In a fair democracy, all citizens are considered equal. According to various religions, all souls are considered equal. Under the Canadian constitution, everyone is treated equally under the law. And lastly, in a country like Canada that values the free market, all corporations are considered equal, except when they are not. It may come as a surprise to many Canadians that not all corporations are considered equal by the Canadian federal government, and they exercise this flaw by choosing winners and losers. This is formally known as corporate welfare.
Corporate welfare is when the government helps certain companies through subsidies, usually to promote growth or prevent them from going bankrupt. One infamous example is how the Canadian company Bombardier has received over $4 billion in subsidies since 1966. This is not capitalism, for why should the government choose winners? The answer comes from a combination of political gain and flawed economics, both of which will be discussed.
The standard argument in favour of subsidies is that it helps companies survive and continue to provide jobs for Canadians. If Bombardier were to go bankrupt, tens of thousands of people would be unemployed, resulting in more strain on social benefits like employment insurance and welfare. It would also mean reduced government tax revenue from both Bombardier and its former employees not paying corporate and income tax respectively. Therefore, the same people argue, the government saves money by providing subsidies to prevent this chain reaction. While a reasonable argument, it does not factor in the reality of what happens when corporations receive subsidies.
The truth is, corporations want to make money; this is a fact tried and true throughout the centuries. Using the money that they have, they want to earn as high of a profit while also minimizing the unnecessary risks as much as possible. What is also true is the fact that people work harder when it is their own money on the line. For example, the Wright Brothers were able to invent the first functional airplane using their own money, while those backed by the government could not. After all, why work as hard when you are using someone else’s money? The main principle is the same for subsidies. Bombardier has become the master of using other people’s money, specifically taxpayer money, and what do they have to show for it? The answer is years of financial instability and losses. By replacing the risks of Bombardier’s owners’ money with taxpayer money, Bombardier has no incentive left to turn in a profit. The simple truth is that Canadian taxpayers are paying corporations billions to be incompetent year after year. But what about keeping its workers employed?
The workers are actually being unproductive compared to workers in companies without subsidies. These are trained professionals that cannot achieve their maximum potential because they continue to be employed by failing companies. By keeping these companies alive with corporate welfare, the government is actually hindering good companies by indirectly restricting potential new employees. If corporate welfare was eliminated, then these undervalued employees will finally have an excuse to leave their respective failing employers and get hired by companies that utilize their skills to maximum capacity. While not all workers would find employment immediately, it is the only long-term solution with society and the economy benefiting as a whole. So why, after all this, do politicians across the political spectrum still provide corporate welfare?
The unfortunate truth is that it’s popular to campaign on the notion of saving companies and their employees’ jobs. Politicians are incentivized to keep people happy in the short-term to gain votes, while neglecting the good of the country in the long run. Even the Conservative Party of Canada, the major supposed free market party, will not do the economically and morally right thing by abolishing corporate welfare. Ultimately, when you vote, remember to think about which party will truly do what is right instead of buying votes.
Common Sense 