Saturday, January 10, 2015

Saturday Morning Links

This and that for your weekend reading.

- Robert Ferdman reports on a Pew Research poll showing that wealthier Americans are downright resentful toward the poor - and think the people with the most difficult lives actually have it too easy:
(T)he prevalence of the view might reflect an inability to understand the plight of those who have no choice but to seek help from the government. A quarter of the country, after all, feels that the leading reason for inequality in America is that the poor don't work hard enough.

But as my colleague Christopher Ingraham pointed out last year, to say that the poor have it easy is to ignore how serious their struggle is in comparison to the rest of the population, and especially those with money to spare. The poor are much less likely to have health insurance, much more likely to be the victim of a crime. They don't get the same level of education or have the same food options. Inequality, as my colleague Matt O'Brien wrote, "starts in the crib," and it plays out even in what babies of different socioeconomic backgrounds are fed. And that's just the tip of the iceberg.
- Meanwhile, Amitha Kalaichandran counters that homelessness (like other aspects of poverty and inequality) is anything but a choice. And Sara Mojtehedzadeh reports on how poor neighbourhoods in Toronto rely on payday lenders, and how that only makes matters worse for people already trying to scrape by with very little.

- PressProgress highlights the stagnation of Canadian wages, while Andy Kiersz points out that Canadian household debt is not only higher than the U.S.' today, but also higher than the unsustainable levels that contributed to the 2008 economic meltdown. And Sherri Torjman argues (PDF) that the Cons' regressive income splitting scheme is the last thing Canadian families need at the moment.

- Andrew Jackson discusses the connection between increased reliance on information technology to perform skilled work, and the growing income and wealth gaps:
IT has eliminated middle skilled jobs, and new jobs are being created at the high and the low end of the education and skills spectrum. At the same time, IT development has resulted in huge “winner take all” rewards for a handful of individuals who have pioneered major new applications which have been widely adopted – think Google and Facebook. Compared to the giants of the industrial age, these companies have huge market capitalizations but relatively few workers, and only have to invest modestly in physical capital.

The theory of skill biased technological change tells us a lot but has significant problems as an overall explanatory framework for rising income and wealth inequality. As has been frequently noted, inequality still varies a great deal between advanced industrial countries using the same technologies because institutions, such as unions and labour laws as well as government social and tax policies, make an important difference.

And, as Thomas Piketty showed in his own 2014 best-seller, the ranks of the very rich go far beyond internet billionaires to include those who have inherited wealth, as well as the very well-paid CEOs of “old economy” enterprises who have ruthlessly used IT to cut costs. Technological change may explain why the less skilled are doing badly, but there is a bigger story behind the rise of the super wealthy compared to the merely highly educated.

That said, the authors of the Second Machine Age and their colleague David Autor at MIT make a convincing case that new technology has very much worked against those without very high levels of skills. They make the key point that the elimination of routine jobs by machines results in the relatively unskilled competing for the many lower level jobs which are non routine and cannot be readily automated, such as personal care support workers, hairdressers, cooks and chefs, janitors, security guards and so on. The relative weight of these low productivity, low skill, low pay positions in the job market is increasing, and their pay is flat or falling.
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The authors of The Second Machine Age discuss, but do not go so far as to advocate, a basic income for all citizens. But it will be hard to refute the moral and economic logic for spreading the bounty of technological progress to the many if the wealth of the very rich increases as rapidly as the power of the marvellous machines that are now at their service.
- Finally, Bruce Johnstone laments the willingness of resource-obsessed governments to get us stuck in commodity price traps. Which makes for a needed counterpoint to Murray Mandryk's odd position that the point when we recognize we're trapped is no time to try to free ourselves.

Friday, January 09, 2015

Thursday, January 08, 2015

Thursday Morning Links

This and that for your Thursday reading.

- Duncan Exley points out that the UK has nothing to be proud of when it comes to income inequality. And Bill Curry reports on the Cons' full awareness that the temporary foreign worker program was both taking jobs away from Canadian youth, and allowing employers to pay far less for foreign labour.

- DSWright highlights how Joseph Stiglitz appears to have been rejected by Republicans for a position advising on the U.S. financial system solely because he's dared to express the opinion that regulators shouldn't see their job as catering to the industry they're regulating.

- Meanwhile, Robert Reich discusses the dangers of the Trans-Pacific Partnership, while Patrick Caldwell is the latest to highlight how Kansas' right-wing utopia is turning into a disaster for everybody involved.

- Jeremy Nuttall expands on the Cons' censorship of websites for federal public servants.

- Frances Russell wonders what Tommy Douglas would have thought of the federal government's decreasing role in building a healthy Canada. And Linda McQuaig worries that the Harper Cons are getting away with destroying our medicare system:
(T)he prime minister’s apparent contempt for the democratic process has been so outrageous it’s sucked all the political oxygen out of the room.

In our distraction, we’ve barely noticed something else important going on. In addition to sabotaging our democracy, Harper has been restructuring our country in a fundamental way — something that will be hard to reverse and, incidentally, very pleasing to Canada’s elite.
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The essence of the Harper makeover of Canada has been the deep slashing of taxes, putting serious constraints on what government is able to provide in public programs and services.
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(F)ew Canadians seem to realize that, as things stand, our medicare system — an institution cherished by millions — faces serious spending cuts starting in 2017.

At that point, we’ll be told we can no longer afford a public health care system. What we won’t be told is that the revenue to pay for a public health care system has been spent already — in tax cuts.

Harper appears to have figured out how to discreetly undermine and eventually end medicare. This shouldn’t surprise us, since he once headed up the National Citizens Coalition — an organization established in the 1960s with the goal of killing medicare.
- And finally, John Cartwright offers some suggestions as to what we need to talk about in order to take back our country from the Cons and the corporate lobby in 2015.

New column day

Here, on the OECD's working paper showing that stronger environmental policies are entirely consistent with a more productive economy.

For further reading...
- Obviously, the area where the need for more stringent regulation is most obvious lies in our CO2 emissions. On that front, CBC reports on Christopher McGlade and Paul Elkins' study showing how many fossil fuels will need to stay in the ground to stay below a two degree temperature increase, while George Monbiot weighs in on the UK's reckless plan to maximize the harm it does to our climate.
- And as a reminder, Paul Krugman has noted that there are plenty of additional economic reasons to see fighting climate change in particular as a win-win proposition.

Wednesday, January 07, 2015

Wednesday Morning Links

Miscellaneous material for your mid-week reading.

- Nathan Schneider discusses the wide range of support for a guaranteed income, while noting that the design of any basic income system needs to reflect the needs of the people who receive it rather than the businesses who see it as an opportunity for themselves. And Art Eggleton includes a basic income and more progressive taxes as part of the solution to poverty in Canada.

- Meanwhile, Sarah Petrescu points to income supports and housing as the two most important issues in her review of poverty in Victoria. And Richard Florida highlights the connection between urbanism and inequality while making the case for cities to focus on their poorest citizens.

- Trish Hennessy offers up some numbers as to how Canadians see our political system. And the strong demand for action against inequality fits nicely with Carol Goar's argument that Canadians generally don't buy the pundit-class theory that voters won't accept real political change.

- CUPE points out how much we stand to gain by making meaningful public investments rather than limiting our range of policy choices to service and tax cuts. And Roger Peters makes the case that we should focus on the social economy, rather than judging development solely in terms of corporate interests.

- Finally, Lawrence Mishel, Elise Gould and Josh Bivens chart the stagnation of wages in the U.S. And Mishel expands on the causes of that stagnation:
[The U.S.'] dismal wage growth is the result of intentional policy choices made on behalf of those with the most income, wealth, and political power. As explained below, these choices fall into five broad categories: the abandonment of full employment as a main objective of economic policymaking, declining union density, various labor market policies and business practices, policies that have allowed CEOs and finance executives to capture ever larger shares of economic growth, and globalization policies. Collectively, these policy decisions have shifted economic power away from low- and middle-wage workers and toward corporate owners and managers.

The fact that wage stagnation stems from intentional policy decisions means that fundamental economic forces did not make these trends inevitable. The income, wealth, and wages generated over the last generation were sufficient to provide broadly shared prosperity for all families. There will be substantial growth in income, wealth, and wages over the next few decades as well, and whether the vast majority appropriately benefits from this growth will depend entirely on the policy choices that will be made.

Tuesday, January 06, 2015

Tuesday Night Cat Blogging

Cats on high.




Tuesday Morning Links

This and that for your Tuesday reading.

- Sam Pizzigati interviews Richard Wilkinson and Kate Pickett about the fight against inequality and the next piece of the puzzle to be put in place:
[Pickett:]...In The Spirit Level, we have all these correlations between inequality and social problems, and we have theories and hypotheses about what is driving these correlations. But we didn’t know then whether or not the drivers we hypothesized — things like status anxiety — were actually higher in more unequal countries. Now those kinds of data are being used increasingly in psychological research. So, for instance, there are papers looking at levels of social solidarity in relation to inequality in different European countries.

Wilkinson: Solidarity in terms of whether people are kind and helpful toward each other, whether people are willing to help old people or their neighbors or the disabled.

Too Much: Your upcoming new book, which I hear has the working title, Crisis of Confidence, will go into much of this new psychological research?

Wilkinson: Yes. I worry that many people think that these things we’ve been writing about — like violence or poor educational performance — all go on out there in “society” and have nothing to do with what they think matters most to them, like their own personal and emotional ups and downs and the well-being of their friends and family. So I’m rather keen to show how inequality gets into our intimate worlds.
- Meanwhile, Rick Noack looks at how inequality has undercut economic growth in numerous developed countries including Canada. And Joseph Stiglitz writes about the damage ineequality has done to the U.S.' youth.

- Keith Reynolds discusses Ontario Auditor General Bonnie Lysyk's findings about the gross waste resulting from the use of P3 structures based on unfounded assumptions:
Risk transfer is the magic bullet that is used to justify spending more money on public-private partnerships. The thinking is that the private partner absorbs large amounts of risk that would otherwise be carried by the province and that this justifies additional costs. In the Ontario example, the AG says the government uses calculations that assume there is five times as much risk from public procurement as there is from a public-private partnership.

How much risk is actually involved? The Dominion Bond Rating Service published a document in February outlining how it rated the credit worthiness of P3s. It concluded most P3s were "of low to moderate risk." If this assessment is good enough for P3 investors listening to the DBRS, maybe we should be listening too. As a specific B.C. example, a Finance Department memo obtained under Freedom of Information looking at the Fort St. John Hospital P3 questioned the return the company was getting for taking on risk. The Internal Rate of Return (IRR) is the return the company expects to get back on its invested capital. The government memo said that the IRR the company was demanding in return for accepting "risk" was ridiculous given that:
  • There is no revenue risk in a hospital project.
  • Counter-party risk is the province, so as long as the proponent manages the projects minimal equity risk.
  • Only political risk, which is relatively low.
The Ontario auditor general went even further questioning the whole underpinnings of the "risk transfer" justification.  She found that there was absolutely no "empirical data" supporting the valuation of the cost of risks transferred to the private sector by P3s.  The risks to justify the enormously higher costs, she reported, were anecdotal.
- But perhaps even more telling than the strength of Lysyk's findings is the weakness of the counterargument - and Paul Boothe for one isn't going to let the fact that the argument for P3s relies on wishcasting stop him from keeping up a steady stream of fact-free anecdotes and reliance on an incestuous consultant industry to evaluate itself.

- A new OECD working paper finds that contrary to the Cons' spin, a properly-administered set of environmental regulations doesn't need to cost the economy anything. And Scott Vaughan points out that Canada could easily turn renewable energy into a far larger export industry if we weren't stuck with a government determined to push the dirtiest energy sources available.

- Finally, Jim Stanford offers some good economic news from 2014 (while pointing out that there's still a long way to go). 

Monday, January 05, 2015

Monday Morning Links

Miscellaneous material to start your week.

 - Emma Woolley discusses how homelessness developed into a social problem in Canada in large part through public neglect. Judy Haiven is the latest to emphasize that charity is no substitute for a functional society when it comes to meeting people's basic needs. And Ed Lehman is rightly concerned that Brad Wall and company are still determined to avoid acknowledging the fact that there are plenty of Saskatchewan residents trying to make do with nowhere near enough.

- Emily Badger reminds us how inequality early in life can shape - and block - opportunities for a lifetime to come. And on the subject of people getting far less than a fair chance in life, Robert Mendick and Robert Verkaik report on the latest anti-Muslim hysteria from the Cons' UK cousins - featuring an edict that nurseries and child-care providers inform the government of supposed extremism among the ever-threatening toddler set.

- Blacklock's exposes the Cons' orders forbidding federal employees from viewing news. And Michael Harris discusses how far too many Canadians seem willing to accept having our democratic institutions and constitutional protections negated by executive fiat.

- Meanwhile, Rafe Mair points out that proportional representation can go a long way toward ensuring that one leader doesn't exercise power so recklessly.

- Finally, Dan Leger suggests eight steps to improve Canada's democracy.

Sunday, January 04, 2015

Sunday Afternoon Links

This and that for your Sunday reading.

- Alex Himelfarb writes about the corporate push to treat taxes as a burden rather than a beneficial contribution to a functional society - and why we should resist the demand to slash taxes and services alike:
How is it that we don’t now ask of these tax cuts upon tax cuts: What will be the consequences for these public goods, goods that most of us continue to value, that demonstrably contribute to the general welfare? In part the answer may be that we devalue public goods because they are not priced and so we underestimate or simply take for granted their value. We surely don’t think very often, if at all, of how much it costs to light our streets, or ensure that clean water pours from the tap or that we can more or less trust the food we eat. But these are all things we buy with our taxes because together is the only way we could ever afford them.

Furthermore, public goods don’t give us any edge over our neighbours. Unlike the bigger house or the fancier car, our access to high quality education or healthcare confers no special status. Perhaps that is one reason that some, usually rich, Canadians insist that they should be able to buy their way to better or faster service even when the evidence is overwhelming that that would make things worse for the many. We ought to be asking whether more money to fuel the consumption race is really what we need, whether a little more change in our pocket is more important than strengthened public goods – better health care, affordable child care, first-rate infrastructure, access to justice…
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The promise of tax cuts funded through ending the gravy train is what University of Toronto philosopher Joseph Heath has called a magic hat, wishful thinking. Successive parliamentary budget officers have told us precisely this. So we should not be surprised that the governments which for years promised painless – consequence-free – tax relief, now tell us that our most basic programs are unsustainable, that we have no alternative but to cut or privatize services and forego investments. New programs? Unthinkable. Of course tax cuts have consequences: in a word, austerity.

Austerity in Canada is certainly not as deep or brutal as in some parts of Europe. But even our slow motion version brings with it a vicious cycle of erosion and distrust. It leads to what game theorists call a social trap—when we don’t trust one another enough to do what we know is in our interest. Economist Hugh Mackenzie has been quantifying the value of the public services we buy with our taxes and has found that for the vast majority, taxes are one of the last great bargains. Most of us get more back than we put in, and that’s the case at every stage of the life cycle. But austerity undermines our trust in this bargain. Programs and services are increasingly targeted, serving only a few, or are starved of resources and slowly erode, amplifying our perceptions that governments can’t do anything right, further sapping our will to pay taxes. The family that celebrates tax cuts soon finds that the gains are dwarfed by what is lost—for example, in out-of-pocket healthcare expenses, unavailable and more expensive child care, delayed old age security, higher tuitions, endless user fees including higher postage, and the end of home delivery. And then they hate government and taxes even more.

Austerity feeds short-termism. We today reap the benefits of public services built by previous generations more willing to pay taxes. But what will we be passing on to future generations? In the name of austerity we put off investments critical to our future. We also put off the maintenance of our existing infrastructure, our schools and hospitals, roads and bridges, the worst kind of false economy, passing on even more expensive problems to future governments, future generations, jeopardizing our economic performance, and exposing citizens to avoidable health and safety risks.

Austerity also leads to greater inequality, eroding our redistributive institutions and the programs that reduce and help mitigate inequality. The consequences of austerity always fall first and most heavily on the vulnerable—refugees, migrant workers, prisoners, the poor, people with disabilities, and on the young—a kind of trickle-down meanness.
- Lynn Stuart Parramore interviews Joseph Stiglitz about the sources of growing inequality and the public policy response needed to combat it. And Henry Grabar discusses how the most significant concentrations of wealth are being hidden from public view.

- Meanwhile, David Dayen highlights the need for an accurate history as to the type and volume of public assistance shoveled toward the financial sector after it crashed the global economy, rather than toward the people most affected by the economic crisis.

- Finally, Humera Jabir discusses the Cons' efforts to devalue Canadian citizenship by treating it as a privilege which can be undone by the actions of foreign governments, rather than a right which can't be stripped away.