The COVID-19 pandemic has triggered an unprecedented economic crisis in Canada. In the words of the Trudeau Liberals, “the toll of COVID-19 on the broader economy in 2020 is expected to be the largest and most sudden economic contraction since the Great Depression.” Finance Minister Bill Morneau claims that “Our government has understood, from the moment this pandemic began, that it was our role to step in to support Canadians and stabilize the economy.” As reported by the Toronto Star in early July, “stabilizing the economy” apparently includes giving an eye-watering $700 billion to Canada’s large corporations and banks.
In this country, we’re no strangers to governments handing out billions of dollars of taxpayer money to corporations. What’s new, however, is not only the sheer amount of public funds being doled out, but also the number of different companies which are benefiting from these funds. The same Toronto Star article reports that thousands of companies have collectively received upwards of $27 billion in loans while multiple banks have been provided with $260 billion just to keep functioning. It’s clear that the current round of corporate welfare isn’t just about keeping one or two failing companies afloat. Rather, the whole capitalist system has been put on life support at public expense.
To add insult to injury, the federal government refuses to tell us which corporations they are spending money on. Scandalously, their reasoning is that they need permission from the corporations in order to tell us how much of our money is being given away. The fact that the state is at the service of capitalism could not be more clear.
But this raises the question: why can the corporations not reveal how much public support they are receiving? After all, companies like Bombardier have not been shy about publicly asking for taxpayer money when they ran into trouble. The answer is that many of the corporations are probably receiving financing which is more than their market value. This would obviously raise the question of why these companies are privately owned at all—if it is in fact the government which is fronting the capital.
Another reason for the secrecy is that the money being given to these corporations is unlikely to be paid back to the government, with or without interest. In fact, Trudeau’s finance minister gave the game away a little bit when he said, “Our investments have meant that Canadians and Canadian businesses, instead of drowning in debt and closing up shop, will be better positioned to get back at it. [our emphasis]” This statement is basically saying that the ongoing government “investments”, even when they are given as “loans”, are not adding on to existing corporate debt. This is nothing but an unprecedented government handout to bail out the bosses.
Moreover, the phrase “drowning in debt” is fitting. According to the Toronto Star, Canada’s corporations are collectively carrying an astounding CAD $2.7 trillion (that’s trillion with a ‘T’) in debt. This figure is 118 per cent of Canadian GDP. In other words, the private sector has borrowed so much money that the total amount borrowed is greater than the size of the Canadian economy.
We are immediately led to another question: how could all these corporations, with their armies of experts and bureaucrats, be so reckless in their borrowing? As Fortune magazine explains, many corporations in the past decade have been engaging in what’s known as “leveraged stock buybacks”. This is when a large corporation borrows a huge amount of money and spends it to buy its own shares on the stock market. This artificially drives up the demand for the corporation’s stock, thus inflating the stock price. If you are someone who owns a big chunk of that stock, or if you own a significant amount of the corporation’s bonds, your individual net worth will go up as a result. It is not surprising to find out that those making the decisions to inflate stock prices are the same people who own the most stocks. And when this house of cards falls down, they run to the government for a bailout!
As for the regular people who rely on the corporation for employment, they will lose their jobs and possibly their homes once the corporation becomes bankrupt thanks to all the debt it took on. This tragedy is exactly what happened during the 2008 crisis, and it’s exactly what’s happening now in the present crisis. To quote a Reuters article from mid-July, “Thirty-two […] companies […] approved or paid bonuses [to top executives] within six months of filing [for bankruptcy as a result of the COVID crisis]. Nearly half authorized payouts within two months.” To take a particularly egregious example, “JCPenney – forced to temporarily close its 846 department stores and furlough about 78,000 of its 85,000 employees as the pandemic spread – approved nearly $10 million in payouts just before its May 15 filing.” New information shows that the billionaire class in America got half a trillion dollars richer just as millions of ordinary Americans were thrown onto the scrap heap of unemployment and poverty.
It’s clear by now that the billionaire class has become totally parasitical on the rest of society. What we have is a small clique of extremely wealthy people who are getting even richer at the expense of ordinary working people. Not only that, but the corporations these capitalist parasites are bankrupting are being bailed out by the federal government. But the bailout money doesn’t drop from the sky. It has to come from taxpayer money and by taking on government deficits. These deficits represent public debt and the government will inevitably cut social programs to pay off deficits in the future. Thus, the vast majority of workers and youth who don’t belong to the billionaire class are hit by a double-whammy of unemployment and cuts to relief programs, such as unemployment benefits, just when these programs are needed the most.
Another issue that becomes clear is that all the claims we hear about corporations and billionaires “creating jobs” and the bailouts being necessary to “save jobs” are pure fantasy. We know this from historical examples. General Motors (GM) is only alive today as a result of bailouts in the recent past, but that didn’t prevent GM from mercilessly closing down its factory in Oshawa and laying off thousands of auto workers. Similarly, Bombardier has been sucking on the government teat for years. Yet despite an infusion of more than CAD $3 billion back in 2015, Bombardier has ruthlessly laid off much of its workforce, resulting in thousands of job losses in Canada alone and almost ten thousand job losses worldwide. But we also have the more current examples of Air Canada, JCPenney, Hudson’s Bay, etc. carrying out massive layoffs to stay afloat while letting their fat cat shareholders and CEOs hold on to their ill-gotten gains. In each and every single case, executives and shareholders have walked away with tens of millions of dollars in extra wealth generously paid for by the government while thousands of workers have lost their livelihoods.
Furthermore, if the scandals surrounding WE Charity are anything to go by, the only people who get paid are friends and family of the political elite. The people who run our federal and provincial governments move in the same circles as the people who are currently benefiting off of the misery of workers everywhere. These corporate moneybags generously donate to politicians like the Trudeau Liberals so that they can bend the government’s ear when they run their companies into the ground. The corporate generosity is then paid back several times over when the politicians give out hundreds of billions of dollars of our money to the corporations and banks.
No more ‘business secrets’
It’s obvious that there are absolutely no guarantees of saving jobs when massive sums of public money are given away to large corporations and banks. If the examples above indicate anything, it’s the opposite! Not only that, but at the moment, we don’t even know who is getting money and how much of it they are getting. Of course, the government knows and we can be sure that the CEOs don’t keep any secrets from each other. After all, the same handful of people sit on the boards of many of these companies at the same time.
We must abolish all notions of “business secrets”. The corporations always say that they need to keep their affairs under wraps so that they can compete freely on the market. Well, they competed and they failed. If they now need us to keep them afloat, then the public has every right to know what is being done with their money. The corporations always claim that they can’t afford to keep their workers employed despite somehow finding tens of millions of dollars to give to their CEOs. Taking a look at the books will probably tell a different story. We might find not only that there’s enough money to keep everyone employed, but also that there’s enough to provide much better wages than the pittance workers currently have to get by on.
Moreover, if the books are opened up and it’s made clear to everyone how much certain companies are drowning in debt, this will provide even more reason for these companies to be nationalized and brought under democratic workers’ control. Under public ownership, the working class will be able to democratically manage production and provide high-quality jobs to the millions who are struggling to get by. They will be able to break with the chaos of the market economy, which is immiserating workers and youth all across the country and around the world.
The COVID-19 crisis starkly reveals a system in which the private greed of a few means sacrificing the human needs of the many. It’s time we built a society that works for the working class.