I attend a Canada 2020 presentation last night at National Gallery featuring Martin Wolf. In terms of economic theory … the more I learn the more I learn how little I know. There were some really intelligent people in attendance last night and the preambles to questions were filled with economic theory gems. Most of the meaning contained in the preambles was well beyond my humble economic theory comprehension. However, I believe that I did glean some keen insights from Mr. Wolf. In passing he said something to the effect of those industrial jobs are not coming back … and that insight forms the basis of this post.

There were lots of intellectual theorizing on fixed exchange rates, fiscal and/or monetary policy levers and a raft of other economic tools to influence and calm potentially volatile markets. However, IMHO when you boil economic recovery down to its most simplistic solution it is without a doubt creating long term sustainable jobs. Economic policy levers influence but do not drive the economy. Job growth will spur economic recovery and growth is a driver of the economy not a follower. The gem I gleaned from Mr. Wolf is that industrial era jobs are gone and will not come back.

The economic downturn is a function of two key drivers; unethical behaviour in capital markets and a tectonic shift in the base of employment from industrial to knowledge based jobs. The lack of regulation on financial markets lead the economy into the recession, however, it will be job creation that leads us out. Government policy levers need to recognize that regulating financial markets will help to prevent future unethical behaviour but these measures are in no way a cure for the current economic malaise.

The key to economic recovery is in dealing with the tectonic shift in employment base and not preventing future recessions. Industrial era policy will not work in the era of knowledge based jobs. Financing physical infrastructure such as roads and buildings may have paved the way for economic recovery in the Great Depression, however, the same policy and paradigm will not spur recovery today. What will facilitate economic recovery is a knowledge based policy paradigm. IMHO one of the greatest challenges and opportunities in North America today is re-skilling the industrial work force to become more entrepreneurial. If industrial jobs are not coming back and traditional industries are crumbling before our eyes then we need to spur innovative thinking and creativity to forge new industries. We need to find, facilitate and encourage the knowledge era equivalents of Henry Ford and Thomas Edison.

That transformation is cause for much reflection … more coming soon.

Ian Graham

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