Re: a consistent position?

[Stephen Block <stephenb@xxxxxxxx>]

In terms of the Canadian experience, there are some unique features of the
Canadian economy which, if free trade has not yet undermined, it's no thanks
to the forgers of free trade's intention. For many decades, it was
recognized that Canada was becoming increasingly entrapped by its dependence
upon its primary (resource) industries and that as time went on it would
then be adding more and more tertiary (service) jobs to its economy. What
social democrats favoured were joint ventures between government and
industry, the expansion of crown (publicly-owned) corporations, the
investment in an industrial infrastructure and the maintenance or increase
in service industries run by the government. The difference with the latter
industries was that in the case where the government provided the service,
the emphasis could be more on service and less on profit(ability).

These all seem like pipe-dreams now because the victors, the proponents of
free trade, reject all these propositions and wish Canadians to put their
eggs largely into one basket: export to the US market. Just that emphasis
means that we have to adjust to the prejudices inherent in the pure business
model/ American model of propagating ideas concerning investment. Of course
according to both those models, the market is , a priori, and of necessity,
more efficient than are government-run agencies. There simply is no
discussion permitted otherwise South of the border on many questions which
Canadians see quite differently, in areas such as health care delivery, or
utility ownership, to name only two.

Aside from dependence upon trade to the US being subject to fluctuations in
the US economy, it means that all manner of new industries, new and creative
ways of "growing the economy", as well as the concentration on the
improvement in government services, are foregone in favour of a supply side
export model and private sector biases in determining efficiency, in the
public, para-public and peri-public area. Canada's advanced expertise in
developing  making several different types of government agency models work
well now largely just goes to waste.

The vanishing of these skills and dimensions in Canada's economy are real
concerns and real issues, about as real as the vanishing of the buffalo was
to native Americans in the 19th century. Any theory discussing the issues of
investment and employment which are meant to bear on Canada's situation
needa to account for this side of the ledger. On the other hand, I don't
fault Americans for being unaware of them, or for not properly factoring
them in. I do fault Canadian negotiators for being willing to keep Americans
in the dark and for being willing to bargain essential part of Canada's
heritage away. Indeed my sense during the free trade negotiations of 1987
and 1988 was that "our" negotiators were effectively working for the other
side. And most of them seemed to share with the US negotiators many of the
prejudices against the public sector which the American side had.

American libertarians claim to revere tradition and wish to maintain the
rudimentary aspects of economic life. Well this is, or was, a pretty
rudimentary aspect of Canada's economic life, and it ain't gettin' no
reverence, let alone attention or understanding. And the whole point of free
trade is to try to factor out the public sector, so much that it can no
longer make a difference. (Then after it does no longer make a difference,
they proclaim cheerfully that there's no point in trying to spend more
government money to "grow the economy" because the public sector no longer
has enough of the pie.) But the US , of course, always wishes to push it
further. From the US' policy point of view, public sector involvement is
like a weed which needs to be plucked, indeed an illegal weed whose
trafficking needs to be interdicted.

With the US essentially declaring war on other counties' public sectors, one
really has to wonder what a consistent position might look like under the
circumstances. There seems precious little we can do even to get most US
policy-makers to understand what our views are, let alone sympathize with
them or believe they have even an once of a point to them. So what would US
policy people suggest if the shoe were on the other foot? I guess the answer
is that until now they have rarely had to trouble themselves with this sort
of eventuality.

Stephen Block


> "J. Barkley Rosser, Jr." wrote:
>
>> I would accept long-term investment that
>> would increase employment.
>
> As Warren would tell you, it is not necessary to attract foreign
> investment to increase employment .
>
>> Of course such employment
>> is almost certainly going to involve lower wages and poorer
>> working conditions than exist in the US (unless the
>> investment is in Canada).
>
> This is the case generally, but not necessarily.   Workers outside of
> the US could be paid at the same rate as US wages, adjusted to lower
> living costs, and still provide cost savings for multinational
> producers.  The so-called international division of labor is not driven
> by mere efficient deployment of capital but by the maximization of
> return on capital by the race to the bottom formula.
>
>> It is fine to say that this should
>> not be the case, but I am afraid that Krugman is right on this
>> one, it is extremely unrealistic to insist that it not be via the
>> trade weapon.  To do so will mean no jobs, not better jobs
>> for those in those countries.
>
> No, that is the classic neo-liberal argument.  If return on capital is
> regulated to a 15% ceiling, which is very respectable, and price are
> allowed to rise rather than kept low to bail the US economy out of
> inflation, wages around the world can be much higher.  When domestic
> wages rise, domestic consumption rises.  That and only that is
> development.  The rest is neo-imperialism.
>
>>
>> To quote Joan Robinson:  "It is better to be exploited
>> than not to be exploited at all."
>> Barkley Rosser
>
> Robertson was saying that in the 50s and meant it to be a transitional
> take-off phase compromise, not a permanent state.  BTW, Robertson was
> also attacked for her views on China.  There is an alternative of not
> being exploited at all, with full employment.  Lets not wallow in false
> alternatives.  Krugman, having taught Third World economists to fight
> the wrong battle, are telling his First World clients to play along.
>
> Henry C.K. Liu
>
>