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Corporate welfare teaches companies and regions that what's important is about getting your "fair cut" of "free" money. And when your cut isn't perceived as fair, it can turn a wasteful policy into a corrosive, emotional weapon to be used by those with regional grievances.
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As debate about federal support for the biggest player in Canada's aerospace industry, Bombardier, has heated up over the last few months, critics have come forward to say that investing in Bombardier would be a mistake, and that the company should be left to sink or swim on its own. They couldn't be more wrong.
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Progressive economist Jim Stanford invites us to reimagine Bombardier's demand for another taxpayer handout as an exciting opportunity for an "equity investment." In his view, focusing on the usual metrics for businesses -- such as "does the company make money?" or "can it actually sell the products it makes?" -- is evidence of a dangerous affliction he refers to as "market fundamentalism."
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All told, the B.C. government cut cheques for $1.5 billion in film subsidies over the past five years. That's more than taxpayers spent on the ministries of aboriginal relations, agriculture and environment -- combined. As if that wasn't enough, the federal government jumped in with $1.73 billion more nation-wide. With the low Canadian dollar attracting more filming here, these subsidies are going to soar even higher in 2016-17, as there are no caps on these payouts.
Quebec Economy Minister Jacques Daoust announced that the Quebec government would be "investing" $1.3 billion in taxpayer money in Bombardier's beleaguered CSeries aircraft line, and promptly turned around to prod the new Trudeau government in Ottawa to pony up a similar contribution.
Over the last 50 years, Bombardier has received $2.2 billion in federal government assistance -- of which Industry Canada advises only $543 million has been repaid. In short, if history is any guide, Bombardier is far more likely to be calling on taxpayers again shortly with its hands outstretched, than to actually mature into a bonafide competitive business.
Too many use Orwellian language to propose something contrary to the public good. But, considering the reality of power, the term "taxpayer" helps people focus on the real cost of political decisions that favour a narrow interest, ones which can injure the good life for everyone else.
Why did one federal department, Industry, disburse almost $8.5 billion to 10 corporations who don't need the money? The answer, from a corporate perspective: Why not? Even if a company is flush with cash, why not buff up the bottom line if some politician is willing to use the public treasury to support your company?
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Ever wonder how Canada's net federal debt reached $671 billion by 2013? Or how net provincial debt among the provinces ended up at $509 billion that same year? Wonder no more.
Corporate welfare is the ultimate evasion of responsibility. It helps companies avoid the consequences that consumers would otherwise assign to them, the evasion demonstrated rather clearly by Chrysler's two government bailouts in a generation.
The government's "Venture Capital Action Plan" ignores Canadian evidence that shows government-sponsored venture capital is ineffective. More fundamentally though, it represents a further blurring of the lines between pro-market and pro-business government policy.
In the land of government plenty -- that vast landscape populated with the tax dollars of Canadians -- there is no shortage of politicians willing to hand out and defend subsidies to business and no dearth of corporations willing to take the cash.
My colleague Kenneth Green and I wrote about how by approving fracking for oil and gas, some provinces might generate extra dollars for their provincial coffers. And the response from someone at the Halifax chapter of the Sierra Club? That fracking has caused "a 62 per cent increase in sexually transmitted infections."
Can a company truly be considered a good corporate citizen while taking money from taxpayers through corporate welfare? Corporate welfare happens when a government makes a political decision to use tax dollars to favour one company over another. While all of us understand we need to pay taxes to fund societal benefits like hospitals, schools and infrastructure, most feel government should not use our money to pick winners and losers in business by handing out grants to specific companies.