Federal Industry Minister Tony Clement last week announced that the federal government had rejected a hostile bid by an Australian company to purchase Saskatchewan’s Potash Corp.
There was both applause and criticism after the decision, the former much louder than the latter, and rightly so.
The rejection of the bid by the Canadian government meant that the Conservative Prime Minister Stephen Harper and his cabinet put the interests of national economy before their own commitment to the principle of free trade, thus protecting a national asset to be operated by Canadians, employing Canadians.
It was good to see that the Harper government could judge that immediate economic benefits of their move to reject the Australian bid were far more important for the nation than Conservatives’ commitment to the ideology of letting companies finish deals among themselves without any involvement of governments.
And it came as a very timely demonstration of good economic decision-making.
It was also last week that the US Federal Reserve Board announced it would be injecting $600 billion cash to the markets to stimulate growth.
Now, the parallel between the decision by the Harper government and the US central bank is that both underline the fact that whenever national economic interests are at stake, governments make the decisions that give priority to national benefit, even if it is at the cost of raising eyebrows on the part of partners.
As was widely reported in the media, the world’s top two exporter economies, Germany and China reacted strongly against the US move, which will render American goods much cheaper in international markets, making it hard for the exporters of the two nations to compete with Americans. Later Brazil and other small nations also joined the chorus.
And let’s not forget that the Fed’s move also comes at a time when US has been calling on all other nations, foremost among them China, to cooperate in harmonizing currency fluctuations not to start an exchange-rate war.
So that is a typical case of one not putting one’s money where one’s mouth is.
Realistically, it would be a surprise if the US would act in a fashion more considerate of the concerns that the cash injection would create in other countries.
Because we are still living the world of the nation-states and each and every country will put their interests before everybody else’s, including even in the very much advanced state of the economic union in Europe.
Globalization is just a process where all nation states try to create and use opportunities to advance their benefits and the only thing global about it is the scale of the opportunities, and not the sharing of the fruits with others.
— Mustafa Eric