Moving beyond corporate protectionism

Back when foreign investors were going to take over everything in the country, reducing us all to sharecroppers on our own land -- far off days, before the credit crunch, when people still bought companies -- two things had become very clear. ...

The first was that this was about much more than foreign ownership, but rather involved a set of inter-related beliefs about the economy: that there exist such things as “strategic” industries, for instance, which it is the job of government to identify and protect; that “control” of a market economy is vested not in the choices of shareholders or consumers or even the government, but rather in the physical location of corporate head offices; that boards of directors, in considering a takeover bid, should not represent the interests of its owners in obtaining the highest price, nor should the latter be permitted to sell to the highest bidder, but rather that each should submit to the higher insights of politicians and bureaucrats; and so on.

And the second was that this whole hysteria was almost entirely manufactured in the business sector, that is by the managers of those prospective takeover targets, whose idea of the public interest neatly coincided with their own desire for career advancement, and whose vision of the economy tended to coincide with the view from their office window: as something rather like their own company, that is, with subsidiaries to be opened or closed and product lines to be decided between -- in short, an enterprise to be managed, according to the hunches of the chief executive.

So, by the fires that were then lit, a fundamental choice was illuminated, a choice that may come to define our politics: not between capitalism and socialism, but between capitalism and corporatism -- between a genuinely free market economy in which the interests of consumers and shareholders and taxpayers (and, we might add, the environment) are paid proper heed, and an economy run by and for business. And it is in this light that the federal Liberal party’s efforts to define a new economic policy for itself take on fresh interest. 

While the panic was in full flush, the Grits succumbed to the temptation for partisan gain and rushed out a dim-witted demand for a moratorium on all foreign takeovers (of a piece, in its shallow cynicism, with the party’s continuing dalliance with the income-trust die-hards). But at a conference on economic policy in Montreal this week (“Building and Attracting Global Leaders”) the party showed signs of intellectual life -- a pulse, at any rate.

To be sure, the debate, featuring a smattering of policy experts, some business leaders and a dozen or so MPs, was often vague, filled with platitudes (Canadian business needs to take more risks, we have to stop penalizing success, etc.) and punctuated with special pleading (including that hardy perennial, the shortage of risk capital for small business). But amid it all, you could see the party trying to figure out what sort of party it is, or would like to be. 

This is an important step. Groups, as much as individuals, tackle such questions only in part with their conscious brain. As much they are guided by self-image: what sort of position conforms with my view of myself? The Grits, it is clear, do not see themselves as a party that is hostile to globalization, or closed to the world. “We’re not the NDP,” they would hasten to say. Yet it’s equally clear some in the party still see foreign investment as a problem, rather than a blessing.

And as they debated their response to the supposed blight of foreign takeovers, the same faultline emerged -- between those I might loosely describe as pro-market, and those who were merely pro-business, concerned lest the tender shoots of Canadian enterprise should be trampled underfoot by foreign competitors. Of the latter group, the most thoughtful was Yvan Allaire, the former Bombardier executive, who proposed various ways to make it harder for shareholders to sell their firms, perhaps imposing a one-year holding period on the right to vote their shares, or requiring a higher threshold for ratification than the current two-thirds majority.

Less thoughtful were the interventions of Roy Cullen, MP, who decried the “rape and pillage” of Canada by foreign investors (apparently they've been forcing themselves on unwilling Canadian shareholders). Yet his efforts to whip the room into a frenzy of xenophobia seemed to find few takers. 

Likewise, while the broader debate about Canada’s lagging productivity featured the usual handwaving about “encouraging excellence” and spending more on education, there was also a steady drizzle of sensible, even radical economic reforms. These included cutting income taxes, perhaps putting green taxes in their place; dismantling our remaining barriers to trade, internal and external; opening up protected sectors like telecoms and transportation to foreign investment; and increased private financing of public works. The former Finance minister, John Manley, in particular, seemed to take special delight in trashing every nostrum of economic Liberalism, even proposing legislated caps on public spending at one point. (How one wishes he'd shown the same zeal while he was at Finance.)

Put them all together, and you would have a quite exciting economic platform, one that would reinvent the political spectrum. It won’t happen, of course, but that the Grits are even permitting such heresies to be discussed has to be counted as progress.