Québec Premier can’t fulfil what he pledges
By Bruce A Stewart
Yesterday, as the buses roared up and down Québec highways from one photo op to another, Premier Jean Charest, who’s fighting for a fourth term in office, promised to create 250,000 jobs over the next five years.
That’s what we want to hear from our politicians, right? They’ll make it better.
But you don’t whip jobs up out of thin air, unlike political promises.
Québec has been creating about 40,000 jobs a year already. So, first of all, it’s not much of a promise, because he’s only reaching for another 12,500 each year to achieve it.
Second, he tied his job creation to the Québec government’s Plan Nord — more Hydro-Québec dams in the Cree lands of nothern Québec, along with a mining and minerals boom.
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Hydro-Québec is a Crown Corporation, so we can presume that — as long as the First Nations co-operate — he could find some of his job promises there.
But the rest of the Plan Nord depends on private companies — almost all foreign, thanks to the takeovers of Canada’s mining giants over the years — ponying up to invest and roll out production during the period of his promise.
That’s not something Charest can control. Even if he set taxes to zero, and royalties to zero, he can’t make private companies do his bidding.
(Of course, with a quarter trillion dollar public debt, and the highest tax rates in the country on personal income, he might have some problems selling a zero-zero plan anyway…)
It may not matter if northern Québec is a minerals giant just waiting for exploration and development, anyway.
The world is achingly short of capital these days, and facing the second round of the global financial crisis, with slowing occurring everywhere and near depression conditions emerging in some places. Near-zero interest rates, in effect for years to keep an over-extended set of bankrupt financial institutions afloat, coupled with very high levels of government borrowing, have sopped up most of the free capital out there, while we’re not making much more of it.
Much of what’s left is already committed to the shale oil and gas plays, which are desperate to find investors (hence all the puffery in the United States about energy independence — it’s an attempt to shake America’s couches down for any loose change to drill another well).
Any wonder why companies with cash are sitting on it, unwilling to commit? Any wonder why they’re not rushing to borrow to invest?
Charest could, of course, if he really wanted to fulfil his promise, create new civil service and “extended public sector” positions (teachers, professors, nurses and the like). That way, poor capital formation and poor global economy or not, he could achieve his promise.
That, by the way, is why the size of governments exploded all across Canada in the late 1960s: worried about the baby boomers coming into the job market, we radically expanded our public sector, creating millions of new positions.
Charest’s opponents, of course, will make their own “job boosting” promises in the days ahead, even while they criticize this one. But none of them are likely to tell the truth.
Governments in Canada (federal or provincial) don’t control the global economy. They can’t overcome years of capital destruction and failure to form new capital. They can’t afford to create jobs in the public sector — we’ve still got to pay for the last forty years’ binge there (and all the pensions) — and they can’t order companies to frog-march to their tune.
It’s the kind of promise that isn’t even a bribe using our own money. It’s just a puff of bull in the air.
One day, somewhere in Canada, we’ll start telling the politicians we’re not buying their fantasies any more.