So many of us have bought into the myth that governments create jobs in the private sector, even governments themselves have come to believe it. In the United States, President Barack Obama claims to have added back 2.6 million private sector jobs as of September 2011; in Ontario, Premier Dalton McGuinty boasts of his government’s job creation record, claiming nearly 300,000 jobs since the last recession.
If one means only public sector jobs, one can credit governments with job creation or job losses, otherwise our political masters should not take or be given either the credit or the blame.
Governments, however, can, and too often do, take actions that cost private sector jobs. Unfortunately for the poor souls residing in the province of Ontario, Premier McGuinty and Minister of Finance Dwight Duncan are past masters at poking their political noses into the province’s economic affairs. Under their leadership, the province has lost its way.
Ontario, once the economic engine of the land, now finds itself on the receiving end of hand-outs from the federal government in the form of equalization payments. Ontario, that is to say, has become a “have-not” province under the Liberal watch. And is it any wonder we have fallen from “have” to “have not” status within the federation?
Ontario ranked fifth among Canadian provinces—and a disappointing 49th when U.S. states are included—in economic freedom, according to a new report released today by the Fraser Institute. The report, Economic Freedom of North America, rates economic freedom on Size of Government, Taxation and Labour Market Freedom. On a ten-point scale, Ontario scored a measly 5.8.
The report shows an interesting contrast between Ontario and British Columbia:
Between 1993 and 2000, economic freedom in British Columbia was growing at a slower pace than that in Ontario at both the all-government and subnational levels. During this period, British Columbia’s economic growth was just 11%, compared to Ontario’s 23%. British Columbia suffered from relatively weak economic freedom growth while Ontario benefited from relatively strong growth. In the most recent ten-year period, 2000 to 2009, economic freedom in British Columbia has increased while Ontario, which had escaped from the bottom 10, has now slipped
back. As economic freedom grew in British Columbia, so did its economy, by 26%; in Ontario, economic freedom declined during this period and the economy grew at just 11%, the lowest rate of growth of all Canadian provinces. [Emphasis mine.]
In further contrast to Ontario’s weak showing, Alberta ranked highest among the 60 North American jurisdictions with a score of 7.9. The three other provinces that outscored Ontario are: Saskatchewan (32nd – 6.5), Newfoundland & Labrador (37th– 6.4) and British Columbia (43rd– 6.1).
Ontario’s mediocre record is significant because there is a direct correlation between economic freedom and prosperity of citizens. According to the report, the North American jurisdictions having the highest levels of economic freedom had an average per capita GDP of $54,435, which compares vary favourably to the average per capita GDP of $40,229 in the lowest-ranked jurisdictions.
Ontario is failing because of its government policies. Among provinces with high levels of economic freedom there is a commitment to low taxes, small government and flexible labour markets. These are the conditions that foster job creation and greater opportunities for economic growth. Ontario leads in none of these critical areas.
Moreover, Ontario is one of five provinces that have shown declines in economic freedom between 2000 and 2009. And more’s the pity for with the premier depending on Andrea Horwath’s New Democrats to keep his job over the next couple of years, economic freedom in Ontario is not likely to increase any time soon.
Staying the current course and maintaining low levels of economic freedom will see Ontario residents experience lower standards of living and reduced opportunities.
The really sad part is that the Grits probably do get it and understand only too well the mess they’ve made. But they lack the wits to make the necessary changes without losing their precious jobs and perks and those of their cronies.