Saturday, February 2, 2008

Waiting for OPSEU

An article in today's London Free Press suggests that sector diversity will help protect the city's economy from the worst of a recession. We must leave it to the reader to decide the merits of any Free Press economic prospectus, particularly one that surveys the opinions of only one economic analyst, but we will admit that it is reasonable to suppose that most local Tim Horton's and call centre job prospects will survive an economic downturn. It may even prove that a prolonged recession will, if not raise London's median family income to the average provincial median, at least depress the average provincial median closer to London's.

Of interest, however, are the article's observations that a "strong public sector is cited as a factor in keeping London healthy in bad times," and that it was "political ideology, more than economic necessity, that led to job cuts there in the post-recession provincial government of the Conservatives under Mike Harris." We cannot dispute that handouts of wealth from Ontario taxpayers to London's public sector insulate at least that sector of the city's economy from the economy at large, and we should remind the Mayor and Council of the city's above-average dependence on governmental transfers when they make their demands for even more handouts.

On the flip side, however, even if London itself is a net beneficiary of provincial handouts, there is no question that London's taxpayers are also funding transfers through their provincial taxes to the public sectors of other Ontario cities. So on and so on, a massive circular drain of capital is sucked into a public sector that has never actually created wealth but bled it instead for those desultory services that people cannot be inclined to buy for themselves. A strong public sector may help keep London healthy in bad times, but it certainly perpetuates the bad times from which London must be kept healthy.

When it comes to the public sector, however, it would seem that political ideology will always have to wait on economic necessity until it finally becomes a political necessity as well. In an Ontario governed until 2011 at least by a Liberal Party that is politically wedded to public service unions, necessity will wait for as long as it possibly can.