Read the financial pages of our corporate press, or listen to your average political commentary, and you would recognize the following standard propositions. Foreign investment is good, and needs to be sought after; public debt is bad, and needs to be paid down (retired) quickly. In fact, when it comes to their respective merits, the truth is pretty much the opposite of what we are told to accept.

Foreign investment is, in fact, foreign ownership, and for purposes of clarity and protection against thought control, it should be called foreign ownership, always. By calling it investment, what is camouflaged is that the supposed investment is really foreign debt, owed to foreign owners, forever, by Canadians.

When what is owned, for all time, by others, for their profit, are natural resources situated in Canada, it takes a tight control over public debate to ensure that not too many people figure out what is going on, and that nobody believes we can do anything about it.

Luckily for foreign owners — largely American — the press, the academy, the main political parties, and Canadian-owned enterprises have no interest in apprising Canadian citizens of what is a form of extortion of benefit that belongs to them.

Public debt, contrary to what is normally said, is what pays for investment in health care, education, recreation, transport, culture, development aid or common security. Debating and discussing what investments should be made on our behalf by our municipal, provincial and federal governments is what representative government is about, though you would never know it from listening to Paul Martin Liberals and Stephen Harper Conservatives, or the Green Party for that matter.

Foreign owners are what the Irish labeled, in another era, absentee landlords. They are still with us, though no longer drawn exclusively from the English nobility. Nowadays foreign owners are companies with household brand names, and shares quoted on the New York Stock Exchange. These giant corporations are technically public companies because their stock can be bought and sold by the “public.”

Publicly-traded companies are regulated, and supervised to some or less degree. They are “widely held” meaning pension funds are partners with wealthy individuals and family fortunes. They are “governed” (in the loosest possible interpretation of the term) by boards of directors drawn from the capitalist class, and its servants in banking, law, accounting, marketing and the academy.

Foreign ownership represents a perpetual payment (not unlike a tribute) made abroad of profits, management and service fees. Because transfer pricing prevails between the head office and the branch plant — not , repeat, not, competitive market pricing — arbitrary fixing of costs by head office allows for tax avoidance in Canada, and elsewhere, through the use of tax havens (or just clever accounting), and with the complicity of legislatures and parliaments.

This foreign debt is outrageously expensive when compared to current borrowing costs for governments. The Canadian government can sell big amounts of long-term debt in return for offering 5.75 per cent interest, or about four per cent after inflation. By issuing real return bonds they are currently borrowing money for 32 years at less than three percent. If the economy grows by three per cent, the capacity to pay debt grows faster than the interest expense.

And what about those terrible interest payments which could go to useful purposes? First, for those mostly wealthy individuals who are lucky enough to hold lots of government bonds, interest payments are taxable at the top marginal tax rate, around 46 or 48 per cent in Ontario or Quebec. So a sizable percentage of the interest charges of the federal government comes back to the provinces and the federal government as tax revenue.

And what about sticking the next generation with our debt? If that is a problem, and it only would be if we make poor investments, such as neglecting health care, education, the environment, infrastructure, etc., you get the picture, then there is a simple solution. Debt in the form of government bonds gets passed on in estates from one generation to another. So why not tax it, say, with an inheritance tax? Or tax it every year with a small wealth tax on large fortune?

Public debt remains an income-generating asset for those who hold it, Canadians mainly; residents hold over 80 per cent of outstanding federal debt. As such it represents a stock of financial wealth. When it is “paid down,” as it continues to be by the Liberals, to the tune of about $60 billion in recent years, that represents a shrinkage of wealth. What it does, of course, is open up room for corporate borrowers to tap into the debt market at lower cost, replacing the public borrowers. Not just autos instead of child care, but private expensive child care instead of affordable public services.

Did you just conclude that the Liberals have been paying down public debt to improve the financial prospects of corporations? Well, yes. There does not seem to be any other reason why they would starve health care, education, public infrastructure, culture, recreation, amateur sport, veterans, the poor, single parents, farm families and aboriginals. And it takes a well-trained market economist to explain why only private investment is productive and why public investment is not productive. How so you ask? Assume it. That is the way economists are trained. It takes many years to form a mind that routinely confuses playing “let’s pretend” with informed judgment on public affairs.

I like to think Canada will eventually be a thorough going democracy. It will happen when the working men and women of this country decide to pay attention to how their country is being run. Not before, and certainly not so long as what is investment in the future is thought to be a burden, and what strips us of our wealth is called an investment.

Duncan Cameron

Duncan Cameron

Born in Victoria B.C. in 1944, Duncan now lives in Vancouver. Following graduation from the University of Alberta he joined the Department of Finance (Ottawa) in 1966 and was financial advisor to the...