The free-marketers would argue that Canada is an open-market economy and should stick to its principles. Open markets lead to the most effective use of capital, and while the loss of a head office is undeniably bad, there is no sense protecting companies that are uncompetitive. If lame Canadian bosses can’t add value, let someone else do it, and don’t get your knickers in a twist if that someone comes from abroad.Now, having read that, consider how aggravating it must be for Reguly and others who foresaw (fairly obvious, to be honest) long-term trends and tried to warn governments to position themselves for them, only for such advice to go unheeded, in light of the following report from Bloomberg, also in the same ROB - Caisse Pension Fund to Target Energy, Resources Investments, Sabia Says:
The counterarguments are equally powerful, perhaps more so. If protecting companies from takeovers encourages slothful management and subpar value creation, how do you explain the success of Canada’s banks? Their 20 per cent ownership restriction makes them takeover proof, yet they emerged from the worst financial crisis since the Second World War in better shape than any of the other national banks.
Yes, BHP has promised Investment Canada that its Potash Corp. takeover would provide a “net benefit” to Canada. But the inward investment agency is about as effective as a toy gun. It has rejected only one foreign takeover in its 25-year history and obviously has a flexible interpretation of “net benefit.” Did Inco’s takeover by Vale provide help to Canada? How about the takeovers of Stelco (owned by U.S. Steel) or Dofasco (ArcelorMittal). Forget it. Each of them has become an ailing branch plant.
BHP may be a fine owner of Potash Corp. Then again, it may not. If Investment Canada won’t block the takeover of a company that doesn’t need taking over, it has to ensure “net benefit” means as much. BHP can afford to deliver what the agency demands. It’s just that its demands for the last quarter century have been laughable. As a result, Canada is turning into a branch plant, A Mari usque ad Mare.
The Caisse de Depot et Placement du Quebec, Canada’s biggest pension fund manager, plans to increase investments in energy and minerals to benefit from an expected commodities boom, Chief Executive Officer Michael Sabia said.
“Natural resources, energy, those are areas where we think there’s an opportunity to play offense because of what the structural trends are and what our capabilities are,” Sabia said in an interview at Caisse headquarters in Montreal yesterday.
“When the Marshall Plan was launched after World War II there was a 20- to 25-year run in natural resources and infrastructure and in our view we are right at the start of another period like that,” Sabia said.
By 2015, emerging nations will account for a bigger portion of the global economy than developed countries as middle-class populations from Southeast Asia to Latin America expand while public and private investment grows, according to a Sept. 27 World Bank report.
“You are going to see massive urbanization and the emergence of a very large middle class in places like China, Brazil and Turkey,” Sabia said. “Because of those things, you are going to see demand for natural resources, whether it’s iron ore or copper, and demand for products that enhance the productivity in agriculture.”
“Because of our exposure to the Canadian economy, we have built a lot of capabilities around understanding natural resources and energy-related industries,” Sabia said.
WE HAD ALL THE LEADING COMPANIES, HEAD OFFICES, R&D, etc., to fully profit from this, and we threw it away, thanks to mindless infatuation with ideological dogmatism, lack of curiosity, and limited minds & psyches. Sure, the resources are still here, but we'll just be the hewers of wood and drawers of water, and the really great valued-added stuff will be elsewhere (and I'm not even talking transformation and manufacturing, just fully profiting from our own resource extraction, from our own expertise, dammit). Those fools who propagandised for such a fate, and helped bring it about, are, in a pan-Canadian sense, as guilty of hurting their society as the Catholic priests who told French Canadians for generations they should stick to their farms, as that was God's plan, they should be pure in an unpure world, for their souls' sakes and to serve as an example to the rest of the world. So the anglos had the cities, and business, and the francos were the simple hewers of wood and drawers of water. It took the Quiet Revolution for everyone to wake up, and decide we should be masters in our own house. And so we have traded the priests' sermons on the invisible hand of God for true believers preaching for the perfect, rational, invisible hand of the market. And neither is aware of the harm they have done.
It is past time for all Canadians to become masters in their own house. Canada is indeed a French country, born of Champlain's genius, and Quebec has long lent its genius to make Canada. French Canadians made Canada and Canadian federalism. To ask them to separate from Canada would be like asking beavers to leave their dams, to leave the very lands they made. It is nonsensical and a denial of a people's own souls. Canada needs their clearheaded ambition and idealism more than ever. But for that to happen, Quebeckers must, once again, sing the songs that make Canada dream, and provide the hardheaded wisdom needed when dreamtime is over, and the cold light of day is upon us. Quebeckers are Canadians too, part of the Canadian nation, and no-one knows how to protect a nation's interest better than Quebecers, as all seem to agree, most intently, even.
One must take one's inspiration where one can find it, and when separatists sing their siren song "why can't we be a nation like all others", I think, yes, indeed, as Quebeckers know themselves to be part of the Canadian nation, why can't Canada be a nation like all others? Why can't we, why shouldn't we, put our self-interest, especially in economics, above appeals of self-sacrifice on behalf of noble but impossible capitalist fundamentalist ideals. Blessed be the fundamentalists, for their souls are pure, but even more blessed are the wordly righteous, with the strength to hold on to their ideals while living in the flawed, imperfect real world, and working to improve it.
What does this mean in a worldly sense? Well, as I wrote somewhere or other, here, as an example, are some questions to keep in mind the next time one feels almost overwhelmed by flashing-eyed fundamentalists.
Point of information: Canada is virtually unique in its lack of both meaningful investment review and industrial policy. We are uniquely right and everyone else is wrong?Donc, je pose la question, lorsqu'il s'agit de protéger et de promouvoir nos intérêts socio-économiques : le Canada, quand sera-t-il une nation comme les autres?
Treatment of Foreign Investment in Other Countries:
Like Canada, most countries around the world have mechanisms in place, whether formal or informal, to review at least some elements of foreign investment. While investment flows have increased, and the economic importance of foreign investment has been accepted, MOST NATIONS ARE SENSITIVE TO THE CONTROL OF THE MORE STRATEGIC ELEMENTS OF THEIR DOMESTIC ECONOMY. As such, most governments retain a degree of control over who invests and controls firms active in these strategic sectors. Recent U.S. legislation affecting foreign investment and national security is an example of a formal mechanism.
Australia has a general investment screening system similar to Canada's that reviews foreign investments based on monetary thresholds. Unlike the net benefit test in Canada, Australia's policy is framed such that it can block any foreign acquisition that is judged contrary to "national interest." Most other industrialized countries have general legal authority to block any mergers on the basis of national security considerations. The United States, France, Germany, the United Kingdom, Japan, and China all have such powers."
The global revival of industrial policy - Picking winners, saving losers:
"Nearly every large economy has plans to win global market share and create green jobs.(...)Fourth, rich countries are responding to the apparently successful policies of fast-growing economies, notably China and South Korea.(...)Third, industrial policy works best when a government is dealing with areas where it has natural interest and competence, such as military technology or ENERGY SUPPLY"
And from a fine publication, on a tangential note - Who’s the smartest? A new ranking of European countries places the Nordic nations at the top of the list. As for the bottom . . .: "Recent economic events prove that the institutions and policies that enable a country’s competitiveness are not merely facilitators of productivity, but are also the mechanisms preventing social and economic collapse.”
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