Sunday, September 28, 2014

Neo-conservative economists try browbeating Canadians on FIPA

Harper quietly announced his government ratified the FIPA investor-protection treaty with China.

Justin Trudeau quietly avoided the issue. (Although it’s clear he supports FIPA given he criticized Harper for putting limits on Chinese investment in the tar-sands.)

But some neo-conservative economists were much more vocal.

Economist Kevin Milligan

Kevin Milligan tweeted that opponents of FIPA are ultranationalist hypocrites:

What happens if you apply the Green/nationalist ‘sovereignty über alles’ framework to international climate treaties? Or is that just difft?

Only an economist could be this obtuse. Yes giving up democratic rights to stop destructive behaviors and preserve the world for future generations is a smart thing to do.

Right-wing politicians and economists are silent on how FIPA is good for Canada.

But China is a totalitarian dictatorship. Why would we want to cede sovereignty to fascist oligarchs who want unfettered access to our resources, especially the dirty-energy tar-sands? The two are the very opposite, not the same!

Economist Stephen Gordon

Stephen Gordon uses the same nationalist rhetoric implying critics are flag-worshipping racists.

He insists FIPA can’t stop a government from passing laws that protect the environment.

Of course, he’s an neo-con economist with an ideological vested interest. Not a lawyer with expertise in international trade agreements.

Trade expert Gus Van Harten

One such expert is Gus Van Harten. He is not a neo-Nazi, as Gordon might have you believe, but an Osgoode Hall law professor who has written two books on investment treaties. One criticism he has:

Chinese companies will be able to seek redress against any laws passed by any level of government in Canada which threaten their profits. Australia has decided not to enter FIPA agreements specifically because they allow powerful corporations to challenge legislation on social, environmental and economic issues.
Chinese companies investing heavily in Canadian energy will be able seek billions in compensation if their projects are hampered by provincial laws on issues such as environmental concerns or First Nations rights, for example.


Given Australia — which already does a lot of trade with China — can export its resources to China without a FIPA treaty, why on Earth do we need one?

Trade expert Lawrence Herman

Another critic is Lawrence Herman who is a senior fellow of the C.D. Howe Institute. He says:

A concern I have is that these arbitration decisions are rendered by ad hoc tribunals, appointed for a given dispute only. … Yet these impermanent tribunals are often deciding issues of social or economic policy of national importance.
Australia – a country that shares many interests with Canada – now says it will no longer sign such investment protection agreements, arguing that if Australian businesses are concerned about sovereign risk in other countries, they should make their own assessments about whether they want to invest in those places.

Crybaby Capitalism

Why do free-market economists demand a social safety net for businessmen who want to move their businesses to China? Talk about hypocrisy!

What does Canada have to gain?

Gordon’s logic behind FIPA is not at all assuring. He says because we have a massive trade deficit with China — buying a lot more goods from them then they buy from us — we have to let them buy up Canadian assets to balance things out:

Capital flows are the obverse side of trade flows. It makes no sense to claim to be in favour of international trade but against international flows of capital. …
As it happens, Canada runs a fairly large trade deficit with China: roughly $30 billion per year. This means that as far as China is concerned, trade with Canada is essentially a matter of them accumulating large amounts of Canadian assets.

Wow that sounds like an appealing offer! No wonder Harper tried to bury the announcement!


Germany recently raised concerns about investor-protection rules in the Canadian-Europe Trade Agreement (CETA.) If Germany doesn’t trust Canadian businessmen with these kind of powers, why would we trust a totalitarian superpower with them?

Tuesday, September 23, 2014

Trudeau: bigger, badder EI tax cut

When Stephen Harper recently announced an EI tax cut for small businesses, did Justin Trudeau demand that Harper reverse his draconian cuts to EI benefits instead?

Considering the Liberals have a petition called Stop Harper’s cuts to Employment Insurance, that’s what one would’ve expected.

Bigger, badder tax cut

But Trudeau actually criticized Harper for not going far enough and put forward his own bigger, badder EI tax cut that would let corporations in on the action (which aleady receive a $15-billion-a-year tax cut thanks to Harper.)

Not only is Trudeau blowing the small EI fund surplus on another trickle-down tax cut, he’s cementing in place Harper’s harsh cuts that destroy the social safety net.

Bad Math

As the Progressive Economics Forum points out, Trudeau’s plan rests on bad math. Trudeau says his tax cut will “create” 176,000 jobs and cost $225-million. But these jobs are expected to be created with or without any tax cut.

Trudeau says Harper's trickle-down tax cut doesn't go far enough.

Not only that, it’s difficult to determine what businesses create a "net new job." So the number of businesses trying to claim the tax cut could cause costs to spiral out of control.

Cheating workers

The Liberals and Conservatives have turned Canada’s unemployment insurance program into a tax on poor workers who are forced to pay for premiums on benefits they’re ineligible to receive.

The coverage rate has fallen to an appalling 36% of those who pay in!

Bad History

The EI benefit cuts began in the early 1990s when the Liberals came in power.

A massive recession in 1991 caused the unemployment rate to spike which caused a deficit in the "EI" fund (previously called UI.)

This “crisis” was turned into an opportunity to slash benefits based on the neoliberal principle that a strong safety net discourages people from looking for work.

By disqualifying workers and slashing benefits, the EI fund ballooned to $54-billion by 2008. Both the Liberals and Conservatives used the surplus to pay down government debt — essentially stealing over $50-billion from workers.


We need an alternative to Harper. Not a prettier version of Harper.

We need someone willing to stand up for Canadians and the social safety net. Not tear it down to award wealthy investors and businessmen more free-money tax cuts that never create jobs.