Most of us do not believe that the Ghanaian economy is growing or even showing tentative signs of recovery.
For what we know, unemployment in the private sector is still in decline. This is bad news and cold comfort to the teeming unemployed Ghanaians whose only hope lay in finding jobs in the already bloated public sector.
It has gotten so bad so that many have stopped looking for jobs and according to the grapevine, those who are still looking, prepared to pay hefty bribes to secure any job.
Meanwhile, many people have been talking about job creation lately, especially politicians.
In spite of the facts, it is very unfortunate that too many Ghanaians, of all backgrounds, educated or uneducated, politicians or just ordinary citizen and voter, do believe the president, or for that matter, government can and should create jobs and solve the challenges and problems unemployment through executive action.
Already, we have the experience of populists and demagogues on the campaign trail in this country promoting the thinking that says only government has the power to fix all problems, and guarantee full employment and economic prosperity.
This is pure political paternalism – the belief that those in government possess more knowledge, wisdom, and ability to plan, guide, and direct various aspects of people’s lives better than those people themselves. It comes in many forms.
The government pretends it does not directly control and command the country’s economic affairs; believes in the free market, and then goes to use fiscal and regulatory tools to “push” private enterprises into those directions and activities the government’s social engineers want, while seeming to leave it all up to private sector executives within a “controlled” market economy.
Nevertheless, a planning mind-set and mechanism by any other name, remains political paternalism and social engineering.
Unfortunately, this paternalism and social engineering seek to put people rather than wealth in the center of the economic stage. This means a large public sector with government competing with the private sector to create jobs. This breeds corruption and the efforts always fail.
The interventions cause more harm than good because their economic understanding of how government can revive an ailing economy is quite limited.
Is government the best creator of jobs? Is government job creation the best thing for the economy? The debate still goes on.
The few, who believe that government can create jobs, demonise the private sector, and call it an evil that destroys workers.
They say also that even the private sector needs government investments for itsp own survival.
We will admit government does create jobs. Thousands of them — including teachers, police officers, firefighters, soldiers, doctors, nurses, diplomats, DCE’s, and parliamentarians; and now party foot soldiers.
Advocates of government created jobs forget that businesses exist not for workers, but for consumers. In other words, businesses that create jobs should meet a certain specific needs of consumers to survive, which criteria most jobs created by the government do not meet.
The fact is the whole public sector employs a miniscule seven per cent of the population. However, the seven per cent of public sector employees earn more than seventy per cent of the country’s GDP in salaries and allied benefits. This highlights an important point. What kind of political philosophy is it that look at the vibrancy of the informal private economy and sees nothing except what the government and politicians do?
Government is not the best creator of jobs. Those who know explains that there is a difference between creating jobs and creating wealth. Indeed, in countries that has reduced poverty, it has always been individual interest that has led to the creation of jobs and wealth. For example, the Ghanaian informal private sector economy is the largest net employer in the economy, employing nearly eighty per cent of the population.
Governments do not create those micro enterprises; neither do the individuals and the poor who are involved and active receive any direct assistance from the governments. They are creations of individual interests. The decisions by governments, however, to spend in deficit, that is borrow, tax and print money to create jobs often limit how much wealth or employment individuals and the private sector can create.
This borrowing by the government takes away money from the small-scale business owner and increases the interest rate on the loans he can get, which reduces the amount of investment in the private sector. Not only does this decrease in private sector investment slow economic growth, it results in additional unemployment, and increased price inflation, which erodes the purchasing power of the cedi.
When the government get bigger, the citizen get smaller. In short, public sector job creation is temporary and cannot create wealth in the real sense. What it does is it halts innovation, growth and increases poverty. These ideas may sound vague to those who argue wrongfully that when the government pump money into the economy, it helps everybody, including the private sector. Thankfully, most economists have said that adding government jobs is never a net addition to employment opportunities and rather put a heavier burden on private sector employers and employees.
So what is the best way to create valuable, meaningful jobs? The best job-creation program in human history is the free market and the entrepreneurship it generates. One of the most effective ways to foster widespread prosperity is to permit citizens a wide degree of what economists call “economic freedom.” That is, allow people to be free to choose and free to cooperate with others, provided they do not choose violence, theft, or fraud. And — importantly — ensure that they are secure in their persons and their property.
As a nation, we undoubtedly need government employees for such things as national defense, police protection, and administering our court system. But it is a fallacy of that government can reduce unemployment by priming the pump with spending programs. Government needs to reduce spending and taxes in order to leave income in the hands of individuals who earned it and who can spend it much more efficiently than the government can.
Creating jobs is relatively easy, but economic progress is made when government refuses to create unnecessary public sector jobs, in order to make funds available to private sector investment. Wealth do not just happen, it has to be produced. Continuous intervention in the job market halt innovation, growth, the reduction of poverty, and above all increased unemployment.
Article by Kwadwo Afari [NPP Headquaters]