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Archive for December, 2008

The Battle for History: Robson on the Great Depression

William Robson, President of the C. D. Howe Institute, mounted a rear-guard defence of the conventional wisdom against Keynesian fiscal policy in yesterday’s Globe and Mail. He argues that we should leave the economy to central bankers and monetary policy instead of calling on governments to use fiscal policy. There are at least four problems […]

Resource Royalties vs. Structural Deficits

Briarpatch printed my article, “Dirty Deeds Done Dirt Cheap: Saskatchewan’s Multi-billion Dollar Resource Giveaway,” in its December 2008 edition. The magazine’s editor has a knack for excellent rock-themed titles: my previous contribution on Saskatchewan’s business tax cuts was entitled “Money for Nothing, and the Sultans of Spin Get Their Tax Cuts for Free.” When I […]

Whither African Manufacturing?

This blog has often criticized columns by Neil Reynolds. But he had quite an interesting one in yesterday’s Globe and Mail. In a nutshell, the column argues that used clothing donated from western countries has limited the emergence of garment manufacturing in Africa, thereby stunting that continent’s industrial development. Reynolds emphasizes this research as an […]

Fiscal deficits and social deficits

Why does the Globe oped page save all the good stuff for days when most people are not paying attention? In today’s edition, tax economist Jon Kesselman from SFU says reinforce the automatic stabilizers and focus on social needs: Getting more funds into the hands of individuals who most need support should take priority over […]

Well, now that David Laidler has said it …

The best prof I ever had doing my undergrad at Western was David Laidler. I took a fourth year economic policy course with him, and learned a lot, especially a certain horror known as inflation (John Crow soon embarked on a disastrous war on inflation in the early 1990s that still sends shivers up many […]

2008: The Year in a Picture

We are on the edge of disaster without being able to situate it in the future: it is rather always already past. Maurice Blanchot.   Over the last month, I admittedly got so caught up in the rhetorical swirl of the coming disaster that I woke up December 1st expecting statistical confirmation that Canada slipped into […]

Banks Call for Tax Cuts

Last week, The Toronto Star ran a front-page story, “Cut tax or risk jobs, banks say,” on the Canadian Bankers Association (CBA) pre-budget submission to Queen’s Park. While acknowledging the elimination of Ontario’s corporate capital tax and the slashing of federal corporate income taxes, the bankers argue that it is also imperative for Ontario to […]

Economic Advisory Council calls for tax cuts

OK, there has been no such call. Yet. But mark my words, this panel will call for tax cuts as the federal government’s fiscal stimulus, and the government will deliver. The Economic Advisory Council is not exactly a representative group. No labour representation, no Aboriginal reps, no one from the social or non-profit sector whatsoever. […]

Deflation Marches On

In November, prices fell for a second consecutive month and annual inflation fell for a third consecutive month. The Consumer Price Index declined from 3.5% in August to 3.4% in September, 2.6% in October, and 2.0% in November. A few more months of decline could turn this annual rate negative. While steadily falling prices would […]

Public Transit and the Public Good

The transit strike in Ottawa is now in its second  week, and life is horrible.  Commuting has turned from frustation to nightmare, especially when snowfall makes things even worse. All of which leads me to the perhaps hugely obvious point that decent transit is self-evidently a very good thing for drivers like me and not […]

Re Regulating Finance

http://www.tuac.org/en/public/e-docs/00/00/03/91/document_doc.phtml This is a very useful discussion/policy paper from Pierre Habbard of the Trade Union Advisory Committee to the OECD. Executive summary 1. The latest phase of the financial crisis that broke out in the summer 2007 was marked by a dramatic turn in mid-September with the collapse of Wall Street, US insurance group AIG, […]

Budget Advice for Queen’s Park

The transcript of my pre-budget presentation is now available on the Ontario Legislative Assembly website. The content overlaps significantly with two recent posts. My budget-related testimony on the Ontario Health Premium is also online. Again, it reflects material already posted on this blog.

Consumption, Christmas and the Recession

On CBC news this weekend, they ran a string of stories about how families were cutting back this Christmas due to fears about the economy. There were no poor families interviewed; actually, they were all comfortably upper-middle class (the demographic stereotype of news and most television these days). One family spent $1,000 per kid (times […]

Labour’s Plan to Deal With the Economic Crisis

Labour’s Plan was developed by the CLC in consultation with economists from our affiliates. It has been submitted to all of the party leaders and economic critics. The Summary is followed by elaboration of each of the five main points. (This document does not deal with financial regulation and international economic issues.) http://canadianlabour.ca/sites/clc/files/laboursplanfullEn.pdf

Thinking About Stimulus

My colleague Sylvain Schetagne prepared this Update on Economic Stimulus packages announced as of December 10.  Quite a few governments do seem prepared to act on the IMF recommendation to provide significant stimulus, but there’s a wide range of approaches. Introduction Last November, leaders of the world’s 20th largest economies, know as the G20, met […]

Wayne Fraser on Employment Insurance

Saturday’s Toronto Star featured the following op-ed from the United Steelworkers’ Ontario-Atlantic Director: Fix EI system to help those who didn’t cause the crisis TheStar.com – Opinion – Fix EI system to help those who didn’t cause the crisis Federal government, coalition or minority, should bolster benefits for the unemployed December 13, 2008 Wayne Fraser […]

Union Coverage in Today’s NYT

The front page of today’s New York Times notes that the United Food and Commercial Workers have organized “the world’s largest hog slaughterhouse” (some 5,000 employees in North Carolina). The front page also features an article on the United Auto Workers’ battle with Southern Republicans over the auto bailout. The second page reports the success […]

Disproportionately Large Bailout?

Last night, Andrew Coyne prematurely began celebrating the demise of the US auto bailout and proclaimed the death of “any last lingering justification for” a parallel bailout in Canada. Now that American and Canadian governments have committed auto industry support, he pans Canada’s pledge as being “disproportionately large.” (Disproportionate to what, he does not specify.) […]

Ontario’s Manufacturing Crisis

Global factors – exchange rates, international trade, and now the credit crisis – have undermined Canadian manufacturing. Since Ontario is Canada’s manufacturing heartland, it suffered a great deal of collateral damage. The conventional view is that the province is caught up in a pan-Canadian crisis rather than in something particular to Ontario.  Initially, Quebec suffered proportionally greater losses […]

Reading the Crisis

I highly recommend “The Credit Crunch: Housing Bubbles, Globalisation and the Worldwide Economic Crisis” by Graham Turner. “Graham Turner is one of only a handful of economists to understand the roots of the current financial crisis, its implications for all of us and crucially what should be done now. I strongly recommend you read this […]

Better Late Than Never

The Bank of Canada got it right this morning in cutting the key interest rate by 0.75%. This bold action makes up for the timidity of cutting by only 0.25% last time. The central bank should be applauded for (finally) recognizing the severity of the economic crisis and going further than recommended by the C. D. […]

Should the public protect private pensions and RRSPs?

There is a lot of concern about there about the state of private pensions and private savings plans (RRSPs and the like). Having lost a quarter to a third of their value in the past year, those who anticipated a cozy retirement are now rethinking those plans. But the core problem is that asset values […]

NYT coverage of Canada

It is not often that Canada makes the news in the US. Here’s the story from the New York Times summarizing the latest employment data, the economic update and the resulting political crisis. If we use the factor of ten rule of thumb, our drop of 70,600 jobs compares poorly to 533,000 lost in the […]

Ontario Falls Off a Cliff

The Ontario economy fell off a cliff last month as the US meltdown intensfied the already virulent manufacturing and forest jobs crisis. An almost unprecedented 42,000 manufacturing jobs were lost in November in Ontario alone – that’s one in twenty of the total, and more than the total of manufacturing employment in either Oshawa or […]

A neglected aspect of stimulus

Much of the debate about economic stimulus has been on infrastructure (picture the Hoover Dam, as Stephen Gordon comments). But there is more! One neglected area is around income support, including EI, the CCTB, GST credit and provincial social assistance programs. Below is the quick synopsis from the CCPA’s alternative economic and fiscal update, and […]

Deficits and crowding in private investment

James Galbraith kicks so much ass in this comment about a recent Paul Krugman column that I have to quote it for posterity’s sake (he basically agrees with PK). The question: Is the deficit a threat to future recovery. The answer: No.  The question is grossly  misconceived.  Right now and for the immediate future, the […]

A global carbon tax

Ralph Nader and Toby Heaps make an excellent case for a global carbon tax. With an Obama administration there is the possibility of such a thing happening, and it would be much more sensible that a complicated cap-and-trade system that will take years to get up and running. Even if a North American cap-and-trade system […]

Bad reasons to delay a stimulus package

Over at Worthwhile Canadian Initiaitive, Stephen and Nick have been making the point that “Canada is not the United States, we are not in recession (although the odds that we will be soon are much better than even), and there’s no reason to rush into a program of public works”. To some extent, they are […]

How to defuse the crisis

This political crisis is completely the fault of the Prime Minister. Having laid the groundwork for a solid economic update last week – by saying in Lima that he had learned the lessons of the Great Depression and that he would not rule out deficits – what was tabled was a plan that did nothing […]

Stimulus – Between Orthodoxy and the Unthinkable

The ever deepening global and national economic crisis has produced highly divergent views among mainstream economists on how radical a change is needed to orthodox fiscal and monetary policies with  their focus on balanced budgets and low inflation. At one extreme, the recent Economic and Fiscal Statement indicates that the prevailing Department of Finance view […]