Colonialism or Capitalism for Northern Ontario – Gregory Reynolds

This column was originally published in the Winter, 2010 issue of Highgrader Magazine which is committed to serve the interests of northerners by bringing the issues, concerns and culture of the north to the world through the writings and art of award-winning journalists as well as talented freelance artists, writers and photographers.

Colonialism: control by a nation over a dependent territory.
Capitalism; control by a company over a dependent nation.

That is not the text book definition of capitalism but to many Canadians today that is the reality of the present economic system. The basic difference between the two definitions is that force of arms created colonialism but governments today actually welcome companies with their bags of money and empty promises.

Talk to residents of a British Columbia lumber mill town that has watched the company that owns it shut it down while there were still trees to be cut and homes to be built.

Talk to the residents of Alberta as they watch the owners of the oil sands developments create the biggest environment disaster in North America.

Talk to a wheat farmer in Saskatchewan who often must sell it at a lower price than it could get on the world market because a government created board dictates prices. Talk to a hog producer who is cut off from the United States market because American producers want higher prices by limiting access.

Talk to a worker in an auto parts plant in Southern Ontario who watched production move to the U.S.

Talk to a metallurgical site worker in Timmins, Ontario who is losing his job so copper and zinc concentrates can go to smelters in Quebec so the owners can make higher profits. Talk to needle trade workers in the garment districts of Quebec watch their jobs disappear under the mountain of cheap offshore clothing produced in sweatshops.

Talk to the coal miners of the Maritimes who can no longer work because coal is considered dirty.

Talk to the seal hunters of Newfoundland who face a boycott fuelled by false information and celebrity-led opposition.

In all these instances there is either a compliant government or an international element that has no regard for Canada’s residents. A web of inter-governmental trade agreements severely limits the power of elected representatives to serve the best interests of citizens.

The growth of companies that operate in many nations and are able to move workers, materials and more importantly, money across borders at will has reached the point where these organizations are laws unto themselves.

While we will deal with two such organizations that have ruined many a life in Northern Ontario, there are examples in every province and in fact in most of the industrialized nations of this world.

In a few short decades, Walmart has grown to become the world’s biggest company, operating in 15 countries. Walmart serves customers and members more than 200 million times per week at more than 8,424 retail units under 55 different banners. With fiscal year 2009 sales of $401 billion, Walmart employs more than 2.1 million associates worldwide.

Efforts by small communities, even state governments, to keep this elephant out of local markets has failed. The result has usually been destruction of the locally-owned and operated small businesses and downtown cores. Walmart’s strategy is simple, search the world for the cheapest products, import them and make as much money as possible. China is its favourite supplier today but that could change in the future.

That nearly every item sold in a Walmart store is no longer produced in Canada and the United States, destroying thousands of industries and many more thousands of jobs, means nothing to this corporate colossus.

Xstrata Plc, among the five biggest mining companies in the world, is laying off 670 employees in Timmins in order to maximize profits by transferring their work to Quebec. Headquartered in Zug, Switzerland. Xstrata’s businesses maintain a meaningful position in seven major international commodity markets: copper, coking coal, thermal coal, ferrochrome, nickel, vanadium and zinc, with a growing platinum group metals business, additional exposures to gold, cobalt, lead and silver, recycling facilities and a suite of global technology products, many of which are industry leaders. The group’s operations and projects span 19 countries.

Sudbury, once the nickel producing capital of the world but a long way from that status today, has endured a strike of 3,050 workers long past six months because the owner, Vale Inco, wants to reduce the pension plan for new employees and eliminate a bonus for present production. Vale Inco is a wholly-owned subsidiary of Vale (Vale S.A.) of Brazil. Vale is the second biggest mining company in the world, with a market capitalization of more than US$125 billion. Vale has over 12,000 employees worldwide
and had net sales last year of over US$8 billion.

Vale Inco says its “strength is built on a base of strong and profitable production from our global operations and a worldwide marketing network that extends to over 40 countries.” Vale is making big profits but it argues it must take these two steps to ensure its Canadian operations remain sustainable down the road. Both Vale and Xstrata bought existing Canadian companies and made certain promises to the Canadian government in order to secure approval of the takeovers.

The agreements have expired and federal Industry Minister Tony Clement says there is nothing Ottawa can do because the two companies are not doing anything illegal. Morality does not enter the picture as viewed by the national government. The fact that the Sudbury workers went on strike to protect benefits won through collective bargaining and the Timmins smelter operations were both highly efficient and profitable is actually held against them.

Timmins Mayor Tom Laughren is part of a Save The Met Site Coalition and expresses displeasure at the thought that Canada’s newest smelter is to be shut down May 1. He says it “seems to me that Ontario premier Dalton McGuinty would like to turn Northern Ontario into a park without heavy industry.”

Many mining, forestry and manufacturing communities across Canada are wondering these days what happened to their economies. The answer is that the national government has lost its power (or surrendered it to big business, depending on your viewpoint) to control its own economy. The same thing is happening in many countries.

In the days when nations built empires by searching out new lands to conquer, pillage and exploit, the system that grew out of these activities was called colonialism. Canada was once a colony of France, then France and England, then of England alone.

On the bloody battlefields of World War I Canadians finally shed the shackles of the colonial system, even though the Dominion of Canada had been proclaimed on July 1, 1867. The colonial system was founded on one truism, the one with the most guns gets to make the decisions. Today, Canada has reverted to colonial status once again.

It is not alone, many countries that have elected governments and call themselves independent nations are far from free. Today, there is a new form of slavery. It is not based on occupying armies but rather on money. Those who have the money call the economic square dance.

Any nation that must sell its natural resources to foreigners in order to maintain its standard of living surrenders its economic freedom. Any national government that allows its manufacturing base to be gutted in order to purchase necessities from foreign firms is abdicating its responsibilities towards its citizens. Since the October 2008 market crash, Ontario has lost 166,800 private sector jobs and 67,200 public sector positions.

One of the staples of science fiction writing during the past 50 years is the theme of the world being governed not by one world government but by a half dozen giant trading companies. These six (or 12, it doesn’t really matter) control the financial system, transportation, manufacturing, education (through grants to keep universities alive) and communications. They recognize no boundaries, no laws and no moral code but the acquisition and retention of wealth……and the power that comes with it.

When the idea was first put on paper, it seemed far fetched. Today, look around and you will see that we are well down the road to turning fiction into history.

Stocks can be traded 24 hours a day,financial markets operate around the clock and companies operate in 27 or 95 countries and know no allegiance to anyone but their shareholders. Nations used to control their money, deciding how much would be printed and its value. Not any more. Now there are people sitting at computers 24 hours a day buying and selling currencies the way wheat or oil is traded. It is the wish of the Canadian government that our dollar trade well below the U.S. dollar but the money traders think Canada is a sound country with a healthy financial system and keep moving it up in value.

To keep money trading simple, traders can push a currency up by buying it and selling some other currency (mostly the U.S. dollar but it can be the English pound, the French franc or the German mark) or it can drive it down by massive selling.

Since the U.S. greenback is the basis for all world trade, its strength or weakness has a direct impact on our daily well being. Because Canada must produce and sell its nickel, oil, lumber, paper, hogs and wheat to survive and it is paid for its exports in U.S. dollars, having our dollar at par or close to it cost us not only money but jobs.

As the United States and Canada no longer produce a huge range of consumer products but import everything from television sets to nails, they are forcing large sectors of their economies to depend on short-term low-paying jobs. The more than 400,000 Canadian jobs lost during the last few years are not going to return, according to economists. Any new jobs likely will be in the service sectors.

It is government policy that sees farmland paved over for subdivisions, forcing the country to buy cheap fruit and other foods from foreign sources. How long will they remain cheap and how long will they be available?

It was, in part, bad government polices that cost Northern Ontario over 40,000 direct and indirect forestry jobs. Most forestry operations are owned by big companies, most operating in several countries, similar to the big mining companies. The resources remain but they cannot provide benefits to the province when the decisions as to utilizing them are made in foreign board rooms.

Whether it is the auto sector, parts industry, forestry or mining, the resources remain even as workforces are decimated. When both the federal and provincial governments are indifferent to what is happening 100 km north of the U.S. border, the future is bleak. Canadian Auto Workers union president Ken Lewenza who represents the Xstrata smelter workers said the Timmins smelter closing “means as much here as Chrysler does to Windsor.”

Ontario Progressive Conservative leader Tim Hudak is among the many critics of the Ontario government’s policies, saying: “As the world rebounds from recession, there will be a growing demand for mineral and wood product resources that are found in abundance throughout Northern Ontario.

A farsighted government would therefore ensure that Northern Ontario communities and businesses are poised to take maximum advantage of the growing demand for resources. Unfortunately, the Dalton McGuinty government has chosen another path. Instead of maximizing Northern Ontario’s resource riches for the benefit of Northern families and businesses, the McGuinty government has shut the door on future resource development.

It should surprise nobody that this approach has contributed to the loss of almost 45,000 jobs in Northern Ontario since the McGuinty government took office,” says Hudak. According to a report by Campaign 2000 (a child poverty action group), Toronto & York Region Labour Councils and the Ontario wing of the Canadian Labour Congress, entitled Work Isn’t Working for Ontario Families, new jobs tend to be lower paying, insecure and often part-time. In fact, according to this report, 75 per cent of employment in Ontario is in the service sector with approximately only one quarter of these jobs unionized.

It is easy to blame big business for taking advantage of workers, their families and their communities but the sad truth is that our elected politicians are the only ones to blame. As long as they lie down and roll over when money comes knocking on the door, economic slavery will occur.