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Monday, November 30, 2009

Corporate Welfare Bums of All Parties

There's economics, then there's the political economy:

 "Unfortunately for Canadian taxpayers, our governments have a long history of spending public money on corporate welfare in attempts to pick winners and losers among various business sectors," said Mark Milke, author of the report.

In 2007 alone, Canadians paid $1,244 per taxpayer.

Milke paid special attention to the auto sector in his report, saying the $15.3 billion pumped into the sector -- with General Motors and Chrysler being the biggest beneficiaries -- between April and June of 2009 did not save jobs and in fact hurt other auto manufacturers.

Frederic Bastiat, that brilliant popularizer of classical economics, noted all this a century and a half ago. Some things seem to take awhile to sink in. Or perhaps they are understood too well. Even if the political class is noted for its lack of formal training in economics - nor do they seem to be eager autodidacts in the field - they are plenty of Ph.Ds kicking around Ottawa. In the Public Service there are bound to be a few professional economists who understand the futility of corporate welfare. 

While governments are, usually, sufficiently embarrassed to cloak such schemes under the labels of "innovation" and "regional development," the bailouts of General Motors and Chrysler were done more or less openly. Old industry being bailed out in the most industrialized province in the country. While the economics was lousy, the political calculations were spot on. A majority of Canadians did oppose the bailout. That matters very little. Canadians are used to being fleeced for this special interest group or that. After a few weeks the anger will die down. What Stephen Harper and Dalton McGuinty were keen to avoid is a bleeding news story, one that lasts for weeks and months. 

The CAW is among the most militant unions in Canada, and as such more than capable of generating negative headlines for both levels of government, for a very long time. Like that annoying advertising jingle, eventually you come to believe what you've heard repeatedly. Harper and McGuinty are doing nothing while Canadian jobs are being lost. They need to act NOW! It's the kind of vague impression that plays so important a part in politics. It's an impression that wouldn't survive five minutes of thoughtful reflection. Luckily for the CAW, most Canadians don't spend too much time thinking about public policy.

Posted by Richard Anderson on November 30, 2009 | Permalink


$1244 per taxpayer? It's incredible that supporters of corporate welfare don't see what's right in front of them. End corporate welfare and Canadians would have an extra $1244 to spend and invest.

But, as I understand it, corporate welfare supporters prefer to loot others to support their preferred industries.

Posted by: Charles | 2009-11-30 11:53:17 AM

Charles, exactly right. I live in a small town near a large city. If we all had an extra $1244 per tax payer to spend, that would be a minimum of $500 million we would spend. The "stimulus" would be far more immediate, and would be spent 100% exactly the way the economy would need.

Posted by: TM | 2009-11-30 2:03:40 PM

We would never see the $1244. It would simply be moved into some other pork barrel.Please show me even one time in Canadian history that any level of government has ever admitted to excess taxation with a rebate in the mail.
Good grief, we are at a point where we are being taxed on nothing (carbon). Compared to that it seems the auto bailout was a good deal.

Posted by: peterj | 2009-12-01 10:24:28 PM

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