Tuesday Morning Links

This and that for your Tuesday reading.

- Gary Engler explores Thomas Piketty's Capital in the Twenty-First Century from the perspective of a reader who's far more skeptical than Piketty about the prospect of tinkering around the edges of our current corporatist economic system. And Seth Ackerman writes that Piketty's observations look like compelling evidence challenging the doctrine of marginal productivity theory which is taken as an article of faith by laissez-faire fundamentalists.

- Meanwhile, Bill Moyers interviews Joseph Stiglitz about corporate tax evasion. And Michael Madowitz points out what we should have learned about austerity economics by now:

There are three major lessons for policymakers from this research:

1. Direct government intervention during recessions, either through deficit-financed tax cuts or deficit-financed increases in government spending, is a more powerful tool for fighting recessions than we realized before the Great Recession.
2. In a slack economy, or one that is operating below its potential, austerity—taking money out of the economy to balance government budgets—is especially bad policy. Whether via tax hikes or cuts in government spending, contracting the government’s budget during a recession reduces gross domestic product, or GDP, by more than the size of the cuts—possibly as much as three times more.
3. The costs of doing nothing can be permanent and much higher than we previously thought: U.S. GDP is currently 10 percent below its prerecession 2014 projection, and many economists believe that we have reached a new normal. If this is true, austerity could cost the U.S. economy more than $1 trillion in economic activity every year, even after we have fully recovered from the Great Recession.

The most important development in economic research during this recession has been a better understanding of how short-term labor markets affect the long-run size of the economy. It is simply not the case that recessions have only transitory effects on an economy. This is a profound, if counterintuitive, lesson for policymakers: The prudent approach during a recession may be much more aggressive fiscal and monetary activism than we are used to.

- PressProgress reminds us of the Cons' obstructionism on climate change - which of course looks all the more silly now that the U.S. is taking far stronger action than Canada ever has. And Aaron Wherry suggests that we'd be better off moving past the Cons' vocabulary barrier to discuss the costs and risks involved in climate change policy.

- But Joyce Nelson discusses the connection between fossil fuel lobbyists and right-wing politics which largely explains the Harper Cons' continued determination to stand in the way of any action on climate change.

- Finally, Robyn Benson sounds the alarm about the Cons' plans to attack pensions for current and future retirees alike:

“Target benefit plan,” eh? What’s next—a target wage plan?

“We’ll try to pay you $22 an hour like the contract says. But if things get tight at budget time, we might have to drop that to $14 or so. OK by you?”

No. Not OK.

Workplace pensions are, in fact, deferred wages. They’re a forced savings plan that permits, or should permit, retired Canadians to live decently. A defined benefits plan (DBP)—what our members presently have—is a contract: in return for making regular contributions, a set retirement income, with indexing for inflation, is guaranteed.

Enter Kevin Sorenson, minister of state for finance. He has a brand-new scheme in hand, and he wants to sell it to employers in federally-regulated industries and Crown Corporations. He calls it a “shared risk plan,” but it’s no such thing. It’s just shifting risk onto employees and pensioners.
...
Eroding pension plans by shifting risk onto vulnerable employees and retirees with limited ability to absorb income cuts is quite in keeping with the Harper government’s determination to lower the boom on public sector workers and improve the profitability of their corporate friends in the private sector. Instead of showing leadership by improving retirement income security for all Canadians, it wants to “level down,” threatening young workers and seniors across the country.