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Government as Entrepreneur.

n.  A person who organizes, operates, and assumes the risk for a business venture.
The American Heritage® Dictionary of the English Language, Fourth Edition

Blazoned across the front page of the local rag, the Ottawa Citizen, this morning’s headline read Billion-dollar business fund overlooks city tech firms.  It seems the Ontario Government yesterday announced a $263-million grant  to establish a Toronto-based studio for French video game giant Ubisoft.  The funds are coming from the $1.15-billion Next Generation of Jobs fund, announced in March 2008, which has so far exclusively invested in the Southern Ontario cities of Toronto, Waterloo, and Windsor, overlooking the more than 1,800 companies in Ottawa’s tech sector.

Never mind that Ubisoft has more than $100-million in profits annually, or that the $263-million spent creates just 800 jobs over the next decade at a cost of $330,000 per job (after all, that’s cheap compared to the auto bailout), or that Dalton McGuinty’s government will run an $18-billion dollar deficit this year.  No, what really galls is the statement in May by then economic development minister Michael Bryant that “This is government picking winners and losers, government as entrepreneur.”

There is no element of risk in spending the taxpayers money.  Taxing struggling families to fund profitable multi-national corporations is closer to the centrally run economies of the Soviet Union than entrepreneurship.

Government as entrepreneur.  It’s enough to make you weep.

More to the point, however, the focus of the Next Generation of Jobs Fund is on employment in existing established businesses.  The money has gone to players in the plastics, automotive, entertainment, and health care industries.  Big announcements, and good photo ops, but a short term and short-sighted strategy.

What’s needed is a strategy to encourage job creation through new ventures and innovation.  For example, funds in the United States and Israel are demonstrating repeatedly that small investments in promising startups, with significant mentorship (think Paul Graham, or Yossi Vardi) can produce dramatic results (think Twitter).  It’s easy to think of a number of successful Ontario entrepreneurs that might be a homegrown Graham or Vardi.  The incentive to invest would be that much greater if the Ontario government had some programs targeted at encouraging those entrepreneurs to invest their dollars in some real entrepreneurs, rather than photo-ops for the Premier.

“It would be so nice if something made sense for a change”, said Alice.
Alice in Wonderland, Lewis Carrol.

{ 1 comment… add one }

  • Richard Sprague July 12, 2009, 7:11 pm

    The worst part, of course, is that by providing competition for other startups, the government venture will likely make it even harder for new, private risk-taking to happen. Who wants to compete against the government?

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