Monday Morning Links

Miscellaneous material to start your week.

- Josh Bivens explains why increased fairness would likely lead to improved overall growth for the U.S.' economy:

(O)ne key driver of slow productivity growth in recent years can be fixed: the remaining shortfall between aggregate demand and the economy’s productive potential. Running the economy far below potential for a long time has led to insufficient investment to sustain rapid productivity growth. One way to close this accumulated investment gap is, of course, to simply have fiscal policymakers boost public investment. And this should indeed be a response.

But another crucial response is to ensure that the labor market and wider economy run hot enough to force businesses to boost investment simply to meet growing demand. When this is done, policymakers also need to keep the recovery strong until real wages begin consistently rising. From a policy perspective this means keeping interest rates low and not prematurely raising them due to misguided fears of inflation. The inflationary impact of a pick-up in real wages is likely to be quite muffled by the faster investment and productivity growth that will follow.

As with all macroeconomic predictions, this one about productivity rising to meet wage growth could be wrong. But the downside risk of being wrong is relatively small; a couple of years of above-target price inflation as wages push up costs. Given the many years of below-target inflation, one hesitates to even call this a “downside” of a policy that has the economy going for growth. The downside risk of reining in demand before we even test the virtuous cycle of rising wages leading to rising productivity growth, however, is enormous. The decline in potential output for 2017 between what was forecast in 2007 and what is estimated now is almost $2 trillion. If half of this—$1 trillion—could be clawed back through a policy that runs the economy hot and leads to higher productivity growth, it will be an extraordinarily consequential policy choice.

- André Magnan and Annette Aurélie Desmarais examine farmland investment patterns in Saskatchewan and find that outside money is making land unaffordable for residents.

- Jason Warick discusses not only Saskatchewan's missed opportunity to build a sovereign wealth fund, but also the choices which have frittered away a boom - including $6.6 billion in tax cuts which have accomplished nothing useful. And CBC highlights the workers who are now paying the price for Brad Wall's bad governance, while also reporting that Regina is on the hook for millions more than planned to finish the stadium which Wall saw as more important than providing for Saskatchewan's people.

- Meanwhle, the CCPA studies Justin Trudeau's privatization plans while questioning why he's determined to double the price of infrastructure in order to enrich Bay Street. And Emma Gilchrist discusses the long-term costs of Christy Clark's Site C dam boondoggle.

- Finally, Sophia Harris reports on the stock option loophole left open by the Libs, while wondering whether this year's budget will see a sorely needed change toward collecting revenue from the people who can most afford to contribute it.