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History Table of Contents
1992 Summer Conference
 
Summer Conference 1992
Competitiveness and Social Justice: How Can Canada Have Both?

Panel: Designing the Ideal Canada

LEO GERARD, National Director for Canada, United Steelworkers
STANLEY HARTT, Chair, President & CEO, Camdev Corporation
CHAVIVA HOSEK, Director of the National Liberal Caucus Research Bureau

The panel was moderated by Dr. Barbara Eastman, immediate past president of CIPA Members were Stanley Hartt, President and CEO, Camdev Corporation; Leo Gerard, Canada’s National Director of United Steelworkers; and Chaviva Hosek, Director of the National Liberal Caucus.

Gerard thanked the organizers for taking care of his wife, himself and his little dog.

The question of designing an ideal Canada was something he thought about every day. He designed it on Thursday morning, changed it on Friday, designed it again Saturday and... After listening to David Crane and others he’d gone away to redesign it. What was clear was that it was an evolving process. The other thing that was clear was that there was in our society an element that would say we could not have social justice without competitiveness. There was also an element that said you could not have competitiveness until you had social justice. Gerard believed if you did not have both you would have neither.

As you built the economy you had to develop a set of common values as to what was the purpose of an economy. He did not think we had a national consensus on what the economy was for. It was the view of his union that the primary purpose of national economic policy was to support the enhancement of the quality of life of all Canadians. That was for him a fairly simple statement. But everything after that got very complex.

It was becoming more and more clear that the effects of a completely free market, a completely laissez-faire system would not bring about the kind of social harmony we needed, the sense of common purpose we needed to build a national economic policy and support the quality of life of all Canadians. Gerard would reject a total free-market society, a laissez-faire economic policy, and would support a mixed economy as we had done since the inception of this country.

But he would want to do something we had not done up till now. He would want to develop economic policies that were based on social consensus rather than social adversarialism. That, for a trade unionist, for a social democrat, was not the easiest statement to make. Because as a social democrat you realized that progress was made by challenging the status quo.

In North America the workplace was organized by scientific management. It was one of the last places where that still existed. You took the work, broke it down into components so small that you did not have to train workers. They were replaceable. They could come and go. And you had supervisors standing over them to make sure they did the work They left their brains at the door.

But where the workers used their minds and organized their own work, there was the best return on investment.

We had to move away from hierarchical, authoritarian, over-managed workplaces, and design workplaces that allowed workers to bring their creativity to the job. To do that you had to make tremendous investments in human capital.

At Algoma Steel there had been one supervisor for every four workers.

We had to abandon that.

Once you started down that path you had to think about society a different way. You had to think about some of the things that had been discussed here in the last couple of days. High skill, high participation. Basically all of North American work was organized the old way, in government, in hospitals, in education. But nurses and doctors probably knew more about what was needed in health care than some administrator in some tower.

The difficulty when you started down the path for trade unions was that our experience had been very bad. Any time we get asked to help save the enterprise or to help increase productivity we put ourselves out of work. The North American experience had been that you increased productivity by reducing people. Gerard had read an article in Business Week with the headline, "The Ten Toughest CEOs". That was what was wrong. The "good" CEOs were slashing the workforce to increase productivity.

You had to create the security, through consensus, building to give people a reason to go all out in their work. If they went all out right now, they put themselves out of work.

We needed in the society some sense that we were all in this together, that we all desired a strong economy.

When Gerard gave a speech along these lines, declaring that we were all in this together, a woman at the back would stand up and shout, "Oh yeah? The CEO at my mother’s plant makes 160 times more than she makes!" We had to look at how income was distributed in this country.

Gerard did not believe that job security destroyed initiative. If you had a kind of society that allowed you to retrain if you tripped and fell, then helped you find another job, was it not easier then to ask a worker to go all out?

Finally Gerard put in a plug for the labour movement. The fact was that some of the most successful economies in the world had more than double our union organization. Studies had shown that unionized workplaces had some 30 per cent higher productivity than non-union ones. One of the troubles with our present predicament was that most of the union’s activities and resources were spent on daily survival.

Stanley Hartt wanted to thank Leo for the way he approached the subject. He could not think of a whole lot of things Leo had said that he did not agree with. But none of us favoured a completely laissez-faire economy.

He referred to the constitutional discussion, though promising not to discuss it. He did want to object to economic illiteracy, as exemplified in the proposed constitution.

He argued that Canada is a pretty good place to live in, as it is.

We all knew that growth came through change, and that individual persons in the interstices of the system got hurt. But economic growth produced a chance to have a better job. Hartt did not mourn the old society, in which people did think they were employed for life, but he did say we had a lot of work to do in getting to a society that did the things we needed. We did not do anything like enough research and development to put us on the leading edge of competitiveness. And we did not even look at the capital formation challenges that presented themselves as the nature of our businesses changed daily, as it should; we had our capital formation as it accumulated in pools of money in pension funds, and in savings plans, and in banks – and none of those were what you might describe as go-go investors, or likely to back the Great New Idea that came to them for financing. There were lots of things we needed to do to improve our country, but it wasn’t not doing them that Hartt found the biggest obstacle. Our problem was that we lacked the very consensus that Leo talked about.

Canada was a pretty darn good place to live, first in the U.N.’s index of social development. The U.N. took 160 different factors and determined that quality of life in this country – with all the complaints that we made here at the podium – was first in the world. We had the second highest standard of living in the world, the second highest industrial economy, we were somewhere high up the scale in competitiveness, with an educated and literate population, plentiful resources and lots of space to grow.

Competitiveness and compassion were not alternatives. Like love and marriage they went together, as in the song, "you couldn’t have one without the other." So where were we falling down?

All Canadians favoured a social contract in which there was universal free medical care, effectively free post-secondary education – if you didn’t think that was true, try paying fees at an American university-a non-contributory O.A.S., supported through general revenues, generous unemployment insurance benefits, generous family support. And we had generous welfare programs under C.A.P. Debate in this country was not about the Canadian social contract. It was a myth that any party was trying to dismantle this system. The trouble was the debate was put on the level of that myth.

The consensus we needed was on how to go on providing that enhanced quality of life for Canadians. What was the best way to get there?

We could not get anywhere with myths.

Hartt cited a number of inefficiencies in the medical system which had to do with the way it was managed. We avoided discussing such matters, in the face of escalating costs that the system could not sustain. We needed to debate the real issues, not the ideologies.

Ideology was built into arguments about free trade and how it would force us to adapt our medical system to theirs. It was far more likely that they would adapt theirs to ours.

It was myth that you could keep up social services by taxing the rich. Hartt had become a conservative when he had looked at the books. You could not raise any amount of money worth talking about by taxing the rich.

Everybody in Canada was bunched in around our median income. And if you did not tax at the $25,000 level you didn’t earn anything in revenue to do anything.

Strange that those who advocated fairness in income distribution ignored the fact that we already had very fair income distribution in this sense, that our median income was way above that of the U.S. while our average family income was way below theirs. We were all bunched up together. And Leo, he could confiscate the incomes of the rich – and it would not make one bit of difference to medicare!

We should talk about the real problems, not talk about the free trade agreement as if it were designed to export jobs to low-cost countries. Those jobs were going to go there anyway, because cost differentials were way bigger than any tariff we’d ever had. The jobs that would stay

here were high-paying, high-skill, high value-added jobs. They alone could raise our standard of living and support the social programs we all agreed on.

Another myth was that budgets were redistributive. Growth brought change, involved investment, which involved risks. Investom did not like to see their potential profits confiscated by taxes or inflation. To be against inflation was not ideological. Hartt was defending monetary policy [which Galbraith had ridiculed].

Still another myth was that full employment had been abandoned. Economists would tell you that there was a point beyond which you could not increase employment without incurring inflation. The rate kept going up.

After the 1971 insurance reforms, the rate of unemployment had increased dramatically. The labour market had to be allowed to function, so that there would be a demand for labour. Jobs would be created, income distributed. If, however, the labour market contained structural disincentives to employment – as the 1971 reforms had introduced – it would take greater incentives to make the unemployed go to work That generated inflation. Full employment was a goal that every Canadian government shared.

Unfortunately, at present, eight per cent unemployment was full employment. Full employment, like zero inflation, was a goal we always worked towards but could never reach.

We had to recognize that growth would displace people. What we had to debate were the means by which we reached the goals we agreed on.

Some people fell between the chairs of the old and new, and we had to help them, and we did help them. It was not useful to argue about how terribly our economic system worked. We were in a huge, worldwide structural change in economies.

Hartt told Gerard that he accepted the fact that there were incompetent and lazy CEOs who economized by laying off workers. He too disapproved of them. But there were fields in which layoffs were inevitable. We could no longer count on an industrial economy, based on manufacturing, where those who wanted to work could work for life. We were in the midst of a huge shift of the tectonic plates of the economy. Blaming the Free Trade Agreement did not address the problem.

You dealt with it by looking at the silver lining, by capitalizing on the opportunity.

As for unions, Hartt had been a labour lawyer. He praised what Leo had been doing for his members and Algoma. But he thought that even in labour relations, unions and managers needed consensus, needed to sing from the same hymn book, to identify the same goals.

In Quebec a consensus had emerged of labour, management and government. We should look at that. They had not yet produced the goods, a rate of unemployment that we would like to have. But the cooperation of union and management was a model for us all.

Hartt had visited a plant in California where the workers, organized by the Teamsters, wore running shoes. That could not happen here. The first thing a Canadian union would do would be to insist that the practice stop.

We had to get rid of ideological habits of all kinds and talk about the real problems.

Chaviva Hosek said she had expected that Leo was going to be ideologically left, and Stanley to be ideologically right, and she was going to speak sweet reason. That was not exactly what had happened.

She would want to agree with almost everything Leo Gerard had said, but some hard questions were imbedded. The technical question was that in those countries which had maintained their commitment to full employment – no one believed that was zero unemployment, but it certainly was not 11.7 per cent and probably not even 8 – in countries like Germany there had also been an agreement to manage the rate of wage increases, negotiated between employers and labour. That had not happened in Canada and was one of the reasons why we went through such severe cycles of inflation control, which cost so many jobs. If we were to agree on full employment, the wage increases in our society would have to be much more carefully managed than they were. None of these benefits came without costs.

Hosek was struck by the fact that both the previous speakers had agreed on the need for consensus. Desirable as that was, it would be very difficult to achieve in a country like ours.

The last thing Stanley had mentioned was the consensus that seemed to be emerging in Quebec. That gave her a way of posing the problem.

Considering how multi-racial and multicultural our country was, we had achieved a remarkable degree of social peace and decency and tranquillity. But the societies that had been able to come to a consensus on economic goals tended to be much more ethnically and culturally homogeneous than ours. Hosek wondered how far we could go toward achieving consensus in a country as various as ours. If Quebec could do it, it also might be because francophone Quebec was culturally and racially homogeneous. All the rest of us were much more divided by different histories, different backgrounds, different values.

The peace we had achieved was largely one of mutual tolerance. The kind of social solidarity that Leo had called for – and in a way, Stanley as well – involved more than simply letting each other be (though that was pretty good achievement in a world where people didn’t let each other be). It required us to be able to identify with each other, to look at people from entirely different backgrounds and feel what we would be like if we were them, and feel how they would feel if they were us. That was an extremely tall order, If you looked at the degree of sadness or pessimism Canadians felt right now, it was not only about our economy, though that brought our spirits down, it was also about suspicions about our decision-making institutions, most obviously our parliamentary institutions and our politics.

To negotiate the kind of changes we were going through right now, and achieve the kind of consensus we would all like to believe was possible, we would need to feel that our government and decision-makers had legitimate authority and that there was a due process for reaching any such consensus. We all knew that the legitimacy of authority had been struck many blows. Most importantly, the moral authority of governments had been put in question.

This was true not only of governments, but also of church-related institutions that, for example, had brutalized small children in their care. One heard many stories of persons in positions of trust betraying that trust, and newspaper stories about persons in authority not behaving in the moral way we expected of them. Beyond the stories themselves was a tone or tenor that people in authority were no longer seen by the public as having a right to their authority.

Hosek was not proposing that we give back authority to people we did not trust morally. But it did mean we had to find ways to share that moral authority among larger groups of people, to workout some way in which we wanted to live together. Because without it, no decisions could be made. The process by which those decisions were made was also in question.

Hosek now raised some questions about what Hartt had said. She agreed that people should not be economically illiterate, but there had been ideology in the way he defined it, involving many questions on which they would have to disagree. It was because they did not agree that we needed legitimate authority and due process to discover those areas in which they could agree. It was not useful to fudge the disagreement.

We should recognize that conflicts existed, and that we did not quite have the institutions to tackle them.

Without waiting for a question, Gerard vigorously disagreed with Hartt’s assumptions about what constituted an acceptable level of unemployment. Over a million Canadians were using food banks, and that was not acceptable.

Referring to a point raised by Hosek, he said that Canada and the U.S. were the only countries in the world that negotiated labour agreements piecemeal. In Germany and Japan unions negotiated for a whole industry.

Hartt was amazed at Gerard’s position. He had found that workers got their best deals at the company level. At the macro level, deals were bound to cost unions more. He presented himself as the friend of the workers, claiming to be the least liberal person on the platform-though it was not hard to be less liberal than Gerard and Hartt. As for Hosek’s point about multiculturalism, the issues under discussion did not bear on ethnic origins. But they were ideological issues, having to do with where you stood on the economic spectrum. We did not have to be homogeneous to achieve consensus.

Gerard now accused Hartt of having completely lost touch, etc.

Barbara Eastman intervened to permit questions from the floor.

The first question was where did we go from here? How could we solve the problems?

Gerard said he’d answer after Hartt this time: he wanted to see if there was something about which he could agree with him.

Hartt thought we had to solve the constitutional crisis and put our differences behind us. It was time for some patriotism. We were in a recession. He wished we could fix it by tomorrow. We lived by trade and depended on demand in other countries.

Hosek agreed. But if you were running a business and had some money left over you would do well to look at what skills would be needed in the future and start working on those.

Gerard wanted discussion of economic values, not economic literacy, because the values that had been introduced in the past few years were ripping the country apart. You could not have political unity if you had economic disunity, and vice versa. He did not buy into the idea that we were in a worldwide recession. We were now, but we had not been in 1988, when this recession started. That was only a reflection of how much damage the government had caused by its high interest rate policy. Taxation policy was not fair. We needed a taxation policy that was not designed to accumulate wealth but to create wealth. We needed a strong manufacturing base.

The next speaker from the floor thought that what labour leaders Pomeroy and Gerard had said at the conference was as phoney as a three-dollar bill. After a good deal more of this, Barbara Eastman wanted to hear the question. The question was, would Gerard go to Premier Bob Rae and push for co-determination?

A lengthy discussion followed, with some sparring between Gerard and Hartt, coming down against inclusion of union members on boards of directors, yet in favour of joint union-management efforts to improve productivity. Hosek thought the kind of exchange that had been going on between her fellow panelists was the sort of thing that should occur in a search for genuine consensus. She returned to her point about loss of respect for politicians – for good reasons – and how serious a difficulty it was.

The extent to which governments should be involved, given the nature of party politics, was explored, Hartt insisting they should stay out of the dialogue. Hosek thought there was no democracy more rigidly devoted to party discipline than Canada. Eastman remarked on politicians who toed the party line in public, while privately disagreeing.