Thursday Evening Links

This and that for your Thursday reading.

- Anis Chowdhury refutes the theory that top-heavy tax cuts have anything to do with economic development:

Cross-country research has found no relationship between changes in top marginal tax rates and growth between 1960 and 2010. For example, during this period, the US cut its top rate by over 40 percentage points and grew just over 2 percent annually. Germany and Denmark, which barely changed their top rates at all, experienced about the same growth rate.

Thus, tax cuts will not magically improve economic growth. Instead, the government should focus on building economic capacity with new investments in infrastructure, research and development (R&D), education, and anti-poverty programs. As the IMF has recently observed, the impacts of public investment are greatest during periods of low growth. This view has also been endorsed by recently outgoing Reserve Bank Governor, Glenn Stevens.

Investments in education produce a more skilled workforce, raising earnings and spurring innovation. A worker with only a high school education is twice as likely be unemployed as one with at least a bachelor's degree. An extra year of school is correlated with a significant increase in per capita income.

There are also gains associated with investments in early childhood education. The earlier the intervention, the more cost-effective, which is why policymakers have focused on preschool. Children who attend early high-quality care and education programs are less likely to engage in criminal behaviour later in life and more likely to graduate from high school and university. Reducing the cost of preschool also effectively increases a mother's net wage, making it more likely she will return to the labour market.

Spending on effective social programs provides immediate benefits to low-income families and can enhance long-term economic growth. The increased income security contributes to better health and increased university enrolment, leading to higher productivity and earnings. Similarly, nutrition assistance programs improve beneficiaries' health and cognitive capacity. Research shows similar positive impacts of housing assistance programs.

- Meanwhile, Jessica Deahl comments on the impact of insufficient child care options on working families. And the Star calls for a long-overdue end to federal policy which leaves indigenous women to give birth without maternal health supports. 

- Mark Hume argues that British Columbia's economy has focused far too long on unsustainably exploiting the natural environment. And Jessica Shankleman and Christopher Martin highlight the futility of relying on fossil fuels when solar power stands to be the cheapest and most environmentally-friendly energy source around the globe within a decade.

- Nicola Davis reports on new research showing that it's possible to identify a disadvantaged cohort based on brain health (and intervene to produce far better long-term outcomes) in children as young as 3 years old.

- Finally, Charles Hamilton discusses Saskatchewan's undue focus on breach offences, along with the costs it imposes on the public and on offenders alike.