If governments are looking for savings, why do they give so much of your money to successful private companies?
It's a question that crossed my mind yesterday as I read one particular sentence in Ford's boastful press release about the millions it was investing in a car factory just west of Toronto.
"The enhancements at Oakville Assembly are Ford's latest step in maximizing its existing North American manufacturing assets, matching production to consumer demand as Ford's North American sales surge to pre-recession levels."
Canadian taxpayers are contributing $140 million in tax money to that investment, a contribution of 20 per cent, half from Ontario and half from the Feds.
I'm very pleased about Ford's success. It is wonderful that the same industry that led us into the Great Recession is now helping to lead us out.
What the press release didn't say was that Canadian taxpayers are contributing $140 million in tax money to that investment, a contribution of 20 per cent, half from Ontario and half from the Feds.
This is where the obvious question arises: If Ford's sales are surging and the company is in such wonderful shape, why then are you as a taxpayer giving cash to a healthy, vigorous multinational corporation?
I drove a Ford for years in Britain, and a very nice car it was. It was shiny and red and started reliably and was good on gas. But I paid a Ford dealer in Oxford full price for that car. They didn't wink and hand 20 per cent back saying, "I hope you'll do the same for me some day."
Listen, I'm not someone who objects to government spending. However, I agree with John Stuart Mill that governments, as our representative for the public good, should spend money for cases "in which important public services are to be performed, while yet there is no individual specially interested in performing them, nor would any adequate remuneration naturally or spontaneously attend their performance."
For those who don't want to wade through the language of Mill's quote, here is a rough translation: Government should only spend tax money on things useful to society that the private sector can't or won't provide.
Mill included public education and feeding the starving in his list of valid government expenditures. The list would be longer today, including street lights, roads, public health care and national institutions that do important things like, say, preserving Canadian culture.
A Mill-like analysis is not foreign to our current federal government. Prime Minister Stephen Harper has repeatedly taken a stand against economic intervention. It was only reluctantly that Finance Minister Jim Flaherty turned on the stimulus taps, and since then he has repeatedly outlined plans to shrink the deficit.
It may well be that the whole world would be better off if we all stopped bribing companies, allowing them operate where conditions actually suited them best.
At the other end of the spectrum, once upon a time the federal New Democratic Party coined the term "Corporate welfare bums." However, once in power NDP provincial governments do just the same thing. Certainly the trade union supporters of the NDP often support subsidies for the industries that employ their members.
So why do governments keep doing it?
One potential clue is the wording of an Ontario release about the handout, that the government money will "secure more than 2,800 jobs." This is not a matter of creating jobs but of "securing" them, bribing companies to make sure the jobs stay here rather than heading to "right to work" states where unemployment is high and workers cheap.
This is not far fetched. U.S. Steel shut down most of the Hamilton operation when it took over Stelco, for example. Caterpillar moved 500 jobs from London, Ont., to Indiana when it took over the Electro-Motive plant.
Sometimes you wish the government could turn it around. "Take those jobs south and not another Canadian police car, not another government truck, will come from your company." But without the arrival of a hard-nosed negotiator like former Newfoundland premier Danny Williams, it ain't going to happen.
And of course it is not fair to single out Ford. The oil industry gets great dollops of your tax money, as do industrial companies across the spectrum.
A report from the Fraser Institute insists the money is wasted, saying "business subsidies are not necessary to increase employment, and politicians' claims to the contrary are a weak argument to justify crony capitalism."
Others say it's cheaper to shore up an existing industry than to create new jobs.
Either way, the final answer to why governments keep doing this sounds like something a teenager might say: "Well, everybody else is doing it."
And that would be true. The giant corporations of Asia are almost exclusively creations of government that continue to have close relations with government. We can hardly complain. Some of Canada's most successful corporations - CN, Potash, Cameco, Telus - started as government companies.
It may well be that the whole world would be better off if we all stopped bribing companies, allowing them operate where conditions actually suited them best. It could be that Canada would do very well.
The question is, which country would be first to give it a try.
While we are waiting for that to happen, next time you are talking to a Ford dealer about buying a new car, it wouldn't hurt to mention the 20 per cent.
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