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Competition Food security Trade and investment

Do groceries cost twice as much in Canada as in UK? Walmart Canada, ASDA comparison suggests so

If there is one thing Canadians and Brits like to complain about beside the weather, it is food prices. Anyone who has spent time in both countries will quickly realise a curious paradox: While eating out seems to cost significantly more in the Unikted Kingdom, grocery shopping seems to cost significantly less.

While cross-country food price comparisons can be challenging for a number of reasons, comparing prices between Canada and the UK could be interesting, if not insightful.

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Accountability Governance Media Trade and investment

Will Trans-Pacific Partnership diversify Canadian economy? Not a chance.

The recent Globe and Mail leaders’ debate focused on the economy. One important – albeit crudely constructed – question asked during the debate was: “Do you have a jobs plan for industry beyond taking things out of the ground”. The question presumed that natural resource extraction has been a big employment driver in Canada, which it hasn’t. That aside, the implicit question was whether the aspiring leaders had a plan for, or even wished to see, greater industrial diversification in Canada. None of the candidates provided a direct response to the question. However, one response in particular stood out for its reference to international trade.

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Trade and investment Uncategorised

January 2015 IMTS: What’s one to make of conflicting Canadian trade reports?

Chart 2 Trade Balance Statcan

Statscan’s January 2015 Canadian International Merchandise Trade Statistics (IMTS) report released today read about as badly as such a report could. To put the January results into historical perspective, it notes: “Canada’s merchandise trade deficit widened from $1.2 billion in December to $2.5 billion in January, the largest since the record $2.9 billion deficit in July 2012.” Further: “Canada’s trade surplus with the United States narrowed from $2.2 billion in December to $1.2 billion in January, the lowest surplus since 1992.”

Why, it almost seems like it was just yesterday that the virtues of export-led economic growth were being touted…

Chart 2 Canada Net Exports BMO

Actually, it was two days ago BMO Financial’s AM Charts March 4 ,2015 daily brief included a note, captioned Canadian Exports: Can’t Ask for Much More, that stated: “the BoC can’t complain that exports aren’t carrying the growth baton. Look for that trend to continue in 2015 as
a weaker dollar and firming U.S. growth help.”

So how does one account for the glaring discrepancy?

The Statscan IMTS report, which includes the first chart above, strictly looks at international merchandise trade, Except for a few positive months in 2011 and early last year, it’s pretty much been negative for the last 5 years. The bump early last year coincided with a period during which the Canadian dollar had started to slide prior to the precipitous plummet in oil prices.

Statscan’s Q4 and December Canadian economic accounts report was released just three days prior to its IMTS report. The economic accounts reports looks at demand, including info on international trade of both goods and services. The latest report noted a marked drop in economic growth stemming from the oil price drop:  seasonally-adjusted Q4 growth of 0.6 percent was a significant decline from Q2 growth of 0.9 percent (preliminary results, likely to be further revised down).

The economic accounts seasonally-adjusted trade data appear to show the same trend as the IMTS report did: Canadian exports rose during the brief period in early 2014 when the loonie was lower (than its historcal height in recent years) but oil prices were still relatively stable. The plunge in oil prices starting mid-year that coincided with a marked drop in Canada’s petrodollar significantly gave back those gains. The consistency between the two reports isn’t surprising, since services make up a relatively small share of Canadian international trade.

So how/why do the Statcan and BMO charts showing net exports appear to be markedly different? BMO’s chart shows annualised net exports and presents them as a share of GDP; strong export growth in early 2014 is rolled in with relatively weaker economic growth over the entire year to suggest a trend that should reasonably be expected to “continue in(to) 2015”.

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Employment Immigration Race and ethnicity Trade and investment Women Youth

How the labour movement has failed minorities in Canada

How the labour movement has failed
Rachel Decoste, Huffington Post Canada September 2, 2014

Kudos to Rachel for her thoughtful and informative critique of the Canadian labour movement’s historical under-representation of racial minorities. It’s actually more cleverly written than it first appears (and it’s pretty clever as-is); the embedded web links make some interesting implicit connections.

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Employment Financial security Governance Taxation Trade and investment

r > g: ‘Capital in the Twenty-First Century’, meet ‘Kapital’ of the nineteenth century

Kapital_titelCapital_titre

One can’t have an economy related page without commenting on this book, apparently. Its recently published English edition, Capital in the Twenty-First Century, was a US best-seller – a remarkable feat for a hefty econ tome.

For those who haven’t read it and/or have no intention of doing so, The Economist has taken to reviewing it in parts (of which there are four) for subscribers. It’s that important. The critique of Capital‘s conclusion is noteworthy:

 If the most likely outcome of the trends Mr Piketty describes is that somewhere down the line a left-of-centre government is elected and passes higher top income-tax rates, higher estate-tax rates and pension reforms, and that defuses the crisis, well, that puts the rest of the book in perspective. If the most likely outcome is revolution, well, that does too. And while it would be absurd to expect Mr Piketty to say definitely whether one possibility or another is bound to occur, I don’t think it’s asking too much, given the ambition of the rest of the book, to think we ought to be given some sense of his view on how social and political movements generally evolve in response to widening inequality, and how that evolution tends to be reflected in policy. What good is it to suggest utopian ideas about how to fix these problems without at least gesturing toward the political mechanisms needed to bring them about?

The topic of capital and wealth distribution precludes separating the political from the economic analysis – which, ironically, is the point of contention between Capital and Kapital. As Marx succinctly put it (prior to Kapital): Although theoretically the former is superior to the latter, in actual fact politics has become the serf of financial power.

In noting the post-World-War periods during which income inequality declined were an aberration rather than proof that capitalism (as we’ve come to know it) optimally (re)distributes wealth, Piketty effectively supports Marx’s central premise – that it doesn’t.

And it’s not just Piketty who (despite not conceding the point) has recently come to the uncomfortable realisation perhaps Marx was right.

However, Piketty (among others) ignores the obvious correlation between capital ownership and political influence by suggesting policy makers can address widening inequality by simply hiking taxes on capital wealth. Bill C-23, the Canadian ‘Fair’ Elections Act, and related recent events in the US speak to the obvious omission.

Picketty also ignores capital flight, a problem his home country of France faced only a few short years ago. And that was before it elected a Socialist government and a famed French actor made it headline news.

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Employment Financial security Innovation Trade and investment

UAW VW defeat: Sign of what’s in store for labour?

labour_VW

Volkswagen Vote is Defeat for Labor in South
Steven Greenhouse, The New York Times February 14, 2014

Comfy, no?

Major defeat for decimated US labor union

On Valentine’s Day, the rejection by the Chattanooga, TN Volkswagen workers surely was a heart-breaker for the United Auto Workers. Not only did the employer remain impartial, but VW actually wanted the workers unionised.

The UAW had been trying to organise the VW plant for two years.  In the US Midwest and Northeast, home to what’s left of major domestic automakers’ US operations, UAW membership had plummeted. In 1979, the union claimed 1,530,000 members; in 2010 they counted just 355,000. It was desperate for a foothold in the South, where Japanese and German automakers have located their (to date) non-unionised US operations.

The UAW drop in membership accelerated following the Great Recession. Interest in membership further eroded as the union threw young members and future workers under the bus during auto sector bailout negotiations. As The New York Times succinctly put it in the wake of the recent debacle, Sweetheart Deals Hurt Labor.

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Accountability Employment Trade and investment Transparency

November 2013 SEPH: More on the ‘unclassified’ jobs boom

Chart 1 Unclassified business payrolls
Chart 1 - SEPH unclassified business payrolls

Source: CASNIM Tables 281-0025 and 281-0063 Employment (SEPH), seasonally adjusted, for all employees for selected industries classified using the North American Industry Classification System (NAICS), monthly (persons), Statistics Canada

According to the preliminary figures in this morning’s SEPH release, payroll jobs are down 27,600. The good news: industry-classified jobs were down only 19,100, the remaining 8,400 loss accruing to the mysterious ‘unclassified’ sector – which now accounts for ‘only’ 417,100 jobs.

As mentioned in yesterday’s Economy Lab post, the number of unclassified jobs nearly equal the job total of four broad industry sectors combined. Statscan should either stop referring to the bold-highlighted figure as the ‘sector aggregate’ or footnote that it includes hundreds of thousands of payroll jobs from so-called businesses not classified to any industry sector.

SEPH-LFS comparison

That 27,600 SEPH-reported job loss for November 2013 doesn’t compare favourably with the 21,600 LFS-reported job gain for the same month. As reported in the November 2013 LFS release, 19,100 of those 21,600 LFS jobs were of the ‘self-employed’ variety.

The occasional LFS flourish of self-employment during the Great Recession – and still-shaky recovery five years on – tends to mask the Canadian economy’s (in)ability to create jobs. The November 2013 LFS self-employed job gains were lost twice over as the following month’s LFS release reported a drop of 37,900 self-employed. This highlights self-employment during an economic downturn and shaky recovery often isn’t ‘real’ employment (data quality/reliability aside); rather, it’s households doing their best to cope with a weak labour market.

Comment

Not that this was foreseen (well, kinda) but the contrast between the November 2013 SEPH and LFS releases underscores the importance of getting the payroll survey right. Unfortunately, as Chart 1 shows, the SEPH payroll employment data’s gone wrong in recent years.

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Accountability Environment Foreign policy Governance Media Trade and investment Transparency

Keystone XL: Canada’s environmental record underscores US reluctance to approve project

tarsands

NC6 submissions from Parties included in Annex I to the Convention
United Nations Framework Convention on Climate Change (UNFCCC) 2013

BR1 submissions from Parties included in Annex I to the Convention
United Nations Framework Convention on Climate Change (UNFCCC) 2013

Over the last couple days various Canadian media outlets have reported on the federal government’s quiet submissions to the UNFCCC late last month, in which it conceded likely not meeting its 2020 GHG emissions reduction targets.

For some reason, none of the articles include links to the actual reports. Above are links to UNFCCC Annex I countries’ National Communications (NC) and Biennial Reports (BR). They include reports from Canada (PDF), the United States (PDF) and fifteen other industrialised economics.

Canada’s report is an interesting read, if only for the myriad excuses proffered for its failure – which include the popularity of pick-ups and SUVs

Since 1990, there has been a 33% growth in transportation emissions in Canada, an increase that was mainly driven by an increase in cross-border trade, on-road freight transportation activity and a shift in personal vehicle ownership from cars to light-duty trucks.

By contrast, the US government promoted its recent submissions to the UNFCC on the Department of State website, touting its efforts and successes in reducing emissions. If the US wants to continue making progress on its environmental record, it’ll likely want to distance itself from Pig-Pen as much as possible. The US decision on Keystone XL will be telling.

Aside
Apologies to the Fraser Institute for ‘smearing’ Canada’s environmental record – with Canada’s official environmental record. (That canard was posted a week before the government’s hush-hush UNFCCC submissions.)

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Employment Financial security Innovation Technology Trade and investment

What’s next?

Economists have been loathe to discuss the possibility of machines displacing workers. The facile counterargument is that labour-saving innovation started with the industrial revolution, and subsequent labour-saving innovations coincided with rising employment. Few ever concede that technological innovation could eventually transition from labour-saving to labour-replacing.

Thankfully, that’s begun to change. Nobel laureate Paul Krugman recently reconsidered this long-held economic view.

As have others, including one of our new favourite economists, Tim Harford, whose page we discovered on this University of Toronto Library site (where this page is also linked – thanks).

The robots are coming and will terminate your jobs
Tim Harford, Financial Times December 31, 2013

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Financial security Trade and investment

Canadian banks: The simple arithmetic of household debt

Chart 1 – Chartered banks’ financial assets
Chartered banks financial assets

Source: National balance sheet accounts, Catalogue no. 13-022-XWE, Statistics Canada


Chart 2 – Household and unincorporated financial liabilities

Household unincorporated liabilities

Source: National balance sheet accounts, Catalogue no. 13-022-XWE, Statistics Canada