The Progressive Economics Forum

Last Monday, I testified twice to the Ontario legislature’s finance committee: as an “expert witness” and then on behalf of the United Steelworkers.
I emphasized the provincial deficit’s manageability, the folly of trying to reduce it through cutbacks or privatization, the importance of maintaining tax rates to bolster future revenues, and the advantage of targeted measures [...]

In January, Canada gained 43,000 jobs, almost all of them part-time. Any employment increase is certainly good news and some part-time positions might eventually become full-time positions.
The obvious limitation of part-time jobs is that they provide fewer hours of paid work and hence less income. Statistics Canada’s R-8 unemployment rate, which includes discouraged workers and [...]

Ontario’s pre-budget consultations include a session for which each party caucus selects an “expert witness.” This year, the Liberals invited Warren Jestin from Scotiabank, the Conservatives invited Catherine Swift from the Canadian Federation of Independent Business (CFIB) and the NDP invited me.
In general, my role was not to engage with the other witnesses. The Conservatives [...]

Advocates of the Harmonized Sales Tax often suggest that it will support Ontario’s beleaguered manufacturing sector. They emphasize that the current Provincial Sales Tax applies not only to finished products purchased by consumers, but also to some inputs purchased by businesses. As one business sells components to another, sales tax could be paid repeatedly along [...]

Today’s Gross Domestic Product (GDP) release paints a significantly improved picture of the Canadian economy. GDP rose by 0.4% in November.
Statistics Canada also revised upward its previously released figures. GDP grew by 0.3% instead of 0.2% in October and 0.5% instead of 0.4% in September. While these figures are encouraging, they imply a slower annual growth [...]

The number of Canadians receiving regular Employment Insurance (EI) benefits declined by 7,300 in November. As always, we do not know whether these workers found jobs or simply ran out of benefits. The Labour Force Survey indicated higher employment and slightly lower unemployment that month, which supports a positive interpretation.
Following these declines in [...]

The obvious headline from today’s Statistics Canada release is inflation rising to 1.3% in December, its highest level in almost a year. However, the Consumer Price Index actually decreased between November and December. The overall price level was down 0.3% in absolute terms and 0.1% on a seasonally-adjusted basis.
The annual inflation rate rose only due [...]

Straight Goods contacted me last week for an article about what the federal Conservatives might cut to balance the budget. This concern is understandable given the previous Liberal government’s slash-and-burn approach to deficits. At a minimum, the Conservatives may use the deficit as cover to remove funding from particular programs or organizations that they dislike.
However, [...]

Both employment and unemployment edged down between November and December, reflecting a smaller total labour force. This news raises concern that some jobless workers are leaving the labour force altogether. However, the labour-force decrease was only 9,000, far smaller than the previous monthly increase.
Overall employment changed so little because private-sector payrolls stabilized. While stability is [...]

Nine days ago, I posted some back-of-envelope math on the proposal to privatize the Liquor Control Board of Ontario (LCBO).
Specifically, I noted that keeping its annual profit of $1.4 billion would be worth more than the estimated sale price of $10 billion, which would reduce provincial debt charges by no more than $0.5 billion per [...]

My commentary on Tuesday morning’s Employment Insurance release mentioned the simultaneous Survey of Employment, Payrolls and Hours (SEPH) release.
The SEPH indicated that, from October 2008 through October 2009, average weekly earnings edged up 1.6% across all Canadian payrolls. Earnings fell in forestry, construction, manufacturing, and a few service industries.
But no one reported the most striking [...]

In October, Canada’s inflation-adjusted Gross Domestic Product (GDP) expanded by 0.16%, which rounds up to 0.2%. While a second consecutive month of growth is unambiguously good news, we should be concerned about the amount and type of growth.
Amount of Growth
Real GDP (in chained 2002 dollars) dropped from a peak of $1,241 billion in July 2008 [...]

Today’s Employment Insurance (EI) release indicates that 4,000 fewer Canadians received benefits in October. The key unanswered question is whether these workers found jobs or simply ran out of benefits.
To make matters more ambiguous, the two main employment measures point in opposite directions. The Survey of Employment, Payrolls and Hours for October, also released this [...]

While The National Post typically supports privatization, today’s lead editorial correctly characterizes Premier McGuinty’s recent musings as “a desperate government trying to unload assets during a down market.”
The following paragraphs note the extreme difficulty in getting anything approaching fair value for the sale of huge, complex assets like electric power systems and the folly of [...]

Earlier this year, the Ontario government introduced a bill to give legal force to recent Agreement on Internal Trade amendments. The usual suspects - the union movement, the Council of Canadians, etc. - requested public hearings. After months of stonewalling, the government announced on December 1 that there would be one day of hearings on [...]

As reported on the front page of yesterday’s Globe and Mail, the McGuinty government’s “deficit reduction” strategy involves not only cutting taxes, but also divesting revenue-generating assets.
Today’s Globe comment page features three sassy letters on the contemplated privatization. But the editorial strikes a seemingly pragmatic tone, arguing that the Ontario government should sell “if the [...]

The national inflation rate jumped to 1.0% in November from 0.1% in October. As Statistics Canada notes, this apparently large increase is “due primarily to gasoline prices.” Specifically, last month’s gasoline prices are being compared to the depressed gasoline prices of November 2008.
Given the changed base of comparison, it is not surprising that the headline [...]

A TD-Pembina-Suzuki study released seven weeks ago projected that cutting Canada’s carbon emissions by 20% below 2006 levels, or even 25% below 1990 levels, would only modestly reduce overall Canadian GDP.
Last week, Jack Mintz critiqued this study for positing a fixed amount of capital investment in Canada. Under this highly dubious assumption, climate policy only [...]

Public debate in Ontario tends to frame sales-tax harmonization either as an unjustified “tax grab” or as a needed contribution to the deteriorating provincial budget.  Both views incorrectly assume that the HST will increase government revenues.
In fact, the original proposal was more or less revenue neutral. Removing sales tax from business inputs and cutting personal [...]

November’s 79,000 increase in employment combines a 32,000 decrease in self-employment with 111,000 additional positions paid by employers. This job creation is significant and welcome.
But there is still no indication of a sustained labour-market recovery. Today’s numbers may just continue the recent seesaw pattern in which employment is up one month and down the next.
Because [...]

When Jim’s study of the proposed Canada-Korea “free trade” deal provoked a direct and excessive response from the federal government three years ago, he correctly concluded that his study had “hit the pig.” Since I grew up in Saskatchewan and am currently posting from Mississippi, I have at least as much credibility as Jim in [...]

A couple of weeks ago, the Canadian Centre for Policy Alternatives released a paper of mine about how Canada’s corporate tax cuts will transfer revenue to the American federal treasury. That day, I debated this issue with Don Drummond on the Business News Network (video clip).
Also that day, Jack Layton raised it in Question Period. Ontario NDP leader [...]

American opponents of the Employee Free Choice Act have tried to use Canadian data to make their case against unionization. This past summer, Jim and I posted some initial responses.
This week, York University’s Centre for Research on Work and Society released a collection of articles by Canadian economists (including Jim and me) who support the [...]

Canada’s extended summer of deflation ended in October, when the national inflation rate rose to 0.1%. This change reflects a lowered base of comparison: the price of gasoline plummeted between September and October of last year.
The return of inflation should not be overstated. Today’s inflation rate is barely positive and falls short of the 0.3% [...]

The Canadian dollar is again becoming more overvalued. After dipping as low as 92 US cents at the end of October, it rocketed up to 96 US cents so far today.
Meanwhile, the OECD has released another month of purchasing-power data. Although the loonie’s average price on foreign-exchange markets edged up between August and September, its [...]

This past week, Jack Mintz issued a report (PDF) praising Ontario’s last provincial budget.
I like East Side Mario’s because it features both all-you-can-eat bread and all-you-can-eat salad. So, it is not surprising that a corporate tax-fighter would love a budget featuring both corporate income tax cuts and the removal of sales tax from business inputs. [...]

As yesterday’s Labour Force Survey confirmed, the recession continues for the vast majority of Canadians, who rely on employment for most of their income. But the technical measure of a recession is consecutive quarterly declines in real Gross Domestic Product (GDP).
Some have suggested that, even by this measure, the recession continues. Of course, we will [...]

UPDATE (November 7): Quoted by The Toronto Star and Canadian Press
Today’s release of negative job numbers for October undoes much of the surprisingly strong reported improvement in September. The national unemployment rate is again closer to 9% than to 8%.
Canada-US Comparison
The US unemployment rate cracking 10% will undoubtedly garner much Canadian attention. While the absolute [...]

As noted before on this blog, federal and provincial corporate tax cuts will redirect revenue from Canadian governments to the U.S. treasury.
Today, the Canadian Centre for Policy Alternatives released a short paper (PDF) I wrote on the treasury transfer effect. My executive summary follows:
The U.S. government taxes American corporations on a worldwide basis. Profits repatriated from other countries [...]

Canadian Gross Domestic Product (GDP) fell by 0.1% in August. The decline mainly reflected temporary closures of major oil rigs, mines and mills due to maintenance or labour disputes. This explanation is valid, as far as it goes.
However, the broader issue is that more widespread economic growth should be more than offsetting these isolated events. [...]