Parenting experts have a motto they use with teenagers contemplating life decisions: “To not decide, is to decide.” Teens who passively go with the flow, guided by peer pressure, are still making important choices &#0151 as surely as those who deliberately ponder key decisions. Don’t sit back and watch where life takes you. Grab it by the horns and steer.

This same message applies to economic policy. And it’s one that our federal government needs to hear.

According to news reports, Finance Minister Jim Flaherty is rejecting the idea that Ottawa should actively help to nail down new investments in Canada’s hard-pressed auto industry. Reprising slogans from his years in Mike Harris’s provincial cabinet, Mr. Flaherty argues that “politicians aren’t very good at picking business winners and losers.” (Incidentally, it was under Mr. Harris that Canada’s once-vaunted auto industry entered its current tailspin.) Government’s rightful role is to cut taxes and eliminate red tape — the private sector will take care of the rest.

The litmus test is a proposal by Ford Canada to invest something like $300-million in a new engine facility in Windsor, Ont. The project would reportedly incorporate both environmental and manufacturing innovations: producing more fuel-efficient engines, with cutting-edge flexible assembly technology. The rough practice in recent years has been for the federal and provincial governments to each kick in about 10 per cent of the upfront capital costs of major “keystone” projects such as this one, justified by the tax revenue and other spinoffs these facilities generate. The CAW, parts suppliers and municipalities also pitch in to cement the deal.

And there’s much more than one key investment at stake here. Ottawa’s decision on the Ford proposal will send a signal to other auto makers considering Canadian projects: like General Motors, pondering new power train investments, or Magna International, which wants to build a North American assembly plant.

If Ottawa confirms what industry officials fear — that it attaches no particular importance to the auto industry and will take no special measures to enhance its prospects — then Canada will have exiled itself completely from the race for such investments. With the industry struggling to adjust to new global challenges, that’s like stepping on someone’s finger tips as they cling to the edge of a cliff.

The knee-jerk, pious claim about “picking winners” needs to be carefully interrogated. Every government chooses priorities: the industries, issues and policies that it thinks are most important and promising. And there’s no evidence government does this any worse or better than the private sector. After all, Bay Street’s entire reason for existence is to “pick winners” (in return for juicy commissions and fees), and they’ve produced more tax-assisted financial sinkholes than any government. (Mortgage-backed securities, anyone?)

And Mr. Flaherty’s claim that corporate tax cuts are “neutral” is nonsense. A corporate tax cut rewards companies already making big profits — with no strings attached regarding their subsequent activities. Who’s making big money in Canada today? Oil and gas companies, financiers (those who avoided asset-backed paper, anyway) and big retailers.

So Mr. Flaherty is picking winners, as surely as any other policy maker, when he says he’ll cut corporate taxes and do nothing else. Under that kind of thinking, Canada’s economic landscape will be all the more dominated by open-pit mines, banks and big-box stores. Claiming this is what “the market” wants hardly absolves the government of responsibility.

If the Finance Minister’s concern is that government policy should not favour particular companies, this is easily remedied. Make the investment policy universal for anyone undertaking qualifying projects (through a 10-per-cent refundable tax credit, for example). This, in effect, was happening anyway: Each of the six auto makers operating in Canada received support for “keystone” investments since 2004. Indeed, the policy should be broadened to include other industries (aerospace, biotech, telecom equipment) with similar, beneficial characteristics: high-value, exportable products and highly productive, innovative technology.

Ottawa can still implement a more balanced approach to economic development, finding ways to support the Ford project and others like it. But if it fails, it will further consign us to a narrow, fragile role as resource-supplier, missing our broader potential as a well-rounded, productive nation.

Jim Stanford

Jim Stanford is economist and director of the Centre for Future Work, and divides his time between Vancouver and Sydney. He has a PhD in economics from the New School for Social Research in New York,...