William Watson: Canada's economic problem is too few producers

financialpost.com:

Don Wright, former head of British Columbia’s public service and deputy minister to the premier, wrote a very truething here the other day. In “creating jobs,” he wrote, governments shouldn’t forget basic math. The quotation marks are because governments don’t actually create jobs, they merely shuffle resources around, discouraging some activities with rules and taxes and encouraging others with subsidies, tax credits and so on.

In some industries, wages and tax revenues are high; in others, not so much. If governments squeeze the first kind of industry — oil and gas, for instance — and funnel resources into the second — filmmaking, in one of Wright’s examples — that will have consequences. Such a policy will destroy some high-paying, high-revenue-generating jobs and “create” other not so high-paying, not so high-revenue-generating jobs. There is a great deal of ruin in a nation, Adam Smith wrote. If you’re a rich place, maybe you can afford such indulgences. But even in rich places there may eventually be limits.

You might take from this that governments should get into the business of maximizing the wage and tax payoffs from the kinds of jobs they try to create. That would be a mistake. One obvious danger is that you put so many resources into encouraging the high-surplus jobs you eat up the whole surplus. Another is that the landscape keeps changing: what’s high-surplus today may not be high-surplus tomorrow. A third is that your data are lousy. A fourth is that no matter how high-minded you are, politics corrupts your policy. And so on and so on and so on. Which means you should stay out of job creation, keep taxes and regulations as low as possible and let the good people of your jurisdiction decide what jobs they