Sunday, August 7, 2011

When Ontario attacks businesses

During the early recession time in 2009, Ontario’s Liberal government looked to get into even more businesses, ostensibly to support Ontario’s economy.  Those of sound economic mind will recognize this as one of the worst actions a government can take and is certain to cause destruction of value, jobs and companies. 

The fact that an Economic Development Minister even exists tells me Ontario is going in the wrong direction.  The original and still highest purpose of government is to protect your individual rights so you may choose your own path in life, free from coercive force so long as you do not harm another.  To accomplish this, we delegate the right to initiate force to our governments.  The entity having the greatest potential for harm is government itself.  No other organization exists that has insinuated itself so deeply into your daily life and has such power over you.  Constitutional laws are primarily needed to protect citizens from the force of government, to restrain government.

Minister Bryant said “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 we are in.”  Amazing – the Minister saying out loud that he is knowingly doing the wrong thing – casually, as if the wrong thing is now to be the right thing.  This reversal of right and wrong is altogether typical of proponents of socialism – an inverted and impossible philosophy: freedom through massive use of force.  

Bryant said “Just as companies go to banks and apply for dollars, companies come to the government of Ontario and apply for dollars.”  He failed to recognize a crucial distinction between free people (and their businesses) and government-as-business.  If a business goes to a bank seeking a loan the bank must carefully judge the merits of the business because it is responsible for the safety of your (depositor) money that it is lending to others.  If the bank does not lend carefully and loses your money then you should not deposit money with that bank and instead deposit it with a bank that is careful.  Competition and your consuming preferences require bank accountability.  When a business goes to the investment market seeking equity investment from you it becomes accountable to you as a shareholder whose own assets are on the line every day. 

When government takes the place of a bank or an investor it interferes with your consumer and investment preferences and distorts the economy.  What sort of business would want to partner with the notoriously fickle, inefficient and bureaucratic jaws of the state?  Only those that cannot raise money from careful lenders and investors, whose business has been judged as not suitable by people with direct experience and full accountability.  Thus, government is left as the supporter of those businesses that are least capable, most risky and most willing to use political influence to get their hands on taxpayer money. 

Where does government get this money?  It is taken by force from those who earned it.  Where does it go?  To those who cannot earn it on their own.  Bryant said “governments have to play a role in assisting those companies in consolidation battles to survive.  It’s critical to survive.”  By his measure, every business that exists must survive, no matter what the cost.  Bryant proposed to ignore the clearest consumer signal possible – the insolvency and failure of a company.  If consumers do not want to buy enough product at a price that allows the company to make a profit, then why should government use money taken from consumers to compensate that business for its inability?  Madness.  Bryant wants to force citizens to support businesses that citizens have voted against with their own hard-earned money.  This economic insanity is totally incompatible with the principles of freedom.  Clearly the Ontario Liberals have no wish for a free province and would rather control your life.

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