McQuaig’s Sport and Prey of Capitalists
The history of how Canada got sucked into the privatization and deregulation of free market capitalism.
Linda McQuaig’s newest book, The Sport and Prey of Capitalists: How the Rich are Stealing Canada’s Public Wealth, is a fast read full of local history and written as history should be written, as colourful stories about fascinating people! But, in order to try to remember any of it, I’ve whittled it down to the bare bones here. She comes down hard on Trudeau, both of them, and for good reason, but takes a generally non-partisan role in exploring the good and bad players in our history.
Her concern throughout: “We’ve failed to appreciate our heritage as a nation that has embraced public enterprise to great effect” (6). Then she traces our gradual acceptance, at a huge cost to our country, of the neoliberal policies of deregulation, privatization, and union busting through the history of specific industries affecting Canada today: the banking system, tar sands, railways, 407, hydro, and medicines.
GENERAL ECONOMICS:
There are two very general ideas about how to approach economics (yes, I know there are more, but we’ll just look at these two):
1. We can focus on what’s in the public interest, increase taxes for top earners, and then use taxes, as well as bonds purchased by citizens, to fund infrastructure that then remains publicly owned, Crown corporations, with a focus on meeting the basic needs of each person in society, and make sure governmental regulations and union pressures on corporations ensure that all workers are getting fair compensation. (Polanyi, Keynes)
2. A more neoliberal, free-market, laissez-faire approach: we can focus on what creates the most wealth for people, protect that wealth by decreasing taxes, and allow private industries to have free reign over infrastructure. Privatize basic services, dismantle government regulations on businesses, and prevent union regulations from creeping into the game. (Hayek, von Mises, Friedman, Buchanan)
McQuaig argues that it’s in our best interest to maintain public ownership and control over infrastructure. We need a strong national infrastructure: public transit, affordable housing, roads, and bridges, as well as hospitals and schools” (17). “J.P. Morgan Asset Management points out that, compared to other investment options, infrastructure offers very high returns at very low risk” (21). “Canada is one of the few countries that has increased its infrastructure investment since the 2008 recession” (25).
One argument for lowering taxes is to attract foreign investment, but McQuaig says there’s little evidence that taxation actually impacts business investment. Tax cuts don’t produce a boom. And there’s lots of evidence of the benefits of high taxes. In a thirty-year comparison of low-tax Ango-American nations with high-tax European nations, the high-tax countries “pulled dramatically ahead in achieving greater social well-being and equality, better health, and stronger economic security for all their citizens” (203). When the privatized phone system in Manitoba is compared to the public system in Saskatchewan, the public service was not only better, but 27% cheaper. And an audit of 74 projects in Ontario found that privatizing costs taxpayers an extra $8 billion (65). Privatizing “blocks us from seeing the enormous benefits that can be achieved through government ownership and stewardship, and therefore prevents us from taking advantage of significant opportunities” (68).
Sometimes it appears that the free market works best, but “Apple mastered and marketed ‘technologies that were first developed and funded by the U.S. government and military. In fact, there is not a single key technology behind the iPhone that has not been State-funded’” (207). And “some of the best inventor-entrepreneurs, such as Steve Jobs, were able to accomplish what they did only because of massive, publicly funded investments in basic research. . . . It was the visible hand of the State which made these innovations happen” (214). This is worse, because the corporations benefit from the money provided through taxes, but the public gets no part in the returns.
“Canadian governments have a long history of financing infrastructure by borrowing from the public — that is, raising money by selling government bonds or treasury bills to individuals” (38), but it’s all being eroded by governments that are allowing private industry to take over.
GENERAL HISTORY:
The seeds of neoliberalism were planted here well before the American civil war. It all has to do with the wealth generated on the backs of slavery in the Southern United States.
In Nancy MacLean’s Democracy in Chains, she explains that the “anti-tax dogma that dominates U.S. politics today — with huge reverberations in Canada — is rooted in John C. Calhoun’s defence of the interests of Southern planters” (40). The Northern states elected governments that taxed them and “used the revenues to provide roads, bridges, canals, and schools,” but in the south, slavery dominated, “creating a small but wealthy and powerful elite of white planation owners. Below them was a yeoman class of struggling white farmers, and beneath those farmers were black slaves and their families, who vastly outnumbered whites in many parts of the South” (41). The threat of abolishment of slavery made the elites worry about saving their assets, so the south “pushed hard for constitutional protections against such ‘confiscatory’ taxes” (42).
1828 — Calhoun wrote a Tariff of Abominations to provoke a tax revolt. He “advocated a form of minority veto power that would effectively restrict what the majority could achieve to what was acceptable to the wealthy minority. This notion that the wealthy should be able to block policies that threaten their interest lies at the heart of James Buchanan’s public choice theory” (43), which says that development of wealth, not the best interest of the public, should drive all policy, and that we should acknowledge that it’s impossible for government to act outside of their own interests anyway.
1833 — William Forster Lloyd’s pamphlet on the Tragedy of the Commons explains how, when sharing fields, each farmer will allow their cows to overgraze for their own profit, and they’ll collectively destroy the fields. The solution to this is private ownership. It had some far-reaching effect and didn’t acknowledge that another solution would be to regulate grazing. Also see Elinor Ostrom’s Governing the Commons.
1944 — “As humans, we naturally seek to relate to and be accepted by other humans. . . . The economic historian and anthropologist Karl Polanyi, in his classic 1944 book, The Great Transformation, observes that it is this social behaviour that has defined human societies throughout most of history. . . . . Our focus should clearly be on building a stronger, more functional, and more inclusive social order, rather than on unleashing and stimulating individual acquisitiveness. Public enterprises contribute to a strong social order” (12). Polanyi argues that “humans are, first and foremost, social animals. As social animals, we are likely hard-wired to work together to devise collective solutions. . . . [the free-market idea] was so unnatural that its rules had to be forcefully imposed on the people, who vigorously fought the ‘enclosure’ of the common land by private interests. . . . what is natural is for people to seek the protection of society, through some sort of collective body or government, to shield them from gluttonous private interests” (201).
1947 — the Mont Pelerin Society had their first meeting in Switzerland including Friedrich Hayek, Ludwig von Mises, and Milton Friedman. They overturned John Maynard Keynes’s ideas in favour of laissez-faire economics. This neoliberal way of thought provoked a limit to government powers to increase taxes, and the tax rate of the highest earners began to decline (from 94% to the 30s) as the masses were convinced that taxation is bad. They also advised making all public services privatized, including schools and health care, and Hayek won a Nobel Prize in 1974, and Buchanan in 1986 for their efforts. Some think they didn’t go far enough, like the Koch brothers who criticized Friedman for trying to make government more efficient instead of destroying it completely. Check out Dark Money by Jane Mayer for more on that.
1959 — Peter Newman’s treatise, “Flame of Power, celebrated 11 Canadian business leaders . . . transformed Canada from a community of traders and land tillers into one of the world’s economically most animated nations” (7). All were “operating in a significantly modified free-enterprise system, one in which there was massive government support and subsidies” (7).
1960 — Hayek’s book The Constitution of Liberty promoted the idea that “coddling by government led to moral decay and, ultimately, tyranny” (67).
1973 — Letters between Friedrich Hayek and Charles Koch discuss dismantling U.S. Social Security system, but “neither man expressed any embarrassment about the prospect of benefitting from a public program they had gone to great lengths to disparage” (66).
1974 — Herschel Hardin wrote A Nation Unaware about the pivotal role public enterprise played in Canadian history, particularly with Adam Beck [Hydro-Electric], Henry Thornton [CN Railway], and Dr. John G. FitzGerald [pharmaceuticals] (7). But it appears that we peaked in the 1950s.
BANKING and the POST OFFICE
In the 1820s, “British colonial authorities established government-run banks that were specifically aimed at collecting deposits from the working class. These ‘savings banks’ were modelled on government-run savings banks in Britain, where a strong social reform movement had pushed for them as a way to counteract the extreme poverty and suffering produced by the Industrial Revolution” (150). By 1826, they also became “a tool for keeping workers productive and sober” (150) by keeping wages a little less easily accessible. In 1933, J.S. Woodsworth, a founder of the CCF, the forerunner of the NDP, called for the nationalization of Canada’s banks. But they didn’t stay entirely public or for the working class.
Jump ahead to 2008: We tend to think our Canadian banks were untouched by the mortgage crisis, but our banks were also bailed out with $114 billion when
“funding sources that banks normally relied upon became unavailable. . . . In order to improve the balance sheet of the banks, the CMHC purchased sixty-nine billion dollars’ worth of mortgages from the banks. . . . The CBA explained that they were safe because they were insured — by the CMHC! . . . The measures Ottawa took to protect our banks didn’t require parliamentary approval, so there was little public debate about them. This was in sharp contrast to the situation that existed in the United States” (163–4).
And now, “many low-income Canadians, particularly those with poor credit ratings or without identification, are unable to qualify for a bank account. . . . They often turn in despair to payday loan companies” (167).
Then in 2013, Harper planned to shut down home delivery of mail. Canada Post started looking into offering financial services as well as mail services since it’s a governmental organization with outlets throughout Canada. It could make basic financial services available to remote locations at affordable rates. Harper was against it: “for years, right-wing business interests, led by the Fraser Institute, had pushed for the privatization of the post office, dismissively labelling it a ‘monopoly protected by government’ — ignoring the fact that it is our monopoly and therefore can be used to serve our interests” (147).
And then the “Liberals joined the Conservatives in March 2018 in voting against a parliamentary motion to study postal banking. Indeed, while the Liberals aren’t hell-bent on cutting public services the way the Conservatives are, they do appear to be locked into the austerity model, vigorously promoted by business interests, that depicts any expansion of public services as unaffordable” (170).
Adding further credence to this argument, in 2016, Justin Trudeau gave Larry Fink, manager of BlackRock, the world’s largest investment fund, “an influential role in designing the proposed new Canadian infrastructure bank” (22), with finance Minister Bill Morneau, who maintains a stake in Canada’s largest pension plan firm (23). “This council of economic advisers, made up mostly of business people and without a single labour representative, seemed less focused on how to raise middle-class incomes than on how to advance the goals of institutional investors like Fink” (23). “Recently, governments, particularly at the provincial and municipal levels, have entered into public-private partnerships (also known as P3s), with private interests building and operating infrastructure on long-term leases of twenty to thirty years” (27). Morneau’s report leaves “the impression that these advisers are rather shamelessly urging the government to create a ban that serves their interests, with little or no thought to the broader public interest” (29).
Kevin Page, first appointed by Stephen Harper as the first parliamentary budget officer, is “a meticulous, principled economist who didn’t shy away from speaking truth to power,” and he cautioned that “the private sector players involved will easily get the better of us. ‘They’ll rob us blind!’” (30). McQuaig explains,
“Involving the private sector ends up being costly. Government can raise the money on its own — as it traditionally has — by selling government bonds or treasury bills to the public. . . . Yet, instead of going this sensible, low-cost route, the Trudeau government is planning to team up with big institutional investors” (31). “With the involvement of private finance, Canadians could end up on the hook for an additional $150 billion in interest costs over the life of the infrastructure projects to be built. With numbers like this, Kevin Page’s fear that ‘they’ll rob us blind’ starts to seem like a reasonable prediction. . . . Once we admit that involving private finance will actually cost us more — way more — rather than less, these arguments can be seen for what they are . . . gibberish dressed up in the garb of social justice” (32).
The policies being made inflate the price we’ll pay for infrastructure and entitle BlackRock the “opportunity to actually own important pieces of Canadian infrastructure” (33). Privatizing Canada’s airports was also “taken up with some gusto by the Trudeau administration after it was given the thumbs-up by Morneau’s advisory panel” (33). Political science prof, Heather Whiteside, believes that,
“such profiteering will almost surely grow with the new infrastructure bank, which the Trudeau government has said will expand opportunities for private equity. This suggests that our infrastructure will increasingly be owned by unknown players reaping enormous speculative gains at our expense and accumulating those gains, beyond our reach, in offshore tax havens” (37).
PIPELINES and TAR SANDS
In May 2018, Justin Trudeau agreed to buy a leaky, 65-year-old pipeline, that transports bitumen (low-grade oil mixed with sand) from Edmonton to Burnaby, for $4.5 billion, from Kinder Morgan, a Texas-based energy company, in order to sell it to other foreign investors. He reneged on the environmentalist, Indigenous right positions that he ran on once he was elected, and instead argued that he’d be crazy to keep all that money in the ground; it’s all for the good of the people.
McQuaig counters,
“How can something be said to be in the national interest when it would compromise the ability to survive on the planet? Can something really serve our interest as a nation when it undermines our more basic interest as humans? . . . Cutting and privatizing has far-reaching consequences. It diminishes our collective power to own and control key aspects of economy. . . . We haven’t made these changes because of the inherent superiority of the marketplace or due to financial necessity. Rather we’ve made them because of the pressure exerted by powerful financial interests. (2–3) “The economic case for the pipeline expansion is actually remarkably flimsy. . . . In a world of declining oil demand, the first sources to be abandoned would be the expensive ones, such as the oil sands, where producers can’t break even without a world oil price of at least $60 a barrel” (14–15).
Then she compares Alberta’s situation to Norway. Alberta had a market approach since the 1940s under Ernest Manning (Preston’s dad). In the 1970s, after oil prices quadrupled, Peter Lougheed, conservative Premier, “launched the development of Alberta’s massive tar sands” (177). He invested $200 million in it, and Ottawa and Ontario invested too, but “Lougheed’s time as premier, from 1971 to 1985, represented the high-water mark for assertive public control and management of the province’s oil reserves” (178). Public contributions were phased out entirely by 1987. Pierre Trudeau’s National Energy Program (NEP) set national interests against provincial and inadvertently helped multinational companies to “battle Ottawa’s attempt to increase Canadian ownership of the oil patch. . . . The foreign-owned oil companies took full advantage of the resulting bad blood between the warring Canadian factions” (178). In 1990, Petro-Canada privatized. “Canada is one of the few countries to shun public ownership. . . . National oil companies owned by China, South Korea, Thailand, and Abu Dhabi have all been allowed to buy stakes in the oil sands” (190).
In 1993, Ralph Klein, conservative Premier, fully privatized the Alberta Energy Company. “Klein’s energy minister, Patricia Nelson, openly acknowledged that she relied almost entirely on her weekly consultations with important industry players who formed what she called her ‘kitchen Cabinet.’ Big Oil’s dominance was particularly pronounced under Klein, but [Kevin] Taft maintains that, in the years since his departure as well, the industry has maintained effective control over the Alberta government — and over Ottawa” (180). Since 1997, “although Albertans were entitled to receive 100% of this annual rent (or leftover gain) from the oil sands, they’ve averaged just 9%” (182).
Worse than financial loss is environmental destruction “A 2018 study published in the journal Nature Communications ranked Canada among countries with the world’s least effective climate measures” (193). And then there’s the imminent cleanup fiasco which will likely cost at least $260 billion: “There is going to be a thousand years of carnage left up there” (196). Just a few years ago, NDP Premier Rachel Notley
“assured us that her government has put a ‘hard cap’ on the oil sands in order to allow Canada to meet its climate targets. But this ‘hard cap’ turns out to be really soft. Rather than cutting back oil sands emissions, it permits them to grow another 60 percent. At that rate, the oil sands will use up roughly 78 percent of the overall emissions budget for all of Canada. . . . Nationally, the oil sands account for less than one-half of 1 percent of employment” (194).
By contrast, Norwegians “ignore Big Oil’s constant huffing-and-puffing attempts at extortion” (183). The state controls 67% of of shares and the rests is in public stock. Norway produces half as much oil as Alberta, but has oil assets of almost $1 trillion that are used by the debt-free state to fund education for all citizens straight through to the end of university.
RAILWAYS and RADIOS
The CPR, Canadian Pacific Railway, was privately owned but subsidized by the Canadian government to the tune of $25 million. It was finished with the famous last spike in 1885, after they had convinced 15,000 Chinese labourers to work for very little pay at hard labour that killed at least 600 of them.
The CNR, Canadian National Railway, started in 1919 by buying up five bankrupt railways and turning them into one thriving railway in just one year, with net earning increasing tenfold (78). Then in 1922, an American engineer, Henry Thorton set out to attract more immigrants to Canada (75). He supported workers’ rights and unions: “Any other policy makes for social unrest, and if carried on long enough is likely to create political upheavals” (76). In 1924, they added radios to their trains and started their own broadcasting system, which sent passengers from the CPR to the CNR. In 1929, they nationalized the broadcasting industry, which survived the market crash in part because of Bennett’s support: “The use of the air that lies over the soil or land of Canada is a natural resources. I cannot think that any government would be warranted in leaving the air to private exploitation” (85).
The CNR remained a Crown corporation until it was privatized in 1995, changed to CN and later to VIA, and then the services decreased and tracks started to be ripped up as they only run lines that turn a profit, which “compounds the isolation and lack of mobility experienced by those living in remote communities, and it highlights how much of a setback the CN privatization has been for tens of thousands of Canadians — and for the cohesion of a vast country with a spread-out population” (86).
In the 80s, Brian Mulroney’s government “made deregulation a top priority,” and, in 1988, the Railway Safety Act pushed by Jean Chrétien and Paul Martin, ensured “transferring responsibility for safety enforcement from government to the railways themselves” (89). In 2011, Stephen Harper “brought the deregulation agenda to a fever pitch” (89) with the Red Tape Reduction Committee. “A key aspect of the directive was the abandonment of the ‘precautionary principle,’ the principle that, if there is any scientific doubt about the safety of a product or practice, regulators should be cautious and restrict its use. . . . Under the Harper directive, the burden of proof was placed on the regulator to show solid evidence of harm; otherwise the company had the green light” (89).
Then came the Lac-Mégantic rail disaster in Québec that killed 47 people in 2013. It wouldn’t have happened if “Ottawa hadn’t abdicated its responsibility to enforce safety regulations for railways operating in Canada. Instead, Canadian politicians embraced neoliberal economic policies, championed by Margaret Thatcher in the United Kingdom and Ronald Reagan in the United States, that argued for getting government ‘out of the way’ so that the market could work its magic. This involved radically reducing regulations, which were increasingly depicted as nothing more than a costly regulatory burden on business” (89). “Harper and his officials were never held accountable for their reckless deregulation. Nor were the greedy rail barons who pushed — and continue to push, mostly successfully — for relaxed safety laws” (92).
407 HIGHWAY
According to the 52-minute documentary, End of Suburbia, the increase of suburbia was about separating the rich from the poor, which was also tied to racism (redlining in the 1930s), and followed by a misallocation of post war wealth mixed with cheap oil to get people driving instead of taking trains. It’s all part of that same mentality of ensuring the wealthiest can be kept separate from the dirt of industry while maintaining a comfortable lifestyle. To get us driving in individual cars, free from the riffraff that take public transit, we need more roadways.
The 407 wasn’t meant to be a privatized highway.
It was built in the early 1990s by the Rae government in partnership with the private sector with a promise that “tolls would be used exclusively to cover the highway’s construction costs and would be lifted once those costs were fully covered, likely in about thirty years.” Then in 1999, under Mike Harris, it was sold to private bidders, Cintra (in Spain) and SNC-Lavalin (the Montréal firm that bribed Libyan officials for contracts), with $200 rebates to taxpayers mailed out the same day the provincial election was called (52). It was sold for way less than it was worth “for cosmetic pre-election deficit reduction” (56), and SNC-Lavalin turned around and sold their shares for twice as much just three years later.
Taxpayers had already paid $1.5 billion on it by then, and now have to pay to drive on it forever. There have been tons of problems with the mismanagement of toll collection since then, including bill suppression practices: “if initial bills weren’t paid, the company stopped sending follow-ups, but continued to keep track of penalties and interest charges. Then, years later, it demanded payment of stunningly large overdue accounts” (55). They sorted that out, but we’ve still been saddled with paying rising tolls to a foreign company, forever.
HYDRO ELECTRICITY
In the 1890s, gas was used for lighting, but hydroelectric was brighter, safer, and more reliable. “Steam power was becoming problematic. It required burning wood or coal, and after decades of cutting down forests, wood was no longer in easy, nearby supply” (95). In 1903, Henry Pellatt wanted the right to develop power from Niagara Falls with private interest partners, “known as the Syndicate, whose high prices in its streetcar and lighting monopolies had left many in the city unable to afford these services.” They had lots of connections, like Ontario Premier George Ross (president of Manufacturers Life Insurance Company), who invested in the Syndicate (99), and William Mackenzie, also heavily involved in the railway.
On the public side of the argument was William Hubbard, the first Black person elected to Toronto City Council. He had chanced to save George Brown’s life who then gave him a job as his driver. He worked his way up with a strong advocacy of public power. In 1894, he “orchestrated plans to replace Pellatt and his private interests with a public system dedicated to serving popular needs” (97). “Public power ‘pitted the haute against the petite bourgeoisie of Ontario. . . . Agents of finance capitalism — the investors, brokers, banks, insurance companies — on one side against the consumers of power — merchants, manufacturers and ratepayers — on the other” (99).
In 1903, delegates from 99 Ontario communities came to Berlin (now Kitchener), including Adam Beck, the Mayor of London, to discuss popular rights vs monopolistic privilege. This is when we hear “Conservative leader Whitney declaring that ‘the water power of Niagara should be free as air’ . . . should not be the sport and prey of capitalists” (103). Big banks and business also attended: “Byron Walker, president of the Canadian Bank of Commerce, who directly attacked the notion that government could own and operate something as complicated as a power generating system” (105), and they started an Anti-Hydro Citizens Committee of Business Men. At an initial vote, 19 communities endorsed public power, and it was later ratified by municipal voters that the Crown organization, Ontario Hydro, would get to develop electrical power. They celebrated in Berlin, with Adam Beck and MP “Billie” King flipping the switch.
Then in 1911, Pellatt built himself a huge castle he called Casa Loma.
The provincial ownership of power was an extraordinary development; “Roosevelt had long been impressed with Ontario Hydro, and in the depths of the Depression, he copied aspects of it” (110).
In the 50s, under Ontario Premier Leslie Frost, conservative MPP Dana Porter argued that it’s “unfair to oblige private oil and gas companies to compete with a publicly owned gas company, which would be able to deliver gas cheaply. With this logic, Porter turned Adam Beck upside down: instead of regarding lower prices resulting from a pubic system as a benefit to the public, it was seen as an injustice to private interests” (114). Due to competition with privatized natural gas, Ontario Hydro “embarked on an extensive, needless, and counterproductive campaign to increase consumer consumption of electricity” (116). The subsequent surge in use provoked interest in nuclear power. Conservative governments built lots of reactors, and Peterson’s liberals built Darlington, costing $14 billion, with debt for the project still being paid for today. Bob Rae stopped the expansions. In 2001, Harris planned to sell Hydro One, but that fell through when his position was taken over by Ernie Eves (after Harris stepped down over Walkerton and Ipperwash scandals).
Then in 2010, Liberal Premier Dalton McGuinty also “accepted the business groupthink that assumes the superiority of the private sector and defers to the business community in all key matters” (60), and he decided to “turn to private developers to build the new, less-polluting, gas-fired power plants the province requires to replace the coal-fired plants it was closing,” instead of “allowing the projects to be handled by Crown corporations” like Ontario Power Generation and Ontario Hydro. He gave the contract to Eastern Power, run by the Vogt brothers, who had no capital, so they funded the $59 million needed for construction with help from several American hedge funds. Then McGuinty cancelled the construction entirely due to public pressure. The hedge funds managers ended up suing the Vogt brothers for the whole line of credit they had set up, not just the part they actually used, which totalled over $228 million and also sued the Ontario government for $310 million in damages. McGuinty settled for just under $200 million. The problem wasn’t in the change of heart, cancelling a contract, but in the private funding of the project. “It is highly unlikely that the costs would have been anywhere near as high if the McGuinty team had originally opted for the tried-and-true method under which the government builds and owns the power plants itself. A Crown corporation could have borrowed funds at attractive interest rates” (63).
Then in 2015, Premier Kathleen Wynne also “bought into the logic that selling off part of Hydro One would enable her to ‘leverage’ that public asset to pay for other badly needed new assets, particularly public transit” (117). She sold 60% of Hydro One to raise $9 billion using “deeply flawed” logic. McQuaig explains,
“It would have made more sense for the government to borrow the money or raise taxes, or both. And the deficit reduction was clearly just a one-time, pre-election ploy to make her government look fiscally responsible . . . since the provincial treasury would lose hundreds of millions of dollars in ongoing annual revenue from the utility, leaving the province worse off financially in the long run” (117). “The Hydro sell-off meant that government was surrendering to the corporate world important levers over energy and environmental policy” (118).
After Ontario had been the first North American government to get rid of coal in 2014, Hydro One almost got us back into coal in 2018, but stopped by “Washington state regulators, citing political interference after newly elected Ontario premier Doug Ford fired the board and CEO of Hydro One” (118).
MEDICATION
Canada is known for our public healthcare system, but our access to necessary pharmaceuticals pales compared to many other countries. Yet we have an extensive history of developing patent-free drugs.
In 1913, John FitzGerald developed a cheaper serum to treat diphtheria in a not-for-profit lab when the current medication was privately owned and too expensive for many people. “FitzGerald understood that only a public system could ensure that the vital life-saving products he was preparing would be made available to all Canadians, rich and poor alike” (123). Then in WWI, Colonel Albert Gooderham donated money for FitzGerald to create the “Connaught Laboratories, in honour of [Gooderham’s] friend and Canada’s governor general at the time, the Duke of Connaught” (126). The lab also eliminated deaths from tetanus. And in 1920, when Fred Banting, Charles Best, and James Collip developed insulin to treat diabetes, FitzGerald convinced Collip not to take out a patent (after Banting punching Collip wasn’t enough). The lab worked with Eli Lilly to expand distribution, and became part of the University of Toronto. In the 30s, they developed a blood anticoagulant used in surgeries, made a vaccine against polio with the help of Jonas Salk in the 50s, and helped eradicate smallpox in the 60s.
Then Saskatchewan Premier Tommy Douglas “tried to establish the first government-controlled single-payer medical insurance system in North America” (134), which was opposed by doctors and businesses, and also by the Canadian Medical Association and College of Physicians and Surgeons. But Douglas won the next election with the newly formed NDP government, and the new law took effect July 1, 1962. But, “By the late 1960s, Connaught’s non-profit status had come to be regarded as an anachronism by a business elite with a waning interest in the public good and an increasing focus on bottom-line profits” (136). In 1972, the U of T sold Connaught for $26 million to the Canada Development Corporation (CDC), established by Trudeau’s liberals to keep Canadian companies out of the hands of foreign interests. Then in 1985, Mulroney completed the privatization of Connaught, selling off remaining shares held by the CDC, and now it’s owned by Sanofi, in France.
And we still don’t have Pharmacare. “Canada today is one of the few advanced nations (along with the United States) that lacks a national drug program, and so Canadian are forced to pay more, per capita, for pharmaceuticals than citizens in most advanced nations” (137). Pharmacare could save us $7 billions/year because “multinational companies would be forced to bargain with a single national agency in order to get their drugs on the insurance-covered national drug formulary” (138). The problem with the pharmaceutical industry is that it’s “dominated by multi-national corporations that make decisions with life-and-death consequences for reasons that are related exclusively to their corporate profitability” (139). In Canada “Roughly one billion dollars of Canadian public money is spent each year on basic medical research. Yet, Canadians have no ownership of the products that result. Instead, the university researchers are permitted to take out patents on the products they develop (with our money), and then sell or license those products to corporations that market them, often at great profit” (140). We need more basic research based on what “scientists considered important, not what promised to be lucrative” (143).
McQuaig ends with a call to action:
“Rather than continuing to passively accept the corporate world’s vision for our country, we should free ourselves to think boldly about what is really in our interests and not be intimidated if our conclusions don’t fit with those coming from the business commentators who dominate public debate. Bold thinking would include a willingness to consider not just resisting further privatization, but actually expanding the public domain. [These innovations] involve a change in our mindset — a determination to stop being cowed by business and to start embracing our inner Viking” (217–8).
