What is corporate welfare?
The term “corporate welfare” was first popularized in Canada in the 1970s by then federal NDP leader Stephen Lewis. In its simplest definition, corporate welfare is a payment from government to a particular business or business sector— not for a good or service provided to the government—but simply as a subsidy to the business for a variety of reasons and justifications: the ostensible creation or retention of job, the notion extra tax revenue will be created and the desire to save a particular industry in a specific vote-rich region are among other explicit and implicit justifications.
In short, corporate welfare is a business subsidy, but this is just one of the other names by which it is known. Less accurate and somewhat misleading descriptions such as “targeting,” “incentives,” “investment” and a plethora of other terms illustrate George Orwell’s point that the English language can be abused by lessthan- clear terminology.
Made-to-order studies on corporate welfare
The literature on corporate welfare can generally be divided into two camps. The first camp, with made-to-order studies on behalf of a particular business or sector, avoids a full accounting of the cost of a subsidy to the wider economy. Such studies are often of the “if you build it they will come” variety, be it a new sports stadium built with public funds, an automotive factory given a subsidy to locate in one province or state over another or a green subsidy in an attempt to develop a new product.
Such studies often deliberately focus on jobs, tax revenues and the economy in one concentrated geographic area, ignoring the wider, negative impact upon jobs, tax revenues and the economy across a province/state, country or internationally.
However, such studies are favourites of automotive and aerospace companies seeking handouts from one national government while making the same pitch to another, or, the film sector that plays one state or province off another in its search for subsidies and regional development agencies that claim yet another large dollop of public cash will right all that ails their particular area/industry.
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