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  • Could skyrocketing private sector debt spell economic crisis? June 21, 2017
    Our latest report finds that Canada is racking up private sector debt faster than any other advanced economy in the world, putting the country at risk of serious economic consequences. The report, Addicted to Debt, reveals that Canada has added $1 trillion in private sector debt over the past five years, with the corporate sector […]
    Canadian Centre for Policy Alternatives
  • Betting on Bitumen: Alberta's energy policies from Lougheed to Klein June 8, 2017
    The role of government in Alberta, both involvement and funding, has been critical in ensuring that more than narrow corporate interests were served in the development of the province’s bitumen resources.  A new report contrasts the approaches taken by two former premiers during the industry’s early development and rapid expansion periods.  The Lougheed government invested […]
    Canadian Centre for Policy Alternatives
  • Canada-China FTA will leave workers worse off June 2, 2017
    Global Affairs Canada is currently consulting Canadians on a possible Canada-China free trade agreement. In CCPA’s submission to this process, CCPA senior researcher Scott Sinclair argues that an FTA based on Canada’s standard template would almost certainly reinforce rather than improve upon Canada’s imbalanced and deleterious trade with China. It can also be expected to […]
    Canadian Centre for Policy Alternatives
  • Faulty assumptions about pipelines and tidewater access May 30, 2017
    The federal and Alberta governments and the oil industry argue that pipelines to tidewater will unlock new markets where Canadian oil can command a better price than in the US, where the majority of Canadian oil is currently exported. Both governments have approved Kinder Morgan's Trans Mountain Expansion Project, but a new report finds that […]
    Canadian Centre for Policy Alternatives
  • Weathering the storm: is this the end of CRA’s political activities audits? May 5, 2017
    Yesterday, following a panel’s recommendation to allow charities more freedom to speak out, the federal government decided to suspend the Canada Revenue Agency’s controversial political activities audit program. Indeed this is good news for Canadian charities. Everyone at the CCPA is proud of the role our organization has played in challenging these audits and in […]
    Canadian Centre for Policy Alternatives
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The Wage Structure, Rents and Urban Inequality in Canada

Richard Florida’s new book, The New Urban Crisis (Basic Books, 2017) takes a careful look at rising inequality in big cities in the United States. He details the fact that many of the winners of today’s economy, the top 1% and top 10%, are located in a small number of “superstar” cities such as New York, Los Angeles, the Bay area, Washington and Boston where well paid jobs in higher education, finance, tech, higher education and entertainment are highly concentrated.

These cities are increasingly polarized between very rich and poor neighbourhoods as the affluent and young professionals return to the city while soaring rents and house prices force the middle-class and many of the poor out to the deteriorating older suburbs.

Similar but less extreme patterns have been found in Canada by David Hulchanski of the University of Toronto and other urban geographers who have documented increased income polarization and erosion of the middle-class and mixed income communities in Toronto in particular.

Statistics Canada recently released data from the Job Vacancy and Wage Survey which show hourly earnings of full-time workers by detailed occupation by city as well as for rural areas. (See CANSIM Table 285-0050.) These provide some insight into the question of whether earnings in Canadian cities are highly polarized.

WAGES BY CITY
Senior Managers Sales and Service Ratio
All $52.40 (100%) $18.85 (100%) 2.8
Halifax $44.10 (84.2%) $17.50 (92.8%) 2.5
Montreal $49.60 (94.7%) $20.90 (110.8%) 2.4
Toronto $63.70 (121.6%) $20.35 (108.0%) 3.1
Calgary $62.50 (119.3%) $19.30 (102.4%) 3.2
Vancouver $55.30 (105.5%) $19.10 (101.3%) 2.9
Hourly Wage of Full Time Workers. CANSIM 285-0050

 

The Table shows earnings of the highest and lowest paid broad occupational categories, senior managers, and sales and service workers, for Canada and for selected cities. As shown the ratio of the highest to the lowest paid group is 2.8 at the national level, meaning that senior managers earn on average 2.8 times as much as sales and service workers. But the ratio is significantly greater in Calgary (3.2) and Toronto (3.1)

Unsurprisingly, the most highly paid senior managers are to be found in Toronto and Calgary which are major financial centres and the home of many corporate head offices.

What is interesting is the relatively more uniform level of hourly earnings of sales and service workers. These are only very modestly above the national average in Toronto (108.0%), Calgary (102.4%) and Vancouver (101.3%.) And sales and service wages in these cities actually lag behind Montreal.

House prices in Vancouver and Toronto are, of course, far higher than the national average, as are rents. CMHC data show that the average monthly rent of a two bedroom apartment in Toronto is $1327 and $1450 in Vancouver (and $1258 in Calgary), compared to a national average of $962 per month and just $668 in Montreal.

Richard Florida highlights the low incomes of urban service workers in many big US cities after adjusting for inflated rents. This is clearly also a problem in some of Canada’s most successful big cities.

Fiscal situation of Canada’s ‘oil rich’ provinces

I’ve just written a blog post about the fiscal situation of Canada’s ‘oil rich’ provinces (i.e., Alberta, Saskatchewan and Newfoundland and Labrador). It consists of a summary of key points raised at a PEF-sponsored panel at this year’s Annual Conference of the Canadian Economics Association.

Points raised in the blog post include the following:

-The price of oil is impossible to accurately predict, and there’s no guarantee it will rise to past levels.

-Each of Canada’s ‘oil rich’ provinces should therefore find other ways of financing future spending.

The full blog post can be found here.

Monitoring Program Performance in Calgary’s Homeless-Serving System of Care

I’ve just written a blog post discussing how program performance is monitored in Calgary’s Homeless-Serving System of Care.

Points raised in the blog post include the following:

-The Calgary Homeless Foundation (CHF) is the System Planner for Calgary’s Homeless-Serving System of Care (full disclosure: I work as CHF’s Director of Research and Data). As System Planner, CHF disburses approximately $42 million annually to programs in Calgary that assist households experiencing homelessness (I’ve previously blogged about those various programs here).

-CHF also monitors performance of the programs it funds; it uses Key Performance Indicators (KPIs) as part of that effort.

-CHF has recently unveiled new KPIs (which are the subject of my new blog post).

The link to the new blog post is here.

A Post-Keynesian Summer School – TORONTO – June 23-25, 2017

The Review of Keynesian Economics and the Progressive Economic Forum are sponsoring a

“Post-Keynesian Summer School”, to be held on the campus of the University of Toronto, June 23-25, 2017, and featuring leading post-Keynesian scholars from Canada, the US, and Europe.

The summer school is aims at both undergraduate and graduate students, and registration is only $25 US per person, which includes all coffee breaks.  In addition, Edward Elgar Publishers has graciously donated a number of important post-Keynesian books that will be given away at the end of the school.

 

The programme

9h15: Welcome address
Louis-Philippe ROCHON (Laurentian University, Canada)

9h30 – 10h30: What is post-Keynesian economics?
Louis-Philippe ROCHON (Laurentian University, Canada)

10h30 – 11h00: Coffee Break

11h00 – 12h30: The role of fiscal policy and the state in post-Keynesian theory
Mario SECCARECCIA (University of Ottawa, Canada)

12h30 – 13h45: Lunch

14h00 – 15h30: The role of debt in post-Keynesian economics: Real and financial components
Joelle LECLAIRE (SUNY- Buffalo State, USA)

15h30 – 16h00 Coffee Break

16h00 – 17h30: The importance of interdisciplinary research in post-Keynesian economics
Guillaume VALLET (University of Grenoble – Alpes, France) and  Nicolas ZORN (University of Montréal, Canada)

 

SATURDAY, June 24, 2017

9h00 – 10h30: A history of endogenous money/monetary policy in post-Keynesian analysis
Louis-Philippe ROCHON (Laurentian University, Canada)

10h30-11h00: Coffee Break

11h00 – 12h30: Post-Keynesian theories of financial stability
Esteban Pérez CALDENTEY (ECLAC, Chile)

12h30-13h45: Lunch

14h00-15h30: A history of central banking
MatÍas VERNENGO (Bucknell University, USA)

15h30-16h00: Coffee Break

16h00 – 17h30: A post-Keynesian approach to development: The case of Africa
Salewa ’Yinka OLAWOYE (Ryerson University, Canada)

SUNDAY, June 25, 2017

9h00 – 10h30: Some theoretical roots of post-Keynesian economics
Robert DIMAND (Brock University, Canada)

10h30 – 11h00: Coffee Break

11h00 – 12h30: An introduction to mathematics for heterodox economists
Matheus GRASSELLI (McMaster University, Canada)

12h30 – 12h45: Saying Goodbye

Income Inequality Surged Under Harper

Just as Conservatives gathered to elect a new leader, Statistics Canada released income data for 2015. These allow us to look at trends under the full term of the Harper Government from 2006 to 2015.

Average after tax income of economic families rose over this period – from $68,200 to $76,900 in inflation-adjusted dollars. But the gains were very unfairly distributed.

The after tax income share of the top 10% of families and persons rose from 27.2% to 27.7% and that of the next 10% rose from 16.7% to 17.0%. Thus the share of income of the top 20% rose by almost one full percentage point from 43.9% to 44.7%. The share of the all income groups in the bottom 80% fell under Harper.

The poverty rate (low income measure after tax) under Harper rose from 13.4% to 14.2%, mainly because of a big jump in the low income rate for the elderly which rose from 10.2% to 14.3%.

Data from CANSIM 206-0041 and 206-0011.

Precarious work, Federal government edition

There was a recent article in the Hill Times about temporary workers in the federal public service, noting that this number is growing even under Trudeau’s sunny ways (that’s not entirely fair, the report only covered the first 5 months of the Liberal’s tenure).

The numbers come from the Privy Council clerk’s annual report, which shows that the number of temporary and contract workers in the federal public service increased by 2,800 between March 2015 and March 2016, to 35,000 workers, or about 13% of the total federal public service.

Because the recent Changing Workplaces Review from Ontario was on my mind, and the recent attention on the abuses of temporary employment agencies, I wondered if we even knew how many temporary agency workers there are in the federal public service, or the federally regulated sector.

From the Annual Survey of Service Industries: Employment Services, we do know the size of the Employment Services Industry – $13.3 billion in 2015, and we know that over half of that was temporary staffing. Government and non-profits make up about 10% of sales – but there would also be temporary agency workers placed in transportation and telecommunications, for example, and that breakdown wasn’t available here.

I had better luck with the Federal Jurisdiction Workplace Survey (FJWS). This survey covers industrial companies under the federal jurisdiction (not workers directly employed in the federal service). In 2015 the FJWS asked about the number of temporary workers paid through an employment or personnel agency over the course of 2015. Employers reported 60,000 workers paid through temporary agencies, most of these workers were employed with large workplaces. The breakdown by company size and industry is shown below.

Distribution of temporary workers paid through an employment agency, 2015

# of employees
Company size
1 to 5 employees 900
6 to 19 employees 800
20 to 99 employees 1,300
100 employees and more 57,100
Industry
Air transport 800
Rail transport x
Road transport 4,600
Maritime transport x
Postal & pipelines 39,700
Banks 8,100
Feed, flour, seed & grain 300
Telecomm & broadcasting 6,000
Miscellaneous industries 300
Total 60,000

Source: FJWS (2015)

Note: The “x” indicates that the data has been suppressed due to confidentiality concerns as required by the Statistics Act.

This all tells me two things. First, it is totally reasonable to look at ways to protect precarious workers in the federal public service and the federally regulated sector (remember all that noise about the NDP federal minimum wage promise not helping anyone?), and second – we need better data to do it.

 

Ontario’s Electricity Sector III: Legislative & Finance Update

My January and April posts on the Ontario electricity sector described how decisions by different Ontario governments gave rise to excess electricity generation with an inflated cost structure, leading to higher electricity prices. Here I discuss the latest development, the Liberal Government of Ontario’s proposed financial framework for its “Fair Hydro Plan” (FHP). In election mode, the Government tabled Bill 132 on May 11, introducing a mechanism to finance the FHP, creating a 17% price reduction in the short-term, but failing to acknowledge the significant price increases and massive debt that will result in the long-term. Although opposition parties have come out forcefully against Bill 132, the Liberal Government has a legislative majority and has time-allocated debate, so it will likely become law before the Legislature rises for summer. This post provides financial projections related to the FHP and shows that it is driven by craven electoral calculations rather than efficiency or equity considerations. I also review the financial and governance provisions in Bill 132, highlighting the risk that the type of “structured finance product” (SFP) being introduced in this legislation could be imposed elsewhere in Canada. Read more »

NAFTA and Labour Rights

I recently spoke at the Standing Committee on International Trade on their study “Priorities of Canadian Stakeholders having an interest in Bilateral and Trilateral trade in North America, between Canada, United States and Mexico”.  I share my notes with you here, although I did ad-lib a bit in the actual committee meeting.

**********************

The labour movement is keenly aware that trade is, and always has been, an important feature of the Canadian economy. Many of our jobs depend on trade. We understand that all governments have an interest in fostering open trade.

Part of the problem we now face is that distributional impacts of trade and investment agreements have long been ignored. We are told that trade deals will have winners and losers, but not to worry – we can compensate the losers. In my opinion, the failure to compensate those who have been affected by negative trade shocks has led to growing inequality, and a nationalist sentiment in many developed nations.

More than 20 years after signing on to the North American Trade Agreement (NAFTA), the ways it has failed working Canadians are very clear. Canadians were told that NAFTA would create good jobs, shared prosperity, and a better future for working people. Instead, far from generating good jobs and prosperity, NAFTA has undermined secure, well-paid employment and devastated manufacturing and processing industries and the communities that depend on them. While there has been increased trade and economic growth, large corporations and investors have gained the most, leaving workers behind. NAFTA doesn’t just govern trade, but empowers foreign investors to sue Canadian governments, threatening public services and limiting the ability of governments to regulate in the public interest. This so-called free trade agreement has not fostered fair or balanced trade.

One of the critical gaps in NAFTA is labour rights. While NAFTA was one of the first trade agreements to incorporate a side agreement on labour and environmental rights, it was weak and non-enforceable. A stronger labour chapter, building on the recent labour chapters found in CETA and TPP, would be an improvement for labour rights in North America.

This alone will not be enough. The scope of national labour legislation has become inadequate to protect workers in an era of globalization, and we are facing significant governance gaps. A lack of transparency and asymmetrical relationships in supply chains, combined with competition from low income nations for foreign investment and jobs, actually undercuts the ability of free trade to be ‘fair’.

We see this in post-NAFTA Mexico. NAFTA was supposed to raise wages and working conditions in Mexico, lift workers out of poverty, and increase domestic demand. Instead, wages have stagnated, inequality has increased, and whole sectors have been wiped out.

Only about 1% of Mexican workers belong to a democratic union. Most workers are covered by ‘protection contracts’ – agreements between the company and company approved union. Workers don’t even have the right to see their collective agreement. If workers try to vote in a democratic union, the results are often ignored, or even worse, union organizers face harassment and threats.

What are some of the solutions? The federal government recently announced its intention to ratify ILO convention 98 on the Right to Organize and Collective Bargaining. Neither Mexico nor the United States has ratified this convention yet. We should encourage the United States and Mexico to ratify all eight core labour conventions.

None of the three North American nations have ratified the ILO governance convention 81 on Labour Inspections. This is a key convention that ensures that workers have access to the rights that we have all agreed to, and that employers who violate those rights face consequences.

Other responses include:

  • passing legislation on due diligence for Canadian companies operating abroad, similar to legislation that has recently been passed in France;
  • working on a framework for transnational bargaining;
  • working within the ILO, OECD Guidelines for Multinational Enterprises (MNEs), and strengthening Canada’s national contact point.

We are glad to hear the Canadian government state publicly that it is willing to walk away from a deal that is not in Canada’s best interest. It is time to take a new approach to trade that puts the interests of working people and the environment first.

Ten things to know about social assistance in Canada

I’ve just written a blog post about social assistance in Canada. Points raised in the blog post include the following:

-Social assistance has two contradictory objectives: 1) to give people enough money to live on; and 2) to not give people enough money to live on.

-Very few immigrants receive social assistance (relative to the general population).

-Several Canadian provinces have seen a rise in persons with disabilities receiving social assistance.

-The inadequacy in social assistance coverage and benefit levels puts a strain on other parts of Canada’s social welfare system (e.g., social housing).

-When a person applies to receive social assistance but is denied, no systematic effort is made to track what happens to that person.

-Recent research suggests that a modest increase in social assistance benefit levels would likely reduce demand for emergency shelter beds.

The full blog post is available at this link.

POST-KEYNESIAN SUMMER SCHOOL – Toronto – June 23-25, 2017

The Review of Keynesian Economics (ROKE) and the Progressive Economic Forum (PEF) are hosting a:

“Post-Keynesian Summer School”, on the campus of the University of Toronto, June 23-25, 2017.

Over 2 and a half days, the summer school will introduce students to post-Keynesian economics, both theory and policy, and will feature some of the biggest names in post-Keynesian economics.  Registration is only $50 US, and includes all coffee breaks and a reception.

Read more »

A tale book-ended by two Trudeaus: Canada’s foreign aid since 1970

Soon after the 2015 federal election, Prime Minister-designate Justin Trudeau affirmed that Canada was back as a “compassionate and constructive voice in the world” after a decade of Conservative governments. One of the most important means by which any industrialized country interacts with the developing world is via the amount, composition and effectiveness of its foreign aid, which can help boost human and economic development, mitigate humanitarian crises and reduce environmental degradation. There are many types of “foreign aid”, but the most widely-accepted and quantified is Official Development Assistance (ODA).

In this post I focus on the amount of Canada’s ODA from a historical, OECD and global (United Nations) perspective. As outlined below, based partly on former Canadian PM Lester Pearson’s global leadership, in 1970 the UN established an ODA target of 0.7% of GDP. As a number of other analysts have pointed out, Canada was an ODA leader in the 1970’s; however, since that time, Canada’s performance has slipped, and is now well below that of most comparator countries. I find that the majority of this decline is due to a decrease in ODA budget allocation, primarily a political (rather than fiscal) decision. Canada’s ODA will continue to decline and is forecast to hit historical lows by 2021. PM Justin Trudeau appears to want to enable most Canadians’ wish to see themselves as compassionate global citizens; the reality, however, is that the current Liberal Government has not reflected this desire in its ODA budgetary decisions. Canada can and should do better. Read more »

Program Evaluation

I’ve just blogged about program evaluation and the way it’s used where I work—namely, at the Calgary Homeless Foundation (CHF).

The blog post serves as a primer on program evaluation. It also discusses how CHF measures performance by programs that it funds (CHF disburses $42 million annually to programs in Calgary’s homeless-serving sector).

The blog post can be found at this link.

The introduction and evolution of child benefits in Canada

Allan Moscovitch and I have co-authored a blog post that looks at the history of child benefits in Canada.

Points made in the blog post include the following:

-Child benefits can reduce both poverty and homelessness.

-When child benefits began in Canada after World War II, one major motivating factor for the federal government was to avoid recession. Another was to fend off social unrest (i.e. Canada’s growing labour movement and the growing popularity of the CCF).

The full blog post can be read here.

Advocacy in Canada’s Affordable Housing and Homelessness Sectors

I’ve just written a blog post on advocacy in Canada’s affordable housing and homelessness sectors.

In the post, I define advocacy as “a collective effort to bring about changes to political priorities, funding levels, legislation, regulations or policies.” I also discuss seven approaches to advocacy in Canada’s affordable housing and homelessness sectors.

The full blog post can be found at this link.

A Response to the 2017 Saskatchewan Budget

I have an opinion piece on Saskatchewan’s recent budget in the Regina Leader-Post.

Points raised in the opinion piece include the following:

-Reductions in personal and corporate income taxes help the rich more than the poor (and this budget cut both personal and corporate income taxes).

-Increases in sales tax hurt the poor more than the rich (and this budget increased both the breadth and the rate of the provincial sales tax).

-A one-dollar increase in government spending on public services (e.g., on health, education or child care) creates more jobs than a one dollar reduction in any tax. This budget decreased program spending.

The full opinion piece can be accessed at this link.

Ontario’s Electricity Sector II: Political Economy Update

This is a third guest post by Edgardo Sepulveda, who is a Toronto-based expert in telecommunications and regulatory economics.  Twitter: @E_R_Sepulveda


 

By Edgardo Sepulveda

In my previous post of January 29 I described how decisions by different Ontario governments gave rise to excess electricity generation with an inflated cost structure, leading to higher electricity prices and increased inequality. Since then, the Ontario Minister of Energy delivered a “mea culpa” speech on February 24 (the “Minister’s Speech”) that was followed on March 2 by a Liberal Government announcement to reduce electricity prices starting June (the “Liberal Plan”). The Liberal Plan is currently in the form of a press release and hence the Government will be required to introduce proposed legislation to give it legal effect. On February 27 the opposition NDP also announced its own election-style plan, including a reduction in prices (the “NDP Plan”) The opposition Conservative Party (“PC”) has now announced that it will release its electricity proposals as part of its overall election platform before the June 2018 provincial election. This post provides updated analysis of the issues I discussed previously, taking into account these recent announcements, which are summarized in Table 1.

Read more »

Ten Things To Know About The 2017 Federal Budget

I’ve just written a blog post in which I review the recent federal budget.

Points raised in the blog post include the following:

-The federal government is projecting deficits in the $20B-$30B range for roughly the next five years.

-This was likely the most important federal budget for housing since 1993.

-The budget contains important new announcements for homelessness (my blog post provides a nice bar graph showing newly-announced homelessness funding, which was put together by my colleague Janice Chan).

The link to the full blog post is here.

Transit costs are too darn high

Public transit is a key piece of urban infrastructure, important for getting people where they want to go while limiting congestion and pollution. A central part of the federal government’s infrastructure plan involves expanding and improving public transit, through their newly established Public Transit Infrastructure Fund.

Note that Budget 2017 allocates some amount of the total public transit funding to the Canada Infrastructure Bank, the Smart Cities Challenge, and Superclusters (really?), so I have only included the amount committed to the Public Transit bilateral agreements here.

This falls short of what the Green Economy Network recommended – we estimated the need to be closer to $1.76B annually from the federal government (Table 2), which would lead to a reduction of between 11-20 Mt of GHGs annually, but we are talking about committing serious funding to transit, which is good.

The language around the investment in public transit focuses on reducing congestion, lowering GHGs, and shortening commute times, all issues that the Federation of Canadian Municipalities (FCM) identified in their transit campaign. What isn’t mentioned though, is affordability.

And the cost of a monthly transit pass is, frankly, too. darn. high.

Which is why commuters across Canada were not pleased when Budget 2017 eliminated the (non-refundable) tax credit which allowed users to claim monthly transit passes. While the tax credit wasn’t perfect, it did do something to defray the cost of transit for about 1.7 million transit users.

The justification given by the federal government for getting rid of the tax credit is that it mostly benefited higher income families, and had no measurable impact on increasing ridership. Since it is a non-refundable tax credit (you don’t get anything if you don’t have taxable income), it likely didn’t benefit low income families much. But it is for public transit, so one would guess it benefits the middle of the spectrum, rather than high income folks.

The tax credit could be shared between spouses and their children under 19, so the relevant unit of analysis here is a census family.

You can see that higher income families get a higher average return from the tax credit, and that about a third of families benefiting from the credit have household incomes over $100K. But interestingly, about half of the total tax expenditure is for families with a total annual income below $75,000, and half is for families with incomes above that amount. Median total income in 2014 was $78,870, so that’s a pretty fair distribution for a non-refundable tax credit.

On top of this, there were other tax credits with more skewed distributional benefits that were left untouched. No wonder Toronto and Vancouver transit users are crying foul.

How about a gender lens? According to CRA T1 Final Statistics for the 2014 tax year, women made up about half of the taxfilers claiming the public transit credit. What’s interesting is the age distribution – slightly more men in core working age groups claim the credit, but both older and younger women outnumber men in their age groups.

With all of that in mind, what kind of policies would a social democrat like myself suggest?

First, I would recommend that some amount of the infrastructure funding be tied to affordability. Some provinces and / or municipalities have subsidized passes, but the current system is failing many low income transit users, and getting out of range for even median income folks.

Secondly, if I were going to eliminate the tax credit entirely, I would at least wait until Phase 1 of the transit infrastructure plan was complete. Removing the subsidy from riders before the spending has had a chance to show improvements to the system could hurt ridership and revenues during this rebuilding phase.

If I wanted to keep the tax credit, I would modify it so that it is refundable, individual, and phased out at higher incomes (say, anything over the median income).

Finally, I would look at ways that we’ve prioritized cars in our cities. Policies such as congestion pricing could raise revenues to support public transit, and provide an added incentive for car users to switch to transit.

This is a great example of how policy design needs to keep distributional impacts in mind, so that we’re not further hurting low income families as we’re racing to meet our commitments on climate change.

A Review of the 2017 Alberta Budget

Over at the web site of the Calgary Homeless Foundation, I’ve written a review of the recent Alberta budget.

Points I make in the blog post include the following:

-Alberta remains the lowest-taxed province in Canada.

-Alberta’s net debt-to-GDP ratio remains the lowest in Canada.

-For the third consecutive year, the Rachel Notley government announced a tuition freeze for (domestic) post-secondary students.

-No major changes were announced to social assistance benefit levels. Thus, a “single employable” adult on social assistance in Alberta will continue to get approximately $8,000 a year to live on.

The link to my full review of the budget is here.

New book on the history of Canadian social housing policy

One of Canada’s foremost authorities on Canadian social housing, Dr. Greg Suttor, has just authored a book on the history of Canadian social housing policy. Titled Still renovating: A history of Canadian social housing policy, it’s published by McGill-Queen’s University Press and covers the period from the end of World War II to 2013.

I’ve recently reviewed the book. Points I make in the review include the following:

-The book does an excellent job of quantifying trends in housing policy and includes excellent visual representations of data.

-The book is very readable.  Chapter 8 itself includes a great summary of the entire book that would be a great reading to assign to students.

-I feel the book had some shortcomings. For example, it didn’t fully explain why government should be involved in housing policy (even though the author is very knowledgeable on the many reasons why government should be involved). The book also provides less attention to neoliberalism than I would have liked.

The link to my full book review is here.

The Calgary Homeless Foundation’s System Planning Frameworks

Over at the web site of the Calgary Homeless Foundation (CHF), I’m co-author of a blog post about CHF’s new System Planning Frameworks.  These frameworks discuss the different programs funded by CHF.

Points made in the blog post include the following:

-CHF disburses approximately $42 million a year to programs for persons experiencing homelessness in Calgary.

-Approximately $37 million of this amount comes from Alberta’s provincial government; most of the rest comes from the federal government.

-While $42 million sounds like a lot of money, it’s insufficient to meet the scale of the problem.

The full post is available here.

The 2017 Federal Budget

Here is the link to my analysis and comments re the Limits of Liberalism.

http://www.broadbentinstitute.ca/andrew_ajackson/2017_federal_budget_end_of_progress

Reflections on the Social Democratic Tradition

The Broadbent Institute and Douglas-Coldwell Foundation have just published a paper of mine as part of a larger project on social democratic renewal, The paper is mainly retrospective, and touches on social democracy as an approach to economic policy.

Comments are most welcome.

The link is here:

http://www.broadbentinstitute.ca/reflections_on_the_social_democratic_tradition

1.0 Executive Summary:

The purpose of this paper is to provide a political history, overview and critical evaluation of the social democratic tradition in Western politics with some reference to the Canadian experience. It serves as a starting point for the Broadbent Institute’s new initiative exploring social democratic renewal in Canada, a project that will feature essays from a wide range of left perspectives on the future of social democracy in this critical moment of upheaval, inequality and erosion in democracies around the globe.

The term social democracy designates both a social and political movement and a distinctive political theory that developed in opposition to liberal capitalism in the second half of the nineteenth century. As used here, the term social democracy means the full extension of democratic principles to both the social and economic sphere and overlaps closely with the concept of democratic socialism, which denotes building a different kind of economy. Social democracy is about more than capitalism plus a welfare state, and very much remains a goal rather than a reality.

The historical roots of social democracy lie in the movements of the industrial working class and the ideas of socialist opponents of liberal capitalism. Social democracy thus has a more tangential and more recent relationship to feminism, anti-racism, the environmental movement and struggles for the recognition of disability rights and indigenous rights. Social democratic renewal is very much about building deeper linkages to other social movements promoting equality and recognition of differences other than those based upon social class.

Part 1 of this paper explores the relationship between social democracy and the rise of social citizenship and the recognition of economic and social rights. While social democrats can take a great deal of credit for the (temporary and contested) transformation of liberal capitalism into the Keynesian welfare state, this was not exclusively a social democratic achievement. Moreover, social democrats advanced a distinctive view of the welfare state with rights to education, health and welfare based upon citizenship as opposed to much more narrowly targeted and residual social programs. Social democrats also supported strong labour movements as a key foundation for equality and economic democracy.

The social democratic tradition has recognized that inequality of both condition and opportunity is rooted in the concentrated ownership of private capital and in the fact that the logic of capital accumulation limits the workings of political democracy. Until well into the post-war period, economic democracy in the sense of social ownership and regulation of private capital was very much on the social democratic agenda.

Part 2 of the paper looks at the historical development of the social democratic political movement from the Gilded Age of the late nineteenth century until the Golden Age of the immediate post-war years. Prior to the First World War, the expansion of labour and democratic rights led to increased political representation and socialists had to come to terms with the fact that capitalism was capable of both advancing working-class living standards and implementing social reforms, contrary to the tenets of orthodox Marxism. Socialism came to be seen by some reformists as a goal to be achieved gradually through the political institutions of liberal democracy, as opposed to a moment of transition. The division between democratic and revolutionary socialists became explicit after the Bolshevik Revolution, but democratic socialists retained a vision of a post-capitalist economy. The Great Depression and a divided left kept democratic socialism mainly on the sidelines in the 1930s, with the exception of Swedish social democracy, which promoted Keynesian policies and the expansion of the welfare state.

Part 3 of the paper examines social democracy from the heyday of the Keynesian welfare state to the Great Recession. The post-war period saw the implementation of many social democratic policies and a significant decrease in economic and social inequality alongside full employment and strong economic growth. This seemingly confirmed that capitalism could coexist with the recognition of labour and economic and social rights, leading many to reject socialism in the sense of social ownership as an ultimate goal. This shift also took place against the backdrop of the rise of a skilled middle class, the decline of the traditional industrial working class, the mass entry of women into the workforce and, perhaps, a more individualist political culture. The heyday of social democracy was also marked by the rise of the new social movements and a new left calling for fundamental change, including the pursuit of less material goals than traditional social democracy. The emergence of stagflation (high inflation combined with rising unemployment) in the 1970s set the stage for the return of more market orthodoxy (free-market liberalism, or neoliberalism), including the attack on full employment, government regulation, the labour movement and the welfare state by the political Right. Democratic socialists saw greater socialization of private investment and a major role for public investment as the means to maintain economic growth and full employment, but many social democrats increasingly embraced neo-liberal ideas, albeit with an emphasis on maintaining past advances and maintaining equality of opportunity.

The final section of the paper very briefly summarizes current prospects for social democracy at a time when neoliberalism has clearly failed to deliver shared economic and social progress. The key elements of an alternative economic and social agenda exist, including an emphasis on new forms of social ownership, the importance of public investment, and the central importance of environmental transition. A renewed social democracy will also mean building a broad social movement for change in close alliance with other movements including feminist and anti-racist.

The Alternative Federal Budget 2017

This year’s Alternative Federal Budget (AFB) was released on March 9. I was proud to be the primary author of its housing chapter (that chapter is available in English here and in French here).

The first AFB exercise began in 1994, with the first AFB being published in 1995. That involved a joint effort between the Canadian Centre for Policy Alternatives (CCPA) and CHO!CES: A Coalition for Social Justice.

Here are 10 things to know:

  1. Job creation has always been a major focus of the AFB. People need employment to earn income and live fulfilling lives. New jobs also creates important goods and services that help the rest of us prosper. And the more people are working, the more taxes they pay, and the less we (as a collective) have to spend on poverty reduction initiatives (such as social assistance). The type of jobs that get created matter too, as do working conditions; indeed, it’s important that people be happy in the workplace. Finally, who gets jobs matters —think gender, think racial diversity, think Indigenous peoples, think persons with disabilities.
  1. The AFB has always proposed a redistribution of income. This year’s document, for example, proposes a transfer of income (through our tax and transfer system) from households in the top six income deciles to those in the bottom four deciles; households in the top decile would the largest ‘loss,’ and households in the bottom decile would receive the lion’s share of the transfer. The AFB proposes to do this in part by closing tax loopholes for companies and high-income individuals. It also proposes to make our income tax system more progressive and to spend more on important social programs. This proposed transfer of income is illustrated in the figure below (which I’ve ‘cut and paste’ from the Macroeconomic Policy chapter of this year’s document).

 

 

Read more »

Foundations for an Alberta Alternative Budget

An Alberta-based volunteer working group, of which I’m a part, recently released a document titled Foundations for an Alberta Alternative Budget (for media coverage, see this Metro article).  Working group members include staff from Alberta’s non-profit sector, labour movement and advocacy sector. While our long-term goal is to emulate the great work of the Alternative Federal Budget, this year’s effort has resulted in a relatively short document that seeks to lay the foundation for what future Alberta budgets might look like.

Here are 10 things to know.

  1. This exercise brought people and groups together for the first time. While some participants knew each other before, most didn’t. A major reason new people were able to meet each other is that Joel French (Executive Director of Public Interest Alberta) made invaluable introductions.  His wealth of advocacy experience put him in the position to be able to do this.  Thanks Joel!
  1. We didn’t seek organizational endorsements of the document. Nor did we ask volunteers who assisted with the effort to stipulate whether or not they were formally representing their respective organizations when they assisted. Organizations like to carefully consider the advantages and disadvantages of making formal endorsements, and we didn’t want to push anyone to ‘put their cards on the table’ too quickly. Since this is a new initiative, we wanted to give organizations an opportunity to reflect on what this year’s document ended up looking like.  We hope this will help groups carefully consider the possibility of more formal participation in future efforts.

Read more »

Alberta Alternative Budget 2017

Media Release

Foundations for an Alberta Alternative Budget released today

(March 14, 2017-Edmonton) Today, a coalition of researchers, economists, and members of civil society released a plan to boost Alberta’s economic growth while reducing income inequality.

“For too long Alberta’s public services have been strained from decades of underfunding and reliance on volatile energy markets,” said contributing economist Robin Shaban, who noted that Alberta has just seen the worst recession in over three decades.

The 20-page document, Foundations for an Alternative Budget, sets a progressive vision encouraging public investment to stabilize tough economic times and create good jobs.

The report reveals that, since taking office in 2015, the Notley government took important measures to support poverty reduction.  These include: introducing the Alberta Child Benefit; the near doubling of annual spending on housing; and, increasing minimum wage.

The authors note, however, that reducing education fees, increasing funding support for people with disabilities, and increasing public support for long term care are needed to help protect the most vulnerable populations during times of economic recovery.

“Budgets are always about choices,” says economist Garry Sran. “Alberta continues to have the lowest taxes in Canada.”

The province could raise an additional $7.5 billion in tax revenue each year and still be among the lowest taxed regions in the country, he added.

“Increasing tax revenues would provide a foundation for fiscal stability.”

Finally, the report emphasizes that Alberta must forge ahead with a more diverse economy that considers the environment, inclusive growth, export potential, just transitions, and reduced dependence on oil.

Download report.

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Media contacts:

Robin Shaban:  613-898-0026 (cell); contact@robin-shaban.com (email)

Garry Sran:  587-597-7726 (cell); garry_sran@hotmail.com (email)

Five emerging trends in affordable housing and homelessness

Over at the web site of the Calgary Homeless Foundation, I’ve written a blog post titled “Five emerging trends in affordable housing and homelessness.”

Points raised in the blog post include the following:

-The Trudeau government has spent impressive amounts of money on affordable housing and homelessness.  This is time-limited money though.

-There is currently no federal plan in place to deal with the imminent expiry of funding agreements that support existing units of non-profit housing across Canada.

-Many plans to “end homelessness” were put in place by municipalities across Canada in the late-2000s.  Those plans are starting to sunset, yet there’s still a considerable amount of homelessness in most of those muncipalities. The proverbial chickens are coming home to roost.

The link to the full blog post can be found here.

Public Policy and Homelessness: The Case of Calgary

Over at the web site of the Calgary Homeless Foundation, I’ve written a blog post titled “Public Policy and Homelessness:  The Case of Calgary.”

Points raised in the blog post include the following:

-Calgary experienced explosive growth in the size of its homeless population from the mid-1990s until 2008.

-Though causation is hard to establish, the following factors likely had a major impact on this growth: a sharp decrease in federal spending on housing beginning in the early 1990s; a sharp decrease in housing spending by Alberta’s provincial government beginning in the mid-1990s; and strict reforms to social assistance introduced by Alberta’s provincial government in 1993.

-Since 2008, Calgary’s per-capita homeless population has decreased.  Factors that have likely led to this decrease include the implementation of a ‘plan to end homelessness’ in that year; substantial increases in social assistance benefit levels in Alberta brought in after 2008; and (more recently) Calgary’s very high rental vacancy rate (created as an indirect result of the drop in the price of oil, which caused many jobless workers to leave the city).

The link to the full blog post is here.

Poverty Reduction in Alberta

Over at the web site of the Calgary Homeless Foundation, I’m co-author of a blog post titled “Poverty Reduction in Alberta.”

Points raised in the blog post include the following:

-The NDP government of Premier Rachel Notley has undertaken important poverty-reduction initiatives since forming a government in 2015.

-Alberta (relative to other provinces) has a considerable amount  of income concentrated among a small group of households.  We use StatCan data to support this claim.

-Alberta continues to have the lowest level of taxation of any provincial government.

-Relative to other Canadian provinces, Alberta has very little public debt.

The link to the full blog post is here.

Finance Minister Bill Morneau on the Dangers of Bank of Canada Funding

A guest blog post from Larry Kazdan, publisher of the “Modern Monetary Theory in Canada” blog: https://mmtincanada.jimdo.com/contact/.

Under legislation that came into effect in December 2015, e-petitions that garner at least 500 on-line signatures and that are sponsored by an MP can be tabled in Parliament. The federal government is then required to provide a written response, also posted online, within 45 days.

Below is an e-petition regarding the Bank of Canada and the reply provided by Finance Minister Bill Morneau. Morneau maintains that low-cost financing of public infrastructure through the BoC would be inflationary, but apparently his own plan – an Infrastructure Bank that would reward investors with 7 – 9% returns and whose costs would be passed on to consumers through tolls, fees, or taxes – does not seem to cause him the same concerns.

The contentions of the finance minister on a number of issues should be challenged. Below is my open letter addressed to him and sent to the media. Please add your own thoughts in the comments section below and be sure to forward them directly to Mr. Morneau who can be reached at House of Commons, Ottawa, ON K1A 0A6 (no postage required) and email at Bill.Morneau@parl.gc.ca.

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Petition to the Government of Canada

https://petitions.parl.gc.ca/en/Petition/Details?Petition=e-337

Whereas:

  • Since 1974 Canadians have been paying billions in needless interest to international financiers called the Bank of International Settlements;
  • Before this, the publicly-owned Bank of Canada had a mandate and practice of lending interest-free money to federal, provincial, and municipal governments for infrastructure and healthcare spending;
  • Since this switch Canadian taxpayers have been needlessly paying anywhere from $20 billion to $60 billion a year in compounded interest; and
  • This is money that could have been used to better the lives of every single Canadian, and instead we have been needlessly paying large sums of money with no gain and massive losses for Canada.

We, the undersigned, citizens of Canada, call upon the Government of Canada to restore the use of the Bank of Canada to its original purpose, by exercising its public statutory duty and responsibility. That purpose includes making interest free loans to the municipal, provincial, and federal governments for ‘human capital’ expenditures (education, health, other social services) and/or infrastructure expenditures.

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DATE: NOVEMBER 2, 2016

PRINT NAME OF SIGNATORY: THE HONOURABLE BILL MORNEAU

SUBJECT:   BANK OF CANADA

REPLY

Government of Canada marketable debt, which includes treasury bills and marketable bonds, is distributed through competitive auctions to Government Securities Distributors, a group of banks and investment dealers in the Canadian market. These Government Securities Distributors then resell securities bought at auctions to their wholesale and retail clients in private sector markets. Ultimately, Government of Canada marketable securities are mostly held by Canadians, and can be found in retail and institutional investment portfolios, insurance and pension funds, as well as a variety of other investment vehicles. For more information, you may review the Debt Management Report 2014-2015 on the Department of Finance Canada website at http: www.fin.gc.ca/dtman/2014-2015/dmr-rgd15-eng.asp

It is sometimes suggested that the Government of Canada should fund part or all of its debt by borrowing from the Bank of Canada at a low or zero interest rate, rather than by borrowing in private sector markets.

This approach would require the Bank of Canada to either borrow the funds that it loaned to the Government, or create new Canadian currency.

If the Bank of Canada borrowed the funds for the loan, it would have to pay whatever interest rates that prevailed in private sector markets to obtain the funds. Accordingly, it could not afford to re-lend the funds to the Government at lower or zero interest rate.

Alternatively, the Bank of Canada would have to create new Canadian currency, which could lead to adverse economic conditions and costs. The experience of many nations has demonstrated that relying on domestic currency creation to finance government expenditures results in excessive inflation, erodes the value of a country’s currency and often leads to a misallocation of scarce resources.

Since 1991, the Government and the Bank of Canada have jointly agreed that the central objective of monetary policy should be for the Bank of Canada to target an inflation rate of 2 percent. This is the best contribution monetary policy can make to solid economic performance.

Canada’s policy of low, stable and predictable inflation has served Canadians extremely well. This policy has contributed to creating a more stable economic environment relative to that of previous decades and has allowed households and businesses to make better long-term financial plans.

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Open letter to Finance Minister Bill Morneau

Re: http://www.parl.gc.ca/Content/HOC/ePetitions/Responses/421/e-337/421-00858_FIN_E.pdf

In your official response to petition 421-00858, you claim that public financing of infrastructure through Bank of Canada low-cost loans would be inflationary.

But does real-world evidence support your contention when applied to advanced countries with large unused productive capacities and that issue their own currencies, such as Japan or Canada?

According to Australian economist William Mitchell, “…the Japanese experience with sustained high fiscal deficits, the world’s largest public debt to GDP ratio, close to zero interest rates, and deflation, was totally at odds with (neo-liberal) economic theories. It was a mind-boggling failure to explain reality.”

The New Economics Foundation recently published “Is Monetary Financing Inflationary? A Case Study of the Canadian Economy, 1935–75”. The report concludes “The 1935?70 period saw the Canadian economy recover quickly from the Great Depression, weather the Second World War, make a rapid transition from war to peace, and then enjoy a 25-year period of relatively stable and high growth with rapid industrialization….. The Bank of Canada played a key supporting role by directly and indirectly financing government debt.”

Under your proposed Infrastructure Bank, investors are expecting a minimum return of 7 – 9%, and it is clear that low and middle class Canadians will bear the brunt of higher costs through tolls, user fees and increased taxes. That is inflationary.

Canadians deserve a finance minister who will challenge economic myths propagated by financial elites who claim no alternatives exist to their high-cost lending.

Mr. Morneau, whose interests will you serve?

Footnotes:

1. William Mitchell is a Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at the University of Newcastle, NSW, Australia

The incommensurate aims of the Greek people


“When QE was first introduced in Japan in the 1990s, mainstream economists rushed to predict that the massive expansion in central bank reserves would be inflationary.
Students in every mainstream macroeconomics class, and that means almost all students, would have predicted, based on the nonsense they were learning, that the high deficits and high public debt ratios in Japan at the time, should have driven interest rates sky high, that bond markets should have stopped buying government bonds, that the government should have run out of money, and all the time that these disasters were unfolding, that inflation should have been be galloping towards hyperinflation.

Nothing like that happened.

Neo-liberal economists wrote off their mistakes by claiming that Japan is ‘so strange’ that it is a ‘special case’ and therefore not generally applicable.

Their ad hoc defense was convenient because the Japanese experience with sustained high fiscal deficits, the world’s largest public debt to GDP ratio, close to zero interest rates, and deflation, was totally at odds with their economic theories.

It was a mind-boggling failure to explain reality.”
2. Is Monetary Financing Inflationary? A Case Study of the Canadian Economy, 1935–75
http://www.levyinstitute.org/pubs/wp_848.pdf
As shown in figure 1, between 20–25% of Canadian public debt was financed and held by the central bank and government from the end of World War II up to the early 1980s but inflation was below 5% right up until the early 1970s…………..
***
….in the period 1945–70….Federal government capital expenditure funded highways, airports, bridges,schools, hospitals, and other physical infrastructure.
***
During the period 1960?75, the federal government also introduced virtually all of the major policy innovations that make up Canada’s system of social programs: Canada-wide Medicare, universal pensions, the modern unemployment insurance system, and cost-sharing with the
provinces for higher education and welfare.
***
For the majority of the period, the Bank was not independent of the government andits primary objective was full employment and growth rather than price stabilization.

3. Economist John Hotson
http://livingeconomiesforum.org/1996/15hotson
“When the Bank of Canada encourages the Canadian government, provinces, and municipalities to borrow in New York and Tokyo it is a betrayal of Canada. Where should they borrow when new money is needed for government spending? They should borrow at the government owned Bank of Canada, paying near zero interest rates-just sufficient to cover the Bank’s running expenses.”