The problem with the Conservatives' economic update of a couple of weeks ago is that Finance Minister Jim Flaherty and Prime Minister Stephen Harper didn't seem to be either inclusive of opposition opinion or in tune with international trends. Instead, they talked about restraint--starting with restricting public sector workers' right to strike, eliminating the right to appeal pay equity rulings and and eliminating taxpayer funding for political parties. And the need to balance budgets, possibly by selling off public assets, no doubt at a discount. Were those the right priorities in the face of our economic problems?
The conventional wisdom since the halcyon days of Reagan and Thatcher has been to rely on monetary policy to deal with cyclincal fluctuations: fiscal stimuli were often deemed to be either ill-timed in terms of their effects or difficult to turn off for political reasons, and hence inflationary. The Bank of Canada recently lowered its interest rates another 3/4 of a percent, partly in response to the federal government's lack of fiscal policy: no doubt the prime minister, a monetarist, feels good about himself for that. But what really is the scope for relying on looser monetary policy under these conditions? Even The Economist (on the whole a very neoliberal newspaper) has admitted that it is quite limited, and has called on Western leaders to agree on a fiscal jolt that follows President Obama's lead.
We are in what I call a "Keynesian moment"--a financial crisis (i.e. shortage of capital and liquidity for financing in the private sector, a credit crunch), combined with what is expected to be high unemployment, the worst recession since the 1930s, plus an aged and crumbling public infrastructure that is best attended to while resources are unemployed in the private sector.
All these things point to the need to spend more, and to not be afraid to run 2 or 3 deficits in a row in the neighbourhood of $20-30 billion each. That is roughly the equivalent of what Barack Obama and most of the G-20 countries are committed to doing, but all his adult life Harper has been ideologically convinced that Keynesianism was dead and his reluctance to get with the program is palpable. His talk about "doubling infrastructure spending", for example, is just pure spin. That is only impressive if current levels of spending on infrastructure are close to half of what they need to be---and they aren't. They are there for P.R. during the holidays and leading up to the January 27 budget and confidence vote.
A temporary extension of EI benefits would put money right back into the economy (given the high propensity to consume of EI recipients). I would consider it an essential part of an acceptable budget.
Friday, December 05, 2008
Thursday, December 04, 2008
The Governor-General's Decision to grant the p.m.'s request for prorogation
Governor-General Michaelle Jean was put in a difficult position, and probably made the best decision she could under the circumstances. She felt uncomfortable saying no the the prime minister, because there is no clear precedent for doing so on a request for prorogation. Since the government had not actually been defeated yet, she had one formal advisor to listen to: the prime minister and his government.
But here is the problem. She will have another difficult decision to make at the end of January if the budget is defeated and the prime minister requests dissolution because he wishes to go to the people for another election rather than hand power to the "separatist coalition". If on that occasion she says "yes", then Harper will have succeeded in doing in two steps what he was unable to accomplish in one step (assuming that he would not have been granted dissolution today). Can that be right? That could be a dangerous precedent, one that seriously erodes the constitutional check on the prime minister that the Royal refusal to request for dissolution has been through out the history of British responsible government. Clearly, the Governor-General will need to take steps to limit the scope of this precedent for future prime ministers in minority governments: she can do so by treating the constitutional clock as having stopped on December 4, and by refusing dissolution when the prime minister asks for it 7-8 weeks from now.
But here is the problem. She will have another difficult decision to make at the end of January if the budget is defeated and the prime minister requests dissolution because he wishes to go to the people for another election rather than hand power to the "separatist coalition". If on that occasion she says "yes", then Harper will have succeeded in doing in two steps what he was unable to accomplish in one step (assuming that he would not have been granted dissolution today). Can that be right? That could be a dangerous precedent, one that seriously erodes the constitutional check on the prime minister that the Royal refusal to request for dissolution has been through out the history of British responsible government. Clearly, the Governor-General will need to take steps to limit the scope of this precedent for future prime ministers in minority governments: she can do so by treating the constitutional clock as having stopped on December 4, and by refusing dissolution when the prime minister asks for it 7-8 weeks from now.
Re: Carbon Taxes, including ones on gasoline: I TOLD YOU SO
{Note: you may have heard on the news today that car sales fell 9% in October, due to the looming recession. You may have also heard that SUV and truck sales were UP due to falling gas prices!--MC}
Now that gas is back down to a dollar per litre, and no doubt that worrisome backlog of RVs, SUVs and light trucks are again moving off of car lots, and people are breathing a sigh of relief at being able to heat their homes for the winter without undertaking extensive renovations, I WOULD LIKE TO TAKE THIS OPPORTUNITY TO REMIND PEOPLE OF THE KIND OF CARBON TAX THAT I WOULD LIKE TO SEE.
First, UNLIKE THE NDP, let's acknowledge that small emitters are responsible directly for one half of all greenhouse gas emissions, and indirectly responsible (as the ultimate consumers of aluminum, concrete, plastic, forest and aluminum products) for a lot more. And don't give me that "North America is not Europe" crap. Yes, we are more sparsely populated and probably need to burn a little more fossil fuel. But that doesn't mean that we should be protected from spending just as much of our incomes on energy as Europeans do.
Second, UNLIKE GORDON CAMPBELL, we should not have a carbon tax that simply makes fuel a little more expensive. Instead, it should be used to set a FLOOR PRICE that is high enough to ensure continued modification of consumer behaviour. This policy would actually raise additional revenue that could be spent on fighting climate change. But above that floor price, additional carbon taxes would NOT make gas or home heating fuel more expensive at all; instead, they would merely replace EXISTING EXCISE TAXES. (That would mean that consumers would only pay more than they currently do if they chose dirtier fuels, less if they chose cleaner ones).
Such a carbon tax could in effect be 'revenue positive' to some extent when prices are low (because the floor price would be raising revenues ) and be 'revenue negative' when prices are high (because many consumers would be able to use it to reduce the excise taxes they pay on gasoline, home heating, diesel, etc.). The effect would be counter-cyclical, and stabilizing, in terms of moderating swings in prices and in terms of the income effects on consumers of energy price changes.
I am not a professional economist, and I know that we need to be mindful of prices in neighbouring jurisdictions, so I don't know exactly where that floor price should be. But under current conditions, I imagine that for gasoline I would like it to be in the $1.20-$1.30 range.
My understanding is that about half of existing taxes on gasoline and home heating fuels are spoken for (i.e. are currently dedicated to raod and highway infrastructure and maintenance); the rest goes into general revenue, and it is that latter portion that I am proposing be converted, at least in part, to carbon taxes.
It is unfortunate that we tend to punish well-intentioned and useful experiments in public policy, when we should simply be learning from them. Gordon Campbell and Stephane Dion may have given carbon taxes a bad name, but I am confident that in the long run, we might just get it right.
Now that gas is back down to a dollar per litre, and no doubt that worrisome backlog of RVs, SUVs and light trucks are again moving off of car lots, and people are breathing a sigh of relief at being able to heat their homes for the winter without undertaking extensive renovations, I WOULD LIKE TO TAKE THIS OPPORTUNITY TO REMIND PEOPLE OF THE KIND OF CARBON TAX THAT I WOULD LIKE TO SEE.
First, UNLIKE THE NDP, let's acknowledge that small emitters are responsible directly for one half of all greenhouse gas emissions, and indirectly responsible (as the ultimate consumers of aluminum, concrete, plastic, forest and aluminum products) for a lot more. And don't give me that "North America is not Europe" crap. Yes, we are more sparsely populated and probably need to burn a little more fossil fuel. But that doesn't mean that we should be protected from spending just as much of our incomes on energy as Europeans do.
Second, UNLIKE GORDON CAMPBELL, we should not have a carbon tax that simply makes fuel a little more expensive. Instead, it should be used to set a FLOOR PRICE that is high enough to ensure continued modification of consumer behaviour. This policy would actually raise additional revenue that could be spent on fighting climate change. But above that floor price, additional carbon taxes would NOT make gas or home heating fuel more expensive at all; instead, they would merely replace EXISTING EXCISE TAXES. (That would mean that consumers would only pay more than they currently do if they chose dirtier fuels, less if they chose cleaner ones).
Such a carbon tax could in effect be 'revenue positive' to some extent when prices are low (because the floor price would be raising revenues ) and be 'revenue negative' when prices are high (because many consumers would be able to use it to reduce the excise taxes they pay on gasoline, home heating, diesel, etc.). The effect would be counter-cyclical, and stabilizing, in terms of moderating swings in prices and in terms of the income effects on consumers of energy price changes.
I am not a professional economist, and I know that we need to be mindful of prices in neighbouring jurisdictions, so I don't know exactly where that floor price should be. But under current conditions, I imagine that for gasoline I would like it to be in the $1.20-$1.30 range.
My understanding is that about half of existing taxes on gasoline and home heating fuels are spoken for (i.e. are currently dedicated to raod and highway infrastructure and maintenance); the rest goes into general revenue, and it is that latter portion that I am proposing be converted, at least in part, to carbon taxes.
It is unfortunate that we tend to punish well-intentioned and useful experiments in public policy, when we should simply be learning from them. Gordon Campbell and Stephane Dion may have given carbon taxes a bad name, but I am confident that in the long run, we might just get it right.
Wednesday, December 03, 2008
Harper Stumbles
Canadians for Democracy?
Look at this website and ask yourself (1) whether it accurately describes the nature of the coalition being proposed by Stephane Dion and Jack Layton; or (2) whether the coalition constitutes "the overthrow of a democratically-elected government?" This is the kind of misinformation that is rapidly being disseminated all over the country.
Re: The Conventions of Parliamentary Government....
As someone who tries to educate people about the logic of parliamentary government as part of his job, it is frustrating to have a prime minister and a governing party aggressively running ads that play upon people's lack of familiarity with parliamentary coalitions and vague familiarity with American style government in order to paint a deliberately misleading picture of the Liberal-NDP 's supposedly "undemocratic takeover". And probably exacerbating regional tensions in the process.
Prime Minister Harper's televised address of December 3rd made made 4 or 5 references to a "power-sharing coalition with a separatist party", when in fact the Bloc is not part of the coalition government. All the Bloc did was agree not to vote against the coalition in a non-confidence motion for 18 months. This is quite similar to what Mr. Harper was contemplating when he sent a letter to the Governor General trying to replace the Martin government when the Tories were in Opposition in 2004. Mr. Harper has relied on the Bloc for confidence motions (at last count) 14 times, and if he remains in power he will likely do so again.
Mr. Harper should just admit that he blundered, and in addition to withdrawing his ill-timed cancellation of political party subsidies (a strange priority for a budget update by a new government ostensibly trying to set the tone for a conciliatory parliament), he should commit to a program of aggressive fiscal stimulus in line with what Barack Obama and most of the G-20 are already committed to.
Speaking of the Economy.....
Facing the Worst Recession since the 1930s? A country with an ageing, crumbling infrastructure? A financial crisis and shortage of liquidity in the private sector?
It should be obvious to anyone what, in general terms, needs to be done. It is what the leaders of practically every G20 country have already agreed to do--commit at least 2% of GDP to good, old-fashioned Keynesian economic stimulus, even if it means running a temporary deficit.
Obvious to anyone, except perhaps a right-wing ideologue with a Master's Degree in Economics. Proof once again, that a little bit of knowledge can be a dangerous thing......
Look at this website and ask yourself (1) whether it accurately describes the nature of the coalition being proposed by Stephane Dion and Jack Layton; or (2) whether the coalition constitutes "the overthrow of a democratically-elected government?" This is the kind of misinformation that is rapidly being disseminated all over the country.
Re: The Conventions of Parliamentary Government....
As someone who tries to educate people about the logic of parliamentary government as part of his job, it is frustrating to have a prime minister and a governing party aggressively running ads that play upon people's lack of familiarity with parliamentary coalitions and vague familiarity with American style government in order to paint a deliberately misleading picture of the Liberal-NDP 's supposedly "undemocratic takeover". And probably exacerbating regional tensions in the process.
Prime Minister Harper's televised address of December 3rd made made 4 or 5 references to a "power-sharing coalition with a separatist party", when in fact the Bloc is not part of the coalition government. All the Bloc did was agree not to vote against the coalition in a non-confidence motion for 18 months. This is quite similar to what Mr. Harper was contemplating when he sent a letter to the Governor General trying to replace the Martin government when the Tories were in Opposition in 2004. Mr. Harper has relied on the Bloc for confidence motions (at last count) 14 times, and if he remains in power he will likely do so again.
Mr. Harper should just admit that he blundered, and in addition to withdrawing his ill-timed cancellation of political party subsidies (a strange priority for a budget update by a new government ostensibly trying to set the tone for a conciliatory parliament), he should commit to a program of aggressive fiscal stimulus in line with what Barack Obama and most of the G-20 are already committed to.
Speaking of the Economy.....
Facing the Worst Recession since the 1930s? A country with an ageing, crumbling infrastructure? A financial crisis and shortage of liquidity in the private sector?
It should be obvious to anyone what, in general terms, needs to be done. It is what the leaders of practically every G20 country have already agreed to do--commit at least 2% of GDP to good, old-fashioned Keynesian economic stimulus, even if it means running a temporary deficit.
Obvious to anyone, except perhaps a right-wing ideologue with a Master's Degree in Economics. Proof once again, that a little bit of knowledge can be a dangerous thing......
Sunday, November 30, 2008
Another Plug for Bob Rae as Liberal Leader
Many Liberal partisans dislike him because he is a former NDP leader. Many New Democrats dislike him for the same reason. But I happen to think that at this particular juncture, he is the most qualified person to be the next Leader of the Opposition--or, if it turns out that way, the best person to lead a Liberal-NDP coalition government. With most erstwhile Dion and Kennedy people falling behind Ignatieff like the good "True Grits" they are, it is indeed more likely than not that Micheal Ignatieff will be the next Liberal chief. But I have been more impressed by the particular combination of character, intellect, as well as political skill, of Bob Rae. I relished the prospect in 2006 of him skewering Emerson and Harper over Softwood Lumber and besting Harper in political and parliamentary debate. I liked the idea of somebody finally committing to a national plan for drugs and (eventually) home care. I liked the idea of someone with Rae's qualities having governed the nation's largest province under the most difficult of circumstances, and then going on to be prime minister--something that never happens in our country, which punishes such "baggage". And I also liked the story of the Comeback Kid, which apparently has greater resonance in America than it does here in Canada. And if the Harper government government is defeated in the first sitting of the new Parliament, it would make sense for Stephane Dion to take over the reins as prime minister until the Liberals have their leadership convention in May. And, for that coalition to persist, it would probably make the most sense to have Bob Rae as the new leader.
---A Decima Survey in released November 18, 2006 showed that 37 per cent of respondents said they would vote Liberal or consider doing so if Mr. Rae were the leader, compared with 34 per cent for Stéphane Dion, 33 per cent for front-runner Michael Ignatieff and 31 per cent for Gerard Kennedy. Mr. Rae appeared to have pulled even among Ontarians, who had apparently forgotten or forgiven his rocky tenure as an NDP premier in the province. Will all of those left-leaning voters who liked Kennedy and Dion actually vote now for Ignatieff?
---The battle-ready former NDP premier of Ontario was feared by Conservatives as someone who already had experience bringing down Conservative minority governments. Conservative Senator Hugh Segal, The Order of Canada recipent, chief of staff to Progressive Conservative Prime Minister Brian Mulroney, and former President of The Institute for Research on Public Policy, had this to say on CBC Radio after the Convention: “My feeling, and the feeling of most Conservatives, was that we dodged a bullet when the Liberals failed to choose Bob Rae as their leader”
--- My former boss in the Ontario Ministry of Labour, Tim Armstrong, was a Deputy Minister under 4 Ontario premiers from 3 different parties. Uniquely qualified to compare and assess their leadership qualities in context, he had this to say(I reproduce the article in full) :
------------------------------------------------------------------------------------
Political mythmaking, Ontario style
The drumbeat theme of those opposing Bob Rae's Liberal leadership candidacy is, "A smart guy, with a terrible record as premier of Ontario." It's difficult to fathom whether this myth is the product of ignorance, malice, or both.
I was appointed as a Deputy Minister by Premier Davis and served under him and his three successors, Premiers Peterson, Miller and Rae. None of those premiers would claim to have achieved perfection. But the suggestion that the Rae government did not live up to -- and in some areas exceed -- the standards and accomplishments of its predecessors on behalf of the people of Ontario is untrue.
When Bob Rae assumed office, the province was faced with an economic crisis -- a deepening recession, unprecedented competitive challenges from a Free Trade Agreement with the U.S., high interest rates, an overvalued dollar and a budget deficit of several billion dollars rather than the surplus predicted by the prior administration. Over 300,000 manufacturing jobs were lost between 1989 and 1992.
When the Rae government approached the end of its term, Ontario led the way in growth among the provinces and had one of the strongest economies in the G7. Surveys showed strong consumer and business confidence.
Private sector investment was back with billions in capital spending. Labour productivity was at an all-time high, as were manufacturing exports. Health-care costs were under much improved control as part of a broader strategy that was reducing the deficit.
My most memorable work with Premier Rae involved the restructuring of Algoma Steel in Sault Ste. Marie and Dehavilland Aircraft in Downsview. From the outset, the premier made it clear that he was determined, in the interests of the employees, the affected communities, and the provincial economy, that both companies would survive. His personal efforts in achieving success exceeded, in dedication, intelligence and shrewd negotiating skills, anything that I had previously experienced.
The costs incurred by Ontario in these restructurings, as well as those extracted from the federal government, have been recovered, many times over, in tax revenues alone. And the dismal alternatives to success -- weeds in the companies' parking lots, padlocks on their gates, and thousands of discouraged unemployed workers, their families on welfare or seeking social assistance -- were all avoided. These achievements were repeated, at Spruce Falls Pulp & Paper in Kapuskasing and other communities across the province, under the Manufacturing Recovery Program, a program designed and implemented with the full involvement of the Premier.
Bob Rae was, from the outset, under attack from many in the business community. After taking office, he faced vigorous opposition from organized labour, principally for his efforts to curtail what he perceived to be excessive wage demands and his commitment to share the necessary cuts in government spending fairly. In my experience in the labour relations field, if you displease both labour and management, you are likely on the right path.
There were other noteworthy achievements during this time. The Rae government successfully promoted the Jobs Ontario program, with increased investment in child care and training; incentives to employers to hire people on welfare and those whose employment insurance had run out; the elimination of payroll taxes on any new employee hired -- policies that, combined, created in excess of 50,000 jobs.
Ontario's welfare system was renewed, focusing on the needs of children living in poverty; the child-care budget was expanded; hundreds of thousands of poor families were removed from income tax rolls; and the new Trillium Drug Plan gave affordable access to all in need of therapeutic drugs.
The Rae government placed a renewed emphasis on aboriginal affairs, leading to the first Statement of Political Relationship between a provincial government and aboriginal leadership, acknowledging the need for government-to-government relations and providing new funding to address native poverty, with emphasis on housing, child care and improved sewer and water facilities.
Finally, as premier, Bob Rae held a deep commitment to the success of our federal system, and in particular, one that would accommodate Quebec's goals and aspirations, without jeopardizing Canadian national unity. He played a leadership role with the First Ministers that produced an affirmative vote in Ontario on the national referendum on the Charlottetown Accord.
Many other reforms were set in motion, many of which have been continued by successive governments. As to the Liberal leadership race, may the best candidate win. But in the process, the trumped-up myth that Bob Rae presided over an ineffective government needs to be put to rest.
Tim Armstrong was Ontario's Deputy Minister of Labour and Deputy Minister of Industry, Trade and Technology and was the province's Agent General for the Asia- Pacific region, 1986-1990.
Source: The Hamilton Spectator
Monday, August 14, 2006
by Tim Armstrong
Page A15
---A Decima Survey in released November 18, 2006 showed that 37 per cent of respondents said they would vote Liberal or consider doing so if Mr. Rae were the leader, compared with 34 per cent for Stéphane Dion, 33 per cent for front-runner Michael Ignatieff and 31 per cent for Gerard Kennedy. Mr. Rae appeared to have pulled even among Ontarians, who had apparently forgotten or forgiven his rocky tenure as an NDP premier in the province. Will all of those left-leaning voters who liked Kennedy and Dion actually vote now for Ignatieff?
---The battle-ready former NDP premier of Ontario was feared by Conservatives as someone who already had experience bringing down Conservative minority governments. Conservative Senator Hugh Segal, The Order of Canada recipent, chief of staff to Progressive Conservative Prime Minister Brian Mulroney, and former President of The Institute for Research on Public Policy, had this to say on CBC Radio after the Convention: “My feeling, and the feeling of most Conservatives, was that we dodged a bullet when the Liberals failed to choose Bob Rae as their leader”
--- My former boss in the Ontario Ministry of Labour, Tim Armstrong, was a Deputy Minister under 4 Ontario premiers from 3 different parties. Uniquely qualified to compare and assess their leadership qualities in context, he had this to say(I reproduce the article in full) :
------------------------------------------------------------------------------------
Political mythmaking, Ontario style
The drumbeat theme of those opposing Bob Rae's Liberal leadership candidacy is, "A smart guy, with a terrible record as premier of Ontario." It's difficult to fathom whether this myth is the product of ignorance, malice, or both.
I was appointed as a Deputy Minister by Premier Davis and served under him and his three successors, Premiers Peterson, Miller and Rae. None of those premiers would claim to have achieved perfection. But the suggestion that the Rae government did not live up to -- and in some areas exceed -- the standards and accomplishments of its predecessors on behalf of the people of Ontario is untrue.
When Bob Rae assumed office, the province was faced with an economic crisis -- a deepening recession, unprecedented competitive challenges from a Free Trade Agreement with the U.S., high interest rates, an overvalued dollar and a budget deficit of several billion dollars rather than the surplus predicted by the prior administration. Over 300,000 manufacturing jobs were lost between 1989 and 1992.
When the Rae government approached the end of its term, Ontario led the way in growth among the provinces and had one of the strongest economies in the G7. Surveys showed strong consumer and business confidence.
Private sector investment was back with billions in capital spending. Labour productivity was at an all-time high, as were manufacturing exports. Health-care costs were under much improved control as part of a broader strategy that was reducing the deficit.
My most memorable work with Premier Rae involved the restructuring of Algoma Steel in Sault Ste. Marie and Dehavilland Aircraft in Downsview. From the outset, the premier made it clear that he was determined, in the interests of the employees, the affected communities, and the provincial economy, that both companies would survive. His personal efforts in achieving success exceeded, in dedication, intelligence and shrewd negotiating skills, anything that I had previously experienced.
The costs incurred by Ontario in these restructurings, as well as those extracted from the federal government, have been recovered, many times over, in tax revenues alone. And the dismal alternatives to success -- weeds in the companies' parking lots, padlocks on their gates, and thousands of discouraged unemployed workers, their families on welfare or seeking social assistance -- were all avoided. These achievements were repeated, at Spruce Falls Pulp & Paper in Kapuskasing and other communities across the province, under the Manufacturing Recovery Program, a program designed and implemented with the full involvement of the Premier.
Bob Rae was, from the outset, under attack from many in the business community. After taking office, he faced vigorous opposition from organized labour, principally for his efforts to curtail what he perceived to be excessive wage demands and his commitment to share the necessary cuts in government spending fairly. In my experience in the labour relations field, if you displease both labour and management, you are likely on the right path.
There were other noteworthy achievements during this time. The Rae government successfully promoted the Jobs Ontario program, with increased investment in child care and training; incentives to employers to hire people on welfare and those whose employment insurance had run out; the elimination of payroll taxes on any new employee hired -- policies that, combined, created in excess of 50,000 jobs.
Ontario's welfare system was renewed, focusing on the needs of children living in poverty; the child-care budget was expanded; hundreds of thousands of poor families were removed from income tax rolls; and the new Trillium Drug Plan gave affordable access to all in need of therapeutic drugs.
The Rae government placed a renewed emphasis on aboriginal affairs, leading to the first Statement of Political Relationship between a provincial government and aboriginal leadership, acknowledging the need for government-to-government relations and providing new funding to address native poverty, with emphasis on housing, child care and improved sewer and water facilities.
Finally, as premier, Bob Rae held a deep commitment to the success of our federal system, and in particular, one that would accommodate Quebec's goals and aspirations, without jeopardizing Canadian national unity. He played a leadership role with the First Ministers that produced an affirmative vote in Ontario on the national referendum on the Charlottetown Accord.
Many other reforms were set in motion, many of which have been continued by successive governments. As to the Liberal leadership race, may the best candidate win. But in the process, the trumped-up myth that Bob Rae presided over an ineffective government needs to be put to rest.
Tim Armstrong was Ontario's Deputy Minister of Labour and Deputy Minister of Industry, Trade and Technology and was the province's Agent General for the Asia- Pacific region, 1986-1990.
Source: The Hamilton Spectator
Monday, August 14, 2006
by Tim Armstrong
Page A15
Sunday, November 16, 2008
What Should an Auto Company Bailout Look Like?
In exchange for government aid, the Big Three's creditors, shareholders, and executives should be required to accept losses as large as they'd endure under Bankruptcy protection, and the CAW should agree to some across-the-board wage and benefit cuts. The resulting savings, combined with the bailout, should be enough to allow the Big Three to shift production to more fuel efficient cars while keeping almost all its current workforce employed. Ideally, major parts suppliers would adhere to the same conditions. What must be avoided is a re-run of the U.S. Chrysler bail-out of the 1980s--when that company took a big chunk of public money and then turned around and laid off 1/3 of its workforce.
In exchange for job security, trade unions should agree to wages-plus-benefits that are closer to what North American workers for Toyota, Honda, and Nissan make--e.g. @$50 per hour instead of the $67 per hour that Big Three workers currently make.
That's tough medicine, but reasonable from this taxpayer's point of view.
In exchange for job security, trade unions should agree to wages-plus-benefits that are closer to what North American workers for Toyota, Honda, and Nissan make--e.g. @$50 per hour instead of the $67 per hour that Big Three workers currently make.
That's tough medicine, but reasonable from this taxpayer's point of view.
Friday, November 14, 2008
What Price Budget-Balancing? Note the P3 Dimension
{The federal government is on record as saying 'the time for study is over, this is the time for action' when it comes to Public-Private Partnerships (P3s). Yet a great deal of the research that has been done is ambivalent about the value of P3s, which often trade off public sector accountability and long-term economic benefits for the sake of short-term improvements to government financial accounts. Now that the federal government is under pressure to take steps to avoid a budget deficit, that ideological and political commitment to P3s is about to become as strong federally under Harper as it has provincially under Campbell. Keep your eyes peeled for dodgy deals designed to conceal true long-term costs from Canadian citizens. Here are some apposite remarks from Professor John Loxley, from his 2008 CAUT Distinguished Academic Award Acceptance Address:---MC}
"As the Council of CAUT is aware, the decision by the administration at my university to award a five year contract to Navitas, through the International College of Manitoba, to recruit and teach overseas university students at pre-university and university 1 course level has been controversial for a number of reasons. The contract did not go through either the Board of Governors or the Senate. There appears to be no provision for academic oversight of courses, teachers or standards by the Senate, and the details of this forprofit agreement are confidential. Clearly, this would not make the ICM a model for accommodating pre-entry needs of Aboriginal students. But the Navitas/University of Manitoba agreement is interesting to me for other reasons. It is an example of a public-private partnership (PPP) and for the past decade or so I have been studying the theory and applicability of PPPs in Canada and around the world.
Declaring that ‘The time for study is over; this is the time for action’, the federal government recently made it a prerequisite of it signing infrastructure
co-financing agreements with provinces that they consider PPP arrangements for all large infrastructure projects. Yet serious academic studies of PPP experience suggest that they uniformly cost more than public sector alternatives, rarely provide value for money, do not necessarily shift risk to the private sector as they are supposed to do, and do not reduce effective government debt as they often promise. In the light of this, the Navitas agreement raises many unanswered uestions. For instance, was a public sector alternative to Navitas ever considered or costed out by the University of Manitoba? Is this a way of undermining the collective agreements which protect those who teach first year courses? How much is Navitas paying the University for using its premises? What safeguards are in the agreement to maintain academic standards and appropriate academic behaviour? Without public access to the legal agreement, it is not possible to answer these questions. But that is not unusual in PPP agreements as access to information is frequently barred by reference to the need for commercial secrecy. This secrecy is rarely justified when public money is being spent and, in a University setting is deeply disturbing. I commend CAUT for its efforts to address our concerns over Navitas and I raise the matter here because, regardless of what the federal government might claim, the academic debate about the wisdom of PPPs is far from over.
What drives administrators to enter into questionable arrangements with the private sector are real or perceived budgetary problems. I have always seen budgets not as mere financial statements, but as profoundly ideological and political statements. To paraphrase Julius Nyerere who was speaking about planning, ‘to budget is to choose’. A critical examination of budgets involves, therefore, a critical examination of political choices made and put to numbers. My involvement in helping develop alternative budgets in Canada in the 1990s arose out of widespread dissatisfaction with budgetary choices being made at the federal and provincial levels, in particular. Those choices had a profound impact on people and institutions on the ground, and universities were not exempt from this. While there is a perfectly legitimate justification for simply critiquing budget choices, developing an alternative budget helps put those critiques into a more disciplined, constructive framework, thus helping to head off the counter claim that the demands being made are unrealistic, unmanageable or fiscally irresponsible. This is, of course, highly political and contentious work since it involves challenging the political power behind the budgets, be it the federal government, the provincial government or the university administration. It helps, enormously, to have the protection of tenure, academic freedom and a strong collective agreement. Working from an academic base also makes it easier to work, collegially, with civil society
organizations; women’s groups, environmental groups, trade unions and anti-poverty groups, as one is perceived, rightly or wrongly, to have a high degree of independence and impartiality.
Linking my work on PPPs and on budgets, leads me to caution against universities building closer links to the private sector for budgetary reasons. The budgetary impact of PPPs is often quite negative as governments replace direct borrowing by paying for leases on assets purchased by the private sector at higher interest costs."
---John Loxley, FRSC
"As the Council of CAUT is aware, the decision by the administration at my university to award a five year contract to Navitas, through the International College of Manitoba, to recruit and teach overseas university students at pre-university and university 1 course level has been controversial for a number of reasons. The contract did not go through either the Board of Governors or the Senate. There appears to be no provision for academic oversight of courses, teachers or standards by the Senate, and the details of this forprofit agreement are confidential. Clearly, this would not make the ICM a model for accommodating pre-entry needs of Aboriginal students. But the Navitas/University of Manitoba agreement is interesting to me for other reasons. It is an example of a public-private partnership (PPP) and for the past decade or so I have been studying the theory and applicability of PPPs in Canada and around the world.
Declaring that ‘The time for study is over; this is the time for action’, the federal government recently made it a prerequisite of it signing infrastructure
co-financing agreements with provinces that they consider PPP arrangements for all large infrastructure projects. Yet serious academic studies of PPP experience suggest that they uniformly cost more than public sector alternatives, rarely provide value for money, do not necessarily shift risk to the private sector as they are supposed to do, and do not reduce effective government debt as they often promise. In the light of this, the Navitas agreement raises many unanswered uestions. For instance, was a public sector alternative to Navitas ever considered or costed out by the University of Manitoba? Is this a way of undermining the collective agreements which protect those who teach first year courses? How much is Navitas paying the University for using its premises? What safeguards are in the agreement to maintain academic standards and appropriate academic behaviour? Without public access to the legal agreement, it is not possible to answer these questions. But that is not unusual in PPP agreements as access to information is frequently barred by reference to the need for commercial secrecy. This secrecy is rarely justified when public money is being spent and, in a University setting is deeply disturbing. I commend CAUT for its efforts to address our concerns over Navitas and I raise the matter here because, regardless of what the federal government might claim, the academic debate about the wisdom of PPPs is far from over.
What drives administrators to enter into questionable arrangements with the private sector are real or perceived budgetary problems. I have always seen budgets not as mere financial statements, but as profoundly ideological and political statements. To paraphrase Julius Nyerere who was speaking about planning, ‘to budget is to choose’. A critical examination of budgets involves, therefore, a critical examination of political choices made and put to numbers. My involvement in helping develop alternative budgets in Canada in the 1990s arose out of widespread dissatisfaction with budgetary choices being made at the federal and provincial levels, in particular. Those choices had a profound impact on people and institutions on the ground, and universities were not exempt from this. While there is a perfectly legitimate justification for simply critiquing budget choices, developing an alternative budget helps put those critiques into a more disciplined, constructive framework, thus helping to head off the counter claim that the demands being made are unrealistic, unmanageable or fiscally irresponsible. This is, of course, highly political and contentious work since it involves challenging the political power behind the budgets, be it the federal government, the provincial government or the university administration. It helps, enormously, to have the protection of tenure, academic freedom and a strong collective agreement. Working from an academic base also makes it easier to work, collegially, with civil society
organizations; women’s groups, environmental groups, trade unions and anti-poverty groups, as one is perceived, rightly or wrongly, to have a high degree of independence and impartiality.
Linking my work on PPPs and on budgets, leads me to caution against universities building closer links to the private sector for budgetary reasons. The budgetary impact of PPPs is often quite negative as governments replace direct borrowing by paying for leases on assets purchased by the private sector at higher interest costs."
---John Loxley, FRSC
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