Paul Martin has pledged that his government would spend millions in the automotive sector. This is a recycled NDP idea, so what I said before still applies:

…Currently, vehicles are manufactured in a variety of places, and many car companies have taken to building vehicles in foreign countries with low wage rates. Ford and BMW build some of their cars and components in Mexico, for instance. The result of this outsourcing is that the cost of the labour in these cars is decreased, which reduces the overall price of the car.

If we move car manufacturing from Mexico, where the average industrial worker earns 12% of his US equivalent (2000 figures, US Dept. of Labour), to Canada, where the average industrial worker earns 81% of his US counterpart, we have effectively increased the cost of labour in manufacturing a car by 675%. This shortfall must be made up somewhere. The car manufacturers could reduce their profit, which would lead to a reduction in value of the company, which would lead to less investment, which would result in fewer jobs being offered by the company in the future, and possibly even layoffs now. Of course, since the manufacturing has been shifted to Canada, this means that Canadians will be laid off. That is the first… outcome for this policy, Canadian unemployment.

The second… reaction is to pass the increased costs onto consumers. A car that used to cost $12,000 might now cost $14,000. Firstly, consumers will buy fewer cars. They will search for cheaper alternatives, buying cheaper cars that make less profit (and less profit means more unemployment, as we have seen) or perhaps leaving more time between vehicle purchases or buying more pre-owned vehicles. This means that the company will sell fewer cars. As demand decreases, supply must decrease, which means that the company must slow production and therefore lay some workers off. The second… outcome of [Liberal] policy is also unemployment.

Then, of course, we must consider opportunity costs. If I must spend $14,000 on a car instead of $12,000, that extra $2,000 must come from my own pocket. The opportunity cost of that increase was whatever I now cannot buy with $2,000. Perhaps I won’t buy that big-screen TV. Or maybe I’ll get my roof replaced and my driveway resealed next year instead of this year, or do it myself. I probably can’t afford to renew my gym membership either. In all of these cases, the industries that supplied these consumer demands, the TV manufacturer, the roofer, the driveway sealer and the gym, will not get my business. Their demand decreases too, and in exactly the same way as for the car manufacturer above, the end result is more unemployment.

So, we can see that what the [Liberals] will do by trying to bring jobs to Canada is to make even more Canadians unemployed.

Even if Martin uses tax dollars to subsidize the Canadian automotive industry, the end result is still greater unemployment and hardship for Canadians. Taxes must increase, or other services must decrease, or the currency must be inflated, but the end result is the same: other industries must be sacrificed to the auto industry. For those who don’t work in the auto industry, be happy that Martin considers you a second-class citizen whose welfare is unimportant compared to auto workers. For our proudly egalitarian country, this is a slap in the face. You’re only equal as a buzzword, when it comes down to it, you’re as valuable as the difference you could make at the polls, and that’s it.

And while we’re at it, Paul Martin’s comments about laissez-faire capitalism are extremely worrying. A former finance minister and current PM should know at least a little about economic theory, apparently, Martin doesn’t.