About those million jobs…

The other day in the Ottawa Citizen I was complaining about the made-up quality of certain numbers that the Ontario Progressive Conservative party has been throwing around, such as their “Million Jobs Plan”:

It takes a certain amount of chutzpah to pluck a number out of thin air and then make it the central organizing theme of one’s campaign.

For reasons of space I neglected to mention that the PCs did make some attempt to explain where they got the “one million” number from. They provided to journalists — not to the public, but just to journalists — a breakdown of where the jobs were supposed to come from. These numbers were suspiciously exact, as opposed to suspiciously round. But it turns out there may be even bigger problems with them.

Just to provide a sense, here is how the CBC reported what they got from the party:

Hudak’s plan acknowledges that more than 523,000 jobs would be created anyway if the government simply continued the policies of the last decade.

  • Eliminate 100,000 jobs in public sector over four years, then hold public sector spending in line with population growth for the following four years. Projected job gain: 43,184 jobs.
  • Abolish the College of Trades and eliminate restrictions on the skilled trades. Projected job gain:170,240 jobs.
  • Reduce corporate taxes to 8 per cent, down from the current 11.5 per cent. Projected job gain: 119,808 jobs.
  • Reduce personal income tax by 10 per cent after the budget is balanced in 2016-17. Projected job gain: 47,080 jobs.
  • Put the province in charge of all rail-based transit and major highways in the Greater Toronto Area; establish a new east-west express line connecting Etobicoke to Scarborough, through Toronto’s downtown. Expand major highways and GO Transit. Projected job gain: 96,000 jobs.
  • Lower energy prices by cutting bureaucracy at Hydro One and Ontario Power Generation; end subsidies for wind and solar power and reduce the number of provincial electricity agencies. Projected job gain: 40,384 jobs.
  • Cut regulations on business, such as so-called “eco-fees” for recycling. Projected job gain: 84,800 jobs.
  • Develop the Ring of Fire in northern Ontario. Projected job gain: 4,400 jobs.
  • Participate in free trade agreement with British Columbia, Alberta and Saskatchewan. Projected job gain 1,592 jobs.

Now this list raises a lot of questions — for example, is the “job gain” created by firing 100,000 public servants supposed to be net? (i.e. is that initiative supposed to create 143,184 jobs, which then minus the 100,000 being destroyed leaves 43,184 left over?) The article doesn’t really say, and I haven’t been able to find any clarification. Also, some of the numbers seem to be ridiculously made-up, such as the 1,592 jobs to be created from “free trade” with B.C., Alberta and Saskatchewan.

In any case, there appear to be some more serious problems. Jim Stanford has alleged that there are even more basic errors of arithmetic and analysis underlying these numbers (which the Liberals have now picked up on). This bit is particularly damning:

Let’s start with the Conference Board report on the employment effects of a 1-percentage-point corporate income tax cut. [According to their projections] by the 10th year there are 5869 extra jobs. In the 8th year (which is 2020 in their scenario, assuming the tax cut was implemented in 2013), there are 5323 extra jobs. If you believed the Conference Board report, therefore, you should claim that a one-point CIT cut should create 5323 jobs by the eighth year after its implementation. The Conservatives are promising a 3.5 point cut, so we should multiply that number by 3.5, giving a total of 18,631 new jobs. This assumes the full 3.5 point reduction is implemented in the first year (whereas the PCs have said it will be phased in over time), so in reality even that number is too high.

Now, the PC backgrounder claims (referring to the Conference Board study for evidence) that the CIT cut will in fact produce 119,808 jobs over 8 years.  Where did that number come from?  A little forensic accounting can answer the question. The last column of the Conference Board Table 5 reports something called “Cumulative Total.” The cumulative total for the employment line (as explained in the text of the Conference Board report at the bottom of p.9) represents the total additional person-years of employment created over all 10 years by the 1-point tax cut. Over the 10 years combined, there were 42,788 additional person-years of employment thanks to the tax cut.  There were only 5869 new jobs by the 10th year, but counting each year for each worker provides the number of person-years. The PCs took the 10-year cumulative increase in person years, divided it by 10 (to get an “average annual increase in person-years,” a very odd concept), and then multiplied it by 3.5. That equals 14,976 — the number listed in the PC technical backgrounder. Then they assumed that many jobs would be created each year! Multiplied by 8, that equals 119,808. That is a gross and obvious mis-reading of the Conference Board’s own results.

(Incidentally, the “multiply by 3.5” move is also invalid, but that’s small potatoes compared to the error the Stanford is alleging.)

If Stanford is right here (and it seems to me the PCs have no choice but to respond to this, so we’ll see), then it raises interesting questions about how the PC “policy making process” works. My suspicion remains that the “one million” figure would have been selected long ago by the communications staff, based on nothing other than its attractiveness as a slogan. At some point, obviously late in the game, it occurred to someone that they might need to explain where these jobs came from (for those old-fashioned rubes who insist that campaign promises and slogans should bear some relationship to reality.) So they handed it over to a junior analyst to come up with some numbers, which is why we’re seeing mistakes like this.

Again, Stanford’s analysis is quite interesting:

There have been many comparisons made between Tim Hudak’s campaign and that of his mentor, Mike Harris, who rode to power in 1995 on promise of a “Common Sense Revolution.” Many observers have pointed out that Hudak’s current plan for public service cuts and deregulation is actually more extreme than Harris’s. But there is another important difference between the two campaigns.

Mike Harris’s economic numbers were crunched in-house by a real economist, Mark Mullins, who left a career on Bay Street to work for the Conservatives (and later did a stint for the Fraser Institute).  Agree with him or not, Mullins was a highly competent economist who understood how forecasting worked, and prepared a fiscal and macroeconomic spreadsheet backing up Harris’s plan that was internally consistent, added up, and released in detail. Mark Mullins would never have made a mistake as blatant and self-destructive as confusing jobs with person-years of employment.

In any case, I’m glad that this has become a campaign issue. For those who are not in Ontario, it is important to emphasize how central this “million jobs” line has been to the PC campaign. It is not only the name of their policy handbook, but it has been prominently displayed on the podium and backdrop of practically every campaign speech and photo-op that Tim Hudak has done. The revelation that it reflects, not just disregard for the truth, but basic arithmetic incompetence, is potentially damaging. I guess the big question at this point is “how damaging?” The fundamental question — and it is a really important question — is whether there will turn out to be any electoral price to be paid for running a campaign that takes as its central organizing principle the idea that, as long as your strategy is good, you don’t even need to pretend to be telling the truth.


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