The Reminder is making its archives back to 2003 available on our website. Please note that, due to technical limitations, archive articles are presented without the usual formatting.
In politics, it helps to have amnesia if one wishes to repeat historyÕs economic failures. For example, the current financial crisis is often incorrectly blamed on a laissez-faire approach to regulation. But it was the U. S. government in the 1970s under Jimmy Carter that first pressured banks to lend to Americans who were high credit risks, pressure then upped in the 1990s under Bill Clinton and subsequently defended over the past eight years. Now that weÕre in the aftermath of the government-engineered credit bubble, too many people think the remedy is a government-engineered ÒstimulusÓ package. The numbers should sober everyone up: trillions spent or proposed in the United States, $30 billion in Canada had the Liberal-NDP coalition taken power, and probably still billions in the Conservative budget due in January. ThereÕs just one problem: Governments have long engaged in such ÒstimulusÓ packages with lousy results. ItÕs called corporate welfare. Here in Canada, federal, provincial and municipal governments spent $182 billion on grants to business from 1994 through to 2006. For everyone who paid federal income tax in that 12-year period, $13,269 went to corporate welfare for the aerospace industry, automotive sector and forestry sector among other recipients. Now their case has been taken up again by the premiers of Quebec, Ontario, British Columbia and plenty of others. The various versions of the ÒstimulusÓ now proposed are merely corporate welfare in new drag, and apparently the Conservatives will dress up welfare-seeking as an economic necessity. In the case of automakers alone, who are now lobbying for a new stimulus package, since 2004, federal governments, along with the Ontario government, have promised $752 million, including $125 million to Toyota, the healthiest automotive company on the planet. If thereÕs anything new about the corporate begging in 2008, itÕs that it is more earnest than ever. But the plain truth about corporate welfare hasnÕt changed: ItÕs a shell game that transfers tax dollars and employment from healthy businesses to risky businesses. The public, and employees at the shaky firms, would be better served if tottering companies went to bankruptcy court where they could reorganize or be split apart with healthy divisions taken over by others. Governments have always spent money in unproductive ways in an effort to boost the economy. But tax and job-stealing from healthy businesses to aid weak ones courtesy of massive tax transfers does nothing for the overall economy or to stimulate job creation. A better approach would be to slash business tax rates in exchange for an end to corporate welfare.
