corporate welfare

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Canada’s mining industry is globally competitive, and has long succeeded without much in the way of government subsidies. It even thrived in the last recession by responding to market demand. Yet instead of letting markets drive mining investment in Quebec, the provincial government is bailing out the asbestos industry using taxpayer money - and this for a product that is harmful to human health.


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From the federal government to provincial governments, the tendency to hide information taxpayers have bought and paid for seems all too common. Regardless of the party label, few governments give up information that is potentially embarrassing without a fight.


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With sales and profits up at General Motors, proponents of the 2009 automotive bailout for GM (and Chrysler) now assert the taxpayer-financed rescue was a success. In a visit to Michigan in late January, U.S. president Barack Obama argued the deal saved jobs. Canadian politicians, including Finance Minister Jim Flaherty, who last summer incorrectly asserted taxpayers received all their money back, have made similar boasts.

Given the revisionist history in play, let’s place that 2009 deal in proper context.

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While many Canadians were on vacation this summer, including many journalists and opposition parliamentarians who might notice taxpayer cash dribbling away, our governments continued to hand out more corporate welfare.

In late August, Ontario offered up $2-million to Dana Holdings and $3-million to Centra Industries, both in Cambridge, Ontario. Predictably, the usual flawed justification was offered: taxpayer subsidies will create or preserve jobs.

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The latest deals to “save” American and Greek public finances—allowing those countries to put themselves into even deeper debt—should puncture the illusion the welfare state was ever a success. The fact is, it was always built on borrowed time and borrowed money.

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Milton Friedman once said his greatest fear about the 1979 bailout of Chrysler by the U.S. federal government was not that it would fail, but that it would succeed. Friedman didn’t mean he was wrong to oppose it. What concerned him was how Chrysler’s rescue (approved by the U.S. Congress in late 1979 and signed into law by President Jimmy Carter in 1980) might lead some to draw the wrong conclusion: the notion that such actions save jobs, among other illusions.


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Canada’s federal election was supposed to be the Seinfeld campaign—a contest about nothing, at least until the NDP’s polling numbers shot up. But regardless of how campaigns are tagged, they are always about something. This latest one should be called the Santa Claus campaign. That is, promises galore with only scant attention paid to how such election-time Christmas gifts will be financed.


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When the federal and Ontario governments transferred $14.5 billion in taxpayer cash to GM and Chrysler in 2009, they likely did so with the best of intentions—to preserve jobs, though no doubt southern Ontario votes also figured heavily into the equation. But in a recent analysis from Dennis DesRosier, the automotive analyst noticed that employment in the Canadian automotive sector, despite the bailout and economic recovery, continues to fall.