If there is one priority for the budget, it should be to look beyond the immediate fiscal issues and set a clear direction to a new economy based upon high productivity and environmental sustainability.
The Harper government’s single-minded focus on unprocessed resource extraction for export as the key driver of growth is closely related to the loss of manufacturing jobs, our high trade deficit, continued very high unemployment, growing regional tensions, the continued marginalization of First Nations; and Canada’s failure to deal with the urgent challenge of global climate change.Read more
Finance Minister Jim Flaherty thinks the provinces are wasting $2-billion in federal funding to support worker training, and says skills training will be “a priority of the budget.”
While employers tend to exaggerate the real extent of skills and labour shortages, there is no doubt that dealing with the growing issue of “jobs without people” is of central importance.Read more
Finance Minister Jim Flaherty is said to be considering extending funding for public infrastructure investment in his forthcoming budget, as urged by the Official Opposition, the provinces and municipalities. Let’s hope, for the sake of jobs and the environment, this is a significant, long-term initiative.
On the eve of the 2013 federal and provincial budget season, public sector austerity is still the order of the day, even though the economy is rapidly slowing down.Read more
Canada is one of the most decentralized federations in the world. Public services (notably health, education at all levels, social services such as elder care, and local services) are delivered and financed primarily by provincial and municipal governments.
The Canadian Constitution states that the provinces should have sufficient resources to provide “reasonably comparable services at reasonably comparable levels of taxation.”Read more
Congratulations to Statistics Canada for providing an update on top incomes in Canada, and for launching two new CANSIM tables allowing researchers to dig into the details.
While the income share of the top 1 per cent has slipped slightly since the Great Recession – likely due in large part to the reduced value of exercised stock options – their share of all income (10.6 per cent in 2010) still stands well above the low of about 7 per cent that was reached in the early 1980s.Read more
Andrew Jackson: The Distribution of Wealth: Implications for the Neo Liberal Justification for Economic Inequality
Nobel Prize winning economist and political theorist Amartya Sen points out that “every normative theory of social arrangements that has at all stood the test of time seems to demand equality of something – something that is regarded as particularly important in that theory.” Even extreme neo liberals such as Robert Nozick who reject the goal of distributive justice and favour a maximum role for free markets and a minimum role for democratic governments demand equality of individual rights to freely participate in an economy based upon predominantly private ownership of property and free markets. Capitalism is all about equal access to individual freedom to deploy labour and capital as individuals see fit, as opposed to pre liberal economic systems based upon slavery and serfdom.Read more
On January 16, the Macdonald-Laurier Institute published a study by former Statistics Canada analyst Philip Cross, entitled “Dutch Disease, Canadian Cure.” It argues that “after 10 years of a muscular dollar, Canadian manufacturers have adapted well to a strong currency – demonstrating that Dutch Disease is economic myth rather than reality.”
Mr. Cross argues, quite reasonably, that high commodity prices are not the only reason for the strong appreciation of the Canadian dollar after 2000. However, as Mark Carney noted in a recent speech, they are an important part of the story, explaining about one half of the exchange rate appreciation.Read more
Prime Minister Stephen Harper and his party have recently attempted to demonize Opposition Leader Tom Mulcair for his alleged advocacy of a “job-killing carbon tax.”
As has been widely noted, Mr. Mulcair and the NDP have, in fact, only called for a cap and trade system based on the broader principle of “polluter pay,” which would require major carbon polluters to purchase emission permits from the government or on a carbon market. This is identical in basic design to Conservative policy during the first Harper government.Read more
President Barack Obama had it right Monday when he told the people of Michigan that so-called right-to-work legislation is about politics, not jobs.
Such legislation, now in place in 23 U.S. states, undermines union finances by giving members the right to withhold dues, even though they continue to enjoy the rights and benefits of a union contract.
These laws are pretty effective in undermining unions. The unionization rate in right-to-work, or RTW, states averages just 7.6 per cent, compared to 18.6 per cent in the non-RTW states.
But independent research shows that jobs, even in manufacturing, do not flow to states that pass anti-union laws.Read more
The Finance Department’s long-awaited study on the economic and fiscal implications of our aging population was finally released on Oct. 23. It’s a gloomy outlook that underpins the Harper government’s view that we have to cut government spending today to maintain costly social programs tomorrow.
What the report fails to look at is the positive impacts of slower growth in the labour force, namely the prospect of better jobs and higher productivity.Read more
We often hear that there is a large and unfair gap between the life-chances of the baby boomers – those persons now in their mid-50s to early 60s – and their children, the echo-baby boomers now in their 20s.
In reality, class inequality within generations is far greater than differences between generations. There are extremes of rich and poor and a shrinking middle-class within all age groups.Read more
Twenty-five years ago this week, the signing of the Canada – U.S. free-trade agreement (FTA) sparked one of the most passionate political debates in Canadian history.
Reflecting on the debate, and the outcomes of the FTA, can we now say who was right, and who was wrong?Read more
Bank of Canada Governor Mark Carney recently delivered a widely-publicized major speech in Calgary on the economic phenomenon known as the “Dutch Disease.” This was more nuanced than much of the media coverage.
Governor Carney argued that the booming energy and wider resource sector concentrated in Western Canada has provided a significant boost to the national economy, creating jobs in the rest of the country in both manufacturing and services. Overall, he said, high resource prices have been a plus for Canada.
Budget 2015 is, surprise, primarily a political document that extolls the government’s record and highlights tax cuts, but does almost nothing to deal with rising inequality or to shape the trajectory of the struggling economy.
As expected, annual contributions to Tax Free Savings Accounts are to be almost doubled to $10,000 per year, which will cost over $300 million in lost annual revenues within five years. The increase will eventually all but eliminate taxation of investment income, to the primary benefit of the very affluent earning more than $250,000 per year who collect almost half of all capital gains and dividends subject to tax.Read more
There are many factors other than federal government policy that strongly influence the quantity and quality of Canadian jobs including resource prices, business decisions, the state of the American and the global economy, and the actions of provincial governments to name a few.
That hasn’t stopped Stephen Harper and his Conservative government from trumpeting their record as good economic managers and pursuing a successful jobs and growth agenda. Harper’s supposedly “steady hand” on the economy is central to Conservative election messaging and his perceived economic acumen a frequent talking point of the mainstream press.
So on the eve of the tabling of the federal budget for 2015-16 and during this election, it is relevant to ask: has the job market improved under Harper’s watch from 2006 to 2014?Read more
The federal Budget to be introduced on April 21 should have one clear priority – to boost public and private investment so as to create jobs now and a more productive and sustainable economy tomorrow.
The slowing Canadian economy continues to be mainly driven by household borrowing fuelled by ultra low interest rates. With wages stagnant, families are still going deeper into and deeper into debt to spend more than they earn, setting the stage for a nasty housing crash and a rude shock to family finances down the road.Read more
Which gives us a better picture of where the economy is headed -- near record low interest rates on government bonds or a stock market that is not far below record highs?
In Canada as well as the United States, bond yields are just above record lows. The interest rate on 10-year Government of Canada bonds is about 1.4%, meaning that investors are prepared to lock in their money for 10 years for a return well below the official 2% inflation rate target.Read more
Economists love to talk about the theory of comparative advantage, which holds (somewhat counter intuitively) that two countries trading with each other will be better off if each specializes in what it does best, even if one country has an absolute competitive advantage in the production of all goods and services traded.
David Ricardo famously argued that it made sense for England to specialize in the production of cloth and Portugal that of wine, even though Portugal could produce both goods more cheaply.
Unfortunately, the theory has limited application to the real world, and can have pernicious policy consequences.
article originally appeared in the Globe and Mail's Economy Lab.
Photo: teegardin. Used under a Creative Commons license BY-SA-2.0- See more at: http://www.broadbentinstitute.ca/en/blog/unbalanced-thinking-behind-bala...
The Harper government claims to be paragons of fiscal virtue. They have pledged to balance the federal budget this year, notwithstanding a slowing economy, and are likely set to announce details of the balanced budget legislation promised in the 2013 Speech from the Throne.
The promised legislation will disallow annual deficits in “normal economic times” (whatever they are) and “set concrete targets for returning to balance in the event of an economic crisis.”
In the run-up to the delayed federal budget, there is a strange disconnect between fiscal policy and our changing economic circumstances. Balancing the budget seems to remain the key political priority, as if nothing had changed.
But the collapse of oil and other resource prices has changed a lot. Most notably, the Bank of Canada has, unexpectedly, cut interest rates to take out “insurance” against a serious slump in our resource-dependent economy. TD Economics forecast slow growth of just 2.0% this year, and have projected that unemployment will rise by 0.2 percentage points in the next few months.
Meanwhile, Prime Minister Stephen Harper has said that he will not run a deficit unless and until Canada falls into an outright recession, something we would know only in hindsight.This article originally appeared in the Globe and Mail's Economy Lab. - See more at: http://www.broadbentinstitute.ca/en/blog/demonized-industrial-policy-put...Read more
Andrew Jackson is the Broadbent Institute's Senior Policy Advisor.
In September, 2012 he retired from a long career as Chief Economist and Director of Social and Economic Policy with the Canadian Labour Congress.
In 2011, he was awarded the Sefton Prize by the University of Toronto for his lifetime contributions to industrial relations. Educated at the University of British Columbia and the London School of Economics and Political Science, where he earned a B. Sc. and an M.Sc. in Economics, Andrew is the author of numerous articles and five books, including Work and Labour in Canada: Critical Issues, which is now in its second edition with Canadian Scholars Press.