The Greek Tragedy
An excellent commentary from Andrew Watt.
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The Davos Speech
The Prime Minister’s speech at Davos was, I would bet, written by Stephen Harper himself. It bore the stamp of his long standing contempt for the European welfare state. He all but said that the Europeans had brought the crisis on themselves through trying to live beyond their fiscal means:  As I look around the world, as I look particularly at developed […]
Read moreThe IMF and Austerity
Today’s IMF economic update further downgrades growth projections, including here in Canada where growth in 2012 is forecast to be just 1.7%, down from the IMF’s September forecast of 1.9%. That is well below the just released Bank of Canada forecast of 2.0%, and clearly implies rising unemployment. On fiscal policy they say: Countries should let automatic stabilizers operate freely […]
Read moreThe Focus of the Federal Budget Must Be Jobs, Not Cuts.
The Mark have published a pre Budget commentary from yours truly.
Read moreOntario’s Poverty Reduction Strategy
December marked the three-year anniversary of Ontario’s Poverty Reduction Strategy. While I believe there is much to celebrate, much remains to be done. The Strategy surprised a lot of observers, especially in light of the fact that it was announced in December 2008, just as Ontario was entering a recession. Its focus was almost exclusively child poverty, and at full […]
Read moreThe Economist Takes Note: Modern Monetary Theory Gets Much Deserved Attention
As faithful readers of this blog will know, I make only very sporadic contributions to this blog but a substantial fraction of those contributions have made reference to modern monetary theory (MMT), the view (crudely put) that, based on a detailed understanding of the institutional mechanisms behind monetary operations, calls into question our obsession with balancing the budget. Well, after […]
Read moreAusterity Kills: Conservative cure worst thing for what ails the economy says Stiglitz
Governments around the world are heading down a path to economic suicide. So said Nobel Prize-winning former chief economist of the World Bank, Joseph Stiglitz, to hundreds of well-heeled financiers and decision-makers who paid a bundle to hear him in Toronto. With a voice as gruff as gravel, and an energy bristling with urgency, he told governments in Canada and […]
Read moreIMF Hints at Need for Less Fiscal Austerity and a Plan B for Canada
Albeit in a highly nuanced way, the IMF has called on the G-20Â to temper short-term fiscal austerity now that the global economy “has entered a dangerous phase.” In their submission to the October 14-15 meetings of G-20 finance ministers, the IMF call for medium-term fiscal consolidation plans to “create more policy space for near-term support to growth and employment, […]
Read moreFirst We Take Manhattan….. What Occupy Wall Street Could Mean
This is not the stuff of usual protests. Over the past month, a little idea from a Vancouver outfit has mushroomed into a cross-continent movement. Occupy Wall Street, kicked off by Adbusters in July and coming to Toronto this weekend, has already spread to 70 American cities and is going global as protestors challenge society to rethink how the economy […]
Read moreOne Way the Richest 1% Can Help the Other 99%
It’s often said that there aren’t enough rich people in Canada to make a real difference to fiscal policy and, in consequence, the rest of us. Yesterday Canadian Business’s annual special edition devoted to Canada’s richest 100 people hit the stands, where it will stay until Christmas. As a regular contributor I was invited to submit a column. I chose […]
Read moreThe State of the Economy and Labour’s Response
The advanced economies, including Canada, risk falling back into recession because of government spending cuts and a looming financial crisis. The Canadian Labour Congress has been calling for our federal government and the G20 governments to respond by putting jobs first. This paper summarizes the economic situation as of the end of September, 2011 and outlines what needs to be […]
Read moreStephen Harper and Economics 101
Prime Minister Stephen Harper, who prides himself on being an economist, has characterized his government’s fiscal policy as “expansionary.†If he really thinks the simple fact of running a budget deficit is “expansionaryâ€, he should repeat Economics 101. The correct way to look at the question of whether fiscal policy is expansionary or contractionary is not to look at the […]
Read moreThe Ontario NDP Platform
Pollsters tell us that Ontario’s New Democrats may double their seat total in next month’s provincial election. It’s also entirely conceivable that they could be part of a coalition government at Queen’s Park. But what’s actually in the party’s election platform? One central feature of the NDP’s proposals is to implement a tax credit for companies that hire new workers. The tax credits would be valued at […]
Read moreWageless recovery and the politics of austerity
The UNTCAD just published its annual report on Trade and Development, titled Post-crisis Policy Challenges in the World Economy. The report describes a two speed global recovery, showing how developing economies have come out of the crisis stronger then their developed European and American counterparts. There the author invokes the contradictory forces at work in a “wageless” recovery, where wage […]
Read moreHurricane Trichet Hits Jackson Hole
After watching Jack Layton’s state funeral, I noticed that Jean-Claude Trichet’s speech from Jackson Hole is online. The European Central Bank president does not seem to get it. Far from acknowledging that last month’s interest-rate hike was premature, he touts “price stability.†His main theme is that the economic divergence between Eurozone countries is comparable to that between American states. […]
Read moreRecession Ahead?
TD Economics yesterday released a rather gloomy report, putting the odds of a US recession at 40%, and arguing that that Canadian economy is more vulnerable to recession than it was in 2008. It highlights reduced capacity for governments to respond given that interest rates are already very low, and given that household and government debt are significantly higher than […]
Read moreOutlook Darkens as Budget Debate Begins
Allow me to indulge myself just this once. Almost exactly one month ago I wrote a post arguing that the Bank of Canada was being too optimistic about our economic prospects in the July Monetary Policy Report . Today, both the Governor (and Finance Minister Flaherty) conceded to the House of Commons Finance Committee that the outlook is indeed significantly […]
Read moreOn Balancing the Budget
Andrew Watt has written an especially cogent piece on why the balanced budget rule proposed for the Euro area by Merkel and Sarkozy is a very, very bad idea. It also makes relevant reading for Canadians. Andrew points out (1) that fiscal rules have to take into account overall balances and that the public sector cannot balance if the private […]
Read moreMythologies: Money and Hyperinflation
In an earlier post, Marc Lee mentioned in passing the German hyperinflation episode of the 1920s. It’s remarkable that this event still holds such sway over the popular imagination despite other more recent instances of hyperinflation. Certainly, the imagery is powerful: German citizens pushing wheelbarrows full of worthless paper money around for everyday purchases, banknotes used as wallpaper, or dramatic […]
Read moreMMT: What it Means for Canada
Arun Dubois’ blog post yesterday on Modern Monetary Theory has prompted me to write my own take on the subject. For those interested, an interesting thumbnail sketch of MMT, essentially functional finance augmented by a full understanding of monetary operations, is explained here. While MMT deals with the details of monetary and fiscal matters, the implications of its analysis are […]
Read moreNo Retreat, No Surrender: Time For Progressives to Explode Deficit/Monetary Myths
Friends, I’m concerned. I fear that too often, we on the left retreat when we should attack, surrender when we should vanquish. What do I speak of? Well, I am concerned that too many of us are willing to play in the frame, the box, the straighjacket of modern discourse about fiscal and monetary policy. Obama does it. The NDP […]
Read moreStimulus vs Public Investment
A column by Stiglitz in the Financial Times makes what I think is an important point. The current debate over fiscal policy for the US, Europe and Canada is often characterized in the media as one between advocates of higher deficits from Keynesian style stimulus measures, and advocates of lower deficits through public sector austerity. Within this frame, the advocates […]
Read moreMore on Public Sector Austerity in Canada
A short addendum to my previous post: I checked the most recent IMF projections in the June, 2011 Update to the Fiscal Monitor. Table 1 provides estimates of changes in the general government government cyclically adjusted balance in percent of potential GDP. Basically changes are the result of discretionary changes in fiscal policy rather than due to improvement or deterioration […]
Read morePublic Sector Austerity: Why is Canada Leading the Way?
The major economic problem faced by Canadians is a very slow recovery and weak job market, not government deficits or rising debt. But public spending cuts at the federal and provincial level will make the real problem even worse. And, government spending cuts in Canada seem set to be even greater than in other advanced industrial countries, even though our […]
Read moreThe Myth of Expansionary Austerity
As the US and Europe turn from stimulus to fiscal austerity, claims are heard that spending cuts actually stimulate economic growth. That is the argument heard, not just from the Republicans in the US Congress, but also from the Obama Administration who have pretty much stopped listening to even mainstream macro-economists. And it is the argument of European finance ministers and […]
Read moreStill Progressive and family friendly: evaluating Québec’s income tax policy
University of Sherbrooke economist and fiscal specialist Luc Godbout with Suzie St-Cerny and Michaël Robert-Angers has just published a timely research paper evaluating the net fiscal impact on households of Québec’s income tax system.Timely because, as discussed here be Armine Yalnizyan recent data from stats can shows that though globally income inequality has risen during the last recession, they have […]
Read moreGDP Report: Awfully Weak Tea Leaves
Finance Minister Jim Flaherty was unusually blunt on CTV’s Question Period yesterday, saying he was worried about the possibility of another recession. (Finance Ministers are usually very cautious about using the “r”-word, for fear that might worry consumers an dbring about a self-fulfilling prophecy.) Maybe he had already seen today’s quarterly GDP numbers from Statistics Canada, which give lots of […]
Read moreFalse Consciousness, Part I: On Elections and the Middle Class
The following appeared in the National Post today. We’re in the last week of a federal election campaign, and every party wants you to believe they’re there for the hardworking families of a middle class under enormous pressure. That’s you, right? The idea of the middle class resonates, because it is a notion we all share. Time and again, opinion […]
Read moreOf the 1%, For the 1%, By the 1%
The first leg of the federal election campaign has featured much debate over who benefits from different proposals. At least indirectly, it has been a conversation about income inequality. What have they been saying? The Harper Conservatives have introduced a number of high-cost measures all of which are based on tax cuts, all of which would widen the rich/poor gap. […]
Read moreComparing the Platforms: A Better Way to A Balanced Budget.
A quick and easy way to get a very bad bad headache is to attempt to compare and contrast the fiscal plans attached to the major party platforms. But they throw some light on the real priorities of the parties, and the real choices in play in the election. One thing the Conservatives, Liberals and New Democrats apparently have in […]
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