The captains of industry are fond of promoting the notion that capitalists, but never government, generate wealth.
So what to make of two recent Globe and Mail Report on Business stories about government support for venture capitalists?
At the end of June the federal government announced the five venture-capital firms that will receive $350-million it previously allocated to fund start-up firms. As part of the accord, the government is offering a dollar for every two and a half dollars private investors put in. Ottawa’s money is supposed to be an investment, but the public only begins to be repaid after the purported “risk takers” see the return of their capital and 7-per-cent on top of that.
The recent initiative extends an even more generous five-year old subsidy program for “venture capitalists”, who are widely hailed by supporters of capitalism as dynamic wealth creators. But, after a downturn some years ago “the country’s venture capitalists pressed Ottawa for help after Canadian institutional investors largely abandoned the asset class after years of poor returns”, noted the Globe. Alongside support from Ontario, Stephen Harper ramped up social assistance to these “wealth creators”.
The Business Development Bank of Canada (BDC) anchors the venture capital program. Formed by Parliament in 1944 to stimulate investment in Canadian businesses, BDC (previously Industrial Development Bank) is the “largest single venture capital investor in…