Our general belief that jobs are created by businesses needs a little refinement
When Mayor Dean Fortin began proposing a gradual reduction of the business tax rate in Victoria relative to the residential rate, he argued it would help protect and create jobs. In resounding endorsement, the Canadian Federation of Independent Business agreed it would help companies “hire more staff”. A feature in the Greater Victoria Chamber of Commerce’s “Business Matters” magazine, “Local Government’s Role in Business Prosperity”, similarly endorsed this idea.
When federal finance minister Jim Flaherty announced the Conservatives’ latest corporate tax cuts, he explained that this would allow Canadian businesses to “create jobs”.
When the Smart Tax Alliance coalition of BC businesses came out swinging in defence of the Harmonized Sales Tax, chairman John Winter’s primary argument was that the eased tax burden on businesses would help them “create jobs”.
When discussing the Wisconsin state government’s now infamous efforts to squash public sector workers’ rights while giving tax breaks to corporations, Kevin Gaudet, national director of the Canadian Taxpayers Federation, explained on CBC radio that even in times of public financial crisis we should be cutting taxes for businesses because “they’re the ones that put in place the jobs that people get paid for”.
It’s a statement that constantly re-emerges in federal proclamations and provincial debates, local community discussions and dinner-table arguments: Businesses create jobs. The phrase has spread throughout our culture like a viral “meme”, the term evolutionary biologist Richard Dawkins coined to describe ideas, beliefs, symbols and other cultural information being passed around like genes between breeding rabbits.
What’s strange is how this idea so often goes unchallenged by journalists, and even by people debating the person who voices it. Some might counter that businesses don’t need more tax breaks to create jobs, or that small businesses create jobs more effectively than corporations, or that corporations rather than individuals should be shouldering more of the tax burden. But the central tenet is usually treated like a self-evident platitude: Of course businesses create jobs. Who else could?
Yet when we actually think about what’s being said, it’s a bizarre notion. Do we imagine businesses are like sorcerers, maintaining ever-bubbling cauldrons of great ideas, energy and plans, investors and consumer markets, waiting only for that crucial ingredient of a tax break to magically conjure jobs out of thin air?
Really, this notion persists only because it’s always floating around in vague, fantastical, soundbite ether. Examining it on the ground locally is a powerful antidote.
The government or a philanthropic foundation, sometimes, create jobs out of thin air. They’ll simply pick some task that they think needs doing, like cleaning streets or building a statue, and pay people to do it.
That’s anathema to most businesses. In the private sector, most jobs emerge from markets. Consumers or clients are identified for a product or service, and a business starts up to provide that product or service; in that sense, it’s the market, the consumers, or the clients who generate the job.
And once we recognize that, it’s clear jobs get created in many ways. Advertising creates jobs because it makes people want to buy. Environmental catastrophes create clean-up jobs. Clever inventions create jobs. Giving people more welfare gives more people more spending money, and that creates new markets for businesses, and therefore jobs.
Of course, creating any job is actually more complex. Even with clientele and tax breaks for my planned restaurant, I need producers, distributors, an appropriate location, transportation options for my clients, plumbing and electricity, a supportive licensing regime with government etc etc. Many aspects of society must work together to create just about any job.
So my point is, who or what creates a job is a chicken-or-egg question. The assertion that “businesses” are the ones that “create jobs” is misleading to the point of foolhardiness. Because we as a culture place such high value on job creation, the statement establishes an inextricable, inexorable logic that what’s good for businesses is good for jobs is good for society. It’s propaganda, and it can ultimately generate a sociopathic vision where incorporated entities are more worthy of direct public help than most humans, because it’s simply assumed there’ll be “trickle down” positive effects on the humans, too. It tells us we don’t need to care for chickens, but simply invest in eggs, and we’ll have a great farm.
However, when we understand that jobs aren’t normally “created” by any single entity, but are born, fertilized and grown within the entire fabric of society, then we come to a different view. When we talk about creating jobs, we’ll critically examine the social framework which supports or discourages certain jobs. So for example, rather than simply lowering taxes and hoping a business creates jobs in recycling glass bottles, we’ll look at the laws, markets, manufacturing, transportation, wages, tariffs and taxes, social habits and values etc that often make new glass or plastic bottles so popular and cheap. Similarly, job creation projects will be more strongly guided by our broader social efforts, so issues like job sharing, guaranteed livable incomes, public subsidization and financial system reform, or carbon emissions reductions will never be far from the discussion, too. It will no longer seem even vaguely reasonable for someone like new BC Premier Christy Clark to look at the Taseko Prosperity Mine’s disastrous long term economic, social and environmental outcomes, and then trump all those concerns by merely blithely pronouncing it will “create jobs”.
It’s not revolutionary; many people talk about such broader approaches all the time. Except when someone points to the bubbling cauldron and utters the incantation, “Businesses create jobs.” Then, many people’s brains shut down in zombie submission.
Rob Wipond thinks we should more often point out that raising welfare rates creates markets and jobs. Originally published in Focus, April 2011