All through BlackBerry’s long, slow death spiral — for there can be little doubt now that that is what it is — the Harper government has been at pains to make clear it would not step in to save it. The Industry minister’s most recent intervention on the subject was limited to wishing it all the best while expressing the hope it can “make it on its own.”
This is all to the good. Nothing can save BlackBerry now, and nothing should. The company had a great run in one of the world’s most competitive industries, an industry it in no small part created. But it became a victim of its own success, too complacent, too slow to innovate, too little focused on the emerging consumer market while it tended to its corporate client base.
As of now, its market value is essentially the sum of its patents, its cash, and its inventory of unsold smartphones. The business itself is worth nothing. The best thing the government can do for its shareholders and employees is to waive the usual murky “net benefit” test and allow the company to be sold, in whole or in part, to whichever buyer, domestic or foreign, thinks they can create some value out of it.
The reason we should wish to let BlackBerry fall, either to foreigners or to bankruptcy, is precisely to create the conditions for future BlackBerrys to rise. The companies that last — so far as any company can — are those that stick ferociously to meeting, or indeed anticipating, consumer wants. Competition and the fear of failure tend to sharpen that instinct; protection, subsidies and bailouts do the opposite. The company that created the BlackBerry didn’t emerge from some sheltered workshop of the state, but from the talents and vision of its two co-founders. By the time governments started “investing” in it, some years ago, it was probably already over.
By and large, the public seems to get this; if the Harper government is reluctant to get involved, it may be because no one is asking them to. (Even the NDP has so far restrained itself: its response to Friday’s announcement of 4,500 job cuts worldwide was confined to a brief release calling on the government “to make sure that affected workers are helped through this difficult time.”) The kind of economic nationalism that focuses on creating a few “national champions” in “strategic sectors” seems to be waning in its appeal: witness the telcos’ failed attempt to whip up opposition to Verizon. People may still get misty-eyed over the natural resource sector, but where their own dollars, rather than someone else’s, are involved, a certain realism sets in.
That BlackBerry is in the fabled “high-tech” sector may in fact have sealed the deal. People can see how competitive these industries are, how quickly companies rise and fall, and they can see how much the consumer has gained from this, with better products at lower prices coming on stream every year. Perhaps if the company were still on top, and an outsider proposed to buy it, the old protective impulses might have kicked in. But a failing company is more likely to be seen as deserving to, and its foreign purchaser more a saviour than a threat.
All right, then, for whatever reason the Harper government looks unlikely to intervene. Perhaps it will even offer some explanation along the lines above: competition, consumer choice, profit and loss, may the best company win. To which the only appropriate response the rest of us can offer is: huh?
If failing companies should be allowed to fail, if businesses should live or die based on their ability to persuade people to pay for their products, rather than to get the government to force them to pay, well, why has this government been so shy about applying this principle until now?
This is the same government that not only bailed out the auto companies at the height of the financial crisis, but several times before and since, the most recent infusion of public cash coming just this week, at Ford’s plant in Oakville, Ont., complete with the usual glitzy ceremony.
This is the same government that provides all sorts of special tax breaks for favoured industries, as we were reminded, again this week, with the extension of the accelerated capital cost allowance for manufacturers. This is the same government that props up failing Crown corporations like Canada Post, to no one’s benefit including Canada Post’s, as we were also reminded this week via a scalding piece by the corporation’s former CEO, Michael Warren.
This is the same government that sends ministers fanning out across the country at regular intervals to boast of the subsidies they are handing out, whose “grants and contributions” to business fill several hundred pages of the Public Accounts each year, that seems unwilling to rest until it has underwritten every firm, industry, trade association, snowmobiling club and bar mitzvah in the country.
This is the same government that issued a press release “reaffirming” — why yes, it was just this week, now that you mention it — it was spending $50-million on a Venture Capital Action Plan (VCAP), to “help create a vibrant private sector-led venture capital system in Canada.” That’s right: it’s official government policy to subsidize venture capital funds.
So: why them, and not BlackBerry? What was so special about these firms that opened the treasury’s vaults to them, where it was closed to BlackBerry? Why is their inability to succeed without subsidy an argument in its favour, rather than against? What they got that BlackBerry ain’t got?
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Original source article: Why won’t the Harper government help BlackBerry?