Wednesday, March 3

Corporate charity makes me ill

The Ontario government recently donated $81.2 million to Ford's coffers, according to the Toronto Star. The money will be used for Ford's engine factory in Windsor, and is in addition to $17 million in provincial money and $80 million in federal money given to the engine factor in 2008.

Unfortunately, the article doesn't explain why government is giving away $178 million to a single corporation, other than it will help Ford: "We've been able to bring the Essex engine plant back to life and transform it into a leading-edge facility with a significant role in the company's long-term engine production … plans," Ontario economic development minister Sandra Pupatello told the Star.

But since when has it been part of government's mandate to ensure that companies such as Ford have leading-edge facilities? I understand that the auto industry is a major component of Ontario's economy, and especially Windsor's economy. There are Ford jobs at stake, as well as spinoff jobs created from having a major employer in town.

I don't have a problem with helping corporations in general, since healthy corporations generally mean a healthy economy. If the government wants to, say, lower the corporate tax rate, to me that's a reasonable thing to do. What I do have a problem with is government picking winners and losers. A corporate tax cut helps all businesses, but giving $178 million to Ford primarily helps Ford. How did government decide that Ford was worthy of government handouts, but other businesses aren't?

If the government's goal is to help the people of Windsor, there must be more efficient ways than to throw tons of money at one large company. According to the article, the factory employs 250 people. For $178 million, you could write each worker a cheque for $712,000. That would buy each worker financial security (heck, probably a life of luxury) for the rest of their life, give them enough capital to start their own business (and if it fails, to start another business), or allow them to retrain them to do pretty much anything they want.

Alternatively, government could write everyone in Windsor's census metropolitan area a cheque for $550. Surely that would help boost the city's economy more than throwing money at Ford.

In fairness, the article notes that the investment will bring the workforce up to 750 at the factory (i.e. 500 new jobs), and that each of these jobs can be expected to result in seven spinoff jobs — in other words, 4,000 new jobs in total. But that's still a cost of almost $45,000 per job, which seems like a really expensive investment.

What's most troubling is that the minister quoted in the article doesn't even argue that government is trying to help the people of Windsor or create jobs — only that they're trying to help Ford. Yikes.