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The story behind the book
Except for individual study purposes, no print-outs or copies are to be made without the express written permission of the author. |
Circa the late 1980s, I had approached the Institute for Research on Public Policy
about doing a study on privatization, and eventually the IRPP, a national think
tank, agreed to commission me. I thought I could knock it out in a month or two. The IRPP gave me the munificent amount of $3,000 for it. The more I delved into the privatization phenomenon, however, the more bizarre and intriguing it became. I ended up spending a year on it, although the book itself was only 200 pages long.
I hadn't really wanted to write on the subject. As the 1980s progressed, I watched while Margaret Thatcher privatized Britain's nationalized industries, and her privatization ideology then spread to continental Europe, Canada and elsewhere. I was startled by the ideological cant she was getting away with. I had, however, already written about public enterprise in A Nation Unaware and I didn't want to go back to it again. Hadn't I decided, after closing the chapter on my broadcasting advocacy, to move on to new things? "Let somebody else deal with it this time," I thought. Incredibly, however - and I kept patiently waiting - nobody did. The ideologically-driven push for privatization gathered momentum here without any response. I still held back, weighed down by cynicism and lethargy.
In the end, though, because I knew better than anyone else how pivotal crown enterprise had been in making Canada what it was, and how creative crown enterprise could be, I couldn't stand the silence any more. Fighting off an acute attack of déjà vu, I came to the conclusion - maybe, all along, in a shadowy way, I knew I would have to admit it - that if I didn't put words to paper, there wouldn't be a considered response to the pompous and phony privatization dogma being flogged by the Conservatives, the so-called "business community," and the so-called "business press" like The Financial Post and the Globe and Mail's Report on Business.
It was a conference on privatization in Vancouver that tipped me over. It was organized by a newsletter called B.C. Politics and Policy, that provided reports and analysis on provincial government and politics - one of those high-priced newsletters which ordinary individuals can't afford but can be marketed to companies where the CEO has plenty of cash flow to play with and a tax write-off on subscriptions to boot. The content of the newsletter follows accordingly, catering to its subscription base.
Because of the inflated registration fee, I attended the conference almost against my better judgement. It was a sordid and revealing day and a half. The organizers had brought in an elderly, second-rung hack from a British management consulting firm that was piling up huge fees from privatizations, who proffered the usual banalities about what a great woman Margaret Thatcher was, and how wonderful and ordained privatization was, and then went into how much money could be made working on this new frontier where Britain and his outfit were in the lead. There were other self-indulgent and self-serving contributions, some quite outrageous. The registrants seemed to be divided into two groups: a smattering of the right-wing downtown crowd eager to be ideologically spoon fed with a pablum they knew they would enjoy, and others, less ideological, who sensed that if privatization happened, they could pick off some good bargains cheap and wanted to be first through the door. That was it. There were no speakers from the other side, either subjecting privatization to critical analysis or explaining the dynamism of the public-enterprise stream in Canada. I wrote an incisive piece for the Vancouver Sun's op-ed page on how the conference had been rigged.
I heard later, through the grapevine, that the conference organizer's feelings had been hurt by my suggestion that the conference lacked balance. It went to show just how blind ideology could make someone: a blatantly one-sided conference had balance because he had screened out, or wasn't even aware of, another side. It was one of those instances in history where ideology and pragmatism end up wearing each others' masks. The ideology is so dominant and pervasive at large that its dogmatic, self-serving proponents consider themselves pragmatic and easily pass as such, while the pragmatic critics, if there are any, looking at actual cases, are labelled ideological and are cavalierly and smugly dismissed.
I set out to look at the actual case in Britain where the auto-de-fa had begun. It proved even more cockeyed than I expected. Margaret Thatcher, for example, had started privatization with no rationale other than to hurt her political enemies; the ideological rationalization for it was filled in later. Some state industries, like coal and steel, were oversized, and hence inefficient and badly in need of adjustment, but that in itself didn't dictate privatization. An enlightened labour adjustment policy, as in socialist Sweden, would have done the trick. In fact, the really huge efficiency gains in coal, steel and railways in Britain took place after the war, when
those industries were nationalized; reductions in the workforce were in the many
hundreds of thousands. Besides, even the Rust Belt in the United States, with entirely
privately-owned companies, was in bad shape in the 1980s.
My research assistant Jane Oglesby and I worked almost exclusively with coverage in business magazines and in newspapers and with academic studies. Discovery followed discovery, and each claim for privatization fell apart as other findings surfaced. Privatization propagandists, for example, grandiosely lambasted some nationalized companies for lacking modern management and freely made the inference, regardless of logic, that it was somehow inherent in their ownership. The same lack of modern management, however, was endemic in British business across the board. The state-owned companies simply reflected the state of business management in the country generally. Over all, their management was no better and no worse than other British companies. There were state companies, too, like British Gas and the British National Oil Company, in non-rust-belt sectors, that were dynamic success stories.
Similarly, the Conservative propagandists, as the 1980s wore on, pointed with great show to notable productivity gains in some of the companies that were privatized (not dwelling on others that weren't such good examples) as if this had transcendent ideological meaning. Left unsaid was that the companies and services still nationalized showed impressive productivity growth themselves - outpacing both the economy as a whole and private-sector manufacturing. More striking, the most marked productivity gains were made in the traditional nationalized industries - post office, rail and steel.
One of the most colourful canards used by the British privatization advocates was how much the cost of propping up industries like coal was holding back the economy. They pointed to this self-righteously, as if it were responsible for Britain's economic malaise, and freely laid the blame for it not on coal and steel being laggard holdovers from the industrial age but on their - horror of horrors - being nationalized industries. This rodomontade of self-righteousness drew deep on British class politics and was used effectively against the Labour Party, for the workforces and labour unions involved were part of the Labour Party's constituency. The truly significant economic burden on the average British family, however, was Britain's huge agricultural subsidies, all going to private proprietors, most of whom also happened to be Tory voters. This was rarely, if ever, mentioned in debates about privatization. I, at least, never heard mention of it in that context, and only made the connection because I was tracking agricultural subsidies in Europe and North America for other reasons.
What made the greatest impression on me, however, was my discovery of post-war
state-owned enterprises in Europe and how dynamic they had been - one of economic
history's most dramatic stories. One has to remember the context in which Thatcher came to power and the emotions and mythology she tapped into. Britain was widely known as the "sick man of Europe" and compared invidiously to western European countries, especially West Germany and France. West Germany was where the famous post-war "economic miracle" had taken place. France, with a delay in time, had made just as impressive a leap forward, although it was less well-known. Strangely, it seemed, West Germany had managed this while handing out vastly greater subsidies than Britain to its coal industry and railways - subsidies that Margaret Thatcher was blaming for everything. West Germany was also paying out almost twice what Britain was in agricultural subsidies.
As we peeled back the layers, we found that the difference between the "sick man of Europe" and West Germany and France came down to their automobile industries and their impact on related sectors like steel. The British automobile industry had been privately owned, was markedly inefficient, and had only recently been nationalized to save it from total collapse (and was at last, in state hands, catching up in productivity). The key player in West Germany's post-war automobile industry, on the other hand, Volkswagen, had been state-owned until 1961, and was still under state control (16 percent federal, 20 per cent Lower Saxony) when Thatcher, in Britain, went on her rampage. In France, state-owned Renault had made the difference. Somehow Jane, poking through the warrens of the aging UBC Library, managed to turn up a table of European automobile-company productivity measures for the relevant years; it was amazing what one could find if one looked for it. Not surprisingly, given Volkswagen's and Renault's dramatic success, their productivity measures were vastly superior to the privately owned British car industry. If one wanted to generalize about the merits of state ownership versus private ownership, as Thatcher was bombastically doing, the logical inference was clear enough.
In fact, both Germany and France had much more diverse state ownership than Britain, going well beyond automobiles, railways and utilities. State-owned companies had been the dominant players in Finland and Austria - smaller middle countries whose prosperity also had left Britain in the dust and whose economies were remarkable stories in themselves. I also took a look at that other post-war economic miracle that even had American companies on the run, namely Japanese manufacturing. A Yale historian, Gustav Ranis, had described this Japanese entrepreneurial culture, in a long article in 1955, as "community-centred enterprise" - a blend of collective nationalist commitment and entrepreneurial creativity. This was long before its power and potential were well-
known in North America. I had noticed a reference to the article in a footnote, by way
of nothing, but as soon as I saw the phrase "community-centred enterprise" I sensed I
was on the track of something important. I chased down the reference pronto. I wasn't
disappointed. The culture that Ranis described had uncanny similarities to crown
enterprise in Canada.
Given what I had discovered, the kinds of things that Thatcher and her acolytes were saying didn't make any sense to me. I could take them at face value, but they were so off-kilter I kept feeling that I was missing something. The reaction of the Labour Party and of the British labour movement - what I could gather of it - also puzzled me. They didn't seem to know how to mount a proper defence. Neither side had context. I kept burrowing away, trying to clear up my perplexity, until at the end I had a huge file on the British case. At this stage I had a meeting on the matter with a young Labour Party shadow cabinet minister, Tony Blair. Blair was keynote speaker at a Canadian Labour Congress conference on privatization being held in a hotel in Richmond, the Vancouver suburb. I was also a speaker at the conference. Blair, in his address, made some telling and cutting remarks about privatization, which surprised me. I thought the Labour Party, traumatized by Thatcher's right-wing blitzkrieg, had abjectly surrendered on the issue. He agreed to get together with me, to help me out, and we retreated to his room upstairs in the hotel for privacy. I asked him questions about the British case. He answered them. I still wasn't satisfied. He didn't seem to understand what was troubling me. I asked him more questions, adding a bit of intensity. He answered them with not quite the same patience. Each time I asked another question, I thought to myself, looking at him, "He's wondering how he managed to get himself trapped in his own hotel room with this complete stranger who is proving to be a pest."
A month or so later, I sent him a draft of my first few chapters, which dealt with
Britain, for his comments. He didn't reply. I didn't mind. The last thing he would
want to do, I surmised, was to give any more of his time to this importunate stranger
out in Vancouver, British Columbia. (The world was yet to discover that Blair was a
secret admirer of Thatcher's.) Besides, I had already made up my mind about the British
case - that, because of their particular history, the British were so peculiar it was
impossible to understand them except in their peculiarity. The answer to the riddle of
their behaviour lay deep in the British psyche: The British were still fighting the
class war that had grown out of the Industrial Revolution. Thatcher's privatization
crusade might not have had a tenable business logic to it - which is what I was
desperately trying to pin down - but it did strike a devastating blow against the
culture of her political enemies. The Labour Party's perspective reflected the same
psychic peculiarity. They identified so much with the nationalized industries as their
response to Tory capitalism, they forgot about the creative, nationalist business case
for them, although that business case had been an important factor in their original
nationalization just after the war. This very British peculiarity was a world removed
from continental Europe and Canada, where state and crown enterprise respectively,
although promoted by left-wing parties, were also part of their countries', or regions',
economic striving and self-affirmation.
I was still on the side of the British left - I knew who the real villains of the piece were - but I also now realized they were of no more use to me on this issue than Thatcher and her hangers-on. "A plague on both their houses," I joked. The British were too peculiar for anything they did to be a model for us.
So here I was, sitting in Canada and doing the work nobody else had bothered with, watching an ideological scam combined with a journalistic failure unfolding in front of my eyes. It worked like this. Privatization advocates waxed triumphantly, and commentators and feature writers put together excited pieces on privatization, pointing to privatization in Britain as if the mere fact that it had happened there gave it validity. There was no critical check on it, since Canadian audiences and readers, on the other side of the Atlantic from Britain, had not been a party to the British debate and knew little of the details. Privatization spokespeople and the bent media in this country, with pollyanna references to Britain, could get away with anything.
Sometimes it passed all the way from the extraordinarily naive to the altogether ludicrous. At the privatization conference in Vancouver I attended, one of the speakers made a glowing reference to the privatization of Jaguar as a great success story - and by inference testimony to the righteousness of the doctrine. Everyone around me beamed with delight. Left unsaid was how Jaguar, the maker of luxury cars, had ended up publicly owned in the first place: its inept and incompetent parent company had gone bankrupt, an outstanding example of private enterprise failure. Jaguar's subsequent recovery took place under public ownership. It had turned the corner and was making a good profit before it was privatized. That made no difference to the conference participants. None of them, except me, knew the details.
Maclean's ran several pieces on privatization, breathlessly passing on news of the stirring events in Britain without even a whisper that there might be two sides to the story. Keith Baldrey, a reporter at the Vancouver Sun, the newspaper I read, did an upbeat feature on privatization, without balance or countervailing opinion. I called him up, explained the work I was doing, and suggested he do a sequel on the anti-privatization side, as ordinary journalistic due diligence. He never did. Baldrey later went on to become legislative reporter for BCTV, a notorious anti-NDP television station. Vaughan Palmer, the Sun's acerbic political columnist in Victoria, did two gushing pieces on British privatization, one of them an interview with Madsen Pirie, who ran the Adam Smith Institute in Britain and was a fervent believer. Palmer had a reputation for being a cynically minded analyst, but he treated Pirie with adoration - no surprise, because Palmer himself was steeped in blind right-wing assumptions.
The Globe and Mail, editorially on this issue, outdid even itself for know-nothing pomposity and faux-journalisme arrogance. What struck me, as I read their copy on crown corporations and privatization, was that they knew little or nothing about how business really operates. The saddest journalistic case history, however, was Venture, CBC Television's Sunday evening so-called business program.
The origins of Venture were a story in itself, and one that I was intimately familiar with. In the late 1970s, a group of large corporations, led by a Redpath Industries director of corporate affairs, Ken Barnes, formed a lobby, the Committee for Improved Business Reporting, to pummel the CBC for some hard-hitting items it had done on The Fifth Estate, Marketplace, and Ombudsman. The CBC suddenly became quite solicitous and sent people to meet with the lobby for an exchange of views. "I couldn't be more pleased," said Barnes of the meetings. Subsequently, in the same spirit, the CBC announced it would be launching a new television business program.
I knew the executive producer in charge, Bill Morgan. His girlfriend at the time was a friend of mine and the two of them, on a trip to the coast, had come out to my place in West Vancouver. I called him up to alert him of the pitfalls and suggested he get me involved. Business programs on private television and radio dealt almost exclusively with privately-owned business, mostly private corporate business and finance, and adopted their culture, language, artifacts (like stock markets), self-serving ideology and political slant. The existing "business" program on Global Television, for example, Everybody's Business, hosted by Peter Newman, was abjectly captive to its sponsors, large corporations, many of whom had participated in the anti-CBC lobby; the executive producer of Everybody's Business was none other than Ken Barnes, the lobby's founder. The program was the worst kind of pretend journalism. I recommended to Morgan a larger, more inclusive approach that would cover not only private corporations but the economy at large, including the workplace.
After that, silence. The next I heard, CBC president Pierre Juneau, in 1984, was telling an audience of corporate executives, arranged with the co-operation of the Association of Canadian Advertisers, about the new show to be called Venture. He mentioned it by way of saying that the CBC wasn't being hostile or indifferent to them. I then heard from the show's producer, Duncan McEwan. He was coming to Vancouver. He forwarded a copy of the show's prospectus. I knew from the prospectus, even before he arrived, that the show was put together as a sop to protect the CBC's flank from criticism from private corporate business, and that nothing I might say would alter that. I wasn't surprised. By that time, I half expected it. How the prospectus dealt with crown enterprise, however, did astonish me. It simply excluded it. It would not cover it at all.
McEwan explained it all to me in a noisy bar not far from the CBC's building on Georgia. He was only interested in businesses whose object was to make money, which he had somehow determined was the only real business. It was in the prospectus: "The motivation in business is making money." I told him how silly and fanciful that was. It was a misreading of the impulses that really lay behind business progress - striving, creativity, accomplishment, and also identification with community. Making money in itself, on the other hand - greed, in short - was too constricted and could be counterproductive. Hadn't Henry Ford himself said that he wasn't interested in making money? In any case, I went on, where did that leave commercial crown corporations which did make money? McEwan sloughed that one off. Venture envisaged itself as "the visual equivalent of the front page of the Wall Street Journal," said the prospectus, and there weren't any Canadian crown corporations there.
It was no use arguing with him, I realized. He either didn't know about economies or he didn't care. Crown corporations, then still at the centre of our economy - for that matter, most of economic and business reality - weren't in fashion. They fell outside the frame. As I eventually wrote in my manuscript, the application of this exclusive, ideologically-generated fashion had bizarre consequences. Not least, it forbade coverage of the country's greatest and largest broadcasting enterprise, the CBC itself, the producer of Venture, while glorifying boring little paper games of private television apparatchiks whose main business function, behind the phoney, glued-on mask of "entrepreneur," was giving American studios extra money for their programs. But, then, coverage of paper entrepreneurialism of all kinds, led by paper shufflers like Robert Campeau, was the apogee of this brittle and thin journalistic high-fashion not only in Venture but also in newspaper business pages and in general media like Maclean's. It was in this cloying, ultra-conformist atmosphere that my book on privatization appeared.
As usual, I had written too much. Denise Bukowski had left Douglas & McIntyre and was doing freelance work. Our bruises from working together on Closed Circuits had healed. I talked the IRPP into buying a few days of her time. I didn't take her advice, but listening to her ideas of how to cut back and re-organize the manuscript cleared up in my own mind how to go about it. She had been a good teacher.
The IRPP, whose books had covers with quickly produced abstract designs, was trying to develop a wider readership for its studies and decided to try out a real cover for a change. I referred them to the freelance designer in Victoria, Ron Lightburn, who had done the Closed Circuits cover - an American eagle atop a television set, its outspread wings interfering with the Canadian signal on the screen. I had called my new book The Privatization Putsch, and his cover for it was both apt and brilliant. It showed a fisted, militant hand, cuff-link flashing in a suit-coat sleeve, holding up a flag with....a dollar sign on it.
The president of the IRPP, Rod Dobell, a professor of public administration at the University of Victoria, wrote a foreword for it, which was unusual for IRPP publications. It was a generous foreword, but its main purpose seemed to be to remind readers that the book presented the views of the author and not necessarily those of the Institute. I might have been miffed, but instead I chuckled when I read it, and considered the disclaimer a badge of honour.
The book was hardly reviewed anywhere. Like crown enterprise, it fell outside the frame and hence was "invisible." Venture, whose only coverage of crown corporations had to do with privatizations, didn't touch it. I also made sure that Vaughan Palmer, the Vancouver Sun's political columnist, received a copy. Palmer was the one who had so naively swallowed the patter of British privatization zealot Madsen Pirie. He didn't touch it, either. I thought of the novel by African-American writer, Ralph Ellison, The Invisible Man, which I had read some 25 years earlier, in which the blind cultural fix against the hero was so strong, he had no way of getting people to take him into account.
The Globe and Mail did assign a review, to an economics professor from the University of Western Ontario. He called The Privatization Putsch a "dangerous book," because, as he explained, it was so well-written that people might be convinced by it. I couldn't have asked for better. My wife Marguerite and I, and our friends, laughed about that. "A dangerous book - Toronto Globe and Mail": that was my own flag for the book thereafter.
Still more interesting to me, the reviewer, who was supposed to have expertise on the subject, appeared not to have the wherewithall to come to grips with the book, and ended up taking trivial, sideways pokes at it instead. His alleged expertise, it seemed, was largely theoretical and dogmatic. This matched the presumed expertise of most of his colleagues at university departments, the Economic Council of Canada and elsewhere who were assiduously cultivating privatization doctrine based ultimately on dogma. My account, on the other hand, was concrete and empirical. I even had the nerve in the book to include a chapter on the great Canadian experiment in privatization to that date, the British Columbia Resources Investment Corporation (BCRIC), which had been touted by privatization advocates as the second coming but proved to be a colossal disaster, after which privatization advocates ignored it.
The Vancouver Sun's reviewer was even more perplexed and out-of-sorts by having to deal with the book. He was most exercised by, of all things, the use of the word "putsch" in the title. I couldn't really blame him for twisting himself into knots. After all, if someone points out that the emperor has no clothes, and the emperor doesn't have any clothes, and a close look at the emperor shows that he doesn't have any clothes, what can one say? I had written the perfect contrarian book. I played with the idea of what it meant to be a "contrarian" - poked fun at myself with it - as if I had a new and wicked, and proud, identity. Except in Saskatchewan, however, where I did some speaking and media interviews - and whose political tradition had independence of mind - the perfect contrarian book didn't do a bit of good, or at least not enough to stop or deflect the putsch, even in Canada.
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