Mel Watkins on Foreign Take-overs
A good piece from today’s Ottawa Citizen. I’ve been similarly struck by the concern re foreign state involvementÂ in our resource sector, combined with evident lack of concernÂ about loss of domestic control of resourceÂ development. Whether we would get that fromÂ greater Canadian capitalist ownership of resource companiesÂ as opposed toÂ more public owneship and regulation is a different question and its great that Mel has put this up for discussion.
Laissez-faire isn’t working
Canada’s non-policy on foreign takeovers is sheer folly — we need to act in our own interests, and those of the world
Mel Watkins, Citizen Special
Published:Â Thursday, June 28, 2007
Forty years ago, in Canada’s centennial year, eight economists laboured in Ottawa to produce a report for the Pearson government on foreign ownership and what to do about it, this being a matter much on the public’s mind. Though it was disowned by the government when it was published in early 1968 and, by default, named the Watkins Report after its chief author, a young and little-known economist, in the subsequent decade its key recommendations, to create the Foreign Investment Review Agency and the Canada Development Corporation, were implemented.
The elections of Margaret Thatcher, Ronald Reagan and Brian Mulroney meant the death and undoing of such interventionism in Canada and elsewhere, in the name of laissez-faire and globalization and the fuller reign of the market.
But if you live long enough, the wheel turns full circle and the old becomes new again. So it is that the business press is now dominated by stories about takeovers and mergers and rising foreign ownership in Canada. What is to be done?
There are, as always in such matters, two answers: do nothing and do something. With Stephen Harper at the helm, do nothing is the policy of choice. But as policy goes, it seems to miss the point of what is happening.Canadian economic development has from the outset been dominated by resource development for export. There is a logic to Canadian capital finding its strength in those sectors where Canada has its comparative advantage. It would seem to make sense, if the Canadian business class and the Canadian state are serious about playing the capitalist game, that it would create and nurture national champions in its resource sector.
But, as York University political economist Daniel Drache puts it, Canada is a careless country. Rather than creating national champions, if one emerges anyway, like Inco slowly over the years, we stand idly by and actually invite its takeover. In the 21st century, with resources such as oil and gas and uranium and nickel becoming the jewels of the global economy, Canada’s non-policy is sheer folly. The great liquidity created by escalating commodity prices is being used to deprive Canada of ownership of its own resource industries. Somehow, this does not compute.
Companies themselves have become mere commodities to be bought and sold on a day-to-day basis. The relationship between that casino economy and the real economy of efficient resource development creating local benefit is obscure. Forty years ago the concern was with American ownership. Now our companies are targeted by Brazil, Russia, India and China, but our corporate and government elites remain passive.
It so happens that all of these countries have state-owned companies in the petroleum sector. Once upon a time we had PetroCanada but it was privatized. Now the response of the Harper government is not to reconsider state ownership but to worry that other countries’ state enterprises may not be “neutral.” This does rather miss the thrust of what is now happening in the world.
Â (go to link above for the full article.)