Foreign Ownership

[maplesyrup]

All debt is not made equal

Public debt remains an income-generating asset for those who hold it, Canadians mainly; residents hold over 80 per cent of outstanding federal debt. As such it represents a stock of financial wealth. When it is “paid down,” as it continues to be by the Liberals, to the tune of about $60 billion in recent years, that represents a shrinkage of wealth. What it does, of course, is open up room for corporate borrowers to tap into the debt market at lower cost, replacing the public borrowers. Not just autos instead of child care, but private expensive child care instead of affordable public services.

Did you just conclude that the Liberals have been paying down public debt to improve the financial prospects of corporations? Well, yes. There does not seem to be any other reason why they would starve health care, education, public infrastructure, culture, recreation, amateur sport, veterans, the poor, single parents, farm families and aboriginals. And it takes a well-trained market economist to explain why only private investment is productive and why public investment is not productive. How so you ask? Assume it. That is the way economists are trained. It takes many years to form a mind that routinely confuses playing “let's pretend” with informed judgment on public affairs.

I like to think Canada will eventually be a thorough going democracy. It will happen when the working men and women of this country decide to pay attention to how their country is being run. Not before, and certainly not so long as what is investment in the future is thought to be a burden, and what strips us of our wealth is called an investment

Maybe everything it not what it appears to be, eh?

[caesar]

You should let us know who you are quoting. Rabble News does not sound very reliable to me.

[takeanumber]

I'm pro-foreign capital.

We need the capital to improve our quality of life and nation.

And they get a good stable investment, with reasonable returns.

I prefer a 25% debt to GDP ratio though, domestically held.

But foreign capital: I'm all for it. It can only make us stronger.

[maplesyrup]

You should let us know who you are quoting.  Rabble News does not sound very reliable to me.

I thought it was clear from the link.

What more information do you need?

And what does reliable mean to you?

[maplesyrup]

I'm pro-foreign capital.

We need the capital to improve our quality of life and nation.

And they get a good stable investment, with reasonable returns.

I prefer a 25% debt to GDP ratio though, domestically held.

But foreign capital: I'm all for it. It can only make us stronger.

How does foreign ownership of our resources improve our situation?

[playfullfellow]

How does foreign ownership of our resources improve our situation?

MS, there are several places that foreign ownership can help our situation. First off, they never really do own the resources, they only own the right to get it out of the ground. The government collects their royalties and landowners can collect access fees. The collection of these resources generates jobs, usually local people if they are available. These people need groceries, clothes, houses, etc., which generates more jobs. So on and so forth, all of these people will collect wages, which is spent in the local economy. From these wages come taxes which the government turns around spends or throws away as they deem to do so. Yeah, some of the profits made by the company leave the country but the turn around is that there were jobs created, wages paid and in the end taxes were paid. Even domestic companies know how to hide their money from the tax man, just ask Mr. Martin how this is done, he seems to be an expert.

[takeanumber]

Hard core capital like, for factories, and machinery, and dams and such.

And like, airlines too.

Now, we can provide a lot of capital for those things too, but it's nice if it comes from foreign sources, because it increases our capital base that much more.

And we benefit.

[maplesyrup]

Why don't we own our resources ourselves, so the profits flow to Canadians, rather than have foreign ownership, where the profits flow out of the country?

I would prefer not to suggest what our Prime Minister did, moving his CSL offshore to avoid Canadian taxes, labour standards, enviromental protection, etc., as a good role model for Canadians.

[takeanumber]

I agree MS, Rent-seeking sucks.

And Corporations do it all the time.

And worse, Conservatives defend it all the time, mainly because they don't understand fundamental economics, or even the term 'rent seeking' in the first place.

(That's why it takes an economic 'l'iberal to clarify things and set Cons straight)

But foreign capital inflows is very different from rent seeking.

[Hawk]

MS you are an isolationist, and while in some aspects I share your sentiments regarding foreign ownership (and I am a Conservative) I do not think we are in dire straights... not even close in fact.

If anything the foreign investment, especially from the south, will only help our economy. They can't do much more than channel more cash into our country, and if their corporations want to fork out the cash to cover development costs go for it. We get our share, we get jobs, we get the produce, and we get better international ties

[Hugo]

Why don't we own our resources ourselves, so the profits flow to Canadians, rather than have foreign ownership, where the profits flow out of the country?

You have it backwards. You're still mired in centuries-old mercantilist thought, which has been proven fallacious and replaced with newer economic theory.

Foreign investment is a good thing, and a sign of a healthy economy. For instance, the USA runs a large deficit and has a very strong economy. Russia, China and Germany all run trade surpluses and are having economic problems.

The simple question that will explain this is, "where is the money going?" When you have a trade deficit, it means a lot of foreign money is flowing into your country. When you have a surplus, it means that like rats on a sinking ship, a lot of your money is flowing out of the country.

Foreign investment in Canada is good. It means that foreigners are sending lots of money to us. It's a lot better than us sending lots of money to them.

[maplesyrup]

Foreign ownership represents a perpetual payment (not unlike a tribute) made abroad of profits, management and service fees. Because transfer pricing prevails between the head office and the branch plant — not , repeat, not, competitive market pricing — arbitrary fixing of costs by head office allows for tax avoidance in Canada, and elsewhere, through the use of tax havens (or just clever accounting), and with the complicity of legislatures and parliaments.

That does not seem like this is a good situation for Canada, or its citizens. having foreigners owning our resurces, avoiding Canadian taxes, etc. When the profits acrue outside Canada, it is not good for Canadians.

[takeanumber]

Rent seeking is different from foreign capital.

They're two different issues altogether.

It is possible to have tons of foreign captial comming in with a minimum of rent seeking.

If you're concerned about rent seeking, Canadian firms are the worst.

[Cartman]

Hmmm...didn't the Japanese build their ecoonomy quite quickly by limiting foreign ownership?

I am not sure how to feel about this one. It seems as though you need to be integrated into the world economy and welcome FI, but you must also maintain a measure of economic independence and self-reliance.

Perhaps the real question is how much foreign ownership is ideal?

[maplesyrup]

These trade agreements have screwed Canada.

Look at our softwood lumber and our cattle industries and the bullying by the Americans. And now Americans want to privatize our hospitals and our health care system.

Let's pull out of Free Trade and NAFTA now, the sooner the better.

BTW These trade agreements are NOT FREE!

[Hugo]

Hmmm...didn't the Japanese build their ecoonomy quite quickly by limiting foreign ownership?

Yep. Then they trashed it in 1993. Ever since they've been struggling terribly.

[Hawk]

Hey MS how about you address some of our rebuttals instead of ranting? =)

[Cartman]

QUOTE 

Hmmm...didn't the Japanese build their ecoonomy quite quickly by limiting foreign ownership?

Yep. Then they trashed it in 1993. Ever since they've been struggling terribly.

True enough, but they have rebounded dramatically since 1993. That's kinda old news now.

[caesar]

Foreign ownership is acceptable for some industries. I do not want foreign ownership of our media sources or transportation systems.

I do not like any foreign ownership of our Hydro power.

I think all the daily necessities of life should remain domestically owned. There should be limits to foreign ownership of much of our resources to ensure that they are not used and abused.

[maplesyrup]

To understand the negative aspects of foreign ownership is not rocket science.

This privatization of health care is an excellent example.

If we job out Canadian health care services to American or whatever multi-nationals, two very bad things will happen:

1 - costs for health care will go up because there has never ever been any research to show that privatization is less expensive.

2 - because it is private, profits will have to be generated for foreigners, which will leave the Canadian economy. Lets's keep any surplus money in Canada to help Canadian society.

[caesar]

The Government in BC was looking at contracting out our health care data management to an American firm. Technically that would make it possible for the US govt to use the homeland Security Act to access personal information from our medical records. I am not sure what is happening there. Just like the raids on the legislature; this government finds ways to bury any information getting out to the public. Many things are fact accompli before we hear about them.

[maplesyrup]

Wasn't quite sure where to insert this article, however this seems as good as place as any.

I don't know how many of you have heard of the author but I like his independence of thought.

Doesn't anyone wonder if there must be something seriously wrong with capitalism, because no matter how much of the media or the universities are controlled by multinationals, there are always intellectuals around to challenge the system and dispute its myths?

A cloud over civilisation

Corporate power is the driving force behind US foreign policy - and the slaughter in Iraq

[Hawk]

Yeah kind of reminds me of the communist revolutionary leaders, always bishing to the government and gaining support till a takeover, then any 'intellectual' part of them suddenly turns into 'totalitarian' and anyone who questions their economy is killed.

[caesar]

Doesn't anyone wonder if there must be something seriously wrong with capitalism, because no matter how much of the media or the universities are controlled by multinationals, there are always intellectuals around to challenge the system and dispute its myths?

Yes, I think capitalism leads to greed; but then too much socialism leads to government controlling all our options. I think a healthy balance of the two systems is best.

Just as unions are necessary to get a fair wage paid to employees but then too much union control means that someone who has a good work ethic and habits gets no rewards for his work. Seniority seems to take precedence over a good productive worker. In fact if you work too hard; you could be penalized by the union.

We need to have a healthy balance of both.

[Guest eureka]

There are a couple of factors in any discussion of FI that should be taken into account.

First, the type of investment must be considered and the behaviour of firms that are foreign owned. Most American investment is in equity where much European investment is in debt (Bonds).

Where ownership of businesses is concerned, we should take a much closer look at the behaviour of those businesses. Some American (particularly) controlled corporations are not as beneficial to our economy as they could be. Canadian branch plants often do not do the R & D but merely assemble or manufacture what is prescribed down south. That is not so good and leaves us as the proverbial "hewers of wood etc."

We need to take greater control and renogiate the Trade Agreements which were not favourable to us.

Second, we should also consider in discussing this, how much Canada invests outside the country and, what type of investment we make. We actually invest quite a lot in the US. I have no breakdown of figures for this.