Wednesday, April 8, 2015

Gambling on Bailouts

Credit: Phil Long
So, according to the Business News Network (BNN), "Canadian taxpayers [will] lose $3.5B on [the] 2009 bailout of auto firms". Does this surprise you?

If a company cannot make it on it's own, what made anyone think that bailing it out of trouble would change anything? It's just a matter of time before the big automakers come, hat in hand, looking for more. Of course, the unions wouldn't agree. As reported in the BNN story, the unions would rather see the government strong-arm the companies into expanding operations. After all, the unions are big business, and they want a bailout too. That $3.5B would have been much more usefully invested in public transportation, or some clean energy venture.

If you open a generic donut shop next to a Tim Horton's, should you be surprised that it fails? One of the reasons that the Future Shop stores are closing is because they are often located in the same neighbourhoods as Best Buy. I'm just glad that nobody from the government offered to bail them out. The fact of the matter is that poorly run companies close. Likewise, employees who demand concessions that force the companies into a bad position, lose jobs. It's all very unfortunate, but not very surprising.

There are many people with new clean energy ideas that don't have the funds to get started. If the federal and provincial governments are prepared to just throw away $3.5B, imagine the jobs that could have been created if they just gifted $1M to 3,500 companies in the clean energy sector. Imagine the progress that we could make on climate change? Rather than Canada being a manufacturer of greenhouse gas emitting machines, I for one would like to see Canada become the world leader in clean energy research and development.


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