Lethbridge Herald, The (Newspaper) - February 4, 1975, Lethbridge, Alberta
Tuesday, February 4, 1975 THE LETHBRIDGE HERALD 5 Investment in resources must continue By Ralph G.M. Sultan, chief economist and assistant general manager, Royal Bank of Canada sector perhaps represents the is- ing even larger sums of This is oart of a speech spending has actually averag- for corporations, three per Jen at the fourth annual ed slightly less than 22 per cent cent for government, eight per greatest opportunity for rais- mceting of the Canadian of total GNP in Canada. There cent for individuals, and one Association for Latin America were two peak periods when per cent for imports, yields 22 in Toronto in June 1974 by investment, relative to GNP, per cent of GNP or three Ralph G M Sultan, chief climbed to more than 25 per percentage points below the economist and assistant cent: a couple of years in the target of 25 per cent. The key e rather than consume. With the rates general manager, Royal Bank of Canada. It is taken from (he September 1974 issue of Canada Commerce, a publica- tion of the department of in- dustry, trade and commerce. middle'50s, and a couple of question is, what is the most years in the middle '60s. At all likely source of those extra three percentage points? There are problems, or questions, every way we turn. Corporate savings must Canada and, indeed, the rest inevitably come from profits, in the form of retained earn- other times, the investment share of GNP has been much lowpr, falling as low as 21 per cent in some years such as 1970. Investment must come out of of the world is'embarking upon somebody's savings, by post- jn which are then availabie a period of massive investment ponmg current consumption, for savj and investment. projects. Much of this invest- and there are just four sources attempts to increase ihe ment will be in the nature of a of savings: corporate savings, "technological fix" to the government savings, personal energy problem. Other invest- savings, and foreign savings ......by which I mean capital ports from abroad. All of these play a major role. The interesting exercise is to deter- mine how much of a savings contribution we should an- ticipate from each. Corporate savings account for about 10 per cent of our gross national product. They tend to rise and fall with the level of coporate earnings. In savings rate run headlong into political resistance, and this is particularly so when high profits are realized in the resource field. It will not be easy to raise corporations' earnings (and therefore inter- nal capital formation) in this sector even higher than they are. Moreover, recent initiatives in the field of resource taxation in Canada will tend to have just the contrary result, by decreasing the rate of capital formation in ujuiu iu unbiaii uuiuiii- 4- r.. ,1 that sector. (We have ex- bia, plus some truly enormous climbing back out of the cellar ienced some rcaHy capital needs in the field of the_y were increases in the ment spending will be induced by the gr.owing demand for harder-to-extract com- modities. This is occurring on a world-wide basis. Such pro- jects tend to consume huge gobs of capital. In Canada, for example, we have the James Bay project, the gas pipeline down the Mackenzie Valley, the Polysar project, heavy water plants, of inflation we have been ex- periencing, individuals have been given scant incentive to increase their savings rates. Finally, what are the prospects of making up the savings shortfall through .a more abundant inflow of foreign savings? Not very good, I would judge. The Americans, the biggest ex- porters of capital to Canada, are now faced with a domestic investment program at least as demanding as ours. They to export capital to Canada on the scale of former times. Furthermore, it is quite ob- vious that as in Canada and elsewhere in the world the political climate toward foreign investment is not quite what it was in bygone years. petence in several other specialized high-technology areas. Some would now have us divert our attention away from that historical path, to less reliance on the resources sec- tor at a time when resources are in much greater demand! Political hostility and ig- norance of the fundamental economics of the resources situation are tending to con- firm the need for such a switch in development strategy, through taxation policies in Canada which would reduce our high rate of capital forma- tion and hence reduce our com- parative advantage in the resource sector and hence our growth rate as well. Political and value judgments rather than business or economic judgments threaten to push hydro dam. in British Coium- nuclear energy. The dollar sums are huge. Canada must invest about billion in the next .10 years. Major petroleum, natural gas, and electric power projects within Canada are likely to re- quire in excess of billion of investment capital and the Alberta oil sands, James Bay hydro, and Arctic pipelines could add another billion. To put the figures into perspective, our cumulative investment needs in the decade ahead are four to five times larger than our total Canadian output last year. One implication is that investment spending will probably have to get a bigger piece of the GNP pie at least 25 per cent if all the an- ticipated investment programs are to be realized. Over the past two decades, investment even today, in relation to GNP, the rate of corporate sayings is below the long-term average. The government sector is also an important source of savings in the economy, in Book Reviews rate of resource taxation Canada.) In the government sector, there is often a bias in favour of programs that stimulate averaging about three per cent current consumption as oppos- of GNP in the long run, declin- ed to government investment, ing in those years such as The personal or household recently when current con- sumption has taken precedence over real capital formation. The third sector to consider is the savings of persons and households, and of small unin- corporated businesses. This averages about seven per cent of GNP, and you can make the case that the ratio has increas- ed modestly in recent years. Finally, there is foreign saving, or net capital imports from abroad, which in recent years has been below one per cent of GNP. This is unfortunate, but it us away from our historically means that the flow of im- successful development path. I ported capital will probably be think there are parallel lessons more restricted. here for Latin America. Surely In sum, then, here is what we both need to build our pure the great Canadian debate technological competence, but about what to specialize upon we must not, at the same time, seems to boil down to: Canada be so suspicious of profits, or has grown quickly, to splendid of foreign control, or so dis- prosperity, through being dainful of the hurly-burly of the blessed with many natural ad- vantages, by saving a good deal, by investing a good deal, and by tending to concentrate resources extraction life, that we kill off, through taxation, the capital-intensive goose that laid the golden resources egg. Calgary lawyer's novels "The Dirty Scenario" by John Ballem (General Publishing Co. Ltd., 256 Adding it all up: 10 per cent Berry's World S> 1975 by NEA. Inc "Wo caviar tonight. It's back to the harsh This exciting novel deals with political intrigue, corrup- tion and murder along the cor- ridors of power in Ottawa. The protagonist is young Paul Curtis, brilliant Member of Parliament on his way up, who is named minister of energy. The plot of this racy novel revolves around whether Canada should export large quantities of arctic natural gas to the United "The Devil's Lighter" by John Ballem (General Publishing Co. Ltd., 237 pages, Oil is the game and the stakes are high. The Devil's Lighter tells what it's like to be on the rigs, to taste the ex- citement of a big strike or the terror of an explosion and the inferno that follows. The story is set in Alberta and the Northwest Territories. Men and machines search in the bitter cold for oil and when it is found another enemy, besides the cold, comes forward. Someone at Cheyenne No. 3 has sabatoge in mind. The plot spells disaster for the oil com- pany. Ballem begins his story States. It is a tale of es- pionage, assassination, sex and double-dealing. The locale ranges from the secret head- quarters of the CIA and the frozen wastelands of the Arc- tic to the icy streets of the Canadian capital. It is an adventure story with plenty of action. Ballem does not have anything very profound to say that has not been already said in such novels as Richard Rohmer's Ultimatum and Ex- xoneration. The Dirty Scenario is recommended as light reading slowly. The first few chapters drag somewhat with character description and es- tablishment of a setting. But once that is taken scare of, the plot picks up considerably. He might have described the characters briefly as they for anyone who is tired of watching action, sex and crime on television. This is just another novel dealing with the current world energy crisis and the rise of Canadian nationalism, which unfor- tunately is resulting in a wave of anti Americanism. The villains work for the CIA who prepare the scenario of the title. We hope that the reader takes this book as fiction, not as fact. John Ballem is a Calgary lawyer. ERNEST MARDON appear in the story. Other than that the book is informative about the basis of the oil industry and the risk of sabatoge and murder makes the novel exciting. SANDRA ROGERS A story of ranch life "The Rancher Takes a Wife" by Richmond P. Hobson Jr. (McLelland and Stewart, This is a sequel to .Grass the Mountains, the author's own account of his trek into the wilderness of central British Columbia where he and his partner took up cattle ranching. In The Rancher Takes a Wife he brings his bride a city girl from Vancouver out to become a part of life in the vast, sparsely populated area in the general vicinity of Vanderhoof. Both join in the account of their lives, the lives of the people around them and of experiences in a hostile environment, where often their very survival depended on their own resourcefulness and ten- acity; where neighbors were neighborly, and each person helped the other. The narration is direct, and matter of fact. It mirrors the life they led the unique per- sonalities, the uninhibited humor, the quiet pride when in spite of incredible hardship and danger, by dint of backbreaking work they brought a herd of cattle through a hard winter with minimal losses. This book does not glamorize ranching it gives a good picture of the mundane, the routine and the plain hard work. In spite of a few inac- curacies a member of the RCMP for instance might be a little startled to learn that in the 1930s he was still a member of the NWMP The Rancher Takes a Wife is readable and entertaining, particularly for city folk who do nothing more strenuous or adventurous than carrying out the garbage. HELEN SCHULER CKPIKS MAGE FIVE on our most obvious com- parative international advan- tage: the capital intensive Faulkner's new deal By Eva Brewster, freelance writer C0UTTS Hugh Faulkner's new deal for Canadian publishers has been criticized as amounting to "hand-outs" and "band-aids" none of which are likely to help put Canada on the map of international giants. What his well-meant measures and likely effects could be compared with is this: Let's presume you started a candy factory and then you and your family ate all your products yourselves. This may sound like a fascinating prospect to children but even they would soon get very sick and you would cer- tainly go bankrupt before your economic ven- ture got off the ground. If this analogy seems a little far-fetched, let's look at some points the State Secretary made in his address to Canada's publishing industry. He said, for instance, that the Canada Council's assistance program will get a 40 per cent increase from its current budget to million. If you consider that Canada is a young country, it may be as natural for our government to give a helping hand to the budding writer as it is to parents offering candies to their children. However, even before this announcement, the Canada Coun- cil was already a great institution for the beginning author. All he needed to do was to approach the appropriate department of the Canada Council, give them an outline of the book he intended to write and, provided it made a minimum of sense, he would be given financial aid to offset the anticipated ex- penses in preparing his final manuscript. Having done so, subsidized publishers would publish the book and many a new writer was thus started on a career without the effort of having to take on other work to earn a living as generations of now famous authors had to do elsewhere. Their other jobs often provided the latter with the necessary experience to create the books that made them immortal. Now look at what happens in Canada to the brain-child of many a subsidized writer. Long before the recent developments, designed to further protect the Canadian publishing in- dustry and Canadian talent, the Canada Coun- cil announced in November 1974 that it had bought up books by Canadian authors for free distribution at home and abroad. Chosen from recent publication catalogues, the titles included all types of literary works except textbooks. The books were packaged in bundles of 200 volumes and any institution, association or group lacking funds to purchase reading material are invited to ask for such kits by contacting the Writing and Publishing Section, Canada Council, Ottawa. As a struggling Canadian writer, I should perhaps be delighted at the apparently ever widening scope for freelance work. As an in- dividual who believes in free enterprise and results by merit, I would feel hurt if somebody offered me 'money before I had proved to liave talent and would consider it a personal insult if, having proved it, the fruit of my labor was offered free to anybody who would take it off the shelves of mediocrity. If my writing did not gain recognition in an open market, I would prefer to turn to some other field more useful to society and to my country. Of equally doubtful benefit is Mr. Faulkner's proposal to possibly tape reviews for distribution to news media and to produce literary supplements for librarians and teachers. The reviewing of books is now in the hands of regional news media, based on honest individual tastes and interests. Pre- digested federal government sponsored infor- mation would, I believe, not only cast doubt on the intelligence of the public, librarians and teachers, but could become an infringe- ment of people's right to form their, own opinions in areas of concerns which may well vary from province to province. While a federal review of copyright legisla- tion may be a good thing, the Foreign Invest- ment Review Act, if used to block all foreign interests in the publishing industry, can only result in other countries, particularly the U.S., taking counter-measures. Those writers good enough to have previously published their work in the lucrative markets of the U.S. or Europe, may find their fields restricted and acceptance of .their writing reduced. And while, until now, Canadian publishers made some profit selling our writing to international markets, they'll find that market vanishing behind the wall of isolationism and counter-protective measures elsewhere. At the same time, those who have succeeded in making a living without government subsidies or intervention will be weighed down by increasing taxation to carry home-produced mediocrity on their shoulders. At point of writing, the Reader's Digest, one of the American owned magazines to lose their tax-- concessions, have made a valid point in their reaction to new Canadian policy. Having made an effort to comply with government demand for more Canadian con- tent in their publications, they say they would increase it even more if the Canadian people really want this to happen. However, they rightly point out that the best, truly inter- national stories wodd then be lost to the readership; the implication being that Canadians would become isolated and in- sular. If that were to happen, the analogy of producing candies for sale and eating them all yourself would prove valid. It could only result in the discerning reader getting hearti- ly sick of purely Canadian content and the publishing industry going bankrupt before it had a chance to prove our writing's real worth and digestibility in honest competition. The limits of independence From the International Herald Tribune A little more than three years after winning its independence (with a large amount of help from Bangladesh has become an authoritarian state, with President (formerly prime minister) Sheikh Mujibur Rahman tak- ing full executive powers for a period of at least five years. Sheikh Mujib, the leader of the Independence Movement, who barely es- caped execution, calls this the "second revolution" the first enabled Bangladesh to break away from Pakistan. This second is, in the sheikh's words, to "bring us economic prosperity." Since economic ills are endemic in a dense- ly populated country, with few exportable products, insufficient food and a rotation of flood and drought, the "second revolution" has set a high goal. Can Sheikh Mujib achieve it? His strength with the people is very great, but it is founded on his courage and charisma rather than on administrative ac- complishment. His prescription for winning the "second revolution" consists largely of combatting "anti national such as smugglers, black marketeers, hoarders and political adventurists, acting with the aid of foreign powers and alien newsmen. Bangladesh does have difficulties in all these areas but whether fighting them will be suf- ficient to solve the major issue of too many people and too little food is certainly questionable. And if and until the struggling nation can become self sufficient, Sheikh Mujib's people will be as dependent on foreign assistance for survival as the Independence Movement was dependent on India. Bangladesh is thus a classic case of the interdependence of sovereign nations today, as well as of the rhetoric that is used to attempt to obscure that fact. The situation is not confined to the poorer states of Asia and Africa, as Japan, Britain and Italy can attest with emotion, or as the United States and the Soviet Union would more reluctantly concede. The need of the industrialized nations for raw materials and fuel from out- side their borders, the need of the less developed' countries for technology and its products, the growing realization that all natural resources are in shorter supply than was once believed while population continues to multiply all of these attest to the limits of independence in today's world. Nor does the answer lie in vehement nationalism although this is a spreading tendency. It is always easier to personify villains and wave the flag than to admit the facts of geography and the economic irrationality of many national boundaries. A relatively wealthy and well fed nation like Canada can indulge in nationalism with less risk than Bangladesh, but not necessarily greater logic; a superpower like the United States or the Soviet Union can view its power within the blinkers of a national tradition, while espousing global philosophies. But the poor and weak, the rich and powerful, all inhabit a single world which can be ravaged by economic epidemics that have as little respect for lines drawn on a map as a cholera germ, as little concern for ideology as influenza. Successor to Marchand? 'By Peter Thomson, Herald Ottawa commentator It remains an open question just how long Prime Minister Trudeau will keep Jean Marchand in the important and highly vulnerable transport portfolio. It is almost a year since Marchand said transport programs were in a mess, and that the government had no transportation policy. Little has appeared to change the situation in the interim. There has also been an embarrassing delay in meeting some of the commitments made to western premiers at the Western Economic Opportunities conference back in July, 1973. The federal government promised then to make the railways produce figures showing their costs in moving various kinds of freight. Finally, just before Christmas, the govern- ment introduced legislation to force the railways to do so. However, there doesn't seem to -be any urgency to deal with the legislation, although all parties have in- dicated they would pass the bill with a minimum of debate. The most disturbing question, however, is whether Marchand's health is permitting him to meet and master the multitude of problems confronting his department. Some members suggest it was significant that, recently, Marchand gave a "western" answer to an "eastern" question. It prompted Andy Hogan (NDP Cape Breton East Richmond) to remark: "Mr. Speaker, I asked a question about the Atlantic region and he talks about western Canada." The evidence suggests it is time for Trudeau to provide his longtime friend and colleague with some less onerous respon- sibilities. Justice Minister Otto Lang, who is also responsible for the Canadian Wheat Board, is the minister most frequently mentioned as a successor to Marchand in the difficult transport portfolio.