I note from a CP wire story that Ottawa U economist David Gray is weighing in behind Harper’s argument that lowering eligibility for EI would be a “disaster”, and I suspect strongly he will not be the last to do so.    http://thechronicleherald.ca/Canada/1135526.html The received wisdom among mainstream neo liberal economists is that a “generous” EI program creates disincentives to […]
Read moreComments in the Bank of Canada’s last two interest-rate announcements and by its Governor have fuelled speculation that it might intervene in currency markets to moderate the overvalued Canadian dollar. Of course, these remarks may be garnering undue and unintended attention. With the Bank conditionally committed to no interest-rate changes for a year, comments on the dollar have been the […]
Read moreLetter to the Queen: Why No One Predicted the Crisis Her Majesty The Queen Buckingham Palace London SW1A 1AA 29 July 2009 MADAM, In response to your question why no one predicted the crisis you have recently received a letter from Professors Tim Besley and Peter Hennessy, sent on behalf of the British Academy. They claim economists’ failure to foresee […]
Read moreWhile this morning’s American GDP numbers were less bad than expected, this morning’s Canadian GDP numbers were worse than expected. May saw the second-deepest decline of any month so far in 2009. Indeed, May’s 0.5% contraction was almost as bad as January’s 0.6% contraction. Sectoral Breakdown Like January and the intervening months, May was characterized by flat output from the […]
Read moreThe worst news in today’s Employment Insurance (EI) figures is that new benefit claims hit a record high. Rising numbers of unemployed workers and hence EI beneficiaries are an unsurprising result of a deteriorating labour market. However, the increase the number of new EI claims suggests that the pace of deterioration is worsening rather than easing. Despite signs of a nascent […]
Read moreIn its first major economic policy announcement, the freshly re-elected BC Liberal government announced that it would be harmonizing the 7% Provincial Sales Tax (PST) with the 5% federal GST, as of July 1, 2010. What is striking about the new Harmonized Sales Tax (HST) of 12% is that it did not feature in the recent BC election in any […]
Read moreHere’s the link to the second issue of the CLC publication “Recession Watch” detailing recent labour market developments http://canadianlabour.ca/sites/clc/files/Recession-Watch-02-EN.pdf
Read moreI normally hesitate to make short term economic prognostications and the Bank of Canada could indeed be right that growth might tip over the cusp from negative to positive in the third quarter as the first sign of a “nascent recovery” from the Great Recession. As many have noted, including Jim on the National on Thursday night, a mildly positive […]
Read moreThe Spring, 2009 issue of the Oxford Review of Economic Policy contains a useful and interesting piece which convincingly rebuts the often cited and assumed link between Unemployment Insurance “generosity” and higher unemployment due to alleged disincentives to work. You’ll have to pay for the full article, I’m afraid, but here is the abstract. Unemployment compensation and high European unemployment: […]
Read moreThe Economist has recently launched a major attack on public sector pensions, joining the likes of the CFIB and the Howe in Canada who similarly draw invidious contrasts between suuposedly gold-plated public sector pensions and those on offer in the private sector. http://www.economist.com/research/articlesBySubject/displaystory.cfm?subjectid=987105&story_id=13988606 It is true that in Canada, as elsewhere, defined benefit pension plans (which pay out a defined […]
Read moreMy friend and former union (AFL-CIO) economist colleague Tom Palley has produced a characteristically lucid piece on the macro economic roots of the US and global crisis for the New America Foundation. He interprets our predicament as a crisis of the neo liberal growth model and not as a failure of financial regulation or, for that matter, conventional macro economic […]
Read moreTo my surprise, the Harper Conservatives seem to again be breaking new ground in enforcing the Investment Canada Act. This afternoon, the Industry Minister announced that he is taking US Steel to court for violating its commitments. Back in May, my union argued that the federal government must be prepared to take US Steel to court. Terence Corcoran mocked this […]
Read moreThe WSJ is concerned about the implicit subsidy provided to financial institutions that are “too big to failâ€(TBTF). Given the obvious willingness of the US government to support Wall Street titans during the height of the financial crisis, the market is pricing in the expectation that the government stands behind those institutions regarded as TBTF. This implicit guarantee allows the […]
Read moreDeflation is no longer a spectre, but a reality for Canada. This morning, Statistics Canada reported an inflation rate of minus 0.3%. Inflation turning negative was widely predicted, including in my previous comments on the Consumer Price Index. Although not surprising, today’s news has important implications for the debate about further fiscal stimulus. Statistics Canada noted that June 2009 was […]
Read moreJim has written a couple of posts about “the current mini wave of industrial unrest in Canada.” My union recently joined the fray by striking against Vale Inco. While several prominent strikes have recently captured Canadian headlines, I wondered whether the economic crisis has actually led to more labour disputes. On the one hand, concessionary demands from employers typically provoke […]
Read moreI’ve always been annoyed by the trite, horse-race-style coverage of financial markets that dominates so much of what passes for economics journalism in Canada (especially in the electronic media). How many 2-minute “market updates” do we really need, anyway? I typically hear 4 or more on the radio any given workday, just getting to and from work (full reports at […]
Read moreIt’s the leading article in the BC section of national newspapers today: BC’s Finance Minister has finally admitted that next year’s budget deficit would be much larger than the $495 million number than our Premier swore by during the recent election campaign. Private sector economists have been saying it for a while and it was about time for the government […]
Read moreThe BC Public Accounts for 2008/09 fiscal year were released yesterday, showing that the province posted a surplus of $78 million or $28 million higher than projected in the 2008 Budget. Oh, phew, now we don’t have to worry about cabinet ministers facing the fines associated with a budget deficit under the Liberals’ balanced budget legislation (which was amended earlier […]
Read moreAfter many months in which tens of thousands of jobs disappeared, the revelation that “only” 7,400 fewer Canadians were working in June may seem like good news. But this relatively small decline in total employment masks more ominous trends. Self-Employment In June, employers eliminated 44,600 paid positions in Canada, but 37,200 more Canadians declared themselves to be self-employed. This development […]
Read moreFurther to my recent post about the current mini wave of industrial unrest in Canada, and who should wear the blame for it… Now we have the latest developments at Air Canada, where the Machinists local has rejected a tentative multi-union agreement which would have deferred Air Canada’s pension contributions in hopes of seeing the company through the recession. Here’s […]
Read moreThe economy is in trouble, and millions of people around the world are suffering (in various ways and to various extremes), because of the failure of a deregulated profit-driven private-sector financial industry. I think that statement is largely unquestionable. You would think, logically, that this fact should put the free-market private sector on the defensive. Ironically, however, the reverse seems […]
Read moreBelieve it or not, in 2011, the “new” EI Fund will begin life $10.5 Billion in the hole, setting the stage for a big job-destroying hike in premiums, even though there is a $57 Billion surplus in the “old” EI Account. In the 2009 Budget (p 106) , the federal government announced that it would freeze the EI premium rate […]
Read more(This covers some familiar ground, but I was asked to summarize a presentation I made to a Columbia Institute organized session for progressive locally elected officials last week and thought it might be of wider interest.) The world and Canada are in the deepest economic downturn since the 1930s as the financial crisis has spread with a vengeance into the […]
Read moreToday’s Employment Insurance (EI) figures confirm that fewer than half of unemployed Canadians received EI benefits in April. Although 18,600 more Canadians received benefits in April than in March, this was the smallest increase in six months. The relatively modest increase in EI beneficiaries corresponds to a relatively small increase in official unemployment during April, the month in which the […]
Read moreErin Weir had a highly useful post on this subject a few days ago. Now here’s a chance to take some action: The Centre for Research on Work and Society at York is circulating the Open Statement below regarding the U.S. debate over the Employee Free Choice Act, and certain arguments that have been made in that debate regarding Canadian […]
Read moreThis morning’s Consumer Price Index data reveals that the national inflation rate fell to 0.1% in May. Four provinces – Alberta, New Brunswick, Nova Scotia, and Prince Edward Island – posted negative inflation rates. The supposed risk of continuing fiscal and monetary stimulus too long is that they could propel accelerating inflation. The Finance Minister and Bank of Canada Governor have […]
Read moreThree months ago, Anne Layne-Farrar intervened in the US debate about the Employee Free Choice Act (EFCA) with a widely-reported paper and Senate testimony. She used Canadian data to argue that the proposed legislation would eliminate 600,000 American jobs. As many critics have noted, Layne-Farrar works for a corporate consultancy and business funded this piece of research. Readers can take […]
Read morePolitical debate and media reporting on today’s economic “Report to Canadians” have emphasized one of the first tables in the document, in which the government claims to have “committed” 80% of budgeted stimulus spending (page 14 of 230). Equally interesting, but perhaps less noticed, are the two “Fiscal Outlook” tables near the end of the document (pages 219 and 221). […]
Read moreThe credit crisis, which sharply increased private borrowing costs but reduced government borrowing costs, highlights the potential advantage of having a public agency to finance economic development. The front page of today’s Regina Leader-Post features a report on my union’s letter (full text below) to the Government of Canada about Evraz using its Canadian facilities as collateral to borrow from Russia’s national development […]
Read moreIn my career of writing letters to my hometown newspaper, my favourite headline supplied by the Regina Leader-Post was “Deficit Caused by Tax Cuts,†for a letter arguing that Saskatchewan’s mild deficit a few years ago resulted from provincial tax cuts rather than from alleged overspending. Today’s inane press release from Finance Canada, lauding the fact that “Tax Freedom Day” […]
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