More job creation could be done

The Daily Twigg  Vol. 1 No. 43  May 10, 2012

Job creation strategies emerge as Key Issue
in elections in B.C. and all around the world

By John Twigg

It is tempting for me to churn out some comments on B.C. politics, which these days are at a boiling churning tipping and turning point, and I will do something on that soon (I hope), but first I want to focus on something even more important: the future of B.C.'s economy in a turbulent troubled world.

The recent elections in France, Greece, England, Italy and other jurisdictions have all prominently featured employment policies and job-creation strategies, and job-related issues are emerging as key ones in many other jurisdictions too, such as U.S. President Barack Obama making it more or less the first plank in his re-election campaign and Canadian Prime Minister Stephen Harper making employment issues a key theme in his Conservative Party government's recent budget.

"Next week I am going to urge Congress ... to take some action on some common sense ideas right now that can accelerate even more job growth," Obama said recently at an early campaign stop in Northern Virginia, said to be a key swing area in the Nov. 6 Presidential election. He was responding to employment statistics showing that U.S. jobs growth had been disappointingly slow.

The Harper government meanwhile has presented a massive budget bill that contains many employment engineering moves, including layoffs in the public service, prunings in the CBC's budget and new investments in skills training for young aboriginals - as well as pushing major resource projects through a faster review process ostensibly for their employment and investment attributes.

Closer to home, the security of public-sector jobs and private-sector investment was a significant factor in the unexpectedly-easy re-election of the Alberta Progressive Conservative Party government and its new Premier Alison Redford [see Daily Twigg #42], and in B.C. the two recent byelections both involved employment issues at the doorsteps and in voter turnouts [see DT #40], with B.C. NDP leader Adrian Dix strongly emphasizing the importance of assisting post-secondary education and training as a means of securing sustainable jobs.

Jobs a key issue in France

The jobs issue also was especially prominent in France's Presidential election, with openly socialist François Hollande winning with 52% on a platform that essentially would preserve the country's heavy intervention in employment standards and protectionism of jobs, such as retaining and adding some 60,000 jobs for teachers, and taxing the wealthy to pay for a more "robust" social system. He also wants to renegotiate France's role in a European fiscal arrangements pact to enable more economic stimulus and job creation, an idea opposed by conservative Germans but given some credence by Christine Lagarde, managing director of the International Monetary Fund.

That pattern was echoed in Greece where voters en masse rejected German-imposed austerity measures that included mass layoffs and instead supported a variety of socialist and "Radical Left" parties who apparently would rather see Greece default on its debts and get kicked out of the European Union than engage in cutting jobs and social programs, though exactly how it will be worked out remains to be seen and compromises are still possible.

A popular backlash against austerity also was seen in Britain's local elections to 181 councils, with Labour gaining 823 seats, Conservatives losing 405 and their coalition partner Liberal Democrats losing 336, reportedly because the centre-right coalition was "out of touch with voters struggling with high unemployment, price increases and low wages" (according to Reuters). British Prime Minister David Cameron apologized for the defeat and blamed it on the need to reduce Britain's mountain of debt.

A remarkably similar outcome was seen in Italy's local elections where representatives of centre-right and centre-left parties that had signed on to the European austerity measures were widely replaced by anti-austerity parties including one led by a comedian that organized mainly through social media and won 20% support for Italy to exit using the euro.

But really the problem is not so much a bunch of angry voters as it is a sort of structural problem seen throughout Europe, such as Spain struggling with an unemployment rate of 25%, which includes 52% for workers under age 25, and Portugal and Ireland with similar problems, all facing heavy debt burdens requiring spending cuts by governments that tend to worsen unemployment.

Even nations with rapidly expanding economies, namely China, India and Brazil, are beset by employment challenges, such as China having to build dozens of whole new cities in order to accomodate the flood of people leaving rural farms in search of better jobs, which triggers protectionism, monetary gyrations and other responses related to employment issues.

A good example is Mexico, which has a rapidly-expanding economy and population but such a corrupt and dysfunctional society that it has become run by drug cartels, the system of justice is in disrepute and thousands of farm workers will travel all the way to Canada to find temporary jobs.

That surplus of labour and shortage of jobs also has greatly infected the United States, which has a huge underground economy involving drugs, guns, gangs, prostitution, pornography and money-laundering which among other ills starve governments of revenue and drive up operating costs. But the lack of good-paying legitimate jobs leads many young people into higher-paying untaxed illegal jobs, not only in the U.S. and Mexico but all around the world.

Many methods available for job creation

Perhaps this will not be new to most of my readers, who tend to be high-end consumers of news and public affairs, but the question is what should or could be done about it?

Advocates of Reaganomics will be quick to argue for further tax cuts for the rich and even more incentives for investors, but do those and other such measures really work? Perhaps they are merely a means for one jurisdiction to beggar its neighbours, such as Canada importing doctors and other professionals from third-world nations rather than paying to train more people already here.

Other analysts claim there are only two choices for governments facing fiscal and economic crunches, to raise taxes or cut spending, but really there are many other strategies available too, such as empowering new industries (e.g. water exports and medical marijuana), changing or even adding currencies and stock exchanges, redefining what constitutes paid work and taxable income, nationalizations and privatizations, encouraging credit unions and co-ops, investing in self-sufficiency to back out imports, subsidizing industries to stimulate exports, and more - such as mandating that waste products henceforth be recycled, and that logs being exported henceforth be held back for local processing.

Looking at British Columbia's employment trends [see DT #29], one sees that those usual free-enterprise incentives have failed (so far) to stimulate a wave of job creation and meanwhile B.C.'s seasonally-adjusted unemployment rate is stuck around 7% - which is not the worst in Canada but is nowhere near zero either, and don't forget that that crude measure has been masking the fact that there are many thousands of discouraged workers who have dropped out of the official labour force but who would quickly take a job if one could be found that they could do.

[ For overviews of B.C.'s employment trends see http://www.gov.bc.ca/keyinitiatives/economic_indicators.html as well as http://www.central1.com/publications/economics/index.html and http://www.bcbc.com/Documents/BCEIndexv11n1.pdf ]

While it is apparent that quite a few resource megaprojects are about to start up in B.C., there is still no sign of any viable long-term strategy being developed for direct job creation and indeed one of the main running debate issues in the Legislature is the apparent shortage of funding and lack of training programs for skilled labour jobs such as heavy-duty mechanics, so the resource industries' needs for such workers are increasingly being met with imported workers.

For many years British Columbia had a healthy apprenticeship and internship program but it was one of the first items slashed when B.C. Liberal Party Premier Gordon Campbell took office in 2001, and only in recent years has effort been made to revive it - a small step in the right direction.

Current B.C. Liberal Party Premier Christy Clark of course talks about using job creation to support families but so far it has been more talk than action, with heavy reliance on private-sector initiatives to expand employment even while public-sector jobs are being capped and cut, which help explain why B.C.'s GDP statistics have been sluggish too (though the modest minimum wage hikes should boost them a bit).

Dix complained earlier this year that the Liberal government's job creation efforts have been focussed too much on existing powerful interests, which drew a response from Finance Minister Kevin Falcon that Dix fails to understand the importance of doing so.

"We've spent the last 10 years working hard to bring back high-paying jobs to British Columbia," said Falcon, but that seems to admit there has been a failure to also create more low-paying jobs for unskilled and entry-level workers, which of course is where a great many of the job-seekers are.

That view echoes of the famous New Deal of former U.S. President Franklin D. Roosevelt who said "Not only our future economic soundness but the very soundness of our democratic institutions depends on the determination of our government to give employment to idle men."

The argument against such direct job creation of course is often that governments with onerous debt loads cannot afford to do so but the corollary to that may be that governments facing chronic high unemployment cannot afford to not engage in direct job creation too.

That's not a damned-if-you-do and damned-if-you-don't paradigm but it's more like a need to do both rather than one or the other, namely try to cap deficits and debt while still stimulating commerce and job creation with a full range of measures.

Indeed one of the merits of direct job creation like France suddenly hiring thousands of teachers (maybe think of them as skills trainers) is that those teachers not only pay income taxes on what they earn but also they pay sales taxes on what they spend and they stimulate other jobs in the process, such as on food, housing, transportation and other consumables. Such job creation may pay more dividends to the economy and the government than something like a subsidy for a green energy project such as B.C.'s Pacific Carbon Trust's dubious offsets which tax schools and hospitals on their emissions and give the proceeds to private-sector producers of natural gas.

B.C. lacks plan for direct job creation

Anyway it has become obvious now that B.C. for one (and many other jurisdictions too) needs a new vision for economic renewal that includes a full range of measures aiming towards full employment in a sustainable, self-sufficient and green economy.

With the global economy apparently facing worsening problems and the U.S. economy apparently being undermined by debt and crime and political corruption and the Canadian government being unable or unwilling to act in B.C.'s best interests it behooves the provincial government to become much more proactive and effective at economic development, job creation and social and economic engineering.

While it is attractive in various ways for governments to focus on encouraging a few large projects such as LNG plants or the Jumbo Glacier resort, the more beneficial and practical projects probably involve training street people to recycle street waste, training aboriginal youths to be parks workers, training welfare recipients to be caregivers for people with mental challenges (thereby enabling both groups to stay out of more costly institutions), and adopting strategies to reduce bed-blocking in high-cost hospitals and give seniors in need better qualities of life in assisted-living facilities.

In fact there are many many good things that could be done by a government with a stronger will to really make a positive difference, such as assisting in achieving self-sufficiency in food, energy and other essentials, encouraging prosperity and social progress, social security and safe streets and yes - full employment.

Former B.C. Premier W.A.C. Bennett was renowned for holding that job for 20 years and among the reasons he did so (apart from blatant partisan electioneering in office) was his policy focus on job creation even at the expense of the environment; he dismissed pulp mill emissions as "the smell of money" and his catch phrase was a high-pitched shriek of "Jobs!" .

That was a long time ago when B.C.'s population was only a fraction of what it is today but nonetheless the policy challenges remain much the same: to somehow create enough jobs that the economy and society can be considered prosperous and sustainable.

In a future issue I'll have a list of specific initiatives that B.C. could undertake if it wanted to be more aggressive at job creation.