The Progressive Economics Forum

(This guest blog was written by Mike Marin and Anouk Dey. It originally appeared in the Toronto Star on February 24. The authors are part of a team that produced the report Prospering Together (in English http://bit.ly/z4GQx5  and in French http://bit.ly/yabiK2) What do the Occupy Movement and Canadian software giant OpenText have in common? Most [...]

Don Drummond confesses that he has been wrong to believe that changes in public policies – such as free trade, cuts to corporate taxes, low inflation, the  introduction of the GST, balanced budgets and reductions to inter provincial trade barriers (aka the neo liberal agenda) – are the key to improving Canada’s dismal productivity record. [...]

The December issue of the quarterly Economic Climate for Bargaining publication I produce is now on-line.  This issue has a number of pieces on issues of inequality, including: Rising inequality is hurting our economy Labour rights, unions and the 99% Canadian economy bleeding jobs; public sector cuts to intensify Recession and cuts hit Aboriginal and [...]

Statistics Canada released an interesting study today on the slowdown of productivity growth in Canadian manufacturing. Conservative economists tend to view productivity as a microeconomic issue, reflecting the allocation of scarce resources through the market. The way to maximize productivity is to remove taxes, regulations and other “barriers” to the market’s free functioning. However, the [...]

The Globe and Mail is running an interesting series this week on Canada’s miserable performance in business innovation and productivity.  Here is the main page.

We all know that the wages and compensation individuals receive in private competitive markets reflects their productivity, unless pesky unions and government regulations get in the way–because Economics 101 (and Michael Hlinka) have told us so.   Corporate CEOs are worth every penny their “independent compensation committees” award in compensation and stock options them because they are “creating value” [...]

Cutting corporate income taxes doesn’t create jobs. They may raise wages, but probably not for you and me. And they mean Canadian taxpayers are paying more….to help the Americans pay down their debt Here’s how I know these things to be true: Yesterday SUN TV rolled out its first full day of programming. The prime [...]

Andrew Sharpe has published an interesting new study on the marked slowdown in Canadian labour productivity growth from the early 200s. He decomposes the decline in productivity growth into changes at the detailed industry level, and finds that the majority (53%) of the slowdown in productivity growth between 1997-2000 and 2000-2007  is attributable to changes [...]

Shortly before I left Canada, Canadian Business magazine contacted me for a story on productivity. It highlighted a presentation by Industry Canada economist Annette Ryan. I was struck by slide 40 (41 of 44 in the PDF): In an endogenous sunk cost model, opening free trade and intensifying competition leads to a divergence in innovation [...]

Back in June, the TD Economics group released a major report co-authored by Don Drummond: “The Productivity Puzzle. ” It provides a comprehensive overview of major studies and the empirical evidence, and should help spark some critical reflection. Progressive economists should agree with Drummond that productivity growth is vitally important to the growth of living [...]

Here is some of what Terry Corcoran wrote in today’s Financial Post about Bank of Canada Governor Mark “Carney’s suggestion that Canadian business has so far ‘disappointed’ because it has failed to revive Canada’s lagging productivity”: Central bankers appear to know many things, and have big fancy computer systems and economic models to tell them [...]

As if there weren’t already enough reasons to eliminate the egregious stock option tax loophole, a column by Eric Reguly in this month’s Report on Business magazine highlights yet another.  This reason helps to explain why we had such a booming stock market up to 2008, but little growth in real investment and productivity. First [...]

We’ve been told for years that corporate tax cuts would work like viagra to boost private sector investment and productivity, and no doubt we’ll hear much more about it in next week’s budget.  But it just ain’t working.  Today’s release by Statscan of private and public investment intentions shows just how limp private sector investment is [...]

This morning federal finance minister Flaherty announced a number of measures ostensibly aimed at reining in speculation in the housing market.  His announcement was typically well-timed to coincide with the Vanier Institute’s annual report on the state of Canadian family finances, which reports record high levels of household debt, growing inequality and housing prices increasingly out [...]

There is an interesting piece on productivity in today’s Daily looking at the changing relationship between output change and employment change in recessions, over time and as between Canada and the US. One part of the story is that employers used to hoard labour during recessions, but are now inclined to cut jobs and hours [...]

A well-timed release from StatsCan today that speaks for itself in terms of relevance to the current Budget debate: http://www.statcan.gc.ca/daily-quotidien/090114/dq090114a-eng.htm “Between 1962 and 2006, roughly one-half of the total growth in multifactor productivity in the private sector was the result of growth in public infrastructure. Public capital (the nation’s roads, bridges, sewer systems and water treatment systems) [...]

http://news.guelphmercury.com/Opinions/article/409306 Today’s economic update by Jim Flaherty must provide investment in jobs the canadian press November 27, 2008 Ken Georgetti Federal Finance Minister Jim Flaherty must use today’s economic update to become part of the solution to our ever deepening economic crisis. Governments, leading economists and even the International Monetary Fund agree that cutting interest [...]

We all know the Conservatives are the “rational economic managers,” right?  After all, their tax cuts, free trade agreements, and tough-love social policy are all motivated by the need to free the entrepreneurial beast within us, and allow us to pursue our natural proclivity to truck and trade with wild abandon.  The productivity of the [...]

StatsCan released a new analytical study today on the decline of Canadian labour productivity relative to the U.S., up to 2003. http://www.statcan.ca/Daily/English/080721/d080721a.htm Main findings are not surprising: Canadian business sector productivity has slipped relative to U.S. productivity (to 87% by 2003).  (We know it’s fallen significantly further than that since — Canadian labour productivity has [...]

How about those productivity numbers that StatsCan released last week?  Wow: another nail in the coffin of Jim Flaherty’s claim that Canada’s economic fundamentals are in “great shape.”  There’s not much more fundamental in economics than how efficiently people produce stuff (except, of course, for what we do with what we produce – that’s even [...]

http://www.ilo.org/public/english/employment/download/elm/elm07-4.pdf  A useful reference; a methodologically sophisticated attack on the core neo liberal belief that labour market regulation undermines efficiency. Why labour market regulation may pay off: Worker motivation, co-ordination and productivity growth by Servaas Storm & C.W.M. Naastepad ILO Economic and Labour Market Paper 2007/4 Abstract The impact of labour market regulation on labour [...]

PEF Steering Committee member Mathieu Dufour passed along this message: For the French readers amongst you, there is a debate currently going on in Le Devoir about the disconnect between wage and productivity growth. I first wrote an Op-Ed stating said disconnect and asking how long we were going to ask people to increase their [...]

The 2007 OECD Employment Outlook incorporates a study (Chapter 3) finding that higher minimum wages raise productivity. In fact, a sophisticated quantitiative study finds that an increase of 10 percentage points in the ratio of the minimum wage to the median hourly wage raises the level of labour productivity in the long-run by between 1.7 and 2.0 percentage [...]

http://www.ccl-cca.ca/NR/rdonlyres/F6226BEA-0502-4A2D-A2E0-6A7C450C5212/0/connecting_dots_EN.pdf Based on the Executive Summary, this report seems worth a read. It seems to go beyond the common rhetoric on the need for more ‘human capital development in a knowledge-based economy’ to take a serious look at economic returns to firms from training – though the scale of the suggested benefits seems rather high. [...]

Two Canadian macro articles diverted me from my best laid plans today. Side by side, the two make for some interesting observations on the state of the Canadian economy, as well as some fodder for thinking about what drives investment. The first, a Statscan piece by Phillip Cross, is a demand-led investment story, with most [...]

http://www.cepr.net/index.php?option=com_content&task=view&id=1122&Itemid=77 This is a very nice piece from Dean Baker of the CEPR on the delinking of real worker pay from labour productivity growth in the US. I’ve argued for years, with much of the left, that average worker pay has lagged productivity growth mainly because of the increased bargaining power of capital vis a [...]

Neil Reynolds has discovered that a fraction can be increased by reducing its denominator. Because labour productivity equals output divided by employment, he claims that “In manufacturing, you measure success by the number of jobs you eliminate.” By definition, a given volume of manufacturing output produced by fewer workers implies higher manufacturing productivity. However, it [...]

The following note, including tables, is available on the Canadian Labour Congress website: Free trade was promoted to Canadians on the famous promise of “jobs, jobs, and more jobs” and is widely defended on the basis that Canada’s large trade surplus with the US contributes to Canadian employment. Meanwhile, American commentators are concerned that the [...]

Ken Georgetti and leaders of major manufacturing unions just finished meeting with the Prime Minister about Canada’s ongoing manufacturing crisis. The Canadian Labour Congress briefing note quoted by The Globe and Mail online follows: The Manufacturing Crisis Overview Canada’s manufacturing sector is in crisis. High energy prices, a high dollar, and worsening trade deficits with [...]

http://www.statcan.ca/Daily/English/070223/d070223a.htm Philip Cross of Statscan has writen an interesting analysis of our very weak labour productivity performance in 2006. Output per hour growth has been very slow – a result of weak output growth combined with fairly strong job growth. The key factor highlighted here is declining productivity in the mining sector as production shifts [...]