The Past Speaks

That is the title of a great new blog post on ActiveHistory.ca

David Zylberberg’s comparison of the histories of coal mining and South Yorkshire and nickel mining in Ontario is interesting. However, he makes an observation that is perhaps not quite accurate. He says:

the two situations are not identical as the exact government role varies and geological differences matter in mining regions. However, there are a number of lessons from South Yorkshire that could apply to the current situation. The most important one is to be aware of the regional implications of macroeconomic policy. When the coal mines closed, there were not new jobs to replace them and the national growth that has occurred since was heavily concentrated in London and south-east England. This meant that those who immediately suffered from policy changes were not the later beneficiaries, helping to create a political culture of regional hostility and poverty. Sudbury’s mines will not close in the near future but jobs are being lost in reorganization. And while Sudbury’s mining service sector has the potential to benefit from new operations around the country, what benefits occur from Harper and Clement’s liberalization of ownership are likely to be concentrated in the financial and corporate centres of Toronto and Calgary.

See here.

I think that this misses the point about hollowing-out and the loss of corporate HQs from Canada. One of the perceived problems with foreign ownership of Canadian mining companies is that the “high-quality” head office jobs are generally moved from Canada to the home country of the multinational. The blue-collar mining jobs stay where the minerals are. These jobs can’t be outsourced,because the principle of globalization does not apply to manual workers in the mining sector.  (Because of immigration laws, Vale can’t bring in Brazilian miners to work a Canadian ore deposit and pay them Brazilian wages, whereas Canadian Tire can outsource all of its manufacturing needs to China).

Vale is essentially a creature of the Brazilian government. It was formed in 1942, when the United States, Britain, and the other industrialized countries were pre-occupied with fighting Hitler and thus too busy to protest about the Brazilian government’s actions. (It helped that Brazil had declared war on Germany and the US  had something called the Good Neighbor policy, which involved tolerating economic nationalism in Latin America).

Vale was privatized in 1997 but it still retains strong links to the Brazilian state. Brazil created Vale because it wanted the country to be home of a mining multinational rather than simply a place where mining multinationals based in the First World did business.

Arguably, it may not make much difference to the actual miners whether they are administered by a corporate bureaucracy based in Toronto or by a corporate bureaucracy headquartered in Brazil or Switzerland or the City of London. Similarly, the elimination of corporate head office jobs in Toronto may not affect restaurants, real estate agents, etc, in a mining town like Sudbury.

However, the elimination of head offices in Toronto could have a major impact on that city and on all the people who sell services to Bay Street workers. One of the reasons Toronto has been able to escape the fate of most of the other Great Lakes cities (e.g., Detroit, Cleveland, Buffalo) was because it is the financial capital of a separate country  rather than simply a regional service centre.  Without the border, Toronto would simply be another fifth-rate American rustbelt town.  The existence of a separate currency in Canada and regulations limiting foreign ownership have helped to make Toronto necessary.

The major beneficiaries of restricting foreign ownership in mining would likely be white-collar workers in Toronto rather than people in the mining communities themselves.

I’m reminded of the distinction Ed Broadbent drew at the time of the 1988 Free Trade election. He said that Mulroney was on the side of Wall Street (US capital), the Liberals were in the pocket of Bay Street (Canadian capital), and he was on the side of Main Street (the common man).

Perhaps Canadian nationalists should support a Bay Street first strategy?

There are some great works on Canadian mining history, including a recent book chapter by Jeremy Moaut, “Whitaker Wright, Speculative Finance and the 1890s Mining Boom in the City of London,”
in Raymond E. Dumett, ed., Mining Tycoons in the Age of Empire, 1870– 1945: Entrepreneurship, High Finance, Politics and Territorial Expansion.

I’m a big fan of comparative history,which I why I have done a bit of reading on Australian mining history (Blainey’s The RushThat Never Ended). Some historian really needs to write a book explaining why Australia has produced BHP, a global mining giant, whereas Canada has not been able to do likewise.

If you will pardon the mineral metaphor, such a book would be worth its weight in gold.