Australian opposition liberal leader Malcolm Turnbull gets what Stephen Harper used to get:
Somebody has to stand up for strong financial management; somebody has to stand up for taxpayers; somebody has to stand up for future generations.
For years whenever a fiscal event occurred in Canada, one of the pundits I would read the next day was Linda Leatherdale at the Toronto Sun. Linda was let go by the Sun in their mid-December bloodletting, but has not been waiting around for opportunity to knock in the interim.
Linda now has her own blog, and if your Jonesing for her budget commentary this morning, she has it:
THE 3-D BUDGET
DEBT, DEFICITS AND DISAPPOINTMENT
Cash-strapped Canadian families, who are losing jobs and struggling to put food on the table, are getting a tax break in the Stephen Harper Conservatives’ “Make it or Break It” budget.
But will they ever pay for it.
After a decade of sweet surpluses in Ottawa – which made Canada the envy of the world particularly now in this biggest economic meltdown since the Great Depression – we’re heading back into the red “big-time.”
Well, you didn’t think she was going to like it, did you? Be sure to read the whole thing.
A commenter on a piece on Gerry Nicholls’ blog wrote:
You are in select company Gerry.
Neither you or Jack Layton have seen the budget, but you are slagging our Prime Minister for it just in case it might contain something you dont like.
It is quite tiresome.
Add me to the company. Here’s what we do know about the budget: it will put Canada in a massive deficit position for the first time in ten years; it is based on the flawed theory that government can, as we Ontario conservatives laughed when Bob Rae did it, spend itself rich. The Bob Rae analogy, by the way, isn’t superfluous: stimulus of the kind we are dealing with here is exactly what Bob Rae did, and we mocked. We mocked because he was wrong and because it failed miserably.
If you are a conservative in philosophy, you cannot possibly support this budget because it is wrong headed and based on bad political philosophy. If you are a Conservative Party supporter, you should not support this budget because it could banish the party to the political wilderness, just as spending themselves rich did to the NDP in Ontario.
What Jack Layton has against the budget I can’t tell, it has all the makings of an NDP budget. But we know enough about what is coming, enough has been leaked that we know it is going to contain a lot that we don’t like.
Economic Fundamentalism, Gerry Nicholls, Jacobian Piece of Impertinence, Stephen Harper, taxpayers, The Layton world view, watergate - shawanigate - profligate
The Coalition of the Treasonous is supposedly upset about a lack of fiscal stimulus in the recent federal update. Other countries, they proclaim, are jumping off the Brooklyn bridge providing stimulus, so we have to too. Here’s a suggestion for PM Harper: do what the Brits are doing. Lower the GST a couple of points:
BRITAIN’S contribution to a global effort to add a shot of fiscal adrenaline to ailing industrial economies was delivered by Alistair Darling, the chancellor of the exchequer (finance minister), on Monday November 24th. He produced an emergency winter budget, which had been preceded by a deluge of leaks, to the House of Commons…
The scale of the giveaway certainly sounded impressive. The centrepiece of the fiscal package was a big reduction in the main rate of value-added tax (VAT), which is charged on most goods and services, from 17.5% to 15%.
For those who don’t know, the British VAT is the equivalent to our GST.
Oh wait, did that two years ago. Maybe that’s why Canada’s “GDP rose an annualized 1.3% in the third quarter.” Because the stimulus is in the system.
Since Britain is copying Canada’s success on the lower consumption tax, maybe someone at CTV can send Craig Oliver a memo: Reducing taxes does put money in peoples pockets.
Don’t believe me, ask the British Labour Party.
Coalition of the Treasonous, Economic Fundamentalism, Silly Politicians
Remember during the election all the stories, what an upstanding, honest, ethical guy Stéphane Dion is? So how come today he is negotiating to bring the traitorous Bloc Quebecois into the government of Canada and the story is, Stephen Harper blinked, as I heard it reported on three different newscasts this afternoon?
I’m still trying to imagine Stephen Harper negotiating to put Gilles Duceppe in cabinet, and not being called a traitor. Yet nobody is calling Stéphane Dion or Jack Layton a traitor (or hypocrite,, since they would be teh first to scream if Harper did this). I’m going to spend some time looking for it tonight, but wasn’t there once a picture of the two of them sitting together that ran as a “look how close they are” story?
Oh, and one last request for the media, can we please stop calling it a stimulus package and call it what it is? A spending package! This is nothing more than Bob Rae, spend your self rich stupidity that the Liberals Bloc and NDP are screaming for, and it’s bad public policy. Last week you were yelling deficit, he’s put us in deficit, this week your yelling spend! Spend!! SPEND!!! And shame on the media for letting you get away with it.
Want to overthrow the legally, elected, constitutionally legal government? Then what is your plan. Let Canadians know exactly what you mean by stimulus.
************************
Update: From the comments:
*“We would see him [Stephen Harper] and (Bloc Québécois Leader) Gilles Duceppe, if they get enough seats, working together to dismantle this country that all of us are so proud of.” (Paul Martin, Toronto Star, December 3, 2005)
* Martin questioned how the Tory leader can explain “his common agenda with the separatists.” (Ottawa Citizen, June 3, 2005)
* “Stephen Harper has made it so clear that he is prepared to do the Bloc’s bidding in Parliament, which I find incomprehensible…” (Paul Martin, Ottawa Citizen, April 28, 2005)
* “Let me tell you, Stephen Harper, you made an alliance with the Bloc, not me. The Bloc wants only one thing: a referendum to divide us and break up our country.” (Paul Martin, Globe and Mail, November 29, 2005)
* “The Conservative Party and the separatists … want this Parliament to fail because the Bloc wants Canada to fail.” (Public Works Minister Scott Brison, Hansard, May 2, 2005)
* “…it is impossible to understand why the Conservative Party supports the Bloc” (Scott Brison, Hansard, April 5, 2005)
* “It has become clear that the Conservative-Bloc alliance is alive and well, despite the Leader of the Opposition’s claims to the contrary.” (Susan Kadis, Hansard, May 17, 2005)
* “It is an unholy alliance [Between Conservatives and the Bloc] and Canadians need to know all about it. I take great exception to the hypocrisy of saying that they are not in bed with the Bloc and the separatists because they are.” (Roy Cullen, Hansard, April 14, 2005)
bad journalism, Economic Fundamentalism, Jacobian Piece of Impertinence, Parliament, pimply minions of bureaucracy
Stéphane Dion and Jack Layton like to suggest any economic woes happening in Canada is Stephen Harper’s fault: Harpernomics is an in play term at present. U.S. banks are failing: Harpernomics; Car plant shutting down: Harpernomics. According to Dalton McGuinty, however, that car plant shutting down is Jean Chrétien’s fault.
OK, that’s not really what he said or meant, but a logical deconstruction of his comments can come to no other conclusion:
“There’s no doubt that there’s some of our traditional manufacturing is being challenged.”
The premier said it was time for a great deal of humility. But he sounded positively chastened.
He said Ontario manufacturers, sheltering behind the low Canadian dollar, “hid from global economic realities” longer than did the U.S.
“We didn’t make the necessary productivity gains that we should have made. We weren’t necessarily as innovative as we could have been and should have been.”
He’s right, but only partly so. He suggests the low dollar masked a productivity problem, but as I’ve previously noted, the low dollar was not a mask, but an indicator. It indicated that companies were not investing in Canada:
…problem is the opposite, the low dollar of the Chrétien era. While exporters and the unions loved the low dollar, and claimed it was driving growth through the 90’s, it was really driving the present manufacturing contraction…
In the 90’s everybody was building like mad, but not investing. Canada’s manufacturing facilities have fallen behind the rest of the world. Changes to manufacturing have been drastic the last 20 years, and manufacturers have not been investing in Canada. The result: loss of jobs now.
If Jean Chrétien and his brilliant Finance Minister Paul Martin did not recognize this implication of the low dollar, they should have.
The current U.S. fiscal crisis has it’s roots in regulations and lending practises that occurred through the 1990’s (although certainly not exclusively). Conversely, at a time when manufacturing was soaring, credit was easy to get and a technological revolution was making factories built a mere 5 or 10 years earlier obsolete, nobody noticed that companies – manufacturers – were not investing in Canada. They were not building new plants and they weren’t updating the ones they had. Ten years later there’s a ‘crisis’ in the manufacturing sector, and everybody is surprised.
The only thing that should be surprising is that Dalton McGuinty was the second person to notice.
A little less than a year ago John Palmer at EclecEcon had a post on the three most important concepts in economics. While some fools were arguing utility theory and the theory of perfect competition, he argued for opportunity cost. Opportunity cost isn’t just basic, econ 101 stuff, it is econ 101, day 1, page 1. It works this way: every time you engage in economic activity (i.e. buy something), you make a choice. I buy this litre of gas or that litre of milk, for instance. It’s so simple, and so often misunderstood.
Why misunderstood? An example: when Stéphane Dion says we want to make polluting pay, that’s opportunity cost. When he says he will return the money to you through the tax system, that’s misunderstanding opportunity cost. Here’s why: if it costs more to heat your house you have two choices: run the furnace less (i.e. turn down the heat) or sacrifice other economic activity to accommodate the extra cost (before the clever among you cite the obvious problem with this case, savings and leisure time both count as “economic activity”). If you’re public policy objective is reducing carbon producing activity, this will effectively work. It is that choice between competing economic activities that will give you incentive to reduce. However, if you give back the extra you took at the thermostat, you have eliminated the incentive. Revenue neutral means, or is intended to mean, opportunity cost = zero. But with zero opportunity cost, there is zero incentive to reduce.
I have cited before others problems with both a carbon tax as it is being sold, and with the concept of revenue neutral: the real level of taxation required to be effective; revenue neutral means neutral for the government; what happens to the tax when it effectively works amd government revenues decline?
But the truth is the main reason revenue neutral is bad policy is opportunity cost. Revenue neutral means zero opportunity cost, and without opportunity cost Dion’s tax shift is simply for the sake of shifting taxes. Or as Stephen Harper would put it, it’s crazy economics.
Nice piece in the Financial Post today by Terence Corcoran, Flaherty should tackle his own price gougers, making some reflections on Jim Flaherty’s announcement that he would meet with retailers to discuss why the price of goods hasn’t come down lock-step with the rise in the dollar. Nice to have a conservative finance minister that has so little faith in the free market, that he must intervene at the slightest provocation (and I do mean slightest).
I have an idea for Jim Flaherty: want to see the market kick into gear? Remove the duty on goods consumers bring back into Canada upon leaving the country. No need to be away 48 hours for a $400 duty free (or 7 and $750). One day in the U.S., bring back as much consumer goods as you please (booze and cigarettes subject to the usual rules, of course). This would create competition with American retailers, forcing Canadian retailers to bring their prices more in line with American prices.
This way, you see, I could get up Saturday and say, Hey! Let’s go shopping! Couple of hours later wee’re in Buffalo, buy a big screen TV, 5.5 Surround sound system for it, a HDDVD, and a bunch of DVD’s. Back at the border:
“How Long have you been out of the country?”
“Couple of Hours.”
“Anything to declare?”
“Four-thousand-five-hundred and seventy-two dollars worth of goods.”
“Any liquor or tobacco?”
“No.”
“have a nice day, sir.”
Jim Flaherty says he wants the markets to work for Canadians. That’s how they would work, by adding competition, not by some busybody politicians harassing sellers.
And the big advantage is he could do it tomorrow, just issue an order in council, or whatever these guys do, and suspend the paying of consumer duties until a) Jan 1 b) Further notice. Simple, and would even be popular amongst us unwashed masses -er voters.
While we are on the subject, and speaking of upping the competition, and since the price differential in books seems to be one of the items that is really annoying people, how about eliminating those pesky Canadian ownership requirements to owning a large bookstore. Then we can get Borders/Barnes and Noble in here and give Chapters a run for their money. Problem being, I admit, this one would take a while. Unlike the issue with not paying duties, which could be implemented tomorrow.
So how about it Jim Flaherty, want to really fix the problem of consumer prices? or do you want to play big hero politician who interferes in the market, but solves nothing?
Economic Fundamentalism, Silly Politicians, Unsolicited Political Advice, whack-a-mole politics
From RBC’s quarterly economic report Provincial Outlook (October 2007):
Ontario — Forecast lowered; competitiveness waning
We have shaved our 2008 growth forecast down significantly, but expect that
growth will rebound modestly in 2009 as the U.S. economy accelerates, currency
relief materializes, major capital spending by the provincial government kicks in
and new auto sector investments swing into production. Renewed upward pressures
on the currency, ongoing strength in oil and other commodity inputs,
weaker U.S. growth and the surge in China’s exports as a share of U.S. imports all
mean that central Canada’s manufacturers will face another challenging year.
Also, forestry, Ontario’s second biggest sector, faces at least another year of
weak commodity prices and escalating costs.While 2009 may bring modestly stronger growth, our chief concern is for the
economy’s long-run competitiveness under the crushing corporate tax burden
that acts as a sharp disincentive to invest. If the province were a country, then,
when properly measured, it would have the second highest tax burden on new
business investment in the world. Much of this goes to funding very rapid
growth in short-term government program spending, with health accounting for
about one-half. Ontario has had the second fastest growth rate on program
spending behind Alberta in recent years, but in a relatively soft economy and
without the Alberta government’s resource royalties backing this spending.
Addressing this high tax burden would be a significant offset to the currency
pressures on the province’s businesses. In fact, much of the incentive to invest
as a result of the 60% currency-induced cheapening in imported capital goods
gets yanked right back by extraordinarily high rates of taxation. (Emphasis mine).
Now that the election is over, can we get around to discussing the economy? What did happen to the CAW and it’s complaints about the manufacturing crisis during the election? How will one more day of pay for one less day of work help businesses in this province be competitive?
The boomer generation has created financial havoc in their wake since they entered the workforce. The 70’s small car boom can be attributed to a huge number of young workers, needing inexpensive transportation, as much as the oil crisis of that decade. In the 80’s housing prices began to jump, as the boom generation started spending their earnings on housing. Add in, for the first time, double income families, and it’s no surprise housing prices skyrocketed. and other than a correction somewhat in the early 90’s, they have fairly consistently risen since.
The 90’s saw the price of health care skyrocket, and the stock market has been strong since the ’87 crash, with the exception of the implosion of the dot-com bubble.
I have long believed that the stock market will crash badly sometime between 2012 and 2017 as boomers remove their retirement money from the market, into safer havens and to finance their retirements. Huge amounts of money leaving the market can only cause a crash, and the only possibility of saving it, as one financial analyst once argued with me, is the addition of pools of inheritance money into the market.
But no doubt, where the boomers money goes, so goes our economic activity. It is with this in mind that I point out a brilliant piece by Andrew Coyne, From 2037, a cautionary tale, in today’s National Post. His argument? A pension crisis, a health care crisis, a rising deficit, rising taxes and “youth flight.” All serious possibilities, and as he points out, all foreseeable and predictable.
His medicine? Improved productivity through better facilitation of labour and capital movement, and adding competitive forces to infrastructure improvement. All sound ideas, all would cause the left to go ape. And Coyne is right, without such medicine, Canada is heading for some serious problems.
Hmm, who’s thought was this one? Quebec is introducing a whopping 0.8c/litre carbon tax effective October 1. According to Claude Bechard, Quebec’s Natural resources Minister, the oil companies should pick up the tax:
We hope at 0.8 cents, the oil companies will be able to absorb it without passing on this royalty to consumers. Especially when you realize that refinery profit margins have gone in the last three, four months from 8 cents a litre to about 19, 20, 22 cents a litre.
Hey, where have I heard that before? Oh, I know, I said it Wednesday. Who would have thought a Quebec cabinet minster is trolling At Home in Hespeler for ideas. Of course, like a politician will, he got what I said all half-assed backwards; at 0.8c, there is no reason for oil companies to absorb the tax, and no way of knowing if they did. Gas in my part of the world jumps around more than 0.8c litre depending on the time of day. It is too small to affect demand, therefore, the gas companies can charge the tax, without affecting their profit. Once a tax is high enough to affect demand, then the oil guys have incentive to absorb the tax, but only then.
If that’s true, why does Mme. Bechard think the oil companies will eat the tax on your behalf?
Well, we count on the goodwill of the gas companies.
Oh, and if the gas companies do absorb the tax, what is the point of the tax. As Bechard himself notes, a carbon tax should be “user pay.” How is getting someone else to pick up your tax user pay? And is not a carbon tax designed to lower usage of carbon releasing goods? How does getting someone else to pick up the carbon tax reduce usage? It doesn’t, and this whole thing is a scam. Bechard could care less about reducing usage, and cares a whole pile about collecting extra revenue, designed as environmentalism.
Carbon Tax, Economic Fundamentalism, Going... Going... Gone Nuts For The Environment, The Media Following My Lead.
“More than 3 billion people in the world are being condemned to a premature death from hunger and thirst,” Fidel Castro
It is nearly axiomatic that anything Cuban “President” Fidel Castro says will be false, incorrect, misleading, and downright pernicious… recently, el Presidente‘s grumblings have been worth hearing, not because they are precisely right, but because they are at least on the right track…
interference by politicians in the market for fuel (added to the massive existing interference) has real-world impact, and Fidel Castro, of all people, understands…
The article is called Ethanol Versus the Poor, and it’s worth reading.
Food for thought, from the Green Party of Canada website (emphasis mine: put them together to form one sentence):
We believe that to achieve sustainability, and in order to provide for the needs of present and future generations within the finite resources of the earth, continuing growth in global consumption, population and material inequity must be halted and reversed.
Economic Fundamentalism, Global Warming, Going... Going... Gone Nuts For The Environment, pimply minions of bureaucracy
– There’s a new “Canadian Military Personnel” website that pays tribute to those “who gave their lives serving Canada,” called Fallen Canadians.
– A great article here by David Warren on the just how out of touch those who buy into global warming are. Meanwhile, Greenpeace builds an ark. (h/t Joanne)
– This line, about Canada’s aboriginals, caught my eye:
Canada’s native Indians are so angry about the government’s failure to improve their often-impoverished living conditions…
Governments fail to improve people living conditions, it’s a little admitted, always reliable, fact. If you want your life improved, it requires doing it yourself.
– Now this is funny, thanks to Road Hammer for finding it.
Economic Fundamentalism, freedom for the individual is the only truly progressive policy, Global Warming, Going... Going... Gone Nuts For The Environment, Paris, Remembrance, Vets
Today, the CAW is calling on all members to “bring public awareness of manufacturing job losses.” They are marching in Kitchener, Ingersall and Oakville. The latter group will bus themselves to a Scarborough Town Centre and march to the Collins and Aikmen plant scheduled to close in July.
One of the CAWs bugaboos is the high Canadian dollar, which they claim is driving out exporters. I would argue their problem is the opposite, the low dollar of the Cretien era. While exporters and the unions loved the low dollar, and claimed it was driving growth through the 90’s, it was really driving the present manufacturing contraction.
Money’s value is determined, like any commodity, through supply and demand. If demand goes up for money, the price of it rises. Demand goes down, supply increases and price goes down. If you go to Florida, before leaving you go to the bank and convert some Canadian money to American money. You have added to the supply of Canadian funds and to the demand for American funds, thus lowering the value of the Canadian dollar vs. the American dollar. Now your $2,000 is insignificant, (remember the Bank of Canada trying to stave of dramatic decreases – and failing – by selling $50M US?), but what if you are a manufacturer?
Manufacturing plants spend hundreds of millions investing in their plants. They do a cost benefit analysis for a project and, if they see a future in a given location, they upgrade/improve/invest in their plant. In the 90’s everybody was building like mad, but not investing. Canada’s manufacturing facilities have fallen behind the rest of the world. Changes to manufacturing have been drastic the last 20 years, and manufacturers have not been investing in Canada. The result: loss of jobs now.
So to Buzz and the CAW. Before you blame the strong currency on your woes, understand that the low currency you so love is the long term root cause for the present problem.
CAW, Economic Fundamentalism, Wasted Away Again in Buzzistan
The hard left think tank Canadian Centre for Policy Alternatives released a much trumpeted report Wednesday that said Canadians are being gouged at the gas pumps. Entitled Gas Price Gouge: The Sequel (pdf file here), the report concludes that consumers are being gouged because gas prices are 15c above what they should be. Using historical price analysis, author Hugh Mackenzie determines that gas company profits should never be allowed to increase above the historical.
Early on Mackenzie makes the point that there are “signals to the industry that the price that the market will bear has gone up.” Still on the first page, he concludes, “the precedent was set (after Hurricane Katrina) as the psychological barrier of $1.00 per litre… was broken.” These are both valid and possibly accurate points, but irrelevant to the thesis at hand.
The problem with the report, as others have already noted, is it treats gas company profits as a bad thing. They are, however, neither bad nor good, they are simply part of a market transaction. Gas company’s, as noted in the report, charge what “the market will bear.” The consumer has choices, one of which is to not buy gas. But Mackenzie and the Canadian Centre for Policy Alternatives never acknowledge this report.
The problem in the gas industry isn’t profits, it’s possible collusion. Profits are both legal and moral, as they should be. Gouging, the word used throughout this report, is defined as “pricing above the market,” yet Mackenzie himself acknowledges the market will bear present prices.
The basic thesis, that the profit rates of two years ago are somehow the appropriate profits, rests on the idea that the Canadian Centre for Policy Alternatives or some other such organization should determine gas prices, not the market as defined by supply and demand.
This report, however, is not a complete throw away. As noted above it’s possible there’s a problem with gas and oil industry: not profit making or price taking, but possible collusion. If this reports numbers are accurate (and Back Off Government questions that), then this report helps provide evidence of that collusion. Collusion, an agreement amongst sellers to act jointly in their common interest, is illegal in Canada, and anti-market behaviour. This is where Mackenzie should have spent his time. Otherwise, all he really proved was that the people running the gas companies are good at their business.
More:
More junk science from the Centre for Policy Alternatives
Road Hammer
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