Juno News - The government can’t create jobs!

00:00:00.000 I'm Jasmine Moulton and this is Reality Check.

00:00:10.040 Reality Check is a new show here at True North where we'll equip you with the facts that you

00:00:14.160 need to debunk the most common arguments of leftists. In the era of Build Back Better in

00:00:19.000 the post-COVID recovery, we've heard a lot from politicians who are really sanguine about their

00:00:23.480 ability to create jobs. Take a listen. Create more jobs. Creating more steady,

00:00:28.620 well-paying jobs. Creating good jobs. 380,000 jobs. Creating good middle-class jobs. We have a

00:00:36.260 million jobs to fill. Our plan will create jobs. Create great, well-paying, local jobs. And create

00:00:44.300 tens of thousands of jobs. To invest in the jobs of the future. Our top priority is getting as many

00:00:51.440 people back to work in good jobs. And to create jobs. We just heard from a variety of Canadian

00:00:56.940 politicians from across the political spectrum, all saying that their government was able to

00:01:01.700 create jobs by spending your money. This is Keynesian economic theory that if the government

00:01:06.820 spends money during recessions or during down economic times, they can stimulate the economy

00:01:12.120 by quote-unquote creating jobs. Now they claim to create jobs in two different ways. One is through

00:01:17.740 creating jobs directly. That's if they create a thousand jobs by hiring a thousand teachers,

00:01:22.500 for example. They also claim to create jobs indirectly. That's through infrastructure spending.

00:01:28.380 These aren't direct employees, but it could create construction jobs, for example. So while

00:01:33.420 politicians will claim that they're creating jobs either directly or indirectly, your argument is

00:01:38.900 that on net, there's actually job losses. The key here is to really look at opportunity costs. So

00:01:45.260 if they've taken all of that money out of the economy, they've spent that money to quote-unquote

00:01:50.160 create their jobs, how many jobs were lost because of the money that they've removed from the economy? 0.99

00:01:55.600 The government can only get money in three main ways. Taxation, by printing it, or by borrowing it.

00:02:00.120 And all of these three things create unemployment. Consider taxation, either a personal income tax or

00:02:05.540 corporate income tax. Both of those things remove disposable income out of the pockets of

00:02:10.300 either individuals or businesses. In the case of individuals, that means that they now have less

00:02:15.360 money in their pocket to stimulate the economy on their own, to buy goods and services that would

00:02:20.680 create jobs. When you look at corporations, for example, they're not just going to take a hit

00:02:25.840 that increased taxation would give them. So they're either going to raise the cost of their goods,

00:02:30.860 decrease or stagnate wages, or even eliminate jobs. And all of those things would decrease

00:02:35.720 employment. Yet politicians of all political stripes are still addicted to the ribbon-cutting

00:02:40.820 announcement that they've created jobs or they've made investments. Because at first, the results are

00:02:46.500 highly visible. If you've given a thousand people money to work, then everybody can see that you've

00:02:52.040 quote-unquote created a thousand jobs. But because the negative side effects of that are so widely

00:02:57.620 dispersed across the economy, it's far more difficult to point out the opportunity costs.

00:03:02.220 The reason why the government will always destroy more jobs than it creates by taking money out of the

00:03:06.700 economy is because of this simple principle. Nobody spends somebody else's money as carefully

00:03:12.120 as he spends his own. Because you've worked hard for your money, you want to spend it as wisely as

00:03:16.680 possible and make sure you get the best return on your investment. But the politicians and bureaucrats

00:03:20.940 spending your hard-earned tax dollars have different incentives. Perhaps re-election, so they want

00:03:26.100 short-term positive news stories like ribbon-cutting and quote-unquote job creation. Or in the

00:03:31.600 bureaucrats example, perhaps they just don't want their budget slashed next year, so they're

00:03:35.420 incentivized to spend through the entire thing. So while politicians may claim to be investing,

00:03:40.700 and you'll hear that word so often, economist Ricardo Caballero said that investing means

00:03:45.640 trading the present for the future. But politicians often take the exact opposite approach when it comes

00:03:51.440 to quote-unquote investing. You'll always hear politicians say that they're making investments

00:03:55.940 for the future, but really what they're doing is short-term spending that's beneficial now,

00:04:01.000 and that actually will be quite costly and not the best decision for taxpayers in

00:04:05.380 the future. As famed economist Thomas Sowell says,

00:04:08.700 it's hard to imagine a more stupid or a more dangerous way of making decisions than by putting 0.99

00:04:13.520 those decisions in the hands of people who pay no price for being wrong. This rings especially true 1.00

00:04:19.000 for the politicians that we seem to have in Ottawa today, and it's hardly surprising that they make

00:04:23.580 so many errors when it comes to quote-unquote job creation in our economy when you look at their

00:04:29.240 background. So let's take a quick look. Let's start with Justin Trudeau, Canada's current Prime Minister.

00:04:33.840 Take a listen to this clip of him from 2014. It was the year before he was elected Prime Minister

00:04:39.000 in Canada. So in this economic climate, how committed to a balanced budget would you be

00:04:45.380 right now? Would it worry you to go into deficit in this current climate to, as you say, put more

00:04:50.040 people to work? The commitment needs to be a commitment to grow the economy, and the budget

00:04:55.340 will balance itself. He honestly believes that government spending is the path to prosperity.

00:05:00.000 That's terrifying. But when you look at his background, it's hardly surprising that he's so ill-informed

00:05:05.320 about economics. He didn't have any formal training in economics. In fact, he didn't have any real

00:05:09.920 business experience at all. He was a teacher for a few years before getting into politics.

00:05:15.080 Next up, if you look at Federal Finance Minister and Deputy Prime Minister Chrystia Freeland,

00:05:20.040 while her resume is very impressive as a journalist, she too lacks the business credentials that she could

00:05:26.020 draw on to justify these grandiose claims she makes about her ability to create jobs in Canada.

00:05:32.080 True North actually did some great reporting on this and found that more than half of Trudeau's

00:05:36.960 cabinet have zero business experience. That said, Canada is a democracy. And while we don't vote for

00:05:42.440 the specific roles of who gets to fill prime minister or the rest of cabinet, Canadians did elect

00:05:47.280 a liberal government led by Justin Trudeau, who clearly lacks very fundamental economics and business

00:05:53.960 training or experience. And that shows when it comes to his abysmal track record on his promises to

00:05:59.460 quote unquote, create jobs. But it's worth going through step by step why the government actually

00:06:04.560 cannot create jobs. Because as I said, politicians of all political stripes in this country are guilty

00:06:09.840 of this claim. So on today's show, we're going to debunk this idea that government can create jobs.

00:06:14.620 And we're going to go through all three arguments as to why they can't. One, it's unproven. Two,

00:06:19.780 it's wasteful. And three, it's unsustainable. Here's argument number one. When the government hands out

00:06:24.680 taxpayer money to private businesses, this is called corporate welfare, and it is extremely

00:06:30.100 wasteful. Now, while the government likes to claim that they're investing in jobs and growth,

00:06:35.180 what's actually happening in plain English is that they're taking money out of taxpayers' pockets like

00:06:40.140 yours and mine, or from small businesses, and most often handing it over to large multinational

00:06:45.860 corporations with pretty big bottom lines. Let's take a look at a few examples. Number one,

00:06:50.640 Bombardier. In 2017, the government gave Bombardier a $373 million bailout. This was from the Trudeau

00:06:58.860 government. And also the Quebec government pitched in an extra $1 billion. Then Bombardier turned around

00:07:04.640 and laid off 3,000 Canadian workers just 18 months later. Obviously, it's really hard to suggest that

00:07:11.540 this was a job creation strategy, and it's a terrible return on investment. Number two,

00:07:16.540 Loblaws. The Trudeau government handed over Loblaws, a massive company in Canada, $12 million to upgrade

00:07:23.380 their freezers. Fast forward about a year later, the company lays off about 700 employees in its

00:07:29.660 Quebec and Ontario distribution centers, citing increased automation as a reason that they didn't

00:07:35.140 need them anymore. At this point, it almost seems like the government is paying large organizations to

00:07:39.500 lay off its workers. But let's carry on. Number three, Maple Leaf. The Ontario and federal governments

00:07:44.660 jointly gave Maple Leaf Foods $55 million of taxpayer money to go toward a poultry processing

00:07:50.660 facility in London, Ontario. The only problem is that the company decided to shut down three other

00:07:56.380 plants in the surrounding area and amalgamate them into one. And in doing so, they laid off 300 workers.

00:08:02.660 Number four, the Ford Motor Company. Ontario Premier Doug Ford and Prime Minister Justin Trudeau

00:08:07.880 jointly gave $590 million of taxpayer money to the Ford Motor Company to retool its Oakville plant for electric

00:08:16.480 vehicle production. But once the plant is retooled, the plant will require 400 fewer workers. As Ronald Reagan

00:08:24.000 said, government's view of the economy could be summed up in a few short phrases. If it moves, tax it. If it keeps

00:08:30.720 moving, regulate it. And if it stops moving, subsidize it. This, of course, would be a terrible approach to economic

00:08:36.100 growth, which is why it's so baffling that politicians in this country stand by this practice.

00:08:40.380 So to sum up, the government taking our taxpayer dollars and giving it to large organizations that

00:08:45.260 often just use the money to increase their bottom line and end up laying off workers anyway, obviously

00:08:50.180 extremely wasteful. Moving on, let's go to argument two. The government's track record on quote unquote

00:08:55.140 creating jobs is unproven. Politicians love to make grandiose claims at the ribbon cutting when they're

00:09:00.280 announcing that they're creating jobs, but they almost never follow up to check on the progress. How many jobs

00:09:06.000 were actually created? And is this good value for money? Under the Trudeau government, two key pillars of their

00:09:11.540 quote unquote job creation strategy include one, the super clusters program, and two, the Canada Infrastructure

00:09:19.200 Bank. So let's take a quick look at how either of these programs have performed. The super clusters program was

00:09:23.820 essentially designed to help groups commercialize their R&D, their research and development. It was introduced in

00:09:29.320 2017, and the government committed just under $1 billion to the program. The government claimed that in 10 years, this

00:09:35.780 nearly $1 billion that they had invested would increase GDP by $50 billion and also create 50,000

00:09:44.020 jobs. Five years later, it came out, and this was reported by Blacklock's reporter, that an internal

00:09:49.480 audit confirmed that the job creation claims about the $1 billion super cluster subsidy were quote

00:09:55.640 fabricated and 100% unverifiable. Auditors wrote that they could not validate the total number of jobs

00:10:02.800 created. In October of 2020, the Canadian government under Justin Trudeau allocated $10 billion within the

00:10:08.960 Canadian Infrastructure Bank and claimed that in three years that would create 60,000 jobs. The only

00:10:16.000 problem is the Canadian Infrastructure Bank actually had a budget of $35 billion, but in its first three

00:10:21.580 years couldn't figure out how to spend anything on any project, although they did bonus out their executive

00:10:27.120 team pretty well. As a Fraser Institute report says, despite shovel-ready claims, government is almost

00:10:32.720 never able to act quickly enough for this type of stimulus to have a positive effect on the economy.

00:10:37.840 The spending often arrives after the recovery has already begun, which results in the stimulus

00:10:42.740 competing with the private sector, actually impeding economic growth. It's no wonder that the House of

00:10:48.680 Commons Transport Committee this past May had a report that had one recommendation, which was to

00:10:54.060 abolish the Canada Infrastructure Bank. While these prices roll off the tongue pretty easily, that is a

00:10:59.420 lot of money, billions and billions of dollars taken out of the Canadian economy, essentially for Justin

00:11:05.260 Trudeau to play his hand at Investment Banker. And we have no idea how many, if any, jobs were created.

00:11:10.940 And sadly, on the flip side, we also don't know how many jobs were lost because that money was extracted

00:11:15.480 out of the economy. So to recap argument two, governments make big claims that they're going to create

00:11:20.580 tens of thousands of jobs, but they never follow up and measure how many were actually created.

00:11:25.460 So now let's move on to our third and final argument, which is that governments creating jobs

00:11:29.700 is unsustainable. When you hear politicians talk about how many jobs that they've created,

00:11:34.420 you should be very skeptical. Usually you should try to distinguish how many of those jobs are

00:11:38.740 government jobs or in the private sector. Now, according to Statistics Canada, and I'll put a chart on the

00:11:44.760 screen here, but for our audio only listeners, Justin Trudeau may be boasting about job creation

00:11:51.080 following the start of the pandemic, but Statistics Canada has just released a report showing employment

00:11:56.800 from February of 2020 to July of 2022. So just over two years, while 422,000, nearly 423,000 jobs have

00:12:07.320 been quote unquote created, the vast majority, nearly 87% of those jobs are in the public sector.

00:12:15.340 On the flip side, only about 13% of those jobs are in the private sector. That means that while

00:12:20.540 367,000 new government employees or bureaucrats have been hired, there's only 56,000 people outside

00:12:29.620 of government now working to pay for their salaries. Does that sound sustainable to you? The Fraser Institute

00:12:34.440 has actually done some incredible work on this question of what percentage of the population

00:12:38.840 works for government versus outside of government. And what they found over the past few decades is

00:12:43.740 that it ranges from anywhere 20% to 25% of the workforce in Canada works in the public sector or

00:12:50.700 for government. And if you are a government employee, obviously that money doesn't just come from quote the

00:12:55.620 government, but it comes out of taxpayers pockets who do not work in government. So now essentially you have

00:13:00.980 about 75% of the population who do not work for government paying for the entire freight of all

00:13:07.640 of the government employees in this country. The Fraser Institute report on public sector employment in

00:13:12.860 Canada states this, empirical research points to a so-called crowding out effect where employment

00:13:18.620 through public sector job creation is offset by a reduction in private sector employment elsewhere in

00:13:23.340 the economy. This is a concern because it's the private sector through investment and innovation

00:13:28.420 that ultimately generates the wealth and taxes needed to provide the public services that we all

00:13:33.280 hold dear. And this is exactly the point. Job growth and job creation really should be happening in the

00:13:39.720 private sector because it's what pays for the entirety of the public sector. You can't grow the public

00:13:44.900 sector if the private sector is contracting. The Federal Treasury Board, which you can kind of think of as

00:13:50.340 the HR of the federal government, they released some rather alarming statistics as well. Full-time

00:13:56.620 bureaucrats have increased by 44,000, nearly 45,000 or 13% in the last five years, while federal

00:14:04.360 government spending is up by 79%. A lot of Canadians think that they pay the high taxes that they do for

00:14:10.560 our healthcare system and our education system. But if you think about it, the federal government doesn't

00:14:16.000 administer those services. Neither of them, both education and healthcare are administered by the

00:14:21.100 provinces. So nurses, doctors, they don't work for the federal government. So who are these 45,000

00:14:26.620 new employees for the federal government that we've amassed over the last five years? And another

00:14:31.600 relevant question is who's going to be paying for all of these new bureaucrats? Because as a Fraser

00:14:36.640 Institute report has found, business investment in Canada is on the decline. And business investment,

00:14:42.520 not government spending, is what really will be an indicator of future economic growth. It should

00:14:47.120 really worry everyone that business investment in Canada is at such low levels. If you look at this

00:14:52.060 chart that the Fraser Institute put out comparing Canada's levels of business investment compared to

00:14:57.040 other OECD countries, the prospects look pretty grim. And again, these are the real job creators,

00:15:04.040 not the government that can take other people's money and pretend to be investing in creating jobs.

00:15:08.540 But these are people who are actually going to cause the future economic growth that this country

00:15:13.340 needs. The government of Canada can pay 10,000 workers to dig a hole one day and fill it in the next,

00:15:18.900 and their job numbers will look great. But that doesn't say anything for the sustainability of

00:15:23.340 those jobs. Essentially, they'll just last as long as the government funding does. And it does

00:15:27.380 nothing to improve productivity in this country. Okay, so let's do a quick recap of the leftist

00:15:31.880 argument and then our arguments against it. It is a leftist argument made by politicians of all

00:15:37.600 political stripes in Canada that the government can create jobs. They'll say that more government

00:15:42.320 spending is needed in times of economic crisis in order to bring about an economic recovery. But here's

00:15:47.580 the truth. The government does not create jobs, it cannot create jobs, and it never will be able

00:15:51.940 to create jobs. And here are your arguments to counter those claims. One, the government has a

00:15:56.140 terrible track record of creating jobs, and its attempts to do so often create more harm than good.

00:16:00.780 Number two, the government doesn't measure its success and often has no proof to back up its claims.

00:16:04.920 And number three, too many government jobs is unsustainable for the taxpayers paying for it outside

00:16:09.500 of government. So here's a reality check. Governments would do really well to acknowledge their own

00:16:13.600 competence and leave the investing to people who actually know how to invest properly and who care

00:16:18.620 about getting a return. And if they really want to grow Canada's economy, they should adopt policies

00:16:23.080 that encourage business investment, like lowering taxes and reducing red tape. Ultimately, the

00:16:28.060 government does not create jobs. But what it can do is adopt policies that are conducive to business

00:16:33.020 investment so that the actual job creators can create jobs. That's our show for this week. Thanks for

00:16:38.000 listening. My name is Jasmine Moulton. And don't forget to tune in next Wednesday for another episode of

00:16:42.460 Reality Check.

Juno News - August 17, 2022

The government can’t create jobs!

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