Joseph E. Stiglitz is a professor of finance and business at New York’s Columbia University. In 2001, he received the Nobel Prize in Economics and, throughout a lengthy career, he has contributed broadly to economic theory and policy. Recently Stiglitz consulted with Barack Obama but he has been one of the Administration’s fierce critics too. Stiglitz earned his PhD from MIT in 1967 and became a full professor at Yale in 1970. Since then, he has taught at Princeton, Stanford, MIT and Oxford. Few economists are more widely respected.
He commented recently on our new form of ersatz capitalism, in which losses are socialized and profits privatized. He refers to what some wrongly call the new American socialism. “But,” says Stiglitz, “socialism is concerned about ordinary individuals. The United States has provided little help for the millions of Americans who are losing their homes. Workers who lose their jobs receive only 39 weeks of limited unemployment benefits, and are then left on their own.”
At the same time, politicians expand the corporate safety net beyond comprehension, offering funds almost without limit even to scummy players in the finance sectors. Stiglitz says, “This is not socialism, but an extension of long standing corporate welfarism. The rich and powerful turn to the government to help them whenever they can, while needy individuals get little social protection.”
In this country, I see that Air Canada has taken its place at the public trough again, asking for an immediate $200 million from the federal government. If the airline is unable to negotiate new borrowing, it faces bankruptcy protection for the second time in six years. Of course, with Air Canada facing operating losses and a pension deficit of almost $3 billion, logical observers believe the government tap will continue running for years to come.
David Lewis raged against Corporate Welfare Bums way back in 1972. Perhaps the only thing changed since then is the accelerated pace of doling out public money to wealthy citizens.
If we must pass out cash, subsidize consumers instead of suppliers and manufacturers. And, by managing the subsidy program, we can accelerate movement toward a green economy. Who wants to give cash to Air Canada that enables it to fly half empty airplanes around the country? Instead of handing over $200 million and getting only thanks in return, purchase 400,000 air travel vouchers of $500 each. Hand those out to schools across Canada, one non-transferable in-Canada travel voucher for every Grade 7 student. Fund a coordinating office and encourage student exchanges.
Youngsters could travel from Vancouver Island to Newfoundland or Yellowknife to Winnipeg, with similar sized groups heading from east to west. Air Canada would sell 400,000 seats that might have been empty, get $200 million of new money and our next generation learns about the country first hand.
While we are doing that, we should stop subsidizing automakers to build inefficient vehicles. Instead, give buyers grants for every vehicle made in North America that is rated at least 7.0 L/100 KM (40 mpg). Replace the aging automobile fleet with safer, clean running, efficient cars. Raise the price of gasoline through significant carbon taxes but pay to get dirty junkers off the road permanently. With sharp incentives for buyers to enter the market, the manufacturers get money the old fashioned way: by building and selling vehicles.