EDITORIAL JUNE 9TH, 2011

Kerry Knudsen

Kerry Knudsen

My landlord in the university years was a physics professor. He seemed to like me; I rented a house, but most of his tenants lived in bee-hive apartments close to the school. He hated them. His fantasy was to build stacked bunkers of concrete so whenever a tenant left, all he would have to do is take a fire hose in and blast it out, let it dry and spray-paint it grey I never took university physics, but I learned a lot from the physics professor. For example, I have never wanted to be a landlord.

I did take economics and social statistics at university, but I am not an economist. I also read a lot and I seem to have a grasp on economics and studies that serves me. Sometimes I share it in an editorial – usually because that’s what I’m interested in that day. In the old days there was a cowboy philosopher, as he called himself, that wandered from topic to topic without credentials. “All I know is what I read in the papers,” was his hallmark expression. His name was Will Rogers.

Once in a great while somebody gets irked and asks me what right I have to write about economics or social statistics. The answer is none at all. I have no more right to write about economics than a physics professor has to be a landlord. All I know is what I write in the papers. One of my irked friends challenged me last week to admit the U.S. President is doing a good job with the economy, considering the overwhelming problems he is facing. I agreed Obama is facing overwhelming problems, but did not allow they were economic. If I had, I would doubtless have to admit he is also responsible for the ice caps still being in solid form. Anyway, I don’t have a degree in economics, but it fascinates me and I read a lot.

For example, there is a new report out from Statistics Canada that measures the contribution of small- to medium-sized businesses to the Gross Domestic Product in 2005. The nut of the report, as you will likely see published elsewhere, is that the contribution of large businesses with 500 or more employees to business-sector GDP was 45.7 percent, while small- and medium-sized businesses, including unincorporated businesses, accounted for the other 54.3 percent.

However, if you drill down a bit, you find that, “Previous studies relied predominately on employment, an input to the production process, rather than on a measure of output. This study overcomes this problem by focusing directly on GDP.”

To me, that change is huge, and it means the report provided now is brand-new material and has not been discussed before. We may have thought, but we could not have known, that SMEs account for nearly 55 percent of the GDP.

Drill down further, and you can see that, as with all statistical reports, assumptions had to be made: “First, firms are consolidated into enterprise groups headed by an ultimate parent. If one were to use a legal structure below the ultimate parent level, the GDP accounted for by the small and medium-sized categories would likely increase since businesses would be separated into smaller groups. Second, as a business may operate in a number of industries, estimates of GDP by size for a particular industry are sensitive to whether all the operations of a business are included in that industry. Third, if one were to include all independently run franchisee firms under the ultimate parent that owns the franchise brand (the franchisor), the GDP accounted for by the large size class would increase. Fourth, GDP can be produced at different valuations, for example, basic or market prices.”

Therefore, while you have to be alert that this is a 2011 report that discusses 2005, and you have to realize there are unmeasured variables, this is still the first time we can see our sector (since we have very few firms employing over 500 people) stands in the economy. If you click on the hotlink above, you can see the tables, but Table 2 shows the share of each of the GDP components accounted for by small- and medium-sized businesses. Small- and medium-sized businesses, including unincorporated businesses, accounted for 58.1% of labour income, but 47.8% of operating surplus and mixed income. This is consistent with the claim that smaller businesses are more labour-intensive.

Diverging from the report, however, we have consistently objected to the inequitable impact labour unions have on smaller corporations versus larger ones.

It is the larger corporations that are cited in labour-oriented appeals to the public and the government, and the larger corporations (excluding Wal-Mart) tend to acquiesce to the unions rather than incur the costs of the offered battle. So new compliance costs settle on the producers, but the majority of the producers were not the alleged targets of the initiatives. Big guys are at fault, the unions say, but the small guys pay. Maybe Statistics Canada should do a study of how many SMEs have been removed from the GDP by labour since 2005.

Which brings me to the current, rotating strike by Canada Post. These guys are not against big companies or small. They are against everybody, like some kind of physics professor posing inductive hypotheses on an entire class of elements. They lack seven weeks of paid vacation, and you have five dollars in your pocket. Time for war.

You are not only a small- to medium-sized business; most of you are entrepreneurs. As such, it is likely you look for cheques in your daily mail. Cheques mean cash flow and cash flow means making payroll. Therefore, it seems as if the “workers” at Canada Post are actually trying to parasitize the revenues the workers at your operation need to survive, as well as your own. Cunningly seeing the public relations fiasco in depriving fellow workers of jobs and benefits, the geniuses in the public sector invented the “rotating strike,” likely evolved from the “rolling blackouts” implemented by governments when there just is not enough power to go around. (I mean electrical power, although there is an argument to be made….) In Will Rogers’ day they called it rationing.

So the CUPW has instituted rotating strikes, hitting Winnipeg, Hamilton, Montreal and so on, while leaving the rest of the country untouched.

The effect is to leave most of us unaffected, while delaying the mail in the struck cities by one day.

One DAY!!! Hallelujah! If I could get a guarantee of every piece of mail being delayed by only one day, I could delay my decision to ask our suppliers to start making e-payments. Of course, that would kill the seven-week vacations, leave the unemployed without either $26 an hour or a job to go to, and we could house them in stacked bunkers sanitized with fire hoses. Of course, one would have to know more about physics before we could implement that, but it might be worth reading up on.

Note: We welcome comment, either for or against.  Click “Comments” below.

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