To whom this may
Feb. 23, 2000
Scott Boswell and
The Board of Directors
Osoyoos Business and Community Development
8711 Main Street 2nd floor
P.O. Box 500
Osoyoos British Columbia Canada
Dear Mr. Boswell:
RE: Call for
Proposal for Business Plan and Promotional Strategy for the Southern
Interior Value Added Wood Cooperative, hereafter the Cooperative
Thank you for
considering P&A. We refer you to our previous letter of September 13, 1999,
and the following comments.
We would be glad to
offer our services under the following conditions:
In the event that
government funding and tax transfers are used to form the Southern Interior
Value Added Wood Cooperative and/or this project. That there is a prudent
Strategic Analysis that tests such government intervention to assure it
meets recognized standards for government’s role and accountability to
intervene in the private sector and pricing mechanism in our Canadian
democratically governed mixed economy.
As resources can only
be spent in one direction at the expense of other aims in the community.
That there is at least an assumption that the intervention and
redistribution of income via tax to the cooperative’s members from other
taxpayer will raise real income and not erode economic production and social
satisfaction for other members of our society.
After reviewing the
Strategic Analysis upon which the Cooperative is formed, we would consider
participation and the drafting of a proposal.
In the event that
there is no Strategic Analysis that supports the decision to establish the
cooperative, then we are prepared to offer a Strategic Audit of the
project. A Strategic Audit would review the strategic issues the members
of the cooperative are facing - and which it is assumed the cooperative
strategic audit would find the cooperative project to be a sound initiative
based on the reality in a – open - economy and marketplace. We would hope
that the Cooperative would assist the members to solve their market,
financial and organizational issues, without eroding the ability for other
members and enterprises in the community to solve theirs.
Does the cooperative
have the potential to increase real income in the community and reduce the
high tax welfare transfer to this area? Does this government intervention
meet the basic rule for government intervention in the private sector and in
the pricing mechanism; that the government is providing service the private
sector fails to provide? Is the cooperative formed merely because of
special interests and because there is HRDC, FRBC or other transfer funds
available? Who is benefiting from the transfers?
Is it reasonable and
of benefit to the community that some companies and sectors receive
corporate tax transfer welfare while others do not?
As another option,
we can offer to discuss a combination of an Audit of the Cooperative’s
overall purpose and a subsequent monitoring of the Business Planning and
Promotion process and standard against the Audit.
If the issues had not
been sufficiently defined, the audit would propose an approach to repair
that void and identify the long and short-term strategic issues and
formulate approaches to solution. That would subsequently provide the base
requirement for developing the business plan and promotion plan.
The concern is when and how transfers are injected:
If there is an identified need among the enterprises in the
wood industry for a mutually owned entity that provides services such as
market analysis, business planning, promotion, etc., nothing prevents the
enterprises in the wood sector to join together and invest equity share
capital to form a mutually owned corporation that can provide such service.
The new corporation can then hire the expertise and experience necessary. It
is not the role of government to use transfers to finance that process.
As a footnote, I
happened to have reorganized one of the largest cooperative organizations in
Europe and while working with the Swedish government have studied numerous
successful cooperative business groupings. Such initiative seems only to
work in a homogenous sector with a strong civicness as the driving force.
It is never
successfully driven by government and outside interests. Strong civicness
is more common in farming communities where the market, economic and
organizational issues and the market determinants are much the same, and
hence where many are facing virtually identical issues -- hence one standard
solution can work for many. In more heterogeneous manufacturing sectors such
as the value added wood sector, it is a different story.
Some regions of
Sweden, Germany and Italy have always had low unemployment and a better
economy than the rest of the country despite declines in the overall
economy. This is because of a strong civicness-driven tradition of
cooperation. Instead of Company X buying a new machine that they may only
utilize 60 percent, they will subcontract the work to a colleague or even a
competitor that already has the necessary machine and idling capacity. Or
two or more firms may co-purchase a machine and run the machine in shifts.
Likewise, instead of laying-off people, companies will exchange staff.
However that is based on an attitude and civicness developed over hundreds
of years and not initiated by government. Attitude is most difficult to
The bottom line is
that it is not government’s role to use tax transfers to stimulate
enterprises to pursue government transfer that will crowd out private
investment and private firms. Government’s role is to address the issues
and discuss formulated approaches to solution with the private sector,
before the issues become acute.
We have a situation
in BC - in general and in particular in the forest sector - where government
intervention (via HRDC, FRBC) has disabled the pricing mechanism and
addicted companies to corporate welfare. The sector will continue to
struggle along on ‘life support’, until such time as the community decides
to ensure that government meets its role and accountability, and restores
the pricing mechanism by scrapping planned economic socialistic approaches.
It is no secret - as
addressed in our September letter – that we have for many years been openly
critical of government intervention such as by HRDC and FRBC that does not
meet government’s role and accountability in a well managed democratically
governed mixed economy. With that criticism P&A has no expectation that
our analysis and approaches to solution will be used in British Columbia.
Nevertheless, our analysis has been confirmed the past few
weeks by the well-publicized “HRDC boondoggle” case. Particularly in
Okanagan HRDC and FRBC, patronage driven transfers that lack prudent
analysis, accountability and aftermath analysis are damaging the pricing
mechanism and hampering investment.
The local Sonax, Van Steywoord Woodworks cases and the
disturbing lack an aftermath analysis, and accountability speaks for its
We would like to
offer our expertise and be able to work with OBCDC, as our criticism is not
personal. I trust however that OBCDC understands that we cannot both
criticize government transfer programs and work with the program at the same
time. Nor do we wish to compromise our analysis and integrity,
We can however,
continue to offer to contribute to solving the analysis and accountability
issues from local level and in this case OBCDC to federal level. We are
always willing to participate in adapting the government’s intervention
system to the standard the community needs in order to promote real income
and social satisfaction in an open, knowledge-driven economy and
Again we are not
members of a central planned economic system. The role of Government and
quasi-government organizations such as OBCDC in our economic system must be
restricted to provide product and service the private sector fails to
provide, and to ensure a sound and functioning pricing mechanism. Not to
compete in the private sector.
This is a nice community to live in because of its natural
beauty. But is also a community where government and semi-government
organization is failing it is role and accountability to society. That is
hampering investment in economic production and social satisfaction. We
have seen corporations stop considering need investment and fresh mindset in
the value-added sector in BC because our government does not meet recognized
standards for government’s role and accountability.
We trust this further
explains our position. We are bound by the policy and standards set out in
our September 13, 1999 letter to OBCDC. We realize in the present
environment and mindset in BC that our position is not promoting work for
P&A and me, and as long as that situation prevails, we do not expect any
work for government or quasi-government organizations in BC.
This is not an easy
situation for us. However, what is worthwhile is seldom easy, and we have
chosen to ‘tack against the wind’ rather than compromise our principles by
participating in outdated programs that erode job and social satisfaction.
It is our analysis that enough good members of society eventually will stand
up and use whatever means necessary to force government to meet its role and
accountability in our mixed economy from local to federal level.
Please do not
hesitate to contact us again. Eventually we are convinced that the standard
will improve and we will again be able to work with government in BC, and
contribute to solving issues such as those identified in the initial
strategic analysis P&A carried out for OBCDC in 1998. Including the purpose
of economic development, as the focus of effort to pursue tax transfer is a
dead end approach in an knowledge driven open economy, - rather devastating.
We also take the
opportunity to inform you that we are forming the Okanagan Institute for
Strategic Development. The initial focus is on Government’s role and
accountability to society from local to federal level in a mixed economy.
Our comparable analysis including Government transfer systems as managed
through HRDC, FRBC, etc., has been a strong contributing factor in the
decision to launch the institute and the first project.
Enclosed you will
find a brief commentary that further supports our position.
To whom issues addressed in this commentary may concern.
BACK TO DEBATE
Okanagan May 2000
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