Document Sample
					Business in the Canadian Context ADMS 1010
Business in the Canadian Context

               ADMS 1010 – Section A

                   Alex Browning

  Web Site:
Business in the Canadian Context ADMS 1010

                  Educational Background
 MBA – Richard Ivey School of Business
 BAS – York University
 B. Ed. (Adult Education) Brock University
 CMA – Certified Management Accountant
 FCMA – Fellow of the Society of Management Accountants
 CIM – Certified Investment Manager Inv. Dealers Ass.
 CTP – Certified Treasury Professional
 Canadian Securities Course – Inv. Dealers
Business in the Canadian Context ADMS 1010

                Business Background
 Sr. V.P. Finance & Administration & CFO – LCBO
 Board Member CMA Ontario
 Past Chair of CMA-Ontario Board of Governors
 Advisory Panel on Public Sector Issues– FEI
Business in the Canadian Context ADMS 1010

 • Course Administration-                    7:00-7:25
 • Introduction -                            7:25-7:40
 • Political and Economic Ideologies -       7:40-8:00
 • Major Political and Social Ideologies –   8:00-8:20
 • Break –                                   8:20-8:35
 • Video -                                   8:35-9:10
 • Ideological Framework of Canada           9:10-9:30
 • Q&A                                       9:30-10:00
Business in the Canadian Context
ADMS 1010

                 Class Outcomes

By the end of this class you will:
• Understand the requirements of the course
• Understand the history of the major economic and
  political ideologies
• Be able to discuss the major Political and
  Economic Ideologies and their application to
Mid-Term Administration

   Availability
    –   The Mid-Term is now available on line

                        Web Site:

If you have any problems accessing email me at

Class Administration: Mid-Term

                        Grading Structure

 •   Mid-Term Assignment 40%
        •   SUBMISSION OF ASSIGNMENTS is due at the beginning
            of class Monday, October 26, 2009. Late submissions
            will suffer a 5 percentage point penalty and must be
            submitted at the beginning of class Monday, November
            2, 2009 as per Section. No assignments will be accepted
            beyond the Seventh Week of the Term.

 •   Academic Integrity

 •   Academic Integrity Tutorial
Business in the Canadian Context ADMS 1010
Course Administration – Mid-Term

 10 Double-Spaced Pages
     •   Good Essay Writing Skills expected
     •   Spelling and Grammar Count – Proof Read Your Work
     •   If in doubt contact and attend the workshops at the Writing Centre.
         The Writing Centre is on the first floor of Atkinson -- telephone:
         416 736-5289.
 •   Referencing must be done: APA format or Footnotes
 •   Quotation marks must be used for all direct quotes
           Academic Integrity
         Academic Integrity

            Academic Integrity Tutorial:
Class Administration

                       Grading Structure

 •   Mid-Term Assignment 40%

 •   Final Exam 60% - Will be similar to Mid-term. Will focus on
     current events and you will have to apply the theory to these
Class Administration

               Scheduling Information

 •   Mon. October 12th – No class
Business in the Canadian Context ADMS 1010
Course Requirements

 If you wish to be put on a waiting list, visit the Receptionist
 for the School of Administrative Studies, Room 282 Atkinson
 •Any student registered or wanting to register must have
 already completed ADMS 1000 or received Advanced
 •If you do not have this prerequisite, you will not be granted
 a satisfactory grade in this course.
 •Course Outline states that all students are personally
 responsible to ensure they have all prerequisites
Business in the Canadian Context ADMS 1010
Course Administration

 Course Outcomes
 To understand and be able to discuss
  How business and government interact
  Why governments seek to affect business
  How some businesses rely on government

  Why governments are in business

  The government and legal frameworks affecting business
  How government decisions are made
  How and why governments intervene in business
  How globalization affects business and government
Business in the Canadian Context ADMS 1010
Course Administration

 Will consider:
  Frameworks within which government and business act
   or are constrained
  Relationship of the public sector or bureaucracy to
   various elements of society
  Forces on government and business
Business in the Canadian Context ADMS 1010
Course Administration

  Frameworks within which government and
   business act or are constrained:
     Ideological
     Constitutional
     Legal
     Economic
     Global
Business in the Canadian Context ADMS 1010
Course Administration

  Forces on government and business:
     To Intervene
     To be Efficient
     To De-regulate
     To Protect
     To Globalize
Business in the Canadian Context ADMS 1010
Course Administration

  Relationship of the public sector or
   bureaucracy to various elements of society:
     Government
     Interest Groups
     Private Sector
     General Public
Business in the Canadian Context ADMS 1010
Course Administration

 Texts required:
 1. Wesson, Tom, Canada and the New World Economic
   Order 3rd Ed. 2007, North York, Captus Press
 2. Jurkowski, D., Eaton, G., Between Public and Private:
   Readings and Cases on Canada’s Mixed Economy. Captus
 Students are responsible for all readings listed on York
   Course Website
Business in the Canadian Context ADMS 1010
Course Administration

 Required Case Readings: Between Public and Private
 •   Summary of Constitutional Events   P. 113-120
 •   Triple E Senate                    P. 176-188
 •   Medical Centre                     P. 325-360
 •   Book Publishing Industry           P. 361-378
 •   Canada’s Industrial Strategy       P. 379-396
 •   Cultivating Cash                   P. 397-428
 •   Privatization 407                  P. 437-442
 •   Solid Waste Management             P. 453-470
 •   Commercialization LCBO             P. 443-452
 •   Soft Wood Lumber                   P. 482-514

                    Words to the Wise

 The course and the class discussion is all about applying
 the theories to today’s real life situations.
 Both the Mid-Term and the Final will ask you to apply the
 learning the cases discuss in class and to issues out of the
 daily news.
 It is strongly suggested that you attend class and that you
 read the papers daily to see how the major events support
 the theories presented in this course.
Section 1: Introduction to Business in
the Canadian Context
Section 1: Introduction to Business in
the Canadian Context



How do we perceive our Economy?

                    News Items
                    Housing Starts
                    Trade Figures
                    Employment Rate
                    GDP
                    Balance of Trade
What issues do we experience in

                    The adoption of a
                     common North American
                    Develop a common North
                     American border.
                    Threats to Canadian
                     culture and the social
                    Canada's dependency on
                     its natural resource
What benefits do businesses
experience most from Government?

    Financial Support
    Protection – Internal and External
    Risk Management
    Lobbyist
What problems do businesses
experience most from Government?

    Harassment
    Intervention
    Red tape
    Regulation
    Bureaucracy
    Inefficiency
    Taxation
What are the questions concerning
government’s role in business?

       Does government over-step moral or
        ethical boundaries to accommodate
       Are there sacred rights and freedoms of
        business that transcend ethical
       Does government reserve the right to
        protect citizens and consumers against
        the natural activities of business?
       Are governments too aligned with
        business interests?
What does business want from

A stable and predictable environment in
today's global world ensures business...

 1.   Continuity
 2.   Stability
 3.   Competition
 4.   Free Trade
 5.   Efficient/Productive
 6.   Unobtrusive
 7.   Supportive
What is government’s role in the

   Regulator
   Law Maker
   Trade Negotiator         $60
    /Deal Maker                200
   Benefactor
   Protector/Guardian
   Deliverer of Service
What is Canada’s Global Position?
                   WTO
                   NAFTA
                   United Nations
                   NATO
                   G-8
                   OAS
                   APEC
                   Commonwealth
                   La Francophonie
Section 2: Political and Economic

                       What is an ideology?
                       How do they
What is an Ideology?
   It refers to a set of shared values, beliefs and ideas,
    and perceptions through which persons interpret
    events of the past, present and future.
   It also refers to an explicit doctrinal structure
    providing a particular diagnosis of the ills of society.
   It will include an accompanying action program for
    implementing the prescribed solution.
What does an ideology tell us?

   1.   It presents a simplified cause and effect
        interpretation of a complex world.
   2.   It integrates a theory of human nature with
        life's basic economic, social and political
   3.   It appears normative and moral in tone and
        content and aspire to perfect behavior.

   4.   It draws its philosophical premises from
        constitutions, declarations, manifestos and
        writings. – Basis of the ideology – Right to
        bear arms
What is the function of an ideology?

   1.   It constitutes a broad belief system and
        advocate reforms in the basic fabric and
        structures of society.

   2.   It addresses fundamental questions about
        leadership, recruitment, succession and

   3.   It persuades and propagandizes people
        who learn not to be influenced by
        opposing views.
What is a Dominant Ideology?

   Prescribes and supports existing social,
   political and economic arrangements.
   Embodies  the prevailing mindset in the
   social, economic and governing system.
It is dominant because...
    When   most people accept it.
    When    the most powerful people or
     institution accept and practice it. (May
     not require consensus of the majority
     of population.)

   Example: Capitalism in US or China’s
    one child policy
What is a Counter Ideology?
   Advances reforms and radical
    changes in society.
   Rallies forces of change in
   Responds to perceived
   Challenges the Status Quo
   Seeks to discredit the Dominant
Example: Captialism vs
 Communism in China
In a society, what are the conditions for
developing a counter ideology?

1. The leaders of society seek to change society.

2. There is an underground movement to bring about
   change in a society. (Revolutionary)
Reasons for Change in Society

    Interactions among competing groups with dominant
     or counter ideology result in changes in society.
     –   Poor versus Rich (French Revolution)
     –   Rich versus Rich (American Revolution)
     –   Poor versus Poor (Peru 1980’s)

    Social Upheaval changes status quo
     –   Great Depression
     –   War
    Technological Changes impact social order
     –   Industrial Revolution
     –   Information Revolution
Reasons for Change in Society

Changing Social and Business Demographics

                   Feudal Era
                  Mercantile Era
                  Industrial Era
                Technological Era
                Information Era ?
Reasons for Change in Society

Changing Societal and Business Demographics

                               Feudal Era

               • Business dominated by aristocracy and the
               • Government and Business aligned
               • Mainly agrarian
               • Trades dominated by guilds – independent
Reasons for Change in Society

Changing Societal and Business Demographics

                         Mercantile Era
                       • Business dominated by a
                       merchant class government still
                       dominated by aristocracy
                       • Government and Business not
                       always aligned
                       • Still mainly agrarian by towns
                       become larger
                       • Roman Catholic Church and new
                       Middle Class conflict – Reformation
Reasons for Change in Society

Changing Societal and Business Demographics

                          Industrial Era

                       • Business dominated by vested
                         interests – Capitalism & Nationalism
                       • Displaced agricultural workers
                       • Tradesmen employees
                       • Governments begin to regulate
Reasons for Change in Society

Changing Societal and Business Demographics

                        Technological Era

                     • Business dominated by multinational
                     • Capitalism
                     • Commoditization
                     • Displaced Blue Collar workers
                     • Greater Demands for Free Trade
Reasons for Change in Society

Changing Business Demographics
                               Information Era
                       • Business dominated by Global
                       • Globalization
                       • Displaced White Collar workers
                       • Knowledge Workers
                       • Governments competing for business
                       • Greater Social Demands for
                         Government Intervention
Section 3: Major Political, Social
and Economic Ideologies
Business and Government
Perspective of Relationships

   From business's                From government's
    perspective, there is an        perspective, there is the
    exponential growth in the       growth of bureaucracy
    size and power of               because of continuing
    corporations.                   business activities.

     The result is a symbiotic relationship between
     business and government
Types of Social Ideologies

      1. Collectivist Ideologies
      2. Individualist Ideologies
Types of Ideologies

 Collectivist ideologies: Rather than leaving
 the individual to pursue his or her own ends,
 the state ensures that the individual serves
 the interests of society when taken as a
 Collectivists focus on community and society,
 and seek to give priority to group goals over
 individual goals
Collectivist Ideologies

    The Left: Holds that economic society is best
     arranged through the direct involvement of the
     workers from the bottom up.

    The Right: Holds that the owners of the means of
     production arrange economic society from the top
Collectivist Ideologies

    Collectivism has found varying
     degrees of expression in the 20th
     century in such movements as
     socialism, communism, conservatism
     and fascism. The least collectivist of
     these is social democracy,
               Calls for violent overthrow of
                capitalist system because
                capitalist class will not share
               Workers will have direct
                input into economic
               Everyone will contribute
                based on ability and receive
                based upon need
Democratic Socialism

   Does not see capitalism as an evil that
    needs to be overthrown through
    revolutionary means.
   Instead, tends to accept elements of
    capitalism, however, desires that
    government play an interventionist role in the
    management of the economy and markets.
Classical Conservatism

                               Stemmed from reaction to French
                               Man is rational but passionate. Passion
                                needs to be restrained.
                               Only the state has the power to restrain
                                man’s passion. Other traditional
                                institutions must exist to do this. Church,
                               The state exists not to protect the
                                individual, but, the past, present and
                               It is dangerous for government to
                                interfere in economies
Edmund   Burke 1729-1797      Change should be gradual
                               Belief in Class
     More individualistic than conservatism
     Challenge the very principle of the welfare state
     Do not believe government has a responsibility to
      maintain a standard of living
     Programs such as education, welfare and health which
      cost the most should be reduced
     Business should be less regulated, markets should be
      free. Including privatization of State owned enterprises
     Less taxation and less government spending
     Minimal but strong centralized government
     Believe in preserving traditional values and institutions
     Believe Government should be tough on crime.
Individualist Ideologies
   The individualist theory
    of government holds
    that the state should
    take a merely defensive
    role by protecting the
    liberty of each
    individual to act as he
    or she wishes as long
    he or she does not
    infringe on the same
    liberty of another.

                               Ayn Rand (1905-1982)
Individualist Ideologies

   Utilitarianism
   Liberalism
   Libertarianism

                     Ayn Rand (1905-1982)
   Utilitarianism advocates
    those actions which bring
    about the most good for the
    most people
   Supports the concept of
    general good
   "the only purpose for which
    power can be rightfully
    exercised over any member
    of a civilized community,
    against his will, is to prevent
    harm to others."[

                                      John Stuart Mills 1806-73
   Utilitarianism is the ethical
    doctrine that the moral worth of
    an action is solely determined
    by its contribution to overall
    utility. It is thus a form of
    consequentialism, meaning
    that the moral worth of an
    action is determined by its
    outcome—the ends justify the
   Proponents include John
    Stuart Mills
   Value of a society is measured
    in terms of the satisfaction of
    the individual.
   Personal freedom leads social
   Laissez-faire and individualism

   Governments do not give
    people rights their job is to
    protect them
   Proponents include Thomas
   Leviathan
   Classical liberals emphasize
    free private enterprise,
    individual property rights,
    laissez-faire economic policy,
    and freedom of contract, and
    oppose the welfare state.
    Classical liberals support
    equality before the law, and
    hold that economic inequality,
    arising from competition in the
    free market, does not justify
    wealth redistribution by
                                      Adam Smith 1723-90
Economic Liberalism
   Laissez-Faire Capitalism.
   No government intervention in economy
   Adam Smith, The Wealth of Nations
   If man is left to pursue his own interests, he will contribute
    to the common good.
   “Government is best which governs least”
   Markets are self regulating and will control man’s
    excesses. (The Invisible Hand).
   It has as its basic concern the development of the free-market.
   Globalization and Neo Liberalism are often interchanged
   The rule of the market — freedom for capital, goods and
    services, where the market is self-regulating allowing the
    “trickle down” notion of wealth distribution. It also includes the
    de-unionizing of labor forces and removals of any impediments
    to capital mobility, such as regulations. The freedom is from
    the state, or government.
   Reducing public expenditure for social services, such as health
    and education, by the government
   No protection of class or social order or institutions

   Deregulation, to allow market forces to act as a self-regulating
   Privatization of public enterprise (things from water to even the
   Changing perceptions of public and community good to
    individualism and individual responsibility.
   The role of government should be confined to creating and
    defending markets, supporting business, protecting private
    property and defending the realm
Neo-Liberalism vs Neo-Conservatism

   Many neo-liberals have been defined as neo-
    conservatives and vice versa. The main difference
    between the two groups has mainly to do with defence
    and foreign policy.
   Neo-conservatives favor huge defence budgets and
    foreign interventions. Neo-conservatism seeks to
    maintain the status quo, traditional values
    Neo-liberals are opposed to government spending since
    it leads to large deficits and debt and see no role for
    governments interfering with business. Governments role
    is to ensure global free markets support business
   Libertarians are deeply
    distrustful of anything that
    limits their own personal
    initiative, movement, or

   Often related to Anarchists

   The Only role of
    government is to protect
    individual rights

                                   Ayn Rand 1905-82
Economic Ideologies

 Capitalism
 Communism
The Concepts of Capitalism

                   Refers to an economic
                    system where the
                    means of production, or
                    capital, is owned
                    primarily by individuals.
                   Economic decisions are
                    made by market forces.
The Concept of Capitalism

               Focus is on an open system of:
                Pricing
                Profits and Losses
                Private Property Ownership
                Capital Movement
Differing Models of Capitalism
1. Pure Capitalism
 Defined by lack of government regulation
 Laissez-faire approach by government

2. Mixed Economy
 Mostly privately owned, however, some degree of
   government intervention
 Most modern developed economies have this element
Theorists of Capitalism

   Adam Smith               John Kenneth Galbraith
   Alfred Marshall          Frederic Hayek
   Joseph Schumpeter        Milton Freidman
   John Maynard Keynes
Adam Smith (1723-1790)
                   Liberal
                   The pursuit of profit will
                    serve the best interests of
                   Market will self regulate.
                   Government should not
                    intervene in the
                   The ‘invisible hand’ of the
                    marketplace. – Perfect
Alfred Marshall (1842-1924)
                  Neo-Classical liberal.
                  He begins by isolating the primary
                   relationships of supply, demand, and
                   price in regard to a particular
                  Developed the concept of demand
                   curve and price elasticity
                  Studied why humans make the
                   choices they do.
                  He postulated that the central idea of
                   economics must be that of a living
                   force and movement, and its main
                   concern must be with human beings
                   who are impelled, for better or worse,
                   to change and progress.
                  Distilled concept of marginal utility.
Joseph Schumpeter (1883-1950)

                  Capitalism is unable to elicit
                   peoples moral allegiance
                  Capitalism in order to operate
                   efficiently must exist in a social
                   environment that allows for
                   freedom on action.
                  Major contributions were the theory
                   of the entrepreneur as the dynamic
                   factor in fostering the business
                   cycle and the theory of economic
                   development of capitalism
                  Supported private monopolies in
                   knowledge-based sectors
John Maynard Keynes (1883-1946)
                 His ideas emerged out of the
                  disaster of the great depression.
                 Government is obliged to bring full
                 His contributions were well read in
                  the US and Britain in the 1930’s
                  and contributed to Roosevelt's
                  ‘New Deal’.
                 Keynes was a major contributor to
                  the concept of the mixed economy.
John Kenneth Galbraith (1908 - )
                    In The Affluent Society Galbraith
                     argued that the expanding United
                     States economy needed more
                     public services such as highways
                     and educational institutions.
                    The economy, according to
                     Galbraith, had finally reached a
                     point at which less time and energy
                     had to be spent on consumer
                    Corporations often sought power
                     through market share over the profit
Frederick A. Hayek (1889-1992)
                    Economic Libertarian
                    Private Market best suited for
                     managing large societies
                    Felt that any government intervention
                     in the marketplace was the first step
                     towards totalitarianism.
                    The marketplace provides the only
                     rational means of allocating existing
                     resources and finding ways to use new
                    Defended individual liberty and the
                     free-market in an academic
                     environment where collectivism had
                     been more fashionable
                    Wrote The Road to Serfdom in the
                     waning years of World War II.
Milton Freidman (1912-2006)
                   Neo-Liberal Economist
                   Founded the so called Chicago
                    School of Economics. A great
                    follower and student of F. Hayek.
                   Strong support of Laissez-Faire
                   Argued for the elimination of social
                    security and other elements of the
                    welfare state.
                   Friedman argued that the
                    concentration of political power
                    inherent in socialist countries was
                    detrimental both to economic
                    prosperity and individual liberty.
Commanding Heights

 PBS Production
 Based upon the
  book by:
    Commanding Heights

   Opening Observations
    –   Look at sponsors
    –   Clinton: Globalization makes us interdependent
    –   Globalization results in Global Terrorism
    –   It would appear that governments are the author of all
    –   The Economic Revolution will determine the future of
        the planet – Is this True?
   There is a Battle of Ideas
    Commanding Heights
   Episode 1 – Battle of Economic Theory
   Keynes: Markets go to excess Governments need to step in
   Hayak: Market would take care of itself – Views built on war
    experience – Markets work Governments do not.
   WW1 – Keynes oppose war reparations : Predicts another war
   Failure of Market Economy leads to Communism and
   Socialism doom to failure because it has no pricing system to
    send signals
   Lenin had a change of heart at end re-introduced market
    Commanding Heights

   US Stock Market Booms RCA $1.50 to $600.
   Great Depression – Keynes predictions came
          Government failed to stop the downward spiral
   Roosevelt believed the Markets had failed
   Governments can win if they act the are intrusive
    if they don’t act they cause instability
    Commanding Heights
   1936 Keynes publishes the General Theory of
    Employment, Interest and Money
   Keynes saw the economy as a whole, a machine
    that could be managed
   Keynes viewed everyman’s right to work
   Depression seemed to spell the end of capitalism
    and democracy – Socialism and Communism grow
   Compare cycle of startup go bust someone new
    starts up go bust with Airline industry since de-
   Keynes spend in bad times save in good
Section 4: The Ideological Framework of
Settlers to Canada brought with them
the ideologies of Old Europe

  Conservatism       Liberalism
   Aristocracy       The rising commercial
   The Church         class.
   The status quo    Change agents
                      Traders
The dominant Ideologies of

 Political            Economic
  Conservatism        Capitalism within the
  Liberalism           context of a mixed
  Social Democracy
What is a Mixed Economy?

   Government regulated competition
   Some State Ownership
   Government protects indigenous industries.
    (In Canada, timber, fishing, mining,
   Government protects and develops social
Historic Differences of Ideology
Between Canada and the United States

   Canadian Ideological thought is more of a
    conservatism ideology and collectivist than the US.
    Canadians feel government is responsible for its
    citizens’ well being. There has been a strong
    continuity of socialism in Canada not witnessed in
   In the United States there is a stronger belief of non-
    interference by government and the primacy of
    individual liberties. Law will not allow Federal Gov. to
    get involved in State issues. US appears to be
    continuing to move ever more to the right and
Is Canada’s Economy Changing?

   In the 1960’s and 1970’s Keynesian economics with
    increasing government intervention in the economy
    was popular.
   Governments owned and operated airlines (Air
    Canada), oil companies (Petro-Canada), and
    Electricity companies (Ontario Hydro, Hydro
   Government was interventionist in its approach to
    the economy.
   Canada continues to suffer a severe identity crisis
Is Canada’s Economy Changing?
   In the 1980’s and 1990’s Neo-Conservative/Neo
    Liberalism ideas began to emerge in Canada and
    governments felt they no longer needed to protect
    domestic industries.
   NAFTA, Canada-US Free Trade, Privatization, and
    the dismantling of the social welfare state became
   J.M. Keynes Out
   Milton Freidman In
   J.M. Keynes Back In ????
Where is Canada going in the

                      Further evolution
                       towards free markets?
                      A return to the Canada
                       of the 1960’s and 70’s?
    Ideology Question

    $10 Minimum Wage

   Socialist Argument

   Conservative Argument

   Liberal Argument
Next Week

Between Public and Private:
   Federal Government's Industrial Strategy to Regional
   Economic Disparities: A Historical Overview pp. 379 - 396
   The Constitutional Timeline of Canada, pp. 121 - 130
Canada And The New World Economic Order, pp. 60 – 82.
Between Public and Private:, Cultivating Cash, pp. 397 - 428.

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