Bail outs a matter of who cries loudest
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Nov 15, 2012  |  Vote 0    0

Bail outs a matter of who cries loudest

St. Marys Journal Argus

St. Marys Journal Argus editorial

An interview with Canada’s leading automotive industry analyst this week (see Page 5 in this edition of the Journal Argus) brought up some old questions regarding the government’s actions during the financial crisis of a few years ago, and their lack of action currently regarding those still reeling from it.

Three years ago, the federal government of Canada and the provincial government of Ontario bailed out American automakers GM and Chrysler to the tune of over $10 billion. This wasn’t a freebie; both companies were expected to make concessions and both governments retained a percentage in the companies’ shares.

But is it not a statute of free market philosophy that inefficient businesses must be allowed to fail in order to make room for smarter and better run companies? If this is true, why are some companies thrown a life-preserver while others are allowed to drown?

Take Robica Forman Tank Ltd. The local manufacturer is currently in receivership; its existing contracts dwindling while the shop stands empty.

Why have they not been bailed out by taxpayer money? True, the 40 people employed by Robica is dwarfed by the substantially larger number employed by GM and Chrysler, but then again, it wouldn’t cost $10 billion to fix Robica’s woes (we can assume, anyway, seeing as no numbers have been released yet.)

Last week’s editorial made mention of the absurd notion behind a bi-partisan system, and how little sense it makes to insist every problem comes with only two solutions. Here we see the issues inherent with taking the grey path between two extremes, those being A: Let failed companies fold, and B: Give every business a helping hand when needed. The government has chosen option C: Help out some companies while ignoring others; the clear issue with this being where to draw the line. Is it a simple matter of percentages? That helping this company will produce a positive outcome while this one will land us in the red?

Somehow, it doesn’t seem likely that a government official, elected or otherwise, has crunched Robica’s numbers in order to gauge the viability of helping it out of its financial woes; and yet, when GM and Chrysler were on the chopping block, proposals, projections, rejections, and agreements between public and private bean-counters were pored over with a frantic sense of urgency.

While the immediate conclusion would be that GM and Chrysler’s failure would affect Canada on a provincial and federal level while Robica’s ripples would be felt only by Perth South and St. Marys, the reality is simply macro versus micro; all communities are affected by factory closures equally, no matter who owns them.

It seems, then, that the biggest difference between the two scenarios is this: GM and Chrysler can afford to hire lobbyists, and Robica can’t. Huge, multinational corporations can buy a megaphone to yell for help. The little guys are left screaming in the dark.

Canada’s leading automotive industry analyst had lots to say about GM and Chrysler, but he’d never heard of Robica Forman Tank Ltd. It’s not his fault, though. When you’re used to dealing with lions with thorns in their paws, it’s hard to notice the mouse who’s been crushed underfoot.


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