In the news: a member of the Ontario Parliament received a new batch of provincial flags, and noticed they weren't up to their usual quality. The flags are normally ordered from a local, family-owned company. But when he checked the tag, he discovered the new flags were made in China.
It seems the Toronto company lost the contract when the government discovered it could save $5.00 per flag by ordering the imports. And while the folks responsible fumbled helplessly in an attempt to explain (one said that the politicians didn't have to buy their flags directly from the government and could get them elsewhere...), the Premier of Ontario defended another decision to buy Asian-made shirts for the Ontario Provincial Police.
Y'know, I'm not an economist ... but why am I seeing the obvious, and these great leaders of ours cannot?
I have to scan the news wires every day, and every day, there's a report of more companies laying off workers or closing their doors. These are firms that will no longer be paying business taxes, and maybe not property taxes. These are workers who will no longer be paying income tax, and who will probably require some form of unemployment insurance (I refuse to use the ridiculous new "employment insurance" name -- you don't need it if you're employed, folks) or welfare. And in some cases, the government hands over bailout money to keep the company going.
Let's say the Legislature ordered 10,000 flags. The difference between the Canadian and Asian flags comes out to $50,000. According to a couple of government documents I found, the welfare payment for a single person without dependents is $7,000. So that $5.00 per flag could help fewer than eight people who might have lost their jobs because their company lost the government contract.
And those workers, now jobless and depending on government assistance, will be far less likely to go shopping and support other workers, whose jobs will then be on the line.
To bring this out to an automotive theme, governments -- not just here, but around the world -- are giving automakers scads of money to keep the assembly lines running.
But if they don't start with the basics, who's going to be left working to actually buy a car? You need to spend money to make money, and in this case, you need to spend money to save money. A flag or a cop's shirt may not seem like a big deal. But when you look at the big picture, it's not a billion dollars that will save GM, Ford and Chrysler. It's everyone saying that spending five bucks on a flag is more important than saving five bucks on a flag. You can pay me now, or you can pay me later.