Don't make bets with my money
The latest fiscally alarming affront to common sense is Ontario Economic Development Minister Michael Bryant saying "The state has got to be strategic ... we need to act as an entrepreneur and invest directly in businesses."
When someone tells you they are being philosophical about things you need to ask which philosophy. So when a politician says he is being strategic you must ask what his strategy actually is. And what Mr. Bryant told the Canadian Club of Toronto on Monday is: "This is government choosing winners and losers. This is supposed to be the thing that governments weren't supposed to do. But this is the business that we are in."
There's a reason governments aren't supposed to do that. It never works. When government starts picking winners and losers it winds up with a big pile of the latter, which quickly comes to include taxpayers. What makes Mr. Bryant think his government is so special or that the laws of economics have changed?
I want to be fair here. In this recession governments have discarded a number of supposedly solid lessons of the recent past with unseemly haste and ill-concealed enthusiasm. But on a few things they've also had good excuses, if not good reasons. We thought, for instance, that we had learned to avoid deficits. But a lot of people never entirely conceded that deficits don't stimulate the economy. They just accepted that it was so hard to stop running them when prosperity returned that on balance they did more harm than good.
I don't agree.
But I admit these people were not throwing all the lessons of the past out the window when they claimed things were so bad we should try a stiff belt of stimulus now and worry about putting the cork back later. (Even so, I wish the politicians weren't smirking so much while doing it.)
As for buying shares in, say, Chrysler, I think it would be a silly thing to do even if it didn't set a dangerous precedent. But if someone says look, it's a one-off, it's a major company, a big employer, a big purchaser, a mainstay of our economy, it's a position that, though wrong, deserves an answer.
The state plunging into the investment business as a general practice is a totally different matter. There's just no coherent argument for it that merits a detailed response. Indeed, when confronted with his minister's blithering, Premier Dalton McGuinty offered not logic backed by evidence but one of his trademark pieces of mendacious vacuity.
"Free markets are alive and well," McGuinty said, "It's just that they have a new partner." As if free markets were single things like fish markets that could have "partners," rather than enormously complex rule-based processes involving millions of participants. And as if government, already the rule-maker and referee, could also become a player without cheating all the others in the short run and getting itself in trouble over time.
McGuinty further drivelled that: "I think what Mr. Bryant was trying to say is that the days of governments kind of quietly presiding over the gradual evolution of the economy are behind us. If you take a look around the world, the strongest economies have governments playing an active role ... I think the smart way is to find where are your sectoral opportunities and find ways to nurture growth in those strong sectors."
It is misleading to say governments used to preside over the evolution of economies. It is false to claim that the strongest economies have historically had governments playing an active role. And it is idiotic to refer, as a documented phenomenon, to governments showing aptitude at detecting sectoral opportunities, let alone nurturing growth in them. His remarks are as arrogant as they are ignorant.
Based on their past performance, would you entrust the Ontario cabinet with your retirement funds if they opened an investment firm or, as Bryant seemed to suggest at one point, a bank? I'm not even certain, if they had been obliged during the 2003 election to put out a prospectus subject to the same rules about honesty and full disclosure that confront corporations, whether they would now be in office, or in jail.
Luckily, the decision whether to let them make investments for you is not in your hands. People like McGuinty and Bryant are not stupid. They are clever, and good at politics. But they are wilfully obtuse when it comes to historical lessons about the actual capacity of the great and good to bestow benefits on the unwashed.
So they're going into business with our money, without warning or permission, and won't stop until it is gone. Which I grant is a limit of sorts. But not one we're going to like.
[First published in the Ottawa Citizen]