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Livio Di Matteo: Labour scarcity, not unemployment, is the more pressing economic challenge

Commentary

When I was a lad, I never served a term as an office boy to an attorney’s firm though I did serve a bit as an apprentice clerk at a reconstructed fur trade post for the purposes of historical dramas and interpretation. I actually spent a lot of my time watching movies and in particular loved TV movie trailers, my favourite being for a movie titled Soylent GreenSoylent Green (1973) https://www.youtube.com/watch?v=N_jGOKYHxaQ which started off something like this:

“…New York City in the year 2022, nothing runs anymore, nothing works, but the people are the same and the people will do anything to get what they need

What the people needed in this dysfunctional and chaotic future was a food product named Soylent Green whose makers had a shocking secret ingredient which was revealed at the end of the movie. I will leave it to the reader to discover for themselves the secret of Soylent Green.

Fast forward 50 years and the fiction of a dysfunctional world has oddly become reality. In the aftermath of the pandemic, the world seems to be turning into a Soylent Greenesque space where nothing runs or works at least as well as it used to. All that is missing is Soylent Green’s giant bulldozers driving through chaotic airport security lines to get rid of excess people so as to reduce congestion. Indeed, airlines around the world would be immediately restored to profitability and solve their labour shortage issues if they simply sold tickets to imaginary flights that did not exist and then kept the money. It would be a sort of virtual reality airline experience and a welcome relief from the travesty that is passing itself off as customer service.There is no obvious scapegoat for Canada’s air travel woes https://thehub.ca/2022-07-12/steve-lafleur-there-is-no-obvious-scapegoat-for-canadas-air-travel-woes/

Much of what has been transpiring is being blamed on the disruptions of the pandemic, and while there is much truth to this, it remains that the labour shortages that have been plaguing the economy have been in the works for some time. Yet, it was always more fashionable to argue that we were headed to a world of excess supply of labour as technology and robots displaced workers. The media was rife with warnings about automation, technological change, artificial intelligence, and machine learning leading to dramatic changes in the labour markets of developed countries that would generate massive unemployment. This was despite the historical evidence of the last 150 years showing that while technology displaced workers, it also created new jobs. 

For example, between 1851 and 2017, Canada’s population grew from 2.4 to 35.2 million, a 15-fold increase, while the Canadian labour force grew 26-fold—from 762,000 to 19.7 million people. Employment data shows that from 1891 to 2017, employment in Canada grew from 1.6 to 18.4 million, a 12-fold increase, while over the same time span the labour force also increased—from 1.7 to 19.7 million, also a 12-fold increase. In other words, while one would have expected a world in which over half of people worked on farms to experience massive unemployment as farming was mechanized, it turns out they found other things to do.

And yet, the belief has persisted that the future would be one of excess labour supply and unemployment. Still, just prior to the pandemic a Fraser Institute reportTechnology, Automation and Employment: Will this Time be Different? https://www.fraserinstitute.org/sites/default/files/technology-automation-and-employment.pdf argued that a growing scarcity of labour in Canada was coming. Specifically, a slowing population growth rate and a declining labour force participation rate due to retiring baby boomers and an ageing population would reduce labour force growth rates over the next few decades. As well, technological change, while changing the composition of employment, would also promote faster economic growth, which creates new jobs. Hence, it seemed unlikely that technological change would result in a decline in the aggregate demand for labour but rather would usher in a period of labour scarcity. 

With the labour market disruption of the pandemic, it would appear the process of labour scarcity has been speeded up. That 20 percent of the labour force was aged 55 and over and was expected to eventually retire was lost on many people. After a couple of years of pandemic duty, early retirement became even more attractive, especially where government financial support provided incomes equivalent to what was being earned. Indeed, for some workers, programs like the CERB probably became a nice early retirement buyout package. The labour shortage effect was magnified by the reality that workers aged 55 and over had actually been increasing their participation rate prior to the pandemic while that for younger workers had been declining. The low rate of natural population increase means not enough new workers are available to take the spots of retirees—assuming they are even interested in working more given the trend to work-life balance—and in the absence of immigration, the situation would be even direr.The Implications of Slowing Growth in Canada’s Labour Force https://www.fraserinstitute.org/sites/default/files/implications-of-slowing-growth-in-canadas-labour-force.pdf

So, can a world where everyone wants more goods and services provided but prefer lifestyles making them less inclined to work to provide them continue to function? We are finding out the hard way.

Howard Anglin: The Alberta Sovereignty Act is nothing but a sideshow scam

Commentary

The Alberta Sovereignty Act is a scam. It’s baloney, bunk, balderdash, and bunkum. Hooey, hogwash, and hokum. Flim-flam, tommyrot, poppycock, and fiddle. It’s the political equivalent of a sideshow tent painted with lurid images of wonders never before beheld by human eyes. And, like any successful carnival curio, it depends on the willingness of the marks to believe the unbelievable. 

In the sideshow, dim-lighting and deft patter create the atmosphere, but it’s the patrons’ desire to be deceived that lets them see a mermaid rather than a mangy monkey-torso artfully attached to half a dried fish. The same is true for the Alberta Sovereignty Act—a political and legal hoax that has become the signature policy of the frontrunner to be the next premier of Alberta.

For those who don’t follow Alberta politics, the Alberta Sovereignty Act is the centrepiece of a broader Free Alberta strategyThe Free Alberta Strategy https://www.freealbertastrategy.com/the_strategy that has two stated goals: “Establishing complete Provincial Legislative Sovereignty within Canada” and “Ending Equalization and Net Federal Transfers out of Alberta.” Notably—and this is the strategy’s novelty—it doesn’t ask permission from Ottawa or any other province. It just asserts whatever powers are necessary to protect the province’s interests, whether they are constitutional or not.

The appeal to many Albertans is obvious. The Free Alberta strategy claims to be a solution to the hitherto insoluble problem of how Alberta can get everything it wants from Ottawa without actually separating from Canada. It appears to square the circle of independence without secession. Best of all, it lets Albertans claim what is rightfully theirs (or what they would like to be rightfully theirs) without having to go begging to Ottawa or to BC or Quebec or the Maritimes. 

At the heart of the strategy are two radical proposals.About the Free Alberta strategy https://d3n8a8pro7vhmx.cloudfront.net/albertainstitute/pages/337/attachments/original/1637104983/Free_Alberta_Strategy_-_Web_Version.pdf?1637104983 The first is the Alberta Sovereignty Act, which would prohibit government employees from enforcing federal laws or court decisions that, in the opinion of the provincial legislature, exceed Ottawa’s constitutional jurisdiction or, more vaguely, “unfairly attack the interests of Alberta’s People.” The second is to effectively opt-out of the Canadian judicial system. Both ideas are, to use a technical term from constitutional law, nuttier than a squirrel turd.

The strategy’s authors know, of course, that this would be flagrantly unconstitutional—for them, that is its major selling point.The Alberta sovereignty act is unconstitutional on purpose https://nationalpost.com/opinion/barry-cooper-the-alberta-sovereignty-act-is-unconstitutional-on-purpose They believe that forcing a constitutional crisis is the only way to remedy the ongoing constitutional injustice that Alberta suffers under the current system. It is a deliberately brute assertion of political power intended to cut the constitutional Gordian knot. But even on these dubious political terms, the Alberta Sovereignty Act is a dead end. Unconstitutionality aside, the Act is unworkable. 

The provincial government can’t just tell public servants not to enforce the law or individuals that they won’t face any consequences for acting illegally. It can’t tell businesses and employees they don’t have to remit taxes that they legally owe. It is one thing for eccentric academics and aspiring politicians to fantasize about ad hoc independence, but the Alberta Sovereignty Act would put all the real legal risk—CRA fines, court orders, and legal penalties—on ordinary people and local businesses. It asks too much of individuals to shoulder the burden of this constitutional frolic.

The Act would be an economic disaster. What business would trust a government that doesn’t recognize constitutionally-appointed judges and is committed to making up the law as it goes along? There is a reason rogue states aren’t exactly magnets for foreign investment. Companies would relocate their headquarters out of Alberta faster than they moved from Montreal to Toronto in the 1970s when Quebec separatism was ascendent. The Act’s answer to this anticipated chaos is to create a new Alberta-based banking industry, but that would just leave all Albertans on the hook financially for the government’s risks.

Albertans have genuine economic grievances. They contribute billions of dollars more each year to the rest of Canada than they get back and, in return, the governments that benefit from their largesse conspire to shut down Alberta’s most valuable industry. And successive federal governments have used provincial transfer payments to curry favour with vote-rich provinces at Alberta’s expense. That’s frustrating, but it’s no excuse for making the situation worse. There is a perverse irony in a policy responding to economic frustration that, if implemented, would bring economic ruin. 

Until recently, the Free Alberta plan and the Alberta Sovereignty Act were just obscure thought experiments with a website. But now that Danielle Smith has endorsed it,Alberta UCP leadership candidate Danielle Smith promises immediate sovereignty act https://edmonton.ctvnews.ca/alberta-ucp-leadership-candidate-danielle-smith-promises-immediate-sovereignty-act-1.5960598 we have to take this deeply unserious idea seriously. I like Smith. She is smart, curious, and refreshingly open-minded about politics and policy. What made her radio show (on which I was an occasional guest) so good was her willingness to listen to and debate almost anyone about almost anything. Sometimes this meant indulging cranks and kooks, but more often it resulted in stimulating conversations that challenged the narrow elite Canadian consensus. 

The Alberta Sovereignty Act comes straight out of the camp of the cranks and kooks. Promises of police forces that won’t enforce the law and a parallel court system that will apply a parallel constitution are just the latest in a long tradition of Prairie snake oil. You can file the Act alongside Social Credit’s “funny money” Prosperity Certificates

There is a hypnotic power to wishful thinking. We all want to be persuaded of the truth of what we want to see and hear, even when deep down we know it is too good to be true. That is why carnival barkers will always draw crowds to pay to be amazed by what, in the clear light of day, would be transparent fakery. And it is why politicians have to be careful to keep their rhetoric in line with reality. 

Because, in a sideshow, the deception leaves its victims a little poorer but harmlessly entertained; but in politics, scams like the Alberta Sovereignty Act have real-life consequences. If Smith or any other leader is foolish enough to follow this fraudulent scheme, real jobs will be lost and real people will suffer. It will be the Alberta Suicide Act.