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Sunday, November 16, 2008

Misplaced Props: Tony Clement says "No" to short-term bailout for the auto industry (yay!) then heads to Washington to sort out bailout plans (boo).

I was once told a story about someone who had asked Tony Clement in a hospitalisty suite how the government ought to help the auto industry getting a stern lecture in the evils of corporate welfare. It was stories like this that led me to support Clement in his leadership bid in 2004, and it was this story in particular that I thought of when I heard that Tony Clement had would replace Jim Prentice (who was a disaster, imho) as Industry Minister, and so I have been cautiously optimistic about his appointment.

That optimism seems as thought it may have been justified as Clement today said there will be no short-term bailout of the auto industry of the type the US is mulling over. (Though the government will still play a role in helping the industry's long-term prospects.)

Unfortunately, as CTV reports, "Clement said last week that he is open to the idea of a joint Canadian-U.S. assistance package aimed at boosting the fortunes of the Detroit Three," and so I'm not convinced that some sort of indirect bailout of some sectors of the economy won't take place, and it's a shame that tax dollars are going anywhere near an industry that has allowed its workers to price themselves out of their own market. 

That said, there is an important symbolism to saying "No" to the outright bailouts that US politicians have been shelling out, and so this is still a pleasant surprise for CPC pessimists such as myself.

UPDATE: Commenter Matt pointed out that the government's stated goal could be even worse if it is a signal that they will be planning the industry rather than allowing it to innovate on its own. While I'm not sure that's the case, the pervasive effects of conditional funding (we will give you billions of dollars! so long as you only make this kind of car) and the permanence of any kind of subsidy program (see the agricultural sector) are very serious and shouldn't be ignored.

While we encourage Clement to avoid bailouts, we ought to also urge him to move away from the type or rhetoric that could see the government taking on larger roles in private industry.

UPDATE 2: Ok, Ok, fine. I get it Clement, you didn't like that sunny small-government optimism, and you just had to crush it. It's gone. Are you happy now? Sheesh.

Posted by Janet Neilson on November 16, 2008 in Canadian Conservative Politics | Permalink

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Comments

I said it before and I'll say it again...as soon as you hear them talking about it, its going to happen. Oh, there will be a song and dance about how they agonized over the decision and it was a tough call and all...but happen, it will...
Let's not forget, these "people" are professional liars.

Posted by: JC | 2008-11-16 7:20:40 PM


What Clement actually says is even more frightening:

"the Canadian government won't be offering a short-term bailout to Canadian auto makers, but would help the industry transform itself so it makes cars that people actually want to buy."

I guess the problem with the Big 3 is that they haven't been letting government do their product design. Can you say Yugo?

Posted by: Matt | 2008-11-16 7:57:07 PM


Matt, so they won't bail them out but will go into partnership to help them restructure?
Sure as hell thats NOT free market capitalism.
Nope! That's Fascism, plain and simple.

And here's a take on how Americans feel about lower gas prices and its effect on their lifestyles.

http://www.nytimes.com/2008/11/14/business/14gas.html?_r=1&th&emc=th&oref=slogin

Posted by: JC | 2008-11-16 8:09:23 PM


I guess the problem with the Big 3 is that they haven't been letting government do their product design. Can you say Yugo?
Posted by: Matt | 16-Nov-08 7:57:07 PM

The problem with the Big 3 are largely legacy issues, ie. retirees, something that the Japs and Koreans in NA don't have to worry about, yet.

Posted by: The Stig | 2008-11-16 8:32:17 PM


JC: when I say "encouraging," I mean it in a relative sense.
Matt: that would definitely be worse.

Posted by: Janet | 2008-11-17 5:42:02 AM


The problem with the Big 3 are largely legacy issues, ie. retirees, something that the Japs and Koreans in NA don't have to worry about, yet.

Posted by: The Stig | 16-Nov-08 8:32:17 PM

The Stig, I would agree - the biggest problem with these automakers is that they are pricing themselves out of the market (laying a heap of the blame at the feet of legislators who passed many of the terrible labour laws.)

That said, it does sound to me like the reforms the government is talking about have to do with products rather than pricing:

""The idea is not bailout, of course, but the idea is how can the federal government be helpful in the long-term transformation of an industry so that we in Canada are building the cars that people actually want to buy?" he said."

Since this wouldn't deal with the key problem with the Big 3 (or Detroit 3 or whatever), it would only pump money into an industry without providing any solutions, so I think Matt has a point about how disturbing these statements are.

Posted by: Janet | 2008-11-17 6:09:24 AM


att and Stig both make good points. While they are starting to make vehicles more appropriate to the times, it seems they missed the time frame. The Asian auto makers were already onto making smaller more fuel efficient cars and had been since their inception.

Posted by: JC | 2008-11-17 6:22:33 AM



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