Job Creation Does and Don’ts: Ask a Farmer
If governments can set and meet targets for reducing the deficit, why not do the same for unemployment?
That’s a question some politicians are asking in the federal election campaign. It’s a deceptively simple and attractive question, especially given the political climate. Judging by the national leaders’ debates and the polls, unemployment and job insecurity are at the forefront of people’s minds. Unemployment touches virtually everyone; we all have friends, neighbours or children who can’t find work, and Atlantic Canadians especially are rightly expressing strong concern about it.
But agreeing that the problem is a serious one that requires determined action by governments is one thing. Agreeing on what actions will reduce unemployment is quite another. Saying that we only need to get off our duffs and set some targets for job creation is a way of sliding past the hard job. It also implies that our current unemployment is the fault of lazy politicians who just can’t be bothered to fix the problem. This borders on the irresponsible manipulation of a highly emotive issue for short term political gain.
The hard job that needs doing is to come up with some credible plan for reducing unemployment. Otherwise, calls for job creation targets are just as vacuous as Ross Perot’s reaction to every tough political problem. He would just look straight into the camera and say, “That’s not hard. We’ll just get a group of experts in the room, and come up with a plan. Then we’ll just do it.”
“Just do it” may be a good advertising slogan, but for politicians it is just an evasion.
The reason for the appeal of the idea of job creation targets is the huge success Paul Martin has enjoyed by mesmerizing the public imagination with the idea of deficit targets. They’re simple. They’re understandable. And they appear do-able.
But there is a world of difference between public spending and unemployment. The difference lies chiefly in the fact that public spending is something that the government controls directly, while unemployment is the result of the decisions of millions of Canadians, and governments have a limited ability to affect those decisions.
Think in terms of an analogy, like farming. There are certain things farmers can control that make a difference to the success or failure of their crop. They can build up the soil with the right mix of fertilizers, organics and so forth. They can plant at the right time. They can make efforts to control pests and weeds. It is appropriate for them to set targets, like controlling the acidity of the soil, or planting all their acreage by a certain date.
If they succeed in meeting their targets, they create favourable conditions for the success of the crops. But there are lots of other factors that they don’t control. Hail, too much rain, lack of sun, or too much sun, floods, unexpected infestations and more. They don’t control the final price they get.
Success here is a combination of good management and good luck. Setting targets for the part that can be managed makes sense. Setting targets for the part that cannot be controlled is just a recipe for frustration and anger.
Farmers with too much time on their hands can always set a target for how high their corn should grow. If it doesn’t measure up, though, they do not help themselves or their crop by getting out in the field and tugging on the stalks to make them grow faster. Adding more fertilizer to a soil which already has all it needs will do more harm than good, even if it makes the farmer feel better because he’s at least “doing something”.
Governments don’t have much more influence over unemployment than this analogy implies. Ottawa can do a lot to create the conditions in which employers are willing to create jobs. Reducing the deficit is one move that helps. Cutting taxes, particularly payroll taxes like UI premiums, would also be positive.
When all is said and done, however, new jobs are created by employers and workers agreeing that the conditions are right for work to be done. If the economic conditions governments have created are unattractive, people won’t be hired. Then the only way to meet government job creation targets is to raise taxes, borrow money and put more people on the government payroll in one form or another. And that will harm our competitiveness and drive our unemployment even higher in the long run.
The right answers to our unemployment problems just don’t lend themselves to snappy sound bites. Now there’s a liability at election time.
Brian Lee Crowley, 22 May 1997
Brian Lee Crowley is the founding president of the Atlantic Institute for Market Studies.
His e-mail address is email@example.com