After my father died in Victoria in 2008 at the age of 91, my sister opened his safety deposit box and discovered $5,000 in shares in the British Columbia Resources Investment Corp., better known as the BCRIC, universally pronounced at the end of the 1970s as the “brick.”
When I say $5,000 in shares, of course, that is a description of what he paid. By 2008, they were worth nothing of the sort. In fact, they were worth nothing at all. Zip, zero, zilch.
My father, and many other naïve small investors like him, may have believed that their BCRIC shares were somehow backed by the B.C. government — they had certainly been promoted by it — and were therefore as good as Canada Savings Bonds, another thing of the past.
He may also have felt buying BCRIC shares was a patriotic thing to do; I know he wanted to support local jobs. He certainly understood companies of great value were owned by the BCRIC.
How my father came to be fleeced by the sharp operators in the B.C. Government who created the BCRIC, and their friends in business who ran it for them, is a cautionary tale worth repeating in the Alberta of 2020.
That’s because Jason Kenney, the something-like-Social-Credit Premier of Alberta, has been talking about doing something that sure sounds like the BCRIC to me, right here in Alberta.
On Feb. 29, the Globe and Mail reported on how Mr. Kenney had mused before a business crowd in Edmonton about what the newspaper described as “the potential of the public purse being unzipped to buy oil and gas projects.”
“Jason Kenney wants public ownership of Alberta oil and gas, and Albertans could buy shares,” enthused the Globe’s headline writer.
“We are prepared to do what is necessary to ensure a future for this province’s economy,” Mr. Kenney told the business types as they grazed. “And I think Albertans are smart, they’re patriotic, they understand that there’s great value in these resources.”
What happened in B.C. in the early 1970s is a complicated story, but it’s still worth recounting the broad strokes, because it bears some similarity to what is happening in Alberta now.
First, there was a recession that saw many natural resource-based industrial companies fall into financial trouble, threatening many jobs.
Then there was a one-term NDP government, led by a premier named Dave Barrett, that saved those jobs for a spell by buying the troubled companies and running them as Crown Corporations. (That is something the NDP government elected in Alberta in 2015 would never have dared to do.)
In 1975, the Social Credit government led by Bill Bennett — the son of the William Bennett Mr. Barrett had defeated in 1972 — returned to power. The younger Mr. Bennett was an early version of what today we would call a neoliberal, and he did not like the idea of the government picking winners and losers, let alone running them.
Being a clever man, Mr. Bennett justified re-privatizing these recently nationalized assets in a clever way — he came up with a scheme he said would help ordinary people become investors and grow to appreciate the way our modern market capitalist system works.
Arguing that the private sector always does a better job than the public sector of running things, Mr. Bennett’s something-like Social Crediters took all the enterprises nationalized by the New Democrats, rolled them into one big resource company and gave five shares to every adult in the province.
Then — and this was the really clever part — they offered to sell additional shares to members of the public who had faith in the government and the value of its former assets.
Alas, the very smart businessmen Mr. Bennett trusted to take over these valuable public assets made some very bad miscalculations. They sank quite a bit of the money in the North Sea, where there was oil that wasn’t fetching very good prices at the time. They dropped more down a mineshaft that turned out not to have a bottom.
Small investors like my dad who had put thousands of their hard-earned dollars into the BCRIC saw their investments drop like the company’s namesake. Before long, their thousands were worth only a few pennies.
By then, of course, the company, with its nearly worthless shares, wasn’t called BCRIC any more. It had a conveniently inoffensive new corporate title: Westar Group Ltd. No need to remind folks that this was Mr. Bennett’s brainchild!
In 1997, Westar was re-re-privatized. That is to say, the shares were taken private. Westar ceased to be a public corporation, subject to public reporting rules, and became private property. Small investors were told there was a “compulsory buy-out” of their shares.
In other words, the wealth that had been put into BCRIC by small investors was privatized. The small investors were given 10 years to cash in their considerably devalued chips.
The buy-out officially ended on June 30, 2007. After that, the shares – which had once traded for as much as $9 each – had no value at all.
Investors like my father, who were too sick, too old, or too forgetful, got nothing.
And the money those small investors had paid for a share of the BCRIC, well, that went somewhere…
Now Mr. Kenney has a similar scheme — although it sounds as if it will be dependable market fundamentalists from his United Conservative Party who will nationalize the assets with the intention of reselling them later, not New Democrats bent on “a risky experiment,” as we say nowadays in Alberta, to save jobs.
Premier Kenney advised his friendly Edmonton business audience to “stay tuned.”
They should. And so should we.
Remember, even if oil were a business with a future — and there’s a strong case to be made it’s not — you’re smart never to trust clever, smooth-talking right-wing politicians with your retirement savings.
Not unless you really want to come to appreciate the way our modern market capitalist system works, that is.
If you’ve got money in a government pension fund on which Mr. Kenney and his finance minister, Travis Toews, are casting covetous eyes, that is an even more troubling prospect.
At least if you’re an investor in the stock market, you have the choice.
And if you have a few thousand to invest, my advice to you is this: Don’t do like my Dad did!