Making Canada Relevant Again- The Economic Super-Thread

[I_am_John_Galt]

And on it goes, so that today we have a Conservative party that, if it had its way, would form a government

Isn't that what they're supposed to do?

and immediately end government social spending,

Is this on Stephen Harper's hidden agenda, because it sure is hell isn't in their policy declaration:

59. Social Principles
The Conservative Party is committed to a strong and effective health care program, well-funded post-secondary education and an effective safety net so that Canadians will be able to face the challenges of life at the beginning of the 21st century.  We will work with the provinces and territories to strengthen the social fabric of Canada to improve the quality of life for all Canadians but especially children, seniors and the disabled.

end government spending on economic initiatives,

Is this on Stephen Harper's hidden agenda, because it sure is hell isn't in their policy declaration:

27. Industrial Development
i)  The Conservative Party favours reducing subsidies to for-profit businesses.  We believe it will be possible to not only reduce, but eventually to eliminate subsidies to for-profit businesses by focusing on improving overall economic growth through facilitating competition, improving productivity, streamlining regulation and fostering innovation in concert with free and fair trade agreements.

end equalization payments to promote economic growth in undeveloped regions of the country

Is this on Stephen Harper's hidden agenda, because it sure is hell isn't in their policy declaration:

22. Equalization
Equalization is an essential component of Canada's nation building efforts.  The Conservative Party supports changes to the equalization program to ensure provinces and territories have the opportunity to develop their economies and sustain important core social services. We will remove non-renewable natural resource revenue from the equalization formula to encourage the development of economic growth in the non-renewable resource sectors across Canada. The Conservative Party will ensure that no province is adversely affected from changes to the equalization formula.

33. Regional Development
The Conservative Party recognizes that regional development policies are an important part of any comprehensive strategy to assist the regions of Canada to meet the opportunities of the new global economy.  Regional development agencies, like ACOA, WED, FEDNOR and CED-Q, must be de-politicized and focussed on attracting new private sector investments.

and cut taxes to nothing.

Is this on Stephen Harper's hidden agenda, because it sure is hell isn't in their policy declaration:

19. Tax Relief
i)  A Conservative Government will provide immediate and long-term broad based tax relief, starting with reducing personal income tax rates and substantially raising both the Basic Personal Exemption and the Spousal Exemption under the Income Tax Act.  Reducing personal income taxes will hike the take home pay and raise the living standard of all Canadians.

ii)  A Conservative Government will reduce business taxes. Reducing business taxes would encourage both foreign and domestic businesses to invest in Canada, meaning more and better jobs for Canadian workers.  Lower business taxes mean greater returns for pension plan members and those who own RRSPs, mutual funds and common shares.

iii)  A Conservative Government will reduce capital gains taxes.  Lower capital gains taxes encourage saving and investment which means more capital for Canadian businesses, more jobs for Canadian workers and bigger returns for Canadian investors.

iv)  A Conservative Government will reduce payroll taxes. {etc ...}

Not to mention abolish the Senate

Is this on Stephen Harper's hidden agenda, because it sure is hell isn't in their policy declaration:

9. Senate Reform
i) A Conservative Government will support the election of senators.  The Conservative Party believes in an equal Senate to address the uneven distribution of Canada's population and provide a balance to safeguard regional interests.
ii) Where the people of a province or territory by democratic election choose persons qualified to be appointed to the Senate, a Conservative Government will fill any vacancy in the Senate for that province or territory from among those elected persons.

and impose a sort of governance by referrendum system unprecedented in the history of world governments.

Huh?

Doesn't sound like very much is being "conserved" to me.

Can I suggest reading http://www.conservative.ca/EN/policy_declaration/ instead of just listening to the sound?

 

[Monsoon]

As you point out, there's a pretty big disconnect between what the Conservative party (and here I talk about the broad-based "grass roots" support, more than the leadership) has to promise to get elected and what it would like to do.  You ask facetiously if any of these points are on Stephen Harper's Hidden Agendatm knowing that the Conservative Party has done a pretty good job of making that phrase sound silly despite its factuality.  Nonetheless, you're on safe ground because Harper's done well at keeping his nose clean of overtly libertarian sentiment outside of his economic policies (post-"Alberta firewall", of course) and he's managed to keep the written platform more or less exactly the same as it was under the Progressive Conservatives.

Question: Why do former Reformers/Alliancers support a party with a platform identical to that of the party they split from in the first place?
Answer: Because the platform is nothing but a political expediency designed to get them elected.  It's a lie.

So in fact there is a hidden agenda in support of the points I mentioned.  Or maybe not so hidden:

Social spending:
Let me quote from Hansard -
Mr. Stephen Harper (Calgary West): Recently the Ministry of Finance released a document that showed our unemployment insurance program to be one of the most generous in the world. This can create serious disincentives to upgrade skills, to work and to move to find work.

Industrial Development:
The quote you yourself extracted from the Conservative platform says that they are opposed to business development: "We believe it will be possible to not only reduce, but eventually to eliminate subsidies".  They go on to say that their magical libertarian free-markets-for-all pill will solve the problems caused by this, but this is nothing but wishful thinking.

Equalization:
Let me quote from Hansard -
Mr. Paul Forseth (New Westminsterâ ”Coquitlamâ ”Burnaby): Mr. Speaker, I would ask the member to carefully reflect on what he is saying and explain the underlying principle of what he is talking about.  Is there a perverse incentive to equalization? What is the long term goal? Should it not be to eventually get off such supports? Is he talking about more transfers rather than self-sufficiency? Should equalization not be gradually reduced?
I admit that being an Alberta-based party makes it hard to support economic development transfers to non-oil rich provinces but, as you've shown, the Conservative Party has managed to ignore the wishes of its backbenchers enough to put some bland words of support for equalization in their platform.  It's important to reach out.  As long as Alberta gets to be considered a have-not province again: "We will remove non-renewable natural resource revenue from the equalization formula."

Regional Development:
Alberta Conservative "Senator-elect" Link Byfield should do the talking here: "The Maritimes would be better off without transfers, and so would all of Canada".  That's not an isolated quote, that's the title of an article he wrote just a year ago.

Taxes:
Ummmm: "A Conservative Government will provide immediate and long-term broad based tax relief".  They pad it out with some characteristically wishful talk about how tax cuts will actually increase government revenue but that is, again, more libertarian garbage.  I grant you that corporate tax cuts will do something to stimulate the economy (though consumption and personal tax cuts are demonstrated to have very little relative effect) but 10 billion in taxes doesn't equate to 10 billion in revenue growth. You can ask good old George "budget-suplus-to-500-billion-deficit" Bush about how well tax cuts work at increasing revenue.

Senate:
OK, you've got me there.  Although the grassroots would prefer to abolish the upper house altogether, the party leadership is willing to settle for fundamentally changing the nature and role of it.  That's much more conservative.

Referenda:
That's how "grassroots" movements are implemented: referendum after referendum after interminable referendum.  Gay marriage? Referendum.  Gun legislation? Referendum.  Decriminalization of marijuana? Referendum.  Petition with as few as 10,000 signatures? Referendum.  I'm not saying referenda are unprecented, but the sheer quantity of referenda proposed (what are our representatives being paid to do - run a polling service?) certainly is.  There's a phrase to describe that: "tyranny of the majority".

 

[squealiox]

Yes, and you are claiming it took them 20 years to figure this out!

it's been about 20 years since the last "greenfield" investment. that doesn't include factory upgrades, expansions or buyouts, which are much more frequent types anyway. investment is investment is investment.

No, it is a simple argument that I will re-iterate for the 50th time: the single reason that Toyota is choosing to locate in Ontario is that it is NOW cheaper.   Uneployment numbers are indicative of the reason: they are not the reason.

They (and pretty much every other auto manufacturer) have been choosing to locate in the states because costs *have* been lower there.

The regulatory environment down there hasn't deteriorated meaningfully (actually they were offered a great deal of incentives to locate in the states) but costs have risen BECAUSE labour costs are increasing due to increased utilization (this isn't even advanced economics: the demand (for labour) curve has shifted to the right (which happens every time a new manufacturing plant is built) resulting in a higher equilibrium price point (for labour)).

and for the 50th time, i will point out the absurdity of reducing the cost-benefit proposition of ontario entirely to the least compelling of all possible factors -- the slim relative availability of unemployed labour. do you have any particular reason to assume the supply-demand curve (a thick, fuzzy pair of lines) has much explanatory power in a situation of 93.5% vs 95.6% employment, such that you can discard all other factors? or that there is no differentiation within the labour market? even though a whole host of far more significant factors has been repeatedly pointed out by the company making the decision, among others?
Even The Amazing Luskin has not attempted such a feat.

you would probably have a point if 20% of ontarians were unemployed. but they aren't and you don't. in fact there are plenty of sunny little countries a lot closer to alabama that have astounding unemployment rates and next to nil govt spending, which by your reasoning should make them ideal locations for a car factory.

>> You are claiming that that the Healthcare system in Ontario is lower cost  

it IS lower cost. case study: healthcare costs are one of the reasons GM and Ford took big debt downgrades this year. or is that another MSM lie, too?

   AND that Ontario people are genetically superior (more trainable) AND that Toyota's executives (and that of every other auto manufacturer) are so stupid that it's taken them 20 years to figure this out.   Give your head a shake!

now you've really gone off the deep end...

 

[a_majoor]

Not to mention abolish the Senate and impose a sort of governance by referrendum system unprecedented in the history of world governments.

The Swiss will be very surprised to discover that government by referrendum at the Canton and State level is unprecedented. The main reason we don't see much enthusiasm here is the ruling elites were utterly defeated when they put the "Meech Lake" accord to a national referrendum back in the 80's, despite outspending the "no" side by a ratio of 10:1. Since letting the voter actually have a say in how things operate could derail Stateism, we avoid encouraging that notion anymore.

They pad it out with some characteristically wishful talk about how tax cuts will actually increase government revenue but that is, again, more libertarian garbage.  I grant you that corporate tax cuts will do something to stimulate the economy (though consumption and personal tax cuts are demonstrated to have very little relative effect) but 10 billion in taxes doesn't equate to 10 billion in revenue growth. You can ask good old George "budget-suplus-to-500-billion-deficit" Bush about how well tax cuts work at increasing revenue.

You can read about the Laffer curve and see how raising taxes becomes counterproductive, or you can go back a few pages and find the posts showing how US tax revenues have exploded and the deficit figures are lower than expected this year. The increase in the US deficit is due to increasing expenditures by the US government, not declining tax revenues. (The "surplus" was a projection based on US economic trends, and the "Dot.com" market crash at the end of the Clinton administration made hash of those figures anyway).

Alberta Conservative "Senator-elect" Link Byfield should do the talking here: "The Maritimes would be better off without transfers, and so would all of Canada". 

Absoulutly true. Who should choose what to do with your wealth? You, or Paul Martin? You have personal goals to achieve with your wealth, Mr Dithers wants to use your wealth to maintain a lock on political and economic power in Canada for the benifit of himself and the Liberal party. If that is your goal, then make a political donation, do not ask/force the rest of us to contribute.

 

[Monsoon]

The Swiss will be very surprised to discover that government by referrendum at the Canton and State level is unprecedented. The main reason we don't see much enthusiasm here is the ruling elites were utterly defeated when they put the "Meech Lake" accord to a national referrendum back in the 80's, despite outspending the "no" side by a ratio of 10:1. Since letting the voter actually have a say in how things operate could derail Stateism, we avoid encouraging that notion anymore.

Touché - you're right that Switzerland (unique in the world) is saddled with such a tyranny of the majority, which may explain why such a prosperous country is also so isolationist and xenophobic.  But surely you can't believe that what works for a culturally and socio-economically homogenous country with a population of 7 million sharing only 41,000km2, would be good for a country as physically and culturally diverse as Canada?  As you pointed out, it's impossible to build concensus by referenda in Canada.

You can read about the Laffer curve and see how raising taxes becomes counterproductive, or you can go back a few pages and find the posts showing how US tax revenues have exploded and the deficit figures are lower than expected this year. The increase in the US deficit is due to increasing expenditures by the US government, not declining tax revenues. (The "surplus" was a projection based on US economic trends, and the "Dot.com" market crash at the end of the Clinton administration made hash of those figures anyway).

I'm not arguing that lower taxes aren't good for economic stimulus, I'm arguing that a $10B tax cut (even if it's made entirely in corporate tax cuts) will not sufficiently stimulate the economy to produce $10B of increased tax revenue. The dot.com crash came at the beginning of the Bush administration (though I'm not suggesting cause-and-effect) and started days after the massive Bush tax cut was signed into law.  The tax cut was designed to take care of the "problem" of the excessive surpluses that country would experience in coming years, based on ridiculously optimistic projections (which you seem to feel was Clinton's fault - I didn't realize he actually formed a part of the Bush administration) of the exponential market growth of 1999-2000.  That growth didn't hold, of course, and the tax cut proved (or will prove) to be a fatal mistake.  Just as the Conservatiove Party would like to promise tax cuts based on surpluses taken from a snapshot of Canada at its healthiest (after 12 years of Liberal rule) rather than accept that it's part of the ebb and flow of economic life.

Absoulutly true. Who should choose what to do with your wealth? You, or Paul Martin? You have personal goals to achieve with your wealth, Mr Dithers wants to use your wealth to maintain a lock on political and economic power in Canada for the benifit of himself and the Liberal party. If that is your goal, then make a political donation, do not ask/force the rest of us to contribute.

I'm not going to argue the point directly because the case for equalization (which is really identical to the case for having a government at all) has been better-made by others elsewhere.  The denial of it is largely a matter of perspective.  My original point, though, is that the views you hold on the matter are not at all Conservative - they're libertarian.  Why do you not vote for the Libertarian Party?  And, if you truly believe that equalization is bad, why do you support the Conservative Party who's platform supports it?  Do you think that the platform is a lie designed to get the party elected so that they can then push their (yes) hidden agenda?

 

[a_majoor]

Actually I am quite open about being a libertarian (small l), and the main reason I support the Conservatives is they are clearly and openly advocating positions that are closest to my own (although not close enough). As a realist, I know that a Conservative government will only "tack" the ship of state in a slightly different direction, perhaps enough to avoid fiscal and social iceburgs, but still running in dangerous waters. If there are enough libertarian sailors aboard, maybe we can steer the ship a bit farther into clear waters. If there was a well organized Libertarian party in Canada, I would certainly support them.

My own plan is to run for municipal office in order to inject some of these ideas into the political debate; and if elected, actually implement them. The success of tax and spending cuts on the local economy should energize voters in other municipalities, and begin the long process of raising voter expectations and training a new generation of politicians to behave in fiscally and socially responsible ways (i.e. get out of our day to day lives).

Since economics is a descriptive science in the current state of the art (i.e. I know from multiple examples from history and across many different societies that tax cuts stimulate the economy and create new wealth, but I cannot predict how much new wealth will be created), I will confess the magnitude of the tax and spending cut effect is open for debate; what is not debatable is the fact that there will be a positive impact from tax and spending cuts.

Just a note about referendums, it was impossible for the elites to gain a consensus from the masses WRT Meech Lake. A similar fiasco happened in Europe just recently when the French and Dutch defeated the adoption of the "European Constitution". In each case, the elites were trying to pull a "fast one" on the people, who were finally able to respond because they had the tools available with the referendum. The Swiss model works because referenda are started "bottom up", by local voters raising petitions and getting enough support to place proposals before the local parliaments. Since the voters create the proposals and raise support, the level of consensus for laws put to referenda is already quite high. Finding enough engaged voters in Canada might be a difficult proposition, but not impossible.

 

[Monsoon]

My own plan is to run for municipal office in order to inject some of these ideas into the political debate; and if elected, actually implement them. The success of tax and spending cuts on the local economy should energize voters in other municipalities, and begin the long process of raising voter expectations and training a new generation of politicians to behave in fiscally and socially responsible ways (i.e. get out of our day to day lives).

I tend to support a little libertarianism at the municipal level - the less government down in the weeds, the better, and a municipality is small enough that consensus can be reached fairly readily by referendum.  Good luck to you.

Since economics is a descriptive science in the current state of the art (i.e. I know from multiple examples from history and across many different societies that tax cuts stimulate the economy and create new wealth, but I cannot predict how much new wealth will be created), I will confess the magnitude of the tax and spending cut effect is open for debate; what is not debatable is the fact that there will be a positive impact from tax and spending cuts.

Agreed - unnecessary spending should always be eliminated.  It's defining the word "unneccessary" that causes the trouble.  When controlling spending, I tend to think that it's better to try to find efficiencies than make what are ultimately ideological decisions about what a government should and shouldn't be doing - that's a separate debate entirely.  For instance, John McCallum found $2bn last year by just poking around and knowing a thing or two about how to run a company, and now the government's trying to dig up another $4bn by restructuring the public service.  There'll be a hissy fit from the union and maybe customer service will decline marginally, but ultimately there's a lot of this sort of spending to be cut before we decide to stop spending money on business and industrial development.

Regarding tax cuts, here's a proposition I'm not sure I entirely support but that I'll toss out for the sake of argument: personal income, consumption, and capital gains taxes should not be cut until corporate taxes approach 0%.  Thoughts?

Just a note about referendums, it was impossible for the elites to gain a consensus from the masses WRT Meech Lake. A similar fiasco happened in Europe just recently when the French and Dutch defeated the adoption of the "European Constitution". In each case, the elites were trying to pull a "fast one" on the people, who were finally able to respond because they had the tools available with the referendum. The Swiss model works because referenda are started "bottom up", by local voters raising petitions and getting enough support to place proposals before the local parliaments. Since the voters create the proposals and raise support, the level of consensus for laws put to referenda is already quite high. Finding enough engaged voters in Canada might be a difficult proposition, but not impossible.

You see "the elite" as being a wholly separate institution from "the masses" - I would argue that an elite is always the result of people coming together from the bottom up.  Ultimately when any project gets large enough it can't be entirely held in the head of any one person - the elite is the group of people involved in the movement that kown each other and know about their part of the movement.  It's just the backbone and spine of the population.  The trick is to ensure that the elite is an accessible one, and one composed of intelligent and reasonable people.  Canada's elite (I would argue) meets these criterias as opposed to, say, Argentina's.  The prime failing of the various People's Revolutions of the 20th century were their inability to replace the elites they deposed with better ones.  The new elites were even more grasping, closed and venal than the old ones and, worst of all, they didn't have the social connectivity to run the nation in an structured way.

I would argue that no lengthy piece of legislation submitted to national referendum would ever pass in a country as large as Canada.  Ever.  A grassroots movement such as you envision could never happen - it would have to be orchestrated if popular support were to rise from many parts of the country at the same time.  The orchestrators would, themselves, have to be a part of the national elite to pull that sort of thing off.

 

[a_majoor]

Regarding tax cuts, here's a proposition I'm not sure I entirely support but that I'll toss out for the sake of argument: personal income, consumption, and capital gains taxes should not be cut until corporate taxes approach 0%.   Thoughts?

There is a fairly sophisticated economic argument that corporations never pay tax anyway (the costs just get passed on to the consumer), and all benefits flow to the shareholders. Certainly the amount of time and effort that is spent in the corporate world in minimizing and avoiding tax could be better spent elsewhere. Many corporations are multinational, or at least have dealings with corporate entities and customers in other jurisdictions, so reducing corporate tax would have to be a regional undertaking at the very least, or business will restructure operations hurriedly to "no tax" jurisdictions with potentially detrimental effects on their own operations and to the outside economies.

WRT personal and sales taxes, they could be streamlined and lowered substantially as well. The guiding principle should be "a dollar is a dollar", rather than having complex rules to tax dollars at different rates according to fairly arbitrary rules of attribution (i.e. where did that dollar come from?). Certainly the time and effort expended in preparing personal income tax could also be better spent elsewhere.

You see "the elite" as being a wholly separate institution from "the masses" - I would argue that an elite is always the result of people coming together from the bottom up.   Ultimately when any project gets large enough it can't be entirely held in the head of any one person - the elite is the group of people involved in the movement that kown each other and know about their part of the movement.   It's just the backbone and spine of the population.   The trick is to ensure that the elite is an accessible one, and one composed of intelligent and reasonable people.   Canada's elite (I would argue) meets these criterias as opposed to, say, Argentina's.   The prime failing of the various People's Revolutions of the 20th century were their inability to replace the elites they deposed with better ones.   The new elites were even more grasping, closed and venal than the old ones and, worst of all, they didn't have the social connectivity to run the nation in an structured way.

Given our political elites do almost anything to remain unaccountable to the voters, I would make a strong case they are disconnected from the masses.

I would argue that no lengthy piece of legislation submitted to national referendum would ever pass in a country as large as Canada.   Ever.   A grassroots movement such as you envision could never happen - it would have to be orchestrated if popular support were to rise from many parts of the country at the same time.   The orchestrators would, themselves, have to be a part of the national elite to pull that sort of thing off.

At the risk of sounding snarky, that is a great argument as to why lengthy pieces of legislation should nott be crafted. Remember the American Constitution is essentially a two page document, while the proposed European Constitution ran to (I believe) several hundred pages and would have made a fine coffee table book. Which document do think is easier to understand and apply?

 

[Kirkhill]

Liberals, Conservatives, Socialists....useless bits of crap save only for convincing those too lazy to think for themselves to vote the way their ancestors have.

Conservatives conserve.  Liberals are free thinkers. Socialists think of society.  That is the origin of the labels.

Conservatives wanted to prevent change.  Others wanted change to occur.  In order to sell the notion of change it was defined as progress.  Crap again.  Change is change.  Progress - I haven't got a clue what that means.

By and large those interested in change succeeded in achieving change.

Unfortunately having achieved Nirvana they couldn't admit it for then they would be fighting to conserve that which they had achieved.  They would then become conservatives.  At the same time they couldn't admit that not all the changes they had called for were positive inter alia "progressive".  More change was required.  Resistance to change was conservative.  They activists that kept them in power demanded more change.  For whatever reason change must happen.

Eventually though there are fewer and fewer things that "progressives" wish to change, for they are truly the font of all that is good in the world, and thus more and more reason for "progressives" to conserve.  The "progressives" then start losing their driving forces, their activists.

Meanwhile the Conservatives, looking at the changes that have been made decide that some changes should never have been made and other changes were the wrong changes.  In order to improve, (dare one say "progress" if that concept isn't copyrighted), then change must be made.  Thus conservatives support change and changers wish to conserve and the voter is confused and goes to the pub.

The party labels serve only to keep ahold of a tribal base that has lost touch with even the party dogma and votes out of reflex.  Pavlov would be proud.

:blotto:

Gawd its a miserable day and I'm in a foul mood.

 

[I_am_John_Galt]

it's been about 20 years since the last "greenfield" investment. that doesn't include factory upgrades, expansions or buyouts, which are much more frequent types anyway. investment is investment is investment.

Yes, all of those happened in the United States as well: they are indicative of small growth or recovery: they are not an indication of the type of new investment that greenfield developments are.

and for the 50th time, i will point out the absurdity of reducing the cost-benefit proposition of ontario entirely to the least compelling of all possible factors -- the slim relative availability of unemployed labour. do you have any particular reason to assume the supply-demand curve (a thick, fuzzy pair of lines) has much explanatory power in a situation of 93.5% vs 95.6% employment, such that you can discard all other factors? or that there is no differentiation within the labour market? even though a whole host of far more significant factors has been repeatedly pointed out by the company making the decision, among others?
Even The Amazing Luskin has not attempted such a feat.

Of course there are differences in the markets, but we are talking about macroeconomics and the fact that the Canadian labour market is not hugely differant that that of the US (although you don't seem to think so).

you would probably have a point if 20% of ontarians were unemployed. but they aren't and you don't. in fact there are plenty of sunny little countries a lot closer to alabama that have astounding unemployment rates and next to nil govt spending, which by your reasoning should make them ideal locations for a car factory.

Unemployment:
1990: Alabama 6.5% Ontario 6.3%
1991: A 7.0% O 9.6%
1992: A 6.7% O 10.9%
1993: A 6.1% O 10.6%
1994: A 5.1% O 9.6%
1995: A 4.8% O 8.7%
1996: A 4.2% O 9.1%
1997: A 4.0% O 8.5%
1998: A 4.0% O 7.2%
1999: A 4.3% O 6.3%
2000: A 4.3% O 5.7%
2001: A 5.4% O 6.3%
2002: A 5.7% O 7.1%
2003 A 5.9% O 7.0%
2004: A 5.3% O 6.8%
2005: Ontario gets the Toyota plant because of it's obviously always been a better place to create jobs (?!?).

I will spell it out for you: pretty much every time the employment gap grows, Ontario's unemployment falls in the next period: the exception is when Alabama (and other states) get down close to 4.0%, in which case  the gap shrinks and Ontario's unemployment shrinks anyway (as the supply of labour hits it's 'cap' in Ala.).

The story is the same for other US states as it is nationally.  Canada does not have a more competitive labour force than the US: this is actually very well documented.

it IS lower cost. case study: healthcare costs are one of the reasons GM and Ford took big debt downgrades this year. or is that another MSM lie, too?

You've said that our Stalinist healthcare system is so efficient that labour costs are lower in Ontario than in competitor US states: that's what your claim boils down-to. The last 20 years of history suggest that Ontario's labour is more costly as employment in Ontario lags that of the US, except when the US is operating at full employment.

 

[squealiox]

You've said that our Stalinist healthcare system is so efficient that labour costs are lower in Ontario than in competitor US states: that's what your claim boils down-to. The last 20 years of history suggest that Ontario's labour is more costly as employment in Ontario lags that of the US, except when the US is operating at full employment.

nowhere have i denied that we have many inefficiencies vis-a-vis the us. but my whole point is that it's not our spending on healthcare and education that is to blame for this. there's plenty of real govt waste out there, but it doesn't follow that all govt spending is wasteful or unnecessary. this much is obvious to most people.

(and btw, stalin was a vicious tyrant who was responsible for gulags, show trials, and the deaths and slavery of millions. please have the decency to not trivialize those crimes.)

 

[I_am_John_Galt]

nowhere have i denied that we have many inefficiencies vis-a-vis the us. but my whole point is that it's not our spending on healthcare and education that is to blame for this. there's plenty of real govt waste out there, but it doesn't follow that all govt spending is wasteful or unnecessary. this much is obvious to most people.

and this gets to my main point: our govt spending is probably to blame for much of these bad decisions, but not EVERY AREA of govt spending. the biggest culprit is industrial and regional subsidies and other forms of protectionism, which do a lot of damage by distorting the economy. some spending on healthcare, education, social safety net, etc., may well provide benefits that are more than negated by the costs of excessive industrial policy.
the toyota case just happens to be a tidy illustration of this. it appears, among other things, the southern states just can't meet the demand for skilled labour as well as canada can (and that remains the simplest explanation, pending any actual data to the contrary emanating from Galt's Gulch).
to dogmatically ignore this distinction and robotically cry "suffocating nanny state" at every penny of public expenditure is like throwing the baby out with the bathwater, and is in any case unrealistic.

The point you've been making is that Canada is somehow sometimes more efficient because of our socialist system!  The fact of the matter is that the regulatory burden doesn't discriminate between destructive government waste of taxpayer resources and 'useful' government waste of taxpayer resources (whatever you imagine that to be: is that like PMPM's $55MM bribe to Toyota?): they are all costs that adversely affect competitiveness.  Companies bear less regulatory burden in the US than in Canada and thus are predisposed to do business there rather than here.  The simplest explanation (is this your criteria?) is that the Southern States can't meet the demand for skilled labour because their skilled labourers are already working not because of some magical taxpayer spending that makes Ontarians more trainable and employable at random intervals (which inexplicably coincide almost exactly with a short lag of periods of labour market is tightening in the US). Keep telling the lie enough and people will believe it, right?  Keep the faith: best healthcare system in the world!!!! Canadian helathcare is a model for the world (that has been copied by zero other countries and counting)!!!  Go Canada Go!  Stephen Harper's scary!

(and btw, stalin was a vicious tyrant who was responsible for gulags, show trials, and the deaths and slavery of millions. please have the decency to not trivialize those crimes.)

He is also responsible for the USSR's extremely statist healthcare system (you know, the subject), which is comparable with that of only a few countries in history (i.e., Cuba, Canada ... even Russia's and China's healthcare systems today are less regulated than Canada's).

 

[squealiox]

The point you've been making is that Canada is somehow sometimes more efficient because of our socialist system!   The fact of the matter is that the regulatory burden doesn't discriminate between destructive government waste of taxpayer resources and 'useful' government waste of taxpayer resources (whatever you imagine that to be: is that like PMPM's $55MM bribe to Toyota?): they are all costs that adversely affect competitiveness.    Companies bear less regulatory burden in the US than in Canada and thus are predisposed to do business there rather than here.   The simplest explanation (is this your criteria?) is that the Southern States can't meet the demand for skilled labour because their skilled labourers are already working not because of some magical taxpayer spending that makes Ontarians more trainable and employable at random intervals (which inexplicably coincide almost exactly with a short lag of periods of labour market is tightening in the US). Keep telling the lie enough and people will believe it, right?   Keep the faith: best healthcare system in the world!!!! Canadian helathcare is a model for the world (that has been copied by zero other countries and counting)!!!   Go Canada Go!   Stephen Harper's scary!.

lots of exclamation marks there, but you have still not shown healthcare and education spending to be a net drain on our economy -- as porkbarrel projects or industrial subsidies undoubtedly are -- beyond merely labelling them as such.

He is also responsible for the USSR's extremely statist healthcare system (you know, the subject), which is comparable with that of only a few countries in history (i.e., Cuba, Canada ... even Russia's and China's healthcare systems today are less regulated than Canada's)

then i assume you will have nothing to say the next time one of your mirror-images on the left invokes the name of a certain german politician...

 

[Monsoon]

There is a fairly sophisticated economic argument that corporations never pay tax anyway (the costs just get passed on to the consumer), and all benefits flow to the shareholders. Certainly the amount of time and effort that is spent in the corporate world in minimizing and avoiding tax could be better spent elsewhere. Many corporations are multinational, or at least have dealings with corporate entities and customers in other jurisdictions, so reducing corporate tax would have to be a regional undertaking at the very least, or business will restructure operations hurriedly to "no tax" jurisdictions with potentially detrimental effects on their own operations and to the outside economies.

Well that's the point of reducing corporate income tax rather than personal income or consumption taxes - to attract businesses and employers.  Even if the corporations are only technically Canadian, there are benefits to be drawn from the employment of lawyers, accountants, and financial industry specialists that thrive in tax havens.

WRT personal and sales taxes, they could be streamlined and lowered substantially as well. The guiding principle should be "a dollar is a dollar", rather than having complex rules to tax dollars at different rates according to fairly arbitrary rules of attribution (i.e. where did that dollar come from?). Certainly the time and effort expended in preparing personal income tax could also be better spent elsewhere.

My proposal favouring corporate tax cuts was based on a chart related to the Laffer curve (I don't recall where I saw it - may have been the Economist, in which case it's likely to be reputable, or it may have been the National Post, in which case it was probably fallacious) that compared the economic impact (based on GDP grwoth) of various different kinds of tax cuts.  The numbers were the ratio of dollars of GDP growth per dollars of tax cut and went something like:

Corporate/Business tax: 1.2
Capital Gains tax:          0.9
Personal income tax:    0.6
Consumption tax:        0.3

Does any know where I can find a copy of that?  In any case, the chart shows that a dollar is definitely not a dollar - tax dollars are most effectively cut from corporate income rather than consumption tax.  There is likely a level of diminishing returns after which it makes less sense to cut there, but I think the money spent on a tax collection system that differentiates between different kinds of income (a cost measured in the tens of millions) is well spent given the resulting impact on the economy (a result measured in the tens of billions).

Given our political elites do almost anything to remain unaccountable to the voters, I would make a strong case they are disconnected from the masses.

I wasn't thinking specifically about politicians (though they form a part of the elite), but in any case my point is that just about anyone who cares to can become a part of the Canadian elite - Mulroney was the son of a paper-mill woker from Baie-Comeau - whereas the elites of other countries are very inaccessible to the general public.  Accountability in an open system like ours derives from the threat of displacement - anyone sufficiently discontent who can do a better job of being the elite can become the elite.

At the risk of sounding snarky, that is a great argument as to why lengthy pieces of legislation should nott be crafted. Remember the American Constitution is essentially a two page document, while the proposed European Constitution ran to (I believe) several hundred pages and would have made a fine coffee table book. Which document do think is easier to understand and apply?

Well, the fine points need to be worked out somewhere; the alternative is an invitation to confusion or judicial/administrative activism.  But I agree that specific issues should not be settled on a large scale by referenda.  "Do you support a strong federal government checked by provincial governments on matters relating to domestic issues?" Would be a good constitutional question to put to the nation.  "Do you agree that the Constitution of Canada should be renewed on the basis of the agreement reached on August 28, 1992 (see attached 150 pages)?" is not.  Even simple legislation ("Do you support the death penalty?") has too many surrounding issues to expect the general public to properly inform itself - that's what legislators are for.

 

[a_majoor]

I wasn't thinking specifically about politicians (though they form a part of the elite), but in any case my point is that just about anyone who cares to can become a part of the Canadian elite - Mulroney was the son of a paper-mill worker from Baie-Comeau - whereas the elites of other countries are very inaccessible to the general public.   Accountability in an open system like ours derives from the threat of displacement - anyone sufficiently discontent who can do a better job of being the elite can become the elite.

Politicians and "elites" are accountable in theory, but looking at our recent history, the "threat" of displacement is pretty low. A certain Mr Cretien funnelled tax money to a business in his riding, with the effect (to an outside observer) of using tax money to support the value of his personal investments. Despite repeated requests by members of the opposition, the press and (presumably) the public, he never produced any documentation that would suggest this wasn't the case. (If he is offended by this suggestion, he has only himself to blame). In Ontario, Dalton McGuinty ignored a law requiring the government to put tax increases to a referendum, and then rrescindedthe law (after the fact). I'm sure you can put up your own favorite example of political or other "elites" who refuse to be accountable.

Well, the fine points need to be worked out somewhere; the alternative is an invitation to confusion or judicial/administrative activism.   But I agree that specific issues should not be settled on a large scale by referenda.   "Do you support a strong federal government checked by provincial governments on matters relating to domestic issues?" Would be a good constitutional question to put to the nation.   "Do you agree that the Constitution of Canada should be renewed on the basis of the agreement reached on August 28, 1992 (see attached 150 pages)?" is not.   Even simple legislation ("Do you support the death penalty?") has too many surrounding issues to expect the general public to properly inform itself - that's what legislators are for.

And Legislators are elected by the same people who do not properly inform themselves. An election is a form of referendum, but instead of having one issue on the plate, there are as many as the party platform(s) have listed, with many obscured or ignored and others only discussed in 30 second sound bites. I suggest a referendum on a single issue is probably more conducive to clear thinking and more effective in determining the "will of the people" than a general election. It also prevents politicians skating around issues the voters are concerned about; why do you think Dalton McGuinty struck down the law requiring tax increases to be put to a referendum, or why isn't a contentious issue like "gay marriage" on the ballot? The main reason is simply that the elites know they will not get their desired outcomes in a referendum (the lesson of Meech Lake), so refuse to use them.

A general referendum (Do you support the Death penalty), without qualifiers would set the boundaries for the legislators to work within. If a clear majority support the death penalty, then legislators must consider that option, while if a clear rmajority do not, then legislators cannot introduce it .

 

[a_majoor]

All we need to do is follow these simple steps to generate these economic numbers:

The Silence of the Bush Boom
The president has a good story to tell, but he must tell it.

Why President Bush seemingly gets no credit for the strong economy is one of the enduring political mysteries of our time. Some call it the "Goldilocks economy" - a term widely used to describe the low-inflation growth of the second half of the 1990s. More accurately, it's a non-inflationary boom where the economy is hitting on all cylinders and the outlook for the coming years is bright. In view of the ravages of the 2000-02 stock market plunge, the 9/11 terrorist attacks, and skyrocketing energy prices, the Bush boom stands as even more of a great achievement.

But still he gets no credit. Most polls show the president's economic approval rating around 40 percent or even less. Scott Rasmussen, who does extensive consumer and investor polling, shows that the confidence ratings of both are about 15 percent lower than in late 2003.

Meanwhile, a splendid group of economic data points show clearly the effectiveness of the president's marginal tax-rate reductions of two years ago. The tax-cut package was in large part directed at stock market and business capital formation, both hard hit a few years back. This was the correct target. Share prices have recovered about 70 percent in recent years, with a number of widely tracked indexes, like the NYSE and the S&P small- and mid-cap indexes, now trading at all-time highs. The economy itself is growing at about 4 percent per annum since the tax cuts, with business investment leading the surge.

Breaking down the major components of the economy, business spending on equipment and software is now contributing close to 30 percent of the increase in gross domestic product. (Prior to the Bush tax cuts on capital gains, dividends, and personal incomes, cap-ex was a net drag on economic growth.) The business surge has caused industrial production to rise by nearly 9 percent in the past couple of years, or 4.1 percent annually.

In this supply-side model, it is investment and production that create jobs. Not surprisingly, the total U.S. employment of 142 million workers stands at an all-time high. Since May 2003, non-farm payrolls have grown by 4 million, while the Labor Department's household survey (which includes the self-employed) has surged by 4.5 million. The unemployment rate is 5 percent with real worker compensation growing by nearly 4 percent. Interest rates and core inflation are running at four-decade lows.

Liberal economists like Paul Krugman ridicule the Bush boom as nothing more than a housing bubble destined to burst. But if the numbers-challenged Krugman would do some homework he would find that the GDP contribution of residential investment has dropped from 15 to 8 percent in the last two years. For that matter, the consumer contribution to GDP has slowed from 90 to 75 percent. By taxing investment less, the economy is generating more of it.

With comparable economic numbers in 1983 and 1984, President Reagan enjoyed a tremendous "morning in America" popularity that won him a 49 state landslide. Similarly, the economic boom of the late 1990s helped President Clinton withstand the political slings and arrows of impeachment. But for some reason this economy is not working for Bush.

Most pundits blame rising gas prices and Iraqi war difficulties for Bush's slump. While these are involved, they're not the whole story. The unwillingness of the Bushies to communicate and market an economic-recovery message is also to blame.

Politics is a lot like 12-step programs, where recovery comes through daily repetition. But on the Friday of an unexpected 207,000 jobs increase, President Bush was nowhere to be seen. Instead of a 10 a.m. news briefing in Crawford, Texas, the news vacuum was filled by blathering Wall Street pundits who turned good news on jobs into bad news on rate-hikes from the Fed. Bush did mention jobs in his radio address the next day, but who in steamy mid-August was listening?

This is the basic marketing problem of our MBA president.

Another possible sub-rosa problem plaguing the administration is the growing public distaste for wasteful federal spending. While the highway and energy bills both had positive elements, both the mainstream and conservative media used each as examples of pork-barrel politics. Adding to this, two-thirds of respondents to a recent CNBC poll favored lower spending and taxing, whereas only 4 percent approved of tax cuts alone. Another 30 percent favored government budget cuts alone.

The 2003 tax cuts were clearly an economic elixir, but the American public may well be growing uneasy with the failure of Washington to better manage taxpayer money. At the same time, the drumbeat of the economic pessimists in the media may only be exacerbating the problem.

Bush has a good story to tell, but he must tell it. Then he must add a chapter on new spending restraint. If the president and his high command can make these kinds of adjustments, they can move the economic polls up where they belong.

- Larry Kudlow, NRO's Economics Editor, is host of CNBC's Kudlow & Company and author of the daily web blog, Kudlow's Money Politic$.
 
http://www.nationalreview.com/kudlow/kudlow200508170841.asp

 

[squealiox]

The simplest explanation (is this your criteria?) is that the Southern States can't meet the demand for skilled labour because their skilled labourers are already working not because of some magical taxpayer spending that makes Ontarians more trainable and employable at random intervals (which inexplicably coincide almost exactly with a short lag of periods of labour market is tightening in the US).

here's another bucket of cold water for that reductionist pet theory of yours:

http://news.bbc.co.uk/1/hi/business/4749347.stm
US jobs growth at five-month high  

Despite the growth in jobs, US factories are shedding workers
The US economy created 207,000 new jobs in July, the biggest gain in five months, according to official figures.
At the same time, US unemployment remained steady at 5% for the second month in a row, continuing at a four-year low.
New positions were created in retailing, education, health services, finance and construction, the US Labor Department said.
By contrast, factories shed jobs for the second straight month.
Upwards revision
The 207,000 new jobs created in July beat market expectations for a total of 180,000.
At the same time, the Labor Department revised upwards its previous job creation figures for June and May.
June was increased from 146,000 to 166,000, and May from 104,000 to 126,000.
The health of the jobs market is vital for economic confidence in the US, with consumer spending remaining the biggest influence on American growth.
'Sustainable growth'
Analysts broadly welcomed the latest figures.
"This is a crystal clear indication that the labour markets are very healthy and it reinforces the notion that the economy is growing in a healthy, sustainable way," said Dana Johnson, chief economist at Detroit-based Comercia.
However, the growing labour market would likely lead to the US Federal Reserve continuing to raise interest rates to prevent inflationary pressures, Ms Johnson said.
The Fed has raised interest rates by one-quarter of a percentage point 10 times since June 2004.
It next meets on Tuesday and is widely expected to raise rates by that same amount again. The US base rate currently stands at 3.25%.
And some commentators point to a number of other employment statistics which suggest that there is still plenty of slack in the labour market.
Among them are wages which have stayed broadly static, and the proportion of adults employed or looking for work which is at a ten-year low. Similarly, the length of time people remain unemployed is at a level last seen in the early 1990s.
(includes links to relevant data sources)

of course, it's the BBC presenting these facts, so they must be lies, all lies...

 

[I_am_John_Galt]

squeeliox: you are in over your head.

 

[squealiox]

squeeliox: you are in over your head.

is that so? you claim ontario's ENTIRE advantage is a slack labour market while the US has full employment. but that seems not to be the case -- especially in manufacturing.

meanwhile, i am still waiting to see a convincing argument -- or any argument at all, in fact -- for the following non-sequitur:
"most public spending is wasteful (true) ===> therefore ALL public spending is wasteful."
do explain why you would assume away the existence of the narrow but very real effects of market failures (eg, assymetry of information, collusion, adverse selection, principal-agent problems, misaligned incentives, externalities, etc, etc, etc) that necessitate a certain amount of state spending and regulation, even though mainstream economists from adam smith on down (even including austrians like hayek) most emphatically have not made the same error.
that, too, is pretty basic economics.

 

[squealiox]

All we need to do is follow these simple steps to generate these economic numbers:

actually, the case for supply-side remedies is far from proven. in fact, according to this column that popped up on the bloombox the other day, the evidence is a lot less convincing than advertised:

Are We Lowering Our Standards for Job Growth?: Gene Sperling
Aug. 11 (Bloomberg) -- No one would argue that the 207,000 gain in jobs in July beat both market expectations and was a vast improvement over typical monthly job growth during this recovery.
Yet, when it comes to the jobs numbers there has been a disturbing tendency among both commentators and the news media to start using the terms ``better than expected'' and ``good'' without distinction.
It seems that everyone got so used to dismal job growth -- and even job losses -- in the first 18 months of this recovery that diminished expectation led many to cheer any report that was into six digits.
Consider the following: during the previous four recoveries that lasted 44 months or longer, job growth averaged 11 percent by this point. With today's workforce, that job growth rate would have meant an average of 285,000 jobs a month.
But job growth in this recovery has been a fifth that rate - - 2.2 percent and only 66,000 jobs a month. While some want to simply say that this is a mild job recovery following a mild recession, job growth would have to be considerably higher to qualify as mild rather than anemic.
Hero's Welcome
In this light, the fact that news reports widely gave the 207,000 jobs report a hero's welcome indicates that some economic commentators have lowered the standard for what constitutes a strong job recovery without even giving an explanation.
Some, of course, simply want to short-circuit a more probing analysis by describing this recovery as a late bloomer. They argue that if we just write-off the inconvenient fact that our economy actually lost 1 million jobs in the first 18 months of this recovery, then all is well.
The late bloomer analysis falls short on two fundamental points.
First, the unprecedented job weakness of the first 18 months of the recovery has been the source of significant economic pain and anxiety for millions of workers. That should be treated as a problem, not a statistical anomaly to be ignored.
Second, if this recovery was just a late starter we would expect the last 26 months to show above average job growth to help dig us out of the hole.
During the 19th to 44th month of past recoveries, employment growth averaged 6.7 percent. Instead, total employment grew just 3.1 percent in the comparable period of this recovery, or 152,000 new jobs a month.
This Time Is Different
I don't claim to fully understand why job growth has been so weak. But we should be willing to acknowledge its weakness and ask -- to paraphrase the youngest child at the Jewish Passover table -- why is this job recovery weaker than all other job recoveries?
It would be simplistic and unfair to suggest that the sole cause for such weak job performance is President George W. Bush's economic policies. It would be even more over the top to point to these weak job numbers as proof that Bush's policies are a raging success.
What we need is a sober analysis of whether policies are impairing job growth or hindering a job market characterized by stagnant wages, low participation in the labor force and long- term unemployment.
There may be a number of mutually reinforcing factors that have discouraged employers from bringing on new full-time workers.
Discouraged Employers
During this recovery we have seen increased risk and uncertainty in the fiscal health of the U.S. economy. There has been rising labor force competition overseas, especially from China and India. Employers are more concerned than ever about hiring because of rising costs for health insurance and benefits.
At the same time, these concerns have pushed companies to go to even greater lengths to boost productivity by squeezing more out of investments in computers and other technology made in the last half of the 1990s.
Some of these trends may be beyond policy makers. But for my money, I believe we can devise policies that stimulate the economy without creating fiscal instability.
These policies would lower employer health-care costs; revise the tax code so that it doesn't stifle domestic job creation; and encourage investments in our workforce and research. They certainly would be a better recipe for job growth than what we got during this recovery.
Agree with me or disagree with me, but let's at least acknowledge these are not great times for job growth and debate why and what we might do about it.