Flaherty’s friends frustrate our future.

Who do you think John F. Kennedy was talking to when he said “ask not what your country can do for you, ask what you can do for your country.” He knew he would be wasting his time if he addressed that to business. Business decision making has little to do with doing the right thing.

That was why many people wondered last week when both Mark Carney, Governor of the Bank of Canada and Finance Minister Jim Flaherty asked business to loosen their purse strings. Carney was told by somebody that Canadian business was sitting on $500 billion in profits and not buying anything. Just how they keep that close tabs on business, we have not figured out. It must be right because next thing our ultra-conservative Finance Minister jumps in on the act and also complains about business not doing right with all the money he allows them to keep in profits.

Now, just what is wrong with this scene?

On the spend side is a banker. A Canadian banker, we should add. Canadian bankers rarely tell people or businesses to spend. They are noted for their cautionary advice. They would hardly suggest that there be any rash investing or hiring of more Canadians. Even Scotiabank would rather pay $3 billion to buy ING Direct from the Dutch than to add more employees in Canada.

And then along comes our dour Finance Minister and adds his two nickels (he does not have pennies for two-cent deals anymore). He tells us that the government has given the economy its best shot and now it is business’ turn. He and the government are busy getting people off the government payrolls and saving a buck where they can. He is saying to business “don’t do as I do, do as I say. And I am telling you to dig into your piggy banks and spend, spend, spend.”

Jim Flaherty certainly sets such a fine example for us all. It is enough to make a Keynesian economist puke. When he and Harper decided to do something about the world economic crisis (back when Harper had a minority government) he came up with an infrastructure scheme that is now driving the municipalities that bought into the scheme into bankruptcy. And it got Harper a majority government.

Someone was telling us some time ago that Canada has one of the lowest business tax rates in the G20. What Flaherty and his friends such as the Ontario government do not understand is that business is in business to make money. Business will always support governments that keep their tax rates low. What government needs to do is to only give tax breaks to companies that prove they are good citizens. Those are the ones doing something for the country.

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Copyright 2012 © Peter Lowry

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