Wednesday Morning Links

Miscellaneous material for your mid-week reading.

- Andrew Jackson writes that Canada needs far more investment in infrastructure - rather than the austerity that's constantly being prescribed by the Cons:

The fiscal policy choice we face is often miscast as one between austerity to deal with public debt and short-term Keynesian-style stimulus. But the real choice, Mr. Summers argues, is whether or not to finance public investments that would have positive long-term impacts on both the economy and on public finances.

Take the case for repairing or replacing Canada’s crumbling basic municipal infrastructure, some 30 per cent of which is reported by the Federation of Canadian Municipalities (FCM) to be in “fair” or “poor” condition. The problem was dramatically highlighted by the need for emergency repairs to Canada’s busiest bridge in Montreal last week, part of a costly and highly disruptive maintenance program for the Champlain Bridge that will be needed to patch things up until a long-postponed new bridge is built.

While the last federal budget renewed the Building Canada Fund for another 10 years, there was no increase in modest federal funding for basic municipal infrastructure. And the Parliamentary Budget Office reports that a significant share of the $10-billion of “lapsed” federal spending last year came from lower-than-projected infrastructure investments.

Underinvestment in infrastructure to meet an arbitrary short-term deficit reduction target makes absolutely no economic sense. As the FCM argues, it is more costly to postpone needed repair and renewal of infrastructure, especially in a slack economy when the work can be done relatively cheaply and can be financed at near-record-low interest rates.
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In a stagnant economy, one marked by low levels of private investment despite near-zero interest rates, the best way to boost growth and job creation is through increased public investment. The case for public-investment-led growth is particularly compelling when such investments have a high rate of return, and thus reduce public debt as a share of the economy in the long term.

- And Erin Weir comments on the complete disconnect between corporate tax giveaways and productive investment in discussing Progressive Economics Forum's presentation to the Finance Committee:

Investment is now well below after-tax profits, which is especially notable considering that “investment” includes outlays to cover depreciation but “profits” are net of depreciation. Comparisons of investment and corporate cash flow (including depreciation) indicate a much larger imbalance.

Statistics Canada’s definition of “corporations” includes Crown corporations, which are generally not subject to corporate tax. Investment by Crown corporations is quite small relative to national GDP, but has grown rapidly over the past decade (as provincial electrical utilities, for example, have had to refurbish aging infrastructure). An untold story of the Great Recession is the stabilizing effect of Crown corporations on the Canadian economy.

When Crown corporations are factored out, the story gets worse. The private corporations that gained from corporate tax cuts have actually reduced their investment as a share of Canada’s economy.

- Karl Nerenberg reports on the Auditor General's findings which show that emergency response services - like far too many essential public goods - are woefully lacking among Canada's First Nations.

- Geoff Dembicki discusses the inefficiency involved in Alberta and Saskatchewan's high-greenhouse-gas-emission economies, while CBC reports on the Cons' non-committal response to even minimal recommendations to protect Canada's coasts from tanker traffic. Tzeporah Berman highlights the desperate need for the public to be able to comment on developments which may severely damage Canada's environment. And CBC also reports on the NDP's new energy plan - featuring a focus on meaningful environmental assessments at the federal level along with greater cooperation with provinces and First Nations.

- Finally, David Dayen suggests that as long as there's no prospect of prosecuting anybody for financial fraud, a Truth and Reconciliation Commission reviewing the global financial system might be the best way to gather the information policymakers need to prevent another economic meltdown.