John A. Rudnick
Branch Manager
Business Development Bank of Canada
313 Bernard Avenue
Kelowna BC
V1Y 6N6
Dear John:
RE: Government’s role and BDC’s role in
our Canadian democratic governed mixed economy.
Thank you for our recent meeting discussing BDC’s
role in the economy – tying into the issues we addressed to BDC in 1998
and 1999. I appreciated the opportunity for such open discussion.
Beside our professional work, it is P&A’s policy as
a member and “shareholder” of the community to be pro-actively involved
in the strategic issues facing the community. When our
strategic audit, strategic analysis, comparable and sociopsychiatric
studies detect government intervention that does not promote real income
in our mixed economy, we may volunteer our analysis through discussion
papers that address the issues and propose approaches to solution.
Since 1996, we have addressed problems with federal
and provincially shared transfer programs including for example HRDC,
Community Futures, FRBC, BDC, etc. that fail to meet minimum standards
for government intervention in a mixed economy. However, as Franz Kafka
wrote: “the message is delivered, nothing changes”.
These interventions continue to damage the
market and pricing mechanism and consequently are hampering
investment in economic production.
In the BDC case, a specific experience of the
credit and monitoring routines between BDC and a corporate borrower was
what initially prompted us to address these issues to BDC. That case
also involved federal and provincial shared transfer programs.
Indications are that the BDC needs to audit its role in the economy
and refine its analysis, client support, monitoring, and loss prevention
and aftermath analysis system.
…….2
The lack of aftermath analysis in cases as Sonax in
Oliver and Van Steyvoort Woodworks in Osoyoos both BC, does not
encourage confidence and investment. Aftermath analysis of failure is
imperative for all development whether in the aircraft and car industry,
in business, or in government programs. The two companies is prime
examples, where it is reasonable to conclude that both companies could
have been successfully reorganized and a significant number of jobs
(80-100) bee secured had the government acted accountable.
Reflecting to the lack of aftermath analysis. The
same or greater accountability should apply to both the government
institution who approve and to the corporations and social establishment
that receive tax transfer or corporate welfare, as to individual members
who seek society’s help for their social and financial problems?
It is also our analysis that the facilitating
middleman service business BDC is operating does not pass a test for
government and quasi government organization intervention in the pricing
mechanism. Particular in BC, BDC is contributing to fuel a economic
guild behavior of medieval style in the communities around the
province.
That does not imply criticism toward members of the
community who pursue transfers. If government offer transfer private
sector will pursue transfer - that is considered shrewd business. In
Canada being a member of a guilt and pursuing transfer under the banner
of helping small business or whatever is in the short term the fastest
way to advance ones wellbeing. It is not private sector role to set the
standards in a mixed economy - it is strictly government’s role.
It is no criticisms towards shrewd management for
pursuing transfer as for example Western Star. The management’s first
responsibility is to theirs shareholders and no to the community.
Management simply has a obligation to pursue transfer the government
offer. The question and concern is whether or not transfer passes a
test for government intervention in the pricing mechanism. In the
Western Star case whether a test was even done - and whatever an
Aftermath Analysis will be done.
The problem is when the government lacks prudent
analysis and injects transfer that damages the pricing mechanism.
Realizing that transfer can only be on the expenses of other aims and
business in the community.
The issues we address are not personal. The issues
are BDC’s role in the economy and which services our government should
provide and not provide via BDC.
To date, it would appear that the BDC has not
attached the same importance as we do, to the issues we are
addressing. As long as that is the case, we have no expectation that
our analysis and approaches to solution will be recognized and used by
the BDC.
……3
Government’s Role
Broadly government’s role is to provide such
service the private sector fails to provide - not to provide services
that compete in the private sector or that endanger the pricing
mechanism.
Our constitution states: government is committed
to … “furthering economic development to reduce disparity in
opportunities”.
The fundamental
problem is that the government is simply not able to secure jobs and
social satisfaction with the same methods that worked in the past. Post
war government and central bank policies and an inflated equity and
financial sector are not translating to better paying jobs and better
socioeconomic standards in the community. We are creating an
increasingly segregated world and socially eroding community complete
with longer food lines.
The problem is
outdated post and Cold War programs that fail to pass a test for
Government intervention in a democratic governed mixed open economy. The
BDC included.
Particularly in
BC, government intervention is damaging the free market pricing
mechanism, which is central to stimulating a globally competitive
private and industrial sector. Instead the system stimulates transfers
from government and fails to encourage lateral private investment in
economic production.
For example, in British Columbia’s Forest sector,
industry failed to identify the economic and market shifts and
ecological issues and therefore did not adapt. The government also
failed to monitor and recognize the problem in the market/pricing
mechanism and to intervene to correct the problem.
During the good times, the system failed to
encourage long-term investment, adding value, and using fewer resources.
During the bad times, it conditioned industry to expect government
assistance and bailouts and generated ‘grant seeking behavior’ that
further distracted industry from the needed strategic analysis and
development. Unsolved since the middle of the seventies, it has
escalated into adversity in the nineties. It is not less than a
national tragedy, that government is supposed to remedy.
Democratic failure.
What is most disturbing is that under the banner of
renewal, the post-war thinking that caused the problem and destroyed the
pricing mechanism continues to implement post-war outdated solutions –
also in BDC. It is a kind of democratic failure.
…..4
The present slow acting system will be
increasingly inadequate.
When problems show up in financial statements,
ecological problems and in Auditor General’s reports - it is too late.
Applies also to BDC.
BDC is one
government intervention in the pricing mechanism that was designed for
post-war closed economic conditions that no longer exist. Although our
comments are not always popular, we stand by our analysis. That BDC
and other government institutions must adapt to a new role for
government intervention in an open and knowledge driven lateral economy,
or wither on the vine.
OISD
In that perspective we take the opportunity to
inform you that we are forming the Okanagan Institute for Strategic
Development. The initial focus to be on Government’s role and
accountability to society from local to federal level in a mixed
economy. Our analysis of the federal and provincially shared programs -
including BDC - has been a strong contributing factor for the decision
to launch the institute and the first project.
We remain interested and prepared to assist with
the necessary changes, but in good conscience will not pursue transfers
and work from programs that do not meet certain economic standards and
accountability for government intervention in the private sector and
pricing mechanism.
I realize this letter will probably not be
perceived as a promotional letter. Nevertheless, if the objective is to
realign programs to meet the Canadian constitution’s standard and that
promote real economic production and real income in BC and Canada in
large, we would be happy to discuss how we could assist.
We always welcome a dialogue.
Yours truly,
OISD
cc:
Bernd Schroder President and CEO BDC
Other this may concern.
/…..
