Thursday Morning Links

This and that for your Thursday reading.

- Kathleen Harris reports on a federal budget update designed to have Canada borrow to shovel money into the pockets of big business. And PressProgress points out the absurdity of that plan when the corporate sector already has far too many loopholes and freebies at its disposal:

Corporate Canada will receive $14 billion in new tax giveaways over the next five years even though they are already receiving tens of billions of dollars every year through special tax loopholes.
...
Although Morneau opted against Trump’s no strings attached approach in favour of targeted tax incentives that allow companies to write-off the costs of investing in new machinery, clean energy equipment and newly acquired assets, the new measures are not offset by closing any of the ineffective and unfair tax loopholes that cost Canada tens of billions of dollars each year.

According to one estimate by the Canadian Centre for Policy Alternatives, Canada is already losing $18 billion per year through special loopholes that primarily benefit Corporate Canada.

Various loopholes benefiting corporations and corporate executives relating to the taxation of capital gains, stock options, dividends as well as entertainment expenses for businesses have been widely criticized and identified as an easy way to restore billions in revenue.

Meanwhile, Canadian corporations already route billions of dollars through offshore tax havens, contributing to an estimated $10-15 billion in lost revenue each year.

Likewise, Morneau’s tax incentives to encourage clean energy investments are not offset by a move to “phase out subsidies for the fossil fuel industry,” something the Liberals promised in their 2015 election platform — in fact, Morneau actually introduced new subsidies in his 2017 budget.

- Meanwhile, Kevin Milligan offers his take as to what a progressive approach to revenue could include - with a focus on increasing personal income tax rates and ramping up enforcement to ensure everybody pays what they owe.

- Zi-Ann Lum reports on new research showing that hundreds of thousands of Canadians have to borrow money to fund necessary prescription drugs.

- Andre Picard writes about the appalling lack of public policy support for caregivers. And David Baxter reports on the growing number of newborns being stripped away from their families in Saskatchewan.

- Finally, Andrew Coyne criticizes Doug Ford's plan to return to systemic cash-for-access fund-raising - previously deemed unacceptable by all of Ontario's parties - now that his government has power to sell.

Thursday Morning Links

This and that for your Thursday reading.

- Simon Wren-Lewis discusses how media negligence allowed austerian economics to be treated as credible long after any pretense of academic merit has been debunked.

- Kevin Milligan and Tammy Schirle examine the relationship between income and life expectancy in Canada - featuring both the comparatively good news that we haven't seen a U.S.-style increase in the disparity between high and low incomes, and the reality that the preexisting gap also hasn't been reduced.

- Meanwhile, Joan Grant comments on the growing housing gap in the UK, as homeowners have become wealthier while housing has become ever less accessible for renters.

- Bethany Hastie and Daniel Mare identify a few simple changes to ensure British Columbians in precarious work are able to exercise their freedom of association and improve their working conditions. And Celine McNicholas, Samantha Sanders and Heidi Shierholz offer their set of suggestions to bolster workers' rights south of the border.

- Emily Atkin points out the need for a sea change in our transportation infrastructure as part of any meaningful effort to rein in greenhouse gas emissions. But the Canadian Press reports that the Trudeau Libs' main priority is instead to ensure that public spending on transit comes at the price of interest payments to private investors.

- Finally, Eli Day writes about a long-overdue movement to ensure that U.S. prisoners - along with anybody else with a stake in public policy - are able to exercise their right to vote.

On unequal treatment

With the Trans Mountain pipeline dominating as much news coverage as it has, it's inevitable that we'd see the usual debate as to the relative desirability of different types of economic paths come to the surface. And I'll point out just a couple of the which look to signal a distortion of the actual impact of different economic options in favour of oil (and at the expense of the public interest).

Let's start with Kevin Milligan's Globe and Mail column which has been thrown around repeatedly as a definitive statement that oil is a solution to inequality.

Unfortunately, Milligan's assertion isn't founded in any data addressing inequality in particular, but instead treats overall income as a proxy for equality without apparent explanation. So let's take a look at some data on the point which is supposedly being addressed.

In fact, for the approximate time period used by Milligan, inequality increased slightly in Canada as a whole. And the most obvious increase in terms of both before-tax and after-tax inequality in the broader time period when we've shifted toward reliance on natural resources occurred in Alberta, which Milligan singles out as an example of resource revenue reducing inequality:

The relationship between economy type and inequality does look to be ambiguous. (In particular, Saskatchewan reduced its inequality while also seeing a resource-based boost in incomes in the 1990s and 2000s.)

But there's certainly no basis to suggest that Canada's shift toward a resource economy in recent decades actually reduced inequality as a rule, either on a national scale or within any particular province. And Milligan's position is particularly jaw-dropping in minimizing even the possible results of redistributing the unequal wealth normally found in resource-dependent jurisdictions (including the ones charted above), while instead asking us to assume that "oil = equality!!!".

Meanwhile, the usual foil for resource development is a focus on value-added manufacturing. So let's turn to Kevin Carmichael's admonition that we shouldn't focus unduly on manufacturing jobs when "only about five per cent of employed Canadians work at a factory".

On its own, that's a fair statement. And Carmichael does note that the real implication of the composition of Canada's economy is that we should be more focused on services.

But if we're going to apply that raw-job standard to manufacturing with no allowance for spinoff effects, surely we need to do the same for the resource sector - which leads us to Statistics Canada's data on employment by sector. And that shows manufacturing providing 1,508,942 jobs in 2017 - compared to 199,780 for "Mining, quarrying, and oil and gas extraction" combined.

The effect of singling out manufacturing for minimization is to create more space for the even more obviously-flawed argument to prioritize resource extraction above both competing sectors and the public interest - at a time when we're seeing far too many governments eager to do exactly that.

Monday Morning Links

Miscellaneous material to start your week.

- J.W. Mason reviews Yanis Varoufakis' Adults in the Room with a focus on how damaging austerity was forced on Greece by other governments. And Jan Rovny comments on the need for Europe's left-wing parties to adapt to the precarious economy and evolving social structures.

- Laurie Monsebraaten reports on some of the early results of Ontario's basic income trial - including the predictable health benefits of income security. But in a signal as to how the corporate sector views individual financial security. Rob Davies reports on the UK's investigation into Carillion's collapse - including the privateers' view of the pensions promised to workers as a "waste of money"  .

- Douglas Welbanks challenges the arguments against free tuition by pointing out both the increased importance of post-secondary education, and the limited amelioration of inequality within a student loan system which saddles young workers with debt. 

- Brady Dennis and Chris Mooney point out that many countries are falling short of even their already-insufficient Paris Agreement emission reduction promises. And Crawford Kilian notes that Canada is living far beyond its environmental means.

- Finally, Kevin Milligan writes about the outlines of the alternative budget plans on offer from Canada's federal opposition parties. And Nora Loreto discusses how the NDP's future lies in its ability to mobilize the public, rather than hoping to catch lightning in a bottle on election day. [Edit: fixed wording, typo.]

Saturday Morning Links

Assorted content for your weekend reading.

- The New York Times editorial board points out that a higher minimum wage can produce clear economic benefits for businesses as well as for workers:

One 2013 study by three economists — Arindrajit Dube, T. William Lester and Michael Reich — compared the experiences of businesses in neighboring counties in different states and found less turnover in states that had raised the minimum wage. Workers were less likely to leave on their own, and managers were more likely to keep the workers they had on staff to avoid the cost of recruiting and training replacements.

Other studies on the effect of local minimum wage increases in places like San Francisco and Los Angeles have found similar results, according to a recent overview published by the Center for Economic and Policy Research in Washington.
...
There is another way in which a higher minimum wage helps businesses: by increasing consumer spending. When poor families earn more, they spend more. A group of more than 600 economists, including seven Nobel laureates, recently told President Obama and congressional leaders that an increase in the minimum wage would stimulate today’s weak economy. Even Walmart, the country’s largest retailer, has previously called on policy makers to increase the federal minimum wage. A spokesman for the company recently told Bloomberg News that it was “looking at” supporting the current Democratic proposal.

The argument that a higher minimum wage would hurt business is old and tired. There is clear and compelling evidence that the economy and companies enjoy real benefits when workers are paid more.

- And Tim Stacey suggests that in light of the connections between poor wages, insecure work and poor health as obstacles to future opportunities, governments should be looking for ways to foster jobs which offer some prospect of security - rather than pointing to temporary and precarious jobs as a sign of success.

- Don Cayo reminds us why the Cons seemed to have it right in temporarily nixing income splitting - making Stephen Harper's more recent declaration that he's fully committed to channeling wealth upward all the more inexplicable. And Kevin Milligan notes there's less than meets the eye in Statistics Canada's latest wealth survey, while Andrew Jackson recognizes that younger workers are facing a nasty combination of high debts, high entry barriers to homeownership and low asset levels.

- Carol Goar comments on the false economy the Cons are trying to claim by cutting health services to refugees.

- Finally, Susan Delacourt writes about the systemic damage done to Canada's democracy by the Cons' well-established pattern of using public office solely for their own ends:

The cumulative, long-term effects are emerging though. The ever-growing list of “enemies’ of the government — Liberals, New Democrats, public-service watchdogs, journalists, environmentalists, election officials, charities — expect to find themselves on Harper’s bad side.

But this newest poll shows that a large number of non-political citizens, armed only with their voting rights, may expect to find themselves on the wrong side too.

Our democratic life can go on, whether or not the public likes, respects or even pays attention to the people in power.

But when two-thirds of the public expresses doubts about the fairness of future elections, that’s a problem — not just for Conservatives, but to the institution of government altogether.

Saturday Morning Links

Assorted content for your weekend reading.

- Paul Krugman highlights why inequality is indeed an issue which demands action - both for its own sake, and for its impact on other goals such as economic sustainability. And Bill Moyers discusses the difference between a government responsive to its people and one completely controlled by elites:

The historian Plutarch warned us long ago of what happens when there is no brake on the power of great wealth to subvert the electorate. "The abuse of buying and selling votes," he wrote of Rome, "crept in and money began to play an important part in determining elections. Later on, this process of corruption spread in the law courts and to the army, and finally, when even the sword became enslaved by the power of gold, the republic was subjected to the rule of emperors."
...
Why are record numbers of Americans on food stamps? Because record numbers of Americans are in poverty. Why are people falling through the cracks? Because there are cracks to fall through. It is simply astonishing that in this rich nation more than 21 million Americans are still in need of full-time work, many of them running out of jobless benefits, while our financial class pockets record profits, spends lavishly on campaigns to secure a political order that serves its own interests, and demands that our political class push for further austerity. Meanwhile, roughly 46 million Americans live at or below the poverty line and, with the exception of Romania, no developed country has a higher percent of kids in poverty than we do. Yet a study by scholars at Northwestern University and Vanderbilt finds little support among the wealthiest Americans for policy reforms to reduce income inequality.
...
I should make it clear that I don't harbor any idealized notion of politics and democracy. Remember, I worked for Lyndon Johnson. Nor do I romanticize "the people." You should read my mail and posts on right-wing websites. I understand the politician in Texas who said of the state legislature, "If you think these guys are bad, you should see their constituents."

But there is nothing idealized or romantic about the difference between a society whose arrangements roughly serve all its citizens (something otherwise known as social justice) and one whose institutions have been converted into a stupendous fraud. That can be the difference between democracy and plutocracy.

 - Andrew Sullivan makes a similar point in commenting on the impact of Pope Francis' discussion of market zealotry (h/t to Cathie):

(T)he way in which market capitalism has become a good in itself on the American right is, well, perniciously wrong. As soon as a system ceases to be a means to a human good, and becomes an end in itself, it has become a false idol. Perhaps the apotheosis of that idol worship was the belief – brandished on the degenerate right in the past decade or two – that markets are self-regulating. Of course they’re not, as Adam Smith would have been the first to inform you. Another assumption embedded on the American right is that more wealth is always a good thing. The Church must say no. This is a lie. Wealth is a neutral thing above a certain basic level of non-drudgery. Above that, it can be an absolutely evil, deceptive thing, distorting human souls, warping their dignity, vulgarizing their character. An American right that worships at the altar of both free markets and material wealth, and that takes these two idols as their primary goods, is not just non-Catholic. It is anathema to Catholicism and to the Gospels.

- Michael Valpy writes about the connection between extractive economics, inequality and social exclusion - while observing that those exact factors are serving to reinforce each other in Canada.

- Meanwhile, Matthew Hays offers a devastating look at how Canada is beginning to look from abroad - with Rob Ford serving only as the most prominent example of a crude, selfish and thoughtless persona. And Scott Reid points out the systematic elimination of any sense of shame from right-wing politics as a substantial part of the problem.

- Finally, John Geddes writes that the Cons' patently absurd attacks on improvements to the Canada Pension Plan are making it needlessly difficult to discuss how to ensure retirement security for Canadians. And Tammy Schirle and Kevin Milligan offer their own proposal to bolster the CPP.

Leading the evidence

Paul MacLeod's post-mortem of Nova Scotia's election campaign is well worth a read. But following up on Kevin Milligan's astute point, I'll point out how one of the main factors in the outcome looks to hint at partisan politics taking yet another turn for the worse - even as it signals what activists may need to do to bring about change which may become increasingly difficult through the party system:

It was around this point that the Liberals decided they needed a new game plan. They had recently been trounced in the federal election and the Liberal brand was at an all-time low.

That fall, the provincial party hired Toronto’s Gandalf Group to do an extensive (and expensive) poll of voters — what they liked and what they didn’t like.

This poll, combined with business roundtables and other research, created a wealth of data.

Reading through the numbers, the Liberal campaign team decided the weakness of the NDP was electricity. If they could paint Dexter as an ally of Nova Scotia Power and McNeil as a champion of ratepayers, they could move votes.

It was, in the words of one senior Liberal, the first time they had an evidence-based plan instead of just following their gut instincts.

Now, it isn't exactly news that most parties are interested in developing evidence-based politics even if their policies don't match. After all, the Cons have quite happily trashed the census and other forms of public knowledge about Canada at the same time as they hungrily collect (and limit access to) constituent information for their own political uses.

And that trend doesn't much figure to change if conventional wisdom coalesces around the idea that success in politics revolves solely around poll-tested campaign messages rather than competent governance or coherent plans.

Indeed, I have to wonder whether the Libs' lack of principles might actually create some advantages on that front just as it did when politics were seen more as a matter of brokerage rather than contrasting visions. While a party with a reasonably well-defined set of core beliefs may have a more limited range of options in testing messages for public presentation, one which is accustomed to simply following the leader might adapt more easily to changing messages at a moment's notice to fit the latest poll numbers.

But if partisan politics are headed toward more sophisticated efforts to be seen as the main pitchman for whatever voters seem most likely to buy, that creates an opportunity for anybody focused on issues rather than parties.

Anybody looking to see an issue promoted to the forefront of an election campaign can get there by persuading a party that the cause can shift votes. And if the worst danger of that approach is that all parties might be forced to echo one's message in order to avoid having it turn votes against them, that's hardly a disastrous outcome - especially if political competitors continue to have an incentive to force the government's hand once a campaign is done.

Of course, in the longer term I'd think it's well worth trying to ensure political discussion - in both partisan and non-partisan form - takes place more in the realm of "what will be best for the public in the long run?" instead of "what will shift votes in our favour today?" But the more political parties are prepared to follow evidence in at least some form, the more likely we are to see a successful effort to bridge the gap between the two.

[Edit: added link.]

Tuesday Afternoon Links

This and that for your Tuesday reading.

- Tim Harper writes about Tom Mulcair's success in building the NDP up as the leading alternative to the Cons for Canadian voters:

Two-thirds of his questions since becoming leader have dealt with the economy as he attempts to build the case that his party can be trusted, for the first time, with the keys to the treasury in 2015 while chipping away at the Conservative brand as the stolid overseers of the public purse.

“They love being in power,” he says of the Conservatives, “(but) they hate governing. They don’t take the time, they don’t follow the rules, they are disdainful of the public administration, the civil service, they mock them, they don’t listen to them and they wind up making huge mistakes like the F-35.”
...
 “I’m going to run the next campaign, visor-up, straight on about sustainable development, about the obligation for any government to look at the environmental, economic and social impact of every decision they make,” he says.

To do otherwise, he says, is to saddle the next generation, already looking at larger deficits and meagre pensions, with the cost of environmental cleanups.

It is the 18-to-25-year-old voter pool he is targeting. He sent his young crew of MPs to university campuses right after the last election and he continues to reach out to the 65 per cent of that age group that did not vote in the last election.

It may be the same pool in which a Justin Trudeau-led Liberal party will be fishing, but right now, that is not a concern for the opposition leader.

“I believe passionately Canadians will follow us down that path,” Mulcair says.

- Linda McQuaig points out that while we may not quite have the same free-for-all as the U.S., there's plenty of need for discussion about gun regulation in Canada - particularly when it comes to assault weapons.

- Dave Coles discusses how the Saskatchewan Party's new employment legislation takes aim at public-sector janitorial and food service workers in particular. But the Harper Cons look to be well ahead in the "pick on the most vulnerable" sweepstakes after taking aim at seasonal migrant workers who need access to parental benefits.

- Finally, shorter Kevin Milligan on Canada's choices in trying to expand retirement security:

The proven track record of the CPP in providing a secure retirement for a minimal cost only makes me all the more doubtful that we should choose any option other than "funnel money to banksters".

Thursday Afternoon Links

This and that for your Thursday reading.

- Alice offers her own take on Ian Capstick's leadership musings by questioning why a current candidate would see more prospect of influencing the race by dropping out now rather than staying in the field:

* It is worthwhile being able to win the second choice support of members supporting the candidates most likely to drop off the ballot first, in order to create a sense of momentum at the top.
* A leadership candidate may not have control over the direction of second choice support for his or her supporters, but there is one thing he or she can control after the first ballot – and that's when to drop out. If candidates have a good handle on the amount of second choice support they themselves have elsewhere, and also know where their own supporters are likely to go next, they can optimally time when to withdraw from the race, so as not to forego second choice support that might come their way soon, but also to free up second choice support they might be able to send elsewhere (or prevent it from being counted by staying in).

None of this is true before the first ballot is cast though. Which is why any suggestion that a candidate might drop out for strategic reasons now to "stop" someone, would have to be taken with a grain of salt, unless they could also deliver some other benefit, such as campaign organization, information, or something else.

- Sixth Estate points out another classic example of the Fraser Institute producing prepackaged spin on what looks to be the issue of a sponsor's choice. But it's worth noting in fairness that a firm commitment to non-disclosure is a part of Fraser's own business plan.

- Erin highlights some of the flawed assumptions in Kevin Milligan's attack on full taxation of capital gains.

- Finally, Sandy White asks rhetorically whether we want to be a society that encourages hope or extinguishes it in criticizing the Cons' crime policies. But I'm not sure the answer actually is all that obvious from the Harper Cons' standpoint: after all, isn't their long-term anti-government direction based largely on a desire to convince citizens to abandon hope that their public institutions can create a better society?

On selective concerns

The past decade-plus in Canadian politics has seen a non-stop series of changes to tax rates and structures - with a particular focus on handing yet more money to those who already have the most. And I'll challenge readers to find a single commentator suggesting that we hold off on the next proposed giveaway because it might lead to imbalance against other forms of taxation - even though some of the major changes (such as year after year of corporate tax slashing) would obviously have a potential impact on the form of corporate structure chosen by Canadian businesses.

Naturally, though, that nonchalance only applies in one direction, as it's impossible to suggest increasing taxes on those who can afford it most without being met with a declaration that we shouldn't do anything unless we're absolutely certain it won't change incentives in the slightest. And it's worth noting that the selective concern says far more about the pundits applying a radically different standard to tax increases than to tax cuts than it does about the merits of the policy choices involved.

Room for progressivity

Yes, I know some commentators are treating the latest from Kevin Milligan et al. as somehow proving a point that raising high-income tax levels won't accomplish anything. But I'd think one has to strain rather hard to draw such an interpretation from a column that includes the following:

What might an increase in taxes for the highest earners look like? Brian Topp, one of the front-running federal NDP leadership hopefuls, has recently proposed a new 35-per-cent federal tax bracket for those with incomes over $250,000. A new tax bracket like this wouldn't actually hit very many of us. Fewer than one per cent of us earn more than $250,000, and the tax on dollars earned under that threshold would not change. So, more than 99 per cent would see no change under this proposal. The combined federal-provincial top rate in B.C. would be 49.7 per cent instead of 43.7 per cent. This isn't out of line with other jurisdictions: the top rate in the U.K. is 50 per cent and the proposed top rate for 2012 in California is 46.3 per cent. For those with longer memories, the top rate in Canada 40 years ago in 1971 was 80 per cent.
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Brian Topp assumes his proposed 35-per-cent federal rate would yield $3 billion in new revenues. Economists have fairly good estimates of how much revenue "slippage" we might expect for top earners, and these estimates suggest the additional revenue might slip down closer to $1.5 billion. These same estimates suggest that if we pushed the combined top tax rate too close to 60 per cent, higher taxes would stop yielding much new revenue at all.

So Milligan et al. see room to increase our current high-earner tax rates by upwards of 15 per cent of income before we'd approach the optimal level of public revenue. And that revenue would include not only the added $1.5 billion per year anticipated as part of Topp's plan, but the inflow from increasing the current rates substantially more (albeit with diminishing returns along the way).

So there looks to be ample room to increase taxes on those who can afford it most - and substantial returns to be generated in the process. And we should be eager to highlight those opportunities as the Cons try to tell Canadians that we can't afford anything but an era for austerity for everybody but the corporate sector.

On optimal choices

It's a plus that we're seeing some discussion in Canada as to the optimal income tax rate to maximize revenue. But Paul Krugman goes a step further in pointing out why that revenue-maximizing rate (however calculated) is the optimal rate period:

In the first part of the paper, (Peter Diamond and Emmanuel Saenz) analyze the optimal tax rate on top earners. And they argue that this should be the rate that maximizes the revenue collected from these top earners — full stop. Why? Because if you’re trying to maximize any sort of aggregate welfare measure, it’s clear that a marginal dollar of income makes very little difference to the welfare of the wealthy, as compared with the difference it makes to the welfare of the poor and middle class. So to a first approximation policy should soak the rich for the maximum amount — not out of envy or a desire to punish, but simply to raise as much money as possible for other purposes.
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(T)extbook economics says that in a competitive economy, the contribution any individual (or for that matter any factor of production) makes to the economy at the margin is what that individual earns — period. What a worker contributes to GDP with an additional hour of work is that worker’s hourly wage, whether that hourly wage is $6 or $60,000 an hour. This in turn means that the effect on everyone else’s income if a worker chooses to work one hour less is precisely zero. If a hedge fund manager gets $60,000 an hour, and he works one hour less, he reduces GDP by $60,000 — but he also reduces his pay by $60,000, so the net effect on other peoples’ incomes is zip.

Of course, he doesn’t actually lose all of that $60,000, since he ends up paying less in taxes. So there is a loss of revenue from that withdrawal of effort. But that’s precisely what the Diamond-Saez calculation takes into account, and the reason the optimal top tax rate isn’t 100%.

So, are conservatives comfortable with this analysis? I would guess not, that they have a deep-seated belief that the 1%, by working harder, are doing the 99% a big favor, creating jobs and raising incomes — and that this gain isn’t fully (or even largely) captured by the money they’re paid.

My point, then, is that this claim — and the lionization of high earners as people who make a vast contribution to society — is not, in fact, something that comes out of the free-market economic principles these people claim to believe in. Even if you believe that the top 1% or better yet the top 0.1% are actually earning the money they make, what they contribute is what they get, and they deserve no special solicitude.

[Edit: fixed typo.]

Credit where due

I suspect there's still going to be plenty of room for argument as to how much attention we ought to pay to inequality in the development of economic policy. But let's give Kevin Milligan and other UBC economists full credit for their observations when prompted by Pete McMartin on issues of inequality and economic structure, including both in terms of why the GDP-above-all-else model has sometimes fallen flat with the public...

The majority of respondents in that poll agreed with Milligan. They, too, felt that, overall, the HST would benefit the economy.

But...while they recognized the HST would benefit the economy, they also felt that, on a personal level, none of the HST’s benefits would accrue to them.

A message resided in that distinction, Milligan felt, one that perhaps spoke to a greater malaise.

“With all the growth in the economy the HST promised,” Milligan said, “these people couldn’t bring themselves to vote for it because they didn’t see that growth benefiting them.”

Read that way, the HST vote wasn’t a referendum on a tax: It was a referendum on the nature of the economy.

It was a signal, perhaps, that many British Columbians felt they were disenfranchised from an economy that no longer worked in their interests. Their incomes were flat or falling. They struggled to cover their bills and mortgages. They watched all the economic gains of the last 15 years go to an increasingly affluent minority. Why vote for a tax that would, in their eyes, only exacerbate those trends?

...and their policy prescriptions to ensure an economy where everyone benefits:

So what, they were asked, would they recommend to close the income gap opening up in Canadian society?

Well, there were no easy answers, was their reply, but there were broad themes. Some of those:

• End programs such as the Temporary Foreign Workers Program that artificially encourage low wages in service industries.

• Recognize that unions — once a bulwark of the middle class — have encouraged better wages not only for unionized workers but non-unionized workers as well, and reconsider government policies that have made the process of union certification more difficult.

• Concentrate efforts for income equality where it is now most needed, not with seniors, who have fared relatively well, but with younger workers, young families and single parents, who have suffered most from income inequality.

• Improve the tax-and-transfer system to increase social assistance to those in the lowest income brackets.

• Re-examine the flatness of our tax structure, which lags behind that of the U.S. in that regard, and the fact we don’t have increasing tax rates for very high incomes. Said Riddell, “We definitely should be looking at higher tax rates at the very top of the income distribution.”

• Begin a national conversation to look at the issue of income inequality, to consider if Canadian society is going in the direction we want it to go. It needn’t be something so cumbersome and official as a Royal Commission, but a task force, perhaps, that shines a more focused light on the concerns the global Occupy movement has brought to the public eye.

And if we can get enough of the Economist Party on board with a similar set of prescriptions in response to an acknowledgment that inequality is an issue worth addressing all along the income scale (rather than merely for the bottom 10%), then there may well be some prospect of incorporating its overall principles into a political platform that succeeds as a matter of both policy and politics.

Friday Morning Links

Assorted content to end your week.

- Andrew Coyne's proposal for a Truth in Politics Act offers an interesting way of trying to hold politicians to their promises. But surely our current federal political scene offers the most obvious lesson as to why it would likely be ineffective.

After all, the Harper Cons have responded to every allegation of wrongdoing - however well-founded - by attacking the messenger and claiming that any attempt to hold them to account is politically motivated. And is there much doubt that anybody looking to enforce a campaign promise would immediately face exactly the same type of abuse, dragging the entire system into the same hyperpartisan political ground where the Cons so love to operate?

- Roy Romanow contrasts the pursuit of limitless resource exploitation with the choice to encourage sustainable well-being:

On Thursday, the Canadian Index of Wellbeing releases a report tracking trends in Canada’s environmental performance from 1994 to 2009. My hope is that it will empower Canadians to say, “For God’s sake, put the brakes on and turn the wheel” because we can no longer accept — in this country or any other — the degradation stemming from our seemingly endless and unsustainable appetite for fossil fuels, water, metals and energy. The notion of limitless growth is no longer a viable economic paradigm.
...
Fortunately, we Canadians are not caught up in some form of predetermined drift, rushing headlong toward an inescapable future. We have the collective capacity to shape our future, to decide which values we will embrace, which visions we will pursue and which policy decisions we will enact.

But preserving our natural resources and improving our environment for future generations will require more far-sighted policies and enforcement by government, better stewardship by industry and lifestyle changes by individuals.

- Kevin Milligan's analysis of the cost of the Cons' plan to hand yet more money to those who need it least is well worth a read. But Milligan's analysis does fall into the trap of focusing needlessly on the over/under line rather than the distribution of benefits on the income scale - and just as an increase in the number of people below the income-tax cutoff does absolutely nothing for those already there, so too does the line at which a household could put all of its assets into a TFSA a look rather insignificant to Canadians without plenty of capital assets to move into a plan in the first place.

[Update: I should have known Armine Yalnizyan would already be on the case.]

- I'll temper Dan Gardner's latest by noting that at least some repetition for effect and clarity isn't necessarily a bad thing: indeed, the principle of "say what you're going to say, say it, then say what you've said" is well-established in plenty of arenas beyond the political one without any implication that the audience is being held in contempt. But he's right to note the absurd lengths to which the concept has been applied, particularly on the faux populist right.

- Finally, James Laxer nicely summarizes the limited group of voters who the Cons want to see at the polls - and why we can't afford to let them succeed in driving others away:

Here’s the profile of those they’d like to see at the polls: white men over fifty, especially those who don’t spend much time in city centres; Christian fundamentalists; those in “ethnic” communities who have been vetted by Jason Kenney (a leaked memo exposed the Conservative plan to harvest votes from those they depict as “ethnics”); gun owners; youngish neo-cons who want to grow up to be like David Frum (not a large demographic); and, of course the rich, as well as those who think they will be rich. Women are generally unreliable; and the young are a downright menace. If you’re under twenty-five, Harper almost certainly wants you to pass on voting. Look what happened to the nineteen year old woman who was muscled out of a Harper rally because Conservative spooks found a picture of her on Facebook side by side with Michael Ignatieff.
...
Lower voter turnout is not just a lucky break for the Conservatives. Right-wing political parties have been assiduously working to lower voter turnout in Canada, the U.S. and Europe for several decades. While running for office, the leaders of these parties denigrate government, those who work for governments and the benefits to society that flow from government programs. They promote the idea that politicians are cynics who are “all the same”, “in it for themselves” and “not to be trusted.” (The rich, who DO vote, know that whatever the ethical merits of those who hold leadership positions of right-wing parties, they can always be counted on to back business against labour and to spend billions bailing out the banks when that is required.)

Negative advertising, it has long been known, has the effect of driving down voter turnout in the electorate at large.

No, Stephen Harper does not want YOU to vote. His plan is to tranquilize the majority of Canadians into a state of torpor while he takes complete control of the instruments of the Canadian state.

On family situations

Kevin Milligan makes a case as to why income taxes should be applied at the family level. But I can't help but think that his argument actually describes precisely why income splitting is about the worst possible tool to do so:

One of the goals of income taxation is to -- gently or more forcefully, depending on your taste -- soften the inequalities generated by the market distribution of wellbeing. But does someone’s wellbeing depend on their family situation? For example, if someone is earning $20,000 per year and living alone, is that person better or worse off than someone with the same income living with a spouse earning $100,000? It seems likely that the ability to share food, housing, and other costs renders the person with a high-earning spouse better off. These family circumstances push toward the argument that the family is the right unit to measure wellbeing. Ignoring one’s family situation -- as strict individual taxation would do -- seems like we would be throwing away important information for assessing wellbeing.

Of course, the problem with income splitting is that it doesn't "soften" the presumed advantage of the individual with a high-earning spouse at all. Instead, it rewards the individual with a high-earning spouse by allowing an election to apply a lower rate to the spouse's higher earnings - while the individual earning $20,000 on his or her own gets no opportunity to turn that low income into a tax advantage.

In effect, Milligan looks to be making a case to make a general practice of adding all household incomes, and applying income taxes to the total. Which may well be worth some further discussion - but suggests that income splitting to provide added benefits to families with a single high earner is utterly misguided.

On cutoff points

Kevin Milligan muses about a Guaranteed Annual Income, in the process acknowledging at least some economic arguments for universality as part of a tradeoff between cost and progam incentives. But while I'm glad to see the discussion continue, there's room for argument both as to how Milligan characterizes the GAI proposal, and as to what the political results of his mooted plan would likely be.

Here's how Milligan describes his model for a GAI:

The idea of a GAI is quite simple. Everyone receives a transfer from the government of some fixed amount. This transfer is ‘clawed back’ with every dollar of income received. This structure leads to benefits and income that look like the illustrative graph attached to this article, assuming a $10,000 initial transfer and a 25 per cent clawback rate.

Now, there are some very positive aspects of that type of proposal, including in particular the smooth path for benefits at all points on the covered income scale. But there's a serious problem in describing such a program as "universal".

On one hand, such a GAI could be administered separately from the income tax system so that it serves solely to transfer money to people on the basis described by Milligan. But it should be obvious in that case that the program stops well short of universality, with benefits going only to those making $50,000 or less - meaning that there are bound to be issues in creating a large number of people who perceive themselves as not participating in the plan.

On the other hand, the 25% clawback rate could be integrated with the income tax system (which would presumably make for the kind of flat tax that the right would absolutely love). But while that could be seen as "universal" in a sense, it would also loom as a powderkeg due to the complete lack of overlap between people paying into the system and those who receive any benefits from it.

Mind you, I can understand that from an economist's perspective, the best possible system is one which minimizes the number of transfers that take place - making that division look like an ideal outcome. But again, the long-term political ramifications of pitting a class of payors against a class of recipients would make such a plan a recipe for disaster down the road.

Which doesn't mean that a GAI-type system shouldn't receive plenty more consideration (preferably with a smooth benefits curve that never entirely cuts off). But I'd argue that Milligan's GAI falls short of being politically sustainable - and shouldn't serve as anybody's idea of a universal program.