Categories: Capital Read, Inside the Queensway

Economic cognitive dissonance …

by kadyomalley on Thursday, July 24, 2008 11:59am - 0 Comments

So, just to make sure that we’re all clear on this: Don Drummond is an oracle of economic wisdom when it comes to issues surrounding the labour market, an aging workforce and global competiton, but should be ignored entirely when he challenges the claim that the Liberals’ Green Shift will unduly harm rural Canadians and send gas prices soaring into the stratosphere. Everyone got that? Good.

[Oily the Splot was unavailable for comment.]

Hot off the HRDC newswire:

Don Drummond to Head Labour Market Information Advisory Panel

OTTAWA, ONTARIO – The Honourable Monte Solberg, Minister of Human Resources and Social Development, and the Honourable Murray Coell, British Columbia’s Minister of Advanced Education and Labour Market Development, Co-chairs of the Forum of Labour Market Ministers (FLMM), today announced that Don Drummond, Senior Vice President and Chief Economist of the TD Bank Financial Group, and former Associate Deputy Minister of Finance Canada, will chair an Advisory Panel on Labour Market Information.

“Providing timely and relevant labour market information to all

Canadians is critical to our government’s goal of creating the best-educated, most skilled and most flexible workforce in the world,” said Minister Solberg. “Mr. Drummond’s demonstrated leadership in the private and public sector and his knowledge of the competitive challenges facing Canada make him ideally positioned to lead this important work.”

The five-member panel will advise federal, provincial and territorial ministers on how labour market information can contribute to Canada’s economic growth and efficiency over the next decade and better respond to the growing information and planning needs of employers, workers and learners. The panel will report back to the FLMM by the spring of 2009.

“All provinces are keenly interested in addressing the twin challenges posed by global competition and an aging workforce,” noted Minister Coell, FLMM provincial Co-chair. “Under Mr. Drummond’s leadership, the advisory panel will examine labour market information and determine the best options to support the growth of the skilled labour pool needed by all employers.”

Tags: conservatives, don drummond, Green shift, Monte Solberg, Stéphane Dion's Permanent Tax On Everything

More by kadyomalley

JMD

There may be real problems in the labour market to which Don Drummond can apply his considerable talents. There is no climate crisis (unless you consider this summer’s endless cool, rainy days a crisis).

So when Drummond comments in favour of Dion’s Green Shaft plan, he is joining in the fight against the phantom menace of global warming. In that case, it is fair to critize Drummond’s judgement. He seems to accept at face value the the fudged output of computer climate modellers purporting to show there is some sort of cliamte crisis underway that is going to set the earth on fire. Drummond would benefit by paying attention to what is really going on in climate science, not what the main stream media say is happening.
Scott M.

Let me guess — if someone were to link the climate crisis with the Arctic’s heat wave, you’d be the first to refute it. But you have no problem linking “this summer’s endless cool, rainy days” to your contention that there is no climate crisis.

Am I right?
T. Thwim

JMD.. Just Meaningless Denial?

If you were paying attention to what is really going on in climate science, and not to what *any* media is reporting (mainstream or no) you’d be holding the opposite view.

Since you’re obviously not a scientist, here’s some basic laymen’s descriptions and debunking of the most commonly held criticisms of AGW.
http://en.wikipedia.org/wiki/Talk:Global_warming/FAQ

http://www.skepticalscience.com/argument.php

While I have no doubt you’ll not read them, perhaps those who are actually interested in the truth might use them as starting points to find out for themselves what’s actually going on.
Wayne

I only have one question for so called academics how can the price at the pump not go up? consider the following (1) how does gas get to the pump -> deisel trucks mostly (2) is carbon tax on diesel -> yes therefore = _________ price goes up … then again you have to consider the source of analysis : Mr. Drummond was responsible for tax policy, social policy
http://www.todaysautonews.com jwl

I don’t think these false consciousness arguments Liberals seem to be using are going to be a vote winner.

I think consumers understand all too well what’s going to happen and having MPs, and other panjandrums, lecture them about how they are wrong to believe what they do is not going to help.
Scott M.

Indeed, you’re right Wayne, some inputs will go up and that will increase the price of gas slightly.

I’m not sure what you’re getting at though — when sulfur regulations came in, or the requirement for only unleaded gas came in, no one claimed that it was a “tax on gasoline” despite the fact that it raised prices.

Don’t think regulation is a fair comparison? Fine.

When was the last time someone complained that gas prices would go up when truck companies had to pay more for their licenses? Was that called a “tax on gasoline”?

The fact of the matter is hundreds of government decisions increase or decrease the cost of products every year. If every one was called a “tax on gasoline” or “rebate on gasoline”, that would be all we hear about.

As such, the government, media and the rest of society calls *doesn’t* think of an tax-induced increase on transportation costs for gasoline a “tax on gasoline”.

Those who make the arguement that the Liberals are increasing taxes on gasoline have a problem with the English language and with current Canadian usage. It looks foolish to blame a political party for using the language in the way society accepts.
Sisyphus

Great. Another cookie cutter TV bank economist
whose chief talent is the 20 second sound bite
and whose chief interest is keeping a heavy
heel on wage growth.
The economic orthodoxy equivalent of Jim Stanford.
Jim Stanford? Why not?
http://www.todaysautonews.com jwl

Scott M Would ‘tax on oil’ meet your exacting standards or would that too not be in line with current Canadian usage?
Christy

Seems to me that comments regarding Green shift etc. are just efforts to change the topic, doesn’t labour market suggest that this is the cover for the Conservative’s immigration policy?
Geiseric the Lame

The landed class may have changed over the years but the game hasn’t. Anybody who isn’t Herbert Spencer is just a prop.
MJH

Industries that will pay carbon taxes, without complete tax reduction offsets, will pass the increased costs on to consumers like any other business expense! The cost of consumer goods will increase for all of us; only a fool will spin otherwise.
Scott M.

MJH, you’re absolutely right. And no one (serious) is saying that the cost of consumer goods won’t go up a bit.

What they are saying is that if you make the right choices, after you figure in the tax relief you are getting, you will be better off.

Are you up to the challenge?
Scott M.

Sorry, I couldn’t resist the tag line. In all seriousness, isn’t it a bit ridiculous to talk only about the negative aspects of the proposal without at least acknowledging the other side?

I certainly hope that the general public aren’t dumb enough to fall for that.
Geiseric the Lame

“Industries that will pay carbon taxes, without complete tax reduction offsets, will pass the increased costs…”

They can try but that means yielding competitive advantage to companies within the industry that manage their carbon costs more effectively but if you want to drag oligopolistic resilience into the equation I’ll be more than happy to oblige you in bemoaning the new challenge it would present.

but leave me out of any talk about collusion.
Scott M.

jwl… it’s not a tax on oil, it’s a tax on carbon. It’s related to the carbon output of anything… oil, coal, natural gas, etc. It’s going to be put on at the wholesale level of the products, and they are going to exclude regular gasoline from the tax as the excise tax is already the equivalent of about $42/tonne (and, after the fourth year the carbon tax will be at $40/tonne).

I don’t accept that argument myself (I would prefer to apply the carbon tax on top of existing taxes), but hey, I’m not designing the liberal’s plan.

Things that use these carbon inputs (including the production of electricty via coal, etc) will have increased costs. But it’s not going to be the end of the world. The people who shift their habits so that they benefit from the tax rebates will be better off. People who choose to use more carbon will be worse off.

That’s the whole point.
Mike Horn

Every year taxpayers employees and consumers pay more and more money so we can cope with the climate crisis. Drought fire and pestilence are a growing problem here in the West. Eastern industries, like SUV makers, are adapting indirectly. It would be nice if the government was picking up these costs instead of adding to them but they live in the same economy we do. Canada doesn’t really have to reduce emmisions to protect industry and infrastructure, it’s just a good idea.

A private sector solution would probably involve insurance and lawsuits. Say if the courts ruled that emmiters are partly responsible for increasing weather costs, then those emmiters would need insurance against future payouts. Insurance practice would dictate very high rates to cover rapidly rising risks and those rates, unlike a tax, would be hard to predict or control. The upside would be that insurers tend to regulate stupid practices out of existance without much concern for who gets angry.

I’m just saying
Brian

The only person who should be ignored entirely is Kady and her frothing from the mouth hatred of everything Conservative and shameless shilling for the Liberals.

There is no evidence from the article that a Conservative was even aware of what Drummond had said or asked about his comments. Its easy to ignore something entirely when you don’t know it exists. Grow a brain.
Shenping

“Industries that will pay carbon taxes, without complete tax reduction offsets, will pass the increased costs on to consumers like any other business expense! The cost of consumer goods will increase for all of us; only a fool will spin otherwise.”

Ummm . . . that’s the stated goal of the plan, not a secret hidden consequence. The tax offsets are reduced income taxes, so that consumers have more money to spend. Classical economics would suggest that consumers then choose more goods that don’t have the carbon-taxed inputs, reducing carbon output.

Taxing one input (carbon) & giving an offsetting decrease to the same firm would be rather pointless, other than to increase jobs for accountants.

In practice, when an input cost goes up, firms tend to pass part of the cost along to the customer and bear part of the cost themselves, unless there’s a monopoly. Supply and demand determine prices. Input costs only effect supply, so firms take some of the cost to maintain volume.
Wayne

Shenping : you hit the nail on the head however you did not take it to it’s logical conclusion = how on earth can you make it revenue neutral if you do not know how much money you can ‘ Promise ‘ to give back to the taxpayer since you can not determine what the difference is between a natural market price increase and the amount due to the carbon tax (the next sound you hear is the coffee mug being dropped by the auditor general) to get the necessary information you would have to understand and know the exact amount at each stage of the supply chain UH! OH! starting to sound like a GST isn’t it?
http://deleted Sandi

comment by Brian on Thursday, July 24, 2008 at 4:52 pm:

The only person who should be ignored entirely is Kady and her frothing from the mouth hatred of everything Conservative and shameless shilling for the Liberals.

Oh, Brian – I wasn’t aware that Canadians are only allowed to say positives about Harper and negatives about every other party – did this pass in the House? Was it part of Harper’s crime package?

Harper – keep Drummond busy so he can’t comment anything positive about Dion or any other party….another Harper tactic.
Caper

Brian
If those in charge of appointments did not critique Drummond, then it is they that need a brain
Shenping

OWWW Zing!! You know, Wayne, when you’re not defending Harper you write some pretty good stuff.

I suspect the idea would be to calculate the projected revenue if oil consumption stayed at its current level, which, if you’re not a pure classical economics guy, it probably will for some time. It takes a long time to sell a SUV these days. And then decide how to distribute an equal amount of income tax cuts based on current income levels. Although in practice, I don’t think input price increases are passed 100% to output prices as long as profit is above a certain level.

Come to think of it, how do you ever tell the difference between a “natural” price change and one caused by a specific government policy?

The short answer is I don’t think you can ever make any change in tax policy perfectly revenue neutral, as Wayne says. There are models & methods for making estimates, but that’s all they are. The predictions will be accurate within x percentage points y percent of the time. The flip side of this is that there’s no control group to decide. 50% of Canadians pay the old tax, & 50% pay the new. See who is better off. Not. That’s just the nature of financial projections. They’re better than nothing, y percent of the time.