08 August, 2011

Why companies won't hire - CNN.com

An excellent analysis of the current economic challenges that confront the Americans, and by extension we here in Canada from David Frum. He demonstrates a clear understanding of the forces that affects corporate executives as they chart a path of financial survival if not success.


Corporate profits are running stronger than they have been in years. The penultimate example being the recent report which stated that Apple Corp. held more cash resources than does the US government... resource and oil companies are running almost as well. Recessions are also times when weaker firms either fail or become sufficiently enfeebled that they are purchased by larger holding companies (such as the one that Mitt Romney ran) which usually break up the company and sell off its assets, making a quick profit for their shareholders but extinguishing the employment for entire communities. 

This has been our experience here in Mattawa. Smaller, weaker mills were purchased by larger corporate competitors using government funds as incentive. Alas, as soon as the period expired during which they promised to keep the mill open as a condition of receiving various government grants and tax holiday's, (one or two years), they closed the operation, removed the capital equipment purchased over the past two years (with accelerated depreciation to apply to offset taxes due on profit at taxpayer expense) and sent to either American, Chinese or Latin/South American countries where they find lower operating environments. 

Citizens throughout the Greater Ottawa Valley of eastern Ontario have suffered this experience. From the collapse of tech giants such as Mitel and Corel, to the small local mills purchased by multinationals to obtain their timber rights to feed large mills further away. Municipalities who while never actually prospering in any grand style, have sustained employment since the earliest days of our nation, developing a strong middle class as a result. Now that the resource industry payroll has disappeared, (and even as the profits of its proprietor corporation prospered)  the economic welfare of the area now depends more and more on the taxes taken from what is quickly becoming an economically devastated and shrinking middle class.


The good times that came with being hewers of wood have come to an end and the workforce of the area fear becoming the 'cod fishermen' of the early 21st century; communities shaken in confidence and dependent upon government support to survive. 

In other places and in previous times like these, the RC Church in Canada became an agent of economic activity, organizing cooperatives and credit unions throughout the regions. The grew into financial institutions dedicated upon servicing local enterprises. This is on top of many messages

Why companies won't hire - CNN.com

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