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Last I checked, Quebec was spending close to 2 billion a year on its childcare program. Taking that national would cost about 10 billion a year, to a first approximation. What irritated me about the Paul Martin plan was the 'three card Monte' aspect of it. If you listened to the Liberals back in 05/06, you'd think that there was going to be a public daycare on every block, but they were doing it for $1billion a year. Something didn't add up. The choice confronting voters was not $100 a month vs heavily subsidized universal care for all. Maybe you liked one better than the other, but (surprise) the politicians weren't accurately representing the choice that we faced.

Moving to today's policy announcement, I think the Liberals ought to be clear what they mean by a 'national program.' Are they ponying up $10 billion a year? Or a few more spots in a few more provinces?

I have a 2 1/2 year old, and a bunch of friends have kids about the same age. The problem I see is not that people can't afford care, it's that care - especially good care - is simply not available. For whatever reasons, the market is unable to provide. So I think the daycare issue is insufficient supply. It's a HARD job to do well, and people with the skills and inclination to do it can make more money doing other things. No way, no how, are good caregivers earning marginal product. If we want more daycare spots and more qualified caregivers, then why not subsidies supply? Starting with wages for qualified workers.

AB has a too small, but reasonable program for accrediting and giving money to day homes:


Maybe the liberals could start with something similar on a national scale. And given that childcare workers earns so little, it's basically giving money to poor people. Two birds with one stone.

But somehow - and I would be greatly interested in an explanation as to why - Stephen Harper's government has managed to turn the recession into a political asset.

This has puzzled me, too. During the last election the conservatives boasted how Canada was going to completely avoid the recession and that surpluses would remain as far as the eye could see. Even after the conservative mini-budget immediately following the election, the one that was more concerned with kicking the opposition while they were down than dealing with crashing stock markets, after the income trust turnaround (it was the right thing to do, unfortunately), and Stephen Harper proclaiming that there were great buying opportunities in the stock market as it proceeded to plunge even more, you'd think they'd be scraping by. The 'stimulus' is broadly popular, even though the opposition forced them to do it (and conservative ridings are benefiting disproportionately). I have to respect the irony in all of that. It's why I like to passively follow politics.

I surmise that the coalition was perceived as a bad idea to most Canadians who don't understand how our government actually works. I guess it seemed undemocratic? If the opposition merely withdrew all support after that partisan hackery of a mini-budget and there was another quick election (with them possibly campaigning on the coalition) things would likely be very different. The conservatives would have had a hard time explaining themselves amid the carnage that was happening at the time. I don't know that we'd be better off, though. I despise the conservatives for almost all their non-economic policies and they've made some poor economic decisions (GST cut, where and income/corporate tax cut would have been better), but the opposition hasn't put forward anything that has made me nod in agreement.

How I wish for the days of Paul Martin being where he belongs (as Finance Minister). He made a poor Prime Minister. :-/ May have been better if it meant keeping flaherty away, though.

But somehow - and I would be greatly interested in an explanation as to why - Stephen Harper's government has managed to turn the recession into a political asset

I'm guessing here but I think a lot of Canadian voters evaluate the performance of Canada's economy by using the US's performance as a benchmark. This is inevitable, given the amount of US media the average Canadian sees. With that in mind, although Canada has been in a recession, the downturn up here is not nearly as bad as what is going on in the US. The average Canadian, when evaluating the Canadian economy, notes that it is not nearly as bad as what the media makes it out to be (with that being the US recession). Or to put it another way, the Canadian economy under Harper is out-performing expectations, with those expectations based on the US economy. And I think that translates into the political asset you speak of.

I'd be interested if either Nick or Stephen (or anyone else) has thoughts on Patrick's comment above.

From the perspective of microeconomics, the comment just doesn't make any sense (there's a shortage of supply because prices are too low - shouldn't this drive prices up?), but it's a comment I hear often and Patrick is one of the most sensible regular commenters here so I can't dismiss it.

But I can't understand *why* there should be such failure of the market to provide good day care options. There aren't any significant barriers to entry that I am aware of. Is it just that since historically child care has been 'free' (kids in school or taken care of by mom) we have an unrealistically low notion of what it should cost? There must be a recognized explanation out there...(?)

But I can't understand *why* there should be such failure of the market to provide good day care options.

Depending on the province, daycare is a heavily regulated industry. I'm not saying that it shouldn't be, but there are regulations that inherently make it expensive. There are minimum child:caregiver ratios that are as low as 3:1 in some provinces for infants. If the caregiver makes even a rather lowly $25K/year, that's almost $700/month per infant. That only factors in the labour costs and not the real estate, equipment, etc!

Declan: yeah, it does sound like rubbish but that's what I see. Maybe it's the market pricing care like warehousing with a guard when what we need and want is something closer to school for little kids and teachers.

Care for infants is impossible to find, and when it is available it is very, very expensive. Single moms really take it in the teeth. Most people would rather be with their infants anyway, so it might make more sense to expand the parental leave system and just give poor people money.

Other issues on childcare (as well as the excellent points raised above): lots of parents work part-time/evenings/weekends. Few formal, regulated centres provide such care (which gets back to Steve's point programs for rich people).

In terms of market failure in childcare - how about the tax wedge and imperfect ability to monitor quality?

A typical home child care provider is an at-home parent with a low- to moderate- (as reported for tax purposes) income. She could face a high effective marginal tax rate due to child benefit tax backs etc. But given her low opportunity cost of time (she's at home looking after children) she's prepared to accept a fairly low wage rate if she's paid in cash. (The child care expense deduction in the income tax system is useless in the majority of cases since, taking into account CPP, CCTC etc typically the provider will face a higher marginal tax rate than the paying parent, so paying evasion is more advantageous).

There is absolutely no way that a formal child care centre that has to pay minimum wages, payroll taxes, capital costs etc can compete.

At the high end, child care centres also have to face competition from overseas workers brought in through the domestic worker program.

I think there's also something problematic about the way that child care educators assess quality of care. My kids have been in some of Canada's "best" formal child cares (SFU's centre and Carleton's). They were singularly unimpressed by the quality of care they received there. Our nanny seemed o.k. at the time but now the kids will reminisce about "do you remember how she used to shut us in..."

The problem with the market is that it's really really hard to identify a good day care option even when it's staring you in the face.

When I'm feeling guilty I read Phillip Larkin: http://plagiarist.com/poetry/1053/

"Most people would rather be with their infants anyway, so it might make more sense to expand the parental leave system and just give poor people money."

I'm glad there's something we can agree with after this thread. :-)

On the Conservative success despite the recession.

First, on average across the country I don't think its been that much of a recession, in particular as was pointed out in comparison with the States.

Then the Liberals have shot themselves in the foot politically a couple of times, first with the coalition, then with the rush to an election no one wants.

Third, the Conservatives have used the stimulus plan to engage in a combination of pork barrel politics and propaganda that might not appeal to us academics, but works well with the population at large.

And finally, they've been running a near constant barrage of negative advertising for months (I can't say unprecedented because they did the same thing with Dion.)

I'm not surprised by their standing in the polls at all.

"The Chrétien government did better, but much of their success can be attributed to not reversing the policy decisions of Brian Mulroney's government."

And having David Dodge around. The Liberals didn't really grasp the situation Canada was in until he read them the riot act.

"I would be greatly interested in an explanation as to why - Stephen Harper's government has managed to turn the recession into a political asset."

You would think the recession - and this one in particular, because it has been said to have exposed the flaws of laissez-faire capitalism -would be a boon to the left. But then again, Harper's government is behaving a lot like a left-wing party, spending oodles of cash to stimulate demand.

Declan: agreed. If there really is an excess demand for daycare at existing prices (if some daycares have queues of people wanting a space at the current price), then that really is a puzzle. Why don't they raise prices? Barriers to entry might explain why supply is low, but won't explain excess demand. Why doesn't price rise to the market-clearing equilibrium?

If anything, I would expect some sort of efficiency wage argument to predict prices being too high ("take good care of my kids or your daycare will be unemployed") and excess supply of spaces.

A populist prejudice against "price-gouging"?? Daycares/daycare workers thinking of themselves as semi-charitable organisations, and unwilling to price at what the market can bear?? And true profit-maximising corporations scared to enter the market ("how dare your giant greedy corporation profit at the expense of my kids, exploiting us poor working mothers")??

Those are crap explanations, with little evidence to support them. But they are the best I can do.

Jeffrey Simpson's explanation:

"the majority reaction in such circumstances is...that the times are wrong for visions and big changes, that instead we want governments that “manage” the crisis, that attend to the business of helping today rather than summoning us to think about the great issues of tomorrow."


I saw that, but I wasn't sure that it was a satisfactory answer - what's different this time?

OTOH, after the last two recessions, the governing party ended up going into the election with new leaders.

"... - what's different this time?"

If by the last two recessions you mean the tech bubble bursting and the early 1990s recession, both those times the right was split. This time the left - Liberals begin a party that campaign from the left and govern from the centre/centre-right - is split.

I was thinking of the 1982-83 recession - the tech bubble hardly counted as a recession in Canada.

On Nick's comment re greedy corps: there might be some of that mindset. But I'd still expect to see some high-end daycares for rich people anyway. Compare health care. In general, Canadians are opposed to making profit from sick people, but that doesn't stop private diagnostic clinics, for example. To my knowledge there're no such thing as high end daycares. But there are nannies imported from other countries. There's even special provision in immigration law for bringing nannies to Canada. So rich people are spending money on care for their kids, it's just not daycare. So maybe part of the problem is that the people who want daycare tend to be people who can't afford to pay the equilibrium price for good care. As a result quality of service erodes, wages for workers are pushed down (since it would be the main cost to a daycare firm), as a result people don't want to go into ECE because it doesn't pay well, which erodes supply, etc ... lather rise repeat.

Another thought that occurs to me is that there aren't many economies of scale for daycare providers. Especially when it comes to labour. There may even be diseconomies of scale, i.e. our caregiver uses her own home, which she would live in anyway.

Well I guess I'll have to revise my theory.

"Another thought that occurs to me is that there aren't many economies of scale for daycare providers."

I think this is very much part of the problem. My mother looked after neighborhood kids in our home for a number of years. Though doing this for pay, full-time, and there always being considerable demand for her services, she felt she could never take more than a maximum of four at a time. I tried to convince her to do things on an industrial scale - we had a rather large back yard and if we fenced it off we could probably have fit 40 or 50 kids back there - but she wouldn't go for it.

"we had a rather large back yard and if we fenced it off we could probably have fit 40 or 50 kids back there"

In AB I foresee a whole new line of business for feedlot operators.

"I would be greatly interested in an explanation as to why - Stephen Harper's government has managed to turn the recession into a political asset"

My suspicion is that it has made Canadians picture this recession being managed by the Liberals and found them wanting. Additionally, the recession has highlighted Harper's flexibility (deficit spending) which I suspect he needed in the public eye. I wouldn't go so far as to say he's growing on people, but he is increasingly understood to be more complex than the initial impression he made. The song response pointed to this in a way.

I think the Conservatives have not suffered in this election because job losses have mostly been concentrated in Southern Ontario and around the Montreal areas, which don't tend to vote Conservative anyways.

I think the graph on this site illustrates the point very well:


Outside of a few key Liberal-leaning regions, the recession has actually been quite mild.

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