Necessity of Crown Corporations

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LCBO and the Necessity of Crown Corporations

Public administration has always been a reality; from the Roman Empire to Chinese Empire there is an extensive history of the government controlling constituents through institutions. In modern history important leaders, such as Woodrow Wilson, have demanded for an extensive study of public administration reasoning that efficiency would follow if there was a greater understanding of public policy (Wilson, 1887). In this examination of public administration academics seek to determine the beginning of public policy, however, it is not a clear as there are many actors affecting public policy. Academics work toward differentiating the significant aspects of the actors from the insignificant ones through specific theoretical approaches such as positivism. The underlying principle of positivism “is precisely its postulate that scientific knowledge is the paradigm of valid knowledge, a postulate that indeed is never proved nor intended to be proved” (Larrain, 1979). Using this ideological framework and taking excessively from economics without giving due credit, academics begin explaining public policy as a result of market failure (Pigou, 1932) (Weimer, 1992). Market failure in public policy can be described as the idea that the government puts in policy when the market cannot provide a service or lacks the will to provide a service. This broad definition of market failure was then wilted down to several different types: public goods, externalities, natural monopolies, imperfect information, common pool goods, and destructive competition. Many academics argue over labels, but most agree upon these (Michael Howlett, 2009). To deal with these market failures the government has many tools at its disposal such as the taxonomy that Christopher Hood created to categorize these tools into groups in the NATO (Hood, 1986). NATO stands for Nodality, Authority, Treasury, and Organizations; Nodality being the information resources of government, authority their right to punish or restrict, and treasury refers to their ability to spend but also tax. Organizations, including the bureaucracy itself, are other institutions that falls under this category of crown corporations. Crown Corporations, the Canadian title for state owned corporations, state enterprise, or publicly owned corporation, are organizations which are owned by one of the three levels of government to some degree. This definition causes conflict within academic circles as to which companies fall under the title of “Crown Corporations” because it is difficult to determine what percentage the government would own to garner this title. Companies such as General Motors of Canada, Limited might fall under public enterprise if a public enterprise only needs a small percentage of state ownership. The protocol because of this uncertainty has been the government must own a majority of the company to be a Crown Corporation, whether that be by 1 percent or 99 percent (Michael Howlett, 2009). The companies entitled “Crown Corporation” usually provide a good or service for sale unlike their counter parts in the bureaucracy. Although the government has a place on the Board of Directors of many of these Crown Corporations, the control that the government has over their operations is not that forceful (Walsh, 1978). Crown Corporations which exemplify this relaxed relationship of control are ones such as the Canadian Broadcasting Corporation (CBC), which runs news articles that are very critical of the government in power, and the Bank of Canada, which can change fiscal policy to the detriment of government such as raising the National Interest Rate even if the government has amassed large sums of debt. Crown Corporations are a historical staple of Canada’s evolution from a British Colony to a First World Country with a large mixed economy relative to its size. These endeavours fall under the title “Nation Building” and these services essentially...
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