It’s not a new activity. In one way or another, the practice of publicly subsidizing profitable private corporations has been going on for more than a hundred years.
So in that sense, Wednesday’s announcement that the Ontario and federal governments are giving Japan’s Toyota Motor Corp. up to $34 million to build a hybrid car in Cambridge is par for the course.
It comes almost three weeks after Stephen Harper’s announcement that his government will put $250 million more into Ottawa’s auto subsidy program, formally known as the Automotive Innovation Fund.
The federal government has already spent $227 million from this fund (including $71 million in repayable loans) on firms such as Toyota, Ford and parts giant Magna.
For Ontario, this is business as usual. Governments in this province — Conservative, Liberal or New Democrat — have long been in the business of subsidizing business.
For the prime minister, however, the latest news is slightly more ironic. This is the same man who, not that long ago, railed against what he called corporate welfare.
“In the past 30 years, far too many corporations have been drawn into this trap by the available plethora of government, grants, loans and subsidies,” Harper told the Toronto Board of Trade in 2004. He vowed to end the practice.
But that was when he was opposition leader. In government, Harper soon discovered the political benefits of offering public subsidies to private corporations. His decision to have Ottawa help fund the 2009 bailout of Chrysler and General Motors only confirmed his conversion.
Not that he is unique. Writing in the online publication, The Bullet, York University’s Leo Panitch and Sam Gindin point out that subsidy schemes like Ottawa’s put the lie to claims that the right is somehow opposed to government involvement in the economy.
In fact, government involvement is a constant. The only question is whose interests this involvement serves.
In the case of auto subsidies, governments argue they have no choice. Manufacturers in general and car companies in particular are adept at playing off jurisdictions against one another when deciding where to locate their plants — plants which usually offer good, well-paying jobs.
If Tennessee is offering sweeteners to, say, General Motors, to build a factory in that state, can Ontario remain aloof?
The result has been a great boondoggle as governments vie with one another for the privilege of subsidizing jobs. A recent New York Times investigation concluded that, since 1985, auto companies alone have racked up $13.9 billion in subsidies from U.S. state and local governments.
Even the most rock-ribbed free enterprisers are happy to be on the public payroll. Vehemently anti-union Caterpillar Inc., the Times noted, has received $196 million in government subsidies since 2007.
Yet as Canadian autoworkers found out last month when GM announced plans to cancel Camaro production at its Oshawa plant, bailouts and subsidies don’t guarantee jobs.
That’s because governments that make these deals rarely require iron-clad employment commitments from corporate recipients.
And because subsidies usually take the form of low-interest rate loans or outright gifts rather than shareholder equity, donor governments rarely have any say over a company’s future hiring plans.
In the case of the great 2009 auto bailout, the Canadian and U.S. governments did demand shares in the companies they aided. But they insisted they wouldn’t use this equity to determine corporate direction — and they kept their word.
So now we’re paying for Toyota to build hybrid vehicles in Ontario. Good for us. It will probably result in some new jobs.
These jobs may even last for a while. Or at least until some other government offers Toyota a better deal.
Original Article
Source: the star
Author: Thomas Walkom
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