9/15/11

What jobs strategy?

Elections often make the concerns of working people rise a little bit in the sights of the major business parties.  And this election has seen some of that as well.

Notably, the Liberals are now beginning to make some noise about job creation.

That's perhaps a bit better than the Progressive Conservatives, whose job creation strategy is little more than some wishful thinking about tax breaks and the magic of the market.

In the last couple of days, the Liberals have begun to loudly tout their spending on public transit infrastructure, claiming it will create tens thousands of construction jobs.

But are these really new jobs? There was a lot of cash spent (and a lot of media releases from Liberal politicians) on public infrastructure projects during the last four years.  Those constructions jobs came and went as the construction projects were completed.   That's the nature of the construction business.  So this announcement sounds more like the government is really just announcing that normal public infrastructure renewal (and the jobs that come with it) is continuing.

Moreover infrastructure spending is only one, quite small, part of overall government spending.

To get a better understanding of the government's job stimulation policies, one has to look at their overall spending.  Not just in areas that employ construction workers, but also in areas that employ child care workers, nurses, secretaries, housekeepers, librarians, and other socially useful workers who are likely to spend their earnings in Ontario businesses.

What the Liberals don't say is that their funding plan for the next two years is so bad that they will actually reduce spending in many parts of the public sector and overall operating spending will fall behind inflation.

That means government spending will actually fall in value -- never mind create jobs.

That is a recipe for job cuts rather than job creation.  Yet jobs, after health care, is a top concern for Ontarians.  (By the way, the Progressive Conservatives are even weaker on the spending file -- so expect even less from them.)

We have gotten at least one business party to recognize that a job creation strategy is needed --but so far there is no meat on the stick.

There may be more to come, however.  The new emphasis on a jobs strategy from the Liberals is not simply due to the popular pressure during an election. It also reflects a real concern among some ruling business and political circles around the world that the policy of social service cuts and deficit reduction is killing jobs, and also the economic growth they themselves depend upon.

So if the world capitalist economy continues to decline, there may well be more concerted action from governments (of whatever nominal political stripe) to move away from deficit reduction and to focus on economic stimulation and job creation --with increased public spending to pay for it.

The world economy now seems to be teetering on the cliff:  if it does go off the side, fiscal conservatives and deficit hawks may just have to suck it up and go along with a stimulation policy -- just as they (very quickly) did after the 2008 financial collapse.

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