Taking taxpayers for a ride
With the environment on everyone's agenda and Canada groping for a strategy to deal with global warming, the government of Ontario has stepped up with an imaginative, far-seeing response to the challenge that confronts us all. While others are content merely to debate the issue, the McGuinty government has bet hundreds of millions of dollars of public funds on a revolutionary new form of mass transit that maybe, just maybe, holds the key to a greener future. Perhaps you've heard of it. It's called the Camaro.
Based on a leading-edge, eco-friendly technology known as the internal combustion engine, the Camaro concept car may seem like something out of science fiction, but in fact starts production in just three years. Using the advanced industrial wizardry of rear-wheel drive -- whatever will they think of next? -- the Camaro's whisper-quiet 400 horsepower engine can carry its two passengers as many as three kilometres on a litre of gas. Take that, climate change!
But this sort of technological breakthrough doesn't just happen on its own. It's the fruit of the kind of dynamic, creative partnership between business and government that naysayers typically decry as "corporate welfare." Left to the short-term obsessions of the marketplace, Detroit would probably just turn out a string of gas-guzzling muscle cars, high-octane Viagra for aging baby-boomers recalling their carefree youth. Whereas with government money they can pretend it's about jobs.
If it strikes you as contradictory that the government should be subsidizing the production of monster sports cars at a time when we are all supposed to be urgently cutting back on our consumption of fossil fuels -- the McGuinty Liberals' federal cousins are even now debating the merits of various tax "incentives" to that end -- then you are probably one of those purists who also think it odd that the same government would be shelling out millions of dollars on energy conservation programs even as it is suppressing the price of electricity. And if there is one thread running through every argument for subsidies of this kind, it is an utter abhorrence of "purism."
Rather, its adherents congratulate themselves on their pragmatism, as if based on a deeper, more mature understanding of the realities of a complex world. Was that not what the Globe and Mail meant when it praised Mr. McGuinty for his "pragmatic approach to luring automotive manufacturing jobs," that is to say for his willingness to spend public money to do so?
Was that not also what Peter Boag, the president of the Aerospace Industries Association of Canada, had in mind in his spirited rebuttal to a Post editorial attacking the Technology Partnerships Canada program, on which his members depend? The "reality," Mr. Boag informed our readers, is that "all aerospace industries without exception are supported by their national governments." Could the Post's editors not see that? Were they so blind?
So, too, Quebec's Economic Development minister, Raymond Bachand, defending yet another multi-million dollar handout, this time to IBM, pointed out, as a Post story had it, that "corporate subsidies are a fact of life around the world," as if this were a clinching argument.
But in fact this devotion to pragmatism is merely a cover for another, even more inflexible dogma. I am tempted to say it is the dogma of pragmatism itself, the creed of what Robert Fulford calls the "fanatical moderates," who view anything that smacks of principle with suspicion. This elevation of incoherence into a weltanschauung holds a peculiar appeal for certain people, turning as it does what might otherwise be considered a failing -- an inability to think things through -- into a virtue: After all, nobody likes a smarty-pants.
But that's not the case here. Those who demand that the rest of us subsidize them to make cars, or aircraft, or computers, are not, as they fancy, pragmatists at all. They have a very particular, almost religious dogma in mind, which holds that it is written in the stars that Canada should be in the business of manufacturing cars or aircraft or computers -- which being divinely ordained, must be realized, whatever the cost.
A pragmatist, it seems to me, would say: Leave aside such prejudgments. Just tell me, what industries offer the highest economic returns? That is, for which sorts of goods and services does the gain to society, measured by the price consumers are willing to pay for them, exceed the cost to society, measured by the resources used in their production, by the widest margin? The very requirement of subsidy, to a pragmatist, would suggest the opposite -- the industry would have no shortage of investors, otherwise -- and since the subsidy could only come out of the profits of other industries, offering higher returns, would doubly preclude itself.
That other countries do it, likewise, is significant only if you subscribe to the Manifest Destiny view of industrial policy. For anyone else, it surely argues against subsidy: Whatever argument there might have been that the cost to other industries is offset by the competitive advantage the recipients gain in world markets disappears the moment other countries signal their willingness to play the same game.
But hey, whatever works. I'm just a pragmatist.
Based on a leading-edge, eco-friendly technology known as the internal combustion engine, the Camaro concept car may seem like something out of science fiction, but in fact starts production in just three years. Using the advanced industrial wizardry of rear-wheel drive -- whatever will they think of next? -- the Camaro's whisper-quiet 400 horsepower engine can carry its two passengers as many as three kilometres on a litre of gas. Take that, climate change!
But this sort of technological breakthrough doesn't just happen on its own. It's the fruit of the kind of dynamic, creative partnership between business and government that naysayers typically decry as "corporate welfare." Left to the short-term obsessions of the marketplace, Detroit would probably just turn out a string of gas-guzzling muscle cars, high-octane Viagra for aging baby-boomers recalling their carefree youth. Whereas with government money they can pretend it's about jobs.
If it strikes you as contradictory that the government should be subsidizing the production of monster sports cars at a time when we are all supposed to be urgently cutting back on our consumption of fossil fuels -- the McGuinty Liberals' federal cousins are even now debating the merits of various tax "incentives" to that end -- then you are probably one of those purists who also think it odd that the same government would be shelling out millions of dollars on energy conservation programs even as it is suppressing the price of electricity. And if there is one thread running through every argument for subsidies of this kind, it is an utter abhorrence of "purism."
Rather, its adherents congratulate themselves on their pragmatism, as if based on a deeper, more mature understanding of the realities of a complex world. Was that not what the Globe and Mail meant when it praised Mr. McGuinty for his "pragmatic approach to luring automotive manufacturing jobs," that is to say for his willingness to spend public money to do so?
Was that not also what Peter Boag, the president of the Aerospace Industries Association of Canada, had in mind in his spirited rebuttal to a Post editorial attacking the Technology Partnerships Canada program, on which his members depend? The "reality," Mr. Boag informed our readers, is that "all aerospace industries without exception are supported by their national governments." Could the Post's editors not see that? Were they so blind?
So, too, Quebec's Economic Development minister, Raymond Bachand, defending yet another multi-million dollar handout, this time to IBM, pointed out, as a Post story had it, that "corporate subsidies are a fact of life around the world," as if this were a clinching argument.
But in fact this devotion to pragmatism is merely a cover for another, even more inflexible dogma. I am tempted to say it is the dogma of pragmatism itself, the creed of what Robert Fulford calls the "fanatical moderates," who view anything that smacks of principle with suspicion. This elevation of incoherence into a weltanschauung holds a peculiar appeal for certain people, turning as it does what might otherwise be considered a failing -- an inability to think things through -- into a virtue: After all, nobody likes a smarty-pants.
But that's not the case here. Those who demand that the rest of us subsidize them to make cars, or aircraft, or computers, are not, as they fancy, pragmatists at all. They have a very particular, almost religious dogma in mind, which holds that it is written in the stars that Canada should be in the business of manufacturing cars or aircraft or computers -- which being divinely ordained, must be realized, whatever the cost.
A pragmatist, it seems to me, would say: Leave aside such prejudgments. Just tell me, what industries offer the highest economic returns? That is, for which sorts of goods and services does the gain to society, measured by the price consumers are willing to pay for them, exceed the cost to society, measured by the resources used in their production, by the widest margin? The very requirement of subsidy, to a pragmatist, would suggest the opposite -- the industry would have no shortage of investors, otherwise -- and since the subsidy could only come out of the profits of other industries, offering higher returns, would doubly preclude itself.
That other countries do it, likewise, is significant only if you subscribe to the Manifest Destiny view of industrial policy. For anyone else, it surely argues against subsidy: Whatever argument there might have been that the cost to other industries is offset by the competitive advantage the recipients gain in world markets disappears the moment other countries signal their willingness to play the same game.
But hey, whatever works. I'm just a pragmatist.
8/23/2006
