisis, an announcement would best come from the Government’s high profile financial spokesmen, Finance Minister Flaherty and Bank of Canada Governor Mark Carney. It would have to be made on Monday, before markets open on Tuesday. The media would undoubtedly have questions, so a press conference would be preferable to a press release. Finally, the statement should begin with the context and then move to the course of action the Government has decided upon.

To some extent, the question is posed in what economists would call partial equilibrium rather than general equilibrium. Spain’ sudden exit from the Euro zone would have consequences for the viability of the Euro itself and for the European economies as well. Better to reserve the Prime Minister for a response to the next phase of the financial crisis.

As the Chinese say, we live in “interesting times.” Surely, public management exams should be no less interesting.

In recent months, there have been two similar, but not identical, ads attacking Liberal Party leader Bob Rae. The Conservative Party’s ad (“Bob Rae wants to be prime minister”) has been broadcast, especially during sports events, and is still available on YouTube. I don’t know if the National Citizens’ Coalition’s ad (“Bob Rae is back”) has ever been broadcast, but it too is available on YouTube.

The shared message is that Bob Rae was a failure as premier of Ontario. Both zero in on Ontario’s economic performance (job losses) and Rae’s policies (income increases and large deficits). The Conservatives conclusion: “If he couldn’t run a province, why does he think he can run Canada?” The Coalition’s: “If he gets the chance, he will do for Canada what he did for Ontario.”

The Coalition’s message is shriller, in both content and tone. The Conservatives refer to “the most job losses since the great depression,” while the Coalition is more explicit in its claim about causality: “he was the job-killing NDP premier who threw Ontario into the worst recession since the dirty thirties.” Its ad is also more detailed in its recital of tax increases, including gasoline, car tires, parking meters, insurance premiums, and photo radar; it would appear that the NCC is appealing to the same constituency that Rob Ford targeted in his pledge to end the war against the car. Finally, there is a marked difference in tone. The Conservatives’ ad is ironic and humorous – Bob Rae prime minister, funniest thing I ever heard. The NCC’s ad is urgent and alarmist – Bob Rae prime minister, scariest thing I ever heard.

It is widely believed that the Conservatives’ attack ads on Michael Ignatieff were very effective. The assertion that “he didn’t come back for you” ads created a narrative that contrasted enormous personal ambition (Ignatieff’s return to Canada after thirty years away solely because of his desire to be prime minister) with a ruinous public policy of tax increases under an Ignatieff Government. The Rae attack ads have the same narrative structure, but will they be equally effective? Viewers might remember that Rae was premier long ago and that, during that time, all of North America was in a recession that, the NCC’s claims to the contrary, Rae did not cause. While Ignatieff’s ambition was portrayed as over-reaching, Rae’s is the natural, and appropriate, ambition of the leader of an opposition party. Finally, there is the matter of intentions. Why was Bob Rae raising taxes? Even the NCC wouldn’t claim it was for his personal enrichment.

One perhaps unintended consequence of the Conservatives’ attack ad is that the Liberals launched an immediate appeal to party members for funds to counter the ads, and very quickly raised over $ 250,000 in donations from 4000 members.

After the launch of the NCC’s ads but before the launch of the Conservatives’ ads, the CBC’s George Strombolopolous interviewed Bob Rae about the attack ads. Rae made several thoughtful points. Consistent with the political maxim, “if he says you’re fat, you say he’s bald,” Rae reminded us that there are clips and transcripts available of Stephen Harper’s speeches and articles when he was director of the National Citizens’ Coalition: Canada is a northern European welfare state, people are unemployed only because they want to be, build a firewall around Alberta.

Rae presented a somewhat mixed message in the interview. On one hand, he said that “one of the biggest mistakes we make in politics is allowing other people to define us and then letting that stand” and that “there are a lot of things I did as premier that frankly I’m very proud of.” But then he said that he didn’t think “if he says you’re fat, you say he’s bald” politics is very productive.

So this leaves open the question of what to do in response to political attacks or, more concretely, how the Liberals should spend the $ 250,000 they just raised.

The Liberals could use the money to attack Harper, not for what he said and wrote in the past, but for what he is doing now – gutting the environmental review process or knowingly downplaying the cost of the F-35 fighter aircraft.

Rae could also expand on his statement about the things he did as premier that he is proud of, and doing so could create a teachable moment. (Unfortunately, the Liberal Party website, in its profile of Bob Rae says only that he was premier of Ontario between 1990 and 1995, perhaps not wanting to remind readers of his change in affiliation.) Rae’s 1996 memoir “From Protest to Power: Personal Reflections on a Life in Politics” does go into some detail about the accomplishments of his government, particularly in terms of helping some firms (Algoma Steel, Spruce Falls Pulp and Paper, De Havilland Aircraft) survive the recession and using the government’s capital budget to maintain employment.

Looking back over the last two decades, there are several comparisons that could be drawn between the Rae and Harper governments’ economic policies. Rae took office just as a recession hit North America. If any one Canadian was to blame for the 1990 recession, it would have to be Bank of Canada Governor John Crowe for his high interest rate policies. Rae no more caused the recession of 1990 than Stephen Harper caused the financial crisis of 2008.

The responses of the Rae and Harper governments to the recession were quite similar. Both bailed out major employers that were near bankruptcy. Both used capital spending to maintain employment. (Economic Action Plan meet Jobs Ontario.) Both oversaw major deficit increases. Both restrained public sector salaries, though the Rae Government preferred salary restraint to layoffs, while the Harper Government is delivering both. The Rae Government increased taxes, in part in response to its critics in the business community, while the Harper Government has kept taxes constant or cut them slightly in the last few years.

If Bob Rae wanted to remind people of recent political-economic history, he might also say a few words about Mike Harris and the Common Sense Revolution. Harris defeated Rae on a promise of tax cuts and spending cuts. He delivered the cuts, but also brought Ontario a deterioration in the quality of public services, public sector labour unrest, alternative service delivery by unqualified private sector agents (the cause of the E coli outbreak in Walkerton), and costly privatization (Highway 407). Criticism of the Harris Government is also a criticism of its ministers, three of whom – John Baird, Tony Clement, and Jim Flaherty – now occupy .senior portfolios in Harper’s Government. Flaherty often would like the electorate to forget that he was a particularly avid Common Sense Revolutionary.

Bob Rae’s current hesitation in engaging with his political past might be the result of his uncertain political status as interim leader. If he were no longer the leader, he would be free of expectations; if he were the leader, he would have to engage with it, because his political past would continue to be the focal point of Conservative attacks.

I think it would constitute a teachable moment for Canadians if Bob Rae were to explain what his record reveals about the pressures all governments face in economic crises, and the similarities of many of their responses, regardless of political ideology. And it would be a good thing of public discourse about economic policy was conducted on a higher level than the over-simplifications of 30 second Conservative attack ads. Perhaps Rae will still seize the teachable moment.