Montréal, le 7 novembre 1998
Numéro 24
(page 6) 
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       LE QUÉBÉCOIS LIBRE sollicite des textes d'opinion qui défendent ou contestent le point de vue libertarien sur n'importe quel sujet d'actualité. Les textes doivent avoir entre 700 et 1200 mots. Prière d'inclure votre titre ou profession et le village ou la ville où vous habitez. 
 by Ralph Maddocks
          By the time this is published, we shall probably be in the throes of a Quebec election where promises will be made which the promisers will have no intention of keeping and nobody will be surprised or outraged for more than a split second. Even though we are the most taxed citizenry in the entire country, it is highly unlikely that we will find ourselves better off in the foreseeable future.  
          We will hear that our debts (incurred by the same people in earlier times) must be reduced, that tax reduction will be possible only when the deficit is down to zero. Even when the deficit is at zero we will still have a large provincial debt to service. If you owe 5 000 $ on your credit card but pay the interest each and every month you will have reduced your monthly deficit to zero, but your debt remains. It is doubtful if we shall hear any believable explanations about how this debt may be reduced to zero. 
          One statement made by the Liberal aspirant to the post of Premier of this province mentioned that he would eliminate the government agency which hands out money and use the money to bolster the failing health system. If he does this it will (a) be a first and (b) likely result in the wailing of those people whose names often adorn Les Prix Béquille. No matter what designation the politicians give it, corporate welfare is almost inevitably an abysmal failure. 
          Quebec, along with the other provinces, has a long history of pouring taxpayers' money into failing businesses. Businesses which stop failing until the latest injection is used up, then continue on their way to oblivion or until another injection of our money reactivates the cycle again. The often used reason for these corporate welfare schemes is that they create jobs, or prevent job losses. Another reason for government grants is that a company may be enticed to build in an area where its own research and common sense would tell it not to. 
          If you analyze the list of grants made to companies, by the provinces or the federal government, you invariably find the same names coming up again and again. In New Brunswick, it was found that 91% of businesses receiving assistance from the Atlantic Canada Opportunity Agency had received it at least once before. Some had been to the trough over ten times in seven years. Similar percentages appear in the other Atlantic provinces. 
          Of course the defenders of corporate welfare will point to the success stories, and there are a few, as supporting evidence for their continuing use of your tax dollars. If you give money away often enough it is likely that there will be some successes, even governments can't mess things up all the time. The question which won't get asked, or answered, is why should taxpayers' money be poured into any business at a time when we are cutting healthcare and plunging deeper into debt. There are a number of reasons why it is bad business for governments to use taxpayers' money to subsidize businesses and space will not allow complete enumeration. 
Subsidizing and its effects 
          The most pernicious effect of a subsidy is to create an atmosphere where the recipients no longer have an incentive to increase their efficiency. Some years ago, the Financial Post carried a story about a small French language newspaper in Nova Scotia which, that year, had received assistance from Quebec, Nova Scotia and Ottawa to the tune of some three quarters of a million dollars. The paper had been in existence for over half a century but had a circulation of only 3 or 4 000 subscribers. The subsidy amounted to over 200$ per subscriber. When last I looked, it was still in existence, doubtless helped by another dose of our good money in the meantime. 
          When this paper received all this money, it meant that its competitors, unless they too got subsidies, had to work harder and to find their own money to compete against their subsidized competitor. In effect they are being asked to compete against the government. A similar case occurred in Manitoba where the government subsidized the competitor of an agricultural manufacturer. If you think about it, the government was using the successful company's tax dollars to subsidize its competitor. In the face of such actions is it reasonable to expect any company to continue to operate in an environment where their competition is subsidized with their own money? 
          Another effect of government subsidies is to encourage bad business decisions. A favourite tool of  government is to offer bank loan guarantees. By guaranteeing a loan, the government is taking all the risk, the bank having declined the risk in the first place, and the company isn't assuming much risk and can only gain. The potential loser is the taxpayer. 
          The other side of that coin is that after being burned a few times with bad loans, the government becomes more cautious and lends money only to projects where the risk of loss seems low. 
          Invariably these projects would have proceeded using the firm's own money anyway. So government has created a climate where businesses who don't need assistance get it anyway. Over the last sixteen years we have seen large companies such as Bombardier (245 millions $), Pratt & Whitney (949 millions $), De Havilland (425 millions $), Air Ontario (224 millions $) and Le Groupe MIL Inc. (241 millions $) receiving almost a fifth of the 11 billions $ handed out by the Feds over that period. Only 15% of fully repayable loans have been repaid to date. 
          Politicians making such loans are always taking credit for alleged job creation. What they don't seem to understand is that all that usually happens is that jobs get redistributed. If I get a grant to open a new restaurant in my town, I create a handful of jobs. My MP or MLA will then wax enthusiastic about the new jobs created. What he or she will not talk about is the restaurant across town that went out of business because of me. So what has really happened is job redistribution at best. 
          Alberta has outlawed loans over 1 million $ unless the legislature approves them. Can the long suffering taxpayers of Quebec hope for as much? Don't hold your breath. 
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