Economic Nationalism

Is economic nationalism on the rise in Canada, even though we have a conservative federal government in power? The author of this article in the Globe and Mail thinks that it is, and that "[a]s it happens, Mr. Harper is probably the most economic nationalist prime minister since Pierre Trudeau." Hmmm - those are strong words, and probably could be counted as fighting words in some quarters. I can see the concern of those who are against state-owned firms buying Canadian companies. Here is the much revered Jack Mintz in the Financial Post arguing that limits must be placed on state-owned companies buying canadian companies.

Mintz even concedes that "The uncomfortable aspect of my recommendation is that it would make capital more difficult to flow from countries with a predominance of state-controlled entities. However, sometimes money shouldn’t be accepted on just any terms. After all, governments could privatize their own companies if they want their companies to grow." To the last bit, I say Amen. To the first bit, I say that this shows that opponents of such takeovers are not really motivated by pure economic considerations and resort to masking their objections in the language of state-owned versus non-state owned.

It is ironic that such rhetoric has been emanating from us lately. Canadians should know the Canada Pension Plan (a state owned corporation, if there ever was one) routinley invests money abroad. Its investments have generated the same reaction from some other countries. For example, a few years ago, New Zealand blocked CPP's bid to purchase a 40% stake in New Zealand's Auckland airport.

The New Zealander's used the same 'no benefit to New Zealand' test that we purport to be using now in evaluating our foreign takeovers. And as in our case, the decision to reject Canada was purely ideologically driven, and not based on economics. 

I also recall in the 1980s the anti-Japanese sentiments that permeated both sides of our border. The same arguments against state-owned investments today were used back then, but with a slightly different nuance. Instead of arguing the state-owned argument (since the Japanese companies were not), the arguments focussed on the asymetrical trade rules that Japan imposed on its North American counterparts. Eventually, Japanese protectionism only harmed Japan, and today we hardly think of them as the world power we were warned they would become. Today the same rhetoric is being used against China.

At the end of the day, the free-trade country is the one that wins out and the protectionists lose. It is time we learn that lesson. 

Comments

[nuclear engineering textbooks]

Well that's good if the New Zealander's used the same 'no benefit to New Zealand' test that we purport to be using now in evaluating our foreign takeovers...It's a good decision.