A combination of advances in automation, COVID19, and globalization threaten to radically shrink employment opportunities in Canada.  Meanwhile, the rich are getting richer.  What are we going to do about disappearing jobs?


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​In a recent article for Social Europe, American academic Branco Milanovic suggests that working from home during the pandemic could radically change the demographics of work.  He postulates that “as performance of a job becomes divorced from physical presence at the work-post, it will open many jobs to anyone with a Wi-Fi connection around the world.”

In other words, just as 20th century globalization very quickly offshored working class manufacturing jobs, our pandemic world could kick start the large-scale outsourcing of previously “safe” middle class jobs.  Why pay Canadian wages when you can get the work done for a fraction of the cost elsewhere?

The Hollowing out of the Middle Class

Whether or not that will happen is still conjecture.    What we do know, however, is that the next wave of AI advances won’t just focus on replacing traditional working class jobs.  Expect many jobs that require a post-secondary education to disappear.   
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Here’s a list of the kinds of jobs that are already in the process of being automated: 

• Customer service agents
• Market analysts
• Sales managers
• Programmers
• Auditors and book-keepers
• Radiologists
• Middle managers
• Researchers
• Insurance underwriters
• Paralegals

The new reality is that any job whose routine can be learned will be at risk of being replaced by robots and algorithms.  The jobs that will remain safe are those that focus on non-routine task which involve perception and mobility. These are the jobs at the high and low end of the income scale.

At present, low paying non-routine jobs are largely service occupations involved in the assisting or caring for others.  The sad irony is that they are often the workers we need the most during times of crisis. 

High paying non-routine cognitive occupations include upper managerial consultants, professionals,  and technical experts. Middle management, on the other hand, is steadily being replaced by algorithms. As Yale professor Daniel Markovits, author of The Meritocracy Trap, points out in The Atlantic, top managers no longer work their way up through the ranks.  They are increasingly parachuted in from the top with a mindset to cut bureaucratic waste - a euphemism for jobs.

In other words, our middle class is being hollowed out, with a very small group moving up, and an ever larger group moving down the income ladder.  Millennials, already the principal victims of the corporate world's enthusiasm for precarious work, will probably be the hardest hit.

The Exponential Growth of Automation in the Work Place

According to a 2020 survey by the World Economic Forum, one half of the time spent on tasks at work in large companies will be done by machines by 2025.  To put that in perspective, in 2016 only 29% of those tasks were automated. The WEF prediction doesn’t stand alone. Multiple studies done prior to the pandemic -- by the McKinsey Global Institute, Oxford University and the U.S. Bureau of Labor Statistics, among others — assert that there is massive and unavoidable change afoot. 

The pandemic, not surprisingly, is accelerating that change.

Big Business’s “Solution” to Growing Job Losses

The business world presents retraining as the only option to address the looming unemployment crisis.  There are three problems with that approach.

First, retraining programs have a very poor outcomes record. A 2019 report from the US White House Council of Economic Advisors found that “government job training programs appear to be largely ineffective and fail to produce sufficient benefits for workers to justify the costs”. The same is probably true for Canada.

Second, given the speed and scope of advances in automation how do you know what jobs to retrain for?  

Third, companies deploying automation and AI say the technology allows them to create new jobs. But, according to a report from Time Magazine, “the number of new jobs is often minuscule compared with the number of jobs lost.” There are going to be too many people looking for too few jobs.

The sobering reality is that Big Business doesn’t care about job losses.  I like to think that small local businesses do.  But, like workers, they too have been pummeled by COVID19. More than 200,000 Canadian small businesses could shut their doors permanently due to the pandemic according to a recent survey by the Canadian Federation of Independent Business.

Meanwhile, Wall Street “minted 56 new billionaires since the pandemic began” with the largest gains in wealth amongst the Big Tech companies and their owners. Here in Canada “the country’s top 20 billionaires have amassed an average of nearly $2 billion each in wealth during six of the most economically catastrophic months in Canadian history.”

A Radically Different way Forward

The solution to the looming job crisis is not to retrain people for jobs that will probably continue to be replaced by advances in automation.

The solution is to create and value non-routine jobs that cannot be displaced by automation.  Big Business is not going to be interested in this. It won’t be profitable enough. The creation of non-routine jobs will have to be a government financed initiative.

It's an initiative for which there is an historical precedent.  It wasn’t the private sector that lifted Canada out of the 1930s depression.  It was government spending - spending that built our province’s infrastructure and created jobs across the country over a 38 year (1938-1974) period. All of this was managed without the federal government incurring large debts thanks to an innovative, but deliberately forgotten, use of quantitative easing.

But let’s be clear.  Government funding does not mean handing out government money to big corporations in the manner of the provincial government’s gift of over $300 million to oil companies, supposedly to protect NL oil workers’ jobs – jobs that are actually going to be impacted heavily by automation in the future. 

The money would go to jobs that build community and strengthen the environment.  There’s a growing movement advocating for the development of this kind of “People’s Economy”, where jobs could be devised, created and run, not just by governments, but by community and environmental groups. If you are curious about how it could be administered, check out this short video.  Or take a look at how the  this Toronto neighbourhood is working towards that goal.  

Conclusion

There is no historical precedent for what is happening to jobs. Throughout human history workers have always been needed to fuel the economy, even if they did that as slaves.  That’s about to change.

We can either acquiesce to that change, maybe even get some sort of basic income supplement to fend off the hard times as jobs collapse.  That’s certainly what the corporate world would prefer.   Or, we can redefine work and in doing so begin to create a different economy.

Acquiescence will, in my opinion, lead to powerless poverty, massive long-term unemployment,  weakened democracy, and an economy dominated and controlled by monopolies and the oligarchs behind them. It will be a mistake to assume that this will be benevolent leadership.  


On the other hand, it’s doubtful that our political leaders will have the will to challenge the corporate economy in even the smallest of ways.   The neoliberal ethos that government should stay out of the market has permeated parliamentary and civil service culture for the last 30 years. 

Change will only happen if we, the public, loudly demand it. That will require political activism, something that we Canadians are not very good at. 
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But there is a lot at stake.  And the timing is right.

Marilyn Reid

 ​Universal Basic Income, which is a federal guaranteed monthly payment to individuals, is a hot topic at the moment.  It’s also a confusing one.    Some groups want to restrict accessibility to people on low incomes while others insist that everybody should receive it. Some want it to be administered in conjunction with other social services while others see it as a replacement of these services. 

Most of the discussion focuses on the immediate effect it will have on people’s lives.  Very few people are looking at the long-term impact.  That’s the major focus of this blog posting. 

But first, let’s look at the cost of UBI.   

According to a 2020 study by the conservative think tank, the Fraser Institute, a monthly federal payment of $2000 to Canadians between the ages of 18 and 64 would cost $464 billion a year.  Per capita, that is similar to estimates  by a recently released study on UBI commissioned by the B.C government.

This is an enormous amount given that the federal government only brought in  $338.8 billion in revenues in 2019, and ran a deficit of $19.8 billion. As for taxing the rich more to pay for UBI, the Fraser Institute study estimated that collecting the entire disposable income from those earning over $250,000 a year would be sufficient to cover only 25 percent of the program’s cost.  

The extensive use of tax havens by corporations would also make it very difficult to get money from that sector.

Given the cost, if we get UBI, the monthly payment will, in all probability, be a much lower amount. However, even a $600 version of UBI would still represent over 40% of government expenditures and could come with cuts to existing programs. It’s why so many anti-poverty organizations and left wing think tanks are opposed to UBI. They believe that low monthly payments, coupled with a contraction of government services, could exacerbate poverty rather than reduce it.

They have a point. But what worries me even more is what UBI could mean for future generations.  Here are five questions I think UBI advocates who genuinely believe the program will lead to a better world need to grapple with.           
                    
 Will UBI be an obstacle to finding solutions to the looming job crisis that is predicted?

A 2013 report out of Oxford University estimated US job losses of 47% over the next few decades due to advances in automation. This was backed up by a 2020 survey of large businesses done by the World Economic Forum.  Business leaders estimated that the time spent on current tasks at work in their corporations by humans and machines would be equal by 2025.    
 
This scenario suggests a need for government to actively begin creating jobs in the manner of the New Deal during the Great Depression. But where will the money come from, both now and in the future, given the massive financial commitment government will be already making if we get UBI?

 Who really profits from UBI?
 
The billionaire class (Bill Gates, Mark Zuckerberg, Jeff Bezos, Elan Musk, etc.) are in favour of Universal Basic Income.  So too are 120 Canadian CEOs and business owners. And why wouldn’t they be? Maintaining consumption in the past has always been tied to employment and adequate wages.  Those UBI monthly payments, not just to people who need the money for basic needs, but to many in the middle class who don’t, will stimulate and subsidize consumption even as the automation related layoffs roll out. There will also be very little pressure to raise wages for two reasons. One is the monthly top-ups workers will be receiving. The other is the growing surplus of laid-off workers, many of whom will want to find work.  Expect  higher profit margins for owners and shareholders with UBI.
 
Where there are winners, there are always losers. One that UBI enthusiasts are perhaps not considering is the environment – an environment that is already deeply scarred by too much disposable stuff. Should government be facilitating this by promoting the consumption of more stuff? UBI for everybody will do that.

Will UBI lead to greater inequality?

In the past, reductions in inequality happened because workers were able to collectively threaten to withdraw their labour. Just as outsourcing jobs to other countries shifted that power dynamic between workers and employers in 20th century Canada, so too will the automation revolution. Only this time it won’t be just blue-collar work that is affected.  Algorithms are expected to substantially reduce middle class jobs, including managerial positions. 

The effects could be long term. The speed of IT breakthroughs has no historical precedent and is evolving at an exponential rather than a linear pace.  We really don’t know where it’s going to take us. If we don’t focus on creating new and different jobs, jobs that can’t be replaced by robots and algorithms, we could end up with a huge, powerless, unemployed and underemployed underclass.  A worst-case scenario would take us right back to the massive inequality and exploitation of the 19th century when 10% of the population owned 90% of the wealth.

Do we really want to leave the responsibility for job creation entirely to the private sector?  In choosing UBI with its huge costs that is exactly what we are doing.           
                    
Will UBI weaken democratic government?

It isn’t just that UBI deprives government of the funds to create jobs, or introduce a national pharmacare or dental care program, or put much needed money into affordable housing, public transit, day care, etc.
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In prioritizing payments directly to people rather than through institutions, UBI reinforces the neoliberal belief that “the Greater Good” is best achieved through individual effort. I worry that UBI will lead us further down the path that former British Prime Minister Margaret Thatcher articulated when she said “There is no such thing as society”. Milton Friedman, the principal articulator of the belief in market control of human destiny, was an advocate of Universal Basic Income.  That should raise alarm bells.

Is there a better way that government can spend money to help people?  

In January 2021, a report commissioned by the BC, NDP government  to assess the viability of introducing UBI in B.C. was published.  More than 40 experts participated in the 518 page study which in the end rejected UBI as a way forward to create a more just society. Researchers made 65 recommendations that included reforms to social services, taxation, labour standards, housing, disability assistance and income support.

It is an excellent report, but what it doesn’t do is directly address the job losses predicted through advances in automation. An approach that does do that, is a Job Guarantee program to all those who want to work, paid for by the federal government, but designed and administered at the local level by local groups.

​This is not workfare. The emphasis would be on jobs that care for communities and the environment they live in – jobs that can’t be replaced by robots.   For an understanding of what this kick-start to a “people’s economy” might look like, you could check out our short eight minute video. It’s based largely on the work of American academic Pavlina Tcherneva.

Conclusions
 
Sigmund Freud said that “Love and work are the cornerstones of our humanness.” Of course, he meant that the work has to be meaningful. Much of the work in our consumer-oriented society does not meet that criterion.  The work place has become far more exploitative and precarious than it was 50 years ago when I and other baby boomers entered it. 
 
The consequences are sobering.  According to a 2020 report by the Parliamentary Budget Office, the top 10% of the population now owns 56.5% of Canadian wealth, the top 20% holds 73.5% and the bottom 40% just 1.2%. As for income, the above BC report claimed that one in three single BC working age adults were living in poverty.   Expect those statistics to worsen as robots and algorithms continue to displace jobs.
 
UBI enthusiasts, in my opinion, are too optimistic about long-term outcomes. The underlying UBI assumption is that the future will be governed by the same norms that apply in the present, and that

• enough jobs will still be there for those who want them.
• wages will not stagnate and could rise as workers have the option to turn down lousy jobs.
• public services won’t be cut or privatized.
• UBI payments will be sufficient and keep up with inflation.
• unions will still have some power.
• the majority of those who aren’t working and can’t find work will be content with this, thanks to their monthly UBI income.
• Government’s ability to act in the public interest will still be there.

What if the above suppositions ultimately end up as wishful thinking? That could happen.  What UBI supporters are not recognizing is the ways in which UBI, albeit unintentionally, will strengthen corporate power at the expense of democratic choices.  The consequences could be both unforeseen and unpleasant, as the corporate world rarely acts benevolently of its own volition. History has shown us that.

I understand the attraction of UBI.  At first glance it seems so fair and egalitarian.  But, for all of the reasons I’ve detailed above, I believe it could be a Trojan Horse.  There has to be a better way to reduce poverty and growing inequality.


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Marilyn Reid

On February 24th a private member's bill on Pharmacare was voted down by the Liberals, Conservatives and Bloc Quebecois.  Do the bulk of our MPs really not want Pharmacare?  That seems unlikely.  Our letter to the Telegram suggests that there were other factors at work.   

Letter to Telegram:  Why was the Private Member’s Bill on Pharmacare defeated?

During the 2019 federal election the Liberal government promised to “take the critical next steps to implement national universal Pharmacare so that all Canadians have the drug coverage they need at an affordable price.” This came after a 2017 report from the Parliamentary Budget Office estimated that a universal Pharmacare system would save Canadians more than $4 billion a year.

On February 24th the Liberals appeared to renege on that promise by defeating a private member’s bill that would have introduced a legal framework to allow the federal government to begin negotiating arrangements with the provinces.

Newfoundland and Labrador consistently scores last among the provinces on measures of overall health. Given that reality, we find it hard to believe that our six Liberal MPs are not in favour of Pharmacare. Is it not much more likely that the Whip system was in play, as it so often is in Canadian politics? Canada apparently has the most rigid party discipline of any nation that uses the British Westminster system.

That discipline extends not just to the Whip. As MUN professor, Alex Marland, points out in his recent book “Whipped”, it goes right through party infrastructure. Politicians have described (anonymously) their role as “useless”, “that of a lackey on a leash”, “jack-in-the-box who pop up to vote” and “invisible”.

Our question is: Who whips the Whips? Because, if decisions and policies are being developed exclusively in the back rooms of the Privy Council and Prime Minister’s Office in conjunction with powerful corporate lobbyists, then our democracy has become a mere façade – a façade behind which lurks Big Oil, Big Finance, Big Pharma and other Bigs.

It’s one of the reasons we support Proportional Representation. PR is not a perfect system. Nevertheless, those coalition governments it tends to produce at least make it harder for corporate elites to influence policy to the extent that they do here in Canada.

As for our MPs, we feel for them. The travel inconvenience and career uncertainty are bad enough. But to then realize that your ideals and those of your constituents have so little influence in Ottawa must be profoundly discouraging. Pharmacare is probably just one of many disappointments.

This is not the way democracy is supposed to work.

 Marilyn Reid,
The Avalon Chapter of the Council of Canadians.

 
“The changes unleashed by the Fourth Industrial Revolution are so profound that, from the perspective of human history, there has never been a time of greater promise or potential peril.”
                                        Klaus Schwab, chairman of the World Economic Forum (2017)
 

The changes Klaus Schwab is referring to are technological -- major advances over the last decade in artificial intelligence, robotics, virtual reality, blockchains, biotechnology, quantum computing, the Internet of Things, 3D printing, and more.

The speed of these breakthroughs has no historical precedent and is evolving at an exponential rather than a linear pace. According to a 2020 survey by the World Economic Forum, one half of the time spent on tasks at work in large companies will be done by machines by 2025.  To put that in perspective in 2016 only 29% of those tasks were automated.

Looking at this from a consumer perspective, the Fourth Industrial Revolution promises us cheaper and more convenient access to all sorts of new stuff.

The peril, however, is unprecedented job losses.

There is much talk of retraining for the new digital age. While retraining is important, it is difficult to see how automation is going to create anywhere near enough jobs to make up for losses. Moreover, there is always the risk that the retrained jobs will themselves get automated.  We just don't know how far this automation revolution will take us.

The CEOs of industry understand that. It’s why so many of them are now coming out in favour of a Universal Basic Income, in which all residents (say between 18 and 65) receive monthly payments from government, regardless of whether they have a job or not. 

This, understandably, can seem immensely appealing to those stuck in precarious work where all too often you are underpaid and undervalued. But UBI does nothing to address the root of the problem, which is job destruction.

Unless we address this, there is the real danger that we will end up with a very small group of people with much sought-after high-tech skills that do very well, and a whole lot of people who don’t. A worse case scenario is a marginalized underclass of permanently undervalued and underemployed citizens.

One obvious solution to this dilemma is to create jobs that the machines can’t do. These would be the jobs that enrich our sense of community and fellowship - jobs that bring us together and deliver meaning to our lives.

The private sector doesn’t do a very good job at creating that kind of work. The desire to make every more money gets in the way. But government could.

What if, instead of a Universal Basic Income, we offered to everybody who wanted it a Guaranteed Basic Job? What if we made the focus of those jobs community and environmental improvements? What if we allowed local communities to decide what their needs and wants were? 

Two authors have both written and spoken extensively about that very possibility. Pavlina Tcherneva outlines how the jobs could be created in “A Case for a Job Guarantee”, and Stephanie Kelton writes about how a job guarantee could be financed through Modern Monetary Theory in “The Deficit Myth”.
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As for us, we’ve made an eight-minute video summarizing why Canadians should consider a Federal Job Guarantee, how it could work in practice, and how it could be financed. Please consider checking it out. 

We live in a time of unprecedented crises – climate change, biodiversity implosion and now our pandemic.  Unprecedented crises demand unprecedented action. A federal job guarantee with an emphasis on grass root participation may not be a sufficient answer to the multiple crises of our age.  But it is a good first step.  

Universal Basic Income (UBI) is increasingly a buzz word in conversations.  The concept of giving all adults, both those who are working and those who are unemployed, a monthly income seems both fair and egalitarian.  As a short term solution to crises like our current COVID pandemic it makes perfect sense. 

But there are some sobering implications about making UBI a permanent fixture of our economy – implications that are explored in this eight-minute video, entitled “Could Universal Basic Income be a Trojan Horse?"  We invite you to check it out.

​Did you know that among the ten provinces, Newfoundland and Labrador has the highest percentage  of rural communities without banking services?   It's actually a  situation that is getting worse across the country, as the big banks shut down more and more rural branches.

That very inconvenient problem could be solved by giving Canada Post banking status.  It's not a new idea.  There has been a cross country push for postal banking for almost two decades - a push that is, not surprisingly opposed by the banking sector.  

Our partner group, the Avalon Chapter of the Council of Canadians has made a short eight minute YouTube video exploring the reasons why rural Canadians both need and deserve postal banking.  It asks the question:  Why does the federal government consistently refuse to address the problem? 

We bet you can guess the answer. 

  You can check  out the video here.

Community groups in Newfoundland and Labrador are worried that that is exactly what is going to happen.  Here is what the local Avalon Chapter of the Council of Canadians had to say in a Nov. 4th Letter to the Telegram. 

 
                                 The Trouble with Bubbles

With the word “bubble” now so trendy, this seems a good time to critique the bubbles surrounding leadership in our dominant political parties. 

The Goliath of our troubled political bubbles belongs, without doubt, to the Conservative Party.  We had a Conservative government ensconced in a bubble with a powerful premier at the centre, obedient minions in the civil service, and an entourage of business interests who cared only about immediate profits.  No one outside that bubble was listened to. Result: Muskrat Falls. 

Then there were the Ball government’s bubbles.  Probably the most memorable is that first incredible, 2016 budget attempt that put a levy tax of 1.2% on Newfoundlanders and Labradorians struggling with incomes less than $25,000, but only .45% on those making $200,000 or more.  It was quite an amazing demonstration of how those in bubbles of privilege, even when well meaning, can have little understanding of the economic reality of ordinary people.

Already there’s evidence that similar blinkered, bubble trouble may thrive with the new Furey government. An example is the Task Force recently commissioned to spend the $320 million allocated to the province by the Trudeau government.  The federal money came with two loosely worded conditions  -  that it  be used to support laid off oil workers and  that it  reduce carbon emissions.  For those of us who thought that meant training and channeling workers into green economy jobs, dream on. 

What we got was a Task Force in which 19 of the 21 appointees came with strong links to the offshore industry.   We’ve also got leadership in both the Liberal and Conservative parties itching to make sure that as much of that money as possible goes to helping the oil sector stay in the province.

We shouldn’t be surprised.  The oil sector is very, very good at getting money out of governments.  According to a 2019 International Monetary Fund report, when you include damages done to the environment and atmosphere that the industry doesn’t pay for, the subsidies to oil in 2017 were a staggering $2.13 trillion or 2.7% of world GDP that year.  And that was a typical year.

Like other community groups, we do understand that the government is between a rock and a hard place, and that, at this point in time, we need to slowly transition away from our dependence on oil.  But that transition may ultimately be necessary, like it or not.  Choosing to minimize exposure to other points of view and other directions is what we don’t need.

Prioritizing one “solution” above everything else is exactly the kind of bubble trouble that gave us our Muskrat Falls mess. 
 
Marilyn Reid, on behalf of the Avalon Chapter of the Council of Canadians

The 21st century has seen a dramatic shift away from steady work with benefits and into precarious work.  With that has come stress, uncertainty and increased debt load for many people.

So what changed?  What went wrong? Could it be globalization? 

This eight minute video, made by the Avalon Chapter of the Council of Canadians, argues that there is a cause-effect relationship between “free trade”, trade agreements  and precarious employment. It questions the motivation of government in signing trade agreements that do not appear to be in the public interest.  
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We hope you will consider watching it. 

For those of us who are opposed to Public-Private Partnerships, the appointment of Dame Moya Greene to  chair the Economic Recovery Team is a little unnerving. This letter to the Telegram by Helen Forsey articulately expresses our concerns.  We couldn't have said it better.

               Difficult decisions by others usually means more pain for us   

​While the appointment of a highly qualified woman to chair the economic recovery team is very welcome, I am somewhat wary of the establishment background that Dame Moya Greene brings to the task (“Meet the woman tasked with helping chart Newfoundland and Labrador's fiscal recovery,” Sept. 5, The Telegram.)Greene’s history with Transport Canada, TD Securities, Canada Post and the U.K’s Royal Mail all suggest a high level of comfort with neo-liberalism, the market-oriented policy framework that typically embraces deregulation, privatization and austerity.

In recent decades, neo-liberalism — formerly termed neo-conservatism — has largely taken over in political circles, shaping government policies for the worse without our even being aware of it.
Classic neo-liberal approaches include bottom-line corporatism, privatization and public-private partnerships (P3s) — all core aspects of Greene’s professional record.

The be-all and end-all of the neo-liberal management credo is “efficiency,” and Greene apparently buys into it lock, stock and barrel.The important thing, she says, is to ask: “Is the corporation efficient?”

But “efficient” for what purpose?

Businesses exist to maximize profit, and efficiency can help.

Public services, however — health care, schools, the post office — exist to serve the public, and profit-oriented efficiency often contradicts that purpose.

Moreover, as John Ralston Saul has pointed out, efficiency and democracy don’t go together well. Democracy, he says, “is intended to be inefficient.”

As for privatization, Greene claims that what matters is not “who owns the shares” but whether or not the corporation is efficient.

Again, though, efficient for what purpose?

During COVID-19, profit-motivated cost-cutting by privately owned long-term care homes in other provinces sacrificed people’s lives on the altar of efficiency.

Eugene Forsey — the late trade unionist, constitutional expert, senator, Newfoundlander, and my father — described privatization as “the biggest international romp ever mounted by the rich for skinning the poor.”

In a 1980 article in Macleans magazine, he wrote: “Neo-conservatism, of which privatization is the first instalment … is just a slick, high-falutin’ synonym for something very far from ‘neo’ and much closer to the very old ‘Every man for himself, and devil take the hindmost.’”

When the powerful warn of “painful and difficult” decisions to come, it tends to indicate that the outcomes will indeed be painful for us as citizens, especially for those already struggling to make ends meet or cope with sexism and racism.

While political consequences may make things difficult for the decision-makers, the actual pain will likely be reserved for the rest of us.
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Helen Forsey
St. John’s

Real transformative change often happens when there is a crisis.  

It was the Great Depression that pushed the US government under Franklin D Roosevelt to constrain and regulate the banking elites that had caused the financial collapse.  In Canada, government under Prime Minister McKenzie King implemented even more radical steps, first by nationalizing the Bank of Canada, and then, by using its money creation powers, to finance a golden period of public infrastructure growth in our country which lasted from 1938-1974.  

As you can see from the graph below that golden period was financed with minimum debt load to the Canadian people.  In fact, it was only when we abandoned using the money creation powers of the Bank of Canada that our national debt exploded. 

What the Canadian government did would be called Quantitative Easing (QE) today.  But it’s a form of Quantitative Easing very different from what governments are currently using to rescue and stimulate economies savaged by the Covid19 pandemic. 

The current and prevailing Quantitative Easing model  assumes that money injected into the financial system will trickle down to Main Street and the small businesses and workers that populate that economy.   Except that it doesn’t.  Research from Europe, the United States and Great Britain suggests that over the last 12 years of their experiment with QE, it has been the rich that have profited the most.

That kind of profiteering and self-interest is not what we need during the present crisis. Instead, we need a Quantitative Easing framework that serves the needs of ordinary people.   Check out our YouTube explanation of how one could work.

We thought this blog by the local chapter of the Council of Canadians was worth publishing, as it echoes our worries about the creeping privatization through P3s of public services.  Prior to the election of the current NL Liberal government there were no public private partnership agreements in our province.  We now have four.  We do not want our water infrastructure to join that group.    Read on to find out how that could happen.
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According to media reports, St. John’s, Mount Pearl and Paradise have to collectively come up with $250 million to upgrade their waste-water infrastructure.  At the provincial level, NL municipalities could be looking at an overall cost of $600 million to meet the new federal regulations.  The big question for all of us is where the money for these upgrades is going to come from.

Our concern is that NL municipalities may be forced into some sort of public private partnership (P3). This posting explains what P3s are, why we are opposed to them, and how we think a P3 agreement might  be imposed  on us.


Part A:   A brief history of P3 agreements
Part B:   Why we oppose P3 agreements for waste-water infrastructure
Part C:   The role of the Harper government in promoting P3s
Part D:   The role of the new Canada Infrastructure Bank in P3 promotion
Part E:    Will our province  be Ground Zero for the privatization of waste-water infrastructure?
Part F:   The Blue Community Movement

Part A:  A brief history of P3 agreements

In a typical P3 agreement a consortium of private sector players finances the project and provides the architectural, constructional and management expertise. A tightly bound contract is drawn up between government and the consortium. Then, over a 20 to 30 year period the private sector group reclaims the money from the public, either through tolls (P3 bridges and highways) or by directly charging governments (water infrastructure).

Public private partnerships have been pushed as a solution to funding  infrastructure upgrades since the 1990s. At that time, governing parties in the richer countries saw P3s as a way of shifting budgetary expenses to future years.  This camouflage of expenditures allowed governing parties to look more fiscally responsible as elections approached. 

In the Global South the story was different.  International organizations like the World Bank imposed privatization of one sort or another on governments, by making them a condition of a country’s loan agreement.

In spite of the propaganda spouted by so many financial institutions, water related P3s have not for the most part been a success.   Maude Barlow, our honorary chairperson at the Council of Canadians, and a former senior advisor to the UN on water related issues states it succinctly. “Private water and wastewater services employ fewer staff, cut corners on source protection, provide poorer customer service and charge higher rates.” 

Unfortunately for poorer countries with heavy debt loads, re-municipalization is not easy, given the continuing enthusiastic support of privatization by the international financial institutions. It’s a different story in richer countries, however.

France,  is a particularly interesting example of the recent pushback against P3.   The country is the home of the two  largest water corporations in the world (Veolia and Suez). Yet, since the year 2000 more than one hundred French municipalities have taken back public control of water.

At a broader level, the European Court of Auditors have detailed widespread shortages and limited benefits in EU public private partnerships.

 

Part B:  Why we oppose P3 agreements for waste-water infrastructure

The concern of our local CoC chapter is that, just as the rest of the world is seriously questioning and retreating from the privatization of water, Newfoundland and Labrador may be forced into accepting a “P3 solution” for waste-water upgrades.   Here are six reasons for our opposition to going the P3 route for waste-water infrastructure.

1.  P3s constrain our human right to public water and sanitation.
In 2010 the United Nations recognized the human right to water and sanitation as an essential part of the right to life. The Human Rights Council further clarified that governments have the primary responsibility to deliver these new rights. P3s obstruct and limit this responsibility.

2.  P3s lead to the loss of public control.
Given that P3s effectively grant monopolistic power to private sector consortiums, we should take note of what has happened elsewhere in the world. As Nicholas Shaxson, author of The Finance Curse, explains in his critique of P3s in Great Britain:

 “The top down state sets long term performance targets, which can never cover all the possible eventualities. The highly complex contracts are impossible to monitor effectively and influence in a changing world. The players constantly try to shirk and wriggle out of commitments and whenever there is a clash, the government which has outsourced its expertise to private actors gets dragged into bargaining games it can’t win. Government has lost its ability to understand what is going on.”

3.  P3s impose additional costs and burdens on taxpayers and the local economy.
US research indicates that private  providers of waste-water infrastructure charge on average 63% more than governments for service delivery. 

 Unfortunately, there are no Canadian statistics yet available on P3 waste-water projects. However, cost analyses have been done on other P3 projects (health care, transportation, etc.). As a result, six auditor generals, (Ontario, BC, Quebec, Nova Scotia, Saskatchewan as well as the federal auditor general) have made extensive criticisms of the additional costs of the P3 approach.  

Keep in mind also that the “partnership” between government and the private sector is rarely a partnership with local businesses. That’s because local businesses generally do not have the resources to meet the financial requirements of a P3. Instead, the partnership is invariably with powerful corporations with no emotional ties to local communities. That means that almost all profits will leave the province. Furthermore, in order to increase profits, P3 management often cut back on workers and benefits. That can have an effect on quality control.

4.  Risks remain with the public sector.
Canadian auditor generals also concluded that instead of transferring the risk to the private sector – one of the main justifications for privatization – provincial governments usually end up assuming all the risk in P3 arrangements.  In other words, it’s public risks but private profits. 

5.  P3s could lead to permanent privatization.        
Did you know that there is a ratchet clause in the CETA trade agreement between Canada and the European Union that states that once a service has been privatized it cannot be re-municipalized as long as CETA exists? Water delivery is exempted. Waste-water is not. Currently, the perception is that government has the option of taking back control at the end of the project term. Under CETA, maybe not.  It’s impossible to predict how any challenge to re-municipalization might play out in an ISDS court. 

6.  P3s unfairly disadvantage future generations.
Under a P3 arrangement, the initial financing of projects is done by the private sector. In the past this has allowed governments of the day seeking re-election to look more fiscally responsible as project costs are pushed into the future. The neoliberal rationale for this decision has been that as the economy continues to grow it will be easier for future generations to pay the cost. Except that we now know that talk about future growth may be just a fantasy, particularly in our province. We would argue that this transfer of extra cost obligations to a future generation is no longer (if it ever was) an honourable option.  
 
Part C: The role of the Harper government in promoting P3s

Way back in 2012 the Conservative government under Steven Harper introduced new regulations for waste-water infrastructure. These regulations, which were to come into force in the years leading up to 2020, required secondary processing standards for sewage treatment. Around 40% of Canadian municipalities were affected by this legislation at estimated costs between $18 billion and $24 billion. Here in our province, 90% of municipalities are theoretically required to upgrade at a cost of around $600 million. We say theoretically, because small communities will probably be exempt, simply because the effluents they dump into the ocean are below the threshold amount designated for upgrades.

While we acknowledge the need and importance of upgrading waste-water infrastructure in our province we are suspicious of the real motives of the Harper government. After all, this was a government that deliberately gutted regulations related to Canada’s lakes and rivers, effectively leaving 99% of them unprotected.

Consider the following two points:  

• Shortly after introducing the new regulations, the Harper government required all governments making infrastructure upgrades with costs over $100 million to go the P3 route. What is worth noting here is that, at that point in time, P3 consortiums were rarely interested in projects under $100 million.
• Only around 20 municipalities across the country had entered into P3 arrangements for water or sewer infrastructure. Cities and towns across the country were clearly resisting P3 pressure.

Can you see a connection here? Create the circumstances under which municipalities must spend money on infrastructure, and then either require them to go the P3 route or limit other funding options.  We don’t believe it is a coincidence that so many sources for federal grants have been canceled or allowed to run out over the last seven years.

Part D: The role of the new Canada Infrastructure Bank in P3 promotion

The present federal government has withdrawn the insistence that public infrastructure projects over $100 million go the P3 route in order to access any federal grants. That’s good. What the Liberals have not done, however, is provide adequate funding through grants or loans so that municipalities can make the required upgrades to waste-water infrastructure. That doesn’t jibe with the Liberal campaign promise back in 2015 to spend money on building and strengthening Canadian infrastructure.

Many voters envisioned that 2015 campaign promise as some sort of FDR New Deal where government would incur debt and then spend it throughout the country by subsidizing infrastructure projects, either through direct grants to lower levels of government or through loans to local businesses and municipalities. But that’s not what we got – not at all!

During their first term of office the Liberal government formed the Canada Infrastructure Bank (CIB). This is a crown corporation completely controlled by the private sector. There appear to be no government representative on its board of directors and civil society groups have very little access to its deliberations and policies.  

The CIB’s declared mission is to build Canadian infrastructure through public private partnerships.  But is that the way it’s really going to play out?  We can’t help wondering how many CIB promoted P3s are going to end up capturing and controlling already existing public infrastructure  -  infrastructure like our waste-water systems.  Furthermore, given the corporate control of the CIB’s board and administration it’s hard not to conclude that CIB sponsored P3 contractual agreements could be significantly biased  in favor of the private sector consortia and the big corporations they represent.

The CIB’s  goal is to leverage private sector P3 investments of up to $140 billion over the next ten years.  To that end the federal government has committed $35 billion to be spent over that time period.  A small amount may go to municipalities. For example, Mapleton, Ontario was recently loaned $20 million to be put towards waste-water infrastructure upgrades.  But here’s the interesting part.  The caveat was that the $20 million was to be used  to “attract private capital expertise” through a P3 agreement.

If the CIB’s money is not being spent on directly financing infrastructure projects, where is the bulk of it going?     It turns out that a large part of the $35 billion federal investment in the CIB is to be used to subsidize the borrowing costs for corporations bidding on P3s. That’s to be done by loaning consortium partners money at a lower rate than they could get on their own in the money markets. As a co-investor, the CIB can also mitigate some of the unexpected risks a consortium might face by injecting capital at key points.

All of this makes P3 projects, even smaller ones like Mapleton (population 11,000), appear a lot less risky for the private sector. But still, the private sector would really prefer larger projects - which is why there is increasing reference to the concept of “bundling” on P3 promoting Internet sites.
 In the past, the term was used to refer to the bundling of different partners within a particular consortium. The new talk however, is of persuading communities to bundle together. A practical example would be if Lewisporte, Twillingate, Gander and Grand Falls bundled together as partners in order to encourage a P3 investor to come in at a lower cost option.

Worse case scenario:  The majority of municipalities needing upgrades across the province agree to bundling in the interests of saving money.

Part E: Will our province be Ground Zero for waste-water infrastructure privatization?
There is, of course, the possibility that our fears about the privatization of waste-water infrastructure are unfounded. P3s for waste-water management have not to our knowledge been formally proposed.  That doesn’t mean, however, that they won’t eventually be slid onto the table. 

Certainly, the federal government is pushing municipalities to do something. As reported in a CBC article, in some cases town managers in NL municipalities that don’t have an infrastructure upgrade plan in place have been threatened with $500,000 fines and two years in prison. The federal government is obviously well aware that our towns are several hundred million dollars short of having the money to make the required upgrades. Why then this bullying unless it is to push communities into a corner where they believe P3s are the only way out?

That raises questions about how much support municipalities that want to resist a P3 “solution” are going to receive from the provincial government.  There are reasons for pessimism.

First, it is very possible that the present Liberal government is, itself, in favour of a P3 “solution” for our waste-water infrastructure crisis. Since taking office in 2015, the Liberals have gone the P3 route for the proposed mental health hospital, the new prison and two nursing homes.  By contrast, there were no P3s in Newfoundland and Labrador prior to 2015. The Liberals may also argue that they simply can’t find the money given the current fiscal problems the province faces.

This fiscal dilemma is further complicated by a federal government that appears to be ideologically slanted towards some sort of privatization of public infrastructure. Does that mean they won’t consider other strategies like actually loaning federal money to our municipalities or pushing into the future the 2020 deadline? Who knows?

The one bright point is that we have a minority government with potential opposition to the P3 route from the other parties. But will they come out against P3s and will they look for other solutions?

Water related infrastructure is very possibly the next frontier in the private sector’s quest to gain greater control of Canada’s lucrative public infrastructure delivery.  If that is so, our province, thanks to its dismal fiscal situation and the many communities needing upgrades, may well be Ground Zero in that power shift.

Part F: Joining the Blue Communities Movement

 Did you know that, in the developed world, Paris, Berlin, Bern, Brussels, Los Angeles and many other cities have become Blue Communities?  

The Blue Community movement was initiated back in 2009 by the Council of Canadians in partnership with CUPE and the Blue Planet Project. Blue Community members commit to three things.

• recognizing and protecting water as a human right
• protecting water as a public trust by promoting publicly financed, owned and operated water and waste-water services and
• banning or phasing out the sale of bottled water in municipal facilities and at municipal events.

This Fall, Los Angeles became the first American city to become a Blue Community.

We would like Newfoundland and Labrador municipalities to consider joining the 27 other Canadian communities right across the country in becoming a Blue Community.  But let's be practical.  First, we have to acknowledge that there may be forces in the business community and in government that are going to push  privatization at us through a P3 agreement.  

If and when that push come we have to be ready to say NO to any  P3 agreement on our water infrastructure delivery.

Privatization through public-private partnerships (P3s) was the silent elephant in the room during the emergency meeting held earlier this month between municipal counselors, MHAs and MPs. The September 6th meeting was called because Newfoundland and Labrador municipalities have to find $600 million in order to meet the looming deadline for upgrading our waste-water infrastructure to federal standards. Another $400 million will eventually be needed to upgrade water infrastructure.

With a federal election coming up next month, it’s not surprising MPs didn’t want to talk about P3s at the meeting. But make no mistake: both the federal Liberals and Conservatives are strongly in favour of them.

Under P3s, a corporation or consortium of corporations provides the initial financing of an infrastructure project. It then runs the project for two to three decades, charging governments for management and services rendered during that period.
​
There are compelling reasons why municipalities should try to resist the P3 route for waste-water improvements.  To find out what they are, check out our article in THE INDEPENDENT.

A local social justice group, the St. John's Chapter of the Council of Canadians, has recently taken a strong stand in support of Municipalities NL's request for a ban on single-use plastic bags. They've even done a visual survey of plastic bag consumption at local supermarkets around the  Avalon Peninsula. The results were a little surprising. Just 12% of shoppers in the sample used only reusable bags.  Another 4% had a combination of reusable and single-use bags.  


Why are we writing about this as well? What do plastic bags have to do with  our primary interest, which is the erosion of democratic principles both in and outside government?  Lots!  We've taken a good look at how the Liberal government has handled the request for a ban and we don't like what we see.  
 
The first question has to be: 
 
Is Municipalities NL's request reasonable?
 
Did you know that every year Newfoundlanders and Labradorians go through an estimated 100-120 million plastic bags, manufactured for single use? Only 3.5% of these bags are returned to retailers by shoppers. The rest end up pretty well everywhere. 

According to a recent UN report on global plastic bag pollution, these largely unrecycled bags will take hundreds of years to decompose. The bags won’t just deface our landscape. They will contaminate our soil and water. They will choke and kill wildlife on land and sea, and poison those creatures that manage to initially survive their ingestion.  

We now know that plastics are reaching the human food chain as well, thanks to a small but groundbreaking study published in October.  The study found microplastics in the guts and feces of all of their human subjects.  The researchers concluded that the source of this contamination was, not just fish, but, perhaps even more worrying, plastic packaging including drink bottles.  The implications are huge.  Statisticians are estimating that as much as half of the world's population may be contaminated. 

Governments are gradually waking up to the scope of the problem.  Two months ago the European Parliament voted to implement by 2021, not just a ban on single-use bags, but on a wide variety of other  single-use plastic packaging, To put that enormous undertaking into perspective, nearly 50% of the plastic waste generated globally is plastic packaging.

the European Union can do this because it is a powerful economic unit that crosses borders.  Most countries don't have that kind of control, given that plastic packaging seldom originates in the country in which the product is sold.   Countries can, however, exercise control over single-use plastic bags, and more and more are choosing to do so.  According to the United Nations report cited above around sixty nations have now instigated bans or levies on plastic bag use.  

In June of this year PEI became the first province in Canada to introduce legislation banning single-use plastic bags. The law will be implemented gradually, with a fee or levy of 15 cents per bag starting July 1, 2019. The fee will increase to 25 cents per bag on July 1, 2020. As of Jan.1, 2021, businesses could face fines for distributing free, single-use plastic bags to customers.

In light of all of the above, we believe that Municipalities Newfoundland and Labrador showed both vision and leadership back in 2015 and again in 2017 when they asked government to introduce a similar province-wide ban.
 
Who is for and who is against a plastic bag ban in our province?

Municipalities NL is not alone in its request for a ban.  Few people know that back in 2016 the Liberal Party itself  passed a non- binding motion urging the government to implement a complete ban. The Leader of the  Opposition, Ches Crosbie has also come out in favour of a ban.
 
Then there is the government’s own report on management of single-use plastic bags. It points out that curbside recycling programs across most jurisdictions do not accept or want single-use plastic bags.
 
Government’s refusal to publicly commit to a ban is, of course, exactly what industry groups want. The Canadian Federation of Independent Grocers, the Canadian Plastics Association, the Retail Council of Canada and the Canadian Federation of Independent Businesses have all contacted government lobbying against a ban. They are suggesting that alternatives to a ban can be found.

What does the recycling "industry" not want us to know?

Just what those alternatives might be is very unclear given that bag recycling is not an economically viable option. According to figures cited in a 2013 article in the The Huffington Post, the estimated cost to recycle one tonne of plastic bags was $4000, while the market price for the  same tonnage of recycled bags was a mere $32.

Those shockingly mismatched statistics hint at a dirty little secret the recycling industry doesn’t want us to know. Large amounts of North America’s plastic trash have for years simply been shipped offshore to countries that were willing to accept it, presumably for other trade concessions.

China, a country with the biggest “mismanaged” plastic waste problem in the world has been the main recipient of our plastic garbage. But, since last January China has been refusing to take, not just single-use bags, but a number of other “dirty” plastics. The fear is that other countries will follow suit. Increasingly the talk is of a looming plastic waste crisis that will not likely be easily solved without extensive, complicated inter-jurisdictional collaboration.

Three years after the request for the ban government is still waffling.  Why?

We at Democracy Alert acknowledge that plastic packaging is an inter-jurisdictional problem given that so many packaged products are not made where they are sold. Single-use shopping bags, however, are another matter. They represent a straightforward local problem with a manageable solution in the form of a ban that’s been tried in various ways in multiple jurisdictions. It is a solution that won’t cost a lot of money to implement. Nor will it have a negative impact on jobs in the province. There’s even a well thought through blueprint of how it could work thanks to the PEI example.
 
Of course, Government knows all that. Yet  it is now pretty obvious that we're not going to get that ban.    Government started  preparing us for that reality last summer during Acting Minister Andrew Parsons'  ON THE GO interview with CBC . Our favourite quote was “Most single-use bags aren't single use.”    While there's some truth there, we would like to know how exactly  a dog owner using the bag a second time as a pooper scooper will make a further dent in those 100 million plus bags we consume.
 
Minister Parsons also said

• “This is just one tiny thing,  where we’re  dealing with 0.2% of the litter that’s going out there.”
• “We want to work with everybody.”
• “We want to look and see what’s going on across jurisdictions.”
• Government is “looking at some of the other alternatives we can do.”

 
Government's latest pronouncement, as cited in the community newspaper The Compass last month, is  less waffling and perhaps more easy to interpret.  “As a result of meeting (with different stakeholders) industry has indicated a willingness to work with the province on a plan to significantly reduce plastic bags.”
 
We read that as no ban in the near future and no recyling of existing bags.  What we are going to get, we suspect, is a voluntary levy - something like a token five cent charge on plastic bags.  We notice that many stores have already started doing that.  

What is wrong with Government's corporate driven "solution"?

From a practical perspective, if government had read the UN report with an open mind they would know that a five cent charge on plastic bags is not going to make much of a difference.  There are good reasons why PEI is starting with a 15 cent levy.  

But that is not what upsets us the most.  

Government didn’t get the request for a ban from some special interest  group that arguably might have a narrow agenda. The request for a ban came from democratically elected municipal leaders representing the same population of voters as those that elected provincial MHAs. That in itself should have given Municipalities NL's request enormous clout. 

 Our municipalities are also the organizations best placed to understand the scope of the problem since they are responsible for garbage collection and cleanups. They obviously made the request for a ban after considerable discussion. That too should have given their request tremendous clout. 
 
And let's not forget that government's  own report made it very clear that there  was no  recycling solution to the plastic bag problem. 
 
 Apparently none of this appears to have  mattered to our government leaders.  Not even the will of their own party membership has swayed their bias towards a corporate "solution". 
 
What's our conclusion?  With an election coming up next year we might want to take a good look at the extent to which our elected leaders seem to be joined at the hip to the corporate sector  -  so much so that they can't even perceive their own bias. 

There's something wrong here. 

The answer is LOTS!    

​Three different provinces are decisively  moving towards proportional representation.
British Colombia

British Colombia  is in the midst  of  mail-in referendum which started on October 22 and will last until November  30th. Voters will be asked two questions on the referendum ballot.

• The first question asks if we should keep the current First Past the Post voting system or move to a system of proportional representation.
• The second question asks voters to rank three proportional systems: Dual Member Proportional (DMP), Mixed Member Proportional (MMP), and Rural-Urban Proportional (RUP).

If a majority of voters choose proportional representation in the first question, the proportional representation with the most support on the second section will be adopted. You can learn more about  how this will happen on the BC government website.

Prince Edward Island

​​Prince Edward Island will be holding a referendum attached  to the 2019 provincial  election.  The question will be "Should Prince Edward Island change its voting system to a Mixed Member Proportional voting system?'' 

Why Mixed Member Proportional?  Back in 2016 Mixed Member Proportional was the preferred choice on a non binding PEI plebiscite on whether or not to change the electoral system.

Quebec

​​On October 1st, Quebec held an election.  Three of the four parties now represented in the National Assembly, including Coalition Avenir Quebec  which has a majority government, have signed an agreement declaring that they will support changing the province's voting system to a proportional representation system.  Where Quebec differs from the other provinces is that there will be no referendum.  The change will simply be legislated.

We  suspect that those of you are reading this blog are already firmly in favour of proportional representation.  Nevertheless it's always useful to have information that you can use when promoting electoral reform among friends and colleagues.   Here is an excellent website responding to some of the supposed flaws of proportional representation systems.

On Friday, April 6th, hearings took place at the Beothuck Building on Crosbie Place to establish who would have standing to appear at the Muskrat Falls Inquiry. Democracy Alert, in partnership with  The Council of Canadians and the Social Justice Cooperative, was one of twenty-two groups looking for standing 

What does Muskrat Falls have to do with three groups that have no expertise in finance or engineering? What could we possibly hope to contribute?

Look carefully at the Terms of Reference for the Inquiry and you’ll see that they largely confine participation to what the Commissioner, Judge Richard Leblanc, referred to at the hearing as “the business case” of Muskrat Falls. What’s missing is an examination of the culture in government that allowed Muskrat Falls to progress in the way that it did.

Our groups felt that it was important to cast a light, not just on the specific bad decisions that had been made, but also on how the different institutions of government had failed to constrain these decisions. In other words, were our democratic institutions behaving the way they are supposed to in a healthy democracy?

We suspected that our chances of being granted status were slim. We were right. Here’s what Judge Leblanc had to say to another participating group even before we actually spoke to our request. “You know, we talk about the democratic deficit. …….but this inquiry is not about deciding what the democratic deficit is, if there is one. I, to be quite frank, based on what I’ve seen to date, in terms of what I have to get through, I’m going to be lucky if I can get through what I have here. And I’m not minimizing the importance of that (concept of democratic deficit), but I also have to be mindful of the mandate given to me.”
​
Unfortunately the very specific mandate that Judge Leblanc refers to means that, in all probability, the following questions are not going to get asked.

How informed was discussion in the governing parties and in the House?

Where did the power rest in the governing parties throughout the progression of the project? Were too many of the big decisions made behind closed doors? Was the role of ordinary MHAs largely that of uninformed cheerleaders? Did MHAs have doubts? Were their concerns listened to? How much information did they have?

As for the House of Assembly, was debate meaningful or was it mere theatre? Did the questions and debates have any kind of impact on government?

How easy was it to speak truth to power in the Civil Service?

What was expected of civil servants in matters concerning Muskrat Falls? Were there risks to one’s career of being anything less than a cheerleader for the project? Has the NL Civil Service become so politicized that its professionalism is at risk? These were some of the concerns that were raised by former civil servants with whom we spoke before making our submission.

Why was there so little objective analysis of Muskrat Falls decisions from experts?
​
In the end, the most meaningful criticism of Muskrat Falls has come from outside the system – from ordinary people who have had no choice but to make themselves into experts on the project.

The former editor of this publication, Justin Brake, along with the Land Protectors and the Grand River Keepers have risked criminal records to record the human impact of the project on those living close to the dam. Then there are the efforts of people like Dave Vardy, Des Sullivan, Ron Penney, Cabot Martin and others to uncover and expose financial, engineering and environmental irregularities. All of these efforts have been selfless and hugely time-consuming.

There’s something not quite right about that. We live in a primarily rural province with little more than a half million people. Where is the expertise supposed to come from in holding government accountable, if not from our publicly paid intellectuals? Why was there, for example, not more criticism of the project from Memorial University faculty? Is there a culture of restraint in speaking truth to power at MUN?

Judge Leblanc’s Ruling

In our concluding statement we acknowledged that we understood that it was not the mandate of the Commission of Inquiry to put democracy on trial. But we argued that “it is important to at least find some space to talk about the culture in the different levels of government that have enabled all these decisions to go through.” That was the missing ingredient we wanted to bring to the commission.

Judge Leblanc’s response in his formal rejection of our application for standing was unequivocal. “While the applicants submit that it is not sufficient to merely conduct an investigation into the project circumstances related to sanction, construction and oversight, that is precisely what the Lieutenant Governor in Counsel has mandated this Commission to do.”

Our post-hearing observationsPerhaps we should be grateful that we didn’t get standing. Persuading past MHAs and civil servants to tell their story either in print or in person at the Inquiry would not have been easy. We would have had to work very hard in the gathering of witnesses and information.

And yet, should we not protest Terms of Reference that exclude or, at least, make it difficult to question the democratic process that allowed a project that was probably badly conceived right from the start to steamroll ahead? That exclusion raises issues about whether government actually has the will to self-correct.

Here’s how we think things are going to go down.

The Commission of Inquiry is going to do their job as they determine it according to the Terms of Reference. We are fairly confident that they will establish that inappropriate measures were taken throughout the project.

Then it will be business as usual in government. We will continue to be dominated by parties that choose to rule rather than govern. In other words, the players will change but the way power is wielded in this province will remain unchecked – with very little protest from the people.

Instead, our anger will focus on blame. In line for public condemnation are senior management at Nalcor and various premiers, maybe even a few cabinet ministers. It has started already.

That focus on blame may seem justified, but will it come at the expense of taking a good hard look how our democratic habits enabled our Muskrat Falls fiasco?

We are arguably overly partial to strong leaders and grandiose gestures in this province. Amongst those of us who vote there is an intense loyalty, especially outside of St. John’s, to the two major parties. That lack of competition from other parties gives the Liberals and Conservatives excessive power through constant majority governments.

We register our disappointment in government by not voting. Newfoundland and Labrador consistently has the lowest voter turnout of any province both in federal and provincial elections. That was even true in the last provincial election in spite of the looming crisis.

Muskrat Falls is an enormous crisis with huge economic fallout. There is already talk of seniors on low income spending their days in the mall so as to avoid putting on the heat at home. Young people increasingly feel they have no choice but to leave the province in search of work. Small businesses worry that people will not have the discretionary income to buy their goods or services.

And then there are the people of Labrador living in the shadow of the Project itself. We can only imagine their stress load and the sense of injustice and betrayal they must feel.

In our opinion, all of this has happened because something went very wrong with the democratic process in our province. The Terms of Reference of the Commission of Inquiry deny us the opportunity to explore that connection.

That seems short-sighted at the very least.

Taken from an article in the Independent

January 31st is the last day for public comment on municipal legislative reform in Newfoundland and Labrador.  We urge readers to make your voice heard.  You can do that by uploading your submission here or by e-mailing it to MuniLegislativeReview@gov.nl.ca

A local group, Citizens' Assembly for Stronger Elections (CASE) has  come up with some excellent ideas on how to strengthen democracy at the municipal level.  Their report can be accessed at /https://www.casenl.ca/

Below is an excerpt from a letter to the Telegram by CASE's chairperson, Caitlin Urquhart.
​
​"We’re calling on the Provincial and Municipal governments to make voting more accessible by extending the right to vote to permanent residents, and moving the election to October. Newfoundland and Labrador is the only province or territory that votes in September. The September election is square in the middle of back-to-school season, which prevents parents of school age children from getting informed, engaged or running as candidates. When residents of all ages and backgrounds vote, get involved and run for office, they help our communities thrive (look at Branch)! That’s democratic participation!

We’re calling on governments to promote a diversity of candidates by adopting a ranked ballot. Ranked ballots are a simple way to make a big difference. Recently, all the federal political parties have used ranked ballots to select their leaders. Instead of marking an X, voters rank their preferences 1, 2, 3 and so on. Voters have no need to vote strategically. And candidates must have at least 50 per cent of the vote to win, which means they have a strong mandate from the voters. Now that’s democratic representation!

We’re calling on governments to create transparent and accountable elections by reducing campaign spending limits and banning corporate and union donations. Elected officials are answerable to their constituents, and they should be funded by them. Restricting campaign donations to private residents improves public confidence in the impartiality of their representatives. Publicizing campaign expenditures and reducing the amount candidates can spend will make running a campaign accessible to greater cross-section of residents. That’s transparency and accountability!

If you agree with us, please don’t wait, tell your MHA and municipal council today.

You can find out more about us and our recommendations on our website casenl.ca
Caitlin Urquhart, chairperson
Citizens’ Assembly for Stronger Elections — NL
St. John’s"

Published on Jan 21, 2018 in The Independent  by  Marilyn Reid
 
If there is one good thing that came out of the federal government’s electoral reform fiasco, it’s that it invited Canadians to envision what kind of parliamentary democracy we would like to have.

Most people know from media reports that the overwhelming majority of respondents recommended the implementation of some sort of proportional representation (PR) system. In other words, they wanted a parliamentary system in which the percentage of seats a party held in the House matched the percentage of votes the party received in the election.

What is less known is that several contributors to the Electoral Reform Committee, including three from our province, went as far as to design and submit their own version of what they thought a good proportional representation system should look like. This was an important breakthrough, because up until that point, discussions about proportional representation had almost exclusively focused on systems developed in countries with much denser populations than Canada.

Mixed Member Proportional may work well in Germany with its population density of 231 inhabitants per square kilometre. Single Transferable Vote may suit Ireland where there are 67 people per square kilometre. However, these systems have serious limitations when applied to sparsely populated regions of our country — regions like Newfoundland and Labrador with its population of only 1.4 people per square kilometre. We need a PR system that suits our unique demographics.

Fortunately, we now have some good, made-in-Canada models to choose from. But, here’s something to consider. Why does government have to make a decision about which PR system we’ll have before a referendum is held?

A new referendum concept

Three local groups, Democracy Alert, the Council of Canadians and the Social Justice Cooperative are advocating a two-step approach to electoral reform in our province.

Step 1 is a referendum attached to a provincial election with a simple choice:

      ______ I would like to continue with our current system for electing MHAs.
      ______ I would like to change to a proportional representation system.
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Step 2 comes later. If voters select proportional representation it would be the responsibility of the incoming government to strike an all-party committee coupled with some sort of Citizens’ Assembly. Their responsibility would be to research, deliberate, consult with the public, and then select the PR system that best suits the demographics of our province. That system would be put in place for the following election.

Why this different approach to a referendum?

This simplified referendum doesn’t just avoid rushing into a decision about the kind of proportional representation system that would best suit our needs. It would also enable Newfoundlanders and Labradorians to argue for or against proportional representation on its general merits, rather than getting bogged down in explanations of exactly how the system would work.

That can be a significant issue. In the 2007 Ontario referendum lack of knowledge was repeatedly acknowledged as a reason for why Ontarians were voting against the initiative. Not all of that should be blamed on inadequate information being available to the public, although that was certainly the case.

Understanding the fundamental concept of balancing seats and voting share is reasonably easy. Unfortunately, understanding the mechanics of how proportional representation is achieved – and this is true of virtually all PR systems – is complicated. People’s eyes invariably glaze over when we start explaining the implementation steps related to a particular system.

Yet, concerns about the mechanics of PR implementation don’t seem to have been an issue for New Zealanders, nor for the Scottish, Welsh and Northern Irish, all who have switched over the last 25 years to proportional representation systems. Why not?

Success in New Zealand: What was different?

In contrast to here in Canada, proportional representation was given enthusiastic support from respected high profile groups in the above jurisdictions. In New Zealand it was the Royal Commission on the Electoral System that was a game changer. The Commission recommended that the country change to MMP, arguing that this would lead to better government. The mainstream media, in stark contrast to the Ontario referendum, also came out in favour of change.

Voters trusted what they heard, even though many didn’t understand the mechanics of MMP. And they wanted change. They were disillusioned with the performance of their two major parties, which had been lurching interchangeably from one majority government to another, never cooperating with each other.

Why the push for proportional representation in our province now?

Our Muskrat Falls crisis has led to an unprecedented breakdown of public trust and confidence in the decision making capabilities of political leadership in this province. Like New Zealanders thirty years ago, we know government needs to change the way it operates. But will that happen? What are our chances of getting a referendum on proportional representation in this province if it’s left entirely up to volunteer civil society groups to mobilize the public?

What’s badly needed is support and leadership from groups with status equivalent to the New Zealand Royal Commission. A stand taken by the NL Law Society would be an important start. There’s even a precedent for such action. In 2004, the Law Commission of Canada issued a report recommending that the federal electoral system be changed to a proportional representation system. Like New Zealand they chose MMP.

Support from Municipalities Newfoundland and Labrador also makes sense. And, who knows? Maybe even leadership at Memorial University might see the merits of electoral reform.

The time is now right to push for a paradigm shift in politics. Even the staunchest defenders of the political status quo will have a hard time denying the extraordinary failure of the political process to assess and correct the group think that led to our Muskrat Falls disaster.

Addressing the arguments of the nay-sayers

But, will potential allies accept proportional representation as a viable alternative? Or are they biased by misconceptions often repeated in corporate media. Proportional representation, we’re told, produces minority governments and minority governments are weak. Very little gets accomplished.

Wrong! We Canadians got both our health care system and Canada Pension Plan under “minority governments”. Proportional representation produces coalition governments where major parties work in collaboration with smaller parties to serve the greater good.

As for Europe, coalitions have given EU citizens a lot of things that Canadians would really like to have – affordable Day Care, national Pharmacare, stronger environmental regulations. There is also less inequality in most European countries than here, and a much higher voter turnout at elections.

Let’s think strategy!

So how do we get that positive message out to those who are in a position to influence decision making?

We need lobbyists. More precisely, we, the people, need to become lobbyists. We need people across the province prepared to contact and engage with potential allies in government, in the business community, in the legal profession, in academia and elsewhere around the province.

The message would be straightforward.

We are a province in the midst of an enormous economic crisis caused by a political system that has malfunctioned. Now is the right time to consider the benefits that changing to proportional representation might bring too Newfoundlanders and Labradorians. There are many.

Let’s offer the people of our province a referendum on the concept of proportional representation. If voters choose change, let’s then take the time to decide on the very best system for our province.

Care to become a lobbyist?

Marilyn Reid is a member of Democracy Alert and the Council of Canadians. For information on how to become involved in electoral reform, contact democracyalert.nl@gmail.com

                “The House is a parody of democracy. All substantial decisions on  bills                 and budgets are  made elsewhere and party discipline drives all real                                                                     debate behind closed doors.”
                                                  
No, this quote is not referring to politics in Newfoundland and Labrador. But the rationale behind it does make it easier to understand how and why our Muskrat Falls fiasco evolved the way it did.

Graham Steele, the author of the above statement, was a member of the Nova Scotia legislature from 2001 to 2013. He wrote a book about his experience called “What I learned about politics”.

“The House is a parody of democracy.”

Steele opens the book with a description of the first time, as a newly elected Member of the Nova Scotia Legislative Assembly (MLA), he stood up in the House to give a speech. “No one in the room, absolutely no one, was listening.” Some were chatting with their neighbours, some were reading newspapers or a book, some were tapping on their computers or smart phones. “Our elected members mostly ignore each other in the House.” he concludes. 

And why wouldn’t they? If the ruling party has a majority government, which is the dominant reality in our first-past-the-post system, they have no need to listen to the opposition. As for opposition parties, they know they have no power to influence government. The final vote on any legislation is a foregone conclusion under majority governments.

The reality is that the House is mere theatre. When our elected representatives do pay attention to what someone opposite is saying “it is usually to heckle, interrupt, even insult.” This is not just a Nova Scotia experience.  We see the same level of disrespect and disinterest in political debate in our province.  In all probability it’s not that different across the country.

“All substantial decisions on bills and budgets are made elsewhere.”

According to Steele, the real decision making in government happens, not in the House, but behind closed doors in the Premier’s office or elsewhere in the civil service. By the time a bill or a budget is tabled in the House, there is little chance of an amendment. In fact, most politicians have only a superficial understanding of pending legislation. Much of it is written up by in-house lawyers and economists in language that is legalistic, arcane and barely understandable. The result, according to Steele is that most politicians don’t even bother to read the bills. They simply do what they are told to do by party leadership.

“Party discipline drives all real debate behind closed doors.”

Steele makes the point that politicians do what they are told because politics is, above all, a team sport. Party unity must be maintained and any politician who differs from party policy risks being punished. The punishment can be harsh, as Mount Pearl-Southlands MHA Paul Lane found out when he was booted out of the Liberal party after declaring he could not support the unpopular 2016 budget.

Newly elected politicians are very quickly socialized into the culture of acquiescence to decisions on high. They learn that if they are to get ahead they must do what they are told, preferably with panache.

Politics, Steele believes, has degenerated into “a permanent marketing campaign” designed to push through decisions, policies and strategies that are made in back rooms elsewhere. “Everything – the invention of differences, the attention-grabbing rhetoric, the focus on scandal and personality, the refusal to deal with the real issues, the devaluing of legislative work in favour of constituency work, the election of candidates, everything is aimed at winning your vote.”

The end result for politicians is demeaning.  “Being in politics makes you dumber and the longer you are in politics the dumber you get.” says Steele.

How do we correct all of the above?

Has democracy really become as dysfunctional as Graham Steele suggests? Certainly, the disrespect for politicians is at an all-time high in our province.  Voter turnout is at an all-time low.

The real danger is that we will focus on blaming people rather than the process itself. As Steele points out, “It’s too easy to say we need better politicians. The fact is that our politicians are us. There isn’t a better, more perfect, angelic version of us.”

What we really need to do is change the way our political system works.

Steele, himself, would like to see more independently elected politicians, who, freed from the shackles of party discipline, would be able more easily to vote with their conscience or according to what their constituents want. He recognizes, however, that that is not practical. Independent candidates rarely get elected.

We agree. It’s one of the reasons why Democracy Alert is in favour of proportional representation (PR). While proportional representation will not solve all the problems that Steel alludes to, it will end the dominance of our two major parties and endless majority governments where differing perspectives have no effective influence. To that end, we have finally chosen a PR system that we think would best suit the needs of our province. But that’s a subject for another blog posting.

So how do we end this blog? We’ve chosen to quote “The Rules of the Game”, Steele’s tongue in cheek advice to new politicians aspiring to be successful.

 “The rules of the game"

• Get yourself re-elected. Like the sex drive among primates, the drive to be re-elected drives everything a politician does.
• Spend as little time as possible at the legislature. There are no voters there, so any time spent there is wasted. Go where the voters are. Go home.
• Perception is reality. Since people vote based on what they believe to be true, it doesn’t matter what is actually true. This is at the root of all the dark political arts.

• Keep it simple. Policy debates are for losers. Focus on what is most likely to sink in with a distracted electorate: slogans, scandals, personalities, pictures, image. Find whatever works, then repeat it relentlessly.
• Put yourself in the spotlight. People are more likely to vote for someone they’ve met or feel they know or at least have heard of. If it’s not in the news, it didn’t happen.
• Politics is a team sport, part 1: Loyalty: You can’t accomplish anything as an individual. No matter what, stick with your team.
• Politics is a team sport part 2: Always be attacking. There are other teams that want to take away your job at the next election. You have to beat them, and if you can, destroy them.
• Don’t leave a paper trail. You don’t want to leave any evidence that runs against your own story. If you’re explaining, you’re losing.
• Fight hard to take credit. Fight harder to avoid blame.
• Deny that these are the rules of the game.”

(Graham Steele  was a senior cabinet member in the 2009-2013 Nova Scotia NDP government. He chose  not to run for re-election in 2013 and is now an assistant professor in the Rowe School of Business at Dalhousie University.

Submitted by Marilyn Reid

                                                        Our Question of the Month

Which of these countries has not seen the recent rise of right-wing populism?


                 (a)     The Netherlands      (b) Hungary      (c) Germany       (d) Norway        (e) Spain   

In recent elections in Holland, Germany, Hungary and Norway, far-right populist parties gained seats. The answer to the quiz is Spain. Grass roots populism does exist in Spain. However, unlike the trend towards right-wing populism that many other countries are experiencing, Spanish populists have veered to the left over the last decade. While Spain’s current governing party is still centrist-right, the Spanish left-wing populist party Podemos won 20% of the votes in the 2016 election.
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Why have so many people in so many developed countries turned to populist parties or leaders in the last decade? 

Harvard economist Dani Rodrik argues that populism is a backlash to  our 40 year experiment with intense globalization -  an experiment that is perceived by many as undermining  employment opportunities  and cultural  and social cohesion.

A growing number of people feel unfairly treated by globalization.  Moreover, they are increasingly disenchanted  with mainstream political parties who they accuse of being  oblivious to their concerns. 

That’s the genius of populist parties. They speak to the frustrations and fears of ordinary people and represent themselves as the only real source willing to push back against the powerful forces that have caused the problems. 

Populist  rhetoric is a return to the emotions of confrontational politics. The adversaries are “Us, the good people” against “Them, the selfish elites” who now control mainstream political parties. 

Who are these selfish elites?  That answer depends on whether you are a left-wing or right-wing populist.

Left-wing Populism

Left-wing populism is rooted in economic and class distinctions. For many, perhaps the most familiar example is the Occupy Movement with its identification of Wall Street, the international corporations, and the “one percent” as the villains.

Left-wing populist leaders like Bernie Sanders in the US and Podemos’s Pablo Iglesias are avowedly socialistic in that they want a more equitable redistribution of wealth and income. They seek to re-politicize democracy by emphasizing class struggle (big against little, rich against poor). They want to introduce a passion for politics among the people and a vigilant citizenry continuously on guard against elites who would take more than their fair share.

The link between left-wing populism and high inequality

Historically, left-wing populism has been strongest in countries with high inequality. In Latin America, perhaps the most unequal region of the world, left-wing populist parties or leaders have consistently polled between fifteen and thirty percent of votes over the last few decades. In Europe, the hotbeds of left-wing populism have been Spain and Greece, countries in which inequality and unemployment are substantially higher than in northern Europe, and where governments have (on the insistence of the European Commission) imposed oppressive austerity measures.

You might think that left-wing populist movements would be thriving given that inequality is growing pretty well everywhere.  They are not.  In fact, support for leftish parties (both centrist and extremist) is at its lowest level in seventy years – and falling.   Why is that? 

Why is right-wing populism now the preferred choice for so many people?

Right-wing populism

Right-wing populists are less grounded in class conflicts than their left wing cousins. Instead,  their  frustrations are often rooted in forces  external to the nation state.    

In Trump’s United States, that manifests itself, not just as opposition to trade agreements, but to countries like Mexico that exploit these agreements to “unfairly” benefit their own people. In Europe, the identified enemy is  the EU bureaucracy itself, which is accused of serving the needs of international capitalism and financial elites at the expense of nation states. 
 
Right-wing populists, unlike their left-wing cousins, object also to  the increased  flow of labour across borders under globalization. Contrary to what you might expect, given ever increasing employment uncertainty, right-wing populists' primary objection to immigration, at least in Europe, appears to be cultural rather than economic. Populists fear that the rising diversity caused by increased immigration threatens national culture and the unity of national community. Citizens, they argue, are losing their sense of who they are.

All of this tends to make right-wing populists more nationalistic than their left wing cousins. They are also more likely to be attracted to strong authoritarian leaders who will strengthen the nation and return to the conservative values of the past.

In its most exaggerated form, right-wing populism encourages xenophobia. It is unjust, however, to tar all right-wing populists as racists.
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The link between migration patterns and right-wing populism

         











To put this BBC chart in perspective, in 2015 Hungary had, per capita, 30 times as many asylum applicants as Great Britain and 56 times as many as Spain.  The great majority of applicants have been from Afghanistan, Syria and Iraq.

In spite of having strong socialist traditions, all six of the countries highlighted  in the above chart have experienced surges in far-right  parties in recent elections.  They are not alone.

The sudden surge in right-wing populism  across the developed world has reached historic proportions. 
Back in the late 1980s voter support for populist parties or candidates averaged under five percent. By 2015 it had risen to over twenty percent of the vote. That increase has been driven overwhelmingly by the growth of far-right nationalist parties.

The Outlier   -   Regional Separatist Populism

Regional separatist populism is a different kind of populism – one that sets secessionist regions (e.g., Catalonia, Scotland) against their respective national centres. It’s not a new phenomenon but in Europe it has bubbled up to boiling points in the last decade. 

Secessionist populists are primarily ethnic in character and cannot be pigeon-holed into right or left wing positions.  They want the independence and control of their own destiny that nationhood would give them.

And then there is Brexit, another cross-party phenomenon.   According to exit polls after the referendum, the biggest reason respondents gave for voting for Brexit was a desire for greater national autonomy than the EU allowed.

A lot of people just don’t like handing over control to supranational institutions and agreements.

Where do young people stand on populism?

According to a 2016 analysis of the World Values Survey by Foa and Mounk, support for political radicalism in North America and Western Europe is higher among the young than other generations. Perhaps that is the reason why voter turnout among millennials is so much lower than other age groups in our country. Young people simply can’t find a Canadian party that interests them enough to vote. Canadians have not yet gone populist in the 21st century.

So which way are young populists swinging?

It would be misleading to imply that there is not support among young people for authoritarian leaders and right-wing populism. However, it’s also true that:

• In Great Britain 63% of voters under 35 voted for the labour party led by avowed populist Jeremy Corbyn.
•  In the United States populist presidential candidate Bernie Sanders received the bulk of his support from young people.
•  In Spain, the Indignados protests which led to the formation of the left-wing populist party Podemos were led by young people.

If there is a resurgence of left-wing populism, it looks as though it will be young people who will lead the movement.

To conclude:

Here are some questions that those trying to understand the rise of 21st century populism are grappling with:   

• Should healthy democracies create more space for parties that emphasize “Them” and “Us” antagonisms?
• Are populist parties the only productive form that allows the "politically incorrect"  demands of the people to be considered in the political arena?  And if so why?
• Could populism force a transition to a new and better socio-political transformation?
• Do we need a resurgence of left-wing populism?

Our centrist parties (both on the left and the right) would, no doubt, respond with a resounding NO to all these questions. So too would the corporate controlled media that invariably portray all populists as simplistic thinkers, while at the same time frequently giving simplistic analyses of their appeal.

It’s arguable that populism is the defining political phenomenon of the 21st century. It’s not going to go away – or at least not as long as people feel their concerns and problems are being ignored by those who hold the power.

We need to start talking about populism. It’s a huge and complicated topic with many dimensions. So, expect more blog postings by Democracy Alert on this topic.
 
Submitted by Marilyn Reid.

Back in the old days, 50 years ago, free trade agreements were about trade and tariffs. Today, trade Agreements have morphed into foreign investment promotion and protection agreements (FIPAS).  At the heart of these agreements is the investor-state dispute settlement (ISDS) provision that allows foreign corporations to sue national governments in offshore tribunals where national law counts for nothing. 

We  thought it fitting to focus on ISDS lawsuits for our quiz this month, given that the North American Free Trade Agreement (NAFTA) between Mexico, the US and Canada is currently being renegotiated.  

                                                         Our Quiz of the Month

Below are eight countries and eight questions.  Can you match them?
                                    Argentina,  Canada, Ecuador, Egypt, Germany, Libya, 
                                                                Russia, the United States,

 What country

1. is facing a $5.6 billion ISDS claim for deciding to phase out nuclear energy after the Fukushima nuclear disaster?
2. is facing a lawsuit by a waste-water management company for increasing the country’s minimum wage?
3. has never lost an ISDS challenge?
4. was originally ordered to pay over $2 billion (including interest) for terminating  an oil concession after the company sold 40 percent of its production rights without the required government approval.
5. has been ordered to pay the highest compensation ever ($50 billion)?
6. was ordered to pay $900 million to an investor after backing out of a tourism project even though the investor had only invested US $5 million in the project?
7. has been the recipient of the most ISDS lawsuits?
8. is facing a $1.3 billion lawsuit  for allegedly  failing to create a fair regulatory environment for new investors in the telecommunications sector?

 
Here are the answers to the above  quiz:  1. Germany,  2. Egypt,  The United States,  4. Ecuador, 
5. Russia,   6.  Libya,  7. Argentina , 8. Canada            

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The original justification for including ISDS provisions in trade and investment agreements was to protect investors from expropriation or nationalization of their assets in countries with weak rule of law. 
The reality, unfortunately, has been quite different.

Between 1993 and 2015 only 17% of ISDS claims were actually filed because of direct expropriation. Instead, the ISDS system is primarily being used to challenge government regulations, particularly with respect to the environment. Around 63% of claims against Canada so far have involved challenges to environmental protection or resource management programmes that allegedly interfered with the rights of foreign investors.    

Corporations are demanding ever larger damage awards. According to UNCTAD since the year 2000 there have been 88 ISDS disputes in which the claimants demanded more than a billion dollars in compensation.

Canada's ISDS record

According to UNCTAD, out of the 137 countries for which it has data, only five countries (Argentina, the Czech Republic, Egypt, Venezuela and Spain) have been sued more often than Canada.    

That is startling, but just as startling is the other side of the coin.  Canadian corporations rank fourth, after those in the US, Germany, and the Netherlands, in launching lawsuits under the umbrella of their home country’s FIPA agreements.

Corporations within Canada have used Canada’s FIPA treaties to initiate 45 lawsuits.  Twenty-two have been directed towards third world countries, almost all of them by mining companies.   Ten lawsuits have targeted the United States. No lawsuit against the US has to date been successful. 

The NAFTA renegotiation:  What is the future of ISDS?

NAFTA renegotiations are taking place in Ottawa this weekend and ISDS will be part of the discussions. Although the US has no official policy yet, the US trade representative has, somewhat surprisingly, drafted a proposal that would give individual countries to opt out of ISDS.

 A decision by Canada to opt out of ISDS would be very much in the interests of Newfoundland and Labrador. We’ve already experienced two NAFTA lawsuits that have set potential precedents over water and judicial sovereignty.  As for Muskrat Falls, any scaling back or retreat from the project would in all probability provoke NAFTA lawsuits from participating corporations like Emera that have affiliates in the United States.

Unfortunately, our federal government does not appear to be interested in seizing the opportunity presented by NAFTA renegotiations to return judicial control over corporate lawsuits to our national court system.  Trade Minister Freeland prefers, instead, to talk about strengthening “the right to regulate” within NAFTA. The model for this will be the Investor Court System (ICS) that is about to be implemented in the Canada-EU CETA trade and investment agreement.

 But the Investor Court System also has many strong critics.  Last month Belgium asked the European Court of Justice to rule on whether the ICS was compatible with European law.  Both the largest German federation of judges and prosecutors  and the the European Association of Judges have stated their opposition not only to ISDS but to the ICS.

Why is the federal government so keen on ISDS?

The constant threat of lSDS lawsuits puts a potentially huge price tag on any law or regulation that government might want to introduce in the future.  In this sense, ISDS in any form is a back door, long term assault on Canadian sovereignty.  Yet, in spite of Canada being the most sued developed country in the world, our government is determined to keep ISDS in NAFTA?   Why is that?

It seems pretty clear that the big ISDS winner is the corporate sector.   Could it be that we have a federal government that places the interests of international corporations above that of protecting the public good and the environment, both at home and abroad? 

……….
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Submitted by Marilyn Reid

​As part of our educational mandate Democracy Alert has  developed a series of multiple choice questions  on societal  issues, designed to provoke discussion in  senior high social studies classes.

We thought it might be of interest to our readers if we extended this format to our blog each month. Here is this month's question which  focuses on the economy.      

A generation ago the top managers in large corporations were paid straightforward salaries like everybody else.  Today, CEOs are increasingly paid a portion of their salary in stocks or shares.  Our question of the month  is:  In Fortune 500 companies  (the largest American corporations) what percentage of what CEOs are paid  is now, on average,  issued as stocks?  Is it:

a)       20%                        b)  40%                 c)  60%                  d)  80%

                                                                     ............................................

One of the principal tenets of neoliberalism is that  individuals will and should try to maximize their own wealth.  That includes CEOs. The average Fortune 500 CEO now takes 80% of their pay in the form of stocks or stock options. The result is that  their natural inclination or priority will be to increase the price of these stocks as quickly as possible.  One of the ways of doing that is to get the corporation to use its own money to buy back stock, thereby decreasing the supply of its stocks available for others to buy.  The effect will be, in the short term, to increase the price of the stock.  This has become so popular that buybacks now consume on average over 50% of the profits of S&P firms.

Can you see a problem here?  Money that should be going into paying workers their fair share, strengthening production, and investing in research and development is being diverted so that stock holders and their CEO can make quick, easy money.   In this way neoliberalism favours those who already have money over those who are trying to earn it. It has also created a stock market where the rise and fall of share values no longer accurately reflect corporate strengths and weaknesses.
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This statistic came from The Corporate Contradictions of Neoliberalism, a paper published over summer in the American journal  American Affairs.  While last month’s blog focused on the illusions neoliberal ideology  perpetrates about how money and debt are used, this month’s review looks specifically at how large corporations function in the neoliberal economy.

Why have we chosen this article to review?
 
Precarious employment, lower wages, decreased benefits, and mounting stress are features of 21st century society. Most analyses of the growing economic pain and uncertainty felt by an ever expanding number of people focus on globalization or automation. We are subtly told that there is nothing we can do about their impact.  Globalization and automation are part of progress and unstoppable.

But, what if the big culprit behind growing inequality is the modern corporation? Under neoliberalism, the corporation has become the world’s dominant institution, with many of the largest corporations eclipsing nation states in revenues and global presence.

Fortunately, there is growing criticism of the neoliberal interpretation and idealization of the corporate world. We particularly like David Ciepley's analysis.

Ciepley asserts that there is a huge contradiction between the idealized picture neoliberal economists paint of how a healthy economy should work and the economy neoliberalism is actually sponsoring . The neoliberal corporation is at the heart of this misconception.

Misconceptions about corporate ownership

Originally, the corporation was modeled on the incorporated city, first Rome and then medieval towns. Just as the citizens of a city do not own the assets of the city, stockholders do not own the assets of the corporation. The corporation, which is an abstract legal entity created by government charter, is the sole proprietor.

In other words, contrary to what we believe, stockholders do not share ownership of a corporation. Stock is just a financial instrument - a special form of investment that a corporation is privileged to sell, in the same way that a corporation can sell shoes or cars. Stockholders can resell their investment if they can find others investor to buy their share, but they do not have any legal claim over the corporation’s assets, except at bankruptcy, “when they are last in line as heirs, not first in line as owners”.

​To continue reading this article click here.