How do we feel about a national daycare program?

Those who use simple heuristics to make up their minds about policy questions (e.g. “government good, markets bad”) will undoubtedly already know how they feel about the federal NDP’s recent announcement of a bold new plan for a national daycare system. The headline feature of the system is that it will be subsidized, so that the cost to parents should come in at about $15 per day.

There has of course been a sense of welcome relief that the NDP has stopped doing small-bore, pseudo-populist politicking, and is actually coming forward with a genuine proposal to expand the Canadian welfare state, moving it away from the American toward the Scandinavian model. But if you look at the issue from first principles, or from a social justice perspective, public involvement in the daycare sector is not an easy issue to assess. In this respect, it is not like the other two “big fish” out there in the policy space – carbon pricing and national pharmacare – which are no-brainers by comparison.… Continue reading

Doug Ford has a policy idea, and it’s a bad one

For those who haven’t been following these things, our current Toronto mayor Rob Ford has dropped his bid for re-election and his brother Doug has taken over for him. How much of a difference this makes remains to be seen. One might be tempted to say that there’s no real difference between the two, just six of one, a half-dozen of the other. That’s not entirely accurate, it’s more like schlemiel, schlemazel.

Anyhow, Doug Ford (aka “schlemiel”) has been sticking fairly closely to the “post-truth” playbook, essentially saying whatever sounds best, in a way that shows total disregard for the norm of truth. Yesterday though he announced a genuine policy commitment, which is to reduce Toronto’s land transfer tax by 15% per year for 4 years. Reducing this tax is something that his brother Rob (aka “schlemazel”) campaigned on four years ago, and failed to gather enough support on council to implement.… Continue reading

What’s Wrong With Cap and Trade? Klein on Climate Change

I read many pieces this week on Naomi Klein’s recent book on climate change. Since she is widely read, I’m happy that she decided to zero in on global warming and climate change. Since my children are young, I often think that they will hold it against my generation that we didn’t act with more conviction and determination to slash green house gas emissions. As far as I can tell—I’ll get the book this weekend—she argues against market-based solutions for halting climate change, and she advises against thinking that modest reforms compatible with capitalism will be sufficient.

I agree with her that it would be foolish to place our hopes in the hands of rich philanthropists who think that their business acumen will enable them to tackle complex collective problems. I argued before that philanthropy cannot replace higher marginal tax rates for the wealthy, and that a philanthropist deciding how and where he will give his money is not the same as democratic decision-making.… Continue reading

Capitalism remains controversial

I find it astonishing the extent to which people continue to resist the basic way that the price system allocates goods — even in America! The idea that prices should move up or down, in order to balance supply and demand, is something that remains unintuitive, and morally repellent, to most people. There is a lovely example of this in the recent fuss over Uber’s surge pricing scheme. Anyone interested in the “sociology of market behaviour” should find this and this fascinating reading. Basically, Uber’s prices go up or down in real time, depending on how many people want rides and how many drivers are on the road. It’s a nice example of a firm using technology to create something like the perfect market of Economics 101 fame. And one would think that consumers would prefer high prices to shortages (i.e. queueing, long wait times, etc.) yet people hate it.… Continue reading

The two worst talking points on carbon taxes/pricing

My little disquisition on carbon pricing earlier this week was actually just a warm-up for what I really wanted to write about, which is the two incredibly irritating talking points that have pretty much made up the entirety of the federal government’s communications strategy on this issue, for at least five years now. The first is the claim that a carbon tax would be a “tax on everything” or that it would increase the “price of everything.” The second is the claim that a carbon tax would be “job killing.”

What’s infuriating about these talking points is that they both sound vaguely correct, even though they are completely wrong. Thus they have all the hallmarks of our “post truth” political environment, where government no longer even tries to defend its actions or policies, it simply adopts a communications strategy that is calculated to be effective with a target segment of the electoral, then sticks to it through thick and thin.… Continue reading

When is a tax not a tax? Carbon taxes vs. carbon prices

There seems to be a certain amount of confusion across the land about the idea of a “carbon tax” and whether it deserves to be called a “tax” or not (e.g. here). Proponents of such a scheme – myself included – have taken to calling it a “carbon pricing” system, in order to emphasize the dissimilarity between a carbon tax and more conventional taxation schemes, such as the income tax or the GST (and also to avoid getting caught up in the “all taxes are bad” dragnet currently being thrown by the right). This has led opponents of the scheme, including the current federal government, not to mention their lackeys in the right-wing press, to insist that it is a “tax.” Indeed, the Minister of the Environment never misses an opportunity to repeat the government’s mantra, that a carbon pricing system would be, not just a tax, but a “tax on everything” (and the previous Minister claimed that “carbon pricing in any form is a carbon tax.Continue reading

Further reflections on corporate taxes

Kevin Milligan and I had a little back and forth a couple weeks ago about the use of privately owned corporations by the wealthy to reduce their tax liabilities (in the comments here). This provoked a few thoughts, which I was going to write up. I was inspired to move them back to the front burner today, while reading Andrew Coyne’s provocatively titled column, “If we really want to soak the rich, we should abolish the corporate income tax.” He wrote this, it would appear, after having read the recent Mowat Centre working paper, Corporate Tax Reform, by Robin Boadway and Jean-François Tremblay.

First a bit of housecleaning. Not only is the headline misleading, but Coyne mucks things up when stating their central thesis:

If you want to soak the rich, in other words, abolish the corporate income tax — and with it the tax break on dividends and capital gains.

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Some Half-Baked Thoughts on the Economics of City-Life after Returning to Montreal after a Week in Paris

One of the great fringe benefits of my job is that I often get invited to some pretty great cities for work. I’ve just returned to Montreal from a week in Paris. I love Paris. What I love most about Paris are its neighborhoods. Walk a few kilometers outside the tourist center, and you will find fantastic inner city areas that each have their distinctive character and identity. For a long time, I used to hang out in the 14th arrondissement (intra muros Paris, the Paris that lies inside its internal ring road, le Périphérique is divided up into 20 boroughs). These days, I am more likely to try to find a place in the 20th, which is one of Paris’ most riotously multicultural neighborhoods. On this recent trip, I watched Chile win a World Cup match in a Chilean bar, watched Brazil triumph in a Brazilian restaurant, and don’t even get me started about what happened when Algeria beat South Korea!… Continue reading

How’s that firewall working out for you guys?

So the federal government announced its “approval” of the Northern Gateway pipeline. The fact that the Prime Minister said nothing, the Minister of Natural Resources was nowhere to be found, and none of the government’s BC MPs were available for comment, says pretty much everything you need to know about the government’s own estimation that the thing will ever be built.

That they would approve it was a foregone conclusion, since failure to approve it would have been the final nail in the coffin of the Keystone XL pipeline. (One of the major talking points of American Keystone XL opponents is that, if pipelines are so fabulous, then why don’t Canadians just build them on their own soil, why do they have to go through the U.S.?) Furthermore, the only thing that the Harper government has really done in Ottawa, with any sort of consistency, is advance the interests of Alberta and the Alberta tar sands.… Continue reading