Today’s output from Blogistan Polytechnic Institute’s state-of-the-art HEMMED (High-Energy Meta Mojo Elucidation Detector) machine is an ear worm for a catchy tune and something you may not have known about our neighbor to the north, Canada.

We hear so much about American capitalism: “pure” markets and how those markets will sort out the winners and the losers. And that any government intervention is socialism and a start down the slippery slope to whatever is worse than socialism (a film on our dishes maybe?).

Of course, in Realwordia there are no pure markets and winners and losers are chosen in many ways that have nothing to do with merit.

In Morning Feature last week, we learned that some good old fashioned protectionism might not be a bad idea and may help save some of our industries and jobs.

Turns out that protecting vital industries is not that hard.

Potash is in the news. Potash “is the common name for various mined and manufactured salts that contain potassium in water-soluble form”. And it is a big deal in Canada where their potash mining accounts for 43% of the world’s trade:

The word “potash” is derived from the Dutch word Potasch, and originally referred to wood ash. Potassium carbonate, a basic chemical of pre-modern times, was extracted from it. Today potash refers to potassium compounds and potassium-bearing materials, the most common being potassium chloride (KCl). Potassium is the seventh most abundant element in the earth’s crust, and is the third major plant and crop nutrient after nitrogen and phosphate. About 95% of world potash consumption is used in FERTILIZERS, with small amounts used in manufacturing soaps, glass, ceramics, chemical dyes, drugs, synthetic rubber, de-icing agents, water softeners and explosives.

The Canadian potash industry consists of 9 underground mines and 2 solution mines operated by 3 companies employing more than 3400 workers. Potash is moved by truck (5%) and rail (95%). In Canada, potash is the third largest major MINERAL product in volume on Canadian railways and international shiploading.

Canada does not just sell the potash it mines … it uses it extensively in its own agricultural industry.

So it should come as no surprise that when an Australian company wanted to buy the largest potash mine in Canada, red flags went up. Not only the 3,400 jobs, the railway and international shipping but Canadian agricultural would be affected.

The reaction to the hostile offer was to invoke a 25 year old investment law to block the deal:

The unusual nature of Canada’s potash reserves — about half of the global supply comes from Canada — and widespread bitterness over other foreign takeovers of Canadian mining companies had created pressure from even prominent business leaders to block the deal.

It was only the second time that the Canadian government had turned down a bid in the 25-year history of the current foreign investment law.

Brad Wall, the premier of Saskatchewan, led the campaign against the BHP takeover. His right-of-center government usually opposes state intervention in business and, in particular, the province’s historical practice of owning companies in some industries , including Potash at one time. But Mr. Wall is now concerned that foreign ownership of Potash would reduce royalty and tax revenues.

Yielding to political pressure, Canada said on Wednesday that it would not approve a proposed $38.6 billion purchase of Potash Corporation of Saskatchewan by BHP Billiton, the large Australian mining company.

The Potash decision was made under the Investment Canada Act. Under it, rulings are made by the industry minister, a politician, and require only that companies show a “net benefit” to Canada, a largely subjective assessment.

Surprise! A business newspaper suggests that “net benefit” is a “largely subjective assessment” both mocking it’s value and it’s fairness to that “pure” market they love to talk about … when it benefits corporations.

Actually, the “net benefit” rules are pretty clear:

In determining whether an investment is of “net benefit”, the Minister will consider the following factors:
a.the effect on the level of economic activity in Canada, on employment; on resource processing; on the utilization of parts and services produced in Canada and on exports from Canada;
b.the degree and significance of participation by Canadians in the Canadian business or new Canadian business and in any industry or industries in Canada;
c.the effect of the investment on productivity, industrial efficiency, technological development, product innovation and product variety in Canada;
d.the effect of the investment on competition within any industry in Canada;
e.the compatibility of the investment with national industrial, economic and cultural policies; and
f.the contribution of the investment to Canada’s ability to compete in world markets.

Eeek!! Protectionism! Or as they say in Canada “eh”.

Happy Tuesday to everyone and fist bumps!

The BPI Campus Progressive agenda:
1. People matter more than profits.
2. The earth is our home, not our trash can.
3. We need good government for both #1 and #2.

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