Friday, November 02, 2007

But... but... that's not fair!

I was amused to see Jim Flaherty reduced to befuddled whimpering last night, as the news of Chrysler's job cuts came out. He seemed shocked, genuinely shocked at the idea that Chrysler would piss in his cereal like that. "We just announced ridiculously lopsided tax cuts for you people!" he as much as said.

Of course, it's not like tax cuts can re-create Chrysler's market share, or make a poorly-run company, uh, not poorly-run.

I don't buy the argument that there's nothing the government can do to prevent these kinds of job losses, but the question is always, "why should we want the government to do that?" It's not like there's a pressing national interest in us having American branch-plants here in Ontario as opposed to anywhere else, or not at all. What this does show, however, is how laughably obtuse the rhetoric about tax cuts being a magical solvent that dissolve all problems in our economy is. Frankly, Flaherty could announce tomorrow that corporate taxes were now zero and it wouldn't matter to these people -- it's never enough.

Oh, and a brief follow-up. I wrote a few days ago that Flaherty's $60 billion giveaway to the rich could have instead built 1,500 kilometers of high-speed rail, in the two most frequently-proposed corridors. I was deliberately understating things, but even I didn't quite realize by how much. In 2004, the Van Horne Institute did one of the most complete estimates of the cost of building high-speed rail in Canada, and came up with a figure of roughly $12 million/km. This is their most expensive option -- basically, the French TGV model transplanted in Canadian steel. (And while they strongly endorsed HSR, the TGV model is not the option that the VHI reccomended.) This tracks nicely with the experience in Europe, where the most recent line cost the French government roughly C$13 million (after exchange rates) per km. So even if we assume that the cost is $15 million/km, that gives us enough money for 4,000 km of HSR, or both the Quebec-Windsor line and the Edmonton-Calgary line, with enough left over for track from Calgary to... Sault Ste. Marie. If costs were contained to the $12 million/km estimate, we could link Calgary with Toronto. Or scrap the national rail idea, and link Calgary, Edmonton, Saskatoon, Regina, Winnipeg and still do the Quebec-Windsor line!

Now, it's possible that either or both of those ideas is a white elephant in the making. (I think the second idea is probably the better one, but linking up with Vancouver would be both a good idea but tricky in practice: HSR needs long, straight tracks that are possible in the prairies, but as far as I can tell impossible/absurdly expensive through the Rockies.) But my personal pet idea of the moment isn't really what matters here. I think it demonstrates rather well the scale of what our reflexive tax cutting costs us in real terms.

1 comment:

Green Assassin Brigade said...

They could also be working on a made in Canada solution to global warming by allowing the safe of the Zenn Electric car. If something is not done soon these jobs and a wholly Canadian company will also leave.


while just a niche product so far, there is potential for it to take off and coexist in your very reasonable world of high speed trains.