Strangely, neither of the two most hyped issues at last weekend’s federal NDP convention reached the floor for debate. I have nothing to add to the discussion about changing the party’s name. However, the proposal to not tax small-business profits compels me to elaborate the case I made when Nova Scotia Liberals promised to slash the provincial small-business tax to […]
Read moreBenjamin Tal over at CIBC thinks there is good news to be found in the fact that the average duration of unemployment is not rising much despite the fact that unemployment is rising rapidly. As reported in a green shoots kind of good news story by the Globe and Mail In dramatic contrast to past recessions and the current situation […]
Read moreIn July, the Consumer Price Index posted an annual decline of 0.9%, the most negative inflation rate since July of 1953. This decline is troubling not only because it is larger than last month’s decline, but also because it is more widespread. Recent decreases in inflation have mainly been driven by lower gasoline prices in 2009 compared to 2008. This […]
Read moreThere are some really wonderful new young economists out of Canada. I just had to let folks know of a fabulous study “Coups, Corporations and Classified Informationâ€(find it via this list) done by one of them: Suresh Naidu (one of our own) and his colleagues Arindrajit Dube and Ethan Kaplan. (In the interest of full disclosure, Suresh is a buddy […]
Read moreHere is a guest post from BC union (Steelworker) researcher Kim Pollock. By Kim Pollock There is growing evidence that a new stock-market bubble is growing daily, right before our very eyes. But while stock-market prices and market capitalization grow, there are still few signs of real economic recovery. In Canada for instance, real gross domestic product decreased 0.5 percent in […]
Read moreAdvocates of harmonizing provincial sales taxes with the federal GST almost always argue from the premise that, whereas the GST only covers consumer purchases, provincial sales taxes apply to all business inputs. Harmonization is then presented as a means of removing the sales tax from business purchases of machinery and equipment to promote new investment. Not surprisingly, provincial governments have […]
Read moreThank you, Jim Flaherty and Stephen Harper. I just finished the first leg of a long-contemplated kitchen renovation that got pushed over the top by February’s federal budget tax credit for home renovations. This year only! Act now before it is too late! The credit is worth a maximum of $1,350 per family if you spent a full $10,000 or […]
Read moreToday’s Labour Force Survey indicates that employers paid 79,000 fewer Canadians in July. However, a surge of workers declaring self-employment or abandoning the workforce altogether left 9,000 fewer Canadians officially unemployed. Self-Employment Many Canadians are turning to self-employment due to a lack of jobs. Self-employment rose by 35,000 in July, reaching another all-time high. As a result, the net decrease […]
Read moreToday’s job numbers are a clear sign that, far from entering a recovery, the Canadian economy is still in free-fall. This was the first month of the third quarter, the quarter in which the Bank of Canada expects positive GDP growth to resume . But, over the past two months, the number of employees has fallen by 124,000 or one […]
Read moreIt is a bit stunning to discover that Jack Mintz – former head of the CD Howe Institute and now at the University of Calgary – has been appointed research director of the federal – provincial review of pensions. http://www.vancouversun.com/business/fp/Jack+Mintz+research+director+pension+reform+task+force/1794203/story.html Even Finance Minister Flaherty should be a bit embarassed to appoint as a “researcher” someone who is so strongly on […]
Read moreI note from a CP wire story that Ottawa U economist David Gray is weighing in behind Harper’s argument that lowering eligibility for EI would be a “disaster”, and I suspect strongly he will not be the last to do so.    http://thechronicleherald.ca/Canada/1135526.html The received wisdom among mainstream neo liberal economists is that a “generous” EI program creates disincentives to […]
Read moreComments in the Bank of Canada’s last two interest-rate announcements and by its Governor have fuelled speculation that it might intervene in currency markets to moderate the overvalued Canadian dollar. Of course, these remarks may be garnering undue and unintended attention. With the Bank conditionally committed to no interest-rate changes for a year, comments on the dollar have been the […]
Read moreLetter to the Queen: Why No One Predicted the Crisis Her Majesty The Queen Buckingham Palace London SW1A 1AA 29 July 2009 MADAM, In response to your question why no one predicted the crisis you have recently received a letter from Professors Tim Besley and Peter Hennessy, sent on behalf of the British Academy. They claim economists’ failure to foresee […]
Read moreWhile this morning’s American GDP numbers were less bad than expected, this morning’s Canadian GDP numbers were worse than expected. May saw the second-deepest decline of any month so far in 2009. Indeed, May’s 0.5% contraction was almost as bad as January’s 0.6% contraction. Sectoral Breakdown Like January and the intervening months, May was characterized by flat output from the […]
Read moreThe worst news in today’s Employment Insurance (EI) figures is that new benefit claims hit a record high. Rising numbers of unemployed workers and hence EI beneficiaries are an unsurprising result of a deteriorating labour market. However, the increase the number of new EI claims suggests that the pace of deterioration is worsening rather than easing. Despite signs of a nascent […]
Read moreIn its first major economic policy announcement, the freshly re-elected BC Liberal government announced that it would be harmonizing the 7% Provincial Sales Tax (PST) with the 5% federal GST, as of July 1, 2010. What is striking about the new Harmonized Sales Tax (HST) of 12% is that it did not feature in the recent BC election in any […]
Read moreHere’s the link to the second issue of the CLC publication “Recession Watch” detailing recent labour market developments http://canadianlabour.ca/sites/clc/files/Recession-Watch-02-EN.pdf
Read moreI normally hesitate to make short term economic prognostications and the Bank of Canada could indeed be right that growth might tip over the cusp from negative to positive in the third quarter as the first sign of a “nascent recovery” from the Great Recession. As many have noted, including Jim on the National on Thursday night, a mildly positive […]
Read moreThe Spring, 2009 issue of the Oxford Review of Economic Policy contains a useful and interesting piece which convincingly rebuts the often cited and assumed link between Unemployment Insurance “generosity” and higher unemployment due to alleged disincentives to work. You’ll have to pay for the full article, I’m afraid, but here is the abstract. Unemployment compensation and high European unemployment: […]
Read moreThe Economist has recently launched a major attack on public sector pensions, joining the likes of the CFIB and the Howe in Canada who similarly draw invidious contrasts between suuposedly gold-plated public sector pensions and those on offer in the private sector. http://www.economist.com/research/articlesBySubject/displaystory.cfm?subjectid=987105&story_id=13988606 It is true that in Canada, as elsewhere, defined benefit pension plans (which pay out a defined […]
Read moreMy friend and former union (AFL-CIO) economist colleague Tom Palley has produced a characteristically lucid piece on the macro economic roots of the US and global crisis for the New America Foundation. He interprets our predicament as a crisis of the neo liberal growth model and not as a failure of financial regulation or, for that matter, conventional macro economic […]
Read moreTo my surprise, the Harper Conservatives seem to again be breaking new ground in enforcing the Investment Canada Act. This afternoon, the Industry Minister announced that he is taking US Steel to court for violating its commitments. Back in May, my union argued that the federal government must be prepared to take US Steel to court. Terence Corcoran mocked this […]
Read moreThe WSJ is concerned about the implicit subsidy provided to financial institutions that are “too big to failâ€(TBTF). Given the obvious willingness of the US government to support Wall Street titans during the height of the financial crisis, the market is pricing in the expectation that the government stands behind those institutions regarded as TBTF. This implicit guarantee allows the […]
Read moreDeflation is no longer a spectre, but a reality for Canada. This morning, Statistics Canada reported an inflation rate of minus 0.3%. Inflation turning negative was widely predicted, including in my previous comments on the Consumer Price Index. Although not surprising, today’s news has important implications for the debate about further fiscal stimulus. Statistics Canada noted that June 2009 was […]
Read moreJim has written a couple of posts about “the current mini wave of industrial unrest in Canada.” My union recently joined the fray by striking against Vale Inco. While several prominent strikes have recently captured Canadian headlines, I wondered whether the economic crisis has actually led to more labour disputes. On the one hand, concessionary demands from employers typically provoke […]
Read moreI’ve always been annoyed by the trite, horse-race-style coverage of financial markets that dominates so much of what passes for economics journalism in Canada (especially in the electronic media). How many 2-minute “market updates” do we really need, anyway? I typically hear 4 or more on the radio any given workday, just getting to and from work (full reports at […]
Read moreIt’s the leading article in the BC section of national newspapers today: BC’s Finance Minister has finally admitted that next year’s budget deficit would be much larger than the $495 million number than our Premier swore by during the recent election campaign. Private sector economists have been saying it for a while and it was about time for the government […]
Read moreThe BC Public Accounts for 2008/09 fiscal year were released yesterday, showing that the province posted a surplus of $78 million or $28 million higher than projected in the 2008 Budget. Oh, phew, now we don’t have to worry about cabinet ministers facing the fines associated with a budget deficit under the Liberals’ balanced budget legislation (which was amended earlier […]
Read moreAfter many months in which tens of thousands of jobs disappeared, the revelation that “only” 7,400 fewer Canadians were working in June may seem like good news. But this relatively small decline in total employment masks more ominous trends. Self-Employment In June, employers eliminated 44,600 paid positions in Canada, but 37,200 more Canadians declared themselves to be self-employed. This development […]
Read moreFurther to my recent post about the current mini wave of industrial unrest in Canada, and who should wear the blame for it… Now we have the latest developments at Air Canada, where the Machinists local has rejected a tentative multi-union agreement which would have deferred Air Canada’s pension contributions in hopes of seeing the company through the recession. Here’s […]
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