Worthwhile Canadian Initiative

Spending on Public Health Programs: Yet Another National Divide

In 1974, the Lalonde Report titled “A New Perspective on the Health of Canadians” argued that we needed to look beyond traditional health care focused on medicine. If we wished to improve the health of the public, a broad determinants of health approach focused on things like lifestyle choice and behaviour  needed to be pursued. 

Subsidies on Interest Income to increase Aggregate Demand

File this one under "crazy ideas that might be worth thinking about, even if only to understand our own theories better".

The mathematics generation gap

Here's my theory: Some students struggle with economics because they do not fully understand the mathematical tools economists use. Profs do not know how their students were taught mathematics, what their students know, what their students don't know - and have no idea how to help their students bridge those gaps.

Why increased immigration won't fix population aging

A popular solution to the problem of population aging is to simply increase the rate at which we admit immigrants. This sounds reasonable: the age profile of new immigrants is generally younger than that of the existing population. But increased immigration can't do much more than make the problem slightly less bad. (See also this CD Howe Institute study.)

A short history of population aging in Canada

I'm still playing around with demographic data, and one thing I've done is trace out a timeline of how we ended up having the population aging problem in the first place. I even prepared an animated gif file: a WCI first.

Population aging has begun in earnest

Last year, I blogged about the demographic projections that Statistics Canada had prepared in 2005, and I noted that data post-2005 were tracking the lower bound for the working-age share of the population. They've since released another set of projections starting in 2010, and things don't look any better. The sharp rise in the retirement-age population has already begun, and very little can change the demographic trajectory of the next 20 years.

Asset Management

My brother thinks of himself as a farmer, which he is. But I think of him as an asset manager. He has chosen to hold his assets in land, tractors, ploughs; and that's him, driving his tractor, pulling his plough over his land, fixing the tractor, fixing the plough, managing his assets. He earns his income doing the 1001 things he needs to do to get the best return from his assets.

"This new priesthood"

A larger and larger proportion of the general income of the nation is every year expended upon medical treatment; each decade show a quite disproportionate growth of the classes of the population which earn a livelihood by medical services. The grip of the doctor and the chemist grows continually stronger.

Probability Theory Question of the Day

A fun question based on something one of my wife's doctors told me. It turns out the information I received from the doctor was likely incorrect, but the question the information is too good not to use, so I'm just going to pretend it is legit. Here goes:

A Strong Dollar?

American economic policy debate has recently taken turns familiar to Canadians - health care sustainability, debts and deficits, and most recently, the value of the dollar. 

Why is there HST on used furniture?

The harmonized sales tax is a value added tax. 

At each stage of production, the government collects taxes on the value added at that stage.

Suppose, for example, a carpenter buys $10,000 worth of wood, makes it into furniture, and sells the furniture for $15,000.

At a 12% tax rate, the carpenter pays $1,200 HST when he buys the wood. He charges his consumer $1,800 HST when the furniture is sold.

The carpenter then sends the difference between what he collects and what he paid out - $1,800 - $1,200 or $600 - to Canada Revenue Agency. (The $1,200 rebate the carpenter gets for the taxes he pays is called an "input tax credit".)

Notice that the $600 the carpenter sends in to the CRA is equal to 12% of $5,000 - in other words, it's a tax on the $5,000 of "value added" by the carpenter through furniture production.

But with the population aging, downsizing, and selling off their 1970s dining room suites, who needs to make furniture any more? Used is where it's at. 

Should economists be licensed?

In the US, as in most other OECD countries, unionization rates have been falling for decades. Yet this decline has been counter-balanced by a rise in professional licensing. This picture, taken from Kleiner and Krueger (ht Thomas Lemieux), says it all:

Cities, Capital Cities and Economic Performance

It is the conventional wisdom that urban centers with their concentrations of human and physical capital and their dense social networks are engines of growth.  One exception to this is can be the case where a dominant urban center by virtue of its institutional monopoly on a country or region’s economic life is able to extract economic rent from the surrounding country side and ultimately kill the goose that laid the golden egg. 

How not to evaluate immigration policy

The Fraser Institute has released a study on immigration policy, but there's not much point in telling you its conclusions: the questions they ask are not worth answering.

Why it's hard to profit from northern asparagus

Life explodes in springtime: green grass, flowers, blossoms. Asparagus, strawberries, rhubarb. Fiddleheads.

These seasonal crops all thrive in northern climates. So why is it hard to grow them profitably? There are boring, obvious explanations: labour costs, the high Canadian dollar, and so on.

This post explores another reason for asparagus unprofitability. Canadian asparagus is ready to harvest in April, May or June, depending upon the local climate. The Peruvian and Mexican asparagus crops, on the other hand, are available in Canada starting in January or February. 

As the Border turns: Cross-Border Shopping Revisited

According to a report in the May 11^th edition of the Globe and Mail, the U.S. government is pressing the Canadian federal government to loosen the rules so that fewer Canadians have to stop and pay duties as they return from a trip to the United States:  “The personal exemption issue has been formally raised by the United States trade representative,” an official with the U.S. embassy told The Globe and Mail on Wednesday.

Are gifted education programs a waste of money?

In my latest Globe and Mail piece, I summarized a study by Sa Bui, Steven G. Craig, and Scott Imberman on the effectiveness of gifted education. The authors look at students in a large urban American school district who were evaluated for gifted programming in grade five. They ask: Who does better on the grade 6 and 7 standardized tests, the students who just made it into the gifted program, or the ones who fell just below the gifted threshold? 

The 2011 election and Somebody Else's Problem

In Life, the Universe and Everything, Douglas Adams posited the existence of 'SEPs':

An SEP is something we can't see, or don't see, or our brain doesn't let us see, because we think that it's somebody else's problem.... The brain just edits it out, it's like a blind spot. If you look at it directly you won't see it unless you know precisely what it is. Your only hope is to catch it by surprise out of the corner of your eye.

The technology involved in making something properly invisible is so mind-bogglingly complex that 999,999,999 times out of a billion it's simpler just to take the thing away and do without it....... The "Somebody Else's Problem field" is much simpler, more effective, and "can be run for over a hundred years on a single torch battery."

This is because it relies on people's natural predisposition not to see anything they don't want to, weren't expecting, or can't explain.

The echoes of internment

The internment of Japanese-Canadians during the second World War was one of the less noble points in Canadian history. But this post is not about guilt or shame.

Economists are increasingly aware that history matters. A recent survey by the Harvard-based Canadian economist Nathan Nunn describes how decisions made centuries ago - for example, the types of institutions set up by European colonial powers - still shape countries' economic development. 

Japanese-Canadians have higher incomes and education levels than the population as a whole. Japanese-Canadians also have the highest rate of intermarriage of any ethnic group. The National Association of Japanese Canadians attributes this partly to the relatively small size of the Japanese-Canadian community, and partly to the community's scattered distribution.

People of Plenty

American historian David Potter’s book People of Plenty argued that resource abundance shaped the American attitude towards possibility and opportunity.  Abundant resources set the stage for wealth accumulation and created a society that believes that everyone can become rich through their own work and effort and that initiative and opportunity are the key to social mobility and success.