While theres nothing objectionable about governments funding a public good like education, its notable that the industry partner in question here is aerospacean industry that seems to perpetually receive a disproportionate amount of politicians attention, not to mention taxpayer money.
Superficially, this isnt surprising. Airplanes are impressive to just about everyone, from small children to politicians, and for obvious reasons. Theyre big machines that fly. Even the word aerospace conjures up positive imagery of sophisticated technology and engineers in lab coats. For anyone who laments industries like cutting down trees or extracting oil out of the ground as boring relics of a bygone era, aerospace ticks all the exciting boxes that signal economy of the future.
Unfortunately for Canadians, that future never quite seems to arrive. Bombardier, Canadas most prominent aerospace company, is the national poster child for corporate welfare, having received $4 billion since 1966.
Last year, after receiving $1.3 billion in aid from Quebec taxpayers, it proceeded to fire 2,000 Canadian workers. Not long after, the Trudeau government came along to give them a further $372 million in repayable loans. It is no exaggeration to say the company has essentially been kept on life support for decades by Canadian taxpayers. And if Bombardier sold brooms instead of airplanes, the market would have put it out of its misery decades ago.
Naturally, aerospace boosters are quick to insist theres more to the story. Often this takes the form of what are usually referred to as economic spinoff effects. The pitch goes something like this: Bombardier builds planes. Those planes need parts. So Bombardiers demand for parts sustains a whole bunch of suppliers as well.
This logic sounds great on paper but theres just one small problem: it isnt true. Far from Bombardier sustaining its own supply chain, Canadian taxpayers are forced to subsidize companies in the aerospace supply chain as well, through regional development funds, provincial funds, and the recently launched Strategic Innovation Fund.
In fact, the aerospace industry in Canada resembles a giant pyramid scheme, with taxpayers at the bottom of the pyramid. Based on the aerospace is special argument (often backed up with the sage every other country does it argument), Canadian taxpayers have the privilege of subsidizing an entire industry top to bottom. Theres the aforementioned subsidies to Bombardier; subsidies for Bombardier-led consortiums to do research and development; subsidies to the buyers of Bombardiers planes (in the form of cut rate loans through Export Development Canada) which are in many cases already priced below cost; and subsidies to Bombardiers suppliers.
If this sounds like a crazy business strategy, its because it is. And if we were to replace the word airplanes with candy canes, no sane person would take the pseudo-economics of aerospace seriously. But because it is about airplanes, and airplanes are sophisticated machines, politicians, industry executives, union leaders and more than a few otherwise intelligent people buy into the whole absurd charade. And why not? Its not their money at stake. Its merely the broader taxpaying public, and those working in industries to which the normal laws of economics apply, who end up paying the price.
Its far past time we accept the obvious: aerospace isnt special, and its perpetual coddling by politicians soaks Canadian taxpayers and hurts Canadian businesses in other industries. If the aerospace industry cannot survive in this country without Canadian taxpayers propping it up forever in countless ways, its time to let it go.
See the original post here:
Canada's aerospace industry is a giant pyramid scheme - Canada Free Press
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