Paul Phillips wrote about one claim of the NBER paper on Canada: >This strikes me as odd because Canada has a higher proportion of >foreign investment than any other industrial country I believe. Yes, inward FDI is high in Canada. But it is even *higher* in the U.K., Netherlands, and Australia, if measured by FDI stock over GDP in 1994, according to OECD data. It is past time the left dropped the nationalist fixation on foreign ownership in Canada. Ken Hanley provided a great parody of the preposterous regression method in the NBER study, but the study does make some points we should pay more attention to. For example, Ken wrote: >The relative weakness of R & D may be partly explained by the fact that >a great deal of our industry is branch plants of US and other foreign >investors. The R and D takes place mainly >in the home base country often the US, not in the branch plants. In fact, the NBER paper offers evidence that it is Canadian heir-controlled firms that do relatively little R and D. I don't know how much a "great deal of our industry" is, but US control of corporate assets in all non-financial industries in Canada was only 15.9% in 1995, and 11.4% of corporate assets in all industries, according to Statistics Canada. In 1993, total foreign control of assets of the largest 25 enterprises in Canada was only 3.6%. I know Ken said the weakness of R and D is only "partly" explained by US branch plants, but I think the NBER paper shows we need to spend more time talking about Canadian finance capital and less about the foreign boogyman. I've quoted these figures before on Pen-l, and I am admittedly dense, but I don't think my claim that US control in Canada is usually exaggerated has been refuted. Ken asked what the NBER study meant by rent-seeking behavior. I only skimmed the paper, but it seems to be the usual argument - family-contolled firms use their power to rip off other shareholders and close connections to government to gain preferential regulation. On the latter they cite the example of how the Bronfman family were allowed to transfer $2 billion in family wealth to the U.S. in 1991 without paying tax on capital gains, something even the Auditor General questioned publicly. One of their main points is the widespread 'pyramiding' of corporate ownership in Canada. They point out that unlike in the U.S., companies in Canada do not pay tax on dividends received from other firms they own. They argue that corporate pyramids promote transfer pricing, preferential financing, barriers to entry, etc. It actually reminded me of the good old left-wing rhetoric about how Canada is run by "50 big shots". Until the 1960s when nationalism took hold, we generally understood (IMHO correctly) that the real problem is these home-grown capitalists, not foreigners. (Ken also wondered if the NBER paper was referring to "toothless review mechanisms for foreign investment" when they associated less openness to foreign investment with large heir wealth. The study used someone else's evaluation of Canada's relative openess to foreign investment, and I didn't see any description of the latter's criteria, but one would expect it would include the full range of issues. The study's comparison was for 1988, before the FTA, but well after the toothless Trudeau-era Foreign Investment Review Agency was morphed into Investment Canada, whose mandate is to actually "promote" foreign investment.) Tom Walker argues that the problem with left perspectives is the failure to recongize the >predominantly >rentier nature of "indigenous" Canadian capitalism. "Rentier" here sounds like it could be super-centralized, super-rich family-dominated organization of capitalism the NBER paper not innappropriately calls the "Canadian disease". If so, I agree with both, but I prefer the old fashioned 'finance capital', and I don't see why Tom is shy about calling it indigenous. Unfortunately, there is also some truth in Tom Walker's suggestion that >The Canadian left has now reduced itself >to whining incessently for a return to an implicit bargain with the big >brother rentiers. I don't think there ever was a real 'bargain' with big brother rentiers, and Ken is right that the left a-la-social democracy is now outdoing itself to prove it is fiscally responsible. But left-nationalists have spent a lot of time over the past couple of decades offering tactical tactical advice on how to be a better bourgeoisie - invest more in R and D, become more competitive in world markets, etc., instead of figuring how to fight the bourgeoisie. Maude Barlow and the Council of Canadians is more of the same pie in the sky. Bill Burgess
