Sunday, December 20, 2009

Paul Samuelson: The Greatest Economist Since John Maynard Keynes

A week ago I gave a paper at Erasmus University in Rotterdam, the alma mater of Jan Tinbergen, the first winner of the Nobel Prize in Economics. As I passed a memorial to Tinbergen in the centre of campus, I remarked to a colleague that I thought it was Paul Samuelson who had been more deserving of the honour of being the Prize's first recipient. This sentiment is no doubt being echoed around the world following Samuelson's death yesterday, at the age of 94.

No one did more to make economics a rigorous analytical discipline than did Paul Samuelson. For that very reason, some people blame him for making economics inaccessible to ordinary folk (somewhat true, but most of the basic ideas taught at the introductory level still require little math to understand) and for reducing the vagaries of social life to black and white formulas. This latter complaint is unfair, however, because Samuelson always prized subtlety and eschewed simple ideological answers. It was his near-contemporary and sometimes intellectual rival, Milton Friedman, who was far more guilty of a living in a "black and white" universe.

I can only agree with what Samuelson earlier this year in an interview with Forbes magazine:

"Today we see how utterly mistaken was the Milton Friedman notion that a market system can regulate itself," ... Everyone understands now, on the contrary, that there can be no solution without government. The Keynesian idea is once again accepted that fiscal policy and deficit spending has a major role to play in guiding a market economy. I wish Friedman were still alive so he could witness how his extremism led to the defeat of his own ideas."

(For A Christmas Coda: )

Note to NDP, Taxpayers: Two Can Play the Revenue Neutrality Game

Whether it is Ignatieff, Dion or Campbell calibrating the cost of their carbon tax proposals, or President Obama costing healthcare reform, "revenue neutrality" seems to be the new gold standard for measuring tax policy. I reject this assertion, because (1) it assumes that current levels of taxation are somehow the right ones, no matter what the policy goals at stake; and (2) it assumes what philosophers call a utilitarian ethic--focusing on a global assessment of utility while ignoring the distributive consequences of a tax. Both of these assumptions ignore too many factors for 'revenue neutrality' to be a sound standard of evaluation.

Nevertheless, if "revenue neutrality" insulates a government from the charge that it is taxing society more, then the NDP can play that game too. Simply reduce the HST by 2 or 3 points , and then increase personal and corporate income taxes a corresponding amount, so as to ensure that total revenues are unchanged. There will be howls of rage on the right, of course, since "their" money will have been taken away again and given back to those middle and lower-income people. But it would not be increasing the total tax burden on society: it will simply be reversing the thinly-veiled redistribution of wealth that Gordon Campbell has been undertaking for the last 8 years.

Saturday, December 19, 2009

Harper's Climate Change Strategy: Stay Just Behind the Curve

Yes it is PROBABLY RIGHT to say that something is better than nothing--although it could be worse than nothing if it lulls people into thinking that it is enough. I am also willing to believe that Canada did play a constructive role in putting together a minimal agreement--since that is all that Harper and Prentice wanted in the first place.

I am a Canadian, and as such am frustrated by my government's attitude that it will only do what the Americans do--in order to avoid the economic cost disadvantage that Canadian industries would suffer if we did better. Accordingly, the only green technology that Canadian governments have invested heavily in is carbon sequestration--because that is an investment in the oil industry.

These are the actions of government that doesn't really believe in climate change. If it did, it would recognize that costs of adapting to catastrophic climate change completely dwarf the costs to industry that it is apparently most worried about. It would also recognize that there are economic benefits and opportunities galore in being ahead of the curve, instead of staying doggedly just behind it.

Friday, December 18, 2009

A Windfarm Might Be Appropriate for Boundary Airport--ALR area

I recently travelled from the Amsterdam airport to Rotterdam via a high-speed train. The 20 minute journey reminded me of the drive from Tsawwassen to downtown Vancouver--except that, in addition to the quaint Vander Zalm windmill there were also several modern wind turbines and what looked like hydroponic farms. It made me wonder: am I having a glimpse of the Lower Mainland's future?

Certainly, the value of agricultural reserve/farm land cannot continue to diverge from speculative land development value forever; in addition to doing more to support agriculture per se, the provincial government might wish to look at wind farming. If it is not feasible for privately-owned lands, then it might be considered for the public lands around Boundary Bay, Boundary airport or Burns Bog (?). If, of course, it is compatible with the wild fowl who like to fly through these areas.

If a country as small and densely populated as Holland can find space for numerous "wind farms", surely British Columbia can as well? I suspect that deep down Campbell & Co still harbour a land developer's desire for commerical and residential propoerties springing up from the farmland. Which is why they don't invest the effort to think of ideas like mine, but will throw out incentives galore for less environmentally sound projects like fish farms and mini-hydro.