There have been some careless corporations (think Volkswagen) and some genuinely bad corporate leaders – not all of whom are in jail. But, in spite of these bad apples, what we rely on corporations to do is both desirable and necessary.
First, think jobs. We want well paid, secure full-time jobs with benefits and opportunities for advancement. Corporations and very large private companies are the only ones in the private sector who can provide such jobs in a free capitalist society.
Where do citizens turn for financial support when there are no more government grants and we need more resources for the football team, the opera or the children’s hospital? It is hard to think of any major community cause or event that does not rely on corporate sponsors.
Vancouver’s ongoing quest to attract head offices is testimony to corporations’ value. Corporate head offices provide jobs and create work for their suppliers, including professional services like law and accounting. They also attract other companies, among them startups, and they do support the non-corporate sectors.
Even Donald Trump recognized the value of corporations in reviving the U.S. Hence his suggested policy to repatriating U.S. corporations that have moved abroad by easing tax demands on corporations themselves and on any repatriated funds.
These promises alone are not enough for success. Corporations need several things to prosper, including:
- Competitive tax rates
- Skilled and unskilled workers
- Access to affordable supplies
- Access to markets and customers
Although Trump offers competitive tax rates, his policies will make it more difficult to meet the other requirements.
Anti-immigration and Hire American policies mean that corporations cannot readily bring in the engineers and other high skilled STEM (science, technology, engineering and mathematical) talent they need. The U.S. is producing neither the quantity nor the quality of these required workers. The latest Programme for International Student Assessment (PISA) results testing students show that 15-year-olds in the U.S. are low and falling in international ranking in reading, math and science.
The barriers to trade that Trump has been talking about, if implemented, will definitely reduce imports. However, in today’s global economy, they will have only limited effectiveness in attracting companies to manufacture in the newly protected market. Not only does the U.S. have a shortage of the skills needed for 21st century jobs but trade barriers will also increase the costs of needed supplies for U.S. operations. As other countries respond to U.S. trade barriers, American firms will find they are losing not only access to supplies, but also non-U.S. markets and customers.
Sixty years ago, this was not a big problem. National economies were much less integrated and more self-sufficient. The U.S. was the biggest, richest market of them all. The aggregate U.S. market, however, will very soon be smaller than China’s. Big corporations see themselves not as American, but as global – they might not be eager to run ‘home’ to the States.
As prospects for corporations in the U.S. dim, opportunities open for Canada. For example, Microsoft has established a Vancouver operation, because it is easier and faster to bring in foreign workers than it is in the U.S.
Canada can design and maintain policies to get more of the jobs, taxes and community support such operations can generate. We do need at least fairly competitive tax rates. We need access to skilled STEM workers from outside the country and we could train more inside. Already, Vancouver and Seattle are looking at how to better co-operate to get and keep the engineers both cities need. And we need policies and practices that will keep entry level and basic service jobs filled.
Regardless of whether the U.S. increases barriers to Canadian goods and services, it is in our own interest to develop alternative trading partners. We are already moving in that direction with the CETA agreement with Europe and are working toward more open trade with Asia even as the U.S. leans in the other direction.
This greatly help Canada and be very appealing to international corporations. They may well choose Canada as a good place to access world markets for labour, supplies and customers and, in turn, will provide the good jobs, the tax dollars and the community support we want.
Troy Media columnist Roslyn Kunin is a consulting economist and speaker.