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July 6, 2010

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Time to abandon tired global-or-nothing ideology

Every other day in the big mainstream dailies, it seems, some right wing champion of so-called public-private partnerships is given generous column inches to extol the virtues of P3s and the global market. Earlier this year, for example, ATB Financial economist Todd Hirsch argued that opponents of a Calgary bridge construction project that went to a Spanish bidder were needlessly “paranoid” about lost jobs and “insecure” in their failure to embrace the wisdom of the global market in awarding contracts for large public infrastructure projects.

Mr. Hirsch’s argument rested on the tit-for-tat logic of global trade—that if we give a construction project to a company in Spain we’ll end up getting an IT contract in return. This misses the point about the Bow River bridge deal and similar projects elsewhere. Mr. Hirsch and likeminded observers, in their zeal to push a global-or-nothing agenda, seem unwilling to examine what a “local first” policy really means.

Consider for a moment a procurement model that includes in its decision-making process the value of a local business that may have been located in the community paying taxes in that community. Should such value not be considered a factor in the fiscal well-being of a community—not only for the bottom line but also with regard to the environment, employment, and innovation? In terms of building healthy local economies, I am sure Mr. Hirsch would agree that we’ve pretty much maxed out on our traditional reliance on revenue streams such as federal government transfers and cost development charges on property taxes. Just as I can agree that fair taxation should be the goal for all levels of government.

So what are the alternatives? Let’s take a look at how our existing tax dollars go to work. Some of us believe that maximizing the multiplier effect of those tax dollars—creating more revenue from consumer spending that stays in the community—is a good thing. So is providing more opportunities for young entrepreneurs to stay in the communities where they live so that they can develop innovative new products at home, rather than joining the brain drain to bigger cities or other countries. We could create additional revenue by promoting programs that use capital stock in municipalities. We could do leakage analysis in order to find ways to slow down the number of dollars that leave the community. We could consider programs that deal with import substitution to reduce, for example, our reliance on produce that’s been flown in from another hemisphere.

These ideas are not new—nor are they rocket science. (Notwithstanding the new Canada-United States Procurement Agreement, which threatens to open up even our water supply to U.S. markets—and that’s a whole other issue—several American states and cities have enacted procurement policies that provide either preferential options for, or discounts to, local bidders on infrastructure projects.) These initiatives have worked in the past, and they continue to prove effective in developing new revenue streams that can be nurtured over the years. The point is not to “always buy local” but to think local first: by giving the local business community the challenge of working with local consumers, the quid pro quo for their efforts will always be more customers. This is not about stopping anything; it’s about starting something new.

Mr. Hirsh and other defenders of the globalist orthodoxy promoted by large corporations—the presumption that there is no alternative to unfettered global trade—would be well advised to do a rethink and take a look at what’s happening out there. For example, if he happened to read Michael Shuman’s The Small-Mart Revolution: How Local Businesses are Beating the Global Competition, or checked out the Business Alliance for Local Living Economies (BALLE), which represents more than 21,000 independent business members across the U.S. and Canada, he might be surprised to learn what’s actually working at the local level. He might even find that his mantra of Global, Global, Global—far from being cutting edge or the way of the future—is in fact a tired, unimaginative, inside-the-box way of thinking about the economy.

Barry O’Neill is president of the Canadian Union of Public Employees, B.C. division.