Corporate welfare bums!...

Tickle Down Theory. Don't look up!

In response to a report that Ontario has lost 50,000 private sector jobs, Economic Development, Employment and Infrastructure Minister Brad Duguid proudly announced that:

The Ontario Liberal government has already lowered corporate tax rates, invested directly in the auto sector and introduced the HST to help manufacturers, he said.

Does anyone else recognize this tired formula as being the usual knee-jerk response to bolstering the economy: Stuff the corporate horse at one end, to feed the sparrows (workers) at the other?

The fact is that, according to the Fraser Institute, between April 1, 1980 and March 31, 2009, federal, provincial, and local governments spent (on an annualized basis) $683.9 billion on subsidies to private sector business, and government business enterprises. 

$346.2 billion from the federal government;

$287.0 billion from provincial governments;

$54.2 billion from local governments.

(See:  Government Subsidies in Canada: A $684 Billion Price Tag Taxpayer subsidies to corporations, government businesses, and consumers by Mark Milke. Fraser Institute.)

 Moreover, as recently as February 24, 2014 Carol Goar of the Toronto Star reported that a whopping $15 billion in subsidies went into the North American auto industry, i.e. 

 Over the last decade, Ottawa and the provinces have poured more than $15 billion of taxpayers’ money into the North American automobile industry. Policy-makers know each bailout, subsidy, loan guarantee and incentive emboldens carmakers to ask for more. But they dare not say no. Thousands of jobs are at stake.

Finance Minister Jim Flaherty took the well-worn path in his Feb. 11 budget, topping up Ottawa’s Automotive Innovation Fund by a hefty $500 million. But Serggio Marchionne (Chrysler CEO) is still looking for a substantial handout from Ontario. [$700 million!].

( See: Time to pull the plug on auto subsidies: Goar", Toronto Star, February 24, 2014)

The question is why? The automobile industry is doing very well indeed, and (according to Goar) auto subsidies are a regressive income transfer. According to the Institute for Research on Public Policy, the average auto assembler earns $66,000 a year. The average annual wage in Ontario is $48,880. By subsidizing car plants, Ontario would be transferring money from those of modest means (like seniors) to those with bigger paycheques and better benefits.

However, subsidies—cash 'gifts' to the rich—are the way it has always been done, and none of Kathleen Wynne, Charles Sousa, or Brad Duguid have demonstrated any breath-taking innovation yet.

It’s kiss babies, kick sand in the faces of seniors (while emptying their pockets), and shore up their voter base in the Greater Toronto Area. In other words, 'business as usual.'

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Beware when the eagle of state becomes a prey to a bunch of vultures:

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