A few months ago, I was turned on to the phrase “corporate lebensraum” by James Healy, an L.A.-based artist and founder of the Museum of Death (which I wrote a story about). Healy had used the term to title an exhibit in the early ’90s where he juxtapositioned cereal boxes with serial killers.
The exhibit, which eventually spawned the museum, was meant to show how companies expand into the public’s consciousness, often in dangerous and destructive ways. “Lebensraum” is, of course, a German word meaning “living space” that is forever linked to Hitler’s effort to take over Europe. “Corporate lebensraum” was a perfect take on the idea that, as the L.A. Times put it, was meant to evoke similar horrific feelings of revulsion. Through the exhibit, Healy and his partner visualized and expanded their “argument that food manufacturers are turning children into monsters, seducing them into a deadly consumerist trap right at the breakfast table.”
Serial (and cereal) killers aside, it occurred to me the other day that corporate lebensraum can have other interpretations as well - and one of them is in fact unfolding before our eyes through the actions of Canadian telecommunications companies.
As I mentioned in my post on the joint purchase by supposed arch-rivals Bell and Rogers of the Maple Leafs NHL team (and other properties, including the Toronto Raptors), it’s unfortunate that these firms continue to look inward to Canada rather than thinking about international expansion. But at the same time, in the context of corporate lebensraum, what else are they to do?
We’ve been warned of this inevitability, which is happening because of the laws that prevent foreign ownership of such companies. In presenting the findings of the Competition Policy Review Panel back in 2008, Lynton Wilson said that keeping the walls up around Canada not only prevents foreigners from coming in, it also heavily discourages Canadian companies from stepping out.
“The best way to ensure that successful Canadian businesses are not simply absorbed by international consolidators — to avoid being ‘hollowed out’ — is to take the play to the other end of the rink,” he said. “Canadian firms must become more savvy and determined global players.”
Bell and Rogers certainly aren’t doing that. Instead, they’re “filling in” by buying up everything they see in Canada - whether it’s electronics stores, television broadcasters, magazines and newspapers, sports teams, or even starting banks - because such operations apparently create synergies for their main telecom businesses.
Perhaps, but where do the synergies end? With hefty profits continuing to flow from captive customers and no real pressures to step outside Canada’s borders, the big telecom companies will continue acquiring “synergies” until there isn’t much left to consider as such. As I joked to Global News on Friday, Canadians might eventually have to buy their shoes from Bell and groceries from Rogers.
It’s an exaggeration, but it’s also an unconsidered side effect of the government’s refusal to lift the foreign ownership restrictions. The longer the walls stay in place, the larger these companies will grow and the more they will become conglomerates with businesses that touch every aspect of Canadians’ lives. It’s another kind of corporate lebensraum, where the companies will expand until they overwhelm everything.
Is that a good thing? There are certainly benefits to conglomerates - they have size and money, which obviously come in handy. But they are also uniformly recognized as being inflexible and inefficient, which is ironic given my recent posts regarding the telecom companies’ lack of efficiency.
Inflexible conglomerates have sunk many a ship, from precipitating Japan’s prolonged recession to Sony missing the boat on digital music players (In his biography, Steve Jobs said company’s inflexibility is what allowed Apple’s iPod to take over). It seems rather risky, then, to allow them to grow within Canada, especially at a time when the global economy is shaky.
Once again, the question becomes: Are these growing telecom conglomerates efficient? I tried to answer that the other day by looking at revenue versus employee figures, but in the end the numbers aren’t even required to come to an answer. Can a single company efficiently run telecom services, magazines, retail stores, virtual banks, sports teams and who knows what else? It hasn’t been done yet, so there’s no reason to believe Canada will be a special case.
Foreign ownership restrictions are not just keeping telecom prices high and customer choices low, they’re also contributing to the building of giant, inefficient companies that will inevitably place a weight on the nation’s economy. The issue of foreign ownership, therefore, isn’t just a consumer issue - it’s increasingly becoming one of national importance.
Unless we want a handful of companies providing us with every product and service under the sun, this particular brand of corporate lebensraum desperately needs to be stopped. That can best be done by refocusing the energies driving it outward, onto an unsuspecting world.
December 12, 2011 at 2:49 am
Too big to fail. My biggest fear is that when time comes, they’ll get given a huge handout of tax-payer money.
December 12, 2011 at 8:26 am
In other words, this MLSE deal is a direct proof of Canadian telecoms lack of true competitiveness: Thanks to foreign ownership rules/isolation these companies have managed horde the cash / profits, and now need to spend it somewhere. If they were true telecom leaders and lean-mean-corporate-fighting-machines, they would expand abroad and use their cash and expertise for that. Since their profits are instead thanks to idiosyncratic home market rules they turn inward instead, cobbling up all and everything in Canada as you write.
December 12, 2011 at 9:32 am
2015, NDP majority, or enjoy more of this.
December 12, 2011 at 12:03 pm
Actually, the NDP is the party most opposed to removing foreign ownership restrictions. Plus, I don’t know if any of us will live long enough to ever see an NDP majority. ; )
December 12, 2011 at 5:13 pm
When it comes to foreign ownership, for sure. They’d be considered historically protectionist. Although I’m not sure if that’d still be the case today.
At the very least, they would advocate consumers enough to defend themselves against the number of mono/duopolies and collusion we have to deal with in Canada.
December 12, 2011 at 9:41 am
I remember hearing a rumour about AT&T back in the day. Supposedly the straw that broke the camels back and caused the US gov to break up AT&T was an attempt to buy an entire nationwide chain of bakeries. I have not been able to confirm that this actually happened but it was at least an expression of the perceived issue. A particular company had managed to accumulate so much money that they were causing problems by their desperate attempts to find a place for it.
December 12, 2011 at 12:01 pm
Bakeries? That’s hilarious! What was the “synergy” involved?
December 12, 2011 at 9:44 pm
I agree with bwalzer - my biggest fear is that, at the size corporations have grown to, they are in many respects more powerful than governments (and dictate policy - but we already knew that).
The question that needs to be asked is, is this the world we want to live in, where democracy means squat because everyday life is controlled by a handful of giant corporations?
When are politicians going to listen to their constituents that have been crying for many years now that giant corporations have grown into a societal cancer and that this economic model, that may have worked great a hundred and fifty years ago, is in desperate need of an overhaul?
December 14, 2011 at 1:10 am
Some Canadian companies have done wonders moving beyond the borders. Scotia Bank, CIBC, Toronto Dominion, They are finding themselves in their primary fields of business in many countries around the world. The telecom companies however do realize that there are huge regulatory hurdles in other countries as well as in Canada for foreign owned broadcasters. As much as Canada regulates, so does the US, and England and France and so on. Just look at what happened to ATT trying to buy T-Mobile! It’s just about dead at this point.
On the other hand, telecom companies have for years tried to make something happen… While they realize that they provide the communications infrastructure for the masses, its not worth much unless you have premium content. Originally, many ISPs thought “Build the Information megahighway” and someone will put content on it that folks will purchase bandwidth from us in order to view. Then they found out that when they view the other stuff on the internet, these same ISP’s lose viewers from their TV holdings because you can’t watch 9 shows at once unless you are a little nutz!
So they first caused the cost of bandwidth to go up like crazy cutting off the value of the content that would most likely compete with their TV entertainment. Next, in order to differentiate themselves from the competition in what is basically a commodity market, they buy up all of the content providers that are the most sought after… The sports franchizes. If you want to see the Argos play you have less choice…
These guys are smart… They would much rather DOMINATE a market that they know and have control over than to take a chance on a foreign market that they could lose their shirts trying to figure out. The down side outweighs the up…