economy - The Trawler.org
DEN TANDT: “Conservative priorities will be the economy, the economy and the economy.” (National Post, CA)275 days ago by Emily.Thompson
With Parliament resuming today in Canada, Michael den Tandt, in his latest “Full Comment” in the National Post, discusses where he believes debates between the three major parties will be focused during this session. No shock to anyone—den Tandt believes that the Conservative will pick up where they left off with the economy with the opposition parties following suit, attacking them from left, right and center.
Like in the previous sitting of the House of Commons, Den Tandt postulates that NDP leader, Thomas Mulcair will likely stick to his “Dutch disease” theme, believing that the high Canadian dollar driven by strong resource revenue is to the detriment of most of Canada. Despite this disagreement, Den Tandt argues that the Conservatives and the NDP will co-operate in an attempt to sideline the third place Liberals. With the upcoming Liberal convention that will likely garner the party considerable media attention, the Conservatives and the NDP cannot afford to let the “Grits” capitalize on this opportunity to energy with a platform that is more conservative economically and aggressively progressive on social issues.
In the immediate future, den Tandt sees Harper and the Conservative party focusing on faster deportation of foreign criminals, modernizing the RCMP and pushing forward with an EU free trade deal with a Canada-Panama Free trade agreement to quickly be put in front of the House of Commons.
Den Tandt clearly, effectively and reasonable denotes the possible avenues down which each party may travel in the upcoming session of Parliament. While it would come as a shock to few that the governing and opposition parties will be focusing on the economy, Den Tandt presents a nuanced argument determining how the parties will work together or work against each other in the next few months.
MCPARLAND: “Free trade with China is one thing, corruption-free trade is another” (National Post, CA)280 days ago by Hermonie.Xie
In a recent opinion article for the National Post, Kelly McParland cautions against rushing into free trade with China. Recently, Ottawa has considered exploratory talks on a free trade agreement with China. Last Sunday, PM Harper signed the Foreign Investment Protection and Promotion Agreement, which establishes a system for resolving disputes on laws and practices that impinge on foreign investment.
While he recognizes the importance and value of seeking free trade with China, McParland questions the ability of China’s opaque political structure to provide the legal and political reliability needed for a trade pact that is palatable to Canadian businesses. While “China has the trappings of a modern western business culture,” below the surface the country remains a place “where law is what the government says it is, on any particular day”.
McParland points to a few recent political scandals to show a China ridden with corruption. In August, Gu Kailai – wife of ousted Chinese leader Bo Xilai, was tried “for the murder of a British consultant she feared was about to reveal the extent of the family’s corruption.” McParland notes that the murder itself might have been covered up had it not been for “a bit of bad luck in which a local police official approached the US seeking protection from Bo”. While top-ranked Communist officials have modest salaries on paper, “unofficially they can buy their kids Ferraris.”
The icing on the cake is the recent mysterious disappearance of president-in-waiting Xi Jinping, who has been missing for nine days and skipped scheduled meetings with foreign dignitaries such as US Secretary of State Hillary Clinton and the PMs of Singapore and Denmark. Thus far, the international community has failed to get a clear answer from Beijing on his whereabouts and his health condition.
For McParland, all of this suggests that China will play by its own rules with no regard for the international community. For this reason, he does not believe China will make a good trading partner for Canada despite its wealth and economic sophistication.
Terence Corcoran argues a different perspective in his editorial for the Financial Post. In this article, Corcoran makes the argument that in a world filled with talk about retaliation and protectionism, Canada’s trade talks with China is a step in the right direction – so long as Canada can handle the challenges and risks in dealing with China’s state-owned-enterprises.
In a recent opinion piece for the National Post, Andrew Coyne discusses the challenges related to the productivity problem faced by the Canadian economy, and possible solutions to it. Canada’s economic productivity has fallen behind other developing nations over the years. “Between 1985 and 2006, Canada’s productivity growth ranked 15th of 18 developed countries by the OECD,” and Coyne notes that productivity is set to deteriorate further.
Coyne suggests that the country is facing a “double whammy” of aging population on the one hand, and a shrinking work force on the other. “Between the Baby Boom of 1945-1964 and the “baby bust” that followed it, the result is a projected ballooning in the relative numbers of the elderly.” The proportion of those over the age of 65 is forecast to rise from 12% to 25% by 2030. On the other hand, the number of people of working age for every retiree will fall from 5 to 2 by 2030.
The C.D. Howe Institute published a report suggesting that Canada is facing a “net unfunded liability” (promises to pay, mostly for healthcare, for which no funds have been set aside) of $2.8 trillion. The expected increase in public spending on pensions and healthcare, together with a shrinking labour force will further exacerbate Canada’s productivity problem.
Coyne lists several solutions for declining productivity, some of which are presently applied, but quickly dismisses them as “partial fixes” which would make “no more than a dent in the problem.” Such ”partial fixes” include healthcare and pension reform to reduce costs, encouraging people to work past the traditional retirement age, encouraging larger families, and liberalizing immigration policy.
Coyne dismisses the utility of the various aforementioned social policies because they do not directly address the issue of productivity. Instead, he argues for neoliberal economic solutions such as lowering taxes and encouraging foreign investment to encourage investment and foster productivity through competition. He notes that while the Canadian policy makers “got a lot of things broadly rights in recent years” with freeing trade, cutting inflation, balancing budgets and investing in R&D, important sectors of the economy remain “over-regulated, over-protected, over-priced oligopolies.” Coyne concludes that overregulation is a “luxury” we can no longer afford if we want to meet the productivity challenge.
While lowering taxes and fostering competition can help create new incentive frameworks for private firms that enhance productivity, Coyne perhaps too hastily dismisses social policies that can affect the incentive structures of the population at large. For a more detailed exposition of Canada’s productivity issue, please refer to a recent article in the Ivey Business Journal.
Since the East African Community (EAC) released its 2012 budget estimates, Jaindi Kisero questions the feasibility of the assessments. Acknowledgements of inflation and deficits were evaded during the speech given by Mwananchi Mlalahoi. Spending measures seem bloated, especially since financial projections show a loss in revenue. Moreover, expenditure is siphoned-off to pay civil service and debts in the respective countries of the EAC, leaving little to finance proposed operations. Large portions of the budget appear to be buttressed on lending from European, Asian and other African banks. The author does not doubt the importance of borrowing to build infrastructure; however, can the EAC’s debt remain sustainable without economic growth? Kisero explains in greater detail the fundamentals of the EAC economies and the fundamental problems of the EAC budget proposal. (Full article)
Rasna Warah explores Somalia’s foreign trade relations – particularly its burgeoning relationship with Turkey. As the country lifts itself from destitution, states should forge links with its emerging economy. She argues the international community ought to learn from Turkey’s approach in the region. For example, donor countries should have a physical presence in the country with corresponding diplomatic visits – a real mutual partnership. Moreover, Turkey’s contributions are in both the private and public sectors, thus improving the economy while providing necessary services – an echoed sentiment among Somali academics. Meanwhile, Somalia has responded well to trade, especially given its record in exporting livestock to neighbouring countries. Fear of potential financial corruption was duly addressed in the Istanbul Declaration which would improve regulation standards vis-à-vis development assistance. Turkey’s methods toward changing aid-based, informal economies inward to the global economic community will prove exemplary for future state investments.(Full article)
The government’s announcement of a 10% increase in petrol prices has come under sharp criticism. In this article, Shekhar Gupta points out that oil marketing companies are supposedly free to reset the petrol price on a fortnightly basis anyway. They have not been doing so however, making this price hike an ‘event’. Before this, the last increase was carried out in November 2011, but the process stopped because the UPA was getting ready for the Uttar Pradesh elections. The UPA suspended that fortnightly rhythm in search of cynical electoral gains which never came. The UPA’s actions are emblematic of a larger problem within the UPA – its slow decision making; the UPA dithers and meanders into making everything out to be a story, a controversy, an event.
Nicholas Kristof’s new article about the extreme poverty and desolation on American Indian reservations is a clear and quite depressing look at how a particular group of society has been completely left out of the American Dream.