Democracy Gone Astray

Democracy, being a human construct, needs to be thought of as directionality rather than an object. As such, to understand it requires not so much a description of existing structures and/or other related phenomena but a declaration of intentionality.
This blog aims at creating labeled lists of published infringements of such intentionality, of points in time where democracy strays from its intended directionality. In addition to outright infringements, this blog also collects important contemporary information and/or discussions that impact our socio-political landscape.

All the posts here were published in the electronic media – main-stream as well as fringe, and maintain links to the original texts.

[NOTE: Due to changes I haven't caught on time in the blogging software, all of the 'Original Article' links were nullified between September 11, 2012 and December 11, 2012. My apologies.]

Thursday, May 01, 2014

The banks give thanks: How Ottawa killed a good idea

Few myths are more carefully nurtured by Canada’s elite than the notion that Canadians are well served by our six big banks.

Stephen Harper rarely misses an opportunity to suggest that our banks saved us from calamity when the 2008 financial crisis pushed the world into recession. (It’s true that Canada’s more regulated banking sector did hold up better than the unregulated casino banks of Wall Street.)

Still, beyond the confines of the business class and the Harper Conservatives, it would be hard to find an ordinary Canadian who wouldn’t be delighted to see our century-old banking oligopoly face some actual — what’s the word? — competition.

Canada has one of the most concentrated, least competitive banking sectors in the world, according to a newly-released report from the IMF. This lack of competition allows the Big Six to get away with charging some of the highest banking fees in the world.

Of course, competition is the last thing the banks want. And given their power (straddling the very heart of the Canadian establishment) and their wealth (record profits last year topping $30 billion), the banks tend to get what they want from the Harper government.

This could explain the government’s otherwise baffling decision last fall to reject an option that would have allowed a serious competitor to enter the banking sector, offering financial services to hundreds of thousands of Canadians who currently lack a bank account and often end up paying triple-digit interest rates to payday lenders (otherwise known as loan sharks).

Canada Post had put together a lengthy file supporting the case for “postal banking.” Under such a scheme, Canada Post would offer banking services through its 6,400 postal outlets — stepping into the vacuum left after the big banks closed more than 1,700 branches across the country in the last two decades, leaving hundreds of rural and remote communities without a bank.

What’s more, by entering the lucrative field of financial services, the publicly-owned postal service could have earned significant profits. A management report done for Canada Post concluded that postal banking was a “win-win” strategy.

But instead of opting for an idea which promised to increase competition in the banking sector and produce higher profits for Canada Post, the Harper government settled for a “lose-lose” strategy of postal rate hikes and drastic cuts in service, including the elimination of door-to-door delivery.

The government clearly hopes to keep the public in the dark about the potentially popular postal banking option that it rejected. The internal Canada Post file supportive of postal banking was heavily censored before being released recently under Access to Information to Blacklock’s Reporter.

Meanwhile, the Canadian Union of Postal Workers is trying to publicize the benefits of postal banking, particularly for lower-income Canadians who’ve been largely abandoned by the big banks in their increasing focus on “wealth management.” In a symposium in Ottawa last weekend, the union brought in speakers from England, France, Italy and New Zealand to describe the success of postal banking in their countries.

(In the interest of full disclosure, I’ll say that I made a presentation on the Canadian banking industry to the symposium, for which I was paid.)

Over the years, there’s been strong support for postal banking from within the post office — from former Canada Post CEO Moya Greene, among others. In testimony before a Senate committee in April 2010, she described how New Zealand’s post office started offering banking services in 2002 and, seven years later, saw banking account for 70 per cent of its profits.

The Harper government’s resistance to the idea is at least partly ideological. Postal banking would essentially create a public banking system — something that would be repugnant to hard-right Conservatives who have spent years dismantling Canada’s public systems and turning them over to the private sector.

This hostility to public ownership is evident, for instance, in the frequent and irrational calls from the right to privatize Ontario’s Liquor Control Board, even though it does a perfectly good job of selling liquor (something that doesn’t require much entrepreneurial skill; if you offer it, the public will come) and produces well over $1.5 billion in profits each year for the public purse.

In fact, that track record of success is likely what makes the LCBO so annoying to the right. There it is in plain sight, contradicting the right’s mantra about the terrors of public ownership. It could lead ordinary Canadians to believe that some services can be provided just as well — or better — by the public sector.

And the case for public banking is even stronger than the case for public liquor sales — except for those who subscribe to the notion that Canadians should be forced to fend for themselves in the shark-infested waters of Canadian banking.

Original Article
Source: ipolitics.ca/
Author:  Linda McQuaig

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