Are Cana­dian cul­ture pro­tec­tions nec­es­sary?

Sub­si­diz­ing cul­tural in­dus­tries and shel­ter­ing them from com­pe­ti­tion is waste­ful

Waterloo Region Record - - Insight - FER­GUS HODG­SON Fer­gus Hodg­son is the ex­ec­u­tive ed­i­tor of An­tigua Re­port, a colum­nist with the Epoch Times and a re­search as­so­ciate with Fron­tier Cen­tre for Pub­lic Pol­icy. Troy Me­dia

Many ad­vo­cates for cul­tural di­ver­sity have a sud­den change of heart when the topic turns to Canada’s ‘cul­tural in­dus­tries.’ As they say in Ar­gentina, for money, the mon­key will dance.

What con­sti­tutes Cana­dian her­itage, given its com­plex mi­lieu, tends to be in the eye of the be­holder. How­ever, the her­itage is so weak that, sup­pos­edly, it would crum­ble in the face of for­eign trade.

Many peo­ple profit from this claim and suc­cess­fully lobby for na­tivist me­dia and dig­i­tal en­ter­tain­ment. The in­ter­ven­tion­ism in­cludes fed­eral sub­si­dies and Cana­dian-con­tent re­quire­ments for ra­dio and tele­vi­sion. At least 60 per cent of tele­vised con­tent, for ex­am­ple, must be “made in Canada.”

The Canada Pe­ri­od­i­cal Fund drops $75 mil­lion on me­dia out­lets and mag­a­zines an­nu­ally, sub­si­diz­ing what should be in­de­pen­dent, free-speech plat­forms. Ditto for tele­vi­sion and dig­i­tal me­dia, which get $350 mil­lion from the Canada Me­dia Fund, in ad­di­tion to the $1 bil­lion the CBC re­ceives.

This lobby was so strong that they ex­empted them­selves en­tirely from the North Amer­i­can Free Trade Agree­ment (NAFTA) and now the United States-Mex­ico-Canada Agree­ment (USMCA). In fact, the pend­ing USMCA ex­pands the ex­emp­tion to new plat­forms that would dare to com­pete with le­gacy pro­duc­ers.

Those who face lim­ited com­pe­ti­tion in­clude pro­duc­ers of books and pe­ri­od­i­cals, film and video record­ings, and ra­dio and tele­vi­sion. Even cable and satel­lite broad­cast­ers re­main sub­si­dized, in­su­lar and pro­tected.

Not only will cul­ture not be lib­er­al­ized un­der USMCA, for­eign in­vestors re­main walled off. Divvied tax­payer money is fair game (a tool for po­lit­i­cal pa­tron­age), but for­eign cap­i­tal for de­vel­op­ment is not.

Any firm with­out 80 per cent Cana­dian own­er­ship and board rep­re­sen­ta­tion can’t get a broad­cast­ing li­cence. The De­part­ment of Cana­dian Her­itage also blocks in­vest­ment “that could re­sult in own­er­ship and con­trol of Cana­dian cul­tural busi­nesses by for­eign in­vestors.”

Even mi­nor­ity in­vest­ment with min­i­mal con­trol must be “com­pat­i­ble with na­tional cul­tural poli­cies” and of “net ben­e­fit to Canada and to the Cana­dian-con­trolled sec­tor.” You can imag­ine in­vestor in­ter­est in that bu­reau­cratic and un­pre­dictable dis­cus­sion.

Mean­while, Canada has one of the low­est busi­ness in­vest­ment rates of the de­vel­oped world.

A look at the state­ments of those in­volved shows their lack of in­tel­lec­tual in­tegrity. When the shoe is on the other foot and they want to sell to U.S. con­sumers, free trade is back in vogue.

The Cana­dian Arts Coali­tion “were ex­tremely pleased to find cross-bor­der move­ment of busi­ness pro­fes­sion­als within Canada’s pri­or­ity list for a mod­ern­ized NAFTA.” They want to block com­pe­ti­tion while en­joy­ing free rein for Cana­di­ans to sell their arts and skills to the Amer­i­cans.

The As­so­ci­a­tion of Cana­dian Pub­lish­ers is “de­lighted” with the USMCA’s pro­tec­tion­ism, but they af­firmed the need for ac­cess the other way: “Many (Cana­dian pub­lish­ers) earn up­wards of 50 per cent of their an­nual rev­enues from ex­port to the United States.”

Mag­a­zines Canada says we need them to pro­tect “so­cial co­he­sion” and “tie us to­gether as a na­tion.” Their touted ex­am­ple of pub­li­ca­tions in 34 dif­fer­ent lan­guages con­fuses what makes pub­li­ca­tions or cul­ture Cana­dian.

The myr­iad of pro­tec­tions and sub­si­dies for cul­ture pro­duc­ers, ex­ac­er­bated by the USMCA, pose two ques­tions:

• Is this serv­ing Cana­di­ans at large or just re­cip­i­ents?

• When will pro­duc­ers de­velop the where­withal to com­pete openly?

Com­pelling ev­i­dence sug­gests the lat­ter in re­sponse to the first ques­tion and never in re­sponse to the sec­ond.

The Cana­dian film in­dus­try of­fers an in­sight­ful and em­bar­rass­ing ex­am­ple, since cin­e­mas are one place where peo­ple are free to choose. Canada’s two high­est gross­ing films are “My Big Fat Greek Wed­ding” (2002) and “Porky’s” (1982). When you look un­der the hood, you find these were barely Cana­dian at all: di­rected by Amer­i­cans and filmed in the United States, ex­clu­sively in the case of “Porky’s.”

Most Cana­dian films are not prof­itable, and few en­joy in­ter­na­tional suc­cess. From the Globe and Mail: “An­glo-Cana­di­ans do not go to the the­atre to see movies made by their coun­try­men.” These films have a box-of­fice mar­ket share of one to 1.5 per cent.

One of the world’s largest film­mak­ers, Lion­s­gate, has its ori­gins in Van­cou­ver. How­ever, as its suc­cess grew, com­pany ex­ec­u­tives moved to Cal­i­for­nia and listed on the New York Stock Ex­change, favour­ing com­pet­i­tive­ness over parochial­ism.

The most well-known eco­nomic ar­gu­ment for pro­tec­tion­ism is the in­fant in­dus­try the­ory: par­tic­u­lar in­dus­tries need a grace pe­riod to grow a nexus of par­tic­i­pants. Once they achieve suf­fi­cient economies of scale, they can com­pete in­ter­na­tion­ally.

While in­dus­try clus­ters do ex­ist, the case for their cen­tral plan­ning is weak. Few in­fant in­dus­tries, if any, grow to be­come in­de­pen­dent. The pat­tern is they be­come lob­bies ad­dicted to cor­po­rate wel­fare, as with Que­bec’s Bom­bardier.

The rea­son­ing also falls flat for cul­ture, since in al­most all cases providers don’t rely on heavy man­u­fac­tur­ing or fixed, large-scale oper­a­tions. Fur­ther, the no­tion of economies of scale runs counter to the unique, cre­ative char­ac­ter at hand.

Me­dia sub­si­dies have proved sim­i­larly stub­born. As out­lets un­dergo a dig­i­tal over­haul, this year saw $50 mil­lion in new fed­eral sub­si­dies. A “dis­ap­pointed” John Hinds of News Me­dia Canada said: “The amount an­nounced is far too lit­tle to ad­dress the grow­ing chal­lenge of pro­vid­ing lo­cal news.”

Rather than em­brace change and adapt, his in­sa­tiable mem­bers want $350 mil­lion in ad­di­tional hand­outs. Give them an inch and they will take a mile.

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