by Kelly McParland, National Post
Ask Dalton McGuinty how he can be so sure his gamble on the alternative energy industry will succeed, and he tells a little story about the horse and buggy. There were probably people who thought the new-fangled horseless carriages filling the roads a century ago were just a fad and would never catch on, he says. But the car industry blossomed into a powerhouse, and the windmill/solar energy business will too. Because it has to.
Maybe the story goes over in all the schools he visits, but if that’s as deep as the Premier’s industrial analysis goes, we’re in more trouble than I thought. The horse and buggy industry died because a better, faster, more convenient, more desirable product came along, and the auto industry boomed out of sheer public demand.
No one had to give Henry Ford or Walter Chrysler 20 years of government subsidies to talk them into building a factory, the way Mr. McGuinty is paying Samsung to build them in Ontario. No one had to tour the province insisting the Model T would catch on eventually, if we just gave it a chance and forked over enough billions to keep it alive in the interim. No one had to, because the attraction of the product was so self-evident people crowded showrooms to get one of their own. Demand drove the industry, not government ad campaigns, or jacked-up fees for buggy whips. The market killed the carriage business and substituted a new one in its place. That’s the way it usually is with innovative new products. Just ask Steve Jobs how hard a time he has selling iPads.
Mr. McGuinty doesn’t see it. He’s a believer. He thinks it’s great that there are factories in Ontario making parts that could be made cheaper in China (and eventually probably will be), propped up by his government. He doesn’t blink when he’s asked how — when the smartest investors on Bay Street don’t claim to know which industry will succeed and which won’t — he can be so sure he’s picked a winner. He just thinks he has.
When told that Opposition leader Tim Hudak puts the cost of the government’s subsidy program at $1 billion a year, he says that’s “interesting” but doesn’t dispute it. Nor does he argue with a competing estimate of $1.5 billion a year. He just goes on about how spectacular it is that Ontario is leading the way in this cutting edge industry, that has failed in other jurisdictions and only continues to breathe here because he keeps sending it cheques.
Ontario has had 30,000 applications for its program, he says. And why wouldn’t it? When the government is promising guaranteed money, it’s no big surprise that crafty entrepreneurs would want to get in on it. When told that Mr. Hudak says he’d never be arrogant enough to suggest he had a magic formula for knowing which businesses will thrive and which won’t, he acknowledges that they “disagree.” He believes he’s made the right decision in betting billions on an industry that has so far shown no signs of being any more promising than any of the other environmental “alternative” industries out there — the battery that’s finally going to be strong enough to replace gasoline, the fuel that’s going to replace gasoline, the light bulb that’s going to be cheap and attractive enough to replace incandescents.
Mr. McGuinty has to believe. He has no other choice. He’s bet so heavily on his vision, is in so deep to the Samsung people, has so firmly closed off any escape routes, that he either has to believe or despair. Asked why, after vigorously defending a planned new gas-fired power plant outside Toronto, only to suddenly buckle and cancel it in the face of protests, he responded: “It’s never too late to make the right decision.”
Unless you’ve already bet the farm and can’t get it back, that is.