It’s bogus to say Harper made a losing bet on the resource sector
People create jobs; government’s role is to remove barriers hobbling initiative
The first question in the recent leaders’ debate on the economy in Calgary was to Stephen Harper: “Canada is facing structural rather than cyclical change. Do you have a jobs plan for industry beyond taking things out of the ground?”
Here’s how, as an economist and not a politician, I would have answered it: “You’re sure we’re not facing cyclical change, Mr. Walmsley (that’s moderator David Walmsley, who is editor of the Globe and Mail)? The slow- down is definitely over? And even if it is, recoveries don’t present problems of their own? Cyclical doesn’t just mean down, you know. It also means up.”
But never mind all that. Regarding structural change, when has Canada not faced structural change? Successful economies are always changing. Almost all of us once worked in agriculture or in industries serving it. Now, fewer than three per cent of us do. Do you have your own non-agricultural job because the government had a “jobs plan,” that after we left the farm, some of us would work in newspapers?
Manufacturing never employed as many of us as farming did. But it used to employ a larger share of us than it does now, though even as its share of employment has fallen, its share of overall output has been pretty steady. How’s that? Fewer people producing the same output is productivity growth. Productivity typically grows faster in manufacturing than in many of the service industries that people have moved into. But that’s not on Stephen Harper. You see that in all rich countries and have seen it for at least 50 years.
Harper is widely criticized for having made the apparently losing bet of turning Canada into an “energy superpower,” as if we weren’t one before him and won’t be after. He did make much-publicized speeches about our resources, but he really didn’t tilt the economy much in that direction. Big economies aren’t so easy to tilt, and special deals for other sectors, especially manufacturing, have continued during most of his governance. The energy patch boomed over the last decade mainly because world prices rose and companies responded accordingly. The recent fall in prices doesn’t mean all the new investment was for naught. Do you know what the price of oil will be in two years?
That’s the key thing about structural change. No one knows what the economy will look like in 10 years. Yet, those who accuse Harper of having chosen a failed “jobs plan” by betting on energy apparently don’t see the irony, to say nothing of the unwisdom, of their desire to replace his supposed energy-based plan with yet another sector-based bet, only this time with a different sector.
The implication of Walmsley’s “structural change” is that if the government doesn’t have a plan for where the jobs will come from, the jobs won’t come. That’s hooey. Jobs come because businesses and individuals want to improve theirs and their families’ lives, and the way they do that is by selling things for a living. The more in demand are the goods and services they offer for sale, the better a living they make.
Most of what government can do to help this process along is negative: Don’t tax away the incomes that are the incentive running the show. Don’t hobble people’s initiative and imaginations by outlawing innovation by, for example, preventing new technology from transforming the taxi and hotel industries or by legally capping milk or poultry production. Don’t shelter Canadians against competition. Do help finance the schooling that enables people to participate effectively in this process of mass self-improvement — though financing schooling doesn’t mean pricing it always at zero.
One thing markets do really well is get money and people to industries that are producing what the world wants. Let’s leave them to it and discuss the other important problems markets can’t solve. It’s not as if there’s any shortage of those.