May 3, 2000
John A. Rudnick
Business Development Bank of
313 Bernard Avenue
RE: Government’s role and BDC’s role in our Canadian democratic governed
you for our recent meeting discussing BDC’s role in the economy – tying into
the issues we addressed to BDC in 1998 and 1999. I appreciated the
opportunity for such open discussion.
our professional work, it is P&A’s policy as a member and “shareholder” of
the community to be pro-actively involved in the strategic issues facing the
community. When our strategic audit, strategic analysis, comparable
and sociopsychiatric studies detect government intervention that does not
promote real income in our mixed economy, we may volunteer our analysis
through discussion papers that address the issues and propose approaches to
1996, we have addressed problems with federal and provincially shared
transfer programs including for example HRDC, Community Futures, FRBC, BDC,
etc. that fail to meet minimum standards for government intervention in a
mixed economy. However, as Franz Kafka wrote: “the message is delivered,
interventions continue to damage the market and pricing mechanism and
consequently are hampering investment in economic production.
BDC case, a specific experience of the credit and monitoring routines
between BDC and a corporate borrower was what initially prompted us to
address these issues to BDC. That case also involved federal and provincial
shared transfer programs. Indications are that the BDC needs to audit its
role in the economy and refine its analysis, client support, monitoring, and
loss prevention and aftermath analysis system.
of aftermath analysis in cases as Sonax in Oliver and Van Steyvoort
Woodworks in Osoyoos both BC, does not encourage confidence and investment.
Aftermath analysis of failure is imperative for all development whether in
the aircraft and car industry, in business, or in government programs. The
two companies is prime examples, where it is reasonable to conclude that
both companies could have been successfully reorganized and a significant
number of jobs (80-100) bee secured had the government acted accountable.
Reflecting to the lack of aftermath analysis. The same or greater
accountability should apply to both the government institution who approve
and to the corporations and social establishment that receive tax transfer
or corporate welfare, as to individual members who seek society’s help for
their social and financial problems?
also our analysis that the facilitating middleman service business BDC is
operating does not pass a test for government and quasi government
organization intervention in the pricing mechanism. Particular in BC, BDC
is contributing to fuel a economic guild behavior of medieval style in the
communities around the province.
does not imply criticism toward members of the community who pursue
transfers. If government offer transfer private sector will pursue transfer
- that is considered shrewd business. In Canada being a member of a guilt
and pursuing transfer under the banner of helping small business or whatever
is in the short term the fastest way to advance ones wellbeing. It is not
private sector role to set the standards in a mixed economy - it is strictly
It is no
criticisms towards shrewd management for pursuing transfer as for example
Western Star. The management’s first responsibility is to theirs
shareholders and no to the community. Management simply has a obligation to
pursue transfer the government offer. The question and concern is whether
or not transfer passes a test for government intervention in the pricing
mechanism. In the Western Star case whether a test was even done - and
whatever an Aftermath Analysis will be done.
problem is when the government lacks prudent analysis and injects transfer
that damages the pricing mechanism. Realizing that transfer can only be on
the expenses of other aims and business in the community.
issues we address are not personal. The issues are BDC’s role in the
economy and which services our government should provide and not provide via
government’s role is to provide such service the private sector fails to
provide - not to provide services that compete in the private sector or that
endanger the pricing mechanism.
constitution states: government is committed to … “furthering economic
development to reduce disparity in opportunities”.
The fundamental problem is that
the government is simply not able to secure jobs and social satisfaction
with the same methods that worked in the past. Post war government and
central bank policies and an inflated equity and financial sector are not
translating to better paying jobs and better socioeconomic standards in the
community. We are creating an increasingly segregated world and socially
eroding community complete with longer food lines.
The problem is outdated post
and Cold War programs that fail to pass a test for Government intervention
in a democratic governed mixed open economy. The BDC included.
Particularly in BC, government
intervention is damaging the free market pricing mechanism, which is central
to stimulating a globally competitive private and industrial sector. Instead
the system stimulates transfers from government and fails to encourage
lateral private investment in economic production.
example, in British Columbia’s Forest sector, industry failed to identify
the economic and market shifts and ecological issues and therefore did not
adapt. The government also failed to monitor and recognize the problem in
the market/pricing mechanism and to intervene to correct the problem.
the good times, the system failed to encourage long-term investment, adding
value, and using fewer resources. During the bad times, it conditioned
industry to expect government assistance and bailouts and generated ‘grant
seeking behavior’ that further distracted industry from the needed strategic
analysis and development. Unsolved since the middle of the seventies, it
has escalated into adversity in the nineties. It is not less than a
national tragedy, that government is supposed to remedy.
most disturbing is that under the banner of renewal, the post-war thinking
that caused the problem and destroyed the pricing mechanism continues to
implement post-war outdated solutions – also in BDC. It is a kind of
present slow acting system will be increasingly inadequate.
problems show up in financial statements, ecological problems and in Auditor
General’s reports - it is too late. Applies also to BDC.
BDC is one government
intervention in the pricing mechanism that was designed for post-war closed
economic conditions that no longer exist. Although our comments are not
always popular, we stand by our analysis. That BDC and other government
institutions must adapt to a new role for government intervention in an open
and knowledge driven lateral economy, or wither on the vine.
In that perspective we take the opportunity to inform you
that we are forming the Okanagan Institute for Strategic Development. The
initial focus to be on Government’s role and accountability to society from
local to federal level in a mixed economy. Our analysis of the federal and
provincially shared programs - including BDC - has been a strong
contributing factor for the decision to launch the institute and the first
remain interested and prepared to assist with the necessary changes, but in
good conscience will not pursue transfers and work from programs that do not
meet certain economic standards and accountability for government
intervention in the private sector and pricing mechanism.
realize this letter will probably not be perceived as a promotional letter.
Nevertheless, if the objective is to realign programs to meet the Canadian
constitution’s standard and that promote real economic production and real
income in BC and Canada in large, we would be happy to discuss how we could
always welcome a dialogue.
Schroder President and CEO BDC
Other this may concern.
BACK TO DEBATE
Okanagan May 2000
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