Category Archives: Economy

May 23 2014
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Economy, Politics

Verbal jousting won’t cure what ails New Brunswick

 

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They may know next to nothing about forging policies that actually inspire confidence in the public peanut gallery. But when it comes to mud-slinging and spin-balling, our elected leaders are bonafide artistes, each deserving a standing ovation.

So it was on Wednesday, which marked the end of the current legislative season in New Brunswick. There in Freddy Beach, dutifully providing rounds of enthusiastic applause to themselves, were Tory Premier David Alward and Liberal Leader Brian Gallant, bending all kinds of truth to score political points.

Thundered the latter: “This government was quite busy breaking its promises. They made three key promises to be elected in the last election in 2010. They promised they’d balance the books, without cutting services and without increasing taxes. It’s obvious these three promises were broken. I’m asking the premier to explain to New Brunswickers how they are supposed to believe anything in their platform when they broke the three key promises in order to be elected in 2010.”

Rejoined the premier: “We would have thought with a least the recent policy convention we would have had some clear signs with where the Liberal party stood, but all we have is no vision at all. . .The future of New Brunswick is at stake. There hasn’t been a time in many years where the stark realities, the differences between parties, will be made more clear in the coming months. We know our young people want to have the opportunity to stay here in New Brunswick instead of having no choice but to go elsewhere.”

As for the not-quite-hidden agenda behind the political theatre this week, Mr. Alward confirmed, to the edification of exactly no one, that “elections matter. . .The reality is that this election more than any in the past will make the difference in the future of the province. We have a plan and we are dead-focused on that plan, moving forward with shale gas development, moving forward with mining, our forestry renewal and moving forward with a pipeline.” 

But if elections matter, these days they seem to matter matter less to the “future of the province” than they do to the make and model of the rowboat we choose to run aground on some shoal along the not far-off horizon. 

Moncton academic Richard Saillant sounds the alarm in his excellent new book, “Over the Cliff?”, regarding the province’s looming and interrelated fiscal, economic and demographic crises: “For several decades, New Brunswick’s economy has surfed on a rising tide of labour force growth, fuelled by the baby boom generation and the steady, largely successful march of women towards equal participation in the workforce. The tide is now receding, dragging down the economy. A new Age of Diminished Expectations is upon us.”

That’s not much of a campaign platform, but it does suggest one for either Mr. Alward or Mr. Gallant, should they actually put their rhetorical cannons away and level with the electorate for a change.

The requisite soliloquy might go a little like this:

“My fellow New Brunswickers, I come not to praise my record, but to bury it. “Clearly, we need to hit the reset button in this province. All of us, Conservatives and Liberals alike, have made costly mistakes. 

“We let the size of our public service balloon out of all proportion to its utility. We’ve wasted countless millions of dollars on failed economic development initiatives and corporate welfare. We’ve put too many of our eggs in one basket. We haven’t stuck to our knitting. And, if you will permit me one last cliche, I will make you one, and only one, promise going forward: No more promises!

“Now is not the time for verbal jousting, but for non-partisan collaboration across party lines. Now is the time for dismantling ‘politics as usual‘ and for working together towards hard, but commonsensical, fixes for our problems. 

“We must finally recognize that no one – not the federal government, not the money-market lords of Manhattan, not the foreign conglomerates of the world – is coming to our rescue. It’s all on us.

“It’s time we stop huffing and puffing at each other and get on with it.”

Ah, yes, some theatre – though it be pure fiction– can be marvelously inspiring. One might even say, worthy of ovation. 

 

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May 22 2014
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Economy, Education

To reduce poverty, improve education

 

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Any political regime, regardless of ideological bent, that claims the high ground in the perennial war on poverty rallies the faithful with empty rhetoric and promises it knows it can’t possibly keep.

So it was last week when New Brunswick’s Conservative government laid out a plan to reduce penury in the province – one that looked very much like a version its predecessors in Shawn Graham’s Liberal administration introduced five years ago. 

How did that one work out for us?

“New Brunswickers want to know the results of the last plan,” Grit MLA Don Arsenault observed earlier this week. “Where do we stand now in making sure that we are heading in the right direction? The government is hiding those numbers, hiding those results, because we are just a couple of months away from the election.”

As for the new plan, Mr. Arsenault said, “There are 28 actions with no deadlines. How can the government measure whether the plan meets its objectives?”

To which Education Minister Marie-Claude Blais sneered, “It (criticism of the plan) is for political gain. That is what the members opposite want to do. That is what they like to do. There are measurables, and the measurables are being attained right now. . .We are doing all of that, and we will continue to do that.”

In fact, neither the Conservatives nor the Liberals have the foggiest notions for reducing poverty in New Brunswick. They trot out the few remaining numbers the gutted  Statistics Canada can provide and arbitrarily decide to chop income disparity by between 20 and 50 per cent over, say, five years. All of which are nice, round numbers that signify precisely nothing.  

Politicians play the poverty card because they think it makes them appear virtuous. But as they stop chasing their opponents’ tails, they merely set their sites on their own.

Poverty is one of those social bedevilments, like illiteracy, that’s impregnable to partisan maledictions or entreaties. It does not recognize doctrinal superiority. In fact, you best attack it by throwing politics out the window, joining hands across party lines and drinking deeply from the wishing well of good public intentions. 

Once that’s done, you spend a whole bunch of money literally reinventing pre-school and primary education systems in this province.

Progressive think tanks, university educators, child advocates – even the Paris-based Organisation for Economic Co-operation and Development (OECD) – have all come to the same conclusion: Early Childhood Education, or ECE, plays a vital role in ameliorating the effects of poverty on families and provides disadvantaged kids with a leg up and out of their impoverished circumstances.

The Carolina Abecedarian Project conceived 30 years ago at the Frank Porter Graham Child Development Institute at the University of North Carolina ay Chapel Hill remains one of the best-known and persuasive longitudinal studies in the field of early development. The initiative, a controlled experiment, was designed to ferret out the  benefits for poor children, if any, of early childhood education. 

According to its findings, “Children who participated in the early intervention program had higher cognitive test scores from the toddler years to age 21. Academic achievement in both reading and math was higher from the primary grades through young adulthood. Intervention children completed more years of education and were more likely to attend a four-year college. Mothers whose children participated in the program achieved higher educational and employment status than mothers whose children were not in the program.”

Even some economists now believe that ECE is a formidable weapon in the public-policy arsenal for combatting poverty. 

In a paper he published last October, Craig Alexander, senior vice-president of TD Bank Group, wrote that “more access to affordable and high quality pre-school education could help to boost literacy and numeracy skills and would help to reduce income inequality in the long run. . .Most studies show that a one dollar investment reaps a long-term return of 1.5-to-3 dollars, and the return on investment for children from low income households can be in the double digits.”

ECE will not eliminate poverty right away; it efficacious effects are generational. And it does cost money – a commodity that’s in short supply in these parts these days.

But collaborating to find a funding solution is a far nobler way for our elected Grits and Tories to pass the time than is sniping at each other over poverty reduction policies and programs that won’t work anyway.

 

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May 16 2014
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Economy, Transportation

Who’s been working on the railroad?

 

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A former Conservative henchman once declared that Canada’s passenger rail line receives operating subsidies from the federal government thanks solely to the general public’s sentimental attachment to trains – or, rather, the idea of them.

During an interview with the Globe and Mail in 2012, ex-transport minister Chuck Strahl, opined that “train travel in Canada has this romantic notion that if we all rode the rails, all of our problems would disappear.”

To which I might rejoin, “Well, wouldn’t they?” 

Though I haven’t had much occasion recently to “ride the rails,” when in the past I have, I managed to settle the affairs of my own corner of the world with greater alacrity and confidence than I’ve ever managed to muster whilst whipping down a pot-hole-strewn highway or jetting through turbulence in the lower stratosphere.

There’s just something about a train ride that’s so comforting, so evocative of a more elegant, civilized time. Indeed, Mr. Strahl was right. All such sentimental journeys are, by nature, romantic. But what, pray tell, is wrong with that?

The blunt truth is that without some form of public support (both financial and material) passenger rail service in Canada would die a fast and furious death. The numbers just don’t add up to suit the neo-cons and free-market proselytizers among us. Predictably, every government cut to Via Rail since the early 1980s, has hastened that federal Crown corporation’s demise. In fact, if I had any faith in the proposition that governments actually know how to plan for the future I would swear that the gutting of the “national dream” was a deliberate, carefully executed plot.

Today, Via’s national, intercity service provides 497 trains a week in all provinces, except Newfoundland Labrador and Prince Edward Island, rolling over 12,500 kilometers of track. More than four million passengers a year avail themselves of the service, though most travel the Quebec City-Windsor corridor.

That may sound like a robust business, but since 1981, federal subsidy cuts have have prompted the railroad to chop from the outside in. 

In 2012, the Canadian line between Toronto and Vancouver was reduced to two, from three, days a week. The Ocean line between Halifax and Montreal was hacked to three, from six days a week. Other service cutbacks in the Corridor line west of Toronto followed suit. 

With each cut, of course, comes a self-fulfilling prophesy: ridership actually falls which, in turn, justifies more reductions in service and frequency down the road. 

All of which makes the news of Via’s decision last week to spent $10 million fixing a stretch of track between Miramichi and Bathurst welcome, indeed, though Via CEO Yves Desjardins-Siciliano offered an overly circumspect explanation for the move:

“We took three months to look at our options with the rail line, meet the province, municipalities, look at the market opportunity, and convince ourselves that if we made the investment and re-tarted the service, that there would be a possibility for growth,” he said at the announcement. “I think three months to look at that is reasonable.”

Actually, it’s rather ominous, for what Mr. Desjardins-Siciliano is scrupulously avoiding, in his statement, is the fact that without this paltry investment, all passenger rail traffic from the Maritimes to Quebec would effectively cease. Thirty years ago, such a scenario would have been unthinkable in official circles. Today, well, not so much.

As for the financial patch, “it’s useful,” national transportation consultant Greg Gormick told this newspaper’s Cole Hobson recently. “It’s useful, but it doesn’t represent any big change in thinking, any admission that we have some problems with the rail passenger system. . .There has to be a plan to boost the ridership and improve the promotion of the train. That’s the crunch. I think there’s still a lot of things that need to be done before anyone knows which way they can turn on this.”

The fact remains that without some form of government support, the numbers for privately administered rail – especially along the lightly populated Halifax-Montreal corridor – will never add up.

Yet, trains are an integral part of our history, our psyche, and, despite their cost, they do provide an essential, environmentally efficacious, mode of transportation without which all Canadians are somehow diminished.

 

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May 13 2014
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Economy, Employment, Oil and Gas

Where are our new adventures in enterprise?

 

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Down the rabbit hole of unemployment

In coming to grips with what ails the Canadian job market, the nation, the region, our cities and towns have tried it all, only to conclude that the 21st Century is looking less like the 20th and more like the 19th.

A piece in the Saint John Telegraph-Journal yesterday brilliantly evokes the wild west that is Fort McMurray. “Go and spend a week (there) and see what life is like,” a local family lawyer, whose juggling several divorce cases, says. “From what I understand, and what’s described to me by women, it’s Dodge City, circa 1870. There are bars, strip joints, hookers.”

Such are the familiar lures of a boom town hooked on the almighty petro-dollar. In fact, most good jobs in this country are going this way (sans strippers and prostitutes as signing bonuses).   

Forget environmental engineering; think geology and hydrology. If that’s too academically rich for your blood (and if you can drive a stick) consider that an oil sands worker with a high school diploma can earn between $90,000 and $120,000 a year base salary. 

Consider, also, that federal government labour policies explicitly encourage people to work in this sector – to leave their homes in their less promising regions and lasso their own personal moons in Big Sky country. 

Yet, lest we fully become a nation of truckers and wildcatters, a few are issuing one last, possibly quixotic, call for reason in the job market. Weirdly, they are bankers who, one could argue, have the most to gain from unalloyed oil and gas prosperity.

Still, writes Gordon Dixon, chief executive officer of the Royal Bank of Canada and chair of the Toronto Region Immigrant Employment Council, “Diversity and immigration are important parts of Canada’s past, present and future.”

His commentary appeared in yesterday’s edition of the Globe and Mail: “Our diverse population is only an advantage to the extent we are inclusive. Full inclusion means means everyone feels enabled to bring their perspectives, knowledge and experience to the table. Diversity, together with inclusion, plays a central role in driving productivity, innovation and growth.”

And here I thought productivity, innovation and growth had only to do with how much oil you can squeeze from a stone. At least, that’s what I read on the packaging before I drank deeply of the Kool-Aid. 

Not that there aren’t immigrants labouring away in the oil sands. It’s just that there aren’t many opportunities in the new west’s resource industries to demonstrate one’s native proclivities for diversity. Fortunately, we don’t have that particular problem in merry old New Brunswick, where our primary industries (such as they are) are failing both to retain existing residents and attract new ones. 

Last week, Statistics Canada (yes, it’s still alive and kicking after the federal government’s latest round of cutbacks, though just barely) reported that New Brunswick had lost 5,400 jobs (or, at least, 5,400 fewer people were working) in April. That pushed up the overall provincial unemployment rate to 10.5 per cent.

Imagine the entire population of Sackville – home of sweet Mount Allison University, alma mater to my grandfather, father and daughter – suddenly packing up their things an hitting the road en mass like a caravan of Okies from Muskogee. 

Charlie Coffey can imagine it. He’s a guest speaker at this week’s provincial jobs summit. The title of his address is “People Power is the Competitive Advantage: Building a Diverse Workforce in the 21st Century.”

Not surprisingly, perhaps, he’s a former executive vice-president of the Royal Bank who retired after 44 years. Again, he says, coming to grips with what ails us in this region is all about recognizing the importance of diversity.

Let’s not put all our eggs in one industrial basket. Let’s open up our hearts, minds and borders to different perspectives, new entrepreneurial opportunities, new adventures in enterprise.

“Since diversity is an integral part of business success, leveraging diversity has little to do with compliance and legal requirements and more to do with good business – smart business,” Mr. Coffey told the Telegraph-Journal recently. “Sometimes people find it hard to see how diversity and the bottom line are related.”

Of course, that’s only natural when, on any given day, the future of our conjoined economies looks very much like their past.

 

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May 09 2014
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Economy, Government, Politics

Setting the fiscal stage for a political melodrama

 

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It is organizationally awkward, bureaucratically regressive and probably unworkable. 

But say this for the drafters of New Brunswick’s newest law designed to reign in public spending: When it comes to crafting high, political theatre, they hold a candle to no one; certainly, no other Canadian legislator of similarly hawkish mien.

With one merry swoop in deference to the provincial election, coming soon to a voting station near you, Finance Minister Blaine Higgs has tabled the Fiscal Transparency and Accountability Act, which he says will render New Brunswick “one of the most accountable provinces in Canada.” 

It will do this, apparently, by requiring government to reduce the deficit by at least $125 million – or, as the case may be, preserve a budgetary surplus – in any given year. The consequences of failure would, for the first time, directly hit each cabinet minister where he or she lives: in the pocketbook, and in the form of a $2,500 penalty.

The Act, its proponents claim, will also restore common sense to the administration of the province’s finances – which currently labour under a $500-million deficit and a long-term debt of almost $12 billion – by compelling political parties to put a dollar figure beside each of their election promises at the risk of losing their annual operating allowances.

In his official statement in the Assembly, Mr. Higgs struck a triumphant tone.  “New Brunswick will be the only province with this level of transparency required for election promises,” he said. “Elected representatives must be accountable for taxpayers’ dollars, not only when making commitments to voters, but also when making decisions at the cabinet table. Just as New Brunswickers must face personal consequences for not keeping up with household bills, Mr. Speaker, so must elected representatives see personal consequences for not keeping up with our province’s bills. That. . .is true accountability.”

Perhaps; still, it’s odd that the only way this government seems able to deliver “true accountability” to taxpayers is by functioning as if it were its own trustee in bankruptcy

In effect, these new schedules of penalties for non-performance and injunctions against empty promises all but concede that government is a wastrel. It’s a deadbeat dad whose awful track record with the family’s nest egg has landed the whole clan in the chicken coop. It can’t be counted upon to do the right thing on its own. 

Clearly, then, the solution should be obvious: The Tory government will regulate itself, just like before; only. . .well, better.

Astonishingly, the province’s other main parties seem all too willing to oblige Mr. Alward and company in legitimizing this fiction.

Liberal finance critic Roger Melanson made a good show of his faux opposition on Wednesday when he intoned, “To have the minister of finance present this piece of legislation and make a statement like this, it’s quite ironic in the fact that if you look at the specific results from this government and this minister of finance for the last three-and-a-half years, he has missed his financial targets over and over and over.”

A New York minute later he had this to say: “It (the Act) makes sense and I think taxpayers, New Brunswickers, are expecting any political party or any government to be accountable, to be transparent and to be financially responsible.”

But how valid is that commitment when it’s delivered under threat of self-imposed reprisals in the event that the government falls off the spending wagon once again?

Moreover, what are the new costs associated with administering a law that must involve third parties to mete out its complex brand of justice? Are there mitigating circumstances that might waive the various fines and levies? If so, when and how do they kick in?

According to the legislation, cabinet ministers are off the hook if certain “extraordinary events” such as recessions, natural calamities and other so-called acts of God cost the budget $20 million or more. Again, though, who decides what fits the definitions, and what are the mechanisms? 

One element does seem clear, much to the expected chagrin of the Canadian Taxpayers Federation. In a nicely sneaky and utilitarian way, the new legislation essentially guts the archly populist (and retrograde) Taxpayer Protection Act. 

Now, a government that faces a $400-million annual deficit in New Brunswick no longer needs to hold a referendum to obtain the public’s expressed permission to raise new taxes or hike the HST.

Here, then, witness one piece of political theatre stooping to conquer another in high style, indeed.

 

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May 02 2014
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Economy, Energy, Oil and Gas, Politics

Lessons for New Brunswick from The Lone Star State

 

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In Texas, to quote a phrase, they do things big.

Big sky, big country, big portions, big ambitions all frame the tableau that is The Lone Star State.  So does “big energy”, but not always in a fashion that seems familiar to New Brunswickers embroiled in their own existential debate about natural resources development.

Yes, Texas is synonymous with the oil industry and is home to the famous (or, depending on one’s perspective, infamous) Barnett field, which in one recent year produced 1.11 trillion cubic feet of shale gas. But it is also home to the largest and most successful wind energy industry in the United States.

According to a Wikipedia entry, “wind power in Texas consists of many. . .farms with a total installed nameplate capacity of 12,212 MW from over 40 different projects.” In fact the state “produces the most wind power of any” in the U.S. 

Just as impressive, perhaps, is the speed at which the energy resource has developed there. In a scant 13 years, the state’s annual hours of wind generation by megawatts has skyrocketed from 492,000 to 36 million. How?

Again, the Wiki item is instructive: “The wind boom in Texas was assisted by expansion of the state’s Renewable Portfolio Standard, use of designated Competitive Renewable Energy Zones, expedited transmission construction, and the necessary Public Utility Commission rule-making. Wind power accounted for 8.3 per cent of the electricity generated in (the state) during 2013.”

So, the take-away from all of this is that a happy, productive collaboration between business and government has literally invented a clean, renewable and commercially viable alternative to fossil fuels for electricity generation where none existed at the dawn of the 21st century.

Now, not coincidentally, power rates from wind are among the lowest of any energy source in the state (only those from shale gas are cheaper). 

Even better, the billions of dollars the private sector has invested in the industry to become competitive and profitable has spurred economic development in rural areas, where thousands of people are gainfully employed. This has, in turn, attracted innovators and entrepreneurs chasing the main chances implicit in improving existing energy storage (battery) and smart-grid technologies. 

All of which raises a question: What does Texas know that New Brunswick doesn’t?

For years, we in The Purple Violet Province have known that we are home to enviably strong and steady coastal breezes. Back in 2007, a “wind energy map” of our environs conclusively proved that, with foresight and commitment, the resource was rich enough to support 5,000 megawatts of installed capacity. Currently, we have 500, which isn’t bad; but it’s still far below our potential. 

Last week, Liberal Leader Brian Gallant renewed his party’s commitment to installing a moratorium on further shale gas development in the province should he and his crew be lucky enough to form the next government in September. Citing public opprobrium and lingering doubts among various health experts, he wants more studies. Fair enough.

But a moratorium only delays the inevitable day of reckoning. It won’t convince those who adamantly oppose shale gas on principled (concern for planetary climate change) or practical (concern for local air, soil and water quality) grounds. 

It certainly won’t mollify the petroleum industry. It may buy Mr. Gallant a bit more time. Still, at what cost?

The clock is ticking in New Brunswick, where we have become absolute masters at telling private and public-sector authorities to pound sand whenever they have, on rare occasions, mustered the temerity to suggest that true economic development means taking chances. But if we are not prepared to risk what we cherish on shale gas, then what? What will we risk to build a better future for ourselves and our children?

The “aesthetes” of this province display an exasperating tendency to despise fossil fuel and wind power in equal measure. The former, they say, is smelly; the latter is ugly. These people revile change. They wonder why things can’t just go along they way they always have. This has produced, in government, a pathetic, if typical, response: ossification. Do nothing. Maybe, it will all work itself out, after all.

It won’t.

Texas knows this. Say what you like about that red-necked, killer-executing home of George “Wacko” Bush. 

At least, they do things big there.

 

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Apr 30 2014
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Economy, Government, Politics

Pulling New Brunswick back from the brink

 

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Conspicuous by its almost complete absence from the agonizing ruminations over New Brunswick’s perilous fiscal situation has been any suggestion of a real solution. 

No one in government, it seems, has wanted to poke the 800-pound gorilla that is the electorate for fear of getting squashed en route to the ballot box.

That is, of course, a politician’s prerogative: to hand-ring with the best of them, pledge to swallow the bitter pills and persevere for the sake of all our children, only to turn around and waste millions of dollars on doomed schemes in the name of economic development, if not calculated self-aggrandizement.  

Economists and academics are at somewhat greater liberty to tell it like it is without concern for public reprisals.

Indeed, Donald Savoie, the Canada Research Chair in public administration and governance at the Universite de Moncton has made the province’s $12-billion debt, $500-million deficit and public-spending crisis key features of his public commentary, almost delighting (if that is the word) in jabbing voters for their refusal (or unwillingness) to reconcile their expectations of government programs with the reality of their province’s circumstances.   

Now, his colleague, Richard Saillant, the Director General of the Canadian Institute for Research on Public Policy and Public Administration at UdeM, has produced a tight book of 150 pages, or so, provocatively entitled, Over the Cliff? Acting Now to Avoid New Brunswick’s Bankruptcy.

Dr. Savoie is right when he enthuses in the preface that the author, who is also a former federal public servant, “has done New Brunswickers a great service.” In fact, what his dissertation contains is precisely that which has been missing since the discussion began: a solution, or, at least a credible stab at one with enough detail to both warrant and fuel serious debate. 

Be warned, however; Mr. Saillant’s fixes are far from easy, and he pulls no punches in describing them or the conditions that make them necessary.

“For several decades, New Brunswick’s economy has surfed on a rising tide of labour force growth, fueled by the baby boom generation and the steady, largely successful march of women towards equal participation in the workforce,” he writes. “The tide is now receding, dragging down the economy with it. A new Age of Diminished Expectations is upon us.”

Most sobering, perhaps, is his message about public priorities. While he congratulates the Alward government’s success, since 2010, in holding program spending growth to less than one per cent, he insists that the austerity can’t last “while maintaining today’s levels of public services, particularly in the health care sector.”

Indeed, “if the government does not raise taxes further and if it maintains the same public spending patterns as it did on average over the past quarter century,” by 2035-36 New Brunswick can expect to run an annual deficit of $5.5 billion on a long-term debt of $62.3 billion and a whopping debt-to-GDP ratio of 172 per cent. Not that things would likely get that far: “Credit-rating agencies would most likely pull the plug long before this happens.”

As for the solution, Mr. Saillant’s cold-eyed approach involves cutting down “baseline program spending growth every year by at least one-third of the previous year’s deficit from 2014-15 to 2029-30. Starting in 2030-31, this proportion is reduced to one-sixth.”

At the same time, he writes, “The government increases taxes and other revenues above their baseline growth by at least one-third of the previous year’s deficit from 2014-15 to 2029-30.” Again, “starting in 2030-31, this proportion is reduced to one-sixth.”

In the end, this strategy would effectively stabilize the province’s accounts. The annual deficit would fluctuate between $100-500 million. The net debt would peak in 2035-36 at about $17 billion.” 

It’s not, perhaps, the most favorable scenario (we weren’t smart enough, early enough in our collective unravelling to now expect a better result), but it’s the best we can do given our current demographic and economic challenges. And, realistically, even this approach is fraught with all the usual political perils.

But, as Mr. Saillant correctly observes, we voters “need to stop rewarding politicians who make lofty promises without explaining where the money will come from.”

 

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Apr 25 2014
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Economy, Wealth

Are things really looking up for middle-income earners?

 

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We Canadians are richer than we thought, which is a relief, because the pickle barrels increasing numbers of us are wearing to the spring fashion shows this year have begun to chafe. 

According to the New York Times on Tuesday, “The American middle class, long the most affluent in the world, has lost that distinction. While the wealthiest Americans are outpacing many of their global peers, a (Times) analysis shows that across the lower- and middle-income tiers, citizens of other advanced countries have received considerably larger raises over the last three decades.”

Drum roll, please. . .”After-tax middle-class incomes in Canada – substantially behind in 2000 – now appear to be higher than in the United States.”

The review relies on the methodology of the Luxembourg Income Study Database, which includes household and person information on market and government income, demography, employment, and expenditures, as well as intelligence from other datasets in Europe, North America, Latin America, Africa, Asia, and Australasia.

In other words, the source is unimpeachable, which means, apparently, that the findings are unassailable.

“Although economic growth in the United States continues to be as strong as in many other countries, or stronger, a small percentage of American households is fully benefiting from it,” the Times piece observes. “Median income in Canada pulled into a tie with median United States income in 2010 and has most likely surpassed it since then. Median incomes in Western European countries still trail those in the United States, but the gap in several – including Britain, the Netherlands and Sweden – is much smaller than it was a decade ago.”

What’s more, “The struggles of the poor in the United States are even starker than those of the middle class. A family at the 20th percentile of the income distribution in this country makes significantly less money than a similar family in Canada, Sweden, Norway, Finland or the Netherlands. Thirty-five years ago, the reverse was true.”

Naturally, the news of the sudden, inexplicable resuscitation of this nation’s middle class, so soon after demographic coroners pronounced it dead on arrival, have crowded the front pages and lead the broadcasts for days.

The Globe and Mail queried coyly, “Can it be true that the Canadian middle class has never had it so good? And if so, what will it mean for the Liberals and the NDP, who have focused their strategies on promoting the notion of middle-class decline under the Conservatives?”

Certainly, the Tories are letting no opportunity to crow pass them by. “This study would appear to confirm that our government’s approach to creating jobs and economic growth, while keeping taxes low, is working,” Jason MacDonald told the Globe. “We’ll continue with our low tax plan, unlike the tax-and-spend Liberals and NDP, whose approach will only cost Canadian families.”

Nice try, Mr. MacDonald, but no cigar. The study neither confirms nor denies the efficacy of the government’s “approach to creating jobs and economic growth” because that’s not what it explicitly measures. But if it did, the findings would suggest that Liberal policies in the early part of the Century were far more successful as “job-generators” than were post-recession Conservative ones. 

As for the rest of us breathlessly revising our versions of the economic universe, we might pause and consider what’s written in the space between the lines of this study.

Middle incomes in Canada have, indeed, surpassed those in the United States. But that speaks more about the desperate condition of the American economy – in which millions of jobs vanished almost overnight in the aftermath of the financial meltdown and the fiscal collapse of 2008 – than it does about stellar conditions in ours.

The study ranks percentage increases in middle incomes, placing Canada high on the list at 19.7 per cent (along with Britain), and ahead of Ireland, Netherlands, Spain, and Germany (16.2, 13.9, 4.1, and 1.4 per percent, respectively). 

In absolute terms, however, middle-class salaries and benefits in this country have not risen appreciably since the Great Recession. In fact, those in the larger percentiles of the income range (i.e., lower) have seen their levels of real wealth actually contract, despite historically low interest rates and near-zero inflation.

All of which is to say that now is probably not the time to trade in that pickle barrel for an Armani sport coat, just yet. 

 

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Apr 24 2014
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Economy, Employment, Government

Ottawa’s penny-pinching pound-foolishness

 

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For a government that purports to hold the interests of hard-working, middle-class folks close to heart, Harpertown sure has a funny way of showing it. 

Unless, of course, by showing it, our estimable representatives in Ottawa mean to produce precisely nothing to show for the $4.6 million they recently flushed down the public’s drain.   

That was the tidy sum Statistics Canada spent in 2012 asking 25,000 employers across the country about such timely matters as the workplace skills gap – surveys that now sit on a shelf, unanalyzed and unpublished, because the money’s run out to complete the job. 

Not for nothing, but no less a formidable parliamentarian than Employment Minister Jason Kenney has framed skills shortages and mismatches as one of the most important issues in the nation’s recent history. Indeed, in a speech to the Economic Club of Canada last fall, he was adamant and unequivocal. 

“As the head of Canada’s economic union, the federal government plays a critical role in creating the conditions for strong private sector job creation to position our country for success in an increasingly competitive global economy,” he declared. 

“What I’m going to do is to share with you my take on what many agree is the biggest challenge facing our economy. I’m going to talk about how we can tackle skill shortages and skill mismatches, turning them into good jobs for Canadians and greater prosperity for the long term because I think my number one priority is to address this paradox of too many Canadians without jobs in an economy that has too many jobs without skilled workers.”

Of course, to do this, one needs an arsenal of good, accurate information. Or, does one?

Thanks to some intrepid reporting by the Globe and Mail this week, we now know that the StatsCan data, which was collected at the behest of Employment and Social Development Canada, “has sat idle for two years due to lack of funding to make it public. . .StatsCan collected the surveys over the first three months of 2012, but the funding ended there, before the data could be analyzed.”

In the wake of a $30 million budget cut to the numbers-crunching Agency’s budget over the past 24 months, it’s hard to avoid a creepy sensation of deja vu.  

In 2010, when the federal government announced it was scrapping the mandatory long-form census in favour of a “voluntary” household survey, editorials in just about every major newspaper in Canada screamed their disapproval. The nation’s two top statisticians, Munir Sheikh and Phil Cross, actually resigned their posts in evident, if dignified, protest.

In a news advisory at the time, Mr. Sheikh wrote that while he could not “reveal and comment on (the) advice” he gave the government “because this information is protected under the law,” he wanted to “take this opportunity to comment on a technical statistical issue which has become the subject of media discussion. This relates to the question of whether a voluntary survey can become a substitute for a mandatory census. . .It can not.”

Only last summer, Robert Gerst, a partner in charge of operational excellence and research and statistical methods at Calgary-based Converge Consulting Group Inc., declared in an opinion piece for the Waterloo Region Record, “The quality of the results has come under criticism because the voluntary survey replaced the compulsory long-form census questionnaire. In effect, this replaced a random sample with a non-random sample. Non-random samples have their place, but making conclusions about the population isn’t one of them.

Naturally, then, “no conclusions about the Canadian population can be drawn from the national household survey. Since making these types of conclusions is the whole point of a census, the survey data is worthless. (This is also true for any survey where participation is voluntary, including citizen, customer and employee satisfaction surveys).”

Apparently, we’ve devolved from worthless survey data to non-existent survey data – or, at least, unexamined and, therefore, worse than worthless if only because we’ve still had to pay the bill for its compilation.

When will this government get it through its institutional head that to speak with any degree of authority about anything, one must first have facts and figures – evidence – at one’s disposal? 

That’s what truly concerns hard-working, middle-class Canadians about their elected officials and the policies they pursue in the interests they purport to hold dear.

 

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Apr 18 2014
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Economy, Oil and Gas, Society

The risky business of economies planning for the future

 

A credible line of thinking among economists who are not enamored of their political reputations holds that governments bent on producing surpluses, come what may, are misguided, even morally bankrupt.

The argument goes something like this: Publicly elected officials and their bureaucratic minions produce nothing fungible; therefore, they should produce no returns. Rather, their function is to collect taxes responsibly and distribute the funds for the general good – to the rich, the poor and the rest of us. 

The general good comprises the schools we attend, the clinics we need, the roads we use, the parks we frequent, and the safe streets and gathering places we expect as dues-paying members of just and enlightened societies. 

In other words, there should plenty of work to occupy the minds of those we pay through the ballot box and those who serve the periodic democratic lotteries we call general elections. And, in this line of argument, ideally there should be nothing left in the kitty at the end of the political day. All money is absorbed, all money is spent. No deficit, no debt and, crucially, no surplus.

Except, of course, the system doesn’t work this way, anywhere.

But what if it did? Sort of. 

A reader writes, “I have been to Norway several times. By the way, Norway has some of the highest retail gas prices going and don’t even think about buying booze over there. Hard stuff was $50 per 750 ml 15 years ago and God help you if you did not bring in your duty-free limited when visiting.”

Still, as this reader points out, that Nordic country of just over five million souls has just now demonstrated (on paper, at least) that, thanks to its public sector’s perspicacity, attention and drive, each of its citizens is a millionaire, and will likely remain in that vaunted economic status for some time, as New Brunswick’s and Greece’s economies meet on the slide to perdition.

That doesn’t mean Norwegians get to cash in, individually; it means that Norwegians, collectively, get to enjoy one of the highest standards of living in the world, the chance that their children will be among the most highly educated in the world, the certainty that their health care will cost less for the benefits they receive than almost any other place in the world and that old-age peace of mind is actually, well, fungible. 

Here’s what the U.K.’s Daily Mail online edition had to say about the development in early January:

“Norway’s sovereign wealth fund has ballooned so much due to high oil and gas prices that every person in the country became a theoretical millionaire this week. The nation is proving to be an exception as others struggle under a mountain of debts. Set up in 1990, the fund owns around one per cent of the world’s stocks, as well as bonds and real estate from London to Boston. The surplus revenue is collected in the Government Pension Fund Global.”

Said Finance Minister Siv Jensen in an email to reporters: “Many countries have found that temporary large revenues from natural resource exploitation produce relatively short-lived booms that are followed by difficult adjustments.” Added Oeystein Doerum, chief economist at DNB Markets: “The fund is a success in the sense that parliament has managed to put aside money for the future. There are many examples of countries that have not managed that.”

Indeed, there are. 

Canada’s legislators drone on endlessly about this nation’s enormous natural resource potential. New Brunswick Premier David Alward almost begs citizens of this province to embrace the opportunities (as yet, unrealized) in shale gas development.

But what, exactly, is he and his confreres elsewhere in this country doing about securing the long-term efficacy such massive developments might contribute to social development: education, skills training, economic diversification, even (and most paradoxically) strategies to employ the windfalls from oil and gas to wean us off oil and gas with brave, interesting, new, renewable energy technologies?

So far, the genius of our political leaders seems confined to balancing the books, perhaps achieving small surpluses at some indeterminate point in the extenuated future. 

The risk of bankruptcy in this endeavor is not merely fiscal; it’s moral.

 

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