Labour’s Plan to Deal With the Economic Crisis

Labour’s Plan was developed by the CLC in consultation with economists from our affiliates. It has been submitted to all of the party leaders and economic critics. The Summary is followed by elaboration of each of the five main points. (This document does not deal with financial regulation and international economic issues.)

http://canadianlabour.ca/sites/clc/files/laboursplanfullEn.pdf

6 comments

  • I like the general progressive thrust of this. However, I think it’s bad optics to place the definitive evidence that infrastructure spending results in job creation, right next to a call for a Buy in Canada procurement policy without providing evidence the latter will also create jobs. I’m sure it will create jobs, its just that the document suddenly stops citing research when we get into one of the most controversial recommendations.

    Also, I like the reference to voluntary export restraints in resources (i.e. in BC we definitely need to ban raw log exports), but that position will simply strengthen the Tory hand in petroleum regions in the West. Sometimes politics is about policy, and sometimes politics is about what people you know.

    I think the infrastructure should be build with pure public funds, as it’s okay for those to not have any profit margin attached to them. Pension funds have to generate returns, so if you’re putting pension money into infrastructure, suddenly you are forcing break-even projects to generate a profit.

    If we’re going to pick winners I like culture and environmental technologies, but we need to keep information technology in there, even though they’re mostly non-union. I think IT will remain cutting edge until people largely stop writing code and just use applications to modify applications.

  • “Pension funds have to generate returns, so if you’re putting pension money into infrastructure, suddenly you are forcing break-even projects to generate a profit.”

    However if pension funds purchased infrastructure bonds issued by the government then pension funds would have access to a low risk, reasonable return investment vehicle and the public would have access to financing. And all the money (and by definition infrastructure) would stay in Canada.

  • Didn’t we go through this in the thirties? Trying to curtail trade and keep all our money in our own country? Why, if everyone did that there would be a protracted decade-long depression. Then one country will do the exact opposite, spark a local economic boom, and yadda yadda.

    Our big problem is that globalization keeps prices low, which means if trade ever subsides, we’ll get stagflation. Which means we definitely need our infrastructure to be as cheap and as subsidized as possible to keep prices down. Which means no profits on our infrastructure.

  • “Didn’t we go through this in the thirties? Trying to curtail trade and keep all our money in our own country?”

    The CPP did not exist in the 1930s. Nor did I say anything about curtailing trade and keeping all our money in the Canadian economy.

    What I did suggest was that pensions’ fund low risk, reasonable return, public infrastructure.

    Given the great financial disaster of late you would think a prudential policy for pension investment would be a no-brainer.

    “Which means we definitely need our infrastructure to be as cheap and as subsidized as possible to keep prices down. Which means no profits on our infrastructure.”

    Infrastructure has to be funded and that funding implies a cost of borrowing. The question is how that financing is structured; i.e., who pays for it, how it is paid for and who receives the payments.

    Now I suppose you could argue that some Tax could simply be levied and the revenue used to fund infrastructure on a pay as collected basis but that too has costs. And why would we want to fund medium to long term investments in public infrastructure (ie that will pay off over the medium to long-term) out of current tax receipts ?

  • Okay, okay, I’m sorry for implying you’re a protectionist.

    The cheapest possible cost of capital is government debt-financing. So we can repay those on long-term bonds.

  • And I was merely suggesting that pensions buy those bonds. It really boils down to an argument about Canadian savings financing Canadian infrastructure investment.

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