I have written a couple of pieces for Economy Lab in the Globe and Mail recently on the issue of secular stagnation. (Links below)
The term was coined by the pioneering American Keynesian Alvin Hansen who argued that the US economy of the late 1930s faced a long period of stagnation due to a chronic, structural gap between aggregate supply (the capacity of the economy to produce) and aggregate demand.
Keynesians of the time argued that the solution to stagnation underpinned by low private investment was public investment led growth, and were vindicated to a degree when World War Two finally drove a lasting recovery.
I was very impressed by the recent book by Daniel Alpert on this theme, The Age of Oversupply. Alpert’s key argument is that – on top of the deflationary pressures arising from a collapsed housing bubble and financial crisis – the advanced industrial world is only slowly adjusting to the enormous increase in productive capacity that took place when millions of workers in the developing world, especially China, joined the global labour force as part of a process of export-led industrialization and growth.
Collectively, the developing world has added much more to global supply than to global demand. This problem was papered over before the Great Recession, by recycling developing-country export surpluses and savings to finance debt-fuelled household consumption and government deficits in the advanced industrial world. But chronic oversupply now weighs heavily on new investment. This will not be effectively offset by low interest rates.
Some two years ago, Larry Summers debated Paul Krugman in Toronto and rejected the case for pessimism about medium-term recovery. His key point was that the (too ow) Obama stimulus package plus loose monetary policy would do the job. Summers is an uber establishment economist having served as US Secretary to the Treasury under Clinton and as Obama’s closest economic adviser.
But Summers recently joined the ranks of the stagnationists in a widely publicized speech to an IMF conference. He now argues that the “natural rate of interest,” the real interest rate needed to bring the U.S. economy back to full employment with price stability, is significantly below zero. Moreover, he argues that this was the case even before the Great Recession, when there were no inflationary pressures and significant unemployment in the midst of what turned out to be an unsustainable financial bubble fueled by cheap credit.
This speech puts Summers squarely in the camp of those who argue that even ultra-loose monetary policy cannot get us out of long-term stagnation, and that we must turn to fiscal policy to deal with the problem. Indeed, even before his IMF speech, Summers published a major paper with Brad De Long arguing for more debt-financed public investment to promote a stronger recovery.
If Summers is right, the prospects for a Canadian recovery driven by rising exports to the US and increased business investment are pretty dismal.
But, here in Canada, it seems that remarkably few mainstream economists are prepared to argue the case for fiscal stimulus and public investment led growth as supported, most notably, by the CCPA Alternative Federal Budget.
The conventional wisdom, that exports and business investment will drive a stronger recovery, is trotted out by the Bank of Canada and economic forecasters on a regular basis, and then it is sadly announced that this recovery will take longer than expected.
Perhaps it is time to get our heads around the idea that a robust recovery is just not going to happen in the absence of appropriate fiscal policy, just as Hansen argued.
Arun here…breaking radio silence to share with you a thought-provoking piece by Larry Kazdan, a graduate of York University in sociology and history, and currently a Council Member with the World Federalist Movement-Canada, an organization that monitors developments at the United Nations and advocates for more effective global governance.
Our friend and fellow blogger Keith Newman recently wrote some words that set up Larry’s piece nicely so rather than trying to reinvent the wheel, I will let Keith introduce Larry’s work and then urge readers to read the piece in full.
The trillion dollar coin solution for the US debt ceiling fiasco was developed by a Modern Monetary Theory (MMT) blogger in 2010 and gained considerable notoriety after a number of prominent economists supported the idea, notably Paul Krugman, who pointed out that “money is a social contrivance and convenience…”. A short time later the idea was explicitly rejected by President Obama and the Department of the Treasury.
Larry Kazdan has written the piece that follows on issuing such a coin for Canada. While that solution for our country may seem a little drastic, the continuing issuance of Government of Canada bonds provides conservatives in all parties the ability to use intuitively appealing language regarding the non-existent “debt burden” and the supposed need to “balance the budget”. The unfortunate result is inadequate day care, senior care, coverage for pharmaceuticals, public transportation, environmental protection, etc. Yet, if it chose to do so, our federal government could mobilise our vast natural resources, manufacturing capacity, know-how, and unemployed workers to provide us with these things we so desperately need.
Canada’s Trillion Dollar Coin
High-value coin seigniorage has sparked a public debate in the U.S. because it reveals how the American government can keep spending even if a debt-ceiling is not lifted by the Republican-controlled House of Representatives. Read more »
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 hour of the committee meeting, but ducked out before our panel. Fortunately, MP Mark Adler kept the spirit of Hoback alive, as you can read in the transcript posted today. My testimony began as follows:
In addition to my work as an economist for the United Steelworkers union, I also serve as the volunteer chair of an organization called the Progressive Economics Forum, which has about 200 members across Canada. I’m very proud of the fact that four of those members are sitting in front of you on this panel. Angella, Eric, and Jim are also members of the PEF. Typically, we hold sessions at the Canadian Economics Association meetings, and I’m very pleased that we’re able to hold a session at the House of Commons finance committee.
Beyond promoting the PEF, I focused on whether corporate tax cuts have boosted investment.
The federal government has slashed its general corporate tax rate in half – from 29.1% (including the former surtax) in 2000 to 15% since 2012. Because of these federal corporate tax cuts, provincial corporate tax cuts and growth in pre-tax profits, after-tax corporate profits have jumped from below 10% to 14% of GDP (excluding remitted profits of Crown corporations).
We often measure business investment as the “non-residential structures, machinery and equipment” component of expenditure-based GDP. That is a decent proxy, but it includes some non-residential investment by unincorporated entities and excludes some residential investment by corporations.
Statistics Canada’s Financial Flow Accounts allow us to examine the “non-financial capital acquisition” of corporations. These figures tell a familiar story: corporate investment has remained at 12% (or less) of GDP as corporate tax rates plummeted.
Investment is now well below after-tax profits, which is especially notable considering that “investment” includes outlays to cover depreciation but “profits” are net of depreciation. Comparisons of investment and corporate cash flow (including depreciation) indicate a much larger imbalance.
Statistics Canada’s definition of “corporations” includes Crown corporations, which are generally not subject to corporate tax. Investment by Crown corporations is quite small relative to national GDP, but has grown rapidly over the past decade (as provincial electrical utilities, for example, have had to refurbish aging infrastructure). An untold story of the Great Recession is the stabilizing effect of Crown corporations on the Canadian economy.
When Crown corporations are factored out, the story gets worse. The private corporations that gained from corporate tax cuts have actually reduced their investment as a share of Canada’s economy.
Corporate Profits and Investment as Percentages of GDP
|Year||Federal Tax Rate||After-Tax Profits||Corporate Investment|
On Thursday’s Lang & O’Leary Exchange (at 24:45 in this CBC video), I noted that while the Government of Canada just signed a deal with Kazakhstan allowing Cameco to invest more in that country’s uranium industry, the Government of Saskatchewan recently slashed its uranium royalties to encourage Cameco to invest in the province rather than in Kazakhstan.
It’s a win-win for Cameco: the federal government helps it invest abroad and the provincial government makes concessions to compete for those same investment dollars. But it’s hard to see how Canadians benefit from increased nuclear capacity in central Asia and decreased royalty revenues in Saskatchewan.
In CBC’s panel on economic diplomacy, I used that as an example of how Canadian business interests are not necessarily the same as Canadian economic interests. Saskatchewan’s falling uranium royalties are also worth examining from a provincial perspective.
Uranium revenue was already modest. In recent years, the provincial budget has rolled it into “Other Non-Renewable Resources.” The 2013-14 budget projected that amount falling from $134.4 million last fiscal year to $99.7 million this year. Last week’s mid-year report projected a further decline to $98.0 million this year. Read more »
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, public-sector austerity is taking a bite out of economic demand.
Business investment grew by 0.6%, its best quarter so far this year but still lagging the overall quarterly growth rate of 0.7%. The economy grew faster than household consumption, government spending and business investment because companies produced output that went into inventories.
Indeed, a $10-billion investment in inventories accounted for almost all of Canada’s $11-billion of GDP growth in the third quarter. In other words, corporate Canada is storing products it cannot sell because of slowing consumer spending, government austerity and falling exports.
This build-up of supply is troubling because, if it continues, companies will cut back production. To boost the economy, the federal government should use the billions of unspent dollars in its budget to improve Employment Insurance and accelerate infrastructure investment.
Watching Rob Ford in the recent weeks reminds me of what John Ralston Saul once wrote of Benito Mussolini and his contemporary reincarnation in Silvio Berlusconi: “He was the nascent modern Heroic leader. Mussolini combined the interests of corporatism with public relations and sport, while replacing public debate and citizen participation with false populism and the illusion of direct democracy.”
Unlike Berlusconi, who was able to harness his media empire to pump his message (Forza Italia!), Ford has been enabled by private media interests, being served up public soap boxes like talk radio shows to the one-show stint on Sun TV.
As Ford hunkers down in his comeback campaign, he has trotted out his 2010 campaign slogan of “stopping the gravy train”, which he alleges is revving up since him being stripped of power last week. A key plank for the mayor who’s fighting for the “little guy” is that his administration saved Toronto ratepayers a billion dollars, although Rob Ford, with brother Doug, need to equate tax cuts with expenditure cuts to get close to that amount (See Marcus Gee in the Globe: http://www.theglobeandmail.com/news/toronto/billion-dollar-savings-fords-claim-has-one-major-flaw/article15625225/.
Saul further writes that populists like Rob Ford “capitaliz(e) on the anger and confusion in the citizenry. The interests they represent are in large part responsible for the problems they denounce, but their appearance deny the relationship.” The confusion and angers largely stems from the shotgun amalgamation of old Toronto, Etobicoke, York, North York, East York and Scarborough in 1998, imposed by the Mike Harris Tory government as a cost-saving measure. Incidentally, Ford’s father was an MPP in the Harris caucus. The amalgamation took place despite the overwhelming rejection of the proposal by Toronto residents in a 1997 municipal referendum. Here enters a lesson from my public choice class in grad school. Despite what I see as the weaknesses of its methodological individualism, public choice theory gives a good explanation of what happens when you lump together very hetereogenous voters with very different policy values: the electoral process will churn out polarizing figures like Rob Ford, and in his case, pitting the suburbs against downtown.
Public choice theorists would advocate devolution or de-amalgamation in the Toronto case. However, this is a costly reversal not likely to happen in the immediate term. With the 2014 Toronto municipal election months away, progressive mayoral candidates, who tend to be downtown dwellers (potential candidates include former city councilor / current MP Olivia Chow and current councilor Mike Layton) need to REALLY engage suburban voters and get out there to Etobicoke, North York and Scarborough. To forge a credible platform that appeals to a sufficient number of both suburban and downtown voters, this may mean the painful reconsideration of some downtown policy priorities like bike lane construction.
On November 25th, I made the following submission to the House of Commons Standing Committee on Finance regarding Bill C-4, Economic Action Plan 2013 Act No. 2, on behalf of the Canadian Centre for Policy Alternatives.
1. Introduction and Context
Thank you for the invitation to appear before the Committee, as Members of Parliament review the second budget implementation bill for the budget of 2013.
It is a particular honour to appear as a witness, since this committee will only hear eight hours of testimony from witnesses — including one hour from the Finance Minister — over just 2 days of hearings.
It is impossible for Parliamentarians to meaningfully review the impact of hundreds of diverse and unrelated measures included in this legislation over the provided time frame. These amendments run from tax and spending changes, to EI reforms, conflicts of interest in financial institutions, a brand new system of processing economic immigrants, and new rules for choosing Supreme Court Justices.
There are also dozens of changes to employment law which bear no relation to measures in the 2013 Budget, including over 60 amendments to the Canada Labour Code. C-4 even envisions a new, restricted definition of danger, and new rules to appeal that definition. The Canadian Bar Association warns these changes were “conceived and drafted without consultation….contrary to custom” in a fashion that “precludes meaningful comment and debate.”  This is not by accident, but by design.
In 1994, a Member of Parliament named Steven Harper asked the speaker of the House of Commons to rule a budget bill out of order because of its sweeping scope. It touched on public sector pay, EI measures, payroll taxes, a reduction in federal spending through the Canada Assistance Plan, an extension of transportation subsidies, and granting authority to the CBC to borrow money.
At that time, Mr. Harper said “the subject matter of the bill is so diverse that a single vote on the content would put members in conflict with their own principles.” 
That omnibus bill was 21 pages.
This bill is 308 pages. It alters 50 pieces of legislation on a mind-numbing array of topics, many of which have nothing to do with the federal budget of 2013. It makes a mockery of the process of public oversight. It makes a mockery of our democratic institutions.
2. Proposed Amendment to Bill C-4 Read more »
The latest entry in our continuing series of commentaries marking the 50th anniversary of the publication of Mel Watkins’ classic article, “A Staple Theory of Economic Growth,” we present the following contribution by Mel’s long-time collaborator, Marjorie Griffin Cohen. Marjorie considers the gender dimensions of staple analysis.
Staples Theory: Its Gendered Nature
Marjorie Griffin Cohen
Feminism was the unlikely route for my contact with the staples theory. I say ‘unlikely’ because staples development analysis has a structural amnesia to gendered issues. Still, understanding the distinct ways that Canada developed had significant implications for the atypical way labour and gender were configured in the historical development process.
Interest in women’s role in economic development had been in abeyance for a long time after the British feminists early in the 20th century became focused on women’s past – specifically women’s contributions to the 18th century industrial revolution. In the early analysis of industrialization, women’s work was understood (both by feminists and others) to be integral to industrial development in Europe, primarily because women were so very central to the proto-industrial stage of family manufacturing(1), but also because of their dominance in the early factory systems.(2)
Until the beginning of development literature (dealing with underdevelopment in poor countries) the British understanding of capitalist development was more or less the general understanding of industrial revolutions. So too were the labour and family configurations associated with them. As feminism was gaining a tiny toehold in universities in Canada in the 1970s and 80s, those of us exploring how to teach the Canadian economic past from a gendered perspective had almost no material to use. The research in Canada and the US simply had not yet been done, so the only written scholarly work available related to an earlier literature of what had happened in England and Europe. This clearly did not explain women’s role in development in Canada – in any way whatsoever. At that time the push to have Canadian subjects taught in Canadian universities (spearheaded by Robin Matthews and Mel Watkins) made me realize I could not focus on European women, but absolutely had to find out how women figured in the shaping of Canada.(3)
This is where Mel Watkin’s work on staples development comes in. I was new to Canada and since I came from the US, knew absolutely nothing about Canadian history, much less its economic development. Someone directed me to Mel’s work on the staples theory. It immediately made sense that such an enormous country with a tiny population that was focused on exporting mostly primary products should have a distinct economic growth pattern. I read everyone Mel referred to in the piece, including Innis and Mackintosh. Mackintosh’s cheerful approach, that staples export would be the positive path to more diversified development, contrasted starkly with that of Innis whose darker analysis of the significance of the characteristics of the commodity itself and the tendency toward wildly fluctuating economic activity seemed a much more realistic version of what actually occurred. Mel’s theorizing applied the concept of linkages (backward, forward, final demand linkages) to the Canadian case. What became obvious through Mel’s analysis is that what mattered most was whether these linkages were reaped within Canada or elsewhere, and how public policy could make the difference in taming the volatility of a staples economy: to the extent that public policy submits to the ‘boom and bust psychology’ of staples export development, the more unstable the economy was likely to be. Mel was clear that growth and economic instability would be less at the mercy of destiny if planning is accomplished to strengthen linkages.
At first I was interested in seeing how women ‘fit into’ Canadian economic development by examining the nature of women’s labour in both staples production and the agricultural/subsistence sector. The first two excellent and serious studies dealing with women in staple development were focused on aboriginal women in the fur trade. These were Sylvia Van Kirk’s book, Many Tender Ties, and Jennifer Brown’s book, Strangers in the Blood. Both were published in 1980 and showed how central aboriginal women were to the success of the fur trade, regarding both market-oriented production and re-production of the fur trade labour force (or maintaining ‘social reproduction,’ as it is now termed). Around this time H. Clare Pentland’s book on Capital and Labour in Canada 1650 – 1860 came out, and it was the first to focus on the significance of labour organization in a staples economy, where finding an adequate labour supply was a monumentally difficult issue. Pentland referred to early labour productive relations as ‘patriarchal’ because of the need for the employer to assume the reproductive overhead of the workers, even when there was relatively little work, just in order to keep people alive.
But understanding how the population grew and maintained itself during periods of violent economic fluctuations and how the economy grew despite these wild swings meant not just seeing how women ‘fit in’ to an already understood growth pattern. Rather, I found, including an analysis of what most people were doing changed ideas about how capital accumulation occurred in the early periods.
There were clues all over the place about how to understand labour and women’s role in early development, particularly if one examined early records with the intent of specifically looking for these issues. Ideas from other scholars also provided other methods of examining the staple’s relationship to the wider economy. These included Vernon Fowke, who was interested in disputing the sense that pre-industrial agriculturalists were primarily self-sufficient, but instead were initially and continuously reliant on an exchange and monetary economy. In Quebec Louise Dechene and Jean Hamelin pointed out that even in the earliest periods only a small proportion of labour was directly involved in the staple-exporting sector, which meant that other forms of economic activity had been dominant. And there were the accounts of women themselves that could be read, both to understand what types of work they did and how they and the men in their families understood the significance of their work.(4)
By looking at what most people were doing and including women’s labour in the mix, their significance in the whole project of capital accumulation became more apparent. The extraordinary volatility of the staple economy was a starting point for understanding the nature of productive relations, both those in the market and those within the family. It became obvious, as I learned more, that patriarchal productive relations were just as significant in capital accumulation as were capitalist productive relations. Ultimately I wrote a book on this issue, using the staple thesis as my starting point, with the intent of showing how non-market productive relations could be crucial to economic growth and development.(5) Also, understanding the gendered nature of economic growth in Canada could add a different take on the shape of staples development and how its volatility was managed within households.
As I said initially, Mel’s article on the staples theory was immensely influential to my thinking about the gender order in Canada in its earlier periods. But some assertions seem worth questioning now (in hindsight). Two points that Mel mentions as being important for development are worthy of note. First is the idea that Canada had a favourable ‘land/man’ ratio; second is the notion that because Canada was largely a settler society, it did not have inhibiting traditions of the sort that restricted development elsewhere. With labour issues always so very significant because of the low population, it would seem to me that this ‘land/man ratio’ was actually a negative factor. So much land, with so few people, meant that domestic markets were very slow to development. Also, while the gender order was in many ways shaped by the special circumstances of Canada’s geography and staple exports, importing labour was necessary to solve the labour problem. Each wave of European immigrants brought a reinforcement of very traditional gendered relationships. And these tended to retard the various ways that women had been integrated into the staples exporting economy. The effect of English’s women’s immigration on aboriginal women in the fur trade was most obvious, but so too were the traditions from other waves of immigrations from elsewhere in Britain and Europe.
The significance of export staples to understanding what is most important for the economy in Canada has had resurgence with new developments in the energy industry. I live in BC, and here the reliance on staples exports is well entrenched as part of the collective unconscious of policy makers. For example, I recently attended a high-level one-day conference assessing future economic directions in BC. The general sense was that the priority was to generate wealth through gas development and exports (in the form of liquefied natural gas), assumed by most to be a precondition for allocating funds to the things people need. It seems odd, but there exists an embedded idea that wealth is only created through resources – and everything else derives from that. At no point is there recognition of the huge risks of relying on one export staple for future economic success.
Mel Watkins’ “A Staple Theory of Economic Growth” was an inspiration to many of us who used it as a basis for further research into Canada’s economic nature. It inspired subsequent researchers and students, and is a great article to use in teaching. It thoroughly engages students in a way that nothing else on Canadian economic history can do: they appreciate its clarity and immediately see its relevance to the economy today. The staples theory is as alive and relevant in Canada now, as it was when Mel wrote it fifty years ago. If only those in charge of the economy would heed the analysis that Mel and others gave us, they would be much more conscious of the risks inherent in a staples-dependent approach to growth. Those who design economic policy for governments should have a wider perspective than relying on the deepening exploitation of resources. Attention needs to shift to economic activity that meets the needs of people within this country.
Brown, Jennifer. Strangers in Blood: Fur Trade Company Families in Indian Country (Toronto: University of Toronto Press, 1980
Cohen, Marjorie Griffin. Women’s Work, Markets and Economic Development in Nineteenth-Century Ontario (Toronto: University of Toronto Press, 1988).
Collier, Frances. The Family Economy of the Working Class in the Cotton Industry 1874-1833 (Manchester: Manchester University Press, 1964).
Dechêne, Louise. Habitants et marchands de Montréal au XVIIe siècle (Montreal: Plon, 1974).
Dunlop, E.P., ed. Our Forest Home: Being Extracts from the Correspondence of the Late Frances Stewart (Toronto, 1889)
Engels, Fredrich. The Condition of the Working-Class in England  (Moscow: Progress Publishers, 1973).
Fowke, Vernon C. Canadian Agricultural Policy: The Historical Pattern  (Toronto: University of Toronto Press, 1978).
Hamelin, Jean. Economie et société en Nouvelle-France Quebec (Laval: Presses de l’universite Laval, 1961).
Innis, Harold. The Fur Trade in Canada : An Introduction to Canadian Economic History rev. Ed. (Toronto: University of Toronto Press, 1970).
Jameson, Anna Brownwell. Winter Studies and Summer Rambles in Canada  (Toronto: McClelland & Stewart, 1965).
Mackintosh, W.A. Economic Background of Dominion-Provincial Relations  (Toronto: McClelland & Stewart, 1964.
Martineau, Harriet. Retrospective of Western Travel (London: Saunders and Otlers, 1838).
Medick, Hans. ‘The Proto-Industrial Family Economy: The Structural Function of Household and Family during the Transition from Peasant Society to Industrial Capitalism,’ Social History 3, October 1976, pp. 291-315.
Moodie, Susannah. Life in the Clearings vs. The Bush (New York: DeWitt and Davenport, 1855).
Pentland, H. Clare. Labour and Capital in Canada 1650-1860. Ed. by Paul Phillips (Toronto: James Lorimer, 1981).
Pinchbeck, Ivy. Women Workers and the Industrial Revolution 1750-1850  (London: Virago 1981).
Rose, Laura. Farm Dairying (London: T. Werner Laurie, 1911).
Smelser, Neil J. Social Change in the Industrial Revolution : An application of Theory to the British Cotton Industry (Chicago: University of Chicago Press, 1959).
Traill, Catharine Parr. The Canadian Settler’s Guide  (Toronto: McClelland & Stewart, 1969).
Van Kirk, Sylvia. Many Tender Ties:Women in Fur-Trade Society 1670-1870 (Winnipeg: Watson & Dwyer, 1980).
1. This is also referred to as the ‘putting-out’ system where family manufactured clothing and other items from material provided by an industrialist. See, for example, Hans Medick 1976)
2. See, for example Pinchbeck 1930, Smelser 1959, Collier 1964, Engels 1845.
3. The dominance of English and American academics in the social sciences in particular had hindered the development of a vigorous research of Canadian issues. This was corrected, as universities were required to offer jobs to qualified Canadians first. Unfortunately, this law, which was so hard-won, was changed early in the 21st century.
4. See for example Dunlop 1889, Jameson 1838, Moodie 1855, Rose 1911, Traill 1855.
5. This book is Women’s Work, Markets, and Economic Development in Nineteenth-Century Ontario . It was primarily the work I had done for my Ph.D. thesis.
Buried in the federal government’s recent Update of Economic and Fiscal Projections are figures showing the Harper government is set to squeeze federal government’s role to the smallest it has been in seventy years. (Bill Curry at the Globe also just wrote about this, but without figures further back than 1958).
Total federal government spending as a share of the economy is projected to drop to a 14% share of the economy by 2018/19. This would be the lowest since at least 1948. Because the government has tied the federal public service up in knots, actual spending will likely continue to be even lower than planned. And if the Harper government follows through with its plan to allow income splitting for tax purposes and to increase the annual limit for Tax-Free Savings Accounts, revenues will be even lower.
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 demand in our key markets. The traditional engine of growth in a capitalist economy is supposed to be business investment — and vibrant capital spending by companies could help to jump-start all of those other categories of spending (by creating jobs, stimulating more innovative exports, and boosting tax revenues). Business profits and cash flow are healthy — yet businesses are spending far less on capital, than they take in in cash flow. Read more »
I have been hard on our new Employment and Social Development Minister, Jason Kenney, for buying into a widespread myth about labour shortages and skill mismatches in Canada. So, to give credit where credit is due, it appears Minister Kenney has been listening to the growing chorus of voices disputing the existence of a labour shortage in Canada.
Surprisingly (or not), Minister Kenney turns to a simple market solution to business complaints of difficulty finding candidates: raise wages. “The single most powerful tool employers have to address labour skill shortages is raising wage levels,” Kenney reportedly told his business audience. This was not a simple slip of the tongue, accidentally speaking truth to a friendly audience – Kenney later repeated the statement on twitter, saying: “Employers should use market mechanisms, like higher wages & investments in training, to help address skill shortages”. (It’s interesting that this message is coming from the one-time provider of low-wage, easily exploitable migrant workers through the TFWP).
The advantage to this approach is that higher wages are an extremely effective signal for job seekers, and investments in training can pay significant dividends for both employers and employees, and in fact are key to future productivity growth in Canada.
And, of course, the government has a wonderful new plan to encourage employers to invest in training: the Canada Job Grant.
Never mind that the Canada Job Grant proposes to take its funding from a pot already funding training for vulnerable workers who don’t qualify for EI. Never mind that there is no evidence that this program will encourage *new* employer spending on training, but instead is likely to subsidize existing employer training schemes. And never mind that $300 million toward training is a relatively tiny drop in the bucket of what is needed.
So, while I applaud the Minister on his assessment that employers need to raise wages and increase training, I remain puzzled by where this government chooses to intervene in the labour market. To get the ‘most bang for your buck’, as they say, governments should invest in areas where businesses won’t and individuals can’t. Instead, the Canada Job Grant does the opposite, giving employers money for training from a pot of money dedicated to helping unemployed workers who have fallen through the cracks.
At the end of the day, despite the tough talk, Kenney is still selling something that looks a lot like corporate welfare at the expense of the real ‘little guy’.
Here is an entry from the Global South in our continuing series of commentaries marking the 50th anniversary of Mel Watkins’ classic article, “A Staple Theory of Economic Growth.” Dr. Alberto Daniel Gago teaches political economy at the National Universities of San Juan and Cuyo-Argentina. He is a long-time collaborator of Mel’s, and has written extensively about the challenges of development and diversification in Argentina. His commentary explores the relevance of staple theory for understanding the modern barriers to development in the South. Read more »
We continue our special series of commentaries marking the 50th anniversary of the publication of Mel Watkins’ classic article, “A Staple Theory of Economic Growth,” with the following contribution from Daniel Poon. Daniel is one of Canada’s leading experts on the theory and practice of industrial policy, and the successfull industrialization experience of East Asia. He is an economic affairs officer with the UN Conference on Trade and Development (UNCTAD), previously worked as a researcher with the North-South Institute (NSI), and was a Fellow with the Walter & Duncan Gordon Foundation. Here he applies lessons from Asia’s experience, and the rise of China in the global economy, to Canada’s continuing industrialization challenge. Can China be more than a market for Canadian staple resources — and more than a source of upward pressure behind the global prices of those staples? Read more »
The words “little change” appear eight times in today’s Statistics Canada press release on the Labour Force Survey.
The figures for October are indeed remarkably similar to September. This lack of change might be viewed as welcome stability in better economic times, but it has to be regarded as stagnation given the actual state of Canada’s job market.
Unemployment remained at 1,325,000, exactly the same as in September and well above its pre-recession level.
And that official figure excludes hundreds of thousands of Canadians who have dropped out of the labour market altogether. The participation rate remained 66.4%, its lowest level in more than a decade since February 2002.
The employment rate (the proportion of working-age Canadians with a job) remained 61.8%, far closer to the low point of 61.3% reached in 2009 than to the pre-recession level of over 63%.
UPDATE (Nov. 9): Quoted in today’s Toronto Star (page B2).
Almost a year ago, Paul Krugman wrote a blog post entitled “Inaction is the Greatest Risk.” He was addressing American monetary policy, but the same theme applies to Saskatchewan politics. Much as Krugman warned readers upfront that his post was “wonkish,” I’ll admit that the following is “hackish.”
For several months, Saskatchewan Premier Brad Wall has been trying to reposition himself as a champion of Senate abolition, a progressive and popular policy that the CCF-NDP has consistently held since the Regina Manifesto. Yesterday, the provincial Legislative Assembly passed his resolution supporting Senate abolition and his bill repealing the Senate Nominee Election Act.
The provincial NDP caucus appropriately voted for these welcome proposals. But from a partisan perspective, it would have been better to force the Sask. Party to vote for a New Democratic bill on the Senate. From a policy perspective, a better bill would have been an actual constitutional amendment (as Malcolm French explains).
When Wall started publicly pushing this spring to abolish rather than elect the Senate, I pointed out that his government had passed legislation to elect Senate nominees from Saskatchewan. A week later, the provincial NDP caucus announced, “NDP Leader Cam Broten will introduce a bill to eliminate the Sask. Party’s pro-Senate act as soon as the Legislative Assembly resumes.”
If he had followed through on that announcement, the governing Sask. Party would have had little choice but to vote for the NDP bill. Instead, the provincial New Democratic caucus opted to introduce a different bill when the Legislative Assembly resumed, allowing Wall to seize the initiative on the Senate yesterday by repealing his own legislation.
On the Senate question, the Saskatchewan NDP still has an opportunity to put forward the necessary constitutional amendment. The more general lesson is that, while advocating potentially controversial policies always entails some risks, political inaction often entails even greater risks.
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 (Figure 1 on page 3) shows no improvement in Canadian business investment – either in absolute terms or relative to the OECD average – between 2000 and 2004, when the former Liberal government slashed the federal corporate tax rate from 29% to 22% (including the 1% surtax).
The improvement in Canadian business investment corresponds to the subsequent rise in commodity prices, which began years before the Conservative government cut the federal corporate tax rate from 22% in 2007 to 15% in 2012. Read more »
Here is a very intriguing and creative entry in our continuing series of commentaries marking the 50th Anniversary of the publication of Mel Watkins’ classic article, “A Staple Theory of Economic Growth.” We are delighted to have the participation of Alistair and Sheila Dow, two leading heterodox economists from the U.K. They argue here, in a summary of an argument fully developed in a recent article in the Cambridge Journal of Economics, that the staples mode of analysis can actually be applied to other sectors — not just resource-based industries. They apply the main features of staples analysis (focusing on the mode of production and the interaction between production, exports, and policy) to the case of the financial sector and find surprising similarities. Thank you Alistair and Sheila for this fascinating contribution! Read more »
Here is the latest installment in our continuing series of commentaries celebrating the 50th anniversary of the publication of Mel Watkins’ classic article, “A Staple Theory of Economic Growth.” This commentary is from Mel’s long-time collaborator Thomas Gunton, Director of the Resource and Environmental planning Program at Simon Fraser University. Gunton’s submission, supplemented by an extensive bibliography, applies staples analysis to the current boom in resource-oriented petroleum developments in Canada, and finds the staple theory to be as powerful and relevant as ever in explaining Canada’s economic and political trajectory. Read more »
Back in 1998, I wrote a lengthy investigative feature for The Financial Post about Canada’s signals intelligence agency, the Communications Security Establishment (CSE), and its post-Cold War role. You can read it here:
The CSE and its sister signals intelligence agency in the US, the National Security Agency (NSA), engage in espionage using solely electronic means. To this end, these agencies have built a vast network of supercomputers, satellites and datalinks to capture as much of the world’s traffic in phone, Internet and other electronic communication. The computers can search for particular words and voices, allowing these agencies to target individuals and institutions without ever leaving the confines of Ottawa or Fort George G. Meade, Maryland (where the NSA headquarters is located)
Moreover, signals intelligence agencies garner far more money than their counterparts in traditional intelligences agencies such as CSIS or the CIA.
The revelations by whistleblower Edward Snowden on the extent of the NSA’s reach and its ability to spy on Americans and citizens and political leaders of foreign countries, begs a big question: why are they doing all of this espionage?
During the Cold War, signals intelligence agencies focused mostly on the Soviet Union and its satellites and allies. But with the collapse of the Soviet bloc, these agencies needed a new raison d’etre. In my 1998 Financial Post piece, I detailed how these agencies were now focusing on economic targets, such as spying on countries to glean information that would give them an advantage in trade talks, or allow multinationals to garner business deals to the detriment of their foreign competitors. “We were all looking at other ways of earning our living other than military and political intelligence,” Mike Frost, a former CSE operative who spent 18 years with the agency, told me when I was researching the Post story. “It was just a given we would be looking at economic things. We thought there was nothing wrong with this.”
For example, the CSE spied on South Korea while Canada was attempting to sell $6 billion worth of CANDU nuclear reactors to that country (presumably to ensure the deal went through). And it spied on Mexico during the 1992-93 NAFTA talks, again to garner advantages in those discussions.
In the current scandal over the NSA, it’s clear that the real intention of the agency’s spying on America’s so-called allies like Germany, Brazil, France and Spain, is solely for economic purposes. After all, these are not countries that are hotbeds of Islamic or al Qaeda terrorism that would justify this level of espionage.
Indeed, former Guardian journalist Glenn Greenwald (who has broken most of the stories based on the Snowden material) has said it’s clear the NSA’s real purpose is economic espionage: “If you reveal to populations around the world that their calls are being spied on by the millions, they’ll first wonder, ‘Why are my calls of interest to the U.S. government?’,” Greenwald said on the TV show Democracy Now recently. “But when it becomes apparent that the United States government is doing this for economic advantage, they start to feel personally implicated, like they’re being actually robbed.” Greenwald has discovered clear cases where the NSA has done just that: for instance, the NSA had targeted Brazil’s state majority owned oil company, Petrobras, along with other “energy companies, financial programs and airlines”, as well as the Brazilian Ministry of Mines and Energy, which just happens to oversee the industry in Brazil in which Canadian companies have the greatest interest.
Greenwald has cited “extreme levels of surveillance” directed at Central and Latin American economic conferences and has accused the U.S. government of the very same type of industrial espionage it repeatedly lays at the doorstep of the Chinese government.
You can read here, on something called “Washington’s Blog”, a list of stories showing the acts of economic espionage carried out by the NSA in countries like France, Brazil, Mexico, Germany and China:
Ultimately, even during the Cold War, the purpose of Western intelligence agencies was to further the economic ambitions of their governments. Former CIA agent Philip Agee quit the agency in the late ‘60s after he realized his work in the developing world only benefited American multinationals (the 1973 CIA-engineered coup of Chile is a great example of this).
Today, intelligence agencies can pretend that all of their spying is to hunt down “terrorists” in our midst. In reality, their entire function is to further the interests of capital, even if it means trampling our privacy and civil rights in the process.
Yesterday, Statistics Canada reported that the Canadian economy had a month of fossil-fueled growth in August.
Overall GDP was up by 0.3%, only half as much as in July but still a respectable monthly growth rate. By far the strongest growth of any industry was a 1.9% increase in “Mining, quarrying, and oil and gas extraction” – its fastest growth since January.
This sector’s growth was driven by oil, gas and coal extraction, even as other types of mining and quarrying declined. Most other goods-producing sectors – manufacturing, utilities and construction – also declined.
US Steel recently announced its intention to permanently stop making steel at its Hamilton plant, but to continue using its coke oven to process coal for export. That news epitomized Canada’s ongoing shift away from value-added manufacturing toward fossil-fuel exports, as I note in today’s Claudia Cattaneo column in The National Post (page A1 or A9, depending on the edition) and Regina Leader-Post (page D1).
Statistics Canada also reported yesterday that average weekly earnings rose by 1.3% between August 2012 and August 2013. By comparison, inflation had been 1.1% during that year. In other words, Canadian workers have experienced almost no increase in purchasing power over the past year.
This lack of purchasing power is a drag on economic growth. Policymakers should be trying to boost wages and consumer spending. Instead, the federal government continues to attack workers’ rights, most recently by trying to deprive its own employees of collective bargaining.
The idea of a global carbon budget is not new, but has been growing in prominence. Carbon Tracker picked up on it in its seminal Unburnable Carbon report, and Bill McKibben amplified that message in his landmark Rolling Stone article, Global Warming’s Terrifying Math, which launched the fossil fuel divestment movement. Then more recently, the Intergovernmental Panel on Climate Change for the first time set out a carbon budget (or a few possible budgets with associated probabilities of staying below 2 degrees C). This carbon budget is, for all intents and purposes, forever – at least until we can figure an efficient way of pulling carbon from the atmosphere besides trees. In personal life and government fiscal planning, budgets are more likely to annual in nature; so a more accurate analogy for climate policy might be a carbon “trust fund”.
My own work has been to consider the implications of this for Canada. In Canada’s Carbon Liabilities and post-IPCC opeds I have considered a plausible range of carbon budgets for Canada. I started with Canada’s share of world population and GDP as anchor points, but another approach would be to look at Canada’s share of global fossil fuel reserves. I recently went back and laid out all of these possible scenarios, including a look at the 2013 BP Statistical Review of World Energy, which has international rankings of proven fossil fuel reserves. There are also broader categories, probable reserves and possible reserves, but BP does not include them; suffice it to say that the negative implication of carbon budgets for proven reserves is even starker if you consider the bigger categories.
Canada has just under half of one percent of world population; 2.5% of world GDP (1.7% if calculated at purchasing power parities); and based on the BP data, about 3.3% of world fossil fuel reserves (by category: 10.4% of oil reserves; 1.1% of gas reserves; and 0.8% of coal reserves). It is worth noting that Canada’s reserve profile overall is heavily weighted to bitumen and coal, which are dirtier sources of energy more likely to be targeted by a carbon-constrained world. But assuming that Canada got its share of reserves the resulting carbon budget would be 30.1 billion tonnes of carbon dioxide (Gt CO2). This is substantially more than what it would get as a share of GDP (23.4 Gt) and population (4.5 Gt), and given the role of historical emissions as a factor in international negotiations there is good reason to believe Canada would come out somewhere in this range. Nonetheless, even at 30 Gt, two-thirds of proven reserves would need to stay in the ground.
That’s all for a global carbon budget of 921 Gt, which would provide a 66% chance of staying below 2 degrees C. A larger budget of 1068 would lower that probability to 50%, which is probably not the wisest choice, but hey, we’re human and that’s how we roll. With the higher global carbon budget, Canada’s estimated carbon budgets are: 5.2 Gt (population); 27.1 (GDP); and 34.9 (proven reserves).
Of course, we could also consider a lower carbon budget that gives us a higher probability of staying below 2 degrees. The IPCC does not give such a number, but based on work by the Potsdam Institute (we drew on this in Canada’s Carbon Liabilities), the carbon budget is about 500 Gt for an 80% chance. Carbon Tracker notes that the IPCC number has some different assumptions, and now puts estimates a global carbon budget of 800 Gt for an 80% chance. And perhaps up to 900 if aggressive action on other non-CO2 greenhouse gases is taken that would give more space for CO2 (note: their budget is from 2012 on; I have deducted emissions for 2012 and 2013, so my numbers are 2014 onward). Based on 800 Gt, Canada’s estimated carbon budgets are: 3.9 Gt (population); 20.3 Gt (GDP); and 26.2 Gt (proven reserves).
This is all essentially an exercise in sensitivity testing. But the basic argument holds for all cases because Canada’s reserves are much larger. Based on the 2013 BP statistical review, converted into CO2 emissions, Canada’s proven reserves are estimated at 96.7 Gt.
Economists, to date, have generally ignored that carbon budget constraint, assuming an unlimited trust fund from which to keep the party going. But overall this poses a good question for economists: how should we go about maximizing utility subject to a budget constraint, in this case a carbon budget constraint. We can burn fossil fuels but only so much so how should we strategically use up that budget?
The recent report of the Intergovernmental Panel on Climate Change (IPCC) should be a wake-up call for Canada. With a development model based on ever more fossil fuel extraction, Canada’s economy and financial markets are on a collision course with the urgent need for global climate action.
The IPCC, for the first time, stated an upper limit on total greenhouse gas emissions – a global “carbon budget” to keep temperature increase below 2°C. This is considered to be the threshold for “dangerous” climate change, and also the target for international climate negotiations.
A global carbon budget along IPCC lines works out to about 921 billion tonnes of carbon dioxide (gigatonnes, or Gt, of CO2), and that is for a 66% chance of staying below 2°C. The more we emit, the worse the odds get: emit up to 1068 Gt and we are down to a coin toss (50% chance of staying below target).
Canada’s share of a global carbon budget would depend on negotiation, but almost certainly falls between 4 and 24 Gt, based on our share of world population and GDP, respectively. However, Canada’s reserves of bitumen, oil, gas and coal, when converted into potential emissions, are substantially larger: proven reserves are equivalent to 91 Gt; and adding probable reserves yields 174 Gt.
So let’s say Canada’s negotiators are shrewd and they garner a 30 Gt carbon budget because Canada is a fossil fuel exporter. That budget still means two-thirds of Canada’s proven reserves, and 83% of proven-plus-probable reserves, need to remain underground.
This math should alarm institutional investors, and pension funds in particular. Because stock market valuations are premised on those companies extracting those resources, analysts have called this a “carbon bubble” in our financial markets.
This is bad news for the Toronto Stock Exchange (TSX), which is highly weighted towards the fossil fuel sector, with total market capitalization of fossil fuel companies around $400-500 billion. Fossil fuel companies account for about 24% of the total value of the S&P/TSX60 index.
Rights to future income through employer pension plans is the second-most important asset (next to home ownership) for a wide swath of middle-class households. Registered pension plans cover more than 6 million members in Canada, and the total market value of trusteed pension funds in 2012 was over $1.1 trillion, of which almost one-third was held in stocks.
Pension funds are now waking up and starting to make the connections between their investments in fossil fuels, and whether that makes sense in a world of constrained carbon. A group of 70 large institutional investors with $3 trillion in assets recently called on fossil fuel companies to respond to the brutal logic of carbon budgets and climate science with detailed assessments of their climate risk.
Earlier this month, the City of Vancouver took an important first step by seeking a review of its own pension fund investments in fossil fuel (and other harmful) industries. This was driven by a staff report noting that the City’s mission and values, including its ethical purchasing policy and eco-friendly aspirations, are not aligned with its pension fund investments.
What’s interesting about pension funds is that they must account for intergenerational equity. They have to generate maximum current return value for existing (and soon-to-be) pensioners, but at the same time they are legally obligated to ensure the long-term sustainability of the fund. That is, funds must equally represent the interests of young workers for their eventual retirements.
While pension funds are now seeking to talk to companies about whether their capital plans make sense, their position has been strengthened by a growing movement calling for fossil fuel divestment. Students concerned about climate change have been leading the way by targeting university endowments.
The divestment movement is based on moral arguments about climate change. But we should not ignore the economic arguments: if you do the math, any plausible carbon budget for Canada means the vast majority of fossil fuel reserves will need to stay in the ground.
In short, extreme weather, oil spills and other damages from fossil fuel development suggest it is only a matter of time before the world gets serious about climate change. When that happens, a day of reckoning is coming for Canada’s fossil fuel companies, the bulk of whose fossil fuel reserves will become stranded assets. A “managed retreat” from those investments is in order, and much preferable to a meltdown.
[Published in the Globe and Mail's Economy Lab]
As part of our continuing series of commentaries marking the 50th Anniversary of the publication of Mel Watkins’ classic article “A Staple Theory of Economic Development,” we present the following submission by Daniel Drache, Professor Emeritus of Political Science at York University, and prolific writer on the nature of Canadian political-economic development. Here Daniel considers whether the so-called “Northern model” of development can survive this latest incarnation of staples dominance. Read more »
Posted by Nick Falvo under child benefits, income support, Indigenous people, labour market, migrant workers, poverty, progressive economic strategies, Role of government, skill shortages, social policy, temporary workers, training.
October 24th, 2013
This week I am attending a conference entitled “Welfare Reform in Canada: Provincial Social Assistance in Comparative Perspective,” organized by Professor Daniel Béland.
The focus of the conference is “social assistance,” which typically encompasses both last-resort social assistance (i.e. ‘welfare’) and disability benefits. In Ontario, the former is known as Ontario Works and the latter as the Ontario Disability Support Program. Every Canadian province and territory has its own social assistance system—that is, its own legislation, its own policies and its own regulations. First Nations with self-government agreements have their own income assistance programs. And for First Nations without self-government agreements, income assistance is funded by Aboriginal Affairs and Northern Development Canada (but “aligned with the rates and eligibility criteria for off-reserve residents of the reference province or territory”).
I was a discussant on two papers at the conference. Some of the points I made in that capacity include the following:
Mixed Objectives – I believe that social assistance programs in Canada have two major objectives: 1) to give their recipients enough money to live on; and 2) to not give their recipients enough money to live on (in part to encourage recipients to look for paid employment, in part to discourage would-be recipients from becoming recipients, and in part out of a fear that some voters might oppose higher benefit levels). In light of this inherent contradiction, I think that social assistance is a challenging program to design, administer and defend.
Tax Credits – Tax credits (federal, provincial and territorial) have taken on greater importance for social assistance recipients over the past 15 years. Some households with children now earn (slightly) more on an annual basis from tax credits than they do from social assistance (though it should be noted that tax credits are much less substantial for singles without dependents). Any thoughtful analysis of social assistance analysis in Canada must consider the role of tax credits.
Training – In a March column, Thomas Walkom argues that senior levels of government in Canada do not make substantial investments in training for workers. Nor do employers (for the most part). Rather, “cheap workers,” who are already trained, are imported from abroad. This raises an important question: if senior levels of government are unwilling to provide social assistance recipients with training, how realistic is it to expect them to be successful in the labour market?
Poverty Reduction – Most provinces and territories have implemented ‘poverty reduction strategies‘ in recent years. The jury is still out on how effective they will prove to be; however, it could be that, going forward, voters would find improvements to social assistance programs (including increases in benefit levels) more palatable if such changes are made as part of poverty reduction strategies that have clear goals, including goals related to both job creation and training.
Last week’s federal throne speech stated, “The Government will soon complete negotiations on a comprehensive economic and trade agreement with the European Union [CETA]. This agreement has the potential to create 80,000 new Canadian jobs.”
There has since been a subtle but important shift in the government’s wording around that figure, as I point out in the following letter on page A10 of today’s Ottawa Citizen and on The Montreal Gazette website:
L. Ian MacDonald writes, “A study indicates CETA will add $12 billion and 80,000 jobs to the Canadian economy.” In fact, the study in question assumed full employment to estimate $12 billion of additional output and therefore did not project any additional jobs.
Government officials then translated $12 billion into employment for communications purposes. Conservative wordsmiths already appear to be backing away from this indefensible claim. Read more »
A TD Economics Special Report released on October 22nd debunked the popular economic myth spread by Minister Kenney that there are too many jobs without people. The report looks at changes in employment, unemployment, job vacancy rates, and wages. Job vacancy rates are higher for trades occupations in Western Canada, but overall job vacancy rates are low.
There is no sign of wage pressure, even in occupations with perceived shortages, which the report points out as being quite puzzling. In Saskatchewan, wages for *in demand* occupations are actually growing at a slower rate than the provincial average.
The “No Widespread Labour Shortage” line got lots of attention, but perhaps the more important finding from the report was buried. An analysis of the presence and importance of localized skills shortages is nearly impossible, given the current state of labour market information in Canada. We can analyse detailed occupational information at the national level, but that’s grossly inadequate for our needs.
Highlighting the inadequacy of current labour market information, the most recent data on job vacancies was released by Statistics Canada on the same day. It tells us that nationally there are 6.5 unemployed persons for every job vacancy (Jim Stanford and I have argued it’s more like 12 or 13 when you take broader measures of unemployment into account). That tells us that there are a lot of people without jobs. It tells us nothing about local labour market conditions by even broad industrial categories. And since the job vacancy numbers were added onto the SEPH, it tells us nothing about occupations at any level.
Sam Boshra displays the information gap well here, where he shows a cross-tab of job vacancies by provinces and industries, with most of the data suppressed for confidentiality.
If Minister Kenney really wants to help workers and businesses identify and address skills gaps, he should work with Statistics Canada to close the labour market information gap first.
As part of our continuing series of special commentaries marking the 50th anniversary of the publication of Mel Watkins’ classic article, “A Staple Theory of Economic Development,” we present the following contribution by Hugh Grant from the Economics Dept. at the University of Winnipeg. Grant is a former student of Mel’s, and an important chronicler of the history of Canadian economic thought. Here he argues that the historical roots of the staples theory enunciated by Watkins go back a little further than just Harold Innis. Learn here about the initial contributions of W.A. Mackintosh. Read more »
As part of our continuing series of commentaries celebrating the 50th anniversary of Mel Watkins’ classic article, “A Staple Theory of Economic Growth,” we present the following commentary by Marc Lee, economist with the B.C. office of the Canadian Centre for Policy Alternatives. Marc considers the implications — both economic and environmental — of the current infatuation with export LNG in his province. Read more »
The United Steelworkers union endorses the Ontario Federation of Labour’s (OFL) call for a minimum wage of $14 per hour, to ensure that Ontarians who work full-time earn appreciably more than the poverty line. As the OFL submission states:
Minimum wage legislation is an important social policy because it establishes a wage floor. Everyone deserves the opportunity to earn a decent wage, whether it’s a single mother raising a family or a student saving for college. An adequate minimum wage can help to ensure that workers with little bargaining power in the labour market are paid a livable wage. The minimum wage is about lifting working people out of poverty, but it’s also about fairness and the value of work. Even for individuals not living below the poverty line, a decent wage can provide opportunities and allow them to contribute more to their families and local economies. Read more »
This afternoon, I gave a presentation on public policy responding to homelessness in Canada, with a focus on the past decade. I gave the presentation at this year’s annual conference of the Ontario Non-Profit Housing Association.
Points I made in the presentation include the following:
-Once inflation is accounted for, the current annual value of federal funding for homelessness programming (now known as the Homelessness Partnering Strategy) has eroded to roughly 36% of its original value (that is, its value in 1999 when it was known as the National Homelessness Initiative).
-In recent years, it has become trendy for senior levels of government in Canada to espouse the ‘housing first’ philosophy when it comes to responding to homelessness. This means that they say they believe that homeless persons should be provided with permanent housing as soon as such housing can be provided (as opposed to believing that such housing should be provided only once a homeless person ‘rehabilitates’). The ‘housing first’ approach is generally viewed as being a socially progressive approach, in part because this has not always been the philosophy espoused by senior levels of government. However, the same governments that are now espousing their belief in this philosophy are not providing enough subsidized housing for every homeless person to receive said housing. In other words, when it comes to the provision of permanent housing for homeless persons, senior levels of government are providing some permanent housing to some homeless persons. To others, they are saying: “We would if we could, but we can’t.”
-I would argue that, because senior levels of government are not providing permanent housing to all homeless persons who require it, emergency shelters in Canada are often very crowded. On any given night and in many Canadian municipalities, it is common for most emergency shelters to be full, meaning that staff at those emergency shelters turn homeless persons away (or refer them to other emergency shelters). This happens regularly.
-With Canada’s aging population, homelessness amongst seniors appears to be rising. In Toronto, the number of homeless persons over the age of 65 more than doubled between 2006 and 2013.
-Within the next six months, it is likely that final results of a major homelessness study will be released. This $110 million random control study— funded (but not designed) by the Harper government—looks at the effectiveness of providing homeless persons with mental health problems with immediate access to supportive housing (that is, subsidized housing that includes social work support). It is expected that results of this study will lend further support to the ‘housing first’ principle, and may encourage senior levels of government to fund more supportive housing for homeless persons.
My slides from today’s presentation can be downloaded here.