Not a Conspiracy Theory: How Business Propaganda Hijacks Democracy
by Donald Gutstein (Key Porter, 2009; $22.95)
The Fraser Institute launched a program in 1988 that would have far-reaching impact on advancing the corporate agenda. This program, aimed at students, is actually a half-dozen initiatives through which the institute "is cultivating a network of thousands of young people who are informed and passionate about free-market ideas and who are actively engaging in the country's policy debate," as the organization's publication Frontline puts it. The initiatives are separately funded but work together as a comprehensive package of recruitment and intellectual grooming. These programs outgun in magnitude, scope and longevity anything that the progressive left has mounted through unions and social justice organizations.
Over 17,000 students have come in contact with at least one of the student programs, the institute claims. "Developing talented students sympathetic to competitive markets and limited government" through these programs "is one important way that the Fraser Institute is working towards changing the climate of opinion in Canada." Graduates have spread into politics, academia, other think-tanks and the media.
They're especially proud of Ezra Levant, who was a student of the Calgary School's Tom Flanagan and attended his first student seminar in 1992. He was asked to join the student leaders' colloquium in Vancouver and became an intern, where he wrote the book Youthquake, which was distributed and publicized by the institute. Levant tapped into the American conservative movement as a Koch Foundation Summer Fellow in Washington, D.C., and attended various Institute for Humane Studies and Liberty Fund events. After graduating from law school and articling, he worked for several years as a parliamentary assistant to Preston Manning and Stockwell Day. From there he did a two-year stint on the editorial board of Conrad Black's National Post, which was dominated by conservative ideologues. Next, he entered electoral politics and was nominated for the Canadian Alliance in the riding of Calgary Southwest. He attracted national attention when he initially refused to resign his nomination so that party leader Stephen Harper could run. After some high-profile deliberation, Levant resigned. He practiced law briefly at a libertarian law firm in Calgary and wrote a weekly column for the Calgary Sun and Winnipeg Sun. In January 2004, along with other Fraser Institute alumni, he started the socially and economically conservative magazine Western Standard, which took over the mantle from the defunct Alberta Report.
Another star graduate of the Fraser's student program is Danielle Smith, who started her career at a Calgary student seminar. She went on to a year-long internship at the institute, publishing some of her attacks on environmentalism in the institute's Canadian Student Review. She then worked for the short-lived Canadian Property Rights Research Institute and was hired as an editorial writer for Conrad Black's Calgary Herald, arriving in the editorial office just as the workers went on strike for a collective agreement. She later became host of CanWest Global's Sunday talk show for several years. Smith was subsequently appointed the Alberta director of the Canadian Federation of Independent Business. (The Fraser Institute's former environmental director is the B.C. director.)
Other student program graduates include Rob Anders, Conservative MP for Calgary West, who ran the National Citizens Coalition's Canadians Against Forced Unionism project and was considered to be among the most right-wing members of the Conservative caucus. Sonia Arrison was a program officer at the Donner Canadian Foundation and then worked at the Fraser Institute where she specialized in deregulation and privatization. She then became director of technology studies at the California-based Pacific Research Institute, where former Fraser Institute staffer Sally Pipes runs the organization. Marc Law attended the student leaders' colloquium and went on to work for the Fraser as an economics researcher until he started Ph.D. studies in the United States. He became an assistant professor of economics at the University of Vermont, where he specializes in historical studies of regulation. Craig Yirush is a professor of history at UCLA, where he studies early American history. Yirush worked his way through the ranks at the Fraser Institute, attending student seminars and the student leaders' colloquium. He volunteered at the 1992 Mont Pèlerin Society general meeting, was a Fraser intern and attended workshops and sessions at the Institute for Humane Studies.
The student seminar has become the Fraser's initial recruitment tool. The net is cast wide for promising candidates, with up to a dozen day-long seminars held each year in cities across Canada on the full range of libertarian topics: how the market protects the environment; how smaller government leads to greater prosperity; and why we need to privatize health care to save it. A big draw is that the seminars, including coffee and lunch, are free and held in prominent downtown hotels. Seminars are free because they are sponsored by corporate and foundation backers: Lotte and John Hecht Memorial Foundation (B.C. seminars), W. Garfield Weston Foundation (Toronto), EnCana Corp. (Calgary and Edmonton), CanWest Global (Winnipeg). Individuals and companies can sponsor specific components: one student costs $120, lunch is $1,875, coffee break, $500, speakers' travel and accommodation, $4,000. An entire seminar costs a tax-deductible $17,000.
The seminars mix lectures and small-group discussions, presented from a narrow ideological perspective. Discussion groups are led by staffers from the Fraser or its sister libertarian think-tanks like the Montreal Economic Institute. Lecturers are senior fellows at the institutes or executives from the National Citizens Coalition or the Canadian Taxpayers Federation. Featured guest speakers run the gamut from Tony Clement, then minister of health in the Mike Harris government, to National Post columnist Colby Cosh, to Brian Day, president of the private Cambie Surgery Clinic in Vancouver. In short, the range of expertise presented at the seminars runs from right to far right.
Students, in contrast, cover the political spectrum; there is no way the institute can weed out college and high school students with progressive views who come, often out of curiosity. But that doesn't matter. The skeptical ones can participate and enjoy a free lunch. At the end of the day they are offered a warm "thanks for coming and participating," and are never contacted again. Those whose views are approved by the institute, in contrast, are identified for further orientation, writes journalist Patti Edgar, who attended a seminar as a University of Victoria student in 2000. They might be asked to enter the student-essay competition, which is sponsored by the Manning Centre for Building Democracy. Recent topics have ranged from "How can property rights protect the environment?" to "Eliminating world poverty: what is the best approach?" and to the 2008 topic, "The Canadian healthcare system: Why is it broken and how can it be fixed?"
The best essay receives $1,000, second prize is $500 and there's a separate $250 prize for the best high school essay. The winners of the 2008 contest argued that health care is in crisis, not because of inefficiencies in the system or underfunding, but because it is run by a government monopoly that insulates economic activity from the efficiencies and innovations of competition. The winning essay argued that by adding more private sector services and private insurance to health care incrementally, political opposition to demonopolization by "statists" and "chauvinists" can be overcome. The winning high school essay was titled "The case for capitalist healthcare." That all winning entries are similar should not be surprising, given that to ensure that students come up with the right answer, the institute provides lists of sources, which are restricted primarily to libertarian publications and web sites. Students, apparently, receive no credit for critiquing the topic.
The 2009 topic is the positive relationship between economic freedom and global prosperity. Students are asked if economic freedom is the most effective way to pull a nation out of extreme poverty. To make sure students are on the right track, they are urged to start by exploring the Fraser's Economic Freedom of the World project, which ranks governments around the world in terms of how friendly they are to business and investment.
Winning essays are published in the institute's Canadian Student Review. This 12- to 24-page quarterly publication showcases short articles by conservative students, Fraser Institute staffers and some academics. In 2007, 68,000 copies were distributed free of charge -- thanks to the Hecht Foundation -- to campuses across Canada through a network of sympathetic professors and student organizations.
The long-standing student colloquium re-emerged in 2007 in a new format sponsored by the Liberty Fund of Indianapolis. Over two days of intensive discussion, students examined the topic "Liberty and Free Markets." A basic reading for the 2008 colloquium, entitled "Liberty and Public Choice," was the Fraser Institute's annual Government Failure in Canada report.
The linchpin program is the internship. About 400 university and college students apply each year for ten intern positions in the Fraser's Vancouver, Calgary and Toronto offices. Successful applicants are paid $2,000 a month for four months to train as junior policy analysts. They work on specific projects with institute analysts that will lead to publishable reports. The program, which costs about $100,000 a year, is financed partly by the Donner and Bell foundations. Interns participate in policy briefings and a weekly discussion club, develop their presentation skills and plug into networks of conservative experts in their field of research. Interns work on projects such as the school report card, the annual mining survey and new products, like the Regulatory Process Transparency Index for states and provinces, which will measure the"burden of regulation" and undoubtedly find that Canadian provinces rank dead last in North America, with Alberta being the best of a bad lot. One intern worked on an economic sustainability index, while another worked on a project to prove private schools are better for the poor than public schools. In 2007, a new product, funded by the Max Bell Foundation, was open to internship applications; this will profile successful private sector school chains.
A recent addition to the student programs is teacher-training workshops on economic principles. This program is designed "to enlighten high school teachers on the principles of economics." But only principles of economics that support a property-rights, market-based approach to economic activity are presented. Each year, more than 50 teachers participate in the one-day program in Toronto and Vancouver. The Fraser Institute estimates that 90 students are influenced by the participation of each teacher who uses the material in his or her lesson plans. The program is financed by three foundations: London Drugs (chairman Brandt Louie is a Fraser Institute trustee), Weston and Donner.
The Fraser Institute's school report-card program is merely the opening salvo in a campaign to strip public education of its funding and direct the resources to the private and nonprofit sectors.
Every year the institute spends hundreds of thousands of dollars to compile and disseminate its rankings of elementary and secondary schools. It has undreamed-of support from corporate media, which turn over dozens of pages each year for school rankings in the Vancouver Sun, Calgary Herald, Edmonton Sun, Toronto Sun, Ottawa Citizen, Windsor Star, and Quebec newsmagazine L'Actualité.
Every year teachers-union executives and education experts write op-ed pieces pointing out the serious deficiencies in the rankings. And every year the media play the rankers and their critics as a debate between two equally valid viewpoints.
Lost in the debate are the goals of universally accessible, publicly funded education, such as preparing children for citizenship, cultivating a skilled work force, and developing critical-thinking skills.
For its part, the Fraser Institute couldn't care less what the teachers say. It knows the report-card program is working the way it intends, which is to undermine public confidence in the public system. The wealthy, who send their children to private schools, ask, "Why should I pay for the public system, especially the failing parts?" And the poor ask, "I'm not getting a fair deal from the public system. Is there something else?"
Families are already buying houses near high-ranked public schools if they can afford to, or bussing their kids if they're fortunate enough to gain access to "better" schools. And divorcing parents fighting in the courts for custody of their children are citing the school rankings as a reason why the parent who lives near a high-ranked school should get custody.
The institute's Peter Cowley, who manages the report cards, and whose background is marketing, not education, is clear about the goal of school ranking: to "establish one of the conditions necessary for a free market in education; namely the availability to consumers, in this case parents, of reliable information on the comparative value of services provided by competing suppliers, in this case schools," he wrote in the September 2007 issue of Fraser Forum, the institute's magazine.
Other conditions are necessary for a free market in education, the think tank says, and it is working to establish these, too. Most important is to create a system in which government or private entities provide vouchers so that children from disadvantaged families can attend private schools. The Fraser Institute already has a program dedicated to this activity in Ontario and Alberta. Children First is bankrolled by the deep pockets of Canada's third-wealthiest family, the Westons, to the tune of $2 million to $3 million a year. Poor families compete for these vouchers, which can be used to attend religious or private schools.
And once one provincial government offers its own taxpayer-financed vouchers, for-profit school chains will flood into that province. This dismal prospect is most likely to occur first in Alberta, where Danielle Smith, leader of the Wildrose Alliance, stands a good chance of becoming the next premier.
Smith has advocated vouchers since she was a Fraser Institute intern in the mid-90s. While in the think-tank's employ, she coauthored a study with Vancouver Sun editorial pages editor Fazil Mihlar (then the institute's director of deregulation), which concluded that "schools must be given the freedom to innovate," and that making schools compete through a voucher scheme was the way to do this.
To prepare for the day when taxpayer-funded vouchers become a reality, the Fraser Institute already has a website promoting for-profit school chains.
"The intended effect of the report cards," Cowley wrote in 2007, is "to encourage multi-faceted competition among schools, both public and private."
It is indeed true that high-priced private schools do compete for students from wealthy families. When the Calgary Herald publishes the Fraser Institute's Alberta school rankings, twice each year, Cowley notes, private schools are prominent advertisers in the paper. The March 21 Herald, for instance, gave prominent placement to the institute's annual Alberta elementary rankings, leading with a front-page story and 14 pages in the B section. Clear Water Academy, an independent Catholic school, Glenmore Christian Academy, Menno Simons Christian School, and Master's Academy and College all paid the Herald for ads in the rankings section, while Webber Academy took out a half-page colour ad trumpeting the fact that "the Fraser Institute has ranked Webber Academy as one of the top schools in Alberta." Webber can easily afford the ad: it charges elementary students $14,000 a year in tuition.
But private schools have always competed for the children of the elite and the nouveau riche, so the Fraser Institute has not actually encouraged competition here.
Public schools are the real target. Competition should not be relevant to public schools, which must educate children from a wide range of socioeconomic and cultural backgrounds. Public schools must take everyone in the catchment area who shows up at the door, while private schools can screen their students based on testing, report cards, letters of reference, and interviews, to determine if a potential student will "fit in" with the school's culture.
So what is the point of claiming that poor inner-city schools, where parents may have two or three jobs and kids go to class hungry, are competing with wealthy schools, where parents have the time and resources to support their children's education?
The point of the exercise is to undermine public confidence in the system as a whole, to frame education as a market composed of hundreds of individual schools where the improvement or deterioration of a school's ranking is due to the effort of principal, teachers, and students.
The Fraser Institute already has a program to make this point. It hands out awards -- with a little cash (also financed by the Westons) -- in B.C., Alberta, Ontario, and Quebec, to schools whose rankings topped the list over five years, schools whose rankings went up the most, and schools whose rankings are higher than they should be, given their socioeconomic status.
Conclusion: education is improved through the efforts of individual schools. Government officials and teachers' unions play no part in this endeavour. In fact, as free-enterprise guru Milton Friedman insisted, they are the enemy, resisting improved education because they promote their own agendas, which are not those of parents and children. (Note the name of the Fraser's voucher program: Children First.)
Friedman launched the project to turn education into a market with an article he wrote in 1955. He was alarmed by "the trend toward collectivism" and worried about an "indiscriminate extension of governmental responsibility" into education through government-run schools. Friedman proposed vouchers, which local governments would give to each child through the child's family to pay for a general education at any type of school the family deemed appropriate.
"Competition is the most effective way to improve quality, whether in computers, in automobiles, in suits, or in schooling," Friedman once told an interviewer.
Forty years later, Friedman was still railing at public education. "Public schools," he wrote in 1995, three years before the Fraser Institute started ranking schools, "are not really public at all but simply private fiefs of the administrators and the union officials."
The Fraser Institute hews closely to Friedman's line. Institute founder Michael Walker was a close friend of Friedman's, and Friedman was an early Fraser Institute adviser and author. Walker is still a director of Milton and Rose Friedman's voucher-advocacy organization, the Foundation for Educational Choice, based in Indianapolis, Indiana.
Friedman's efforts to apply market principles to education and other areas of social and cultural life have been seen as so extreme that they have been labelled as "market fundamentalism". The Longview Institute, a progressive think tank in California, defines market fundamentalism as "the exaggerated faith that when markets are left to operate on their own, they can solve all economic and social problems". Faith, not fact; ideology, not economics.
Thanks to massive corporate backing and to the work over many decades of the Fraser Institute and similar think tanks around the world, market fundamentalism has extended its grip on much of public-policy debate in Canada and the United States.
Privatizing public schools is a key priority. A 2007 study by the progressive National Committee for Responsive Philanthropy found that conservative foundations in the U.S. were pumping about US$100 million a year into organizations advocating for vouchers and school choice.
The Walton Family Foundation, whose money comes from Wal-Mart, provided the lion's share of the money, more than US$140 million over the five years of the study.
Even U.S. president Barack Obama is veering toward school choice. The Obamas chose Sidwell Friends School, a private Quaker school, for daughters Sasha and Malia. Vice-President Joe Biden's grandchildren also attend the school, where tuition is upward of US$28,000 per child.
And Obama's selection of Arne Duncan, CEO of the Chicago public-school system, as his secretary of education also raises concerns. Duncan is a strong advocate of measuring schools through comprehensive testing, shutting down underperforming schools and replacing them with charter schools where policies are set by parents, and where teachers' unions are normally not certified.
Obama created a US$4.35-billion Race to the Top fund to encourage cash-strapped states to expand the presence of charter schools and to punish -- and perhaps even fire -- teachers who fail to lift student scores on standardized tests in reading and math.
Teachers must face the fact that the deep pockets of the report-card sponsors -- and increasing political support -- will ensure rankings continue to be produced for as long as it takes to privatize K-12 education.
The Fraser Institute and its market-fundamentalist allies are in the war for the long haul. In 1998, the institute produced its first report card on B.C. secondary schools. Expansion was rapid, encompassing Alberta secondary schools in 1999; Quebec secondary schools in 2000 (with the collaboration of the Montreal Economic Institute); Ontario secondary schools in 2001; Alberta elementary schools in 2002; B.C. and Ontario elementary schools in 2003 (the same year that the Atlantic Institute for Market Studies, a market-fundamentalist think tank in Halifax, started ranking all secondary schools in Atlantic Canada); B.C. aboriginal education in 2004; and Washington-state elementary, middle, and high schools in 2009 (with the help of the Evergreen Freedom Foundation).
In 2010, the Atlantic Institute for Market Studies and the Frontier Centre for Public Policy, another market-fundamentalist think-tank in Winnipeg, served notice they will be ranking all secondary schools in Western Canada. Their target is the NDP government of Manitoba, which has refused to turn test scores over to the think-tanks.
School report cards put teachers and education experts in a difficult spot. They know the rankings are false and misleading, but they do their cause no good when they refute the rankings. University of Michigan social psychologist Norbert Schwarz found that repeating falsehoods and slogans helps lodge them in people's minds. Refuting them can lead people to remember the falsehoods better. It doesn't seem to matter if the falsehood comes from several sources or from one source repeating it multiple times, Schwarz found. "A repetitive voice sounds like a chorus," Schwarz contends.
Adolf Hitler held a similar view. He wrote in Mein Kampf that "only constant repetition will finally succeed in imprinting an idea on the memory of the crowd."
Constant repetition is a hallmark of Fraser Institute studies. It has produced hospital waiting lists for 19 years; "Tax Freedom Day" for 34 years; an "Economic Freedom of the World" index for 13 years; and B.C. secondary-school report cards for 11 years and counting.
Teachers respond to the report cards with accurate information, pointing out limitations in the ranking system, such as the narrowness of the criteria. But the studies done by Schwarz suggest that denials and clarifications, even though they seem like the correct thing to do, can actually increase the impact of the report cards. Rather than refuting a false claim, Schwarz and his colleagues found, it is better to put forward a completely new claim that makes no reference to the original falsehood.
University of California cognitive scientist George Lakoff makes a similar point when he explains that conservatives are winning the war of ideas because they have managed to frame public debate on just about every issue. Lakoff defines a frame as a mental structure that shapes the way we see the world. Once a frame has been clamped on an issue of public concern, denying the frame merely reinforces it.
Two frames, or fundamental values, dominate western democratic societies: freedom and justice. In the 1960s they merged in the civil-rights movements of African-Americans, students, women, and other oppressed groups.
As Martin Luther King Jr. said in his stirring "I Have a Dream" speech on August 28, 1963, at the Lincoln Memorial in Washington, D.C.: "I have a dream that one day even the state of Mississippi, a state sweltering with the heat of injustice, sweltering with the heat of oppression, will be transformed into an oasis of freedom and justice."
But half a century later, the oasis of freedom and justice remains a speck on the horizon. For that unhappy state of affairs we can thank the work of market fundamentalists, who captured control of public policy by driving a wedge between freedom and justice, sanctifying the former and demonizing the latter.
The lofty value of individual freedom was debased into shabby advocacy for the free market. Freedom of speech, of association, and of choice became freedom to exploit and freedom to be greedy, as Austrian philosopher Karl Polanyi warned.
Freedom came to mean being free to choose between competing consumer products, such as higher- and lower-ranking schools. As the Fraser Institute puts it, the purpose of the Children First voucher program is to help "families afford the school of their choice."
Justice, in its many manifestations -- social, economic, environmental -- was attacked mercilessly, while the two institutions most capable of promoting justice, government and unions, were cast as enemies to be crushed.
For Fox News Channel resident demagogue Glenn Beck, social justice is a threat to freedom. He recently defined it as "forced redistribution of wealth with a hostility toward individual property rights, under the guise of charity and/or justice," perpetrated by progressives, socialists, and Marxists.
Unions have a long history of promoting justice. The B.C. Teachers' Federation, for example, engages in many social-justice initiatives that "focus on poverty, child and youth issues, race relations, gender equity, homophobia and heterosexism, bullying, environmental issues, globalization, and violence prevention," as well as on aboriginal education.
The task for progressives is to condense social-justice programs into a frame that can be clamped onto education and can challenge the hateful rhetoric of the Glenn Becks of the world.
If public-education supporters hope to counter the success of market fundamentalism, they must stop denying the free-market frame and start constructing a frame based on social justice, and they must be prepared to do this consistently for many years.
Postscript: On June 1, the Atlantic Institute for Market Studies, Atlantic Canada's market fundamentalist think-tank, will host former Florida governor Jeb Bush at the institute's 15th anniversary dinner in Moncton. Bush will recount how he imposed school choice and rigorous testing on Florida's school children. He probably won't talk about the seven decades-long relationship between the Bush and McGraw families. The McGraws own CTB McGraw-Hill, one of the largest developers of school tests in the U.S. and a prime beneficiary of Jeb's brother, George W. Bush's No Child Left Behind law, which mandated universal testing and healthy profits for the testing companies.
Donald Gutstein is adjunct professor in the School of Communication and co-director of NewsWatch Canada, a media-monitoring project. His book, Not A Conspiracy Theory: How Business Propaganda Hijacks Democracy (Key Porter), was published in October, 2009.
Why would big-time global media tycoon Rupert Murdoch meet with Prime Minister Stephen Harper to discuss how miniscule Canadian media tycoon Pierre-Karl Péladeau could set up a Quebecor Media television knock-off of Murdoch's Fox News channel?
The answer is that he wouldn't -- and didn't. Even Kory Teneycke, who was Harper's chief spokesperson at the time and was at the lunch meeting in New York on March 30, 2009, claims the Quebecor venture was not discussed.
That hasn't stopped Teneycke, the huckster for the project, from piggybacking on the Fox News brand. Four months after the meeting with Murdoch, he left the Prime Minister's Office and almost immediately obtained a contract with Quebecor to develop a conservative television channel. Teneycke, who has worked for the Reform party, Mike Harris's Ontario Tories and the Saskatchewan Party, may have coined the phrase "Fox News North" to attract attention and put it on the political agenda.
And he certainly did. Mainstream media and the blogosphere are humming with strident commentary, both for and against. Google "Fox News North" and you'll come up with over 750,000 hits.
But, like Victor Frankenstein in the Mary Shelley thriller, Teneycke created a monster that in the end consumed him. The controversy became too hot for his corporate masters and he resigned, replaced by public relations executive and former Brian Mulroney spokesperson Luc Lavoie.
But back to Murdoch. A clue to the real reason for the Harper-Murdoch lunch was provided -- inadvertently -- by libertarian ideologue Tasha Kheiriddin in an open letter she wrote to Margaret Atwood in the National Post. She berated the Canadian literary icon for signing a petition calling on the government not to allow Fox News North to proceed.
"FYI," Kheiriddin hectored Atwood, "Mr. Murdoch routinely meets with politicians. He granted US President Barack Obama an audience in 2008... Mr. Murdoch has also met with other politicians, including former Australian PM Kevin Rudd and current UK PM David Cameron. How he found the time to add Stephen Harper to his schedule I don't know, but it's more a compliment than a plot."
Kheiriddin is wrong. Think plot, not compliment. There's one big difference between Harper and the other politicians Kheiridden mentions. Murdoch owns media properties in their countries -- Australia, the U.S. and the U.K. He owns none in Canada -- so far.
It is well-known that Murdoch meets with national leaders to advance his corporate interests. In a blog posting in December 2008, Georgia Straight editor Charlie Smith reported on a biography of Murdoch that focused on "how the media baron ingratiated himself with political leaders, who helped him build his empire.
"Don't be surprised if Prime Minister Harper pays a quiet visit to Murdoch the next time Harper happens to pass through New York City, where Murdoch spends most of his time," Smith presciently wrote.
Four months later Harper paid the quiet visit. And the visit would have remained quiet except for the diligent digging of a resourceful Canadian Press reporter who searched mandatory disclosures filed with the U.S. Justice Department by Ari Fleischer, media consultant and former George W. Bush press secretary. As a result, the get-together hit the front pages.
The Fox News North story received the ink, but what Murdoch wants from the prime minister -- and can give him by way of support -- may be a more important story.
Murdoch -- along with other non-Canadian media owners -- has so far been stymied in his quest to penetrate the lucrative Canadian media market. One roadblock is Section 19 of the Income Tax Act, which allows advertisers to deduct their costs of advertising in Canadian newspapers only when the paper is 75 per cent owned by Canadians. Since newspapers obtain about 80 per cent of their revenues from advertising, this requirement effectively kills foreign control of Canadian newspapers.
As well, Broadcasting Act regulations exclude non-Canadians from owning radio or television stations. A non-Canadian is defined as any broadcaster whose foreign ownership exceeds 33.3 per cent of voting shares at the holding-company level.
A country's restrictions haven't stopped Murdoch in the past. He gave up his Australian citizenship to become an American so he could own American television stations. He divorced his wife of 30 years and married a Chinese national half his age, which seemed to give him leverage in prying open the Chinese satellite-TV market.
What will he do to get into Canada? Whatever he has up his sleeve, don't expect it to happen overnight. Murdoch is patient and persistent.
Working in his favour is the fact that neither Section 19 nor the Broadcasting Act regulations are as much of an impediment to foreign ownership as they once were. Lock enough lawyers and financiers together in a room and they'll soon find a way to subvert the goals of the legislation.
That's what happened to the CanWest Global media empire, which was owned by the Asper family -- all lawyers themselves. The company opened the door to significant foreign control with its 2007 deal to buy the 13 specialty cable channels of Alliance Atlantis Communications for $2.3 billion.
CanWest put up only $262 million of the purchase price, with the balance coming from the notorious Wall Street financial dealer Goldman Sachs. The company promised not to exert control. Right!
Perhaps forgetting Lord Chesterfield's dictum that "he who pays the piper calls the tune," the Canadian Radio-television and Telecommunications Commission believed them and allowed the deal to proceed.
Then, after the company crashed and burned, the newspaper holdings were sold to a company called Postmedia Network, which now controls most of Canada's major metropolitan dailies, including the Ottawa Citizen, Montreal Gazette, Calgary Herald, Edmonton Journal and Vancouver Sun, as well as the National Post. Its influence on public opinion is probably greater than anything Fox News North will ever achieve.
In defiance of Section 19, Postmedia Network seems to be owned by New-York-based GoldenTree Asset Management and other vulture funds. Their basic strategy is to look for troubled media companies and then scoop up the company debt -- usually bonds -- at a depressed price. The private equity firms snapped up CanWest's risky bonds and in May 2010 they received court approval to take over the newspaper chain for $1.1 billion.
Their interest is in speedy, double-digit returns, not quality, balanced newspapers.
Here, too, the federal government is likely to believe the company's claim it is Canadian-owned and controlled. Postmedia has a majority of resident Canadians on its board and gives legal assurances (the lawyers again) that the foreign owners will not be able to dictate company policies. But the Canadian directors are not likely to make decisions that will run contrary to the interests of the foreign owners, who are represented on the board.
Meanwhile the Sun TV monster lumbers on. Quebecor's newspaper chain already has a long list of social and economic conservatives writing on a regular or guest basis, such as Ezra Levant, Mercedes Stephenson, Michael Coren, Monte Solberg, John Snobelen (Mike Harris' education minister) and Salim Mansur. Far-right shock-jock Charles Adler has been recruited from Corus Radio. They're being primed to sprint into the Sun TV studio.
The main threat is that Sun TV will magnify the already substantial Canadian right-wing echo chamber. The Harper Tories issue talking points that are picked up by the conservative media -- Sun TV, National Post, talk radio, Maclean's, Sun newspapers, Postmedia commentators -- and bounced back and forth in the blogosphere until they become accepted as facts.
And Harper moves his agenda forward.
Worries that Sun TV will be a Conservative attack dog were fuelled by the hiring of Jason Plotz from the Prime Minister's Office. Plotz was in charge of issues research and provided the material the government needed to go after the opposition.
Lurking behind the Fox hysteria is an even bigger threat to democratic media. Rupert Murdoch waits patiently as Stephen Harper sets out to create Murdoch-friendly ownership regulations and a more compliant regulator. Perhaps he'll be meeting again soon with Murdoch in New York City to report on how things are going.
This time, though, we're not likely to find out.
Vancouver Ltd. (1975)
"Capitalism means making capital out of anything and everything. This little refresher course should get you in the mood for Vancouver Ltd., a nasty little book that tells it like it is.. The results of Gutstein.s labours are couched in a tough, let-the-blue-chips-fall-where-they-may stuyle, and he leaves no doubt about his message: the city is being run by and for the developers and the interlocked directorates. The people have little, if any, chance.... Gutstein has done his homework, and has unearthed some very smelly deals...Should be required reading for any interested citizen." "The Province
The New Landlords (1990)
"Possibly because it was published by one of the smaller presses, this essential study of Asian investment in Canadian real estate hasn.t received the attention it deserves. In an evenhanded and well-written assessment of the impact of East Asian wealth on this country, Gutstein documents the startling case that without our becoming aware of it, we have become squatters in our own land. This is unfortunate. But don.t blame the Oriental investor. They only did what we invited them to do." --Peter C. Newman, Business Watch "Best Business Books of the Year" Roundup
About the Author
DONALD GUTSTEIN teaches in the school of communication at Simon Fraser University and is the author of three acclaimed but controversial books: e.con: How the Internet Undermines, The New Landlords, Democracy and Vancouver Ltd. He has studied the media for more than ten years as co-director of Project Censored and NewsWatch Canada and has written many articles for magazines and online sites devoted to media and social policy. He lives in Vancouver, BC.