The Pain Of A Hard Place

Canada has now been officially declared in recession. Employment remains high, although there continue to be industry lay-offs, one plant after another closing, leaving thousands of factory workers unemployed. It's a miserable worry, with the loss of some 77,000 jobs recently identified.

Canada's fishing and forestry sectors are on the verge of total collapse. We're now considered to be an oil-based economy; the value of the Canadian dollar tied to the value of a barrel of oil. Who would ever have contemplated that?

The Bank of Canada is warning that if the recently-arrived recession is prolonged there is a real threat of more Canadians finding themselves under dire economic duress, leading to an inability to pay for mortgages, car loans and credit card payments. That there is a distinct possibility that Canadians will begin losing their homes, as is occurring in the U.S. and elsewhere.

The big three North American automakers, those exemplars of built-in obsolescence, and poor engineering, have approached the province of Ontario and the federal government, cap in hand, asking for bailouts for their dying industry. It's inevitable, they're incompetent and have proven now to be economically unviable as an industry incapable of producing vehicles of the quality produced by the Japanese and the Koreans. High wages and poor products have scuppered them.

The Government of Canada is faced with a decision; to give them the funding they ask for, or to decline. Analysts feel that any bail-out will have a temporary effect, perhaps saving some jobs for a length of time, before this ill-run industry is back in trouble again, and finally collapses into its death rattle. And for the taxpayer, whose money will have gone into the bail-out, there will be nothing to show.

Where the billions will have been squandered in an attempt to shore up a dying industry. While that funding could have gone into needed infrastructure; our roadways, bridges, municipal and federal buildings that urgently require renewal, and in whose upkeep and restoration the public will realize a utilitarian need for the future. The pressure is on, public opinion uncertain, but government must be seen to be doing something to save Canadian jobs.

Much like what is occurring south of the border. And, actually, our government is biding its time, wanting to see what occurs there, with the United States busily engaged in their own controversial bail-out of the big three automakers. Canada awaits their move, before it will decide how it will react. To, kind of, synchronize action. More like asymmetrical request-and-response, however.

General Motors, Ford Motors and Chrysler have a much larger market in their home countries than they do in Canada. The U.S. has a population ten times that of Canada, and an economy much more robust. Yet the automakers are asking Congress and the Senate to approve a $14-billion aid package, while in Canada, they're asking for $6-billion. One-tenth of 14, in my kind of arithmetic equals 1.4. So, what gives?

Moreover, in bargaining hard with the automakers it is both countries' government's intention to procure certain assurances, each country countering the automakers' requests with their own political needs, to ensure that job security will result. And since prognosticators feel that the ailing automakers are on a downward trajectory, only buying time before total bankruptcy, that's a fond hope.

Despite which, the bill put forward by U.S. lawmakers is clear that the emergency assistance may be forthcoming with the assurance that the funding be used to "preserve and promote the jobs of American workers", and fair enough. But the funding also gives the U.S. government another kind of leverage, that of vetoing any kind of industry actions, such as opening and operating plants outside the U.S. to ensure jobs stay there.

So where does that leave Canada? Where the Government of Canada will also be pushing for the very same legal rights to insist that money isn't going into a deep dark well of unaccountable action, that may or may not benefit Canada and Canadian workers?

The thing of it is, while the Conservative-led government of Stephen Harper is anxiously uncomfortable about using tax funds to give a crutch to the automakers, whose requests border on coersion, they know they will be pressed to do so - aggressively - by their political opposition.

Failure to respond as anticipated will most certainly ensure additional unsettling events will take place once Parliament resumes, if the federal budget does not include a bail-out for the auto industry. And there you have it.