On corporate influence

At first glance, Andrew Coyne's latest might seem like just another anti-government rant. But it's worth noting that Coyne's criticism is much more specific than that, and in fact leaves open an important choice as to how to move away from the current spending model:

Jaffer, first. Whatever may be the truth of his relationship with Toronto financier Nazim Gillani, whose alleged business interests, besides blackmail, fraud and busty hookers, include “obtaining grants and loans from various government bodies,” we have it by Jaffer’s own account that he was no less successful, as advertised on his newly decommissioned website, at “securing support from the Canadian government.” And whether or not he actually enjoyed the kind of access of which he apparently boasted, what is certain is that he could have had no ability to siphon government funds into private pockets where none was available.

But of course the federal government has become a vast spigot of this kind of thing, providing billions of dollars every year in subsidies to businesses, trade associations and other private groups. Just to list the “grants and contributions” over $100,000 takes up more than 280 pages of the Public Accounts of Canada, at around 60 lines a page. With all this money sloshing about, it stands to reason you’d find fraud artists waiting to take their piece, and well-connected friends to help them, just as they did under previous governments. We might as well put up a sign: The Buffet is Open.

Now, I'm sure some will read the passage as focusing more on the money being spent than its destination - and that's probably Coyne's intention as well. But the second part of what makes the spending so problematic deserves to be highlighted.

After all, "into private pockets" element of Coyne's complaint is the one which raises the danger of significant fraud and influence peddling. To the extent government carries out its functions in-house, the stakes for any individual are generally no greater than the relatively reasonable amount of their public salary - which of course relies on their retaining enough trust to continue to be employed. And even for those looking for opportunities to exploit the system, there's seldom a lack of opposition or media interest in exposing that type of problem, resulting in a high probability of detection for any serious problems. Which means that while there's still obviously some danger of misfeasance in the public sector, the stakes are relatively low, the likelihood of fraud limited and the lines of enforcement direct.

In contrast, it's when a government relies on sending money elsewhere to try to get public functions carried out that the concerns raised by Coyne become particularly glaring. And unfortunately, we are indeed at a point where billions of dollars are "sloshing around" to reflect government's supposed commitment to all kinds of industries and causes, with less reason than there should be to think there's much of a link between that funding and our ultimate policy goals. Which is a wonderful outcome for the corporate interests on the receiving end of the largesse (however they come to enjoy that status), but not such a great deal for those stuck with the bill.

Now, I'll grant Coyne that it's worth taking a close look at whether some of the industry-based subsidies and other current streams of funds actually merit public investment. But by the same token, if we do care enough about a particular issue to believe that public action is required, we should be spending a lot more time asking what means will work best: are we satisfied with a government that serves simply as a conduit to fund whatever private actors can best place themselves to receive our money, with all the increased risk of corruption that entails? Or should we consider placing more direct responsibility in the hands of the public sector?