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Money for nothing, gifts for free, I want my CITs

As long as I can remember anything of social significance (since 8I think), corporate Canada has been demanding a little help from its friends with respect to productivity.  The facts are the Canadian private sector has been a world class laggard in terms of producing productivity growth.  Through the eighties and nineties it paid out minor fortunes to the CD Howe and Fraser Institute to pump out reams of varying degrees of plausible hypotheses for the lack of productivity growth.   The usual suspects interrogated were in no particular order of importance: government deficits, strong unions, generous unemployment benefits, generous welfare benefits, the lack of free trade deals, over regulation and lastly (time wise) overly onerous corporate tax rates.

With each campaign eventually corporate canada got what it wanted.  Unions were made prostrate, the eligibility rate and benefit levels of the unemployed and poor were slashed, one free trade deal after another was inked, the deficit was slayed, regulations were either denuded or unenforced and corporate tax cuts were lowered.

Yet after thirty years of eventually getting everything they wanted and economy that is the envy of the world the poor dears need more because as it would seem thirty years down the road productivity growth is worse not better than it was.

We live in a remarkable country, its people reward failure like no other people.  If Egyptians were Canadians they would be sending flowers, not stones and cocktails, to Mubarak and his economists sycophants.

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3 thoughts on “Money for nothing, gifts for free, I want my CITs

  1. I’m no math wiz, but doesn’t increased productivity involve getting more out of less? Then the greatest productivity involves getting something from nothing. Then if they stop paying us altogether we’ll be the most productive country ever, right? And ponies!

    Glad I found your blog. Don’t relent.

  2. It’s funny that you posted this. With all this discussion on corporate tax cuts and with The Bank of Canada talking about lack of productivity in their last few releases I’m surprised that someone isn’t questioning this. I am not an economist but I do live in SW Ontario and have seen big business shut down and manufacturing decimated. I’ve yet to see anyone pull a study together. I understand the dollar being at parity and cheaper labour in third world countries factors into this but it still doesn’t explain why our productivity levels are so low, since those numbers are based on industries still producing in Canada. The Bank of Canada states that business has failed to take advantage of the low interest and dollar parity that would lead to higher productivity levels. But that doesn’t explain why business is failing to take advantage of a system in place that provides everything that they have asked for yet has yet to provide any of the net benefits they said they would produce under those conditions. I think it’s time to stop giving them what they want and put in a rebate system that would reward corporations for employment and productivity gains. Maybe then there would be a net benefit for Canada.

    • I agree some kind of results based CIT system might be a better way to reward productivity leaders. Keep in mind that though that over the short term increased productivity and increased employment are not necessarily mutually compatible. The other thing, and this is crucial, if workers do not have sufficient bargaining power to ensure they receive their share of productivity gains all these gains will float upwards. In the context of a results based CIT system that would be a double reward to high productivity enterprises with superior bargaining power vis a vis their labour force.

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