The National Post ran a little pro-and-con debate on minimum wages in Feb. 22's paper. I was the "pro" side; my argument was excerpted from a longer paper on "What determines wages and income distribution" that is available on the CAW's web site. The "con" side was written by two economists at the Fraser Institute.
Jim Stanford
Jim Stanford is an Economist in the Research Department of the Canadian Auto Workers, Canada's largest private-sector trade union. He received his Ph.D. in Economics in 1995 from the New School for Social Research in New York. He also holds economics degrees from Cambridge University in the U.K. (1986) and the University of Calgary (1984). Jim is the author of Paper Boom (published in 1999 by James Lorimer & Co.) and co-editor (with Leah F. Vosko) of Challenging the Market: The Struggle to Regulate Work and Income (McGill-Queen's University Press, 2004). Jim's column appears in rabble courtesy of the Globe & Mail.Improving social well-being would reduce health-care costs
Governments are still reeling from recession-induced deficits, but now their attention is turning to another fiscal elephant marching into the room: the coming renegotiation of federal-provincial transfer payments. The Canada Health Transfer (CHT) expires in 2014, and must be extended soon. Finance Minister Jim Flaherty plans to clamp down on transfers to reduce his own deficit. But that just passes the buck to the provinces, whose fiscal position is even worse.
As this debate heats up, there's a new piece of knowledge that should be considered carefully as finance ministers arm-wrestle. Since the CHT was implemented in 2004, researchers around the world have established a whole new field of scientific knowledge regarding the social determinants of health.
The pros and cons of foreign investment
The Investment Canada Act, implemented in 1985 by the government of Brian Mulroney, replaced the Foreign Investment Review Agency, which had become a potent symbol of Pierre Trudeau's interventionism. While the new act was explicitly intended to welcome foreign investment (including takeovers) with open arms, it included a "net benefit" test to supposedly protect Canadian interests.
Canada and the new protectionism
When the world plunged into recession in 2008, G20 leaders ostentatiously pledged not to repeat the errors of the 1930s. To hasten economic recovery, they would avoid protectionism and keep trade flowing. Canada's government has been among the loudest voices in this free trade chorus.
This is a gross misreading of actual history. World trade collapsed in the 1930s because of collapsing consumer demand, not protectionism; competitive tariffs were a response to that implosion, not its cause. For the same reason, world trade plunged 12 per cent last year, despite the G20 promises.
Private sector is not helping economic recovery
Tepid GDP numbers released Tuesday by Statistics Canada confirm that Canada's economic recovery, such as it was, is sliding completely into the ditch. We're clearly heading for stagnation at best, and quite possibly another "double dip" downturn.
The headline number was disappointing, to say the least. Real GDP grew only 2 per cent (annualized) in the spring quarter. That's just a hair faster than the U.S. economy (which everyone knows is still deeply in the soup). Two per cent doesn't keep up with population and productivity -- implying higher unemployment ahead, not lower. Typically, at this stage of recovery, the economy should be growing three times faster.
Canada-EU Free Trade Agreement: Jumping from one sinking ship to another?
Canada's trade negotiators used to complain they were missing all the fun. Canada didn't sign any free-trade agreements for seven years (stretching back to a blockbuster deal with Costa Rica in 2002). Then, last year, a spate of little deals (including Colombia, where trade unionists are still being murdered) broke the drought and gave them something to do. But it's the "big one" that now has negotiators drooling: a proposed mega-deal with the European Union. The fourth round of talks kicks off today in Brussels.
Toronto should take note of Auckland's transit woes
Toronto's main business lobby, the Board of Trade, recently called for the outsourcing of public transit services to private companies, part of their free advice to the next mayor on reducing the city's deficit.
On one level, it's an unremarkable proposal: just the latest in a chorus of business demands that governments fix their deficits by selling, contracting out or eliminating public services. But it caught my eye because I am residing temporarily in Auckland, New Zealand's biggest city, where the transit system is the most fragmented, expensive and maddening I've ever used. And it's 100-per-cent private. The gory details provide a caution for those who believe the private market always does things better.
Caterpillar and the Investment Canada Act
There's been some good public debate about the need for changes to the Investment Canada process in light of Caterpillar's incredible actions in London. They showed up uninvited in 2010, took over a long-standing productive profitable plant, demanded money (from workers and government alike), then left -- leaving behind a shuttered plant and a shattered community.
Clearly something needs to change in terms of how the federal government regulates this process: sorting out foreign investments that can add genuine value to our economy, from those which are beneficial to corporate interests and investors but ultimately undermine our capabilities to produce and innovate.
Canadian triumphalism increasingly bizarre
Prime Minister Harper went to Davos yesterday to sing Canada's praises. No sooner had he finished reciting a long list of our national achievements, however, he launched into a list of the sober, realistic, inevitable things that must be done in Canada to ensure "sustainability" in the long term. Top of the list is rolling back our universal public pension system (especially targeting the OAS and the GIS), which is one of our genuine national achievements. Harper plans to use his majority power and adept use of "shock doctrine" ideology to try to do what others (including Mulroney and Martin) failed: roll back this most important component of our sadly-inadequate pension system.
Caterpillar and Rio Tinto lockouts highlight latest management strategy
Business lobbyists used to express grave concern about the economic impact of strikes. Those concerns were always overstated; time lost in work stoppages has declined by 90 per cent from the 1970s. Nevertheless, companies traditionally complain that work stoppages damage sales, productivity and, of course, profits.
Recently, however, business leaders have warmed to work stoppages. In the current bargaining environment, companies (especially multinational firms) hold the best cards. And executives are increasingly willing to precipitate their own work stoppages -- through management lockouts -- to enforce demands for lower wages and benefits.