Saturday Morning Links

Assorted content for your weekend reading.

- Justin Fox questions whether traditional studies tracking the distribution of wealth by quintiles do much good when the most obvious economic faultline is between the (give or take) 1% and everybody else:

Something really dramatic is going on up there in the top 5%, the top 1%, the top 0.01%. But while economists know some things about the impact of increasing overall income inequality, they still don’t know all that much about what this 1% stuff means. In their new paper, Chetty, Hendren, Kline, Saez, and Turner write that their finding of steady intergenerational income mobility “may be surprising in light of the well-known negative correlation between inequality and mobility across countries.” A possible explanation, they continue, is that

[M]uch of the increase in inequality has been driven by the extreme upper tail … [and] there is little or no correlation between mobility and extreme upper tail inequality — as measured e.g. by top 1% income shares — both across countries and across areas within the U.S. Instead, the correlation between inequality and mobility is driven primarily by “middle class” inequality.

That’s the thing about this rise in “extreme upper tail inequality” — most pronounced in the U.S. but by now a clearly global phenomenon. It is one of the most dramatic economic developments of the past quarter century. And it seems like it might be bad thing. But conclusive economic evidence for its badness is hard to find.

Yes, there are theories: All that wealth sloshing around in the top 1% leads to more bubbles and crashes. Extreme wealth corrupts the political process.  Income inequality may be slowing overall economic growth. And, as my colleague Walter Frick put it in an email when I brought this up, “given the diminishing marginal utility of income, it’s hugely wasteful for the super rich to have so much income.”
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I think we’re eventually going to have to figure out what if anything to do about exploding high-end incomes without clear guidance from the economists. This is a discussion where political and moral considerations may end up predominating. And as Harvard’s Greg Mankiw made clear in his maddeningly inconclusive Journal of Economic Perspectives essay on inequality last summer, these are areas in which economists possess no comparative advantage.

- Meanwhile, Michael Rozworski notes that spin about increased "average real wages" is based largely on upper-end gains - missing both the stagnation of Canada's median wage, and the number of workers left out of the workforce altogether. And Gary Bloch highlights how a meager minimum wage leads to worse health outcomes for everybody. 

- PressProgress rightly mocks the CFIB for pointing to the temporary foreign worker program - the most obvious Con effort to prioritize the constant supply of cheap, powerless and disposable labour for even the most abusive of employers over the well-being of Canadian workers - as an example of businesses being hard done by.

- Peter O'Neil reports on the respective efforts of Kennedy Stewart and Brad Trost to facilitate public participation through petitions and MP authority to vote on their own committee chairs. And it's for the best that Stewart's bill has already passed second reading with multipartisan support.

- Finally, Susan Delacourt questions the wisdom of political choices which cut seniors adrift in the name of a perpetual youth movement. But particularly when it comes to the Cons' attacks on pensions and services, I'd think the issue is less one of age than ideology: it's to be expected that people past their peak earning stage may need more public services and supports to compensate, meaning that a party determined to render government useless will inevitably operate contrary to their interests.

Musical interlude

Econoline Crush - You Don't Know What It's Like

Friday Morning Links

Assorted content to end your week.

- Ian Welsh discusses the nature of prosperity - and the illusion that it means nothing more than increased economic activity:

All other things being equal more productive capacity is better. The more stuff we can make, in theory, the better off we’ll be. But in practice, it doesn’t always work that way.

Part of the problem is due to hierarchies and inequality. Inequality is undeniably bad for us. The more unequal your society is, the lower the median lifespan. The more unequal the society, the sicker, in general. More heart attacks, much more stress. The more unequal, the more crime. These links are robust.

The links run two ways. On the one hand, humans find inequality stressful. The human body, if subject to long term stress, becomes unhealthy and far more likely to be sick. People who feel unequal act less capable than those who feel equal. This is true for the rich and powerful in unequal societies and the poor. Everyone suffers. Though the poor and weak do suffer more, even the rich and powerful would be healthier and live longer in equal societies, most likely simply due to the stress effect.

The second part is distribution, or rather, the question of who gets to decide the distribution. The more unequal a society, the less stuff the poor and middle class have, comparatively. Some technologies tend to lead to more inequality, some tend to lead to more equality.  ...
Increases in productive capacity and technological advancement do not always lead to welfare and when they do, it do not have to do so immediately. The industrial revolution certainly did lead to increased human welfare, but if you were of the generations thrown off the land and made to work in the early factories, often 6 1/2 days a week, in horrible conditions, you would not have thought so. You were in virtually every way worse off than before being thrown off the land, and so were your children. A few industrialists and the people around them certainly did very well, but that is not prosperity, nor is it affluence.

Prosperity, in the end, is as much about power and politics as it is about technology and productive ability. The ability to make more does not ensure we are making the right things, or that the people who need them, get them. Productive capacity which is not shared is not prosperity.

- Meanwhile, PressProgress highlights the Cons' latest efforts to make sure workers don't share in any benefit from corporate operations.

- Keith Stewart writes that the oil sector's interest in fostering dependence on its product runs contrary to the social interest in generating clean and renewable energy, while Andrew Gage explains the NEB's choice not to take seriously the most obvious risks involved in the Gateway pipeline and tanker project. And Erin Weir offers up PCS' minimal royalty projections as the latest example of how Saskatchewan's dependence on corporate potash production is producing little return for the province's resources.

- Finally, Greg Weston reports on CSEC's illegal intrusion into the online activity of travellers at Canadian airports:

The latest Snowden document indicates the spy service was provided with information captured from unsuspecting travellers' wireless devices by the airport's free Wi-Fi system over a two-week period.

Experts say that probably included many Canadians whose smartphone and laptop signals were intercepted without their knowledge as they passed through the terminal.

The document shows the federal intelligence agency was then able to track the travellers for a week or more as they — and their wireless devices — showed up in other Wi-Fi "hot spots" in cities across Canada and even at U.S. airports.

That included people visiting other airports, hotels, coffee shops and restaurants, libraries, ground transportation hubs, and any number of places among the literally thousands with public wireless internet access.

The document shows CSEC had so much data it could even track the travellers back in time through the days leading up to their arrival at the airport, these experts say.

Thursday Morning Links

This and that for your Thursday reading.

- Ken Georgetti discusses how the corporate tax giveaways of the past 15 years have hurt most Canadians:

The Conservative government and special interest groups claim incessantly that cutting corporate income taxes is good for the economy and for individual Canadians. We have been led to believe that tax giveaways to corporations would lead companies to reinvest in research and development as well as machinery and staff training to boost productivity. This is supposed to stimulate economic growth and create better paying and more secure jobs. But that is not what has happened in Canada during the past decade.

Let's look at the record since 2000, when the drive to slash corporate taxes began.  The average annual economic growth between 2000 and 2012 was 1.14 per cent, one of the longest periods of low economic growth in decades. Business investment in research and development has fallen from 1.13 per cent of GDP in 2000 to 0.88 per cent of GDP in 2012. Investment in employee training and skills development is down by 40 per cent since the 1990s. The amount spent on training per employee in Canada in 2010 was $688; in the U.S it was $1,071. And now, taxpayers will get the privilege of subsidizing companies for employee training, with the federal government's proposed Canada Jobs Grant.
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The years of tax giveaways have, indeed, been good for business. Their after tax profit margins rose from 6.9 per cent in 2000 to 8.1 per cent in 2012, and now we know what they have been doing with the money. Between 2000 and 2012, the total cash reserves of private, non-financial private corporations in Canada grew from $182 to $541 billion, an increase of over 300 per cent. During the same period, CEO pay went sky-high. The average CEO compensation at Canada's largest non-financial corporations averaged $7.96 million in 2012.

Corporate tax giveaways mean that the federal government has foregone billions of dollars in revenues. To pay for the tax breaks, Ottawa has borrowed billions of dollars and driven up the national debt. Now, the government has chosen to make big cuts to public services essential to Canadians in order to pay the bill for its tax giveaways.

We hold Corporate Tax Freedom Day to draw attention to the failure of business to deliver on its promises to Canadians. Clearly, slashing corporate tax rates did not produce the expected outcomes. No strings attached corporate tax cuts are a cruel and very expensive hoax and we should demand our money back.

- Meanwhile, Linda Nguyen reports that while the same Con/corporate grouping tries to minimize public pensions in favour of private schemes which allow the financial sector to skim massive rents off the top, the vast majority of Canadians expect to rely on the CPP and provincial equivalents to support their retirement.

- Trish Hennessy writes that Ontario should try to get on the right side of history by setting its minimum wage at a level which will keep full-time workers out of poverty. And the Wellesley Institute concurs while discussing the importance of also indexing it to inflation.

- Kev and Dan Tan are both rightly skeptical about the Libs' sudden Senate announcement (followed by almost immediate backtracking about what it actually means). But Paul Wells sums it up best:

The last two acts of Richard II are about sorting out the effects of Bolingbroke’s rash act, and I won’t spoil it for you but it gets a little messy. Similarly, it’s hard to know where the Liberal Party as a whole goes from here. Terry Mercer gave his life to this party. Dozens of other senators and their staffers, same deal. Percy Downe was Chrétien’s chief of staff; he got told this morning he has no further function as a Liberal. An NDP staffer this morning was gleeful, because with only 34 MPs and zero Senators, the Liberals may no longer qualify for a caucus room in the Centre Block. It’s not entirely clear how all this will work.

Nor is it clear it is a permanent state of affairs. The old Reform Party was dead-set against MPs’ pensions until its members started to qualify for some. Stephen Harper did not appoint a single senator until he realized Stéphane Dion had planned to appoint plenty if the coalition crisis had gone the other way. Among a thousand other backtrack scenarios, it’s possible to imagine a future Liberal prime minister — perhaps his name would be Trudeau — watching as a coherent Conservative Senate caucus blocks Liberal legislation that has gone orphan in the Senate. In the nearer term, every time a fellow or lady who still collects a Senate paycheque shows up at a gathering of Liberals, the sincerity of this divorce will be open to question.

- Finally, Matthew McKean discusses how public confidence in politics may be the most important factor in improving voter turnout (and presumably public participation in many forms as well). And the Cons' consistent attempts to weasel their way out of responsibility for their actions surely can't be helping matters.

New column day

Here, questioning the Saskatchewan Party's belief that meeting the province's constitutional duty to provide correctional centre inmates with the basic necessities of life isn't a "core" government function.

For further reading:
- CTV reports on the label the Sask Party has applied to correctional food services (and the resulting privatization process) here. 
- And once again, CBC reports here on the cautionary tale of Ontario's highway maintenance - where public safety has been compromised in the name of outsourcing provincial services.

Deep thought

The Liberals, at their self-perceived best, lag many years behind the principled curve set by the NDP.

(Meanwhile, who's taking odds as to the number of formerly-Lib Senators who will be recruited by the we'll-take-anybody Greens?)

Wednesday Morning Links

Miscellaneous material for your mid-week reading.

- John Cassidy offers ten options to reduce income inequality. And Andrew Coyne concurs with the first and most important suggestion that income supports sufficient to provide a stable living to everybody would make for the ideal solution.

- Meanwhile, Frances Russell is the latest to write that the Cons' income-splitting scheme is only designed to exacerbate the gap between the rich and the rest of us. Miles Corak notes that even Republicans can't avoid recognizing that equality of opportunity is fading in the U.S. - though he recognizes their inclination to avoid acknowledging the role of inequality as a cause. Logan Sachon interviews a few members of the precariat about about the extreme obstacles facing people who have to juggle part-time and temporary jobs for lack of full-time opportunities. And in an interview with Josh Eidelson, John Schmitt discusses how the U.S. has chosen inequality and worker suppression as the basis for its economic policy over the past several decades:

Workers today are a lot older than they were in the 1960s or the 1970s, and they are enormously better-educated than they were in the 1960s or 1970s. The fact that most workers are doing barely better, and some workers are doing worse than their counterparts from 40 or 50 years ago … suggest that the problem is that the way the economy converts people’s skills, people’s experience, people’s education and their training, into good jobs is what has deteriorated over this period. Not people’s underlying skills, or work experience, or education.

And I think it points to something completely different — and I think it’s absent from a lot of the discussion as [to] the reasons why we have economic inequality, and the reasons why we have these continuous problems with mobility and opportunity. And that has to do with bargaining power of workers. And you know, that I think is a piece that’s unfortunately missing from the president’s discussion of economic inequality, and it’s absent from his discussion of mobility and opportunity.

The way the economy has been restructured over the last three or four decades has removed the bargaining power of workers at the middle and the bottom. And it’s done that in a very systematic way.
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It doesn’t stop there … Immigrant workers have almost no rights under our labor law … Because their position is so weak, it undermines the power of low-wage workers who were born here and have — barely — more rights … It creates a perfect set of circumstances for low-wage employers, because they can play immigrant workers against U.S.-born workers, in an environment where neither of them has very many rights. So businesses don’t have a big incentive to try and fix that situation …

We’ve had trade deals such as [the proposed Trans-Pacific Partnership], which we’re discussing right now, which are basically organized to increase the power, economic power of corporations, and to undermine the power of their workers and consumers.

You know, we privatized state and local government functions at quite an alarming rate … The main advantage that the private sector has over the public sector is not that they’re more efficient at organizing school buses. It’s that they pay their workers less and they don’t give them benefits …

That discussion of bargaining power, and the politics and the policies around it, is firstly what’s going to be missing from the State of the Union address.

- Speaking of privatization, Travis Homenuk criticizes the Sask Party's plan to privatize food services in correctional centres. CBC reports that Ontario's highways are suffering from the poor performance of private maintenance operations - though it's far from clear that the imposition of contractual fines makes up for the injuries suffered by citizens due to contractor neglect. And Sean Shaw discusses how P3s are at best a matter of accounting and budgeting trickery rather than value for public money.

- But Matthew Taylor reports that the trend toward privatization is far from universal - as a cross-party group of UK MPs is working on legislation to keep public services public.

- Finally, the CP reports that the Athabasca Chipewyan First Nation has understandably given up on a federal environmental monitoring program. And while it's understandable that nobody would trust, say, a government which puts oil lobbyists on the public payroll to stop environmental research, there's all the more work to be done in ensuring that First Nations with much to lose (or gain) from tar sands development can engage in meaningful discussions with the next federal government.

Tuesday Night Cat Blogging

Joined cats.

Tuesday Morning Links

This and that for your Tuesday reading.

- David MacDonald studies the effect of the Cons' income-splitting scheme, and finds that it's oriented purely toward funnelling money toward the top of the income scale:

“Income splitting creates a tax loophole big enough to drive a Rolls Royce through. It’s pitched as a program for the middle class but in reality it’s an expensive tax gift for the rich,” says Macdonald. “The upper third of Canada’s richest families would receive $3 of every $4 spent on income splitting.”

The study finds seven out of ten senior families get no benefit at all from pension income splitting and the richest 10% of senior families receive more than the bottom 70% combined. The cost of pension income splitting for senior couples in 2015 is estimated at $1.7 billion ($1.2 billion federally and $500 million provincially). In contrast, it would cost $1.5 billion a year to lift all Canadian seniors out of poverty.

The study examines the Conservative plan to extend income splitting to families with children under 18 and finds:

• 86% of all families would gain no benefit whatsoever from this tax loophole.
• The richest 5% of families would see more benefit than the bottom 60% of families combined.
• The bottom 60% of families would receive, on average, $50. The richest 5% of Canadian families — those making over $147,000 — would see an average benefit of $1,100.
• This loophole would cost the federal government $3 billion in lost revenue and an additional $1.9 billion provincially — for a total revenue loss of $4.9 billion in 2015 alone.

- Ian Welsh offers up his four principles necessary for genuine prosperity - featuring fairness, kindness, generosity and a focus on the future as an antidote to the corporate attempt to make a virtue out of greed. Which leads to my further observation that we'd be better off with more Ian Welsh.

- Meanwhile, Paul Krugman observes that U.S. voters are starting to recognize their country's class structure (and to develop due skepticism about policies intended to further the concentration of wealth at the top). And Tim Hudak may be facing the same lesson, as his attacks on workers run into the reality that organized labour produces better outcomes for the population as a whole.

- But David Atkins notes that there's a long way to go in protecting workers' rights and well-being - and that the focus may need to include global treaties which remove any opportunity for employers to seek out havens for employee abuse:

The lesson should be obvious: the more international and legally binding the agreement, the more helpful it will be to workers in developing nations. The more expansive and multi-party the treaties are, the less competitive labor arbitrage risk will entail for any nation that improves factory conditions. Voluntary commitments from multinational corporations will do little to prevent the next tragedy.

Labor and worker protection agreements are in their infancy at the highest international levels. But with multinational corporations increasingly able to use labor arbitrage to manufacture products in nations with the weakest worker protections, the international community must take a stand in creating legally binding, global treaties that are proactive in nature, and carry negative trade consequences for those nations that choose to flout or ignore them.

- Finally, Jennifer Hollett talks about her political experience so far:

Monday Morning Links

Miscellaneous material to start your week.

- Angelina Chapin highlights the drastic impact a guaranteed annual income would have on Canadians currently living in poverty:

To set and meet goals, you have to think long-term. When you’re poor, you can’t focus on the future (and Bill Gates wasn’t raised poor, by the way). You worry about finding boots, not pulling up your straps. The best way to “motivate” poor people is with programs that help lift their gaze from the ground to the horizon. A guaranteed annual income program would do that.

The idea is simple: in place of a complicated welfare system, give people enough money to live above the poverty line in their region (Ontario’s Low Income Cut-Off was $22,229 for a single person in 2011). No strings attached. The less you make, the more guaranteed income you receive.
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Just getting on social assistance is a commitment to poverty. To receive it in Ontario, you can’t have more than $1,657 in liquid assets, which could mean selling a car or giving up savings to qualify. There are at least five administrative steps to continually get welfare. Once you’re in the social assistance system, there’s not much incentive to leave.
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As soon as a welfare recipient starts making any real income, social assistance benefits, subsidized housing and prescription drug money are all cut to some degree. The GAI program would still guarantee any employed person below the poverty line a top-up to, you know, encourage rather than punish their progress.

Many critics of the GAI, ironically, suffer from their own inability to think long-term. They complain about the initial costs, which in Canada could be anywhere from $30-to-$50 billion per year, according to Basic Income Pilot founder Jesse Helmer. But over time, the recipients’ lifestyle changes drive the price down. Citizens for Public Justice estimates that a GAI income could reduce crime costs by $1-2 billion and health-care costs by $7-8 billion annually.

If we could just accept the mound of data showing poor people aren’t degenerates who don’t set their alarm clocks early enough, there would be more support for programs that give people enough money to think ahead.

- But as Paul Krugman notes, the need for more thought about the bigger picture is as much a problem at the top of the income distribution as at the bottom:

Rising inequality has obvious economic costs: stagnant wages despite rising productivity, rising debt that makes us more vulnerable to financial crisis. It also has big social and human costs. There is, for example, strong evidence that high inequality leads to worse health and higher mortality.

But there’s more. Extreme inequality, it turns out, creates a class of people who are alarmingly detached from reality — and simultaneously gives these people great power.

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But every group finds itself facing criticism, and ends up on the losing side of policy disputes, somewhere along the way; that’s democracy. The question is what happens next. Normal people take it in stride; even if they’re angry and bitter over political setbacks, they don’t cry persecution, compare their critics to Nazis and insist that the world revolves around their hurt feelings. But the rich are different from you and me.

And yes, that’s partly because they have more money, and the power that goes with it. They can and all too often do surround themselves with courtiers who tell them what they want to hear and never, ever, tell them they’re being foolish. They’re accustomed to being treated with deference, not just by the people they hire but by politicians who want their campaign contributions. And so they are shocked to discover that money can’t buy everything, can’t insulate them from all adversity.

- In a similar vein, Carol Goar criticizes Chris Alexander as the latest Con to try to win political points by attacking the health of some of the most vulnerable people in Canada:

“There was hope that the government might decide to change the discourse,” said Janet Dench, executive director of the Canadian Council of Refugees.

It gradually dissipated. The last thread snapped a week ago when Alexander lambasted Ontario for its “scandalous” decision to provide medical care to “bogus” asylum seekers.

“It’s irresponsible,” he railed. “It’s also unfair to for taxpayers.”

His tirade set a new low in intergovernmental relations. It signalled that any Canadian office-holder who showed compassion, tried to mitigate the harm Ottawa is doing or defended the values jettisoned by Stephen Harper’s regime was open to attack.
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In the short term, (Dench) and her colleagues will continue to stand up for refugees, reach out to sympathetic Canadians and do what they can to soften public opinion. Their hope is that the 2015 election will bring a change of government and a change of heart.

They’ve given up on Alexander. He had the talent, the knowledge, the international experience and the diplomatic skill to be an exemplary minister of citizenship and immigration. He chose instead to use his power to crack down on sick, vulnerable people.

- Meanwhile, Robert Reich points out that the more successful the privileged are in suppressing the well-being of those below them in the short term, the more likely we are to see wrenching changes in the longer term.

- Finally, Stanley Tromp reports on the findings of the U.S. National Oceanic and Atmospheric Administration about the transportation of tar sands products - featuring much-needed recognition that the Cons and their oil-sector cronies have done nothing to evaluate the new and real risks of shipping dangerous products through sensitive areas. And Transportation Safety Board chair Wendy Tadros confirms that outdated tanker cars create a risk of more Lac-Mégantic-style disasters, while Greg Gormick calls for a combination of public investment and better regulation to ensure rail safety.

Sunday Morning Links

Assorted content to end your weekend.

- Jeremy Nuttall discusses why the Cons' temporary foreign worker program is ripe for abuse, as it ensures workers have every incentive to avoid reporting employer wrongdoing since the employer can singlehandedly ship the employee out of Canada in retaliation.

- But the good news is that workers who aren't quite so easily sent away are making efforts to fight back against the Cons' anti-labour plans - as Kathryn May reports on a pledge among public service unions not to give in to attacks on sick leave and disability benefits. And on the provincial level, SOS Crowns exposes and questions the Saskatchewan Party's privatization of essential infrastructre.

- John Geddes discusses what the Cons want to eliminate in order to make way for subsidies tied to specific employers:

Schemes to place hard-to-employ young people in jobs tend to come and go. BladeRunners is the exception. The British Columbia program has been around since 1994, long enough that even its managers aren’t entirely clear on how it got its name—and for the Organisation for Economic Co-operation and Development to single it out as a proven model. BladeRunners helps unemployed 15- to 30-year-olds—mostly Aboriginal, sometimes homeless, often with histories of substance abuse—learn basic skills and land several key weeks of job experience. Counsellors are on call around the clock when participants run into the inevitable problems.

It sounds like the sort of feel-good program any politician might rush to line up behind. But the B.C. provincial government cites BladeRunners as a prime example of the kind of training that the federal Conservatives are out to cut. At issue is the so-called Canada Job Grant (CJG), announced by Finance Minister Jim Flaherty with considerable fanfare in last year’s federal budget. Under the CJG, Flaherty proposed that the federal government, the provinces and employers each pay a third of up to $15,000 a year for every employee enrolled for training at an eligible institution. But there was a catch: The federal government’s $300-million share was to be taken out of the $500 million a year Ottawa transfers to provinces under existing labour-market agreements—the main source of BladeRunners’ $6-million budget.

- Finally, Ketaki Gohale reports on the level of social responsibility we can expect from big pharma (which we should keep in mind the next time it claims that giveaways are needed to support the development and commercialization of medication):

Bayer Chief Executive Officer Marijn Dekkers called the compulsory license “essentially theft.”

“We did not develop this medicine for Indians,” Dekkers said Dec. 3. “We developed it for western patients who can afford it.”

Fortunately, Médecins Sans Frontières offers up the appropriate response.