This is a revised and more complete version of last night’s post: Impact on Jobs and the Economy What We Wanted The most important priority for the Budget was to stop the unemployment rate from rising to at least 8% this year and to double digit levels next year. “Fiscal stimulus†is not the same thing as running a deficit. […]
Read moreMarc Lee predicted a deficit a year ago (in a paper that graciously acknowledged comments from Toby and me.) Our blog was also ahead of the curve on some other aspects of Budget 2009. I flagged the Equalization cuts the morning after the November 2008 Economic Statement, when they received little attention. These cuts have since become a Budget hot potato because […]
Read moreThe more I read Budget 2009, the less stimulus I see. The very first page of text in the Budget Plan commits to “inject fiscal stimulus of 2 per cent of gross domestic product (GDP)†(page 9). For 2009-10, the Budget introduces new spending and tax cuts worth $18 billion, about 1.2% of GDP (page 217). But it accounts for […]
Read moreHarper “stimulus†budget falls far short  Faced with the prospect of losing their grip on power, the Harper government has made a big show of taking action to address the economic and financial crisis, but it still falls far short of what is needed to revive the economy, create jobs and protect the vulnerable. In particular, the budget fails […]
Read moreIts amazing how much a budget can contain while avoiding addressing the most critical questions of an economic crisis: How are we helping the most vulnerable, particularly those who have lost their jobs? Â With over $2.6 billion in spending on additional EI and retraining programs in 2009, the government has managed to not allow one additional unemployed person to […]
Read moreThe leakiest budget in Canadian history is now in the public domain, and will not lead to the fall of the Harper government. The budget was preceded by numerous press conferences held by Ministers (with the PM uncharacteristically out of sight), leaving some details to be filled in on budget day, largely tax measures, but in the end it featured […]
Read moreJanuary 26, 2009 The Honourable James M. Flaherty Minister of Finance Department of Finance Canada 140 O’Connor Street Ottawa, Ontario K1A 0G5 Dear Mr. Flaherty: I write regarding the 2009 federal budget on behalf of the United Steelworkers union, which represents 280,000 men and women working in every sector of Canada’s economy. To address the worst economic crisis since the […]
Read moreI’ve just read an excellent paper “From Financial Crisis to Depression and Deflation” by Hansjorg Herr of the Berlin School of Economics, circulated by the Global Union Research Network (but not yet posted to their web site.) Herr argues that demand deflation is inevitable in a downturn like the one we are in, but this becomes really dangerous for the […]
Read moreWhat a difference a year makes. A year ago anybody who proposed nationalizing the banks in Canada, the United States or the U.K. would probably have been dismissed as a looney lefty. Now widescale nationalization of major banks is being raised as a serious alternative in leading articles in the Economist and the New York Times. An on-line debate of […]
Read moreThe Fraser Institute, Canadian Centre for Policy Alternatives, Informetrica, Bank of Montreal, and yours truly square off in today’s Toronto Star (page A17).
Read moreThere was a noteworthy discrepancy in how our two national newspapers covered the $64-billion leak. The secondary headline printed in yesterday’s Globe and Mail began, “Finance Department’s deliberate leak . . .” While the story’s text identifies the leaker only as “a senior government official,” a pull-out quote in the print edition identified him or her as a “Finance Department official.” […]
Read moreI don’t usually read (or cite) Sherry Cooper, chief economist for BMO Capital Markets, but in a recent article she was on the money: Layoffs and reductions in hours worked have been accelerating in recent months and cover firms in virtually every sector of the U.S. economy. The same has been true in Canada, but to a much lesser degree […]
Read moreI watched this movie last night and highly recommend it. I am often struck that criticism of Israeli military operations is more accepted in Israel than in North America. However, the movie won a Golden Globe and was just nominated for an Academy Award, which may add some welcome nuance to the dominant North American perspective.
Read moreI assume that Marc is stuck in a news conference, so here is the 2009 Alternative Federal Budget. The Canadian Centre for Policy Alternatives has also released some litmus tests for next week’s budget.
Read moreToday’s Consumer Price Index suggests that Canada is lunging toward deflation. The annual inflation rate plummeted to just 1.2% in December, 2.2% lower than only three months ago. If this pace continues, the national inflation rate will turn negative in the next few months. Two provinces, Nova Scotia and New Brunswick, already recorded negative inflation rates in December. Of course, […]
Read moreHuman Resources and Social Development Canada commissioned a research study, “Income Redistribution Impacts of the EI Program” and changes thereto from Ross Finnie and Ian Irvine for the 2005 EI Monitoring and Assessment Report. I obtained a copy through an Access to Information Request some time back, and to my knowledge it has not (yet?) been posted to the HRSDC […]
Read morePolitical watchers are waiting with baited breath to see whether Michael Ignatieff will acquiesce to Tuesday’s Conservative budget, to the applause of Bay Street Liberals, or whether he will defeat the budget and seize the opportunity to become Prime Minister of a progressive coalition government. It strikes me that there is a third possibility: he might propose explicit amendments to […]
Read morehas just been published and is avalaible here. It largely confirms research conducted by PEF members on household wealth, indebtedness and income. The report highlights the state of financial precarity of many households, the gap between income and spending, the growing debtload and the important impact the “recession” (if we still want to call it that, given its deflationary driven […]
Read moreThe PEF’s 2009 Student Essay Contest Is Now Open USE YOUR ECONOMICS FOR SOCIAL JUSTICE! Tired of learning economics that seems more interested in justifying the status quo, than in explaining the real world – and changing it? Then join thousands of economics students around the world: put your economics to work in the cause of social change. PRIZES $1000: […]
Read moreEveryone’s favourite non-issue came up again at last week’s First Minister’s meeting. The outcome of two amendments to the Agreement on Internal Trade was another bit of “progress”, I suppose (see backgrounder below). As usual, the release offers no details on actual trade barriers that are presumed to exist in Canada. With the long-standing margarine case settled as of last […]
Read moreImpact on Jobs and the Economy Over 100,000 full-time jobs were lost in the last two months of 2008, confirming that Canada has followed the U.S. into a serious recession. Going into the Budget, the emerging consensus among economic forecasters (e.g., BMO and TD Bank) was that the Canadian economy would shrink by at least 1% in 2009, after almost […]
Read moreThe Bank of Canada did not cut its target interest rate enough this morning, leaving it a full percentage point above the US central bank rate. As I argued last week, the Bank of Canada should have matched the American Federal Reserve and cut to zero. Astonishingly, the Bank of Canada’s press release acknowledges that we are headed for deflation: […]
Read moreIt’s noteworthy that the week before a budget that will supposedly accelerate infrastructure spending, the Finance Minister is announcing new management for PPP Canada. Budget 2007 dictated that provinces and municipalities seeking federal infrastructure funding “be required to demonstrate that the option of undertaking the project as a public-private partnership has been fully considered.” As I have pointed out, given the […]
Read moreLast year was a momentous one for Relentlessly Progressive Economics. Of course, some of us continued using the blog to disseminate media commentary on behalf of our respective organizations. However, the Progressive Economics Forum (PEF) itself attracted media coverage a couple of times. Early in the year, The National Post and other CanWest papers cited it for documenting some striking similarities […]
Read moreSo Industry Minister Tony Clement is now insisting that cuts to workers wages will be a condition of any bail-out package for the auto industry. This comes after an economic statement that was going to remove the right to strike and legislate public sector wages, and before a budget that could also include wage cuts or constraints for workers. I don’t recall constraints […]
Read moreThe Parliamentary Budget Office (PBO) was established in response to the systematic underestimation of federal budget surpluses. Its job was to provide independent estimates of the available surplus to keep Finance Canada honest ( “truth in budgeting” as the Conservatives said at the time). With the federal government headed into deficit, the PBO’s purpose is less clear. In theory, it […]
Read moreThe Maclean’s cavalry has ridden over the hill to help Bill Robson defend the conventional wisdom against Keynesian fiscal policy. Here are four problems with Andrew Coyne’s “Special Report” (which I am having trouble finding online) in the latest edition of Maclean’s magazine: 1. Coyne presents as evidence of failed deficit spending a 1991 paper by Christina Romer, who is now […]
Read moreThe Bank of Canada should announce a target interest rate of 0% on Tuesday. This move would match the action taken by the US Federal Reserve a month ago. Recent experience suggests that the chartered banks would not pass along the entire cut. But such a dramatic announcement by the Bank of Canada would place strong pressure on the chartered banks to noticeably […]
Read moreA 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) constitutes a vital input for […]
Read moreWe are now into full blown Budget consultation mode, with MPs of all parties going through a bit more than the usual pretence of listening before the actual Budget is finally put to bed by the government a few days hence. For once, even the Conservative inner circle seem a bit unsure of where to go. Below the closed (charmed) […]
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