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Corporate Welfare and the Makers of Kings

Lets start by me saying, I am no left-wing business-hating nut-case, I have been self-employed my whole life and never have taken an Unemployment cheque or even voted NDP. I am pro-business, but what I am taking about here is not business.  These firms are winning by having unfair political access and that's all the value/benefit they add. 

Any young person in this country can grow up to be a powerful MLA or even the Prime Minister. This is not a land where you must be from the right family or even go to the right schools to be a leader in this country. However if you want to be elected in Canada you must do one thing that is very unsavory -- you must sell your soul to one of the big Canadian Welfare Backed firms that have a financial strangle hold on every citizens life in this country. These are the firms that will give you the dollars to get your campaign advertising it needs. No bucks  -- no trip to Ottawa. But of course like the Mob, one day they will come calling to get a favor from you. That favour will be when you must screw over the electorate to pay back your masters. 

These are the major political contributors, and if you look at the voting record politicians consistently vote in favour of these companies at the expense of the Canadian citizens

Telcom: Telus, Shaw, Rogers, CBC and Bell
Transportation: CN, CP and Air Canada
Banking: TD, RBC, BMO, CIBC and BNS

By the way if you think “financial strangle hold on every citizen” is too extreme try this experiment, try and go 90days without putting a dollar in any of these firms pockets for fees or bills. Try and walk downtown in a Canadian major city for an hour and not see an advertisement from one of these firms. Perhaps you would rather look at the logos on any office building over 20 stories tall. You don’t see this concentration monopoly power in the major cities of other G7 countries. You don't see the same corporate logos on the towers of Atlanta and Chicago, or Madrid and Barcelona, or Hamburg and Berlin. But look who builds the towers in Toronto, Vancouver and Calgary. See? You are "in the Matrix" you just did not see it before.

We are loosing ground. The country’s banks are quick to issue a government-backed, mortgage or student loan – less so when it comes to a small-business loan where they must take a small risk. What that means is our younger citizens must work like slaves to pay back  huge debt on the worlds most overprice over price Real Estate and overpriced degrees that don't result in jobs. At the time of World War One less than 1% of Canadians had a University degree and it was the mark of the rich, the powerful and the leaders of our society. When Harvard University invented the MBA they thought the world might need 4000 of MBAs, today more than 4000 universities issue MBA degrees. Today in Canada we are awash in students with no hope of finding a job, English Lit grads, Art majors, business majors, elementary school teachers, physical education grads and what engineers and scientists we do graduate are off-shore students who return home to build products to help their economy and hurt ours.  The myth is still with us that a University education equals a good life. It is still true if you study Medicine -- not so true for most graduates -- unless they can find away in to our bloated civil service.  The biggest beneficiary of this high education myth is the banks issuing loans guaranteed by the tax-payers of Canada.   Now Canadian students want lower tuition and free interest loans so we can produce even more of them. Yet our small business, starved for capital, can't grow our economy to give those students a job.

Canada’s wireless penetration is dead last among the 34 countries that belong to the Organization for Economic Co-operation and Development, even though Canadian carriers are more profitable than their U.S. counterparts. A technology executive in Ottawa or Waterloo, Ont., will pay dramatically more to fly to the West Coast than will a rival in New York or Atlanta.

Less than three years after a host of new wireless players entered the Canadian marketplace, incumbents Bell, Rogers and Telus say competition is thriving and everyone is well served. It’s true that service, choice and prices have improved if you live in a city with over 500,000 population. Odd those are the same cities served by offshore rival Wind mobile.  Yet our government has been more than obvious in rigging spectrum auctions to push Wind out of business.  But compare what we pay for cell service to the other G7 countries and it is clear our rates are too high, roaming charges are obscene and the carriers don’t seem to have a plan that suits their needs. You cannot trust these firms, Telus once told Canadians if we dare break-up their long distance monopoly our home phones would cost triple – it did not happen. In fact after deregulated long distance home phone service got cheaper.  Because of hostile foreign carrier policies New competition, such as Wind Mobile, Mobilicity and Public Mobile make up just 1.2% of the market.

Cable companies are perhaps the worst monopolies of all. How does it work?? Well you put up an antenna in the USA and get their major networks for free, you then get free feeds via satellite from the Canadian cable channels like Food Network and TSN etc. Finally you do a few revenue share deals with MovieCentral and BBC and toss in some very profitable pay for view. In each case you pay zero for the inventory you sell, that inventory is the raw TV signal. Now you run some wire to each house and poof the rest is all about sitting back and counting your money. Shaw cable provided service in Edmonton for just $7 a month in 1982, now the average bill is over $100 and guess what? The cost to wire your house has DROPPED since then thanks to the lower cost of technology and the already sunk cost to wire Canada. Can you imagine how rich these guys are getting? Don’t you think something is up, when the power company can run wires to your house for free, to sell you power which cost a bundle to make, but the cable company need these fees to sell you a signal they get for free? Our Canadian broadcasters put up HD towers in major cities and charge you nothing for the service or the shows how can they do that? When a commodity (like water) is free and the pipes are cheep, don’t you think the bill should be too?

Want more proof not to trust big telcom? Check this out for crazy:
Or your cable company

Air Canada has been living off handout and using monopoly power to tax Canadians for years. Back in the 70's and 80's legendary Canadian entrepreneur Max Ward, who’s struggling Airline “Ward Air” used to have to form his passengers into phoney “clubs” with $1 membership fees so that the bureaucrats in Ottawa would let him pioneer the market of $500 airfare to Hawaii. This sneaky business was because only Air Canada, with it heavy tax payer subsidies, was allowed to be a scheduled airline and Western Canada based Ward Air could only be a charter. It is only though gutsy innovation over bureaucracy that we are blessed today with low fares from AirTransat and WestJet on certain select routes.  

Last year, there were a record 4.8 million one-way trips made by Canadians to U.S. airports, up 15 per cent from 2010, a new study shows. U.S. air terminals handled more Canadians in 2011 than the total number of passengers who went through Ottawa International Airport. The chief executive officers of major Canadian airports met During March 2012 in Toronto to sound the alarm about the cross-border trend. In Toronto and Vancouver, an average of 22 per cent of U.S.-bound passengers chose to drive to an American airport for their trips last year instead of flying from their hometowns, the council’s study shows. In other cities, a much larger percentage of traffic is being siphoned, including from Thunder Bay, where an estimated 55 per cent of U.S.-bound fliers opt for flights at Minnesota airports, including Canadians who drive six hours to Minneapolis. For consumers in Toronto and Vancouver, flying from the United States has become a no-brainer for leisure trips. The airfare savings are huge for trips to places such as Florida, Nevada, Arizona, California and even Hawaii, Mexico and the Caribbean. There isn’t hesitation to book from U.S. terminals, even after factoring in gasoline for the drive across the border and, in some cases, a night’s hotel stay near the American airport.

Fundamental industries remain protected from international competition. The policy results in strong companies, such as Rogers Communications Inc. and Air Canada. But it also results in an environment that stifles innovation and boost prices.

The mega banks always have the same argument, big is safe and good. If that were true why was it the biggest banks in the world that caused the sub-prime crises? Small banks “stick to their knitting” issuing mortgages, car loans and business loans. Big banks look outward to the world of high finance. Issuing loans to third world dictators who don’t pay back, risky re-insurance deals, making risky stock market bets through proprietary trading desks and building mind boggling hard to understand finance instruments like derivatives and credit default swaps. The list of victims of too much greed in high finance is a very long list but it seldom comes from little credit unions or little banks like Canadian Western or Laurentian Bank. It was big banks that changed the game from making money on loan interest to shafting the client with endless fees.

About the only time the politicians turned on their well-healed masters was in 1998, when four of Canada's biggest banks proposed to merge. At the time the fear was the deals would have meant the loss of thousands of Canadian jobs and the closure of hundreds of local branches across the country. However, what even our politicians did not know was the real nightmare. These banks were tying to build was a machine powerful enough to do the same super dangerous, super profitable, sub-prime-mortgage deals and toxic credit default swaps as America’s Citibank and Goldman Sachs or the UKs Lloyds and Barclays. In short they were jealously trying to destroy Canada with too big to fail banks and bad lending practices like the rest of the western world did. 
In fact the truth then and now is Canada would be better served by breaking up the existing big five banks into a big 10. 

What needs doing:
  1. Canada must have a better way to issue bank charters, right now it takes a majority in parliament, a sure fire barrier to entry
  2. Break up its largest banks we already have the authority in out anti monopoly laws. Banks should be broken up so that they cannot exceed ½ trillion in assets. (About the size of Bank of Nova Scotia).
  3. Level the playing field for WestJet and AirTransat to become full airlines with all the landing rights of Air Canada. Airport fees in Canada must decrease. Air Canada must stop predatory pricing when new carriers emerge. Like the current battle over Toronto’s city airport. We must open routes in Canada to international carriers. Right now if British Airways flys to Toronto it cannot pick up passengers and take them to Vancouver.
  4. Cellular service should have required tower sharing and frequency sharing to make a level playing field for new entrants. A cap on data roaming and international calling charges without prior voice warning at the $5 per call level.
  5. We forced Telcos to share their wires for phone service -- the same model would work for cable TV. 
  6. Change the Mandate of the Business Development Bank of Canada. Make it more like the U.S. SBA, End the fancy field offices and the useless consulting divisions and start funding loans to entrepreneurs. Sure most will fail, but fancy offices and bad advise is no better way to waste money.
  7. Eliminate the EDC, they have not done anything useful in years. 

it is your turn

What can you do? You can meet your MP, they come out from under the rug during elections and some even accept visitors at their constituency office. If not that at least write to them. You can use mail, phone or email, just click here: Send your MP this article and tell him/her that this is too good a country to let big firms buy them off politically. It is time to open competition, break up big monopolies and kill subsidising policies that come at the expense of everyday Canadians or as I call them -- voters.