Making Canada Relevant Again- The Economic Super-Thread

[Edward Campbell]

NS Power was run better by the province than it has been under private ownership.

Running monopolies, with guaranteed low cost capital (plucked from from the taxpayers' pockets) is what governments do - about as well anyone else would and could.

Most governments, in efforts to balance their books, have 'hived off' their monopolistic enterprises.

NS Power still has 97% of the generating capacity in NS but now it has to get its capital in the real, competitive world - at a much higher cost.

 

[TangoTwoBravo]

Why should GM be allowed to close down a plan in Ontario, that has a higher productivity level than any place in the US yet still not face any economic back lash from our goverment or its populace? Corporate welfare is not the same thing as social welfare if a company is allowed to just close up shop and move else where without any investment in our country.   To any East Coasters on here I just have to say one word, ACOA, that should raise eye brows and doubts.

  Why should a Canadian owned shipping line be allowed to get coal from a suppresive regime, such as China, where the miners die by the hundreds while we have viable coal mines here in Canada?
 

I would argue that economics involves choices.  Companies will choose to locate where they can make the most money or just to stay in business.  People choose to pay for cheaper goods to make ends meet or stretch their money a little further.  It seems that manufacturing workers choose to price themselves out of a job.  The government can try to make these choices for everybody, but I do not believe that government knows best when it comes to this sort of thing.  Government can, perhaps, smooth out the bumps and help people and regions make adjustments in the short-term. 

What makes the coal mines you mention viable? What was the price of that coal compared to the coal from China?  At the risk of sounding like an uncaring monster, concern for workers' rights in China and $1.48 might get you a coffee here when it comes down to it.

People abroad are willing to buy our oil and natural gas at the price we are willing to sell it at.  That makes that industry viable in my eyes.

 

[Donaill]

  The cost in lives should be reason enough. However the economic reasons are just as sound. The transport costs to bring that coal into Canada do not make it worth geting. AS far as workers prcing themselves out of a job, well I differ on that opinion. Michelin tire has three plants in Canada, that far out perform the US conterparts, which pay a very good wage and have good benefits. They still manage to make a profit. The good years seem to have dimmed peoples memmories of the early days of the labour movement in this country. Days when companies sold goods to the workers at an inflated price. Often workers would have to put these goods on time and continue to work for poor wages, barely being able to survive.  There were many deaths caused by strike busters. Companies will never pay a fair wage unless they are forced to. The only way wages will drop is when the economy takes a very serious blow, causing great losses within all aspects of the economy.

  There is no easy answer to any of these questions. As ecomies run, inflation occurs. Whether it is because the buying power of third world nations improves, such as the case with China, or other economic reasons. Peoples wages need to keep up with inflation, if not lead it by a certain percentage. Those guys that started working at Michelin in the 80's, making 18/hr, now have less purchasing power now. Yet there are those that would say that 18 is still a great wage. Perhaps it is in some areas. However lets say that said person prchaserd a 150,000 house, only to be sorrounded by 500,000 summer homes. His propery taxes are severely affected by those houses.

I know this is all stuff you already know. My point is that our "high wages" are not as high now as they were in the 70's. 

 

[TangoTwoBravo]

Companies will never pay a fair wage unless they are forced to.
 

What constitutes a fair wage?  I would think that the market would determine the appropriate wage for a given worker.  A company would be forced to pay workers more if another company was willing to poach those workers with a given skill by offering a higher wage.

I understand and appreciate the need for workplace safety regulations and associated laws.  I am not calling for a completely unregulated economy.  That being said, I still do not think that "work" has value beyond that which somebody is willing to pay for that work.  If the only way to get a raise is to go on strike and intimidate those willing to do the same work for the original wages I say tough luck to the strikers. 

 

[Donaill]

That was the only way to get a fare wage. Wages were not fare. Retail still complains if they have to pay a wage that brings someone above the poverty line. Farmers have a difficult time as well, often having to bring in people from the Caribean (At least in the area I grew up in).

 

[Command-Sense-Act 105]

Re companies not paying fair wages:

This is an old piece of union rhetoric that gets rehashed any time a company has to make the hard choices.  I'll offer some thoughts:

1.  Most companies need human capital - skills, experience, wisdom, knowledge - in order to thrive, prosper and consider growing.  If Widget Co pays its experienced hands $5 an hour, Ace Widget, a startup in geographical proximity can pay $5.50 or $5 plus benefits to attract Widget Co's workers, undercut its human capital advantage and gain the ability to produce either a superior product, a cheaper product, or enough products to satisfy a given market by taking advantage of economies of scale.  Therefore, wages will seesaw and ratchet back and forth to an acceptable level between competitors until the equilibrium between the local economic situation, company ability to pay wages balanced with profits required and the necessity to keep a stable workforce.

2.  Wages should reflect the necessary skills and background of the worker, level of complexity, danger, hazard and sensitivity of the work required.  Unfortunately the UAW/CAW have skewed this relationship in North America and are quite near to killing the goose laying the golden eggs (the North American auto industry) through crushing wages, benefits, pensions and various other costs which sap company profit.  Unfortunately, all these "goodies" are now seen as an entitlement by many workers, who also hold the view that a high school educated worker whose job skills consist of using an impact driver to install left side seatbelt retractors in Dodge minivans deserves to be paid an hourly wage that permist him to live in a $250k house, have 2 new cars (never more than 2 years old) in the drive, an inground pool, plus have at least two of the following:  ski doo/jetski/bass boat/ATV/motorcycle/cabin cruiser/cottage up North, etc, plus the right to retire and continue living in a commensurate style and level... but where are the skills?  What is so "fair" about these extraordinarily inflated wages?  Before the flames start, I'm from Windsor, I've seen all this.  Also seen college-educated skilled tradesmen down tools and go work on the line in the Big Three plants because they could make more money doing that than their trade.  Hence, we are faced with some of the most poorly-built cars and trucks, protected by import tariffs, quotas and other governmental protection mechanisms, priced above $50k.

3.  The early days of the labour movement are over.  There was a time when unions fulfilled their function - united a generally less-educated, less-literate workforce to provide them protection against unscrupulous employers who used and abused them, owned the media outlets to prevent their stories being told, lobbied to prevent health and safety, wage protection and other regualtions from being passed into law and generally treated the worker like chattel.  Those days are long over.  Our education system now is far better.  Illiteracy is quite low.  For those still illiterate, television news and radio news, unfettered by the thumb of Rockefeller et al, chase down and break stories of worker mistreatment, environmental destruction and inhuman working conditions with regularity.  As far as a voice is concerned, any worker with a terminal can start a blog, submit stories to news services, post photos, video, audio, documentary evidence.  Laws have been passed and are enforced with amazing regularity concerning health, safety, wages, etc.  The worker today does not need Bob White speaking "on his behalf".  This "the labour movement is the only protection workers have" idea is a complete fallacy and has been for about 20 years.  Unions today are like the self-licking ice cream cone whose main effort seems to be keeping themselves alive and relevant.  Unfortunately, like any other parasite, they will eventually kill their hosts.

4.  Profits are like breathing.  You don't get up each day and consider breathing to be the sum total of your life's effort.  Businesses don't consider profit their sole motivator, because this is a barely-sustainable reason and the reason so many companies go under when tougher times hit.  However, if you do not breathe, you will die.  Unless companies profit, they go under.

The impassioned appeal for higher wages is good - but at what cost?  Of all the workers' jobs?  A better solution would be perhaps a push for a return to a slightly devalued Canadian currency.  A dollar at parity is good if as a consumer you want to go to the USA and buy cheap satellite dishes, NASCAR memorabilia and clothing.  Unfortunately, it's bad if you are involved in manufacturing or knowledge industries.  A return to the 80 cent Canadian dollar would do far more towards keeping jobs in Canada and keeping wages at a "fair" level than any amount of tax breaks, strikes, walkouts or hand-wringing.

My thoughts.

 

[Fishbone Jones]

That was the only way to get a fare wage. Wages were not fare. Retail still complains if they have to pay a wage that brings someone above the poverty line. Farmers have a difficult time as well, often having to bring in people from the Caribean (At least in the area I grew up in).

Well, we bring them in from Mexico here. Only because we can't get the people on the welfare lines to do the picking, but it's not for a lack of asking though :

Ahh, I love the socialist dogma bullshit where everyone is entitled to everything everyone else has, whether you work for it or not.

When I see Jack and Cynthia work in Parliment for minimum wage, or the Union bosses collecting strike pay with the workers, then I might start buying into their pink glasses Utopian crapfest.

I work for what I have, and I shouldn't have to give up one cent for some shiftless bastard that sits on his ass all day at the street corner with a Timmies cup, and not reporting HIS income when he gets the welfare check bought with my dollars.

Wages aren't fair. Well guess what? Life ain't fair. Tough shit.

 

[Disenchantedsailor]

[quote\]
  On a final note, though I am not from The Rock, Danny for Prime Minister.
[/quote]


I'm not sure I agree here,  big balls yes, but lets keep in mind this is the same man who had every Canadian Flag in his jurisdiction hauled down.  Is that the same kind of reaction we could expect from him in the National office

 

[aesop081]

Farmers have a difficult time as well, 

Yes the poor farmers i saw when i lived in Alberta and same with the poor farmers i see around BC. The same farmers with huge houses, big SUVs, 4 door garages, etc, etc,etc......

Yeah those poor farmers are everywhere and its so sad.

Its not like crops are fetching record rices these days or anything......

 

[Donaill]

  You must be seeing different farmers than I am because when a beef farmers around here aren't wealthy by any means. Cash crop farms are slowly disappearing, and have been so since large  corporate farms have started taking over. That cycle may change now since it is starting to become less viable to farm such large quantities of land because the equipment requires more fuel.
  What is killing the NA auto industry was thier failure to take the Asian auto industry seriously. With the opening of the NS market to Asian cars came some complacency. In the beginning the vehicles, such as Toyota trucks and cars, were not at the same quality level. Over time, companies such as Honda engineered better quality and more fuel efficient vehicles. The "Big Three" are new to this way of thinking.  While Ford and the other two have seen a decrease in demand for SUV and truck sales, the ASian owned companies have expanded thier plants here and seen an increase in sales. I will admit that some of it has to do with fuel costs. If gas was still around the 0.85 to 0.95 cent/l level than perhaps truck sales would still be booming along. While some blame the unions, lets not forget that down the road from the Chrysler plant, in Oshawa, is the non unionized Honda plant, paying the same wage and the same benefits. I think Chrysler would be still happy enough to pay the wages and benefits, if the company was able to earn money with anything larger than car. Even high end vehicle sales have declined.


Re: Danny and the flag. That is not teh first time that a Canadian Premier has gone to drastic measures to get his point across. Joseph Howe was famous for it.

 

[Edward Campbell]

... My point is that our "high wages" are not as high now as they were in the 70's. 

Actually, by any reasonable measure, they are higher. (See, e.g. http://www.statcan.ca/english/freepub/11-516-XIE/sectione/sectione.htm#Employ%20Earn )

The problem, for Canadians, is that pretty much all of our competitors - including the USA - are still more productive, still doing more for less.

This is not just a labour problem. Canadian management is highly risk averse. R&D spending (much 'R' should be funded by governments while most 'D' should be paid for by the private sector) is poorly managed in Canada: sporadically provided and often misdirected for political purposes. A weak Canadian dollar, which was applauded by labour for making Canadian goods more 'competitive' in world (US) markets, made it more and more difficult for Canadian companies to upgrade their infrastructure - the end result has been that Canadian plants are no longer able to compete so jobs are lost. (That old "law of unintended consequences" strikes again.)

Slightly off topic, but ...

Re: transportation costs (e.g. coal or consumer goods from China) modern shipping and port handling facilities have reduced the shipping component part of the overall costs of most products, even bulk coal, to nearly insignificant levels. That's why the Chinese want to buy all the oil we can produce and ship it from e.g. Prince Rupert.

 

[a_majoor]

Much of this discussion should be hived off to the Economic Superthread (where most of this has been rehashed already. Economics WILL be taught in primary school when I am Imperator!).

Back to the opening of the topic, the government seems to be softly differentiating itself from the progressive/socialist/"Liberal" tropes that have been dominating politics since the late 1960's. In the UK, "New Labour" seems to be self destructing (and British society is taking a huge beating), and Canada's Liberal Party is also melting down (I will repeat my prediction that they will become a "rump" party over the next two elections as voters with socialist inclinations realise the real thing exists with the NDP and Greens), and the American Democratic party is becoming a parody of itself (although they still have the levers of power). I would say the "Progressive" philosophy behind these parties and similar political movements has become exhausted, but since "Progressives" still hold the commanding heights of the MSM, Judiciary, academia and the permanent bureaucracy it is difficult to openly challenge "Progressiveism" in any of it's forms. After all, they still have the power of the State to grind their enemies into dust (look at the actions of the various "human rights" commission's in Canada, for example).

As Edward has pointed out, much of what the current government is doing is setting the stage so future governments will have a difficult time recreating the "tax and spend" mentality of the past, and gradually withdrawing the Federal Government from areas of Provincial jurisdiction. On the other hand, there is still much work to be done, and it is certainly not the mark of "responsible" government to increase spending at the rate this government is (even in wartime, and especially if the increase is not directly tied to war expenditures). Overall, I will still side with the idea that this is a responsible government overall given they are backing their election promises with legislative action.

 

[Edward Campbell]

Much All of this discussion should be hived off to the Economic Superthread (where most of this has been rehashed already...

Mods: please merge this with the Economic Superthread. My original intention was to provoke a political discussion but it appears we need to rehash elementary economics again and again and again.

DONE- BRUCE

 

[observor 69]

This New York Times article on Obama speaks to a theme I have been ruminating on lately. The use of pragmatic  thought on policy issues.  Analysis of political issues based on reason rather than fixed idealogical stands. The belief that both sides may have parts of the answer to problems.

July 30, 2008
The Long Run
Teaching Law, Testing Ideas, Obama Stood Slightly Apart
By JODI KANTOR
CHICAGO — The young law professor stood apart in too many ways to count. At a school where economic analysis was all the rage, he taught rights, race and gender. Other faculty members dreamed of tenured positions; he turned them down. While most colleagues published by the pound, he never completed a single work of legal scholarship.

              -----------------------------
Mr. Obama, now the junior senator from Illinois and the presumptive Democratic presidential nominee, spent 12 years at the University of Chicago Law School. Most aspiring politicians do not dwell in the halls of academia, and few promising young legal thinkers toil in state legislatures. Mr. Obama planted a foot in each, splitting his weeks between an elite law school and the far less rarefied atmosphere of the Illinois Senate.


But as a professor, students say, Mr. Obama was in the business of complication, showing that even the best-reasoned rules have unintended consequences, that competing legal interests cannot always be resolved, that a rule that promotes justice in one case can be unfair in the next.


More at link.


http://tinyurl.com/64cjop

 

[a_majoor]

This New York Times article on Obama speaks to a theme I have been ruminating on lately. The use of pragmatic  thought on policy issues.  Analysis of political issues based on reason rather than fixed idealogical stands. The belief that both sides may have parts of the answer to problems.

Ideology (when used correctly) is a means of organizing and using a set of principles to examine problems and propose and implement solutions. A person with a "Progressive" ideology uses principles such as bestowed "positive" rights, group rights, State intervention and a preception that the "masses" are ignorant and need guidance to define solutions; a person with a "Classical Liberal" ideology will look for ways to preserve or extend natural "negative" rights,  Free Speech, Property rights and the Rule of Law to define their solutions.

The acid test is comparing the proposed results with the empirical evidence: did the proposed solution work as advertised? For the most part, solutions informed by "progressive" ideas have not worked, and the ever increasing spiral of State intervention to attempt to "fix" regulatory failure simply shows how threadbare "Progressiveism" has become. Classical liberalism really worked (unfortunately, we now have few here and now examples to point to, although most people will still be familiar with the growth of the Asian "Tiger" economies, the Irish miracle and the Reagan Revolution), and if the current Government of Canada continues to adhere to these principles and Provinces move back towards them (look at the sea change in Saskatchewan right now as they throw off decades of NDP rule), then we should expect to see our lot improve.

 

[Brad Sallows]

>A person with a "Progressive" ideology uses principles such as bestowed "positive" rights, group rights, State intervention and a preception that the "masses" are ignorant and need guidance to define solutions;

What you've described is Classical Fascism.

 

[stegner]

What you've described is Classical Fascism.

No it is Classical Conservatism.  There is no classical fascism by the way-just fascism. 

 

[Brad Sallows]

"Classical fascism" means the old-fashioned type of Mussolini and Franco, rather than the bizarre apocalyptic hate-mongering genocidal offshoot run by Hitler.  "Classical conservatism" predates fascism of any stripe, and is rooted in the question of measuring change before implementing it.

It isn't hard to recognize fascism when you see it; several countries in Europe continue to flirt with it.  When you cross over the line from merely redistributing income to help people in need, to include dictating trivial things they may and may not do, you've crossed the line from socialism to fascism.

 

[stegner]

When you cross over the line from merely redistributing income to help people in need, to include dictating trivial things they may and may not do, you've crossed the line from socialism to fascism.

Ok gotcha.

 

[a_majoor]

A problam and a solution. Too bad our political establishment is too scared to do this; it would only be like peeling off a bandage really fast: a brief moment of pain, then relief.

http://libertyincanada.com/blog/index.php?blog=2&title=&more=1&c=1&tb=1&pb=1#comments

Abolish cultural subsidies
08/15/08 | by Editor  | Categories: Weekly Column
By Pierre Lemieux

Starting next year, the federal government will be discontinuing or reducing a dozen cultural subsidy programs. The budget cuts amount to a bit more than 1% the total federal expenditures on culture (which are about $3.5 billion per year). And note that in the last two years of Conservative government, these expenditures have increased by 15%.

The small planned decrease in the continuous increase of cultural expenditures is raising a big fuss. Defending cultural subsidies, Andrew Wilhelm-Boyles of the Vancouver-based Alliance for Arts said, “[G]overnments have historically done this because it was good for the country”. How altruistic these subsidized artists are! They’ll fight tooth and nail for their loot.

The argument for abolishing at least one of the programs has revolved around the “typical Canadian” not wanting to finance leftists to travel all over the world and promote their radical views and eccentric art. The problem with this argument is that it is not only the typical Canadian who pays taxes. Untypical ones are also forced to pay. Why shouldn’t they have access to benefits too? In what French political scientist Bertrand de Jouvenel calls “totalitarian democracy”, where the democratic state intervenes everywhere, there is no obvious answer to the question of whose culture and lifestyle the state should support. Should the majority oppress minorities or should minorities get a piece of the cake?

It is not a defensible solution to stop subsidizing this or that group of artists because the party in power happens not to like them. The real solution would be to abolish all cultural subsidies.

Cultural subsidies reward those who are efficient at lobbying, not at producing culture. They often go to organized interests, whether the artists’ interests or other interests. During fiscal year 2006-2007, for example, publishers got $26.2 million “to enhance their development and distribution”, including $765,000 to Québécor and $193,017 to Transcontinental. The Association for the Export of Canadian Books got $4.7 million, Québec City $1.1 million (under the Cultural Spaces Canada program only), and a small, rural, unknown town $239,371 as a “cultural capital”.

Cultural subsidies actually harm culture. Compare subsidized French culture and relatively unsubsidized Anglo-American culture over the past four or five decades. The subsidized artists are those who can’t persuade the public to voluntary buy their works; the more subsidies available, the more of these “artists” you get. In his 1991 book L’État culturel (“The Cultural State”), French historian Marc Fumaroli notes that the tenants of the Bateau Lavoir, including Braque and Picasso, were not subsidized. Nor were, up to the 1950s and 1960s, playwrights who, like Beckett and Ionesco, had their work played in non-subsidized Paris theatres.

In a post on the French side of this site, Québec author Christian Mistral argues that “subsidizing unpopular art works is a sign of civilization”. As an example, he says, “even if I hate cantaloupe, I resign myself to the fact that it is cultivated for the eccentrics who love it”. Indeed, he has a point. Civilization implies that art lovers exist who are allowed to enjoy works of art and that artists are not forbidden to produce them. It does not mean, however, that cantaloupe haters are forced to finance cantaloupe growers.

Cultural subsidies are not much different than if each subsidized artist was given a revolver and told to collect the money himself.

Even if the state financed them with manna from heaven, cultural subsidies would be dangerous because they mean power to control culture and, thus, ideas and people. Canadian author George Woodcock argued that this is precisely what happened with the creation of the CBC:

“In none of the early documents relating to establishing a national broadcasting system was there much reference to radio as an instrument for cultural development or … as an agency that in some way might foster the arts. The first aims under consideration seemed to be patriotism … and power — how to apportion control over a medium of unparalleled efficacy in the dissemination of information or — if the needs of propaganda required it — misinformation.”