Corporate subsidies or community investments?

I have started reading Rescuing Canada’s Right by Tasha Kheiriddin and Adam Daifallah. At the same time I am trying to squeeze in Ibbitson’s tome A Polite Revolution at the same time as well as a biography of Harry Truman while working 70 hours a week and trying to avoid that whole ‘dead beat dad’ thing.

Anyway, the two 20 somethings Kheiriddin and Daifallah are supposedly the new face of conservativism in Canada. Young, bilingual, immigrant and intellectual – a potent mix and the traditional demographic profile of a liberal.

So I am a couple of chapters into this book and I get to some of their musings on ending ‘corporate subsidies’ which is a common theme of conservatives. To them, this nasty business of choosing ‘winners’ and ‘losers’ is the epitome of the new liberalism – or as they say the ‘statism’ that is now engrained in Canadian society.

So to these scions of Hayek and Schumpeter, I ask the same question that I have posed so many times before.

Let’s say the Americans whom you so adore are prepared to offer Toyota $150 million to put a new plant in Alabama and you abhor Ontario making the same offer on some moral or ideological ground – what does that do to your ideology? Does that break it down?

Maybe you should look up the word ‘competition’ in the dictionary since you are so quick to espouse it and hold it as axiomatic to your whole world view.

Communities are competing for these jobs. And just as Ford will offer ‘cash back’ or some other incentive to get consumers to buy their products, communities need to compete to attract large industries. These are not subsidies (again, you should look this word up in the dictionary), these are investments in highly successful companies with great business models. Subsidizing dying industries or propping up bad business models is one thing, but making strategic community investments into companies that are going to create jobs and economic activity for a generation is another thing.

If all countries, states and communities across the world agreed not to offer incentives then fine. I would fully support this. Let communities compete on other merits. I would welcome this. But until this time arrives, I will never let some narrow ideological vision deter my thinking.

So to the bright young, 20 somethings Kheiriddin and Daifallah that are going to save Canada’s conservatives, I say go for the gusto. Bring back more personal accountability. Fine. Bring back more emphasis on individuals and families and free markets in the place of the state. Fine. But don’t sit back and drool over the rise of American Conservativism without realizing that when it comes to economic development, the biggest ‘subsidizers’ are Republican governors desperate to attract jobs to their states.

In fact, it has been the ‘liberal’ goverors such as Mississippi’s Halley Barbour that have tried to pull back from the large corporate incentive packages to lure industry.

Canada’s conservatives, it seems to me, want to eliminate regional subsidies (Equalization and EI), privatize health care and introduce more market mechanisms into society. But their answer to generational economic decline and dependance in Atlantic Canada is (and I am paraphrasing Stephen Harper) tax cuts for small business.

Note to conservatives: Bernard Lord cut small business taxes to 2% and the number of small businesses dropped. Further, job creation has been the second worst in Canada. Cutting small businesses taxes without a broader understanding of how economic development works is, instead of some intellectual leap, a simpleton’s model (I say this without mentioning any names). Companies want to grow. They want to succeed. Most small businesses don’t mind paying some tax after making significant profits. That’s normal. Cutting their taxes when they don’t make any profits to begin with because they are situated in underperforming economies does absolutely nothing to stimulate economic growth as the NB situation proves all to dramatically.

If Kheiriddin and Daifallah, Steyn and Coyne and every other pundit posturing as a conservative intellectual would just come out and say what they are thinking – I would have more respect for them. They dance around it. They flirt with it. But none come out and say it.

They believe Atlantic Canada should be cut off. Severed. No EI. No Equalization. Sink or swim and all that rot. And while Ontario benefits from the Liberal and Conservative legacy of dumping billions into those economies, Atlantic Canada should not be afforded the same opportunity.

You know what the irony is for me? If I had to chose between the status quo and the so-called sink or swim model, I almost prefer the latter.

As I watch provincial budgets skyrocket (in NB up almost 40% since 1999) and populations decline (NB down since 1999), I believe that ultimately even the Liberals will eventually crack the whip on poor old Atl. Canada.

I believe, respectfully, there is a better way.