No make work projects, please

I am 41 today.  Getting old, I guess.

Just a quick note on government subsidies to support job creation.  I think we really must avoid giving out taxpayer money for short term make work projects.  It seems to me they are politically expedient but do nothing for long term economic sustainability. 

Anyone involved in economic development knows what I am talking about.  Sometimes it is crass politics (Bernard Lord giving $5 million to UPM to keep the mill open past the election) and sometimes it is done with good intentions or maybe naively.

For example, there are dozens if not hundreds of cases like this one.  New Brunswick company gets a contract to do $25 million worth of work for a U.S. firm.   It’s a set contract that expires after 18-24 months.  Company needs to hire 100 people.  Company goes to government and gets $2 million ‘loan’ to support the ‘expansion’.  Two years later, the contract runs out and the people are laid off.

If you are offering tax breaks or grants or loans or whatever, it should be to foster long term jobs.  You will never get 100% certainty but if you know the jobs will end after two years – I would be very reluctant to give taxpayer money – unless there was a clear case that these jobs were sustainable in the longer term.

Besides, if the company’s competitors were smart there would even be a NAFTA challenge to some of this stuff.  In the case I mention above, that is the government directly subsidizing a company to lower the bid costs on a project.   Usually it is too small potatoes to matter but again if you want long term economic development we should be trying to work on projects that will create generational jobs.

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4 Responses to No make work projects, please

  1. Tim Coates says:

    Happy Birthday David. Here’s to 41 more good years (and at least a few of those spent blogging)!

  2. mikel says:

    Isn’t EVERY job a ‘make work’ project? British petroleum made an increased profit of 40 billion last year, and laid off 20% of their workforce. Everybody IN business knows that when business is good, companies hire whether they need the people or not-its good public relations. Then, when it hits the fan, those people get canned.

    As for NAFTA, that’s always been something of a smokescreen. I think I heard the other day that since NAFTA there has been about $7 million that has been paid under under challenges-and it takes YEARS, and a company never knows when IT may benefit.

    But in the absence of those long term jobs, isn’t short term better than nothing?

  3. nbt says:

    Just a quick note on government subsidies to support job creation. I think we really must avoid giving out taxpayer money for short term make work projects. It seems to me they are politically expedient but do nothing for long term economic sustainability.

    Amen to that. Happy Birthday and Happy New Year, Dave.

  4. Arnold Paulson says:

    Happy belated birthday and New Years, Dave. Loving the blog, by the way.

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