Inefficient Idea of the Week

When it comes to governing, there’s bad ideas and then there’s BAD ideas. The statements from Ontario’s Economic Development Minister Michael Bryant yesterday about his government wishing to pursue “reverse Reaganism” falls into the latter category.

Governments are good at overcoming market inefficiencies, providing services that are clearly beneficial to society at large and using their stick and carrot act to induce more efficiency from the economy. However, government are pretty terrible at “picking winners and losers.” When the government’s criteria for making economic decisions becomes all about preserving current jobs, it leads to a worse economic future. That’s because resources and human capital are tied up in inefficient industries (likely at wrong levels) and by removing the profit motive from companies (and replacing it with a “keep employment up” one) industries become bloated and don’t respond to consumer demands or the changing needs of Ontario.

So, though this might be a throwaway comment, it’s rather galling that the minister supposedly entrusted with the economic development of Ontario is advocating for an extraordinarily expensive course of action that would instead lead to economic stagnation.