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Acres of newsprint have been devoted in recent weeks to the possibility that lower oil prices might push the federal budget back into a deficit position. As I argue in my column, this drama is mostly political theatre -- and progressives should be cautious about accidentally accepting the Conservative frame for this debate.
Every year has its ups and downs, of course. But there's something about New Year's that makes one naturally want to emphasize the positive. So here is my personal list of five positive economic developments from the year past -- both globally and right here at home -- that warmed this particular economist's left-wing heart in 2014.
1. Canadian dollar falls back toward purchasing power parity
Free-market economists believe the profit motive is the most reliable and efficient force in economic decision-making. In theory, the selfish, profit-driven actions of private businesses are supposed to benefit everyone. But in the real world, the pursuit of private profit often promotes inefficiency and the misallocation of resources. One glaring (and costly) example is the private drug industry.
Last week my Unifor colleague Jordan Brennan and I published a study through the CCPA Ontario office examining the historical empirical evidence regarding the link between changes in minimum wages and employment outcomes. We find there is no robust evidence in Canadian historical data that increases in real minimum wages cause either lower employment or higher unemployment, even when we focus on key segments of the labour market that are most reliant on low-wage labour (including youth and the retail and hospitality sectors).
Ever since the global meltdown of 2008, it's been an article of faith in Canadian economics that we somehow handled the whole mess better than the rest of the world. No banks collapsed. Our recession, while painful, was not nearly as bad as America's. Our deficits were smaller, and will disappear sooner. Not surprisingly, there's a strong political aspect to that smug mindset: Federal Conservatives never tire of claiming credit for this supposedly superior performance.
In my many years documenting and critiquing the overblown claims of free trade proponents about the supposedly self-regulating, efficiency-promoting, mutually benefiting effects of globalization, I've encountered some real doozies. (My PhD dissertation consisted of a critique of the theoretical and empirical basis of neoclassical CGE trade models, and the construction of quantitative models based on alternative theoretical foundations; I've never been able to lock up that nerdy side of my personality ever since!) The more troubled the global economy becomes, despite (or because of) decades of free trade medicine, the more rose-coloured are the predictions of the gains expected from the next free trade deal. The promised gains from trade are always just aroun