5-30-07, 9:22 am

Buried in the business pages of your daily paper, you can find staggering figures on the explosive growth of profits and mergers.

Statistics Canada reports that Canadian corporate profits for the first quarter of 2007 broke all-time records, hitting $63.8 billion, up 2.9% over the previous three month period. By comparison, quarterly profits have averaged about $50 billion in recent years. StatsCan says that 'about half of the overall profit gain can be attributed to rising commodity prices.'

The same time period saw another economic record: 483 mergers and acquisitions involving Canadian firms worth $66 billion, the highest-ever such figure for a first quarter period.

Most mainstream economists dismiss fears that this trend is eroding Canadian sovereignty, arguing that Canadian capital is buying firms outside this country faster than takeovers by foreign corporations are happening here. At first glance, the numbers seem to support such an argument. There were 143 cases of Canadian-based companies buying foreign firms in the first quarter of 2007, with a value of $22 billion, compared to 46 foreign acquisitions of Canadian companies, totalling $15 billion.

But there are problems with this analysis. As a related story on this page shows, higher export prices for energy and other commodities mean bigger profits for some Canadian companies to invest overseas. But they also lead to a higher Canadian dollar, and growing job losses in the manufacturing sector. The historical tendency to transform Canada into a 'hewer of wood and drawer of water' in the service of U.S. imperialism continues, with the happy involvement of Canadian capitalists in search of a fast buck. For working people, higher-paid, unionized manufacturing jobs are increasingly being replaced by low-paid, non-union service sector employment.

Looking at the bigger picture, what we see is a global trend as capital moves from traditional domestic bases, gobbling up competitors and profitable targets with little regard for national boundaries. Canadian corporations are full participants in this process, such as Barrick Gold and GoldCorp, 'our' mining companies which exploit labour and resources in many Third World countries.

The net outcome is a loss of popular sovereignty and democracy everywhere, including Canada. Transnational corporations are increasing their penetration of the entire globe, with outstanding exceptions such as Venezuela and Bolivia, where public ownership of resources is expanding. But working people are losing their ability to control, regulate and tax these operations. Just because Canadian mining firms reap huge profits in Central America or Indonesia, that does not give Canadians more power over the U.S.-based energy giants active in our country, for example.

In reality, the 'hollowing out' of the Canadian economy is accelerating, without a word of protest from the federal government. For example, the recently announced $33 billion (U.S.) hostile takeover bid by New York-based Alcoa Inc. for Alcan Inc. of Montreal would mean that Canada's three largest mining companies, employing 91,000 Canadians, will be controlled by foreign interests.

Falconbridge and Inco, formerly the second- and third-largest Canadian mining firms, were sold last year. Switzerland-based Xstrata PLC bought Falconbridge, with its historic Sudbury nickel operation and the Noranda and Kidd Creek base-metals deposits. Inco, which pioneered nickel production at Sudbury and in Manitoba, was snapped up by Brazil's state-owned Companhia Vale do Rio Doce.

Alcan is the world's number two producer of aluminum, a strategic metal in the aerospace and military industries which are critical to U.S. imperialism's war machine. Alcan is Canada's eighth-largest company, and the fifth-largest Canadian-controlled firm, with 64,700 employees, annual revenues of $24 billion and assets of close to $30 billion.

Interestingly, there are a few voices of sanity in the corporate towers. 'It's a disaster for Canada,' Doug Davis, money manager at Davis-Rea Ltd. in Toronto told Bloomberg News, responding to the Alcoa announcement. 'Anything and everything is for sale. We'll run out of companies to invest in.'

There is also speculation that Quebec Premier Jean Charest will raise objections to the Alcoa takeover, which would be highly unpopular in Quebec.

However, Canada has the least restrictions on foreign takeovers among the G-7 nations. As some financial analysts have noted, this is a factor in the recent spate of takeovers. Since the beginning of 2006, there have been about 600 foreign takeovers of Canadian firms, worth more than $150 billion (U.S.), including Dofasco, Hudson's Bay, and Abitibi-Consolidated.

Dominic D'Alessandro, the CEO of Manulife Financial Corp., told shareholders at the company's annual meeting in May that 'I sometimes worry that we may all wake up one day and find that as a nation, we have lost control of our affairs.' He called for ownership restrictions for 'sensitive' sectors of the economy similar to those in financial services, media and telecommunications.

But the Harper Conservatives see no problem. Federal Public Works Minister Michael Fortier (who was appointed a Senator and placed in the Harper cabinet on the same day that Vancouver Kingsway Liberal MP David Emerson jumped ship to join the Tories) told the Canadian Press that Alcoa 'is proposing in its offer to maintain most of the jobs in Quebec and, actually, elsewhere in Canada. So, we'll have to see.'

Yes, just like the Emperor Nero fiddled while Rome burned.

From People's Voice