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Archive for 'investment'

Corporate Olympics: Profit Sprint vs. Investment Crawl

Statistics Canada reported today that private and public investment intentions are up by 1.4% for 2014, even weaker than Canada’s investment growth of 1.5% in 2013. Private-sector investment intentions are only 1.3% higher this year, a far cry from the growth of after-tax corporate profits. Yesterday, Statistics Canada reported that net profits were 17.3% higher […]

PEF Session at the House of Commons Finance Committee

The Progressive Economics Forum (PEF) normally hosts sessions at the Canadian Economics Association’s annual conference. But the House of Commons finance committee threw most of the PEF members testifying in its pre-budget consultations onto the same panel on November 21 and then moved it to a room without TV. MP Randy Hoback participated in the first […]

Black Friday GDP: Consumption Slows, But Inventories Jump

Ironically, Statistics Canada’s third-quarter GDP report on Black Friday showed the growth rate of consumption being cut in half. Final consumption expenditure grew by 0.4% in the third quarter compared to 0.8% in the second quarter. Household spending growth fell to 0.6% from 0.9%. Government consumption growth plummeted to 0.1% from 0.4%. In other words, […]

Good Time to Rethink Corporate Tax Cuts

Canada’s macroeconomy continues to be lethargic at best, and there is growing recognition that the continuing sluggishness of business capital spending since the 2008-09 crisis is a big part of the reason why.  Governments are in austerity mode; consumers are maxxed out and cautious about new spending; our exports are restrained by an overvalued dollar and uncertain […]

Do C. D. Howe’s Numbers Support its Policies?

The basic storyline of today’s C. D. Howe Institute “E-Brief”, “Canada Lagging Peers in 2013 Business Investment Growth,” is that corporate tax cuts helped boost investment per worker in Canada above the OECD average. Yet corporate Canada is slipping in 2013 and apparently needs more tax cuts. However, the C. D. Howe Institute’s own graph […]

Why the City of Vancouver should divest from fossil fuels

This is the text of remarks I made today to Vancouver city council on divestment. Earlier this year, Council requested that staff report back on how the city’s financial investments align with the city’s mission and values, and various ethical programs like the city’s purchasing policy and the greenest city initiative. So the meeting was […]

NYT study on public subsidies in the US

This is a little old, but it was brought to my attention late and it seems to be of durable relevance. Last month, the New York Times (NYT) published an article chronicling public giveaways to corporations in the United States. What is extraordinary is that the article is the result of ten months – 10 […]

Stay the course

The Fall Economic Update was hosted this week by the Fredericton Chamber of Commerce. It seems Minister Flaherty wanted to be sure of friendly faces when he announced that the 2012-2013 budget deficit will likely be $5-$7 billion higher than forecast in March. The reason for the higher deficit is that nominal GDP will be […]

Spinning Mr. Carney

For novelty value if nothing else, Mark Carney’s appearance at the CAW convention last week was bound to spark lots of attention.  After all, we could find no other historical example of a Bank of Canada Governor ever speaking to a union convention.  That says something in and of itself, of course.  Central bankers speak […]

Dead Money

Kudos to Bank of Canada Governor Mark Carney for raising the profile of the over $500 billion Canadian corporations are holding in excess cash surpluses and not investing in the economy, which garnered front page coverage (and kudos to the CAW for inviting him to speak.) It’s not the first time he’s raised this  concern. […]

“Right to Work” Laws and Jobs

Ontario Conservative leader Tim Hudak claims that passage of an anti union “right to work” (RTW) law (making mandatory union dues illegal) would create jobs, especially in hard-hit manufacturing. With companies like Caterpillar moving to get ever cheaper labour, it seems semi plausible that anti union laws might attract footloose new investment , albeit at […]

A Green Industrial Revolution

Today the CCPA released a new big picture report by myself and student researcher Amanda Card calling for a Green Industrial Revolution. The report builds on work done for the BC-focused Climate Justice Project, bringing to bear a national analysis of green and not-so-green jobs. We take a close look at GHG emissions and employment […]

Stock Market Swindles Galore

This past weekend (March 31st), Sino-Forest Corp. announced it was filing for bankruptcy protection. The Chinese-Canadian company, once the largest publicly-traded forestry firm on the TSX, collapsed under allegations it was nothing more than a sophisticated fraud and Ponzi scheme. Sino-Forest’s demise wiped out about $6-billion in shareholders’ value, making it a catastrophe on par […]

Corporate Taxes and Investment in Ontario

Last week, Ontario’s Ministry of Finance released the Ontario Economic Accounts for the third quarter of 2011. As The Globe reported, business investment was less than impressive: . . . investment in machinery and equipment fell slightly by 0.2 per cent between June and September, 2011, prompting Ontario Finance Minister Dwight Duncan to fire a […]

The Ontario NDP Platform

Pollsters tell us that Ontario’s New Democrats may double their seat total in next month’s provincial election. It’s also entirely conceivable that they could be part of a coalition government at Queen’s Park. But what’s actually in the party’s election platform? One central feature of the NDP’s proposals is to implement a tax credit for companies that hire new workers. The tax […]

Is Canada’s Economy Wage-Led?

The parenthetical reference to Canada in my last post prompted several good comments. This post attempts to summarize and address them. Dr. Stockhammer has co-authored a paper with estimates for Canada, but he would be the first to note that they are mechanical and not necessarily relevant to policy. He finds that Canada’s domestic economy […]

The Conference Board on Weak Business Investment

I do not know if the Conference Board intended its latest release on sluggish investment in machinery and equipment to be taken up during the election campaign. However, as Canadian Press reports: The Conference Board report comes at a time when the issue of corporate taxes is a key demarcation point among the parties in […]

Saunders and The Value of CIT Cuts, Part I

Doug Saunders, of the Globe and Mail, has gamely launched a real and meaningful discussion about corporate tax cuts on these pages. See the comments section of this post. Since that forum was getting unwieldly, I’m starting a new post. Doug’s stated pursuit (and mine, and I wager most readers’) – how to harness growth […]

Historical Analysis of Business Investment and Taxes Going Back to 1961

Here is a link to the CCPA study we released yesterday, analyzing the determinants of business fixed non-residential capital investment spending in Canada on the basis of quarterly data from 1961 through 2010.  It formally tests for the direct significance of corporate tax variables and finds no such evidence (in either univariate or multivariate analysis). There […]

Untying the Gordonian knot

First of all, today’s top Globe story on corporate income tax cuts not leading to increased investment is a nice example of “you heard it here first”, so a big pat on the back to Relentlessly Progressive Economics. As we like to say: tomorrow’s conventional wisdom, today. I want to take issue with Stephen Gordon’s […]

Corporate Taxation and Investment in the 2011 Federal Budget

Amidst all the frenetic disarray of budget day, I had an interesting and informative exchange on CBC’s Power & Politics with John Manley, former Liberal Finance and Industry Minister, and now chief lobbyist for Canada’s corporate elite (as President and Chief Executive of the Canadian Council of Chief Executives).

Potash Royalties: Lessons from Def Leppard

Advocates of low potash royalties have floated some pretty bizarre arguments. Last week, the Saskatchewan Party put out a news release emphasizing that local farmers use some 0.6% of provincial potash output, as though this tiny sliver of domestic consumption somehow complicates the province’s interest in maximizing revenue as a potash producer. Equally strange are […]

On the margin

Iglika reported to me that Kevin Milligan made the argument in favour of the HST that its presence was economically beneficial because it induces additional investment on the margin, as projects that previously did not meet a certain profit threshold would become real investments. This is a net gain (forget about who benefits from those […]

“Job Creators” MIA

Statscan investment intentions data released today show thatgrowth of  real investment by the private sector is set to slow markedly in 2011 compared to 2010. (up 3.8% vs up 8.0% in 2010.)  So much for the stimulative effect of corporate tax cuts. Surprise, surprise investment is concentrated in the resource sector, especially oil, where high prices and […]

Five Economic Reasons To Say No To More Corporate Tax Cuts

This was posted on the Globe and Mail’s online feature Economy Lab today. My sincere thanks to all the people who have posted on the topic on this site. The Harper government ’s commitment to further reduce the general corporate income tax rate while the nation struggles with budgetary deficits has been championed by – […]

Do Corporate Tax Cuts Boost Investment Over the Hurdle?

Andrew Jackson has engaged perhaps the strongest theoretical argument for corporate tax cuts: that they make more new investments viable by lowering the pre-tax return needed to get over an after-tax hurdle rate of return. (Indeed, I remember the C. D. Howe Institute’s Finn Poschmann lionizing Andrew Coyne for making this argument halfway through TV […]

Corporate Profits, Corporate Taxes and Business Investment

I have been reflecting a bit on the CME study of corporate taxes which Erin has previously covered quite comprehensively. This subject is clearly very much in political play at the moment. With the Liberals and the NDP  opposing cuts to the federal corporate income tax rate championed by the Conservatives, it merits further debate. […]

Poor Capitalists?

Over at Worthwhile Canadian Initiative, Stephen Gordon argues that capitalists are not rich. Of course, wealth is more or less synonymous with owning things that can be broadly defined as capital. Stephen’s argument is focused on income: “If capital income is concentrated among high earners, then it could still be argued that increasing labour’s share […]

The Sell-Off of Corporate Canada

The announcement this week that Prime Minister Stephen Harper is not going to intervene in the sale of Potash Corp. of Saskatchewan to the Australian conglomerate, BHP Billiton Ltd., speaks volumes about how Bay Street  and its servants in Ottawa are so willing and eager to sell off Canada’s corporate assets to foreign corporations. It’s […]

Jack Vicq Rides Again

Jack Vicq is Saskatchewan’s answer to Jack Mintz, a relentless advocate of lower taxes for high-income individuals and profitable corporations. His first report for the provincial government presaged massive personal income tax cuts in 2000 (which soon pushed the province into deficit). His second report for the provincial government presaged massive corporate tax cuts. Saskatchewan […]