Monday Morning Links

Miscellaneous material to start your week.

- Angella MacEwen and Cole Eisen challenge Galen Weston's laughable claim that he and his multi-billion-dollar empire can't afford to pay something closer to a living wage. And Jared Bernstein and Ben Spielberg connect the U.S.' growing inequality to policy choices which have facilitated the accumulation of extreme wealth.

- Meanwhile, the BBC reports on a study showing the close connection between childhood geography and university attendance in the UK.

- Patrick Smith discusses the revolving door between prison and homelessness - including the reality of people reoffending in order to secure services not available to them outside of prison walls. And Brendan Kennedy examines Canada's heavy-handed immigration detention system which locks detainees up indefinitely for little apparent reason.

- Finally, Doug Cuthand writes that Brad Wall's time in office has been marked by a lack of progress in reconciliation between Saskatchewan and First Nations.

Tuesday Morning Links

This and that for your Tuesday reading.

- Joachim Hubmer, Per Krusell and Anthony A. Smith, Jr. study the causes of wealth inequality in the U.S. and find one clear explanation for the stratification between the rich and the rest:

There is one main finding: by far the most important driver is the significant drop in tax progressivity that started in the late 1970s, intensified during the Reagan years, and then subsequently flattened out, with only a minor bounce back. The sharp observed increases in earnings inequality, the falling labor share over the recent decades, and potential mechanisms underlying changes in the gap between the interest rate and the growth rate (Piketty's r-g story) all fall far short of accounting for the data.

- Meanwhile, Jared Bernstein charts the lack of any correlation between tax giveaways to the rich and economic development (as measured by GDP and employment).

- Alan Pyke reports on Bloomberg's estimate that the world's richest 500 people increased their personal wealth by a combined $237 billion this past year alone. And Hugh MacKenzie reminds us that Canada's CEOs rake in more money in a single morning than most workers will earn all year.

- Ben Judah highlights how London's real estate market (like that of other cities) has been inflated by kleptocrats from around the globe.

- Thomas Homer-Dixon discusses the need for Canada to step up the fight against climate change. And Chris Mooney offers another reminder that actual data shows that we're doing even more damage to our planet than has long been feared - which may explain why the Wall government is going out of its way to undermine even basic scientific knowledge and education in Saskatchewan.

- And finally, the Council of Canadians shares Maude Barlow's laudable national vision for 2017.

Monday Morning Links

Miscellaneous material for your Monday reading.

- Jared Bernstein argues that the limited stimulus provided by tax cuts for the rich is far from worth the overall costs of exacerbating inequality and damaging public revenues:

I’m encountering progressives who are compelled to be at least somewhat supportive of wasteful, regressive tax cuts, like those proposed by Trump, or the ones I just wrote about in Kansas, that happen to spin off some positive fiscal impulse. While we’re closing in on full employment, there’s still slack in the job market, such FI could help absorb remaining slack.

That’s true, but there are two relevant questions: bang for the buck (multipliers), and the impacts of the cost of the tax cuts.

The Kansas cuts–particularly the zeroing out of the pass-through income–are instructive as these cuts have very low bang-for-buck in terms of jobs or incomes for middle and lower income folks. They just lower taxes for those who are already “highly liquid,” i.e., they’ve got a bunch of money already and giving them more shouldn’t be expected to boost spending (C) or investment (I) much. And since states must balance their budgets, they constrain G as well.

In terms of poor targeting, Trump-style cuts are similarly lame in terms of growth effects, as I discussed recently re the GW Bush tax cuts in the early 2000s. However, because they involve deficit spending–as I’m sure you’ve seen, the federal gov’t can run deficits–they will generate some positive FI, which we could use.

But at what cost? The opportunity costs are twofold. First, there’s the cost of tapping small versus larger multipliers: were team Trump to spend the money on infrastructure or target those with high consumption propensities, the FI would be stronger (btw, it should be noted that multipliers are smaller when the Fed’s raising rates, albeit slowly and by small increments, than when they’re lowering them).

Second, “permanent” tax cuts will mean a worsening of the revenue shortfall I’ve long worried about (the scare quotes are there because the R’s may build some BS cliff into their tax plan to accommodate arcane budget rules, but the intention is permanence). That will provide an excuse for whacking Medicaid, Medicare, Social Sec, and much other spending that’s important to the poor and middle-class. And yes, those folks are income constrained, so that part of ‘G’ gets spent and feeds back into growth.

- Danielle Ivory, Ben Protess and Griff Palmer point out how the public interest suffers when necessary infrastructure is turned into a corporate profit centre.

- Judith Lavoie discusses how the secrecy around the tar sands has made it nearly impossible for communities to plan for effective spill responses. And Genesee Keevil explores the truly unmitigated disaster that is the Yukon's Faro mine site as an example of what's left behind when a poorly-regulated resource extraction industry leaves the public with the bill to clean up behind it.

- Craig Offman and Nathan Vanderklippe report that the Libs' cash-for-access schemes look to include massive profits for the bundlers involved, as the asking price for face time with Justin Trudeau far exceeds the individual donation limit. And Dermod Travis discusses the big-money politics which the Clark Libs want to continue in British Columbia.

- Finally, Lana Payne writes about the need to push back against bullying politics in order to change them.

[Edit: fixed typo.]

Sunday Morning Links

Assorted content for your Sunday reading.

- Tim Harford discusses how insurance and other industries are built on exploiting people who are risk-averse due to the inability to absorb substantial costs as "money pumps" for those who have more than they need:

(L)et’s step back and ask ourselves what insurance is for. Classical economics has an answer: people are risk-averse, which means that they will pay good money to reduce the variability of outcomes they face. If home insurance guards against the loss of a million pounds when my house burns down, I’m happy to buy the insurance even though the insurance company expects to make a profit from it.

But this risk aversion emerges from the fact that money is worth more to poor people than to rich people. Gaining a million pounds would make me rich but losing a million pounds would make me poor. I should not gamble a million pounds on the toss of a coin, because the million pounds I might lose is more precious to me than the million pounds I might gain.

As so often with classical economics, this is an excellent description of how we should behave. It is not such an excellent description of how we actually do behave. Risk aversion can only explain why we insure large risks. It cannot explain why we insure small ones. 

...

A money pump is a person whose irrationalities can be systematically exploited for financial gain. The simplest money pump is a person who prefers an apple to a doughnut, prefers a doughnut to a chocolate bar, and prefers a chocolate bar to an apple. Just offer them an apple in exchange for their doughnut plus a penny. They will accept. Then offer them a chocolate bar for their apple plus a penny. Then offer them a doughnut for their chocolate bar plus a penny. They end up with their original doughnut and are three pence poorer. Repeat for ever.

Money-pump arguments are sometimes deployed to object that people cannot be irrational, otherwise they would be bankrupted by money pumping. But economists are increasingly coming to realise that, instead, we should be looking for money pumping in action.

Given our anxiety about small risks, what would the money pumping look like? It would be an insurance policy focused on the narrowest possible slice of risk. It would be sold alongside another product or service, often at the last moment. It would be marketed by creating anxiety and then offering the product to make the anxiety go away. In short, it would look like the collision damage waiver, the extended warranty, and PPI. These bespoke slices of insurance are among the largest money-pumping projects in the modern economy. No wonder the banks abandoned their principles to join in.

- Jared Bernstein and Lori Wallach highlight (PDF) the need for an international trade regime which serves the public interest, not only the greed of the people who already have the most. And Yves Smith theorizes that the public backlash against corporate-centered trade deals may lead both to changes in how international trade is managed, and the identity of the countries at the forefront of developing the standards to be pursued.

- Needless to say, the Libs' devotion to the current trade model figures to exclude Canada from that group for the foreseeable future. And the Alberta Federation of Labour laments the Libs' determination to exploit foreign labour at the expense of both easily-abused temporary workers, and the Canadians who would otherwise fill the positions.

- Derek Thompson makes the case for a long-overdue round of trust-busting to reduce corporate power over innovation and economic development.

- Finally, Ed Finn writes that our health system should focus far more on maintaining wellness rather than responding only once an illness develops.

Monday Morning Links

Miscellaneous material for your Labour Day reading.

- Jared Bernstein comments on the prospect of a labour revival which can boost the prospects of unionized and non-unionized workers alike. And Thomas Walkom makes the case for closer identification between the NDP and Canada's labour movement:

Labour needs a political party because unions, on their own, are a declining force. Only 29 per cent of the Canadian workforce is unionized. The number continues to fall.

This has happened because the economy, once characterized by large manufacturing plants, is now dominated by smaller service firms that, under current labour laws, are more difficult to unionize.

The decline of well-paying union jobs is one of the key factors behind the rise in income inequality that politicians routinely fret about.

Yet to reverse this trend would require a total rethinking of employment and labour laws, most of which were designed in the 1940s and ‘50s.

Among other things, the laws must be amended to eliminate the loophole that allows so many employers to pretend their workers are independent contractors who do not qualify for benefits or statutory protection.

As well, labour relations laws would have to be changed to allow unions organizing, say, fast-food franchise outlets, to take on the ultimate employer.

These are just a couple of examples. The point is that, if unions are to survive, labour laws must be rethought.

That in turn requires a political party willing to do the rethinking.

- And CBC reports that Ontario's NDP looks to be taking that advice by looking to facilitate both certification and collective bargaining - though there's still more to be done in examining the broader trends affecting unionization rates.

- Mark Dearn discusses how the CETA figures to undermine democratic governance in Canada and Europe alike. And the CP reports on Justin Trudeau's attempt to stifle discussion of the actual terms of corporate control agreements by indiscriminately bashing anybody who raises reasonable questions about business-oriented trade deals.

- Michael Winship points out how profiteering around the EpiPen the fits into a wider pattern of pharmaceutical price gouging and other anti-social behaviour.

- Finally, Lyndal Rowlands writes that developed countries have a strong stake in working toward meeting global development goals - and suggests it's long past time that we started acting like it.

Thursday Morning Links

This and that for your Thursday reading.

- Neil MacDonald discusses the unfairness in allowing a wealthy class of individuals to set up its own rules, while Jeffrey Sachs notes that the U.S. and U.K. are among the worst offenders in allowing for systematic tax evasion. And Alex Hemingway rightly points out that the recognition that a privileged few are able to flout the law makes it more difficult to establish the trust needed for society to function.

- Meanwhile, Jared Bernstein highlights the costs of trade agreements in transferring wealth and power to those who already have the most, while noting there are other factors which need to be counterbalanced as well:

There are a lot of forces other than global trade suppressing the earnings and opportunities of large swaths of workers, but trade is often the most visible one. Most economists think the lion’s share of wage inequality and stagnation is because of changes in technology that have increasingly tilted against noncollege educated workers, and Froman is saying that there’s nothing much in the way of technology dynamics against which opponents can rally.

In fact, there’s less in the way of solid, ADH-style evidence that technology is a lead culprit here. The decline of unions, eroding minimum wages, the rise of non-productive finance, and especially the persistent absence of full employment labor markets all reduce worker bargaining power, and that is the fundamental force driving wage stagnation amid growth. But Froman’s point that trade bears a disproportionate share of the public’s anger is a good one.

Still, the main message from ADH, Bivens, and the rest of us who’ve been trying to raise this cost side of the equation for decades is that these costs are real. They’re acute for many people and places and diffuse to some degree for others. Economic platitudes about how trade is always worthwhile as long as the winners can compensate the losers are an insult in the age of inequality, where the winners increasingly use their political power to claim ever more winnings.

If we don’t deal with these costs by creating real, substantive, remunerative opportunities for those hurt by trade, some demagogue is sure to come along Trumpeting a case for xenophobia, walls, tariffs and protectionism. If he’s not … um … here already.

- Matthew Yglesias theorizes that work is getting safer and more fulfilling with time - which may explain in part the lack of a concerted effort to further reduce the time spent on the job.

- David Wheeler offers his take on a universal basic income, while Allan Pall writes that social programs are instead headed toward exclusion of youth among other groups.

- Finally, Thomas Walkom reminds us of the importance of putting extreme weather events such as the Fort McMurray wildfire into the context of the environmental factors which cause them. And Martin Lukacs suggests that the cost of cleaning up and rebuilding should be borne by the industry most responsible.

Monday Morning Links

Miscellaneous material for your Monday reading.

- David Graeber writes that unfettered capitalism will never tame itself, but will instead need to be countered by a sufficiently strong counter-movement to seriously question its underpinnings. And Thomas Frank follows up with Graeber about the warped incentives facing workers as matters stand now:

I think the spotlight on the financial sector did make apparent just how bizarrely skewed our economy is in terms of who gets rewarded and for what. There was this pall of mystification cast over everything pertaining to that sector—we were told, this is all so very complicated, you couldn’t possibly understand, it’s really very advanced science, you know, they are coming up with trading programs so complicated only astro-physicists can understand them, that sort of thing. We just had to take their word that, somehow, this was creating value in ways our simple little heads couldn’t possibly get around. Then after the crash we realized a lot of this stuff was not just scams, but pretty simple-minded scams, like taking bets you couldn’t possibly pay if you lost and just figuring the government would bail you out if you did. These guys weren’t creating value of any kind. They were making the world worse and getting paid insane amounts of money for it.

Suddenly it became possible to see that if there’s a rule, it’s that the more obviously your work benefits others, the less you’re paid for it. CEOs and financial consultants that are actually making other people’s lives worse were paid millions, useless paper-pushers got handsomely compensated, people fulfilling  obviously useful functions like taking care of the sick or teaching children or repairing broken heating systems or picking vegetables were the least rewarded.

- Meanwhile, Jared Bernstein writes about the damage done to our public policy by an undue willingness to accept simplistic (but false) assumptions:

(I)t’s widely argued that government actions that set wages or regulate commerce create “inefficiencies.” Regulate an industry and capital will flee; raise the national wage floor and employers will leave the market (or, in Piketty’s world, handily substitute machines for workers). Increase a marginal tax rate and workers will supply less labor; investors, less capital. Form a union and the unionized firm will face competitive disadvantages that will put it out of business. Provide a safety net benefit to someone and they’ll work less. Tax a polluter and you’ll crash GDP. Tax a financial “innovator” and credit markets will dry up.

Conversely, cut back on a tax rate, a safety net program, the minimum wage, the unionization rate, financial oversight, and growth, jobs, and liquidity will flourish.

I’ve been arguing against these positions for decades, backed by considerable empirical evidence showing that moderate changes to tax rates, minimum wages, union density, the safety net, regulatory oversight and so on trigger nothing like the disasters their opponents claim and can yield important benefits (which is not to say there are no “negative impacts” at all). Yet the bar to win the anti-interventionist argument is set remarkably low. You don’t need evidence; you can just cite “basic economics.”
...
As another Thomas—Pynchon—said: “If they can get you asking the wrong questions, they don’t have to worry about answers.” Progressives have all kinds of ideas to shape a more equitable primary distribution. But those ideas will never get much oxygen if we remain voluntary trapped in the cramped debate of a short-sighted economics.

- And Murray Dobbin comments on how the concurrent slashing of government revenues and public services is leading to dystopian outcomes.

- Stephen Maher reports on Stephen Harper's latest abuse of appointment processes, as the Cons ignored the advice of their own selection committee in order to appoint the least experienced and most deferential possible candidate to act as the federal Privacy Commissioner. Dean Beeby notes that the Cons are still illegally collecting background information on access-to-information requesters long after promising to stop. And Scott Harris discusses how the Cons' compulsive secrecy includes refusing to clarify even points which have long been public - such as their nine-figure payoff to Newfoundland and Labrador in an effort to push CETA.

- All of which leads into Chantal Hebert's sudden insight into the Cons' wanton destruction - even if that may be something less than news to many of us.

- Finally, Rod Sweet writes about the oil industry's attitude toward the risks of new and untested operations - and why we shouldn't be surprised when BP-style disasters result:

The rapid expansion of deep water drilling worried him. “I had ongoing concerns with the risk of deep water drilling operations, concerns that started back when I was at Chevron,” he writes.

“They stemmed from just too many things going on simultaneously within the industry. The deep water rig fleet expanded by close to 300% over several years along with much turnover between drilling contractors and so I worried about the erosion of the level of competency that we were accustomed to, particularly at the driller and tool pusher levels.

“These deepwater wells are very complicated. There are downhole conditions that even very intelligent people struggle accurately to asses. The time when you had a drilling foreman who has seen everything and knows what to do in every situation is long gone.”

In his article Lacy insists that when it comes to disasters like Macondo the assumption that ‘this won’t happen’ still pervades the industry...

Wednesday Morning Links

Miscellaneous material for your mid-week reading.

- Jared Bernstein discusses how fair and progressive taxes on the rich are a necessary element of any effort to improve the lot of the poor:

The rising tide of inequality does more than create great economic distance between income classes. It also produces higher barriers to mobility. Increased investment in the poor’s economic opportunities and in their children, their health care, their housing and their education will be needed to overcome those barriers.

To be more precise, there are three reliable ways to help or “lift” the bottom: subsidies that increase the poor’s economic security today; investment in their future productivity; and targeted job opportunities at decent wages. The first two are more closely related than you might think, because researchers are discovering that anti-poverty consumption programs such as nutritional and income supports have long-lasting benefits to children in families that receive them.

None of these three approaches are free.
...
Yes, growth is necessary; in the age of high inequality, though, it is insufficient. What will work here is a large, publicly funded infrastructure program to begin to repair our deteriorating public goods, with the jobs targeted at the working poor.

All of the above — the expanded earned-income tax credit, universal preschool, job-creating infrastructure — will take more tax revenue, and much of that new revenue will need to come from those at the top of the wealth scale.

To be clear, the tax burden on all Americans, not just the wealthy, is low both in historical and international terms. We’re collecting less revenue than many other advanced economies and less than we have in the past. So it’s not just the rich that will ultimately have to pony up if we’re going to continue to fund the things we want and need in a sustainable way.

But since most of the pretax income growth in recent years has accrued to households at the top scale, that’s an obvious place to start.

- Mel Watkins comments on Arundhati Roy's observation that we're stuck with "gush-up economics". And Duncan Cameron weighs in on Tim Hudak's plan to create jobs by destroying jobs and public services alike.

- Bruce Campbell discusses the regulatory failure behind the Lac-Mégantic rail disaster while noting that the people most responsible for systemic problems aren't the ones facing charges. But then, Lauren Krugel reports that the Cons are trying to obstruct even an investigation of tar sands tailings which can't possibly lead to any direct consequences other than fact-finding - signalling that instead of caring about the health and safety of Canadians, Harper and company are fully occupied trying to make sure that nobody uncovers what they're so desperately sweeping under the rug.

- Meanwhile, Margo McDiarmid reports on the latest research showing the catastrophic effects of climate change. And Denise Robbins points out the Republican response that they'd rather try to uproot much of civilization in a few decades than lift a finger to reduce the damage today.

- Finally, Andrew Mitrovica rightly calls out the press gallery's groupthink (and willingness to mindlessly dispense other parties' talking points) about Tom Mulcair. And both thwap and Karl Nerenberg highlight how absurd the Con/Lib attempt to gang up on Mulcair and the NDP was in the first place.

Wednesday Afternoon Links

Miscellaneous material for your mid-week reading.

- Jared Bernstein takes a look at after-tax inequality, and finds that it fits neatly with Thomas Piketty's prescription to address the concentration of income and wealth through strong public policy:

(W)hile the progressive taxes and transfers that don’t show up in Mr. Piketty’s data reduce the level of inequality at any point in time, they don’t have that much impact on its growth. The share of comprehensive income going to the top 1 percent grew 6 percentage points before taxes and transfers from 1979 to 2010, and 5.4 points after taxes and transfers. (If one stops at 2007, before the recession, the same comparison yields an increase of 9.8 points before tax and 9.3 after).

So, yes, critics are correct that inequality analysts, including Mr. Piketty, should look at the impact of taxes and transfers. But if they’re fact driven, what they find will not alter their view about the upward trajectory of inequality. Instead, the extent of wage stagnation and its corollary, the increased role of transfer income and tax cuts in raising middle-income living standards, should alarm them. Instead of hacking away at the safety net, the data reveal the need to preserve it while increasing the quantity and quality of employment opportunities and the real growth rate of earnings for the majority of the work force.

- And David Atkins notes that inequality looks like an important issue to push back against the drift to the right - as evidenced by the Republicans' panic in trying to defend policies designed to make the rich richer:

The GOP's entire supply side theory is that if you reduce regulations and taxes on employers, they'll make more money and be able to hire more people. But even if that were true--and it isn't--it doesn't follow that any potential jobs they might create would actually be good jobs. In fact, most of the jobs that have been created since the Great Recession are low wage work. Most voters are smart enough to realize that.


The GOP could, in theory, blame immigration for driving down wages, and go the hardcore xenophobe populist direction of much of the European right. But that would almost certainly permanently lose them the Hispanic vote in a big way almost permanently, which would be electoral suicide.

But there aren't many other places to go for the GOP on inequality. One local Republican candidate for Assembly said at a recent debate that government regulations were constraining business, and that if we got rid of wage controls then wages would go up. That's literally how boxed in and nonsensical their position is.

If Democrats want to win, this is the issue they'll push. The GOP is in a tailspin on it, and they don't have other good messages in the till.

- Harry Stein comments on Pfizer's attempt to use an acquisition as a major tax dodge, while Brian Goldman discusses how pharmaceutical manufacturers are delaying the availability of new medications in Canada. Which naturally means the Cons figure it's time to hand still more free money to big pharma in the form of the CETA - and Joel Lexchin and Marc-André Gagnon study the costs.

- Carol Goar documents the demolition of the Cons' excuses for pushing the use of temporary foreign workers rather than skilled Canadians. And Lee-Anne Goodman reports that the TFWP is even shadier than previously reported - as employers are actively refusing to answer Canadian applications before applying for indentured servants based on the false claim that they can't find workers in Canada:

(From) customer service representatives in New Brunswick to food service supervisors in B.C. and RCMP clerks in Saskatchewan, many of the 110,000 jobs listed on the job bank are no longer available. A litany of postings are several months old; some have been on the site for more than a year.

Some job-seekers also complain that they never heard back from employers after applying for jobs posted online. An email address set up under a generic name by The Canadian Press has not received any replies to multiple queries about various job postings, including at companies that already employ temporary foreign workers.

Bill Wadsworth, a helicopter pilot in B.C., says he applied for jobs at numerous companies that he later learned were given a positive labour market opinion — or LMO — that allowed them to hire temporary foreign workers.

"I had applied to, and had the qualifications, to work for 75 per cent of the LMOs," he said in a recent interview.

"During my job search, I would contact these companies every two weeks on average. The response was always the same: 'We have no openings.'"

- Finally, Trish Hennessy discusses the plight of the Canadian middle class in her latest Index.