Angry at businesses like Bell Media? Real competition – not anger – is the answer

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There are roughly 1.4 million businesses in Canada with at least one employee. And in every one of those 1.4 million businesses, managers are obsessed with one question: what is the very smallest number of workers we can employ?

Businesses exist to make profit; profit implies minimizing costs; labour is typically a third to a half of a business’s costs. Reducing labour costs is consequently a primary concern.

Do we really need to take anyone else on? Could we get by with hiring fewer? Maybe we have too many already? Should we lay off some existing staff? Could we replace them with machines? Outsource the work overseas?

All this effort adds up. Of the 20 per cent to 25 per cent of the Canadian work force – between four and five million people – who leave their jobs every year, about a third are by layoffs.

And yet, notwithstanding this constant, universal, unrelenting drive on the part of businesses to minimize hiring and eliminate jobs, employment has never been higher, not only in absolute terms, but as a share of the working-age population: The employment rate among those aged 15 to 64 stood at a record 75.8 per cent in 2023. Four million-plus people may leave their jobs every year, voluntarily or involuntarily, but even more are hired.

The same applies to wages. If there is one thing to which businesses are more dedicated than hiring fewer people, it is paying lower wages. And yet wages, too, are at all-time record highs. The average hourly wage, at roughly $34, is 22 per cent higher after inflation, than it was 20 years ago. Despite its best efforts, against its every instinct, business is employing more workers at higher wages than at any time in our history.

That’s not because of minimum-wage laws: Barely one in 12 Canadian workers earn the minimum wage. And it’s not because of unions: Just 15 per cent of the private-sector work force are union members. Rather, it seems as if businesses hire more workers and pay them higher wages because it is in their own interests to do so; because if they didn’t, other businesses would; because there is such a thing as a market for labour.

I review all of this for the benefit of the Prime Minister. Responding to BCE’s announcement earlier this month that it would sell 45 of Bell Media’s 103 radio stations and lay off 4,800 of its workers company-wide – roughly three-tenths of 1 per cent of all those who will be laid off this year, or less than one one-thousandth of all those who will be hired – Justin Trudeau put on a display of exaggerated fury. He was, he told a press conference, “pretty pissed off” at this “garbage decision” by “a corporation that should know better.”

“This is the erosion,” he went on, “not just of journalism, of quality local journalism at a time where people need it more than ever,” he went on. Indeed “it’s eroding our very democracy.” The indictment broadened to include “corporate Canada,” which in recent years had “abdicated their responsibility toward the communities that they have always made very good profits off of in various ways.”

It’s possible he was just playing to the assembled media, who are only too willing to believe they are all that stands in the way of the erosion of our very democracy, especially if there’s a buck in it. But you can see the underlying world view.

Businesses do not make profits by selling people things they value, at a price they consider worth paying, but rather make profits “off” of “communities,” in return for which they have a “responsibility” to employ a certain number of the locals.

Corporations don’t hire people, in this view of things, because they need them – because they provide more output and therefore revenue to the firm at the margin than they cost in wages and benefits – but as a kind of licence fee. Or to be good team players. Or because the government expects them to.

In fairness, these sorts of transactional arrangements – I give you money, you give me jobs; I give you jobs, you give me votes – are politicians’ bread and butter. Given that understanding, I could well imagine the Prime Minister being “pissed off” at Bell and other media for failing to deliver after all the money his government has steered the industry’s way, from Bill C-18 (the attempted shakedown of Google and Facebook for the benefit of the Canadian news business) to Bill C-11 (the attempted shakedown of Netflix and Spotify for the benefit of the Canadian film and music business) to the various direct subsidy programs, old and new.

But honestly, what else is new? Business has been playing this game for decades – and none with more alacrity, not to say venality, than the ones that are pleased to call themselves the “cultural industries.” The con is always the same. Give us money, they say, or protect us from competition, or otherwise stuff our pockets, and we will plow a share of the ensuing profits back into Canadian content.

Often this is couched in the language of cultural nationalism. Drill down into any given controversy over “cultural sovereignty,” where Canada’s artistic virtue is allegedly threatened by some sordid purveyor of foreign content, and as often as not you find the issue is not about stemming the flow of alien cultural product at the border, but who controls the spigot.

As in: “Let us, patriotic citizens that we are, import those popular U.S. television shows, or films, or books, or what have you, and collect the fat profits that accrue thereto, rather than the filthy Americans. We will use those profits to subsidize all the Canadian stuff no one wants to watch or read, in addition to the subsidies you already provide.”

We even gave Canadian broadcasters the right to bump the originating signal of an American TV show off of U.S.-based stations, replacing it with their own broadcast of the same program and charging advertisers for the combined audience – a policy, known as “simultaneous substitution,” that amounted to paying broadcasters to show American programs. All in the name of Canadian culture.

Only the back half of the bargain never seems to arrive. Businesses pocket the money, and carry on as before. And why not? You can’t actually force people to produce art. All you can do is offer them another bribe, and hope this time they deliver. But even if they do: the jobs and the output and everything else only last as long as the subsidies do. The only sustainable jobs are the ones that don’t require a subsidy – the ones that make sense on their own terms.

Rather than pout at being gamed, yet again, the Prime Minister would be better advised to stop playing the game. It isn’t as if businesses unfailingly treat their workers well or – God knows – consumers, especially in this country. But where we see corporations behaving as if the world owed them a living, it is usually best to ask why. Nine times out of 10, the answer is: because of a lack of competition.

Businesses don’t raise wages or lower prices out of the goodness of their hearts. And they don’t do so because government tells them to – or if they do, it is temporarily, and taken out of the public’s hide in some other way. (Example: cap interest rates on credit cards, and marginal credit risks soon find themselves cut off.) They do so out of fear that if they don’t, their competitors will.

Conversely, where competition is less intense, the pressure is off. There’s a reason why Canada has among the world’s highest cellphone charges; why it has among the world’s highest domestic air fares; why it has among the world’s highest fees for financial services. It is because in all these industries the signals that competition normally sends to business – do better – are faint. Three companies dominate the Canadian wireless telephone business. Two airlines bestride the domestic air-travel market. Five banks control most of the financial-services market.

But why is that? Every business would like to dominate its market, just as much as they would like to employ fewer people or pay less. Yet few manage it. Either they are prevented from doing so by domestic rivals, or by imports from abroad. Even where a firm gains the upper hand among the existing players in a market, the threat of new firms entering the industry is often enough to prevent it from abusing its position.

What distinguishes the industries in question is not the mere absence of effective competition, but that effective competition has been prohibited by law. So entrenched are the big players that they are unlikely to greatly fear any new domestic startup. Rather, serious competitive pressure would have to come from outside our borders.

Yet in each case foreigners are, as a practical matter, forbidden entry. Foreign airlines may not fly point-to-point within Canada; neither may they acquire a majority stake in any Canadian airline. Foreigners are likely prohibited from buying a Canadian telephone company, while no one, foreign or domestic, may hold more than 10 per cent of a Canadian bank.

Relaxing these restrictions would be the surest way to put the fear of God into these firms. Yet somehow it is never proposed by anyone in Canadian politics. The same all-party omerta surrounds supply management – another anti-competitive arrangement that could not exist without government enforcement – ensuring Canadians pay two to three times the market price for basic food items such as milk, eggs, butter and chicken.

Instead, we are pacified with meaningless baubles, such as a “passenger’s bill of rights” or showy demands for “lower” cellphone rates (rates are dropping everywhere: they remain higher here than in other countries) or, in the latest iteration, a “grocery code of conduct.” All are, at best, an attempt to treat the symptoms, rather than the disease.

Business leaders have responded to the Prime Minister’s rhetorical attacks on Bell Media and others in wounded tones, warning that it will deter investment. But in truth, we’re not nearly hard enough on business in this country, at least in the ways that count. Rhetoric means nothing. Regulation generally winds up being to the advantage of the regulated (businesses go bust all the time – ever heard of a business being forced into bankruptcy by regulation?). But competition speaks to them in the only language they understand, enlisting their self-interest in the public interest.

Want to get tough on business? Make them work for a living. Enforce the competition laws, and open up protected markets. Prime ministerial tirades aren’t likely to cause Bell Media to lose much sleep, but competition hits them where they live.

Editor’s note: A previous version of this article incorrectly stated that Bell Media planned to cut 4,800 jobs. BCE announced it would be cutting 4,800 jobs, fewer than 10 per cent of which are with Bell Media. This version has been updated.