Worthwhile Canadian Initiative

Milton Friedman on the Euro, Inflation Targeting and the Zero Lower Bound, Circa 2000

In 2000 Milton Friedman gave a keynote address to the Bank of Canada, which is available for download here [PDF]. The keynote itself is interesting, but moreso are his responses to a Q&A session, where he talks about issues such as the future euro and monetary policy at the zero lower bound.  Here, without commentary, are some hilights:

Who Produces CO2equiv Emissions in Canada

Environment Canada has emissions data on 537 facilities in Canada. As Andrew Leach points out these only cover roughly 35% of emissions in Canada, but they provide some useful data.

Unfortunately the emissions are not ranked by who emits the most.  So I took it upon myself to do so, with some pretty big technical support from Rob Schmidt.  The numbers are as follows:

 

Those Who Forget History

From today's Globe and Mail:

In the decades prior to 2000, Canada made progress in moving away from being an economy of resource extraction. By that year, as labour economist Jim Stanford has pointed out in an analysis for the Centre for Policy Alternatives, well over half of Canada’s exports consisted of an increasingly sophisticated portfolio of value-added products in areas such as automotive assembly, telecommunications, aerospace technology and more.

But in the past decade, the clock has been turned back. Because of a boom in the oil and gas sector and a range of other factors, the economy has reverted toward being a staples-driven enterprise. 

But were things really so great back then? What were people saying about the low dollar and manufacturing? I decided to have some fun with LexisNexis and CBCA.

Bleg: Ph.D. Thesis Defense Advice for Economists

Not so much a blog post as it is a cry for help.

I am finally defending my thesis on Tuesday.  I am at a Business School (Ivey), but the thesis, Revenue Management in Multi-Firm, Multi-Product Price Competition is of a traditional Industrial Organization sort.

For those of you who have been through the process - any advice? I could use the help, but I am also hoping this thread is useful for others who will go through the same process.

Misconceptions about Electro-Motive Diesel London

I was delighted to see Martin Regg Cohn write on the closure of the Electro-Motive plant in London, Ontario.  Unfortunately the piece suffers from a number of commonly held misconceptions.

Manufacturing, Technology, Canada and the Dollar.

This week the Ottawa Citzen published my op ed on the impact of technological growth on manufacturing: Where the jobs went.  Jim Stanford of the CAW responded with: The real job killers, also published in the Citizen.  A couple of points I would like to respond to:

Corporate Profits and Investment in Machinery and Equipment in Canada

I am writing a piece on the Electro-Motive dispute in Canada and needed data on equipment and machinery.  I had forgotten which CANSIM series I was looking for and asked if anyone knew.  Reader Chris Hylarides pointed me towards a piece written by... Stephen Gordon.  Not only did Stephen's piece have the data I was looking for, it answered the questions I was looking to ask!  However, his piece was from early 2006.  How have things changed since then?

CEO Pay and the Grandfather Fallacy

It is possible to make good arguments that CEOs are overpaid.  However, it is also possible to make really, really bad arguments.  Sadly, I have seen more of the latter than the former.  The bad arguments have something in common - they rely on the Grandfather Fallacy, a term I picked up from Steven Landsburg back at my days in Rochester.

NHL Ticket Revenue, Relocation and Exchange Rates

A story in today's Toronto Star:

A secret National Hockey League report detailing the ticket revenues of its 30 teams provides additional ammunition for those suggesting more struggling U.S.-based teams should be relocated to Canada.

The confidential document shows that the six Canadian NHL clubs last season accounted for about 33 per cent of the $1.2 billion (U.S.) in league ticket revenue. In 2007-08, Canada's six teams represented 31 per cent.
The report, which was obtained by the Star from several league sources, suggests operating a club north of the border is much more lucrative for the NHL. Five of the top six-revenue generating clubs are based in Canada, with the New York Rangers being the lone team from the U.S. in that group.

“There will be a lot of people using these numbers to argue that the league would be better off with teams in Quebec City and Hamilton, Ont., rather than Columbus, Ohio, and a number of other locations where the NHL is not setting the world on fire,” said Marc Ganis, president of a Chicago sports advisory firm that has advised the buyers of several NHL franchises.

I wanted to test exactly that - how would new teams in Canada fare in terms of gate revenue.  More importantly, how susceptible would they be to exchange rate fluctuations?

A Public Policy Keltner List

In the 1985 edition of his Baseball Abstract, Bill James published his Keltner List, a series of 15 questions designed to evaluate a baseball player's worthiness for the Hall of Fame.

I have a similar, albeit shorter, list of questions I like to ask when analyzing public policy proposals.

London, ON: Learning about Income Disparity

Apologies for the shameless self-promotion, but if you're in London, ON tomorrow (Tuesday), I'd like to invite you to a free symposium on income inequality.  I will be presenting along with Trish Hennessy of the Canadian Centre for Policy Alternatives and Michael Shapcott of the Wellesley Institute.

My talk - Income Inequality, a Tale of Four Countries examines what the United States and Canada can learn from Denmark and Sweden.  Needless to say I will be borrowing heavily from many of Stephen Gordon's pieces here at WCI.

Public Policy and Job/Publicity Opportunities for Economics Students

Yesterday NDP leadership hopefull Brian Topp released a taxation policy paper [PDF].  Sun News interviewed Topp last night and I acted as a responder - video available here.  One particular item of interest is the introduction of a new 35% tax bracket starting at $250,000 (the existing highest tax bracket starts at $132,406 in 2012 and has a marginal tax rate of 29%).  The move is said to raise $3 billion, though their math is not shown - the footnote on the figure reads Calculations from “Income Statistics 2010 – 2008 Tax Year” Basic Table 2A, Canada Revenue Agency.

Worthwhile Sumnerian Initiative?

Spotted at Marginal Revolution - a proposal by Scott Sumner:

Replace the corporate tax with a payroll tax of x% on everyone making more than $100,000/year. Have x% be the tax rate that replaces the lost corporate tax revenue. That would help the poor, it would help the middle class, and it would help the rich. What’s not to like?

Thoughts below:

Does Canada's Electoral System Under-Represent Minorities?

It is erroneously believed by some that the original U.S. constitution had a clause decreeing that a black man was "worth" only 60% of a white man.  The three-fifths compromise, rather, was a mechanism for determining how slaves (not blacks, though in the 1770s only 8% of the black population were 'free', so there was little difference) should be counted in determining how many representatives each state received in the House.

Canada's electoral system, however, does inadvertently make the votes from voters of some races worth less than others.

Economists Still Have Work to do, Ontario Edition

There are two types of TV shows I cannot stand - people sitting around talking about politics and people sitting around talking about sports.  They're full of people shouting at each other and making really, really stupid arguments.  I can feel my IQ dropping whenever I watch even five minutes of one of these shows.

The exception? TVO's The Agenda.  I love this show.  Terrific choice of guests and Steve Paikin is the best interviewer in the business.  Unlike practically every other show on politics, it raises the level of debate instead of lowers it.

Last night's show was no exception.  Part I was an interview with Ontario NDP leader Andrea Horwath and Part II was a roundtable discussion of the Ontario NDP platform (the segments are available to watch at the links).  The panel included a journalist, Adam Radwanski, who is one of my daily-must reads, and three pundits associated with three political parties - Janet Ecker (PC), John Duffy (Liberal) and Erin Weir (NDP), a friend of and frequent commenter on WCI.  A great group - I learned a lot.

The show, however, showed me that us economists still have a long way to go when it comes to educating the general public on economic issues.  There were four points I found particularly problematic.

Behavioural Economics and the Rationality Assumption in Economics

Inspired by The Price Is Too Damn High, Canadian Edition and Frances' post on behavioural economics.

There is a temptation for non-economists to answer any question that puzzles economists by simply declaring "people are irrational!"

"Why are prices so much higher in Canada?"

"PEOPLE ARE IRRATIONAL!"

"What explains the equity premium puzzle?"

"PEOPLE ARE IRRATIONAL!" etc.

The Price Is Too Damn High, Denouement

A follow up to this.  It would appear that the answer is likely, in fact, regulatory-based transaction costs (or at least perceived transaction costs).    Not nearly as exciting as I'd hoped, though I'd need a rigorous study to have any real confidence in the answer.  Anyhow, as a Canadian business person competing with U.S. companies, I'm painfully aware of the differences in cost structure between U.S. and Canadian companies.  However, from the matter of price, it matters not if the law of one price holds.  Of course, it matters to the Canadian retailers, who either have to find a way to compete with U.S. retailers, or die.

This is an issue that will not die.  From yesterday's Globe and Mail:

Popular U.S. fashion chain J. Crew Group Inc. has backed down in the face of a backlash from customers angry about higher prices at its newly opened Canadian store and website.

Starting on Thursday, it is reversing its decision to charge its e-commerce customers in Canada for duties, which raised the final price to as much as 50 per cent above those at its U.S. stores and on its U.S. website.

Still, J. Crew will continue to charge an average of about 15 per cent more in Canada than at its U.S. outlets and website. But to ease the e-pricing pain, it offers a flat $9.95 shipping fee.

I have found a couple companies that charge similar rates in the two countries, including my favourite jeans company Guess, where their in-store products are the same absolute amount in the two countries (89 CAD vs. 89 USD).  Canadian locations of Mexx, on the other hand, list their products in about 8 different currencies, including CAD, but not USD.  Gee, I wonder why?

A friend of mine pointed me to Revolve, where you can toggle between USD and CAD and see that the prices are equivalent after taking the exchange rates into effect (e.g. a product that sells for 204 USD sells for 200.79 CAD).  I haven't seen anyone else do this, though.  It will be interesting to see if Canadians flock to Guess and Revolve and avoid the J Crews and Mexxs of the world.

Updated to Add: A piece that came out today on the J. Crew 'duties and customs' situation: J. Crew price war underpinned by loose duties rules.

The Price Is Too Damn High, Canadian Edition

About five years ago, I was on a trip to Manhattan and I bought a Baltimore Orioles cap.  It is easily the best hat I've ever owned - it fits my head like a glove.  Unfortunately it's getting pretty worn from heavy use.  I decided to see if I could find another one just like it, but perhaps from a different team (I only bought the one I have because I was going to a Yankees-O's game).

I went to Lids.ca and sure enough they had 54 in the same style all for $31.99 (Canadian), including a nice 1949 New York Giants model.  Before placing an order, I went to Lids.com and did the same search.  They have 53 in that style (which one are they missing?), including my Giants cap.  All for... $24.99 US.  Even if you assumed an exchange rate at par, Canadians are paying 28% more for the same product.  This April Douglas Porter found a similar price difference  (link goes to PDF).   And that's before we take into account differences in sales taxes.

Substituting Capital for Labour, Radio DJ Edition

Say hello to Denise:

Her name is Denise and at first glance she's kinda hot.  But she's actually less real than a Penthouse Pet.

Instead, Denise is a James Cameron wet dream, a virtual non-human AI radio DJ.

Built by a company called Guile 3D, she was designed to be a virtual assistant.  In that guise, she can check email, do web searches, answer phone calls and various other tasks.  But then she was bought by a radio person named Domique Garcia for $200 and programmed to be a radio DJ.

Why Might the Premium on Labour Experience Have Increased?

Labour economics was one of my areas at Rochester, but I have not studied it since I left.  As such, to say I have not kept up with the literature would be to put it mildly.   What follows is an experiment in using "the economic way of thinking" and not based on any research.

Has the labour market increased the premium on past experience? Without putting my nose into the current research, I do not know, but for the sake of argument let's suppose it's true.  Why could this occur?