Should We Leave it to the Free Market to Create Jobs?

What is the role of government? The 2007-2008 global financial crises re-inflamed this perennial question. In response to escalating national debts and staggering deficits, governments have begun to initiate "cuts" across the public sector. Canada recently released its fiscal strategy, Budget 2012: Economic Action Plan. While this policy is far from “Greece-styled austerity,” it leaves no sector left untouched. Circumstances are much more dire at the provincial level, at least for Ontario. 

With a $236 billion debt, growing at about $59 million a day, the province is in poor shape. Rating agencies like S&P have made it clear a downgrade will come if disciplined and responsible fiscal policies are not implemented.

The province’s Liberal-minority government has recently put a budget before legislature. The politics of passing a budget in a minority aside, one particular issue has sparked fierce debate: the proposition to sell off the Ontario Northland Transportation Commission. 

There are two irrefutable facts regarding the commission: 

i) It is not profitable. In fact it has consumed $439 million in subsidies in recent years.

Unlike provinces such as Alberta or Québec, Northern Ontario has not experienced, nor been targeted by, concentrated investment or development. 

The commission’s divestment process has put 996 jobs into question. This is a difficult issue. While it is not the government’s duty to provide employment it is the government’s duty to safeguard the well-being of communities. The value of 996 jobs has to be put into perspective. To a metropolis like New York, 996 lost jobs will not drastically impact the livelihoods of families and the greater community. But 996 jobs means something entirely different to small towns and cities. In these areas, 996 jobs lost is 996 households that lose most or all of their income. In an area with only a few hundred thousand people 996 jobs should be considered in a context greater than just “profitability.” The real value, or "jewels, "of the Crown Corporation is the communities and families it directly supports and nurtures. Spreadsheets do not consider the damage to society – governments must. 

In this case study we observe the struggle between classical conservative and neo-conservative values. While no specific divestment plan has been released it is presumed that the commission’s services will be sold to private actors. The problem is that certain services cannot turn a buck. For those services that are bought it is highly likely lay-offs will occur in order to increase profitability. Again in a large metropolis a few hundred pink-slips would not be devastating. However, in small towns and cities every job counts. 

I would hold that a government’s duty to preserve the integrity of its communities comes before balancing the books. After all, that is the rationale behind deficit spending, simply look to President Obama’s $700 billion stimulus. However this does not mean that the province of Ontario should continue to throw good money after bad. Initiatives should be taken to reduce the operating costs of the commission. This should be done in tandem with efforts to provide alternative sources of livelihood through increased investment and development with private partners.

Reducing expenditures should never boil down to a mere cost/benefit analysis with entire populations thrown under the bus. 

Communities come first, always.