Go to the Globe and Mail homepage

Jump to main navigationJump to main content

The main Volvo automobile manufacturing factory in Gothenburg. The Swedish economy grew at a 7.3-per-cent annual clip in the fourth quarter. (BOB STRONG/Bob Strong/Reuters)
The main Volvo automobile manufacturing factory in Gothenburg. The Swedish economy grew at a 7.3-per-cent annual clip in the fourth quarter. (BOB STRONG/Bob Strong/Reuters)

CHRYSTIA FREELAND

Note to dictators: It's the job market, stupid Add to ...

There's nothing like a few revolutions to focus the mind. The lesson the world's smartest authoritarians are drawing from Tunisia's Jasmine Revolution and its neighbourhood copycats is simple: It's all about jobs.

"The leadership in China is always worried about how do you stay ahead of the growth to create enough jobs," says Dominic Barton, the global managing director of consulting firm McKinsey, who has lived in Asia for much of the past decade. "They have to create over 30 million jobs a year. … They know that if they don't and there are disruptions and the people don't have jobs, there will be revolution."

More related to this story

To illustrate how focused China's Communist rulers are on jobs, Mr. Barton described work he had done helping the Chinese government structure its economic stimulus in the aftermath of the 2008 financial crisis. The Chinese authorities came to him with a very specific question: What sort of discount should you put on TVs in Tier 3 cities? "It was a very focused question. And the reason was, they were trying to create consumer demand in a very sophisticated manner."

The mandarins wanted McKinsey's advice on how exactly to implement their TV stimulus program: Should the price of televisions be cut by 25 per cent, or should consumers be required to pay the full price, then apply to their mayor for their 25-per-cent rebate? Mr. Barton says that once he understood how precise the request was, he "did the McKinsey thing" of talking about how important it was to make sure the project worked and had an impact. One Chinese official wasn't impressed by his spiel, Mr. Barton recalls: "He says, 'I think we have a different definition of impact than you … If this doesn't work, we are going to have probably 12 million people that won't have jobs. And you should know that all of the revolutions in our 5,000-year history have occurred in the countryside."'

The Middle East's remaining autocrats are swiftly learning the Chinese lesson, as illustrated vividly by Saudi Arabia's new $36-billion (U.S.) stimulus program, which includes a 15-per-cent pay increase for public sector workers. As Jack Welch, the former chief executive of GE, described it this week, "In this recession, China did incredible things," adding that "it is a little bit like what the Saudis are trying to do now to keep everyone happy."

As Mr. Barton's Chinese interlocutor readily acknowledged, these regimes' concern about keeping their people employed is hardly selfless. Both China's long history and current events in North Africa show the smart autocrat that if too many of his subjects are unemployed, their supreme leader is at risk of losing his job, too. Moreover, instant job creation is easier in economies where the state plays a dominant role - and that is particularly true for power exporters such as China and Saudi Arabia, who have plenty of cash on hand. Nor do government handouts - especially in oil-dependent Saudi Arabia - necessarily offer a path to long-term economic growth and job creation.

Even so, the authoritarian regimes' preoccupation with jobs is in striking contrast with the United States, where despite nearly record levels of unemployment, the central issue in the political discourse at the moment is cutting government spending, a major gripe for the U.S. left, which correctly sees that less state spending will mean fewer jobs.

It isn't only the progressive activists who think jobs needs to be at the centre of the U.S. national conversation. Mr. Welch, an outspoken Republican, says: "Why did we spend a whole year fighting over health care and ignoring jobs?"

Google chief executive Eric Schmidt calls unemployment the No. 1 issue facing the country. Like those Chinese mandarins, he has a proposal. "The best way to solve that problem is to have a construction boom," he said in an interview. "The best way to have a construction boom is for the government to create liquidity in markets that are debt-related to build whatever they care about. My favourite one is energy - rebuilding America's energy infrastructure, insulating all the homes. This requires lots of construction. And these are nice, local American jobs."

Both Mr. Welch and Mr. Schmidt are very worried about government debt. But governments need to be able to do more than one thing at the same time. The Arab uprisings have reminded some of the world's dictators that not worrying about jobs could undermine their own job security. Kicking out elected leaders who can't provide jobs is even easier.

Follow us on Twitter: @GlobeBusiness

 

In the know

Most popular video »

Highlights

More from The Globe and Mail

Most Popular Stories