One of a naturalist’s most difficult challenges is getting domesticated animals back into the wild. Once tamed, they lose their ability to compete and survive. Now comes the odd idea that we should put Canada’s corporate mega-fauna into a sort of petting zoo, doubtless with a number of expensive tax-payer nibblies to keep them happy and life easy. We don’t want them to have to worry about any of that nasty competition out there in the globalized corporate jungle.

The controversy arose last week after US-based Alcoa made a bid to takeover Montreal-based Alcan. Commentators took to the airwaves and the op-ed columns to decry the “hollowing-out” of Canada’s corporate sector, with calls to protect Canadian ownership.

Into the fray stepped a perhaps unexpected voice of reason. La Caisse de dépôt du Québec has impeccable nationalist credentials. It was formed in the early 1960s, in large part on the advice of an economist named Jacques Parizeau, to manage Quebec public pensions and use its financial clout to fund Quebec development and support Quebec companies.

So you might think the Caisse would be in a deep funk about the US takeover of one of Montreal’s corporate jewels. Actually, no. Caisse CEO Paul Rousseau called the takeover “a fact of life” and said any attempt to block the affects of globalization is futile. He dismissed the hollowing out argument, noting globalized companies are managed through interconnected offices spread around the globe. He also pointed to the raw hypocrisy – “talking out of both sides of our mouth” – of celebrating global acquisitions by Quebec and Canadian companies while frenetically waving our arms whenever the process goes the other way.

But, his most important point was that Canada must strengthen its competitive environment to allow our companies to thrive and grow on the world stage – to meet and better the global competition.

Preston Manning and I in our Canada Strong and Free series, published by The Fraser Institute and Montreal Economic Institute, have made the same argument and laid out in details the policies needed to accomplish this.

In Volume 4, Building Prosperity in a Canada Strong and Free, we describe the policies needed to deepen Canadian prosperity, in particular changes in the tax code designed to increase and reward the investment required to build world leaders. In our most recent volume, released last week, International Leadership by a Canada Strong and Free, we argue that Canada should take a leadership role in trade openness to the world.

That’s necessary to ensure the competitiveness of our companies. One way to damage competitiveness would be to limit foreign investment and tell Canadian companies that they are secure from foreign takeovers. Takeovers occur when the existing management becomes complacent and outside investors believe they can get better value for the money from the company than the existing management. This is a powerful incentive for aggressive management and removing it would do immense damage to the corporate sector.

Even worse, nothing could do more to “hollow out” our corporate sector than trying to freeze it into place. Not only would this reduce competitiveness, it entirely misses the dynamic nature of world markets. Giant companies do not remain giant and small companies do not remain small.

Huge companies appear out of virtually no-where, like the shabby one-store southern retailer Wal-Mart, or the garage-based technology company Hewlett-Packard. Big companies fall by the wayside all the time, or are in the process of falling by the wayside, like General Motors, once the world’s greatest automaker. Swissair, known as the “flying bank” because of its stability and a national icon for Switzerland, has been grounded. World leaders can be located in the oddest of places, Nokia in Finland for example. Canada too can have such world leaders provided we develop policies to encourage competitiveness and investment.

Canada doesn’t need domesticated, hand-fed firms. To be a leader, Canada must leave its mega fauna in the wild and improve our policies at home to encourage increased competitiveness.