The Vancouver Sun has reported that over 130,000 manufacturing jobs were lost in Canada last year. Taking a stab at Conservative inaction on the issue, Liberal leader Stéphane Dion has pronounced that he will invest $1 billion to revive the struggling sector if he were to win a federal election. One year ago, Prime Minister Stephen Harper spoke at a Toronto Conservative Party rally, calling the Liberals a party “of vested interests.” Perhaps a rhetorical exaggeration at the time, Dion’s latest row over national industrial policy increasingly legitimizes Harper’s statement. Dion’s plan is economically unnecessary, ethically unwarranted, and in many ways technically inefficient. Had the Conservatives proposed this plan with Canadian tax-payer dollars, would Dion have called it for what it really is—corporate welfare?
The idea that a failing manufacturing sector is a blow to our public welfare is misguided. Structurally, economies change over time. Canada and the U.S. used to be primarily agricultural producers. Now, having evolved into predominantly service-based economies, the agricultural sector comprises two and one per cent of the countries’ overall earnings, respectively. Despite these changes, neither country has suffered any long-term damage. In fact, most economists would agree that living standards have slowly risen despite these transformations. When observing the ailing manufacturing sector, the same perspective should be taken. Dion is missing the forest for the trees: the importance of the economy’s composition pales in comparison to its overall state. Both inflation and unemployment are relatively low, and while growth is slow, it’s due to the economic woes of Canada’s largest importer down south. Moreover, the economy is structurally dynamic: the Canadian workforce is one of the most educated, adaptive, and skilled in the world.
Manufacturers will appeal to our sense of social justice and our predominantly liberal fantasy that government should solve all of our problems. If we accept that capitalism and free markets ought to play a less dominant role in our society, why should we feel obligated to use public money to bail out some of the most well-endowed players in the game? Corporate manufacturers have long enjoyed cushy profits and large market shares. They are large enterprises with a wealth of resources and talent. Recent failures are due to their lack of strategy to remain competitive against developing countries with cheaper labour and more efficient production processes. They suffer no disadvantage, and thus do not deserve our charity.
Of course, many wonder how lost jobs will affect ordinary Canadians who are not responsible for the managerial failures of their employers. Theoretically, they will eventually be re-absorbed into the economy in more high-demand sectors. Yet there is a solution that doesn’t involve pouring money into a failing sector of employment: aiding individuals most affected by retraining them in other employable skills.
In the larger scheme of things, Dion made another suggestion with potential: investment in green technology. And yet, if manufacturers have failed to meet expectations— make a profit, that is— why does Dion expect them to be better at using government R&D money? Such funding should be aimed in a general direction so that future entrepreneurs can re-appropriate these funds to create their own niche markets, in manufacturing or other sectors.
Canadians want to hold onto the idea of an industrious manufacturing base that has served as the “backbone” of our country. Dion, whether out of ideology or opportunity, is encouraging this misguided conception. But our manufacturers are the privileged trustfund kids of the economy, the ones who fail to perpetuate the past successes of their parents. In life, some people fail. In the market, some former winners lose. The proper response is to accept the results and move on.
