Wednesday, June 28, 2006

OECD Advises Canada


The Organization for Economic Co-Operation and Development.

It gets a lot of publicity whenever it tries to get governments to do anything. Presumably it's made up a bunch of business-types who are either running corporations right now, or have in the past. Regardless of this bias, however, you can always find the OECD's pronouncements somewhere near the front page of your local newspaper.

We have to allow banks to merge in order to increase productivity!

We have to lower business taxes, raise sales taxes, sell our telecomms to international corporations, let the free market regulate our farms etc. etc.

The funniest part about that last article is that it mentions that, among the nations surveyed by the OECD, Canada has the strongest economy in the world. That's right, even with our "high business taxes", regulated industries and apparently low sales taxes, we have the strongest economy. And yet the OECD says that we have to change ourselves to be more like the other OECD nations.

Other OECD nations? You mean the ones with weaker economies?

This, to me, reeks of dogmatism. They know, beyond any logic or fact reaching them, that the correct thing to do is drop business taxes, raise sales taxes and let the free market run everything. Regardless of how many times this has failed, nor how well things work when nations don't do this, the OECD knows it's the right answer and they'll push it on you whether you have a problem or not.

But there's another more crucial factor here. Certain industries such as banking, agriculture, news agencies, even telcos, have more important obligations than merely being as "productive" as possible. The agricultural industry is responsible for providing us with food, regardless of fluctuations in international markets. The news agencies are supposed to be providing us with accurate information and analysis. The banks safeguard our money. I could go on.

If the banks, as the OECD insists, are to become more "productive", they must be allowed to merge. But is it in the best interest of account holders and mortgagees that the choices are limited to a small number of very large, very powerful banks? What if we allow foreign ownership of our news media? What sort of news does one get from a single, giant news corporation over the whole world? What if we stop regulating the price of food and suddenly our farmers can't compete? The farmers go out of business and we're completely hosed the next time there's a drought in Haiti. Not acceptable.

These industries all have higher obligations than merely "productivity" and "efficiency". Much like setting the minimum wage, the lowest price is not necessarily the best price. That's why we have a government: to regulate that which needs regulating. What this government will do is not clear. It never has been, but if they hold true to form we're going to see lots of deregulation and tax cutting and screw the consequences.


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