Monday, February 09, 2009

Political Recession Reasoning Flawed

We’re definitely in the worst economy since the Great Depression, as some of the world’s largest companies cut staff, and politicians create more promises towards job creation.

Problem is, as companies continue to kill off staff to keep themselves from dying off, the only jobs which governments are able to create en-mass are the so-called “McJobs.”

McJob – a term coined back in the recession of the 1990s – aren’t real jobs, not in the sense of creating stability in a rocky economy. Think about it, could you really survive in this world making minimum wage flipping burgers?

The average Canadian family certainly couldn’t survive that way – even if they held down several McJobs. According to statistics, the average base income needed to live with the most basic of necessities (shelter, clothing, food) is just over $45,000CDN per year.

I don’t know what McDonald’s or the other burger joints pay, but I seriously doubt any of those pimply-faced teenagers asking “if I want fries with that,” takes home that fair bit of coin.

Politicians do need to take action to help the economic engine start – but they always take the easy route.

Today, Toronto Mayor David Miller – mayor of Canada’s largest city – announced many job creation initiatives. From increasing the numbers of job-finding resources in the city’s libraries, to having more job-finding support groups, and more online resources to help people start their own business.

However, none of these government-funded programs will help the average person get back what they lost, or are about to lose – their very home.
One key player is absent – big business.

Without the mega-corporations of the world, providing funding to those wanting to start their own endeavours, and more to the point, hiring people at a decent, it doesn’t matter how great a job coach you have, or how solid a business plan you develop.

When big companies announce major layoffs it affects the economy far more deeply than any government-based job creation program.

The economy is very much an ecosystem of itself. Everything is interrelated within the great grand scheme of things.

When Canadian telecom-giant Nortel was doing well, the country’s largest stock index – the Toronto Stock Exchange or TSX – was doing just as well, as all the other technology companies working within the telecom industry were feeding off of each other. Recently, Nortel filed for bankruptcy protection, and the telecom industry has slipped into a dangerous slope.

As North American automakers continue to suffer, so to do the related industries. Magna International is suffering, because as the automakers cut production, they just don’t need to purchase as many parts from Magna.

As oil and gas prices continue to rise and fall with the economy, the cost of all goods is affected – the gas used by trucking companies to get those goods to the stores where we purchase them affects the price of the products too.

And as Toronto Mayor David Miller announced all these new job-creation programs, he’s sitting on a soon to be released city budget which will increase property taxes so that they can fund these things.

Everything is interrelated – even at the government level.

Politicians need to do more than just smile for the cameras with every job creation program – they need to really look within the ecosystem of the economy, roll-up their sleeves, and fix the economic engines which are the foundations for us all.

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