The election that never happened…in Quebec

If you live where I do, which is small French (QUE) town with a short name, you would be hard pressed to know there was an election. Nobody in the town has yard signs and as near as I can tell none of the candidates except the Duplessis epoch conservative seem to want you to have a lawn sign. I tried and neither the Bloc (for my partner) nor the NDP (for nostalgia) have a phone number listed for their candidate. I would even pay for the cost of the signs by making an equivalent donation but sadly in my riding apparently both the Bloc and NDP have written it off. Funny that I should move 5000 miles from home, learn a new language and be stuck with the Randy White of Quebec. Alas so much for new beginnings and hope–next stop Wisconsin.

What is odd though is that this riding was not so long ago solidly Bloc and over the last two elections the NDP has doubled its vote to 10%. Now if you are a party that has historically been denied any chance of forming the government because you have been shut out of Quebec and you have gone from nothing to 10 percent in three election cycles it stands to reason that you might want to take such a riding seriously. But sadly no, the resources are going to attempts to defeat liberals so the conservatives can pull up the middle in Ontario, BC and the Isle de Montreal. Whatever.

The Bloc for its part is no better. It use to own this riding but alas I have yet to see the campaign bus make even a cursory tour of Rue Principale. But it is not just a deadly combination of rural and urban idiocy driving the election that never happened; I have not heard one comment about the election from my university colleagues.

My prediction: Quebec has the lowest voter turnout on record.

Finance Minister Flaherty beams sunshine out of his cake hole: Labour market tells a different story

So there is this graph of harmonized unemployment rates comparing select advanced capitalist economies:

Click for crisper image

Then there is this quote from the Finance Minister Flaherty:

“We’re punching above our weight – far above our weight. And now the heavyweights are coming to us for lessons,” he said. “Leaders of the world [are] looking at Canada and our economy with envy, saying: ‘We want to be Canadian.’”

Well Jimmy they are not knocking on our door for advice on unemployment and I could drag out equally dis-confirming productivity stats to bring the hammer all the way down on the anvil but that would take thirty more minutes of my time.

More interesting it would be nice to know what advice Jimmy has been giving the heavy weights: engage in premature austerity and celebrate pyrrhic victory? No wonder Jimmy is getting invited over to all the cool finance ministry cocktail parties around the globe.

As an aside, it would be nice if the journalists over at the Globe would at least challenge the veracity of the claim. But I guess that is what unpaid bloggers do for a non-living.

It is official: Harper wins #1 non-reason to not have an election contest

Because the economy is too fragile!

What? Elections cost money which is spent on labour, goods and services. It seems that is just the kind of stimulus the economy needs. Even more interestingly it is just the kind of stimulus spending Cons should like because it is a one-off event entailing no permanent increase in state spending.

Toronto Star: Now Pushing Yellow Dog Journalism

It used to be that for however inadequate the Canadian press was in terms of political reporting or election coverage there was one thing we could all be thankful for: the private lives of politicians were off the table. With Linda Diebel’s piece of yellow dog journalism in today’s Toronto Star it would appear as though this is no-longer the case. This is sad. Sorry no link.

What I want to know is who ordered the hit? It had to get green lighted from someone pretty high-up the food chain. On the face of it, it looks as though some powerful cabal was worried Adam could win in the future. The venom spewing from some quarters of the Toronto establishment vis a vis Miller was incredulous. And it is that degree of bile that usually is the origin of these types of character assassinations.

The Ignoble and Noble Prizes for Economics

For Immediate Release

The Real-World Economics Review Blog is holding polls to determine the awarding of two prizes:

The Ignoble Prize for Economics , to be awarded to the three economists who contributed most to enabling the Global Financial Collapse (GFC), and
The Noble Prize for Economics , to be awarded to the three economists who first and most cogently warned of the coming calamity.

It is accepted fact that the economics profession through its teachings, pronouncements and policy recommendations facilitated the GFC. We also know that danger signs became visible long before the event and that some economists (those with their eyes on the real-world) gave public warnings which if acted upon would have averted the human disaster.

With other learned professions entrusted with public confidence, such as medicine and engineering, it is inconceivable that their professional bodies would not at the very least censure members who had successfully persuaded governments and public opinion to ignore elementary safety measures, so causing epidemics and widespread building collapses.

To date, however, the world’s major economics associations have declined to censure the major facilitators of the GFC or even to publicly identify them. This silence, this indifference to causing human suffering, constitutes grave moral failure. It also gives license to economists to continue to indulge in axiom-happy behaviour. Nor has the economics establishment offered recognition to those economists who were not taken in by fads and fashion and whose competence, if listened to, would have prevented the collapse.

These two silences reveal a continuing moral crisis within the economics profession . The Ignoble and Noble Prizes for Economics are being offered as small first steps towards a cure.

Poll Procedures for the Ignoble Prize for Economics

Stage One: Nominations and Evidence

Nominations for both prizes are open to the international community of economists, rather than limited to a closed and secret shop. For each nominated economist an evidence page will be opened on to which people can leave evidential comments. In this way a documented case for (and against) each candidate will be built up.

I don’t know maybe we should have a prize for ignoble ideas. Efficient markets and rational expectations were pretty much baked into the reform and conservative wings of the profession. To single out Fama or Friedman seems odd. What about Krugman? He has authored how many papers with rational expectations sitting TDC? Progressive liberal economists need to take some blame for having played and purged along to get along. Economists, for the majority, were a pretty cozzy lot before the GFC. I am glad that after the GFC (and for one a faux noble) that some decided to break ranks ATF, but they enabled the general ideological climate as much as any putatively right-wing protagonist of the profession.

Back to the Crisis: key employment numbers to be released today

Ok, now that the little spectacle south of the border is finally finished it is back to reality.  US and Canadian jobs figures are due out today.  South of the border it will be interesting to see if the numbers are worse than 200,000 to the bad.  In Canada it will be interesting to see if there will be any revisions to that oh so rosy election version of the LFS (I suspect we will have to wait for those revisions).   The Canadian numbers are crucial in light of the IMF’s just released WEO prediction that Canada would be the sole advanced capitalist country to be spared a contraction. Personally I think somebody should throw a couple of different switches on in the IMF’s CGE model.

In the meantime I will leave readers with a salute to the president who was not elected south of the border.  Although as the ambassador at large (no joke) for Haiti Wyclef already has a fairly good gig.

KPMG vs CD HOWE: Canadian Corporate Tax Competitiveness

Travis Fast

There is an old adage going back to David Ricardo that says:

Business men who want advice on how to lobby government should consult with an economist and business men who want advice on how to cut costs should consult an accountant.

A more clever wit than I might rename the above as the Real Ricardian Vice (RRV *tm).

With every election there is some high volume of opinion about the competitive status of Canada within the global capitalist economy.  Typically the left wing parties have been against corporate tax cuts and typically the center and center right parties are for corporate income tax cuts.  In this election the issue has been put in sharp relief.  The Cons have put in 50 billion of corporate tax cuts and the NDP is the sole voice calling for their repeal.

It is a lonely place to be for the NDP given the dominant assumption that causation flows as follows (a causation I should add that is shared by the Greens, the Liberals and the Cons…not that I am shilling for the NDP it just happens to be the case):

Raising CIT = lower unemployment and or lower wages

Why because the standard economic model says that any increase in CIT will be passed on in the form of price increases or unemployment or both.  Price increases retard the purchasing power of wages and unemployment of course kills the capacity of workers to earn wages in the first place.
Either way you slice it the standard model says higher CIT = increased misery for workers.  Those bleeding heart liberal economists they really do love us to death!   But let me just put that to the side and simply concede the field for now to our good friends the REAL economists.

The CD Howe has a much touted study out, co-authored by the apparently irreproachable Jack Mintz (unless of course you live in Alberta), in which the bold claim is made that:

“In 2008, Canada ranks 11th highest among 80 countries in terms of its tax burden on business investment, as measured by the effective tax rate on capital.”

I am no fan of corporate tax cuts but if Canada is the 69th least competitive national jurisdiction in the world we ought to do something.  How can we compete with the top 10 (10-1): Ukraine, Singapore, Mauritius, Hong Kong, Latvia, Bulgaria, Nigeria, Kenya, Belgium, Serbia?  In a sarcastic fashion, I am of course, “gilding the lily”, as it were.  But the difference between the top ten and the bottom ten suggests a positive correlation between higher levels of CIT and higher levels of income, stability, democracy and the like.  And a less honest wit than I might want to ask the CD Howe why they want to transform Canada into a quasi-autocratic third world country given the correlation. But let me leave the negative correlation between low CITs and democracy stability and income to one-side.  That is, let me assume it is a spurious correlation because every single social scientists knows that correlation is not causation: it is the first thing we are taught!

The question remains: is the CD Howe ranking index an accurate picture of Canadian CIT competitiveness?  Well it depends.  If you think that those who are paid to lobby government for beautiful gifts are more reliable than those who are paid to tell corporations what their true cost profile is in a given country than yes the CD Howe is the way to go.  But if you think multinational accounting firms, who after all sell their services to help corporations pick the least costly sites for production, are more authoritative, then you get an entirely different picture of Canadian CIT competitiveness.

KPMG has an annual publication entitled the Competitive Alternatives Report.  And this year they had a special supplement on CIT.  In their results they benchmarked selected national jurisdictions (countries) to the US.  The question they asked was straightforward: if we were to advise clients (corporations) where they should set up shop where would be the least costly countries?  Shockingly Canada, in their sample of 10, ranked the 3 rd most competitive.

Now the more astute among us would note the difference of the sample size: CD Howe=80, KPMG=10.  As such maybe the sample of the KPMG study was biased.  I thought about that.  To rectify that possibility I took the CD Howe percentages on Cit and reduced them to the same form as the KPMG study, i.e., the USA = 1, and then put the KPMG numbers into a table which allowed for a direct comparison of rankings of the SAME countries.

As the table clearly indicates there is a huge disparity between the accountant’s rankings and the CD Howes’ rankings.  Why?  I would politely suggest the difference is accounted for, in the first instance, between what the clients are paying for.  The CD Howe is paid to make arguments for lobbyists who are paid to get gifts from the Canadian government whereas KPMG is paid by the self same entities to give good advice on the real costs of doing business.   This is an interesting result.  The same clients are paying for two different products.  Imagine that?  It seems contradictory until we return to the premise of this post:

There is an old adage going back to David Ricardo that says:

Business men who want advice on how to lobby government should consult with an economist and business men who want advice on how to cut costs should consult an accountant.

This election gets more Bizzare by the day

Travis Fast

On the day the markets melt down for like the 4th or fifth time this year the PM states that:

“My own belief is if we were going to have some kind of big crash or recession, we probably would have had it by now.”

Problem is he has never once conceded there was a problem.  So his own belief is that there is no problem and any evidence to the contrary including his own dismal productivity record is simply ignored.  That the press is letting him get away with this is a shame.   Anyway I suspect Harper has read the tale of Nero but just does not get why Nero is not the hero of the story.

As I said elswhere:

If Harper could not steer the economy when the river was filled with liquid gold how is he going to do it any better when the river is filled with liquid manure?

But enough about the Cons and their rudderless leader.

Apparently the limited brain trust at Liberal inc. thinks that it is a bright idea to send Rae around with Dion.  Some liberals call this the “Palin Strategy” –without a hint of irony in their prose.  First, I am not sure who should be more offended Palin or Rae.  Second what is the strategy here? Rae can help tank the liberal numbers in Ontario and Dion can help tank the party’s number in Québec.   I suppose the eventual winner from this strategy is going to to be Ignatieff in another election.

Minority would be a Disaster for the Conservatives

Travis Fast
There is an idea haunting the Canadian political blog sphere that a minority is as good as a majority for the conservatives. Nothing could be further from the truth.

Having contravened their own stated intent to stick to a fixed election date, having claimed it was because they did not have the support of the house even though there was no formal defeat in the house, and having justified it all in the name of getting a clear mandate from the electorate a minority win would indeed be worse than a defeat.

Not only would the conservatives be stuck with a minority they would not be able to cry about it as it would clearly reflect the desire of the people.  It will be that much more difficult for the conservatives to craft legislation that does not meet a minimum consensus of the house.  If they deliberately provoke the opposition they will be forced to send Canadians back to the polls.  What is more, the Liberals would be in a strong position constitutionally or otherwise to inform the Governor General that they have the intention to govern with the consent of the house.  The conservatives would then be forced into the opposition and the liberals would regain the power of the purse.

This time around, in a minority parliament, the Cons will find themselves highly restrained with an opposition even more committed to wringing concessions out of them.