| Subject: | Re: [socialcredit] debt is simply a financial tool | | Date: | Friday, June 1, 2007 20:25:12 (-0400) | | From: | Joe Thomson <thomsonhiyu @....ca>
|
| In reply to: | Message 4830 (written by william_b_ryan) |
(Bill Ryan wrote:-) Which is because, unlike government departments, they
were organized as independent profit and loss "Crown" corporations and
authorities under the rules of double
entry accounting. It seems to me that this was a very responsible policy.
The overall debt obligations continued to grow but under more efficient for
profit management. Perhaps this point was not made sufficiently clear to
the opposition and the public.
Debt is simply a financial tool, not an inherent evil.
----------------------------------------------
(Joe replies:-) It was indeed a very responsible policy. In most
instances, these various 'Authorities' were formed to do a job that the BC
Social Credit Government first tried to encourage 'private enterprise' to
do, but could either find no interest, or the terms demanded were
extorionate.
In the case of BC Ferries, the Canadian Pacific Railway which owned and
operated most of the ferries to Vancouver Island from the BC mainland was
first encouraged by the Bennett government to modernize their ancient fleet.
And ancient it was, from an era where the 'convenience' in getting a car on
and off the boat in less time than it took to make the crossing was the
least of the CPR's concerns! The preparations for the 2 hour crossing was
like embarking on a trans-Atlantic voyage!
After BC Ferries came in with modern, double-end loading 'built in BC'
vessels, the President of the CPR admitted how shortsighted their company
had been in not responding to modern transportation needs. For those routes
were, and still are, moneymakers.
It was much the same story with the formation of BC Hydro. The 'socialist'
NDP Opposition wanted 'public power' as a matter of their political
ideology. Social Credit tried to encourage private enterprise to build dams
and upgrade the distribution systems outside the major urban areas.
The privately owned BC Electric Co. tried to hold the Government, (the BC
'public', really), to ransom to do the job. Figuring a 'free-enterprise'
regime would capitulate to what they wanted in setting rates. They figured
wrong. We got 'public power' ~ not because the Government was against
'profit', or believed in that 'public power' was 'better', but because a
job that needed doing wasn't being done by the private company, even though
a good 'profit' would be gained from doing it. But it wasn't going to be
an extorionate one.
Talking about 'debt', a great deal of the financing for these 'Authorities'
was raised in BC (and elsewhere, Wall Street quite often), through the sale
of the hugely popular "Parity Development Bonds" in the name of whatever
entity needed capital. These debt instruments paid a very good rate of
interest, and were always cashable 'at par', and were 'guaranteed' by the
Provincial Government. And were 'oversubscribed' time after time when an
issue was floated.
They nearly 'broke' the Government once, too, when the Courts, sometime
after the fact, ruled the 'expropriation' of BC Electric Co., a Federally
chartered company apparently, was ultra vires of the Province. Touching
off a brief, but serious, 'run' to cash in the bonds.
The President of one of the big private banks, Scotiabank if I recall
correctly, probably figuring a nominal 'Social Credit' administration was
better for BC business than a genuine 'Socialist' one would be, made an
emergency loan to the Government. The bonds being cashed were 'covered',
confidence was restored, and further bond issues went back to being
'oversubscribed'.
The point about 'profit' and responsible management would have been lost on
the Opposition of that era, Bill. Theirs was a 'militant socialism', with
a considerable faction involved in that Party who were quite openly
Communistic in their sympathies.
It was quite a 'Golden Age' while it lasted, and ironicly , for a 'Social
Credit' (nominally, anyways) regime, it was 'inflation' that eventually did
it in.
Joe
----- Original Message -----
From: <william_b_ryan@yahoo.com>
To: <socialcredit@elistas.com>
Sent: Friday, June 01, 2007 1:12 PM
Subject: [socialcredit] debt is simply a financial tool
> "(Joe replies:-) Our first 'Social Credit' government
> here in BC tried to do that. So far as the Province
> was concerned, they did stop borrowing 'directly' very
> shortly after assuming office. We were supposed to be
> on a 'pay as you go basis' from there on in. A lot of
> needed infrastructure was financed by transferring
> 'ownership', to Crown corporations or various Crown
> owned 'Authorities' ~ BC Ferry Authority, BC Hydro and
> Power Authority, etc.
>
> "These 'Authorities' were set up like a private
> business. They 'borrowed' the money needed to build
> the infrastructure in THEIR name, and the loan was
> 'guaranteed' by the Province of BC. So seven years
> after taking office Premier WAC Bennet could claim the
> Province was direct debt free.
>
> "For what his various Crown owned creations were
> borrowing was on the Province's books as 'contingent
> liabilities'. The Opposition continuously ridiculed
> this idea, since the overall debt obligations of the
> Government of BC as a whole continued to grow all
> through his tenure.
>
> "The idea was these 'Authorities', if managed
> properly, could liquidate their own borrowings from
> the revenues they brought in. By and large they did.
> Some of them, BC Ferries for instance, on some of its
> 'non-profitable' routes to various islands, as well as
> on its two main 'profitable' routes to Vancouver
> Island, received an annual 'grant' from the government
> equal to roughly what would've been spent on the
> upkeep of roads or bridges, had they existed, over the
> same distances. This allowed it to keep its fares to
> the travelling public quite reasonable, and still make
> a small profit.
>
> "The key was that these enterprises were quite
> well-managed in that era..."
> ----------------------------------------------------
> -----------------------------------------------------
>
> Which is because, unlike government departments, they
> were organized as independent profit and loss "Crown"
> corporations and authorities under the rules of double
> entry accounting. It seems to me that this was a very
> responsible policy. The overall debt obligations
> continued to grow but under more efficient for profit
> management. Perhaps this point was not made
> sufficiently clear to the opposition and the public.
>
> Debt is simply a financial tool, not an inherent evil.
>
>
> ----------------original message--------------
>
> (John Rawson wrote:-) In NZ, the Party has taken a
> somewhat different stance, (and you will disapprove).
> But I'll give the line of reasoning, all the same.
>
> We would stop completely (eventually, it can't be done
> immediately) all Government and Local Govt. borrowing
> from private sources.
> -----
>
> (Joe replies:-) Our first 'Social Credit' government
> here in BC tried to do that. So far as the Province
> was concerned, they did stop borrowing 'directly' very
> shortly after assuming office. We were supposed to be
> on a 'pay as you go basis' from there on in. A lot of
> needed infrastructure was financed by transferring
> 'ownership', to Crown corporations or various Crown
> owned 'Authorities' ~ BC Ferry Authority, BC Hydro and
> Power Authority, etc.
>
> These 'Authorities' were set up like a private
> business. They 'borrowed' the money needed to build
> the infrastructure in THEIR name, and the loan was
> 'guaranteed' by the Province of BC. So seven years
> after taking office Premier WAC Bennet could claim the
> Province was direct debt free.
>
> For what his various Crown owned creations were
> borrowing was on the Province's books as 'contingent
> liabilities'. The Opposition continuously ridiculed
> this idea, since the overall debt obligations of the
> Government of BC as a whole continued to grow all
> through his tenure.
>
> The idea was these 'Authorities', if managed properly,
> could liquidate their own borrowings from the revenues
> they brought in. By and large they did. Some of
> them, BC Ferries for instance, on some of its
> 'non-profitable' routes to various islands, as well as
> on its two main 'profitable' routes to Vancouver
> Island, received an annual 'grant' from the government
> equal to roughly what would've been spent on the
> upkeep of roads or bridges, had they existed, over the
> same distances. This allowed it to keep its fares to
> the travelling public quite reasonable, and still make
> a small profit.
>
> The key was that these enterprises were quite
> well-managed in that era, (later on, after the BCSCL
> government was voted out, and then still later as a
> 'Party', came back in again, such was not the case.)
>
> It also helps when you're government in an era when
> the world is beating a path to your doorstep for your
> 'resources'. And you have, as we HAD then, lot of
> undeveloped ones to draw on. Some of them, like our
> best timber and various minerals then in demand, were
> very competitive with anything anyone else had to
> offer at that time.
>
> There were also a number of 'artificial' advantages,
> like the USA's ''Jones Act", designed to insure there
> would always be an American merchant marine, but which
> gave our BC Coastal lumber producers a tremendous
> shipping cost advantage in waterborne cargos over our
> Pacific Coast US competitors. We could ship lumber to
> the US east coast from BC ports using 'flag of
> convenience' foreign vessels crewed by 'dog-leg'
> labour, (Lascars, Phillipinos, Goans, Greeks, etc.),
> and the US mills were stuck with using US registered
> vessels, with 'unionized' American crews and
> progressively disappearing subsidies from the US
> government.
> -
>
> [Rawson] That would mean that superannuation schemes
> etc. would have to invest elsewhere, and that
> elsewhere would have to be industry. And here we
> agree with just about any political faith; the
> wellbeing of the people depends on the real wealth
> produced for their enjoyment and use. We are a Party
> that believes in private enterprise, and also
> cooperative enterprise.
> -----
>
> In regards to pensions, or 'superannuation' as I guess
> you call them, I believe Douglas made the suggestion
> once that the Bank of England be 'de-nationalised',
> and its shares distributed to British citizens as "a
> basis for pensions".
> -
>
> [Rawson] And we see nothing wrong whatever with
> people investing in order to get a profit. The side
> we object to is the banks investing at little real
> cost to themselves, and taking first priority in any
> returns. ("The volume of money is increased ... when
> a bank purchases an asset ...") I.e. they create
> money to invest.
> -----
>
> But on who's behalf? And what happens to 'prices'
> when that volume of money is increased? You say
> you're not going to have your government borrow any
> more money from 'private banks'. So then you really
> have only the choice of taxation or borrowing from
> your Reserve Bank. Or a 'favourable' balance of
> trade. But you've got to be pretty careful there, for
> your trading partners will be on the lookout for
> anything that looks like a 'subsidy' to producers.
> And I doubt you're in the same favourable position BC
> was once in in regards to our supplying things other
> countries were lining up to buy.
>
> What do you have other than 'taxation' to keep this
> 'new credit' from your Reserve Bank, which you're
> going to use to build 'infrastructure', from raising
> consumer prices? Or are you thinking like the current
> crowd that governs BC seems to think, that a rise in
> prices must mean 'prosperity'?
>
> Regards,
>
> Joe
>
>
>
>
>
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