Some economic policy debates are about jobs. Most aren't about jobs, or shouldn't be. But far too many of them end up being about jobs, even though the policies have nothing to do with jobs.
Frances once explained the advantages of the HST to me. (Note for non-Canadians: the Harmonised Sales Tax replaces a provincial sales tax with a VAT collected in conjunction with the federal VAT). She talked for a few minutes about collection costs and the deadweight loss triangles of distorting taxes. She never mentioned jobs. I didn't ask her whether it would create jobs. If I had asked her whether it would create jobs, I think she would have given me a very quizzical look, then shrugged her shoulders. The HST is not about jobs.
So I was very surprised to read Iglika Ivanova's critique of Jack Mintz's argument that the HST would create lots of jobs. It's not the critique itself that surprised me, but that the debate existed. "My God! People are actually arguing in favour or against the HST based on how many jobs it will create or destroy?!" I was stunned, though perhaps I shouldn't have been. The debate over the Canada-US Free Trade Agreement was mostly about jobs too, though the benefits of free trade have almost nothing to do with creating jobs.
Economies are a general equilibrium system. Everything depends on everything else. If you change any one thing, everything else will almost certainly change too. And that includes HST and jobs.
Here's my guess on how the HST will change employment. I think the HST will probably make us a little bit better off. When people are better off, they usually choose to work a little bit less. I think the HST will probably cause a very small reduction in employment.
My guess about the effect of HST on jobs could easily be wrong. If the HST is a more efficient tax than the one it replaces, real wages will probably rise, as part of the general improvement in our welfare. And maybe the substitution effect of the increase in real wages will draw people out of leisure, or home production, into working more. And that substitution effect might be bigger than the income effect, so the net result is an increase in employment. Maybe. It all depends.
But the key point is that whether my guess about the effect of HST on employment is right or wrong has nothing to do with whether I would support or oppose the HST. If it makes us better off by reducing collection costs and tax distortions, then it's a good tax. It doesn't matter whether people choose to respond to those benefits by working more or working less.
Now it's true that some taxes, like direct taxes on labour income, will tend to distort the labour market primarily, and make us worse off precisely because they create a wedge between what the employer pays and what the employee gets. (I'm setting aside the benefits we may get from the things that tax revenue is spent on, of course.) And the deadweight costs of those taxes are due to the reduction in employment they cause, if either the labour supply or demand curve is not perfectly inelastic. But even in that case, the costs of the tax are not measured by the number of jobs lost; they are measured by the loss in welfare created by the cost of the loss in output minus the benefits of working less. At the margin, we work in order to produce output which we can consume or invest. At the margin, work is a cost, output is a benefit. (If it weren't, and we were all prepared to work just as many hours for free, then taxes on labour income wouldn't reduce employment, and wouldn't have any deadweight costs.)
Employment is not a measure of well-being. If we could get the same output while working fewer hours, that's a good thing. We can spend those extra hours doing something else we would prefer to be doing.
So why do so many debates end up as debates over jobs created or destroyed, even when the policy in question has nothing to do with jobs? That's what I can't figure out.
I once saw a poster advertising a Carleton seminar on "Women in society and X". I can't remember what "X" was. All I remember is that X was an important issue for many reasons, but none had anything to do with the relative roles of men and women in society.
I once shared an apartment with two communists. One was a Glasgow Rangers supporter, the other a Glasgow Celtic supporter (football teams). I remember them arguing whether a Rangers or a Celtic victory would be best for the revolution.
Novelist Mordecai Richler once parodied the sort of debate I am talking about. Something like: "Headline: 'Tiger escapes from zoo'; response: 'Is that good for the Jews or bad for the Jews?'
I call these debates "more studies in applied orthogonality".
I think we sometimes get fixated on a certain dimension, and analyse all policy questions in terms of how they look on that dimension, even when they matter on some other dimension that is orthogonal to the first. Involuntary unemployment is a problem. It's a dimension that matters. But reducing involuntary unemployment is not always the same as increasing employment. And some policies are good policies for reasons that have nothing to do with reducing involuntary unemployment, or even increasing employment. I can't think of any reason why the HST should have any effect in either direction on involuntary unemployment.
Short-run macro policy is about jobs. So is the minimum wage. So are unions.
The HST is not about jobs. Nor is free trade. Nor is environmental policy like carbon taxes. Most economic policies aren't about jobs.