Trudeau’s Economic Imbalance – Labour and Social Democrats Excluded from New Advisory Council

Trudeau’s Economic Imbalance – Labour and Social Democrats Excluded from New Advisory Council

As published in the Victoria Standard: January 31, 2017.

The activities of President Donald Trump have distracted Canadians from the Trudeau government’s decision to hire Dominic Barton of consulting giant McKinsey and Co. Barton will serve as Canada’s new “economic czar” while leading the new 14 member Advisory Council on Economic Growth. Unlike Trump’s chosen advisors, Barton is widely-respected by his international peers although not so much by the legions of “restructured” employees cast off by McKinsey’s corporate clients.

According to the Government of Canada, “On March 22, Budget 2017 will take important first steps in creating the conditions for long-term growth, and a strong middle class.” I’m not convinced that Canada really needs an outsider to lead a council that includes a selection of volunteer and business academic figures. Trudeau could have easily chosen a Canadian chair from the large pool of domestic talent. Notably absent from the council are members of the Broadbent Institute, The Canadian Centre for Policy Alternatives or Canada’s labour movement. Hiring outsiders like Barton has traditionally allowed government to justify unpleasant decisions by deferring to the wisdom of unaccountable and supposedly objective experts. Conversely, if following Barton’s advice proves popular with voters, Trudeau can trumpet his government’s bold vision.

For all its success, and in spite of Barton’s quiet charm and Canadian origins; McKinsey and Co. have been involved in some rather unpleasant episodes over the years. According to Duff McDonald’s 2013 book, The Firm, McKinsey and Co. establish[d] themselves as, “The single greatest legitimizer of mass-layoffs in history.” The track record of McKinsey clients is reminiscent of the Chretien/Martin era of massive public service layoffs and social spending cuts in the name of exaggerated deficit hysteria and anti-inflation warfare waged at great cost to Canadians workers.

A summary of McKinsey and Co.’s misdeeds includes Barton’s role in tidying up McKinsey’s Raj Gupta/Anil Kumar insider trading scandal; McKinsey alumni Jeff Skilling’s disastrous role in the Enron debacle and the firm’s destructive advice to corporations like All State Insurance, AT & T, Time Warner, General Motors, General Electric, Swiss Air and others. According to the December 16, 2016 Toronto Star: “Another alumnus, J. Michael Pearson, recently became a poster boy for the kind of capitalism making many furious. As head of Quebec-based Valeant Pharmaceuticals he voraciously gobbled up other companies, laid off thousands of employees, gutted research and development and jacked up the price of life-saving drugs.”
It is therefore odd to read Dominic Barton’s cautionary remarks from the same Toronto Star article: “He warns tax-dodging corporations worshipping at the altar of short-term share prices to heed the anti-establishment anger jolting countries in the western world, most recently in the form of U.S. president-elect Donald Trump. He worries about the rise of racism and xenophobia, but sees at the core of mass outrage people cast aside by technological change and a globalization that has largely benefited the wealthy.”

Considering that McKinsey earned handsome fees from advising ruthless tycoons; Barton’s negative account of globalization is merely a bland acknowledgement of recent history. As if Barton were a wartime collaborator who has suddenly abandoned his former cause; Trudeau seems eager to employ a man whose firm profited from everything he suddenly deplores. History teaches that collaborators coldly seek their own advantage at the expense of past and future allies. The key elements of the council’s October, 2016 report are familiar to Canadians and in fact have been on corporate Canada’s agenda since the late 1970s. According to Post Media’s David Aiken; “Barton and the council support a: smart infrastructure program, partly delivered via a new Canadian Infrastructure Development Bank.” Key to this program are more public private partnerships (PPP) or infrastructure deals based on cost sharing between government and private industry.

Such deals offer short-term political gain but greater expense over the long term for a public who naturally supports the prospect of rapidly-built hospitals and public transit systems. Since government can borrow money cheaply or raise capital through bond issue; the greater benefit goes to the private side of the partnership through lingering rents and management fees. McKinsey have greatly benefited from PPP deals around the world. “Second, new or reworked rules and policies around attracting foreign investment could [might], within a few years, add more than $40 billion in new economic growth.” Foreign investment also comes with increased foreign control of Canada’s resources and influence over environmental, legal and social welfare matters.

“Third, immigration levels should be boosted to 450,000 persons a year, up from the current level of about 200,000.” Here, the plan does acknowledge the disturbing reality of our aging population and the increasingly high tech nature of modern employment. However, given current unemployment rates, flooding Canada with immigrants might be unwise. Finally, this ambitious goal hasn’t been sufficiently explained nor has the massive security screening expense been articulated.
Dominic Barton’s 2011 remarks in the Harvard Business Review indicate his casual contempt for democracy: “Business leaders face a choice: they can reform the system, or watch as the government exerts control.” By “government control” I assume he includes business and environmental regulations drafted and voted into law by duly-elected Parliamentarians acting on the wishes of their constituents. Such remarks exemplify the anti-government rhetoric instigated and popularized by the Canadian Council of Chief Executives, formerly the Business Council on National issues.

Unelected business leaders “reforming the system” is old news in Canada. In 1985 the Business Council on National Issues, an elite lobby group of major CEOs; made a proposal to the Pierre Trudeau government. According to Peter C. Newman, Council President Thomas D’Aquino had, “…previously decided that Canada needed a new competition act.” D’Aquino spent $1 million to hire a team of 25 lawyers who by 1985…had produced a 236-page master plan. Incredibly, it became Canada’s new Competition Act, virtually word for word…It was the only time in the history of capitalism that any country allowed its anti-monopoly legislation to be written by the very people it was meant to restrain. “

Barton’s advice may prove useful in helping overcome public resistance to international trade deals like the stalled Trans Pacific Partnership. These agreements are secretly negotiated since they always include elements likely to generate strong public resistance. This secrecy dramatically increased after power brokers acknowledged activists’ success in stopping the 1991 Multilateral Agreement on Investment. The proposed TPP will allows companies from 11 more nations to sue Canada for profits lost due to environmental protection laws. U.S. companies have already done so under NAFTA, winning multi-million dollar awards and protecting their legal right to import products like toxic gasoline additives into Canada.
Much of the current climate of lowered public expectations and widespread anti-government sentiment resulted from the tireless efforts of corporate Canada’s media and academic allies to discredit the social programs that differentiated Canada from its individualistic neighbour. Now the Justin Trudeau government is deferring to someone whose organization has demonstrated open contempt for the democratic process and worker’s rights. McKinsey and Co. recently opened a Vancouver office on the chance that Canadians haven’t already endured enough “restructuring.”