Hoping to successfully subsidize innovation is like spending one’s savings on lottery tickets: a lazy waste of opportunity, writes Richard C. Owens in the Financial Post. Below is an excerpt from the article, which can be read in full here.
By Richard C. Owens, April 27, 2021
Spending and subsidy seem to be the only policy levers our governments have a firm grasp on. They’d even have us believe they can subsidize the country into innovative productivity gains.
An especially egregious example is the federal Strategic Innovations Fund (SIF). That Canadians tolerate this Niagara of slush testifies to our political apathy. Displaying neither strategy nor innovation, the SIF ladles out public cash to corporations, many of them foreign-owned. In fact, the SIF debases and mocks innovation, in service not to innovation but to crass politics. Remember $12 million for new freezers for Loblaws grocery stores? SIF. Or $49 million to Mastercard international for a new cybersecurity centre in Vancouver? SIF. Or $55 million for a bridge on a road to an LNG Canada facility in Kitimat? SIF. And on and on. We are taxing people just to give money to rich corporations who ask for it. How is it that Canadians are not up in arms about the SIF? Or the Super Clusters program, or all the other cluster-muck that suffocates innovation in this country?
The pretext that public subsidy serves innovation is hollow. Innovation is rare. It’s born of discipline, toil, long-horizon investment, expertise, creativity and willingness to embrace failure. Innovative productivity gains cannot be created by subsidizing. Subsidies are inherently unproductive, and anyway it’s hard to imagine buying a productive economy with tax revenues from an unproductive one. The world is too competitive. Hoping to successfully subsidize innovation is like spending one’s savings on lottery tickets: a lazy waste of opportunity.
Many inventors, companies, consultants and academics naturally argue in favour of subsidies. Talk’s cheap and the money’s free. And they’re arguing before governments, which always have wide-open ears for opportunities to give our money away for their own political benefit.