Last week it was Andrew Coyne; this week it’s Jack Mintz. Seems all the National Post’s favourite conservative commentators have suddenly decided to offer their Very Serious Advice™ to Alberta’s new government. While Coyne made a spurious comparison between raising the minimum wage and instituting a minimum income, Mintz outdoes him with an even more spurious comparison between Alberta and Greece.
Simply put, it is completely disingenuous to compare Greece to Alberta. Greece has seen its economy lose a quarter of its GDP since 2008 – a level of economic crisis unseen since the Great Depression. Unemployment has spiked to (Read more…)
This week’s podcast is a bit more economics-focused than usual but gets at the heart of what’s going on in the global economy where interest rates are near, at, or even below zero, but where investment, growth, wages and employment continue to suffer. My one guest, who joins me for a feature-length interview, is J. W. Mason. J. W. teaches economics at John Jay College, City University of New York, blogs at The Slack Wire and is a fellow at the Roosevelt Institute. It’s for the Roosevelt Institute that he wrote a recent working paper, (Read more…)
The Great Budget Debate at the Progress Summit of course reflected a thorough clash in values. But there was one note of obvious agreement which makes the conservative position untenable once its implications are drawn out.
All four speakers spent plenty of time talking about the fact that some investments are worthwhile, and acknowledging that the role of government includes assessing which ones justify the use of public money. But Monte Solberg in particular neatly demonstrated how anti-government bias undermines any attempt to carry out that task.
Solberg spent plenty of time on the Cons’ usual jurisdictional dodges, arguing at (Read more…)
As Target Canada tumbled into bankruptcy, Loblaw announced that its fourth-quarter profits more than doubled. What can be learned from this tale of two retailers?
The main reason for Loblaw’s surge was its acquisition of Shoppers Drug Mart last March, which turned it into Canada’s largest grocer and pharmacy chain. Shoppers contributed $3 billion to Loblaw’s $11.4 billion take in sales, a 50% jump. Profits more than doubled from the previous year as Loblaw also saw cost savings from the merger. The irony behind this success story is that it was likely Target’s arrival on the retail (Read more…)
This and that to start your weekend.
- Robert Reich discusses how the increasing concentration of corporate wealth and power is undermining the U.S.’ democracy, while noting that there’s only one effective response: We entered a vicious cycle in which political power became more concentrated in monied interests that used the power to their advantage – getting tax cuts, expanding tax loopholes, benefiting from corporate welfare and free-trade agreements, slicing safety nets, enacting anti-union legislation, and reducing public investments.
These moves further concentrated economic gains at the top, while leaving out most of the rest of America.
No (Read more…)
Oil and gas companies get a ton of subsidies from governments which holds back the adoption of renewable energy. In most countries, the gas industry is supported by policies encourage car use and other related infrastructure decisions. Sometimes, like in Morocco, fuel is directly subsidized and recently the country found that it was just too expensive to augment the market so bluntly.
Morocco should be held up as a ‘poster child’ for effective green policymaking, according to the World Bank’s top climate official.
Speaking at an environmental meeting in Pori, Finland, Rachel Kyte said the Rabat government’s recent decision to (Read more…)
It’s easy to overestimate the importance of the tar sands to the Canadian economy. Tar sands and their pipelines are after all hailed by the ruling Conservatives, sections of the business press and the ever-present oil lobby as this young century’s “nation-building” project. Yet, a survey recently making the rounds highlights the relative unimportance of the tar sands to Canada’s overall economy: while most Canadians overestimate the importance of the tar sands and 41% are guess that the tar sands account for 12 %to 48% of Canada’s GDP, the reality is that they directly contribute a mere 2% to our (Read more…)
Vancouver was the star of a recent New Yorker article that shone a light on the city’s lack of housing affordability and linked this lack to an inflow of foreign buyers. Unfortunately, this link is extremely tenuous, as most of the support is anecdotal or based on very limited data. At the same time, there are good reasons to look for the sources of the lack of affordability much closer to home. Articles like that in the New Yorker allow for far-flung conclusions that end up bolstering a fatalist political narrative about the potential for meaningful change.
First, the data. The New Yorker (Read more…)
Here, looking at one of Thomas Piketty’s findings about the self-propagation of wealth which has received relatively little attention – and pointing out how the a pattern of greater wealth grabbing higher returns can both be managed in order to reduce undue concentration of wealth, and even turned to the public’s advantage through pools of social capital.
For further reading…- Piketty’s discussion of inequality in returns on capital starts at page 430 of the English translation of Capital in the Twenty-First Century – with his study of university endowment funds at page 447 serving as a particularly useful (Read more…)
Triple-bottom line companies and other terms that describe companies that focus on more than just profit keep coming. The most recent is what is no referred to as the purpose economy in a new book. The idea is that as we run out of resources on the planet we need to refocus how we measure and talk about economic success.
A generation of Purpose Economy pioneers, like Whole Foods Market’s John Mackey and Virgin’s Richard Branson, are challenging others to follow their lead and to create new frameworks both to do well and to do good, which raises the bar (Read more…)
Highlight Link: https://openmedia.ca/endowment
Statistics Canada reported today that private and public investment intentions are up by 1.4% for 2014, even weaker than Canada’s investment growth of 1.5% in 2013.
Private-sector investment intentions are only 1.3% higher this year, a far cry from the growth of after-tax corporate profits. Yesterday, Statistics Canada reported that net profits were 17.3% higher in the fourth quarter of 2013 than in the fourth quarter of 2012.
While construction investment is expected to stagnate, the bright spot is that companies plan to invest 3.9% more in machinery and equipment in 2014. But even that (Read more…)
Filed under: Capitalism Tagged: Britain, Capitalism, France, investment, productivity
This is the third and final post in what has become a three-part series on the puzzle of high profitability and low investment in the Canadian economy. In the first part, I looked at some data that shows the existence of the puzzle and explored a few of the factors that could be behind it. The follow-up post outlined broadly Keynesian and Marxian solutions aimed at raising investment: the former based on stimulating demand, the latter on eliminating overcapacity and increasing the relative profitability of productive capital. Here, I want to continue the thoughts that concluded the second part, (Read more…)
The Progressive Economics Forum (PEF) normally hosts sessions at the Canadian Economics Association’s annual conference. But the House of Commons finance committee threw most of the union economists testifying in its pre-budget hearings onto the same panel on November 21. I began my testimony as follows:
In addition to my work as an economist for the United Steelworkers union, I also serve as the volunteer chair of an organization called the Progressive Economics Forum, which has about 200 members across Canada. I’m very proud of the fact that four of those members are sitting in front of you on this (Read more…)
Ironically, Statistics Canada’s third-quarter GDP report on Black Friday showed the growth rate of consumption being cut in half. Final consumption expenditure grew by 0.4% in the third quarter compared to 0.8% in the second quarter.
Household spending growth fell to 0.6% from 0.9%. Government consumption growth plummeted to 0.1% from 0.4%. In other words, public-sector austerity is taking a bite out of economic demand.
Business investment grew by 0.6%, its best quarter so far this year but still lagging the overall quarterly growth rate of 0.7%. The economy grew faster than (Read more…)
Canada’s macroeconomy continues to be lethargic at best, and there is growing recognition that the continuing sluggishness of business capital spending since the 2008-09 crisis is a big part of the reason why. Governments are in austerity mode; consumers are maxxed out and cautious about new spending; our exports are restrained by an overvalued dollar and uncertain demand in our key markets. The traditional engine of growth in a capitalist economy is supposed to be business investment — and vibrant capital spending by companies could help to jump-start all of those other categories of spending (by creating jobs, stimulating more (Read more…)
The basic storyline of today’s C. D. Howe Institute “E-Brief”, “Canada Lagging Peers in 2013 Business Investment Growth,” is that corporate tax cuts helped boost investment per worker in Canada above the OECD average. Yet corporate Canada is slipping in 2013 and apparently needs more tax cuts.
However, the C. D. Howe Institute’s own graph (Figure 1 on page 3) shows no improvement in Canadian business investment – either in absolute terms or relative to the OECD average – between 2000 and 2004, when the former Liberal government slashed the federal corporate tax rate from 29% to 22% (including (Read more…)
This is the text of remarks I made today to Vancouver city council on divestment. Earlier this year, Council requested that staff report back on how the city’s financial investments align with the city’s mission and values, and various ethical programs like the city’s purchasing policy and the greenest city initiative. So the meeting was essentially about the contents of the staff report.
The outcome of the meeting was a small victory for divestment. Council recommended:
THAT the City Clerk be instructed to notify the Municipal Pension Board inwriting of City Council’s position on responsible investing and encourage the Municipal (Read more…)
by Canadian Center for Policy Alternatives | Jan. 24, 2013: OTTAWA— Underinvestment in infrastructure is not a crisis but a chronic problem in Canada, says a new study by the Canadian Centre for Policy Alternatives (CCPA). The study, by economist and CCPA Research Associate Hugh Mackenzie, reveals the extent of underinvestment in infrastructure over the READ MORE
Most Canadian kids don’t leave home without their mother telling them, “Don’t forget your jacket.” Always offering the reminder so her child doesn’t catch a cold. Canada may not have a mother looking out for us, at least on this continent, but Stephen Harper is a big boy and he should know better that in this cold global economic environment our country should be better insulated.
Protecting Canada from the worsening global economy would not mean staying home and reducing trade, it would mean the opposite, improving trade without being vulnerable to every cold breeze. In fact if Stephen
. . . → Read More: The Scott Ross: Cold Conservatism & Canada Without A Jacket
This is a little old, but it was brought to my attention late and it seems to be of durable relevance. Last month, the New York Times (NYT) published an article chronicling public giveaways to corporations in the United States. What is extraordinary is that the article is the result of ten months – 10 months! – of investigative journalism on the topic, during which time over a hundred of public and corporate officials were interviewed and over 150 000 awards by all levels of governments were analysed. The NYT even put together a searchable database of all these awards.
. . . → Read More: The Progressive Economics Forum: NYT study on public subsidies in the US
The Fall Economic Update was hosted this week by the Fredericton Chamber of Commerce. It seems Minister Flaherty wanted to be sure of friendly faces when he announced that the 2012-2013 budget deficit will likely be $5-$7 billion higher than forecast in March. The reason for the higher deficit is that nominal GDP will be [...] . . . → Read More: The Progressive Economics Forum: Stay the course
by Gus Van Harten| Troy Media There is a lot of spin about the Canada-China investment treaty (or FIPA). Canadians should not be fooled into the deal. They should insist on an independent review of the government’s claims, before the treaty is … . . . → Read More: Canadian ProgressiveCanadian Progressive: Don’t be fooled by the spin on the Canada-China FIPA treaty
Having read the investment treaty that Prime Minister Harper negotiated with China last September, my concerns about it have not been alleviated. (Honestly, I actually did read it!)
To begin with, I have problems with the process that created it. Negotiated in secret, it was then tabled in Parliament where it sat for 21 days while the government, as they have a right to do, denied debate. It can