Wednesday, June 6, 2007

Walkom On Canadian Economic Nationalism

While many of Walkom's points are well taken there is a curious omission in discussion of this issue not only in what Walkom says but even in Layton's article that you can read in an earlier post. No one mentions nationalisation or public ownership (feds or state or even municipal). Manitoba Hydro is a good example of a successful state owned enterprise and there are still many (Sask. has several). There are also co-op enterprises. It is as if for profit Canadian capitalist enterprises are the only candidates for economic nationalism. In my view they are part of the problem just as much as foreign owned for profit enterprises. As capitalist corporations their commitment to Canada must be limited to anything that does not detract significantly from their pursuit of profits. There should be restriction on foreign takeovers but to pursue an economic nationalist course much more must be done. Trudeau for example set up Petro Can to get the government into the oil business. Of course his national energy policies upset Alberta but that was to be expected.


Economic nationalism as an illusion
Jun 03, 2007 04:30 AM
Thomas Walkom

Hark. That grumbling you hear is the federal Liberal party making noises about economic nationalism. St├ęphane Dion wants the issue studied. He and New Democrat Leader Jack Layton also want the rules for foreign takeovers revisited.

It's hard to know whether Dion and Layton are serious or merely pandering. The Liberals have ignored these questions since the '80s. The NDP goes on and off. But if we are heading down this road again, we need to rethink what economic nationalism can realistically mean in 2007.

In particular, we have to stop focusing narrowly on the issue of ownership. It's no longer clear that Canadian-owned private firms operate differently from foreign-owned ones. It's not even clear that publicly owned firms operate differently. I give you Toronto Hydro as an example.

The real questions today have to do with control. In whose interests do firms operate? Where do they invest their profits?

In the '70s, these questions were subsumed under the issue of ownership. The argument then was that Canada could hardly operate a sovereign country politically if its economy was foreign-owned.

Behind this was an assumption that Canadian-owned businesses would be different – that they wouldn't be subservient to ill-conceived U.S. laws, such as America's ban on trade with Cuba, and that they would be more successful in producing wealth for us.

Yet even then, there were worrying signs that globalization had the capacity to subvert this nationalist project. Once Canadian-owned firms reach a certain size, they begin to act like foreign firms.

In particular, they tend to move their centre of operations to where their major markets are – the United States. Nortel Networks, the once high-flying Canadian tech firm nourished under the wing of the Bell Canada telephone monopoly, repaid us by situating its de facto world headquarters in Dallas. Canadian National, once a government-owned company, now gains equal revenues from its American and Canadian rail systems.

Nor are Canadian-owned firms necessarily loath to obey U.S. extraterritorial laws. The Royal Bank of Canada, desperate to protect its U.S. operations, applies American domestic law to its Canadian customers in Canada. This came to light in January after the bank refused to let an Iranian-born Canadian citizen open a U.S. dollar account at its Montreal branch.

Nostalgia buffs lament the sale of Inco Ltd. to a Brazilian firm, or the possible sale of Canadian aluminum giant Alcan to its U.S. counterpart, Alcoa. They forget that Inco began life as a U.S. firm providing nickel to the American steel industry. Similarly, Alcan was originally part of Alcoa. It was hived off only at the insistence of U.S. anti-trust regulators.

Others fret that state-owned companies (read Chinese) are buying up Canadian resource firms, saying this could impair national security. This is nothing more than ill-disguised sinophobia. Firms will do what firms do unless government decrees otherwise. At the start of World War I, Inco continued to sell Canadian nickel to both the Germans and the British.

Yet even if the foreign-ownership issue itself is outdated, the broader questions behind it are not. Should Dion become prime minister, he will be expected to seriously deal with this matter.

But the key word here is serious. It's not enough to promote Canadian-owned firms that, for instance, outsource jobs to cheap-wage countries. The point of economic nationalism is to have an economy that works for the people of that nation.

In a global, capitalist world, this is not easy.



--------------------------------------------------------------------------------
Thomas Walkom's column appears Thursday and Sunday

No comments: