For decades, governments in Canada have funneled billions of dollars into the coffers of private, for-profit businesses. It’s hard to pin down an exact figure for this largesse, so numerous are the programs and forms: “grants,” “loans,” “investments” and so on.
Some of the familiar names include such downtrodden businesses as Pratt & Whitney, Bombardier and General Motors. Many of these programs have continued, virtually unchanged, regardless of the stripe of government in power. Today, even governments that otherwise are at odds with each other on virtually every other issue – take the federal and Ontario governments – will find that one point of agreement is that there’s essentially no business too big or too small unworthy of taxpayer money.
We’re often told about the “private sector jobs created” as a result of these “investments.” No one seems to stop and ask some obvious questions.
If the only reason these jobs exist is because a government is transferring public money to a company so that they hire people, in what way are these private sector jobs? How is this different than the government just hiring more people directly?
If these investments are so sound, why are no private investors taking up the offer? Surely the prospect for a sure thing would have a lot of takers.
And if the investment isn’t sound, why is the government of Canada risking taxpayer dollars on it? If politicians want to gamble, they should go to a casino, and use their own money. They shouldn’t be doing it with public funds.
We are also often told that Canadian governments “must compete in the global economy.” Every other government is funneling tax dollars into their own “strategic” industries. So surely Canada has to do the same?
Except we don’t.
There is no compelling reason why Canada needs to be in the business, for example, of manufacturing of airplane engines. And if other countries want to subsidize the production of goods that Canadians can then buy, so much the better: then all Canadians can benefit from their foolishness. Meanwhile, with freed up capital and resources, savvy Canadian entrepreneurs can look for new opportunities in new fields.
The very idea that governments should always rush to the rescue of businesses in the name of saving jobs turns basic economic principles on their head. The reason that real, sustainable jobs are created and continue to exist, it is because they create a product or service that meets a need in the marketplace. If we are going to start ignoring this very basic fact, we may as well have the government “create jobs” by paying individuals $50 an hour to dig holes and then fill them back up again, because the waste of economic resources is little different.
Worst of all, government subsidies send exactly the wrong message to businesses: that the way to succeed isn’t to compete in the market and win by offering higher quality and lower prices, but to come begging to the government for help – and to use the threat of pulling out jobs as a way to blackmail nervous governments into handing over public dollars.
Sadly, the precedent for this madness was set long ago. Politicians love the photo-op and ribbon cutting opportunities. Too many businesses love the free money. Only the tax-paying public loses.
