Corporate welfare: The good, bad, ugly and pragmatic

Federal government investment in private business — disdainfully called “corporate welfare” by critics — can raise the blood pressure of even the most Zen taxpayer. Consider:

Last month, Ottawa wrote off a loan and other subsidies granted to Chrysler for $2.6 billion. The interest is also in the wind.

Or how about the Ontario government’s $220-million investment in Toyota to create some 450 jobs (which works out to a $488,888 subsidy for each job).

And then, of course, there is Bombardier, the grandmother of all corporate welfare recipients.

The Quebec-based transportation company got its first government handout in the mid-1960s. By now, depending on who you believe, Bombardier has received something like $3.7 billion from Canadian taxpayers. And just to add insult to injury, the company isn’t exactly prospering.

Last week, it announced it was cutting 5,000 jobs, including 500 in Ontario, and it sold off one of its aircraft divisions. It also announced a new contract to provide rail cars to the City of Montreal, but that good news didn’t offset bad news about its stubborn corporate debt. Analysts are again speculating that Bombardier’s turnaround may be wishful thinking, and its share prices took the expected nosedive at that news.

Most galling is the reality that those billions, just like the billions in Chrysler bailout money Ottawa just wrote off, are never coming back to public coffers.

What can we do, other than get all red in the face and grind our collective teeth? It’s not as if you can vote for a different party to avoid these so-called investments. All parties do them, in Bombardier’s case, pretty much equally.

Or, we can try to do what makes sense but is typically very hard for average taxpayers struggling to get by in this challenging world — look at the big picture, and look at it over time, not in the moment.

First, so-called corporate welfare is far from new. It goes back as far as the days when Canadian railroads were getting royal treatment in the form of prime pieces of real estate.

But what if, back in the ’60s, the government of the day had said no to Bombardier and set the tone for the future?

No one knows for sure, but there’s a good chance Bombardier would not exist today, or, if it did, it would be much smaller, or be a bit player owned by a global conglomerate. Canada would not have an aerospace and transit player on the global stage. Thousands of spinoff jobs and development plays would not exist.

A different example: What if Canada had not agreed to bail out auto companies such as Chrysler during the crash of 2008? Many economists agree some of the carmakers would not have survived, and Chrysler wasn’t a strong player at the time, so could well have been a victim.

Would Ontario and Canada be better off today had the government refused to bail out Chrysler? Is it wrong for Ontario to invest in Toyota’s expansion given the economic benefits the automaker has delivered, in particular to southwestern Ontario and in integrated supply chain?

The truth is we don’t really know. And neither do you. But as frustrating as corporate welfare is, it’s wise to remember there is more than one way to look at it.

What can we do, other than get all red in the face and grind our collective teeth? It’s not as if you can vote for a different party to avoid these so-called investments.