Your money is being wasted by incompetent fools.
Throwing billions of dollars of taxpayer subsidies at one company will cause other companies to demand the same.
This isn’t a shock.
Well, it’s not a shock to those of us with a basic understanding of the world.
So it’s perhaps not a surprise that it comes as a shock to the Liberal government.
Their massive $13 billion subsidy for Volkswagen has already begun to backfire, with Stellantis halting construction of a massive EV battery plant in a bid to get more taxpayers dollars thrown their way.
Predictably, the Liberals are now trying to blame the Ontario government for this:
“Canada’s industry minister says the Ontario government hasn’t committed to paying its “fair share” to help advance negotiations with automaker Stellantis NV over an electric-vehicle battery plant.
François-Philippe Champagne said the Canadian government will be competitive with the U.S. when it comes to the auto sector. “What we now need is for Ontario to pay its fair share. Full stop. Windsor is a key place to build our EV ecosystem,” the minister said Monday night on Twitter, referring to the southern Ontario city where the plant would be located.”
What makes all of this even more pathetic – aside from the disgusting blame game – is that the Liberals made a huge deal about how they weren’t going to try to compete with the massive subsidies in the U.S. ‘Inflation Reduction Act’ (a hilariously misnamed piece of legislation).
Yet here we are, watching the federal government take gargantuan amounts of our tax dollars and throw it around in an attempt to pick and choose winners in the economy.
The danger of subsidies
There are three big problems with subsidies:
First, they misallocate resources in the economy. We see the $13 billion go towards a factory, but we don’t see all the small business that $13 billion could have created if it was kept in the hands of Canadians in the first place. We don’t see the different spending decisions Canadians would have made if they kept that money – spending that would have boosted a myriad of business around the country. Subsidies have easily visible benefits, but the downside is more diffuse. Ironically though, the $13 billion Volkswagen subsidy has backfired more publicly and rapidly than any subsidy in a long-time.
Second, subsidies are addictive. Companies become addicted to them, as do governments. Politicians love the power of picking winners and losers, and they love the attention that accompanies big announcements. Companies love them because they are getting money thrown at them. However, a company that becomes addicted to subsidies becomes less responsive to actual market conditions, and less responsive to reality. This weakens them over the long-term. Likewise, governments that give out massive subsidies feel less of a need to create a truly competitive business environment. Instead, they tax us more and more, and then give that money away for political benefits. That leaves us poorer over all in the long-run.
Third, subsidies entrench the idea that the government has a right to the money we earn. Governments should fulfill a few basic functions, like national defence, core national infrastructure, and ensuring a justice system that holds criminals accountable while protecting our rights and freedoms. Picking which company wins and which company loses isn’t something a federal government should be doing. Instead, they should simply take less of our money away in taxes and let us decide which companies we choose to support.
If we really want a pro-business attitude in this country, we should get government out of the way, cut taxes, end subsidies, and let companies prove their strength through real competition.
Spencer Fernando
Photo – YouTube
