Government Subsidies

The amazing thing in Canada is that there is an ongoing demand for public dollars to made available for businesses. The aerospace and automotive industries seem to be the biggest ones looking for public dollars.

Today the Globe and Mail had a column today by Konrad Yakabuski about Bombardier seeking money to develop the latest version of their commuter jets. The threat is that if the money is not forth coming, the company will move their manufacturing elsewhere. They are looking for something in the order of $1 000 000 000 from government. This is crazy. Why would we want to keep taxes higher to support a business that we are told is one of the biggest sources of green house gases? The threat is that Canada could lose 2500 jobs if the money is not forth coming. With the $1 000 000 000, the government could pay this work $50 000 a year for eight years. More than enough money to offer these workers the time and money to retrain, more than enough support to get dozens of entrepreneurs out the group of workers to start their own companies.

Meanwhile the auto industry is asking for large sums of money to keep the factories going. From 2003 to 2007 the industry has shed some 230 000 workers, but unemployment in Canada fell during that time. The economy added 1.4 million new jobs, half of those jobs are at least as well paying as the auto sector jobs. The reality is that we are in a transition away from making things like old style cars.

When government chooses to put money into some industries and not others, it skews capital investments to the 'winners' chosen by government. Government is always behind the times when it comes to what is the future. Small manufacturers making new and innovative products in the high tech field, green energy and other new emerging fields are having trouble competing with government supported old industries.

In 2004 some $19 000 000 000 was given by government to industry as subsidies. This means that the government had to raise an extra $6250 per family of five in taxes to support this.

Right now there is a huge global push to go green. In BC we can be the source of a huge amount of the greenest electrical power possible. We have businesses interested in coming up with innovative solutions on how to reduce green house gasses and how to capture them. We have more and more businesses that have a very small ecological footprint. All of these greener businesses are directly harmed by government over taxing us to offer more money to old industries.

The money government offers in business subsidies are also very inefficiently used. A billion dollars in subsidies cost close to $500 000 000 to offer - not counting damage it does to the nimble part of the economy.

Climate change issues will be best addressed through less government intervention in the economy and more use of the market to deal with public 'bads'