Enough Bailing, Let’s Move Forward

There’s a view we all — at one time or another — come to hold: “things shouldn’t change”. For the religious, this line may be drawn where the society has become increasingly post-religious. For the neighbourhood, this line may be drawn where the sense that things are changing for the worse has erupted, and NIMBYism takes hold (“not in my back yard”, a close cousin to BANANA — “build absolutely nothing anywhere near anyone”). For the employer, it becomes the cry to bail them out.

This morning on CBC Newsworld the thoughts of Oshawa-area (GM plant) employees were heard. “Don’t let Oshawa [the town] die. GM doesn’t deserve a handout. We’re all driving vehicles that should never have been produced and that’s got to change. But don’t kill the city.” Unfortunately, if Oshawa is GM, bailing out acknowledged mismanagement at GM would seem to be the order of the day.

Well, let it go. Yes, life in Oshawa may get tougher. How was it for the workers whose jobs were sent to the US — to Mexico — to China? You can either roll over and slowly fade away, or you can roll up your shirt-sleeves and start creating local employment again, under local control, that meets real local needs (so moving to tourism, for instance, is not what I’m talking about).

What’s being said in the calls for bailout money is the following:

For the province, it’s McGuinty saying “I don’t want to have to make tough decisions, so just fund all this and I can continue to pretend all is well”.

For the city, it’s its mayor saying “Oh, God, we can’t afford to exercise our responsibilities for the essentials and I have a whole programme of frills anyway, so bail out the employer and I won’t have to deal with it”.

For the worker, it’s “save my job” on the one hand, and “let all my company stock that infests my pension savings go up” on the other. Heavens forfend that managing risk should have been his or her responsibility. (How many families, too, have both parents and often the eldest child working for the same firm that their savings are tied up in, and their home’s asset value depends upon?)

There is a limited amount of tax revenue available — and an infinite set of demands upon it. Choices must be made. (If you don’t want to deal with choices, get the hell out of politics: it’s what came with your election.)

For instance, making it possible (through zoning change) to densify neighbourhoods with laneway and coach houses, authorised “mortgage helper” basement apartments, and the like would help people retain their homes even if they are laid off — or find a place to live by creating new rental space. More zoning change would put local services in local neighbourhoods, making shopping a walking experience — and supporting more alternative forms of employment locally. So, too, would allowing more businesses to operate from residential areas.

This, in turn, would make investments in transit infrastructure pay off. Electrify the system (trolley buses, trams, interurban rail) and it survives and thrives in oil supply uncertainty (which is coming, and quickly). The net effect is that the town becomes a place to come to, not a place to flee from.

Of course, if you’re GM, or Ford, or Chrysler, the idiots in middle management and in the executive suites who ignored reality for years need a good housecleaning — also a function of not bailing them out and forcing them to deal with their bankrupt state. I say “idiots” because playing bureaucratic games with each other was far more important to addressing the obvious. After all, if Toyota, Honda, BMW, etc. can make quality products that sell for list because they don’t have to be discounted to shift the goods, and can have unionised employees do this, doesn’t it say clearly that management let the North American auto industry down?

Whether it’s banks, automakers, or whatever, risk should not be pushed off on the taxpayer while profits accrue to the managers and shareholders. Resist the urge to bail out, and instead make choices about investment. (This, by the way, is also required with existing government programmes at all levels: clean house and free up resources.)

If Canada, its provinces and its cities did exactly that, we’d have the leverage point to go with our natural resources and sensible anti-deficit financing model of the last decade, and the twenty-first century truly would belong to Canada.

Or we can be idiots and follow the Americans, the Brits, etc. down a rathole. Choose!

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