The Bank of Nova Scotia would like to see less “hollowing out” of Corporate Canada.
We think.
But Rick Waugh, CEO of Scotiabank, argues in a recent op-ed in a competing paper that “more important than trying to prevent the loss of Canadian control, we need to focus on ensuring Canada has the right framework in place to support the growth of Canadian companies.”
And what is this “right framework”? No limits on foreign ownership for most industries. An acceptance of globalization, which, of course, has triggered the highest-profile losses of Canadian corporate icons. And this unsurprising assertion: “Markets, rather than government, should make business decisions.”
Sounds like the status quo to us, topped by a maddeningly vague insistence that Canada become more business-friendly in order, among other things, to “replace (companies) lost to global consolidation.”
Taxes could always be lower, red tape in less abundance, laws and regulations more harmonized among jurisdictions. But for all that, the Economist Intelligence Unit, a branch of the British business magazine, recently said Canada’s “business environment” is the best of its G-7 peers.
Not sure how many times we have to say this, but an allegedly punitive tax regime, bureaucratic impediments and jurisdictional disputes and every other “curative” we’ve heard for what ails Canadian business has nothing whatever to do with the loss of Hudson’s Bay Co., Inco Ltd., Falconbridge Ltd., Alcan Inc., ATI Technologies Inc. and our entire steel sector in the past year and a half.
The Bay was chronically mismanaged, even without necessarily unflattering comparisons with Wal-Mart Canada. Alcan hadn’t earned its cost of capital for years. ATI was distracted by an insider-trading scandal. These are (sadly) routine events in corporate life, which generally make companies vulnerable to takeover. No additional tax breaks or subsidies, the cost of which will be borne by the public, will arrest the cupidity that pushes a major firm like Molson Cos. into the arms of a Colorado-based Adolph Coors Co.
As for the well-run giants we’ve lost – conspicuously Dofasco Inc., one of the best-run steelmakers in the world under nearly a century of Canadian ownership – again, no amount of the “gimme, gimme” mantra of most business leaders would have stopped that company from falling prey to a very deep-pocketed foreign suitor obviously well-pleased with existing Canadian business conditions or the firm would not have been snapped up.
America, Britain and Germany have so many firms instrumental to their economies that even a sustained buying spree among foreigners would leave those nations with a prodigious number of global champions. Oddly enough, each of the aforementioned countries, just the same, is wary of foreign advances on their flagship companies.
It’s arguably too late to debate a made-in-Canada solution to retaining our economic sovereignty, given how little remains to protect. But let’s stop pretending that anything other than a government prohibition on selected takeovers, for failure to provide sufficient “net benefit to Canada,” as existing legislation requires, or the deployment of Canadian institutional investor funds to act as white knights when foreign buyers appear is going to stop curb the transformation of Canadian corporate headquarters into branch offices.
Fearless forecasts?
Fearless forecasts by Ben Bernanke, chair of the U.S. Federal Reserve, compiled by Merrill Lynch Inc. economist David Rosenberg in a recent client note:
Really? “The impact on the broader economy and financial markets of the problems in the subprime market seems likely to be contained.” – March 28
You’re sure? “We believe the effect of the troubles in the subprime sector on the broader housing market will likely be limited, and we do not expect significant spillover… to the rest of the economy or to the financial system.” – May 17
Well, that’s reassuring. “Fundamental factors – including solid growth in incomes and relatively low mortgage rates – should ultimately support the demand for housing, and at this point the troubles in the subprime sector seem unlikely to seriously spill over to the broader economy or the financial system.” – June 5, just before the onset of the global credit crunch.
Damage to date: The Organization for Economic Co-operation and Development warns, in a report released Nov. 23, that global banks should brace for as much as $300 billion (U.S.) in mortgage losses, which could wreak further damage in equity markets, which already last week marked an official “correction” after dropping 10 per cent in recent months.
Signs of the times
Given the dearth of compelling new crime shows this season, compounded by the impact of the current writers’ strike on existing television shows, the New York Times counsels readers to turn to season-long DVDs of the Canadian series Da Vinci’s Inquest. “You’ve already watched so many shows that were filmed in Vancouver; isn’t it about time you watched one that’s set there, too?”
Jargon watch
colleague spam, n. Proliferation of emails from colleagues, expected to rise from the current average of 126 messages a day to 200 messages by decade’s end, the management of which is forecast to consume 41 per cent of recipients’ time by that point.
“Inboxes are bulging today,” reports the Wall Street Journal, “partly because of what some are calling `colleague spam’ – that is, too many people are indiscriminately hitting the `reply to all’ button or copying too many people on trivial messages, like inviting 100 colleagues to partake of brownies in the kitchen.”
Between the covers
Author Thomas Homer-Dixon’s The Upside of Down: Catastrophe, Creativity, and the Renewal of Civilization captured this year’s National Business Book Award. Homer-Dixon argues that a convergence of energy, environmental and geopolitical crises could cause a breakdown in the global order.
We invite readers to propose candidates for best business book of all time, the results to appear in a future Lookahead. Tell us what you think of unheralded tomes or such favourites as Charles Mackay’s Extraordinary Popular Delusions and the Madness of Crowds; Peter C. Newman’s The Canadian Establishment; Bryan Burrough and John Helyar’s Barbarians at the Gate: The Fall of RJR Nabisco; Jim Collins’s Good to Great: Why Some Companies Make the Leap… And Others Don’t; Dante Alighieri’s Divine Comedy (Inferno, Purgatory, Paradise); and Lemony Snicket’s A Series of Unfortunate Events (13 volumes).
This day in history
Born this date in 1857, this Polish-born British novelist wrote Heart of Darkness. (Answer, reverse: Darnoc Hpesoj.)
Quotable tycoon
“The economic position of the U.S. is not viewed the same. The focus of attention has migrated away from the U.S. as the primary market, to China and India, where people see future growth. We are at a point where the globe has tilted, and it is tilted to the east, given the massive growth that is going on in China and India and the surrounding countries.”
– Sol Trujillo, CEO of Telstra Corp., the dominant Australian telecom, on being an American working outside the U.S., interviewed in the U.K. Financial Times, Nov. 23.
