The politics of economic development

I think when you get right down to it most rational people see the need for communities to be involved in economic development. What most people do not like is this. $65 million as a direct subsidy to keep Stora Enso open for a few more years. In other words, the plant would have closed. The government stepped in and propped it up with $65 million in taxpayer money with no idea that it will continue to operate after the subsidy runs out.

I understand the politics of this. Small towns. Mill towns. Major upheaval if the government doesn’t step in.

But I would prefer to see $65 million spent proactively to help the economy adjust to the 21st century – not to hang on to the next election.

We do that in New Brunswick, too. UPM got $5 million from the former Premier to stay open past the next election. Just a little capper. But the point remains the same. Of course, the tens of millions sunk into the textile mills in New Brunswick is exactly the same thing.

It would be actually interesting to see how much money goes into bailing out bad or failing companies compared to how much is invested in the future. It would be interesting to know how much taxpayer money is used to eliminate bank risk with government loan guarantees. I would be curious to see how many small business loans or credit lines in Ontario are guaranteed by the provincial government. I just have no idea.

My guess is that we spent way too much time and effort trying to keep bad businesses afloat and stimulate new business start ups compared to attracting global players. And just in case you want to hurl an insult my way about my global company bias, remember I just criticized the Stora Enso deal above – Stora is a huge multinational. I don’t discriminate. I don’t like the government bailing out companies or doing the job of banks – whether the company is large or small.

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0 Responses to The politics of economic development

  1. Anonymous says:

    “I don’t like the government bailing out companies or doing the job of banks – whether the company is large or small.”

    Well said. Could not agree more.

    And how about a an entire network of credit unions set up with government guarantees to loan money to projects and people that banks won’t touch? The $60M that went into Caisse this year could keep UPM open for 12 elections. Arguably, UPM is the better investment!

  2. Anonymous says:

    These businesses have received subsidies and aid in the form of health care, welfare, road building, education and numerous other government boosts since their inception.

    The concept of “risk” for large businesses no longer applies, they are essentially socialized slush funds for the corporate elite to siphon and maintain their air of respectability.

    This phenomenon only increases as we go global – how about a return to common-sense fostering of local community and business?

    We’ve been selling our souls for McDonald’s pay for too long.

  3. Anonymous says:

    So what’s your view of the ThinkNB effort currently running in Fredericton? Is that the best use of government monies to promote economic development?

  4. David Campbell says:

    ThinkNB? From reading the materials, this is a conference promoting IT companies to local users of IT services. I guess this is a form of import substitution. Companies pay to be part of this event and the government has sponsored it. I don’t have a problem with this. I think a lot of local companies automatically think they have to go to Ottawa or Toronto or beyond to get good IT services (you remember the controversy when the City of Fredericton used a Web firm from another province).

  5. Danny D'Amours says:

    I think that beyond import substitution, the ThinkNB is a great marketing event for local people.

    It is hard to promote local businesses if you don’t know who they are or what they do (or are trying to do). By learning about local companies there is a greater chance of somebody being able to recommend an NB company when time comes to make a purchase and to other business people outside of NB.