Too many laws are made by regulators rather than legislative bodies
Unelected officials enact regulations that restrict individual freedoms
The power to enact laws is derived from the Canadian Constitution which says in part “The Constitution Acts, 1867 to 1982, s. 91, confer on the Federal Parliament the power " to make Laws for the Peace, Order and good Government of Canada, in relation to all Matters not coming within the Classes of Subjects by this Act assigned exclusively to the Legislatures of the Provinces”. Nowhere does the Constitution provide means for administrative bodies like the Provincial securities commissions to issue regulations with the force of law. But they do.
That system has worked well for Canada despite the existence of inconsistent securities laws across Provinces, and we benefit from an open and reliable stock market largely free of fraud and abuse. I see that as at risk as our regulators begin to promote “woke” values and insert them into securities regulations without legislative precedents.
The Ontario Securities Commission (OSC) is moving towards mandating “climate risk” disclosure for all issuers despite the reality that CO2 is harmless and corporations do not and cannot control Earth’s climate. The Securities and Exchange Commission (under Democrat control) is doing the same thing. Burdening corporations with nonsensical disclosure obligations has a cost and that cost comes at the expense of returns and harms investors without offsetting benefit of any kind.
A similar movement in the OSC is embracing the equally nonsensical view of “stakeholder capitalism” where regulators want to compel corporations to take responsiblity for social goals normally the purview of elected officials, promoting Environment, Social and Governance (ESG) disclosure and leaning towards what is called “principle based regulation” where listed corporations are given objectives defined by regulators as being in the “public interest” and are then held accountable for meeting those objectives at whatever cost. Market theorist Aswath Damodaran succinctly sums it up: “I believe that ESG is, at its core, a feel-good scam that is enriching consultants, measurement services and fund managers, while doing close to nothing for the businesses and investors it claims to help, and even less for society.”
In democracies the “public interest” is traditionally defined by elected representatives and if the electorate disagrees, they vote in a different government. Appointed securities regulators don’t face voters and tend to be in their positions through elections. Their view of what is in the “public interest” is their personal opinions, not the public’s consensus.
Corporations are a legal fiction designed to protect investors from liabilty that is greater than the amount they have invested. Officers and directors of corporations have duties to act in the best interest of those corporations, not the best interests of the public or of shareholders for that matter. Imposing ESG goals will create conflicts of interest, increase costs and reduce returns on capital making it harder for pension funds to earn enough to pay for our retirement.
The concept of democracy in both Canada and the United States divides responsibilities between elected officials who make laws, courts that interpret them and an executive and administrative branch that administers and enforces them. But the administrative branch is becoming a tool for left wing governments to enact laws without going throug the inconvenience of any legislature, by having appointed bureaucrats create “regulations” with the force of law, often without express authority from Parliament or any legislature in Canada or from Congress in the United States.
Canada’s Supreme Court has more or less abdicated its role in upholding the protections of our Constitution and joined with the activist left in interpreting the Constitution to uphold laws such as the Greenhouse Gas Pollution Pricing Act without bothering to hear any evidence on whether carbon dioxide had any role in global warming and ramming the Liberal governments carbon tax down the throats of Provinces. When judges bring their personal beliefs into their decisions, they cease being judges and become activists.
Not so in the United States. The recent decision of the Supreme Court of the United States to bridle the Environmental Protection Agency from imposing regulations that compelled coal fired power generation to shift to costly new technologies to reduce (harmless) emissions is an example of the value of a Court upholding a Constitution in a democracy. In the words of Judge Gorsuch in his concurring reasoning for the June 22, 2022 judgment in Virginia v EPA 579 U.S. 2022: Administrative agencies ““must point to clear Congressional authority when they claim the authority to make decisions of vast economic and political significance”.
Canada used to have a Supreme Court that benefited our system of government. Now it has a shill for the Liberal party ideology. That is a sad moment in our history. In parallel, our administrative agencies are becoming activists and our education system corrupt.
Canada’s Liberal government has embraced neo-Marxism and is now encouraging our education system to indoctrinate children with their ideology. Perhaps the worse example is described in today’s Financial Post article “Federal Government effectively declared Red Ensign a Hate Symbol”. The Red Ensign was Canada’s flag until 1967 under which millions of Canadians fought two wars and completed military service. It is deserving of respect. Trudeau is not.
Good article. Keep up the good fight Michael. Happy Canada Day!