The spending spree never stops

Back in 1289, English king Edward I had just two pounds, 13 shillings, eight and a half pence in the bank. But it just goes to show how dumb people were back then. Why, today, the state of Ohio has a rainy day fund that contains fully 89 cents. And Dalton McGuinty just spent a quarter-billion dollars on video games even though Ontario's projected deficit recently surged from $14.1 to $18.5 billion.

Sorry, what am I saying, spent? He called his massive 10-year subsidy to Ubisoft to put a big development studio in Toronto "investing." And you can write the rest of the press release yourself: Bringing high-tech facilities to Toronto will "build a high wage and a high standard of living ... we're building Ontario's economy now and for the future." It is, to be sure, a violation of the free-trade principles we hold so dear when Americans engage in protectionism. But what's a little principle to the high-tech economy of the future?

Of course, when you get careless with principle there is a small matter of interest. Right now it's just 10 cents in every dollar of provincial spending. But give these guys a chance. Back when Bob Rae suddenly ran a $10-billion deficit, Maclean's called a $78-billion Ontario debt "staggering." It's about to roar past $174 billion next year on its way to nearly $210 billion by 2011-12. If that's investing, I'd hate to see borrowing. But don't worry. I will.

Given these numbers I ask again, why did Dalton McGuinty just spend a quarter of a billion dollars on video games? Doesn't he get enough excitement out of spreadsheets? The short answer is that once you start recklessly spending billions you ain't got, what's another $263 million? Heck, Queen's Park spends that much every 21 hours. Whee! Cackle! Whoosh!

The long answer is that Dalton McGuinty has learned nothing except the fine art of spin. Back when Trudeau was cool it was widely believed that governments had greater foresight than the private sector, so they should undertake massive investments for the long-term good of the economy. Very few people now admit to believing such a thing. But they still apparently think it, since when the recession hit governments lost no opportunity to revert to exactly that sort of behaviour, and voters seem happy with it.

It's very frustrating to watch and not just because those IOUs have my name on them (plus yours and everyone else struggling to make ends meet). It's also frustrating because, in the past third of a century or so (I count from the Fraser Institute opening its doors and its mouth in 1975) we who defend free markets have won the battle of ideas. It just hasn't translated into policy.

This hurts. Not only my wallet or my amour-propre, although I do try to keep that nice and shiny. It hurts because I'm convinced that ideas matter, that they are the main driver of historical change. And it revolts me to see them bounce off the enviably pristine, adamantine, impenetrable self-satisfaction of our premier. Especially ideas as fundamental, straightforward and vindicated by experience as those McGuinty insouciantly brushes off between raids on the treasury.

Here's how simple it really is. The company he has lured to Toronto with this walloping subsidy can now lose up to $263 million in the next decade and still make a profit for its employees and shareholders. Of course, McGuinty portrays this company as the surest of sure-fire things and he would know, he's a politician. But if it's so dang sure-fire, it doesn't need a subsidy to make a profit. And if he's somehow mistaken, it doesn't deserve one. After all, someone's got to pay that money on top of the other $113 billion they're planning to spend next year. Because spend and spin is the name of their game.

Last March the McGuinty Liberals were trying to figure out how to spend a $5-billion windfall. Now they're trying to figure out how to spend a $18.5-billion shortfall. Don't worry. They're way smart. They'll do it. They've hiked program spending seven per cent a year since 2001. Unlike medieval kings, they don't have to worry about parliament. Heck, they own parliament.

Incidentally, in the 14th century Edward I's grandson, Edward III, got so broke he had to pawn the crown jewels. But he got them back. I wouldn't count on some Dalton III getting back the car or video game subsidies. Our rulers are way too clever to have assets. All they have is "investments" that, frankly, I'd trade for Ohio's 89 cents.

[First published in the Ottawa Citizen]