On Thursday, January 26th, Premier Alward announced that a group of businessmen would be appointed to recommend ways that the province could be run like a business. What he didn’t say was why, nor did he spell out exactly how a business should be run.
Both these questions, however, should be foremost in the mind of New Brunswickers, as our Conservative governments take our country and our province in radically new directions, embarking on a great social experiment the likes of which we have never known.
Ostensibly, the Alward business programme is intended to find efficiencies in government – and who better after all to find efficiencies, if not corporate managers, right? Given the province’s great fiscal problems, who better than the private sector gurus of downsizing and thrift to get us back on our feet? It seems like common sense.
But it isn’t.
Premier Alward and Finance Minister Blaine Higgs have been telling us for more than a year that the budget situation in NB is so grave we will have to make draconian cuts. Yet so far, no clear plan has been presented. In addition, all discussion emanating from the government seems to overlook the fact that we are in this mess because corporate and personal income taxes were cut by the Graham Liberals to unsustainable levels starting in 2008.
A good business person would probably say that the company has a revenue problem. Rather than cut essential services, why not cut spending on tax cuts, two thirds (more than $300 million) of which will go to the 24% of New Brunswickers making more than $80,000 per year? But no where is this seriously being considered.
Instead, we have an agenda to cut social services and provide efficiencies in the delivery of health care, education, long term care of seniors, and services for youth at risk or students with learning deficits. The results of cutting back essential services will be a less educated and less healthy population, more vulnerable to poverty and unemployment, and as a result, more prone to costly illnesses or imprisonment.
One might argue that the poor have no one to blame but themselves, but this is an ever harder case to make when hard working people find themselves ever more vulnerable to the social risks that have accumulated as a result of stagnant real wages and a rising cost of living.
One hopes that the business crew that Alward appoints to his council are a responsible bunch, but let’s be frank – corporate business leaders of this past generation have been a disaster, both for corporate governance, and for the long term viability of capitalist social relations.
In the 1970s and 1980s, corporate governance in North America changed dramatically, as the maximization of shareholder value became the ultimate ends of management. CEOs came to be rewarded not for prudent stewardship of an entity—the corporate business—which would outlast the individuals in it, but instead for their ability to provide short term gains for shareholders.
The disaster that this would lead to by 2007-2008 is now well known to us, and should completely discredit the idea that business leaders could be in charge of anything more than a fundamental rethink of their own corporate models. By running up short term profits over the last 20 years, they managed to create a bubble that has destroyed more hard earned wealth in the last 4 years than at any other period since the 1930s. Still today, there is no clear sign of the end to the Great Recession we are in.
So which business leaders should we be looking to for leadership at this time? Ones who think short term cuts will solve our problems? Or those who, in the tradition of mid-20th century corporate management, recognized that the corporation, like the province of New Brunswick, would outlast the lives of the individuals working in it, and who governed in the long run best interest of a variety of stakeholders?
Let us hope that the Alward government recognizes the perils of trusting the current generation of business leaders: if you cut essential services, you will be digging an even deeper and more expensive hole from which future generations will have to dig themselves out at enormous cost to the public.
An alternative may be to see the problem for what it is: as a revenue problem. Cut the cuts, and look for long term ways of reducing social risks that all New Brunswickers will have to bear, either individually, or collectively, and which ultimately cost our economy and our public treasury exorbitant sums.