Economists’ Manifesto for Productivity

TD Economics has posted this manifesto, penned by Chief Economist Don Drummond, in the belief that it represents a broad consensus among economists on how to raise the rate of productivity growth in Canada. http://www.td.com/economics/special/dd0906_prod.pdf

The manifesto – unsurprisingly – closely reflects the mainstream (Bay Street, Department of Finance, OECD) focus on “sound” macro policy, free trade, de-regulation and tax cuts. Relentlessly progressive economists will want to take their distance from a lot that is said here, thopugh most of us will agree with the key point that higher productivity growth is an important goal. And Drummond has – refreshingly – taken on board some ideas from the centre left. Most notably, he does not call for further across the board cuts to the corporate income tax rate, and instead speaks to the need for measures which might have a more direct impact on real, productivity-raising, business investment in machinery and equipment (eg an investment tax credit.) He briefly notes the need for more public investment in infrastructure, and investment in skills outside post secondary education, not just more PhDs. He even hints at a reform to the EI program which would be more than just about cuts, but about extending coverage.

Most refreshing of all, Drummond is honest enough to admit that economists will have a tough time selling a productivity agenda so long as productivity gains go to higher profits and high income earners, rather than to higher rates of real investment and higher real wages.

 

3 comments

  • There is not a need to raise the productivity and growth anywhere.
    The planet cannot tolerate more growth, and resultant pollution, and resources are running thin.
    It is time for thinking and a change in direction, and a punishing of those who brought us to this point.

  • It is not a priority to raise the productivity growth in Canada or anywhere else these days.
    It is exponential growth that created the mess that the world is now in. For example a major smelter in this area denuded the mountainsides, which did no harm for the best 75 years, since its happening. BUT NOW that we are experiencing monthly typhoons HERE, it is a problem.
    Gravel. rocks and sand are NOW being washed across the highway for the first time, requiring 4 large machines to clear the way over 3 days, and ENGINEERS are in expectation of anouther douching.
    What is needed is a rethinking of how to make an economy out of the necessary change toward interlocking with the ongoing climate change that is so evident.
    Economists need to get their head out their ass and start being independent thinkers for once.

  • @ Willis

    You may enjoy this. There are economists who agree with you but they couch their comment in a more urbane phraseology.


    http://www.nakedcapitalism.com/2012/06/philip-pilkington-neoclassical-economics-and-the-foreclosing-of-dissent-the-inner-death-of-a-social-science.html

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