How badly do the Progressive Conservatives need to mess up for Albertans to want to elect an NDP government? It may sound like a silly question in the context of Alberta politics, but we might find an answer on May 5.
Judging by the more than 1,500 Albertans who showed up at an NDP rally in Edmonton yesterday, the momentum behind Rachel Notley‘s NDP is real.
“I think the PC Party needs a break from government and Albertans need a break from the PC Party,” Ms. Notley told the massive crowd at the Ramada Hotel on Kingsway Avenue. “You don’t have to repeat history on Tuesday, you can make history,” she said.
Legions of Albertans tired of Jim Prentice‘s long-governing PC Party have rallied around the NDP in this election. With the confident Ms. Notley at its helm and a moderate Lougheed-like platform, the NDP campaign in this election has been near flawless. With exception of a few bumps, including a fiscal miscalculation that was quickly fixed and one candidate’s past praise of former Venezuelan President Hugo Chavez, the NDP machine has run smoothly.
In contrast, the PC campaign has appeared distant, robotic and fraught with controversy. The latest controversy has forced Mr. Prentice to call for a review of MLA expenses. Metro Edmonton uncovered the expenses last week, which included one Edmonton PC MLA who expensed $12,500 for a Christmas Party.
‘The PCs sound, in fact, like Social Credit Premier Harry Strom, the one they beat in 1971,’ wrote Calgary Herald columnist Don Braid. Albertans young enough to have voted in the last election are at least 65 years old, meaning that most voters will not remember the last time we had a change in government in Alberta, 43 years ago.
Mr. Prentice wanted this election to be about his spring budget, but Albertans appear to have decided this election is about trust and acceptability, two areas where the PCs have a poor track record.
Standing in the crowd at the NDP rally, I spoke with two senior citizens who were very excited to experience their first political rally. It is also the first election they will vote NDP. They voted for the PCs in the last election and in many elections before that, they told me.
If the Orange Chinook is real, what will the results look like on election night?
Most media coverage since the leaders’ debate has focused on the NDP and PC parties, but outside of the major urban centres, Brian Jean‘s conservative Wildrose Party is expected to be a big factor. You only need to take a quick drive outside Edmonton City Limits and you will immediately notice the campaign signs change from NDP orange to Wildrose green.
The PCs have placed third behind the NDP and Wildrose parties in most recent polls, but it would be foolish to predict a that party’s defeat even with only on day left in the election campaign. After 43-years in government, the PC Party Establishment is pulling out all the stops to ensure it wins re-election, including its recent fear campaign against the NDP.
It is also important to remember that the constant stream of polls showing the NDP leading the Wildrose and PC parties might not necessarily be reflected in the number of MLAs elected in our first past the post system (as we saw in the 2012 election when the Wildrose Party earned 34% of the province-wide vote and only 19% of the seats in the Assembly).
If a party’s support is too concentrated in one area of the province, it may win seats but not enough to form a majority government. And if a party’s support is too thinly spread across the province, it could be shut out.
On May 5 we will find out if Albertans are ready to take a break from the PC Party and embrace an Orange Chinook. It could be Alberta’s most interesting election night in 43 years.
25 replies on “An Orange Chinook howls in Alberta. Is the PC dynasty at its end?”
First past the post.
There’s your problem Alberta. (Canada!)
e.g. G. Notley’s NDP might have grown a lot faster and larger in the 1980’s and displaced Getty PCs. Or Lib’s might have done the same in the 1990’s/early 2000’s.
Even the Harper gang, when in opposition, railed against FPTP giving Chretien majorities.
re: It is also important to remember that the constant stream of polls showing the NDP leading the Wildrose and PC parties might not necessarily be reflected in the number of MLAs elected in our first past the post system (as we saw in the 2012 election when the Wildrose Party earned 34% of the province-wide vote and only 19% of the seats in the Assembly).
I worry the fear campaign will work. My neighbour told me her company circulated a memo from the CEO telling employees not to vote for the NDP. It’s disgusting and clearly the people who benefit the most from the PC regime are scared. Time to throw the bums out.
Time for spring cleaning! Let the orange chinook blow the Prentice Tory corruption and waste away! Time for some fresh air in Alberta politics!
So let’s examine the major points of the NDP platforms:
(1) CORPORATE TAX RAISE from 10% to 12%: I would encourage people to look at what the Scandinavian countries have been doing. People tend to overlook, or choose to overlook, the fact that Scandinavia can fit as examples of social democracies who are business friendly – free international trade, labour movements, and investments, a high regards on corporate contracts, relatively non-interventionist monetary policies, AND comparatively low corporate taxes. All of the four Scandinavian countries have been lowering corporate taxes for a decade now and three out of four (Sweden, Denmark, and Finland) actually have marginal corporate tax rates below Alberta’s without the proposed NDP raise (25% combined Federal + Provincial). THIS REFLECTS THE GROWING CONSENSUS THAT CORPORATE TAX IS ONE OF THE WORST FORM OF TAXATIONS with regards to economic growth and full employment.
(2) MINIMUM WAGE INCREASE from $10ish to $15 in a few years: This would be the highest in Canada and would adversely pressure the employability of young job seekers and highly unskilled labours. Simply put, businesses who sees their contribution value as less than $15 / hr (before ALL other expenses like EI, CPP, workers compensations, private health insurance, etc) will not hire them. A good case study is France where minimum wages for youths and minimum wages as a ratio to median wages (a measure of minimum wage pervasiveness to the low-skilled / no-experience sub-segments of the workforce) are among the highest in the OECD and their youth unemployment is persistently above 20% and, in some cases, above 25%.
(3) CORPORATE WELFARE:
(a) Rachel Notley and the NDP should have been more forthcoming when they pledge about more oil and gas refining in Alberta because it can only mean one thing – championing a large amount of corporate welfare (which number does not show up at all in the NDP budget) given that the vast majority of refining projects in Alberta have questionable economics. If it can be easily done, the taxpayers wouldn’t be quagmired in the North West Upgrader project. Given the track record in AB, this type of corporate welfare will be highly prone to cronyism, disproportionate risk to public money, adverse selections, and ultimately high failure rates. All of the other Centre-Left parties seem to realize the lunacies of this rhetoric and hence their refusal to jump on the bandwagon.
“According to most analysts, the financials have been — and continue to be — the most significant barrier to significantly expanding Canada’s refining capacity. Though the precise cost of a new facility is difficult to pinpoint, some put the initial capital outlay at more than $10 billion.
…As Canadian Association of Petroleum Producers spokesman Travis Davies sees it, the excess capacity in east coast refineries and the relatively thin domestic market for oil suggests there is no economic case for more refineries to be built.
“We refine more than we use in Canada, so that’s not the problem,” he said. “If we were going to refine more we would be refining it for other markets, offshore markets, U.S. markets.”
In that scenario, he says profitability would depend on the ability to produce a product that could be competitive with what is coming out of the new super refineries in Asia, where labour and infrastructure costs are much lower.”
(b) The NDP scarcely mentions, if there was any, about cuts in corporate welfare in their platform, an item that I believe would have a lot public support in Alberta from both the left and the right. If there was any seriously proposed, it sure looks like a rounding error in their budget table. Quite the opposite, really, given that they propose to add more business subsidy programs to our already complicated regulatory and taxation systems (e.g. the new hiring tax credit, among other things). Of the three major parties leading the poll, only the Wildrose is running on the platform of deep cuts to corporate welfare.
(4) JOB CREATION TAX CREDIT for the first $50k of salary: This gives incentives for businesses to lay off existing employees in order to get subsidized rates for new employees or, worse, gaming of firing / re-hiring employees to get the incentives, thereby casting doubt on the overall effectiveness of the scheme and the compliance cost associated with the program. Also, business start-ups won’t typically see the benefits anytime soon (they are typically not profitable and hence no taxes to offset) and hence won’t sway their hiring decisions much.
(5) INDUSTRY DIVERSIFICATION: Everyone will certainly like to depend less on the energy industry. From some of the points above, the best prescription is to have corporate taxes low to encourage other businesses to come and expand (at 12% corporate taxes, AB’s tax level is higher than Ontario’s, not exactly known as a hotbed of economic growth) – WHICH IS NOT WHAT THE NDP IS PROPOSING. I’m personally not opposed to a royalty review and perhaps this could be a much better source of public revenue rather than a broad increase in corporate taxes.
(6) FAIRNESS: Not about economic efficiency, but it smacks of big time class warfare and ‘voters’ bribing when only the top 10% of income earners and large corporations pay for the increased social spending. Don’t everyone including the middle class utilize social services?
All in all, the NDP economic plan is highly questionable, even if you believe that governments should have a bigger role in social spending. THERE IS NO WAY THAT I’D ENCOURAGE ANYONE TO VOTE FOR PC but I hope people would look deeper beyond the rhetorics.
Prentice is on the Titanic, and there’s a big orange iceberg ahead.
Spot on again FCS
In response to FCS. Minimum wage needs to keep up with the cost of living. $10 an hour is unsustainable and keeps people in poverty while the business owner rakes in $100 000 a year as a personal profit. As a person in business, businesses are able to write the majority of wages as an expense on their taxes, so a couple dollars more won’t ruin the business sector. If anything, with more spending power, the economy should improve as more people consume! Plus, the NDP wouldn’t be bring in a $15 minimum wage until 2018; it would raise a dollar a year until then. Australia has a $16 minimum wage and one of the best qualities of life and has done better than Canada in the global recession overall. Your argument wreaks of right wing rhetoric and is only representative of one school of economic thought.
I am totally fed up with the PCs both provincially and federal pcwith Harper at the wheel.the Tories have been spending our albertans money from the heritage trust fund!you should check it out and see what is left.we have a lot of scare tactics from big business and ceo telling us that if we vote no ,the sky will fall ,and may 6 the sun will not rise in the east!man we are in big big trouble,thanxs to who. The PCs they have screwed up Alberta so bad,I think it will take many years to clean up this big mess.i say get out there and vote and make PCs like Jim the Princess prentice,big mouth,Stephen Mandela,Rick maciver,Daniel smith,shame on you and the others that crossed the floor!i say vote For Anyone Other Than the PC govt. time to take out the garbage and there shire is a lot of it!
So let’s examine the major points of criticism FCS has made of the NDP platforms:
(1) CORPORATE TAX RAISE
Yes, it’s true that the Nordic countries are lower overall than Canada. They also have VAT (sales taxes) in the mid-20% range. And they have higher unemployment (Sweden currently almost 2% points above Canada’s). WHat is missing from your argument is what the OVERALL tax picture looks like. You know, what % employers contribute to employment and pension plans. You can guess where all of this takes it, can’t you? 🙂 Plus I don’t know anyone who wants to be paying what they pay for a Big Mac in Oslo.
The PCs could have easily “shared the pain” with the corporate world by implementing a progressive tax. And do remember that these taxes are on NET income so they would take effect only after profitability had been reached. Here’s one example of how this could have worked: Raise the small biz deduction to 1M; add a half percent to profits 1-5M and a point after that. Or some such thing. This mirrors what they did for personal income so a shared pain would have easily been accepted. Plus it would increase profitability in the small business sector that represents 95+ percent of all Alberta businesses.
2) MINIMUM WAGE INCREASE
I was almost tempted to agree with you until you brought up France. Their employment is highly skewed by the immigrant influx (Africa, Middle East) moreso than their wages. And I hear that story of how an increase in minimum wage will kill small business – simply untrue. It might raise consumer prices though and for that I give you a point.
3) CORPORATE WELFARE
I will only say that somehow Texans can buy crude in Canada and ship it to the bay area and refine it in union shops and still make money. 🙂
4) JOB CREATION
Ah, the fire/rehire gambit. Easily cured by a countdown timer. IOW, simply do not allow companies to pull the stunt they have been doing with TFWs.
5) INDUSTRY DIVERSIFICATION
You need to look at the complete tax picture for this to make sense. For instance, while we currently do not have a PST (Spoiler Alert: It is coming regardless of who gets to rule!!!) and that alone should enncourage businesses to locate here. But it isn’t is it? For a host of reasons like high housing costs, competing with the grossly overpaid oil patch for workers etc. I will agree that gov’t should not play in this arena (think Nova etc.) Half a point to you.
In terms of fairness, those that earn more should pay more. Simple justice if you will. I don’t think any party has suggested that we drop an equal burden on all regardless of income. Oh wait – the PCs did just that previously with the flat tax. But Jim changed that so even the free market fan boys have realized it wasn’t fair.
Like you there is NFW I would encourage anyone to reward bad behaviour (ie. reelect the PCs) because this time they are sure they can get it right. As if…
On corporate tax rates:
Some of the Nordic countries do have lower corporate tax rates, yes. They also have massive sales taxes. Combine these, and their tax rates are far higher than any in Canada, never mind Alberta.
On minimum wage increases:
For a good case study in an area where the economy is more similar to ours than the France system, you might want to look at Minnesota or Seattle, where increases in the minimum wage have correlated with economies improving faster than in states where this has not happened.
On corporate welfare:
I find it difficult to reconcile your arguments against both corporate welfare *and* higher corporate taxes. Apparently, corporations getting money from government to support creating jobs is a bad thing, but corporations keeping money from government for whatever they want.. including ‘dead money’ reserves as Minister Flaherty had to beg them to start spending, is a good thing.
Our industry wasn’t diversifying at the 10% rate for nearly 15 years. I hardly think raising the rate by 2 percentage points will make any significant difference to that record. Our lack of diversification is a problem caused by the oil industry being able to afford extreme wages (25% over the Canadian private sector average) to try to drain as much of our resource wealth as they can before we come to our senses and charge them rates that are reasonable given our stable political situation and well-educated populace. The cost of professional labour in Alberta is simply too high right now to allow good diversification. Climbing down from that will be painful. And we’ll need a government in power that is willing to support the people while we do.
What is not fair is how the lower and middle income families of Alberta have had to pay more tax than in practically any other province in order to support this low tax regime for the rich. Correcting that is not unfairness, it is the exact opposite, it is increasing fairness by making sure that those who can pay more without hurting do so, while those for who paying more means having to choose between food and utilities no longer have to face that choice.
When you get a chance to vote for the power of money or the power of people, choose people.! ABC!
FCS: In present AB context, no corporate tax would be corporate welfare.
FCS, I’m tempted to give you #3. It will certainly require a degree of meddling.
There are a couple of issues right now with refining in Alberta
1. No one has built a refinery for a long time and they are pretty much incompetent at it. The stories coming from the Northwest Upgrader tell of a company that has no knowledge and is letting contractors double and triple bill them for redoing activities that they’ve already done while failing to follow any kind of industry standard practices. That is putting them 2 years behind at this point on phase 1 (and billions of dollars). It is also leading to engineering safety concerns.
2. Oil companies have gotten used to being able to demand a 20% IRR on projects here. That is not at all reasonable or comparable to other jurisdictions but opportunity costs do drive corporations to the more profitable ventures.
3. Crack spread (lol) is super volatile; sometimes the value added between raw bitumen and synthetic crude is $5 a barrel and sometimes it’s $40 a barrel. That makes it very hard for companies to calculate future profits on projects that are this capital intensive. It’s more about risk than lack of profitability (which is why the BRIC program could help). I would point out that Esso (Imperial Oil/Exxon) is doing very well as they are the last remaining vertically integrated company. Oil Price doesn’t matter to them nearly as much since they actually make the refined products and the variance at that level is far smaller. There is something to be said for doing it all.
4. Companies don’t consider the income of the workers when they calculate profitability of a project, they don’t consider net social benefits, they only consider corporate benefits. A government gets to consider the income of employees as a positive, and the tax income it will make from those employees as a positive etc. While a company might see IRR =15% and say no, a government using Net Social Benefit might see 25% and say yes. A bit of contribution and meddling in that case is reasonable.
This election comes down to simply one thing. It is not about corporate tax rates, royalties, minimum wages, or diversification. It is about democracy. All the voters needed was a viable alternative, not too scary, close enough to the centre and they could switch their allegiance.
Many PC voters (probably most) are basically in the centre of the political spectrum. They want tax fairness, spending under control, reasonable environmental protection laws, smaller classrooms and shorter waiting times for health care.
For years (almost 44) they had one choice or possibly two, but never three like this time. Right wing PC’s can move to the WR and centre/left can go NDP. They’ve simply never had that choice before with two other parties looking like a viable alternative. The difference between the WR and NDP is Notley appears fresh, smart, and capable while Jean looks wooden and is too much one issue (taxes).
Change can happen quickly, look at Quebec in the last federal election. The only danger is too many new, unexperienced MLA’s having to make cabinet decisions before they’re ready. Notley, if she wins, will make mistakes. She just needs time and avoid scandals to do ok. If not, in four years, don’t be surprised to see the PC’s back.
To Fluffy point #3
Doubtful that Texas refiners are union shops given right to work legislation. Unions are non existent in Texas.
Texas is on the coast. Alberta is not. Texas can export refined product. Alberta has to fight environmentalists, celebrity activists, NIMBY’s and First Nations activism in order to export product.
@FCS Corporate taxes have been artificially low and yet the share of provincial GDP by oil and gas has increased. The right wing doesn’t know what it’s doing and has proved it by making our dependance worse while giving away non renewable revenue both royalty and tax in the teeth of a completely unsustainable inflationary boom in the industry. TFWs? Radical wage disparity? That’s only a genius move in some alternate universe. Here in reality it looks like a con.
If the NDP take power they will find ample corporate partners who are more than eager to step into all sectors, so don’t fake your worrying, it’s unbecoming.
Me, I’m just hoping they win so they can do a forensic audit of Michener, Calgary Courts, SNC Lavalin, and maybe P3 highway 63 to a willing oil company and aboriginal partnership! lol…
Sorry Doug, you are wrong. BTDT. Here are four Texas refineries that use United Steel Worker union staff and were just recently impacted by work stoppages, although they normally settle before that happens:
Houston Refinery (Lyondell), Houston, Texas
Galveston Bay Refinery (Marathon Petroleum Company), Texas City, Texas
Texas City Refinery (Marathon Petroleum Company), Texas City, Texas
Shell Deer Park Chemical Plant (Shell Oil Company), Deer Park, Texas.
Deer Park Refinery (Shell Oil Company), Deer Park, Texas
You can learn about his at http://en.wikipedia.org/wiki/2015_United_Steel_Workers_Oil_Refinery_Strike
And if pipeline brought it there, pipelines can ship the refined products elsewhere. Or truck it. Your argument is not germane.
I am sorry Alberta will be ruined just like BC and Ontario were when they elected NDP governments, and they voted the NDP in they were upset at previous leaders. They only change Alberta needs is the WILDROSE!!!
People are so naïve they magically believe that an NDP government will get all substitute teachers without any connections full time teaching contracts in the Edmonton area, that services will be better then they were with the PCs and that schools/healthcare will get money and the classroom sizes will shrink. I think I have a higher chance of winning the lottery then seeing this happen, because if there will be shrinking classes it is because things will get so bad that people will move elsewhere to live.
My family immigrated from a former Communist nation, who happens to have a Socialist President,an idiot backed by Putin and my ancestry country is heavily in debt and is owned by Russian companies and the mafia. Most young people have left to work in Austria or England in the thousands. Cost of living is HIGH, price of GAS IS HIGH, TAXES are HIGH, FOOD IS EXPENSIVE, COST OF ELECTRONICS/CLOTHING EXPENSIVE AS WELL, VERY FEW HIGH PAYING JOBS.
You see if the NDP will win- our taxes will go up yet I am sure our services won’t be better then they were with the PCS, the price to fill up will go up, we will probably have HST like Ontario does, jobs in the trades/oil industry will plummet. The emphasis on the environment/LGBT GENDER ISSUES/new sex curriculum just like Ontario will take first precedence and Conservative Hardworking and Christian(Protestant/Catholic) families will be discriminated against because their beliefs do not coincide with NDP Philosophy/Left wing agenda.
“Some of the Nordic countries do have lower corporate tax rates, yes. They also have massive sales taxes. Combine these, and their tax rates are far higher than any in Canada, never mind Alberta.”
Except that I have been talking about corporate taxes as one of the worst form of taxations compared to many others. Of course the Nordic countries have tax burden far higher than Canada + Alberta, but they have been shifting those relative tax burdens toward consumption and household income rather than corporations. It’s obviously not because that Scandinavians don’t believe in large welfare states, but they realize more and more that the old adage that ‘corporations don’t pay taxes, people do’ is more than just a cliche.
Some OECD researchers, not usually known as the hotbed for market liberalism, published this conclusion:
“Corporate taxes are found to be most harmful for growth, followed by personal
income taxes, and then consumption taxes.”
On minimum wage increases:
For a good case study in an area where the economy is more similar to ours than the France system, you might want to look at Minnesota or Seattle, where increases in the minimum wage have correlated with economies improving faster than in states where this has not happened.
Anyone can make a correlation on every single things on the planet for soft-science discipline like economics and biology; what is more difficult and useful is to separate the noise from the information. What happens in MN and Seattle also coincided with a decent economic rebound that is quite separate from the effect of minimum wages. Also, in any case, you can’t make an argument that these jurisdictions created more jobs than Texas (because they simply don’t), where minimum wages are lower.
The France case is a very useful laboratory case because even in relatively strong economic expansion times, youth unemployment never dipped below 20%,
“On corporate welfare:
I find it difficult to reconcile your arguments against both corporate welfare *and* higher corporate taxes. Apparently, corporations getting money from government to support creating jobs is a bad thing, but corporations keeping money from government for whatever they want.. including ‘dead money’ reserves as Minister Flaherty had to beg them to start spending, is a good thing.”
Why is it difficult to reconcile? Small-l liberals and libertarians since Adam Smith and Frederic Bastiat have been making the same arguments. Pro-market doesn’t always equate to pro-business (and definitely not pro specific businesses). Taxes and spending should be broad based and not targeted toward specific industries or, worse, companies; note that the latter is the practical definition of corporate welfare.
And what is the backup that companies ‘keeping money from the government’? Unless you meant the old argument that decreased taxes equals to more money from the government – a highly perverse logic. Also, this is a good conclusion from the CD Howe Institute on the dead money question.
“Yet such concerns seem misplaced. Business sector investment Canada-wide is growing at roughly the same pace as the economy, and the investment share of output is just above its 30-year average, as is typical of an economic recovery period. Meanwhile, the run-up in cash holdings after the last recession reflects long-term changes in business practices, and uncertainty about the future. Concerns over business investment, if any, would better be handled through improvements to market certainty and the investment environment through, for example, stable fiscal planning aimed at building investor confidence.”
Our industry wasn’t diversifying at the 10% rate for nearly 15 years. I hardly think raising the rate by 2 percentage points will make any significant difference to that record. Our lack of diversification is a problem caused by the oil industry being able to afford extreme wages (25% over the Canadian private sector average) to try to drain as much of our resource wealth as they can before we come to our senses and charge them rates that are reasonable given our stable political situation and well-educated populace. The cost of professional labour in Alberta is simply too high right now to allow good diversification. Climbing down from that will be painful. And we’ll need a government in power that is willing to support the people while we do.”
Can you provide more facts on the lack of diversification assertion? The share of the energy sector in Alberta’s GDP came down from 36% in 1985 to 25% in 2013. A big chunk of this period coincided with the Ralph Klein years of smaller governments. Agrium, Westjet, Intuit, etc dont count?
Of course raising corp tax rates by 2% isn’t going to bring a depression by itself, but the potential for adverse pressures is not there.
And it seems to be a cognitive dissonance that you support minimum wages of $15, the highest in Canada apart from one (remote) territory, if you are concerned on the cost of wages for business competitiveness.
What is not fair is how the lower and middle income families of Alberta have had to pay more tax than in practically any other province in order to support this low tax regime for the rich. Correcting that is not unfairness, it is the exact opposite, it is increasing fairness by making sure that those who can pay more without hurting do so, while those for who paying more means having to choose between food and utilities no longer have to face that choice.”
What larger taxes paid by the lower and middle income families than ‘practically any provinces’? Pre-2015 budget, total AB income taxes for both $50k and $75k are lower than all maritime provinces, SK, MB, and, not even a contest, QC, while slightly higher than the amounts in BC and ON). a $25k income earners, AB income taxes would be lower than ON and most of those other provinces. The basic personal exemption in AB is $18k, which is much higher than most provinces. Plus there is no sales taxes, which is usually regressive, in AB. ForHere is the tax calculator from Turbo Tax to back up the assertion.
“TFWs? Radical wage disparity? That’s only a genius move in some alternate universe. Here in reality it looks like a con.”
Pogo, go complain somewhere else (the venue is called a Federal election) when it comes to TFW. TFW is a Federal program and not provincial. Aside from that, I’m continued to amazed that social justice warriors like you truly vilify TFW program and, usually, the foreign workers who primarily want to better themselves and their families.
And I fake my worrying pretty good that you can’t see it coming.
“Australia has a $16 minimum wage and one of the best qualities of life and has done better than Canada in the global recession overall. Your argument wreaks of right wing rhetoric and is only representative of one school of economic thought.”
That’s right, let’s always politicize economics issues according to your ideology. The minimum wage question is probably one of those topics that have a pretty decent consensus among economists. Here is a report commissioned by the Ontario’s Liberal government (The Wynne government chose to ignore the recommendations of the report, but that’s another story).
““In the Canadian context, researchers have generally found an adverse employment effect of raising minimum wages especially for young workers… More recent studies find larger adverse employment effects… Typically those studies find that teen employment would drop by 3%-6% if the minimum wage is raised by 10%… Disemployment effect were substantially larger for workers who have been in minimum wage jobs for a long period of time (i.e. permanent minimum wage workers…” (pg 36/91).
You might want to read the last sentence again in particular – it says that current minimum jobs are in more danger to disappear upon an increase in min wage level. I do hope that you realize that there are better ways to address poverty rather than distorting the labour market for low-skilled workers and screwing small businesses.
The Australian case always show up in minimum wage discussion. I brought up France as a case study so let’s look at how Australia differs from France.
France tops the chart for the ratio of minimum wages relative to median wages (a measure of the relative level of minimum wages domestically and its pervasiveness to the sub-segments of the labour market that ‘clears’ with lower level of wages).
Obviously there are more structural rigidities than just minimum wages in France. In Australia economic growth was / is much stronger and that pushed down the % portion of the population that would otherwise earn sub-minimum wages relative to that in slow-growth economies like France; minimum wages relative to median wages in Australia is in the low-50% vs low-60% in France. Australia’s ease of employment regulations relative to France also put businesses at less risk for hiring people, especially those with no work experience. By the way, Australia’s recent unemployment rate has been hovering around 6% in the last one year since global demand for commodities tapered off and their unemployment rates hovered 7-10% in the 1990s before the start of the commodity booms. Doubt that their high minimum wages help the situation, although overall Australia’s economy is much more efficient their France.
Finally, Autralia’s overall tax burden at all level of governments is quite a bit lower than Canada’s: 26% vs 315, respectively. Their governments also have less command and control on the economy – less centralization on healthcare (i.e. more private sector involvement), less government-owned corporations, etc.
“2) MINIMUM WAGE INCREASE
I was almost tempted to agree with you until you brought up France. Their employment is highly skewed by the immigrant influx (Africa, Middle East) moreso than their wages. And I hear that story of how an increase in minimum wage will kill small business – simply untrue. It might raise consumer prices though and for that I give you a point.”
Okay, let’s look at Texas then where they have a big low-skilled immigration influx as well. Their unemployment rate for 16-24 yo is currently at ~13%, 10 percentage point less than France’s on a better day. Also, the paper that I referenced specifically compared France vs Germany, you can’t say that Germany doesn’t have its own substantial low-skilled immigrant population.
If you can point out arguments on the impact to small business or cite credible studies, it’d be more helpful than saying that it’s simply untrue.
“3) CORPORATE WELFARE
I will only say that somehow Texans can buy crude in Canada and ship it to the bay area and refine it in union shops and still make money.”
That’s because Texas have excess capacity on refining capacity, especially for heavy oil. Their labour costs for capex and opex are also quite a bit cheaper.
Watson, thanks for the comments and they are interesting points.
“Oil companies have gotten used to being able to demand a 20% IRR on projects here. That is not at all reasonable or comparable to other jurisdictions but opportunity costs do drive corporations to the more profitable ventures.”
Not sure that this is unreasonable as personally I won’t be excited to invest at a volatile, massive capex business like refining below a 20% pro-forma IRR (presumably a levered one too).
As for the argument for net social benefits, I find it highly unconvincing that a refinery should count as public goods the way that roads, highways, etc are (and when it comes to highways, in this day and age of IT tracking and billing, the public goods argument is becoming less and less convincing). A full model of net social benefits, fraud with uncertainties and forecasting errors as they are, must also include the deadweight loss that comes from the government financing sources. I’d say let the private sector bears the full risk / returns rather than the taxpayers.
Thanks, Ugly Dog. Can go on and on but people are voting today. I can only say that my confidence in AB will be quite shaken if the NDP won this thing. I left Eastern Canada (Toronto) to avoid these kinds of nanny state mentality. Of course, they are not the worst type of NDPers but the hypocrisy about fear-mongering from top-down is getting barf-inducing.
More like the scathing red of communism coming over our province. Saskatchewan and BC became successful for one reason and one reason only: getting rid of the NDP. Watch people leave as well as the corporations that will be punished for their success with soviet-style corporate tax rates…
Hammer, sickle, and Notley.
I cannot believe people who are upset that the NDP party has been voted in with a majority govt.people say that with PREMIER RACHEL NOTLEY as leader of our great province will be worse off,and lose lots of business and jobs,which I feel they will be proved wrong!i believe she and the party will wake up every morning and try to do what is best for all The PEOPLE of Alberta. If you check out some of the facts about the PCs with JIM THE PRINCESS PRENTICE,he raised our TAXES 58 TIMES,ye 58 times since he has taken over as leader in the LAST 8 MONTHS!!!!!!!!,!!,!,!!!,!!,!!!,!,!!!!,!!, at least our new premier did not hide the fact that they would have to raise taxes !think about it people 58 times in 8 months!the princess I’m sure did not raise any corporate taxes 58 times in 8 months!who has more money,the working people of this province,or the corporate companies,and big buiseness!at least with he NDPIn powering am sure they will fix our health care,our teachers,nurses ,health care staff,and I’m sure they will fix our RED ALERT system with our ambulance s big mouth MANDEL I hope you didn’t need an ambulance when there were NONE AVAlABLE!oh I forgot you are one of the PCs who get special treatment!get in line MANDEL!its just to bad that the PCs still have 10 seats,it would have been better if they only had1 seat,bye bye PCs and good riddins!