David Orchard
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(An edited version of this article was published in the Globe and Mail under the title, "In praise of state ownership, October 22, 1996)

The State or the United States

by David Orchard

For years we've endured a torrent of propaganda warning that public ownership is a disease, the only cure for which is privatization.

Gripped by this ideology, Margaret Thatcher's government sold $50 billion of public assets at a fraction of their value and often with disastrous results. Mulroney's Tories followed, as have Chretien's Liberals, in spite of promising the opposite before their election. "The national dream is dead," declared transportation minister Doug Young as one of the world's great railroads was sold. He and finance minister Paul Martin showed off a mock cheque for $2.1 billion as the shares sold out. (That taxpayers absorbed CN's $1 billion debt prior to the sale went unmentioned.)

In the pro-privatizers' holy war to seize public assets, truth is the first casualty.

Buried is a long proud history of public ownership worldwide, including Germany's Volkswagen, France's Renault and Italy's IRI group which became Europe's largest employer. Systematic state intervention created the Japanese miracle and the Asian tigers. Austria, in Germany's shadow, built an outstanding, domestically controlled economy through public ownership. War torn Finland, using government ownership, transformed itself into an advanced industrialized nation achieving a higher per capita GDP than Canada's.

Public finance built Canada's canals in the 1840's, the railroads linking the nation together and world class electrical, telephone, insurance and broadcasting companies. In the country with the highest foreign ownership in the industrialized world, public ownership has been a counter force often the only one. In the oil industry, Petro-Canada; in the grain trade, the Canadian Wheat Board; in broadcasting, the CBC; in electricity, the provincial hydro companies all have stood against the tide of American control.

Now institutions that built this country, and stand between it and economic absorption by the U.S., are attacked as pariahs, and governments scurry like frightened mice to carry out the bidding of a small, but noisy, elite.

Investment dealers, brokers, law firms and ad agencies who stand to make tremendous profits lead the privatization chorus. Corporations eyeing cheap buys are there along with their front people in the think tanks they finance; the Fraser Institutes, etc. Senior crown corporation executives, dreaming of private sector salary packages, join government and academic ideologues singing with full media coverage.

Chanted like a mantra (no evidence needed or provided) is the slogan that efficiency increases in private hands. In fact, the public owns some of the world's most efficient companies. There are numerous Asian, European and North American examples. When Jaguar, Rolls Royce and Chrysler failed under private enterprise state intervention rescued them. In Saskatchewan, $5 billion of public investment has built some extremely efficient corporations. In 1985, Air Canada topped 700 airlines to receive Air Transport World's coveted award for excellence. The airline's maintenance base was one of the world's most efficient. Not good enough. It was sold, and the CEO of a failed U.S. airline brought in to show Canadians the better way.

After British Telecom's privatization, 63 percent polled believed services had deteriorated or failed to improve. Privatized British Gas charges the western world's highest rates despite that country's North Sea reserves.

Privatization transfers power from bloated bureaucrats to the people, we're told. Former Saskatchewan premier Grant Devine declared, "We're going to turn this province over to the people of Saskatchewan." SaskOil, the publicly owned oil company was sold. Within months 75 percent of the open market shares of SaskOil were owned outside the province. Mr. Devine is gone, and most unlamented, but his works remain. The Potash Corporation of Saskatchewan, the world's largest producer, was sold for one quarter of its replacement value an American CEO (with an astronomical benefits package) placed in charge.

These privatizations are massive theft. British privatization guru, Madsen Pirie, is frank about the deliberate underpricing of public assets. "You watch the big flotations in Britain.... There is invariably a premium. The price goes up on the first day and everyone says the government sold it too cheaply. Yes, of course it did, because it's very important that the people who buy the shares should perceive an immediate gain. That makes them support privatization."

Selling public assets will reduce government debt, we are assured. In reality the possible one time payment on debt from asset sales is offset by the loss forever of annual revenue from these enterprises, many of which are consistently profitable.

British Tory, Harold Macmillan, stated that selling state assets would no more provide a lasting economic solution than selling off the family silver.

Privatization stimulates entrepreneurial creativity, so the line goes. In fact, the CNR pioneered network radio (eventually becoming the CBC). The world's fastest and most advanced jet interceptor, the Avro Arrow, was created under public ownership, as was the first commercial jet, the Avro Jetliner, eight years before Boeing's 707.

Canada's record of private industry research and development is dismal. Air Canada, Hydro Quebec, Ontario Hydro and Sask Tel have, by contrast, a long and impressive list of innovations. Entrepreneurial courage created these successful companies in the face of tremendous private, often foreign, resistance.

We live next to the world's superpower. Without public ownership an already dangerous level of foreign control will escalate.

Graham Spry described the fight to create the CBC, as American radio networks were moving into Canada in the 1930s, as "the state or the United States."

The same is true today. Except that under NAFTA's straitjacket once these enterprises are dismantled it will be impossible to get them back.

Sovereignty depends not only on informed and alert citizens, it also depends on control of our resources.

Instead of destroying Crown corporations we should expand them to compete directly with the foreign giants operating here. At the same time, the biggest unkept Liberal promise abrogation of NAFTA if it could not be renegotiated in Canada's interest must be carried out if Canada is to reverse its headlong slide into satellitehood.

David Orchard is the author of The Fight for Canada - Four Centuries of Resistance to American Expansionism and was runner-up to Joe Clark in the 1998 federal Progressive Conservative leadership contest. He farms in Borden, SK and can be reached at tel (306) 664-8443 or by e-mail at davidorchard@sasktel.net

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