Exchange Rate Appreciation and Manufacturing Investment

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An interesting article just published by my friend Robert Blecker (American University) reinforces our concerns regarding the long-run impact of the loonie’s recent appreciation on the size and competitiveness of Canada’s manufacturing industry. Here’s the formal citation & abstract: The Economic Consequences of Dollar Appreciation for US Manufacturing Investment: A Time-Series Analysis Author: Robert A. Blecker a Affiliation: a American […]

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The Dangerous Shortage of Government Bonds

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Here’s an interesting sidebar to the current hissy fit roiling financial markets:  It has turned out that Canada’s public debt is now dangerously low. Huh? We all know that where debt is concerned, private is good and public is bad.  That’s why we cheer on consumers as they pump up their indebtedness to a record ratio (over 100%) of disposable income, […]

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Free University Tuition – A radical position?

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A friend just pointed a UN treaty (the International Covenant on Economic, social and cultural rights), to which Canada adhered in 1976, which states that signing parties should strive to tend towards free tuition for post-secondary education. It is in fact one of the “nine core international human rights treaty” (dixit UN website). The relevant article (see provision c) and […]

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Levitt’s Been Thunderstruck: Is Economics on the Highway to Hell?

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A couple of months ago, Robert Oxoby of the University of Calgary posted a joke paper comparing AC/DC’s original lead signer, Bon Scott, with his successor, Brian Johnson. The paper presented the results of an experiment in which test subjects responded less “rationally” to financial incentives in an “ultimatum game” when listening to Scott’s “It’s a Long Way to the […]

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Danny Williams and Oil Royalties

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In April 2006, Newfoundland Premier Danny Williams walked away from proposed Hebron development because the multinational oil companies were not offering sufficient benefits for his province. The national media and federal government heaped scorn on this decision. A couple of days ago, Williams secured a new deal that gives the province a 4.9% equity stake in Hebron, a 6.5% “super […]

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Been There, Done That, Got the T-Shirt

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Forgive me for greeting the latest financial meltdown with a big yawn. We are facing a combination of two textbook cycles, neatly overlaying each other: 1. Classic speculative cycle:  something catches the eye of speculators, they drive it up in price in search of (utterly unproductive) speculative profits, the rising price produces a self-fueling speculative bubble, and then something happens […]

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Bank of Canada Rides Over the Hill

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Nice to see the Bank of Canada swinging into action the last couple of weeks, pumping many billions of dollars of liquidity into financial markets to ease the sub-prime-inspired credit crunch, and making very hard-nosed statements about its intention to “defend” its desired interest rate regardless of where the markets want to go. Now that’s my kind of central bank. […]

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Credit Crunch

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Whereas Jim Stanford’s latest Globe column argues that central banks should be as willing to intervene on behalf of manufacturing as on behalf of hedge funds, Andrew Coyne’s column in today’s National Post argues that central banks should intervene as little as possible and not bail anyone out. At least Coyne’s position is consistent and avoids the double standard identified […]

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Competitiveness vs. Comparative Advantage

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This post is in response to the following excellent comment from Stephen Moore, the man who will trounce Ralph Goodale in the next federal election (or at least do better than I did): April 2007 testimony before the parliamentary committee on International Trade saw Industry Canada, DFAIT reps and others stress the importance of the SPP (Security & Prosperity Partnership) […]

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Ontario’s Income and Property Taxes

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To put some figures on yesterday’s commentary about the social-service download to municipalities and low provincial-income taxes, I checked the latest Equalization tables (which are publicly available from Finance Canada). In 2005/06, Ontario collected $22 billion of personal-income taxes. At national-average rates – an average dragged down by low-tax Alberta and by Ontario itself – Ontario’s income-tax base would have […]

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Too Little, Too Late

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Premier McGuinty has pledged to relieve Ontario municipalities of $1 billion in disability-support payments and prescription-drug benefits if his government is re-elected. Municipalities will continue to pay for a further $3 billion of provincial social-service programs. During the Great Depression, Canada’s patchwork system of municipal relief proved totally inadequate. Subsequently, provincial governments established social-welfare programs and uploaded unemployment insurance to the federal […]

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The Minister Responds

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Today’s National Post includes a letter from BC’s Minister of Economic Development, Colin Hansen, in response to my TILMA op-ed. It is great that the Post has facilitated some debate on this important issue and that the Government of BC feels compelled to participate in this debate. The fundamental point of disagreement is whether TILMA applies to all regulations (but […]

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Drummond on Corporate Taxes and Investment

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For years, Don Drummond of TD Bank has publicly observed that business investment in Canada is lagging far behind soaring profits and called for further corporate-tax cuts to spur investment. He never seemed to perceive a contradiction between the fact that corporations are not reinvesting their record-high after-tax profits and the claim that even higher after-tax profits would boost investment. In a […]

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The National Post on TILMA

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On Friday, the National Post’s lead editorial suggested that inter-provincial trade barriers are significant enough to validate the Quebec-separatist view that “Canada is not a real country.” The following edited response from yours truly is printed as a “Counterpoint” in today’s edition. UPDATE (August 16): BC’s Minister of Economic Development has responded to my op-ed. In a recent editorial, the […]

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The Other National Newspapers on TILMA

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Following the National Post’s complete endorsement of TILMA on Friday, The Globe and Mail and Toronto Star ran columns on Saturday that were relatively skeptical of this agreement. As both columns note, the joint statement released by the Premiers in Moncton leaves the door open to making the Agreement on Internal Trade more like TILMA without committing to do so. […]

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London’s Super-Rich

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The following passage is from “Why England is Rotting” in the June 11 issue of Maclean’s: London’s role as a financial centre on its way to eclipsing New York City has provided a vision of prosperity which, it is assumed, trickles down to the population at large.  But it is a city in which increasingly only those on welfare, or the […]

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Financial Meltdown

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As background to the “flight from risk” which underpins the growing financial crisis in the US and Europe, see the latest annual report from the Bank for International Settlements published in June, especially the chapter on financial markets in the advanced industrial countries. The BIS is a kind of central bank for central banks. http://www.bis.org/publ/annualreport.htm While cautiously stated, it’s not […]

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An Ambivalent Labour Force Survey

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My take on today’s release follows: Job Numbers As Statistics Canada noted, “Employment was little changed in July.” Employment growth in Alberta and Ontario was largely offset by job losses in the other eight provinces. As a result, the Canadian labour market created 11,300 new positions in July, far fewer than in previous months. Some commentators argue that the Bank of […]

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The Premiers’ Meeting and Internal Trade

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Last week, while I was out of the country and away from this blog, the Government of Saskatchewan formally rejected TILMA. The news release announcing this decision quite reasonably unveils working groups to address the few inter-provincial problems that may exist, but strangely refrains from outlining any of the strong arguments against TILMA. However, media reports reflect the Minister’s success […]

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Alberta Distortions

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I am big on big investment spending.  I’ve argued for years that weak business investment undermines our job creation, our productivity, our incomes, and our competitiveness.  I’ve proposed lots of policy measures to stimulate more investment spending: public as well as private. But what’s happening in northern Alberta is enough to nauseate even a Soviet-esque advocate of mass capital accumulation […]

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Vive la velorution

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Agnès Poirier Thursday August 2, 2007 The Guardian Le Tour is dead, long live le vélo! The French vélorution began the day after Bastille day, or day one of the vélib – short for vélo-liberté. With it, millions of Parisians have been able to forget the shame of the Tour de France and make the road theirs, 24 hours a […]

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Mark Steyn on Conrad Black

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I did not follow the Conrad Black trial, but enjoyed reading Mark Steyn’s mammoth post mortem. In contrast to Marc Lee’s excellent commentary on this blog, Mark Steyn is a die-hard supporter of Black. The post mortem’s main argument is that Black’s legal team did an extremely poor job. In one sense, blaming the lawyers is simply the last ditch […]

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Chavez and the Venezuelan Economy

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New CEPR Paper Looks At Venezuela’s Economy During the Chávez Years For Immediate Release: July 26, 2007 Contact: Dan Beeton, 202-293-5380 x104 Washington, DC: A new paper from the Center for Economic and Policy Research looks at the Venezuelan economy during the last eight years and finds that it does not fit the mold of an “oil boom headed for […]

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Spill-overs from Loss of Good Jobs

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http://papers.ssrn.com/sol3/papers.cfm?abstract_id=978399 A new NBER Working Paper from Beadry, Green and Sand of UBC looks interesting.. Spill-Overs from Good Jobs PAUL BEAUDRY University of British Columbia – Department of Economics; National Bureau of Economic Research (NBER) DAVID A. GREEN University of British Columbia – Department of Economics BENJAMIN SAND University of British Columbia – Department of Economics April 2007 NBER Working […]

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The Manufacturing Crisis and Greater Toronto

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It is notable that TD Economics is much more concerned about the scale and impacts of the manufacturing crisis than colleagues like Jeff Rubin at CIBC – not to mention Steve Poloz of Export Development Canada. TD’s recent report on the state of the Toronto economy http://www.td.com/economics/special/db0707_gta.pdf notes that 100,000 manufacturing jobs have been lost in the Greater Toronto Area […]

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Foreign ownership in the resource sector

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A centrepiece of Canada’s industrial policy is attracting foreign investment. This seems to me a lack of imagination on the part of our elites; rather than develop genuine industrial stategies, so much the better to just let foreign capital come and create the jobs for us. And in the resource sector, the flipside of investment is that we lose control […]

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No Increase in Consumer Prices

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A month ago, I noted that if the Core Consumer Price Index remained unchanged from May to June 2007, the annual core-inflation rate would jump to 2.5% because this Index had fallen from May to June 2006. Today’s release from Statistics Canada reveals that this is exactly what happened. Since the monthly Index remained constant at 109.9, the annual rate […]

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