Free Trade - Part 2

Continuing with the theme of yesterday's post, I am taking the liberty of reproducing some letters that appear in today's Star on free trade. They nicely puncture the myth, propagated and perpetuated by the right, of its unalloyed benefits to Canada:

Brian Mulroney and the harsh reality of Canada-U.S. free trade: Hepburn, Feb. 21

For many years before and after Brian Mulroney's free trade agreement I worked as a mechanical engineer with consulting firms. During those years I was involved in the design of a number of food processing plants. At least four of the plants were “grassroots” operations and were setting up in Canada because of the sales advantages offered.

All of those plants were closed down shortly after the FTA came into being and all were employers of large numbers of people who lost their jobs. Many of the other plants that I was involved with, mostly expansions of existing operations, also shut down their Canadian operations after the FTA.

When the FTA came into being, not only did plants shut down but the market for design of plants tapered off considerably and many engineering consulting firms laid off a number of engineers and architects. Some even closed completely and I am sure the domino effect came into play in many industries that relied on Canadian building for business.

I should probably add that because of the interest for companies to build in Canada, a great deal of new technology and advances in older technology was developed here and thus with the FTA a great deal was lost to other countries, mostly to the U.S.

Dean Ross, Port Hope

I agree and empathize fully with Bob Hepburn 's comments on the real effect of free trade on ordinary people: people who have lost their jobs and the fact that almost all of these factory jobs are gone forever. It is a sad fact that real truths like this are covered up and never acknowledged by those responsible. This article is front page material in my opinion.

Another effect that I personally observe is the loss of basic manufacturing skills in our country. All but gone are the machine shops, factories and the businesses that served them. A simple example of my own was my recent inability to purchase a round threading die. It seems that these replacement dies are no longer sold by the likes of Home Depot, Lowes, Canadian Tire, Busy Bee, Princess Auto, etc. The only possible reason is no demand. As little as three years ago, they were available. (I note that some of the above do offer sets with many dies of different sizes, but they are all aimed at the hobbyist and not suited for manufacture.)

We have indeed sold our souls to the Asian manufacturers. It is beyond sad and we will experience the effects for years to come.

Don Dorward, Pickering

How refreshing , if unusual, to read a mainstream piece that actually talks turkey about the disastrous free trade deal. In Canada, we've been living in a kind of opium dream since the late ’80s, with the usual suspects — quick-buck artists and ideological hobbyists — insisting ever since that we've never had it so good.

Just as there was a conspiracy by business elites in '88 to foist free trade on the country, there's been a de facto conspiracy ever since to push the line that it's been some kind of boon for us all, even despite the overwhelming contrary evidence. Remember, more than 60 per cent of us sensibly rejected the deal when it was an election issue, even if our disgraceful electoral system gave Brian Mulroney a “mandate” to saddle us with it.

Brian Mulroney and his patrons obviously think we're stupid, and they might well have a case, based on almost 30 years of our allowing their nonsensical economic analyses to float.

But watch and enjoy nevertheless the inevitable unravelling in our lifetime of the doublespeak concept of “free” trade, as unaffordable energy costs and other factors begin to make the shipping of goods thousands of miles to market look merely old-fashioned and quaint.

George Higton, Toronto

The Legend of Brian Mulroney

Actually, our former Prime Minister is more a legend in his own mind, but then, confronting harsh reality has never been one of Mr. Mulroney's strong suits. His litigious past serves as ample testament to that fact.

But myth is always much more exciting than truth, and what better myth could Mulroney propagate than the one about the free-trade agreement his government negotiated 25 years ago with the United States? Last week, he made an appearance at the University of Toronto’s Rotman business school, where more than 700 guests gathered to commemorate his government's 'great' achievement. In his usual hyperbolic and self-congratulatory tone, in an hour-long chat with Rotman professor Joseph Martin, Canada's erstwhile 'leader' asserted that his accomplishments will stand among the greatest in Canada’s history, one of his proudest being the free-trade agreement. Indeed, he even went so far as to describe the pact as “the greatest in the history of the world.”

It is an assessment with which many would strongly disagree. One of the dissenters is The Star's Bob Hepburn who, on February 21, wrote a piece entitled Brian Mulroney and the harsh reality of Canada-U.S. free trade. He begins by reminding readers of some harsh truths that Mulroney seems unwilling to confront:

One morning 10 years ago, my brother lost his long-time job when the owners of the Scarborough electronic parts factory where he worked announced it was closing the plant and moving its operations to Chicago.

Soon after, his company shut down two other factories in Oakville, tossing 400 employees out of work. The jobs were shifted to the U.S. and Mexico. A bit later, the Markham electronics company where my niece had worked also closed its doors. It, too, moved its jobs outside of Canada.

The owners never admitted it, but workers were convinced a major reason why the companies closed the Ontario plants was the Canada-U.S. free trade agreement reached in 1987 under former prime minister Brian Mulroney.

The deal, which was the focal point of the 1988 federal election, eliminated import tariffs on most products, resulting in many profit-hungry companies closing plants here and moving the jobs to cheap-labour areas.

And Hepburn is not alone. Economist Jim Stanford, quoted in Hepburn's piece, wrote an article for he Progressive Economics Forum, replete with empirical date that shows those who extol the agreement are living in a world of fantasy and faith, a world typical of right-wing ideology, one fueld by the tactic of repeating something enough times so that its veracity is rarely called into question.

Citing government statistics, Stamford observes that our exports to the U.S. are at the same percentage level as in the mid-1980s, that our trade deficit is the highest ever, that our productivity has fallen in comparison with the U.S and that income levels of most Canadians in real terms are unchanged.

Then there are those who believe, using both anecdotal and empirical evidence, that people are decidedly worse off since the free trade deal was concluded. Youth unemployment hovers somewhere between 14 and 15%. People's lives are on hold. A study released today, conducted by McMaster University and the United Way, finds that the rate of insecure or precarious work has increased by 50 per cent in the past 20 years and is impacting everything from people’s decision to form relationships, have children and volunteer in their community.

Indeed, the statistic are grim:

- Barely half of working adults in the GTA and Hamilton have full-time jobs with benefits and expect to be working for their current employer a year from now;

- The other half are working either full- or part-time with no benefits or no job security, or in temporary, contract or casual positions.

And while statistic may seem dull and unevocative, the accompanying profiles are anything but, ranging as they do from a 27 year-old university lecturer struggling to cobble together a career that could take him far from his wife and young son to a 60-year-old home-care nurse whose working conditions and hours are anything but stable.

Just don't expect Mr. Mulroney, in his present and persistent self-congratulatory mood, to be moved by their plight.

For Some Insight Into The Corporate Mentality

...you might want to watch this:

An Insane Country, Or An Insane Government?

Albert Einstein famously defined insanity as doing the same thing over and over again and expecting different results. By that standard, we can perhaps infer that Canada is insane.

As we are reminded in a very interesting column by Thomas Walkom in this morning's Star, Canada has a long history of staking its economic well-being on the export of its resources. Citing political economist Harold Innis,

... Canada’s history was dominated by natural resource exports, which he called staples. That Canada has exported raw materials is hardly novel. What Innis grasped, however, was that these staple exports created a pattern of development, both political and economic, that over time was hard to escape. To use the language of one of his students, the Canada that Innis described kept enmeshing itself in a “staple trap.”

Whether the resource was wood or beaver pelts, the government would spend substantial sums building up the infrastructure to cultivate its exports, only, of course, to have any given staple ultimately fall out of favour. The same thing is happening today with our almost total dependency on the tarsands as the country's economic driver, to the exclusion of any real diversification or environmental oversight.

Walkom calls attention to a new study called The Bitumen Cliff which observes that our dirty oil requires vast quantities of money... not just to extract...but to transport it by rail, pipeline or ship.

There are other causalities of this insanity as well:

Again, other economic activities are given short shrift. In this case, the high dollar created by Canada’s soaring oil exports has eaten into the ability of manufacturers to compete abroad.

And again, the political system wraps itself around the staple, with Ottawa’s Conservative government gutting environmental laws for fear that they might interfere with pipelines and resource extraction. (For an example of the latter, take a look at this story about how the pipeline industry essentially dictated the changes to Navigable Waters Protection Act included in last year's omnibus bill which will result in far less protection than existed beforehand, all in the name of pipeline expediency.)

The folly of this approach is that, like our staples of the past, our oil will fall out of favour:

Suddenly, the politics of climate change have made Alberta’s carbon-emitting bitumen less welcome in the United States. More to the point, technological changes that favour the production of cheaper shale oil and gas, are transforming the U.S. from an energy pauper into one of the world’s big petroleum players.

To put it another way, Canada’s biggest export market no longer needs the tarsands quite as much as it did.

So the damage will have been done, and all we will be left with is a fractured economy and environmental despoliation, only to await the cycle to begin all over again.

Come to think of it, perhaps it is not our country that is insane, only our political 'visionaries'. Yet one more aspect of what will be Stephen Harper's sad and dishonourable legacy.

Fathoming The Reactionary Mind

I readily admit that I find it difficult, if not impossible, to fathom the extreme right-wing mind. To me, it is a mind mired in a world of fantasy, willful ignorance, and intractable denial. Magical thinking seems to be a substitute for cogitation. Name-calling in lieu of discussion. Denunciation instead of deliberation. And I would be quite content to leave such minds alone, content as they are in delusions of grandeur and superiority, except for the fact that they bother and disrupt the business of the adults in society.

The above, I'm afraid, is an all too apt description of the leader of the Ontario Progressive Conservative Party, young Tim Hudak.

Yesterday, Kathleen Wynne brought down her throne speech in the Ontario legislature. As reported in the Globe, with nods to both the NDP and the Conservatives, the speech trod a fine line between fiscal responsibility and social spending in its effort to garner support from both parties.

Despite the reasonable and conciliatory tone of the speech, young Hudak, as is his wont, immediately rejected any possibility of support. The Star's Martin Regg Cohn notes the following:

Tory Leader Tim Hudak followed Wynne at the microphone to say his party would vote against the speech, instantly marginalizing himself just as he did last year for the Liberal budget (allowing the New Democrats to dictate the agenda).

He went on to reject any possibility of countenancing road tolls or congestion fees to address the problem of gridlock in the GTA until government waste [is] first eliminated. As Cohn tartly observes: Hmmm. Now there’s a Tory inaction plan: foster more political gridlock so that traffic gridlock festers for another generation.

I have no idea whether Kathleen Wynne has either the capacity or the political capital to reverse the significant damage done by her predecessor. I do know, however, that for Hudak to reject out of hand even the possibility of working collaboratively for a time, insisting instead on an imminent election, is the mark of an untutored and immature mind, wholly consistent with the extreme right-wing mentality described at the start of this post.

Perhaps He Should Try Thinking Before Speaking?

Last week I wrote a post on two inane ideas uttered by young Tim Hudak, the hapless leader of Ontario's Progressive Conservative Party. He proposed tying post-secondary funding to rates of employment upon graduation, along with the idea that only those who achieve a certain mark shuld be elegible for student financial assistance.

Two letters in today's Star help to put his 'ideas' into the perspective they deserve:

Re: Hudak cracks whip on students, Feb. 13

Once again, Tim Hudak is turning into the greatest boon for the Ontario Liberals. His policy paper on post-secondary education will benefit absolutely no one and will negatively affect students who are in most need of financial aid.

I was once an undergraduate student and needed OSAP to fund my education. I was also working two jobs to provide for other expenses during the school year. In the process, my academic performance wasn’t the greatest, but the learning experience was unparalleled. I eventually earned two degrees from my alma mater, worked for a few years and went back to school to get a graduate degree on scholarship.

If Hudak had his way, people like me would never get a degree. His proposal is also redundant as there are already scholarships, grants, bursaries and loan-forgiveness tied to various prerequisites including academic performance.

During the 2011 provincial elections, the Hudak PCs managed to fumble a double digit lead over the Liberals. It doesn’t look like they have learnt their lesson.

Aditya Iyer, Ottawa

Let’s grade Tim Hudak’s efforts with this plan: as a retired college professor and dean, I’m aware, as are thousands of students, of the continuing efforts to link college and university programs.

A three-year degree? Reminds me of an old joke where a conservative emperor standing on his balcony proclaims to this constituents, “Everyone in my kingdom shall be educated. To that end I give each of you a degree.”

What is missing here is a little item called relevant curriculum.

I’m certainly interested in Mr. Hudak’s thinking about how his plan addresses the TBSB survey about student stress and anxiety about the future. But let’s find the kernel of wisdom in this proposal: what about grading the quality of political ideas to the money we pay our politicians? A six-month trial on that one could well erase the provincial debt.

Don Graves, Burlington

My mother always taught me to think before I spoke. Apparently Tim Hudak did not have the benefit of such maternal counsel.

On Corporate Propaganda and Tax Avoidance

It is the fashion among our corporate overlords and their rabid right-wing courtesans to utter a trite phrase that, because it is repeated so frequently, is taken as truth by many: We don't have a revenue problem, we have a spending problem. Like the magician who relies upon misdirection to perform the seemingly miraculous, the corporate cabal purports to prove, through both its rhetoric and 'studies' done by its think tanks (think The Fraser Institute in Canada, The Cato Institute in the U.S. as examples), that taxes are 'job killers' and that the key to robust economies and solid employment numbers is low taxation.

Of course, the falsity of such assertions has been amply demonstrated, most recently by Bank of Canada Governor Mark Carney, who has weighed in on more than one occasion about the abysmal rate of business investment in new machinery and equipment — considered vital to boosting growth, creating jobs and making the economy perform more efficiently. This sad state despite the fact that Canada has one of the lowest corporate tax regimes in the world.

While there will always be the true believers who subscribe to the myth of the efficacy of marketplace discipline and an ultra-low tax regime, I suspect more and more are starting to realize that the corporate agenda has nothing to do with the betterment of society or the support of democracy, and everything to do with its own self-aggrandizement. As reported last week in The Toronto Star, The OECD (Organization for Economic Cooperation and Development), consisting of 34 countries, issued a report condemning the practice of corporation, including giants such as Google, who are shifting profits to places where they pay little or no tax, places such as the Cayman Islands, Bermuda, and Barbados.

As the report points out, not only is this costing the countries in which these corporations do business billions of dollars in lost revenue, it is also encouraging a perception that the domestic and international rules on the taxation of cross-border profits are now broken and that taxes are only paid by the naive, and if nothing is done about the situation ordinary taxpayers might refuse to pay their share of taxes on the grounds that the system is unfair.

So there you have it: corporations with a patent disdain for the countries who make their businesses both possible and viable, without conscience or concern for the massive damage their schemes do to the social and economic fabric of those countries, beholden only to their own bottom lines and their shareholders.

If such misbehaviour is not an indictment of unfettered capitalism, then I don't know what is.