Tag Archives: Inflation

Roundup: Falsely framing carbon prices and inflation

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Because this is sometimes a media criticism blog, I want to point your direction to a CTV piece from the weekend, taken from an interview with Government House Leader Steven MacKinnon on CTV’s Question Period. The headline and substance of the piece, taken from the interview, is “Feds won’t pause carbon price despite inflation.” Now, if you were a casual reader who didn’t know what was going on, you might think that the carbon price is driving inflation and the government is being obstinate in refusing to deal with that driver of inflation.

That would, however, be completely wrong. We know that the carbon price contributes only negligibly to inflation because inflation is measured on a year-over-year basis, and with the carbon price increasing at the same rate every year, the impact on year-over-year prices remains negligible. The Bank of Canada figures that it works out to 0.15 percent of inflation. Is this mentioned anywhere in the story? Nope. Instead, it’s both-sides as pointing to Poilievre’s promise to “axe the tax” (which is not a tax, but a levy, and yes, there is a difference), contrasted with MacKinnon pointing out that at committee last week, food economists pointed to the fact that there’s no evidence the carbon price has had a meaningful impact on the price of food, because, again, if you pay attention, you would know that the bigger drivers of food price inflation are droughts or floods in food-producing regions, including Canada’s, which is related to climate change. (That poing is also absent from the story).

Why does this matter? Because of how the story has been framed. It frames itself that carbon prices are driving inflation, which is false and misleading. It sets up a false scenario about what is driving inflation (which has fallen over the last year and is now in a sticker place just above target), and sets about positing a false solution, while trying to look like it’s concerned about cost-of-living concerns while looking at absolutely none of the driving factors of what has caused an increase in the cost of living. This, my friends, is shoddy journalism. I get that they were trying to get a headline out of that interviews, but great Cyllenian Hermes, that was not the way to do it, and it’s a little embarrassing that this was the result.

Ukraine Dispatch:

At least three Ukrainians have been killed in Russian attacks on cities in the country’s east, near the front lines. Ukrainian forces repelled an attempted Russian advance on the southern front, as Russians move their forces forward following the withdrawal from Avdiivka. The withdrawal from Avdiivka was preceded by a change in Russian tactics designed to take advantage of the shortage of ammunition. Ukrainian forces say that Russians executed six unarmed Ukrainian soldiers taken prisoner in Avdiivka as they were fleeing, and two more in the nearby village of Vesele. Here is a look at the significance of Ukrainian drone attacks on Russian oil refineries and other infrastructure within Russian borders.

https://twitter.com/defenceu/status/1759195559272108467

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Roundup: MPP pay freezes serve no one

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There was a piece in the Star yesterday about how MPPs in Ontario have had their salaries frozen since 2008, with no plans to lift it anytime soon. This is the kind of thing that populist rhetoric engenders, and it’s terrible for the state of our politics. While nobody is in politics to get rich, particularly in Canada, we are pretty miserly about what we want to pay our elected officials, and every time there is some kind of economic downturn, we immediately demand that they either freeze or cut their salaries to “set an example” (which is ridiculous because I have yet to see any senior executives in the private sector freeze or cut their pay in response to bad economic times—they get further bonuses, especially if they manage to reduce payroll during said tough times).

It cannot be understated that we underpay our elected officials, particularly at the provincial and federal levels, for jobs that are fairly 24/7 in most instances—especially in the era of social media where they are expected to perform at all hours of the day and night, and where they can’t go to the store without being expected to be “on” and engaging with their constituents. And in a lot of cases, people take a pay cut to become an elected official, particularly if they are doctors or lawyers. We say we want to attract the best, but the longer this kind of thing goes on, the more it will only attract those who are already wealthy and can live with the pay cut. Oh, and Ontario killed their pensions for MPPs decades ago, so on top of being underpaid, they don’t get a pension out of it either, which just makes it all the worse proposition for someone.

Nevertheless, we already have the astroturfers at the so-called “Canadian Taxpayers Federation” griping that Toronto City Council and the mayor are getting a modest pay rise this year, and because legacy media laps up everything they put out, this feeds the hairshirt parsimony and cheap outrage that makes us look as petty and parochial as our worst instincts tend to be. (Tall poppy syndrome is absolutely one of our national neuroses). This isn’t good for democracy, but nobody wants to make that case, which is why we’re in the situation we’re in.

Ukraine Dispatch:

Russian missiles hit an apartment building and a medical centre in Kharkiv early Wednesday; Russia claims it was precision-targeting a building housing “foreign fighters” that included French mercenaries. Ukrainian forces also downed19 out of 20 drones targeting Odesa. The fighting has intensified near Bakhmut, as Russian forces are making more offensive assaults.

https://twitter.com/ukraine_world/status/1747574419994648962

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Roundup: Rachel Notley announces her departure

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In a move that has been expected for over a month now, Alberta NDP leader and former premier Rachel Notley announced that she’ll step down as soon as her replacement is chosen, and no, she has absolutely ambition to run federally. It’s probably a good thing that Notley has decided enough is enough, thus avoiding becoming another Andrea Horwath, and frankly, considering how she managed to lose the debate against Danielle Smith, and from there the election, well, it was probably time to call it a day and let a fresher face take over.

It’s not an exaggeration to say that Notley’s time in Alberta politics was transformational—even though her rise to government was largely accidental (voters looking to punish Jim Prentice’s PC government for having the temerity to tell them to “look in the mirror” about demanding high services and low taxes had no other options as the provincial Liberals’ leader just bailed and the Wildrose were decimated after Danielle Smith crossed the floor with most of their MLAs), she managed to run a government that was reasonably competent in a province where one-party rule had left them corrupt and unable to do things like come up with realistic budgets that didn’t involve throwing money at problems. She did what every NDP organisation dreams of and decimated the provincial Liberal party, forcing the centrist voters in the province to her banner by running more to the centre herself, and essentially turning the province into a two-party race. But it’s also notable how her success also had a lot to do with moving away from standard NDP dogma.

Here are some reactions to her announcement (and I thought Jagmeet Singh’s was especially hilarious considering how she spent most of her time in office distancing herself from him), a few biographical details, and a look at her legacy.

Ukraine Dispatch:

Unsurprisingly, the higher intensity of Russian attacks led to a sharp increase in civilian deaths over December. Meanwhile, president Volodymyr Zelenskyy is attending the World Economic Forum in Davos to drum up more support from partners, and met with Antony Blinken while he was there. (No doubt Conservatives in Canada are going to hold this attendance at Davos against him, because conspiracy theories).

https://twitter.com/ukraine_world/status/1747261931164192849

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Roundup: The inflation and population figures

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There were a couple of important figures released from StatsCan yesterday, and the first was the November inflation numbers. While some analysts were predicting it to fall, it held at 3.1% for a second month, showing that this is the part where it’s starting to get sticky, and why the Bank can’t let up measures and start reducing interest rates just yet. One of the upsides is that food price inflation continues to come down, which means that prices are stabilising, so that’s very good news (and it has nothing to do with carbon prices). And don’t forget to check out this thread from Trevor Tombe, as he digs into the numbers.

https://twitter.com/trevortombe/status/1737111583002923039

The other figures released were the population figures, and it was the fastest growth of any quarter since 1957. The thing to keep an eye on here is that a lot of this seems to be driven by non-permanent residents, whether international students (and the big problem there are a couple of colleges in Ontario turning themselves into abusive degree mills), and other temporary foreign workers, some of whom may have been hired in an abusive way. Some of this are also asylum seekers who have not yet received status (because “closing” Roxham Road didn’t really do much for this situation other than push it underground).

https://twitter.com/MikePMoffatt/status/1737106801617703236

https://twitter.com/MikePMoffatt/status/1737109349477310976

https://twitter.com/MikePMoffatt/status/1737112568286855177

https://twitter.com/MikePMoffatt/status/1737136794938884329

Ukraine Dispatch:

Russia launched an air attack on Kyiv for the fifth time this month, but this attack was intercepted and no damage was reported. President Volodymyr Zelenskyy says that Ukraine is boosting its domestic production capacity and will produce one million drones next year. Zelenskyy is also dismissing talk that there is a rift between him and the head of the army. Here’s a look at the work judges are doing to keep the justice system going in a country under fire.

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QP: Hyperventilating about Stellantis

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While the prime minister was present, his deputy was in the lock-up, meeting with reporters about the Fall Economic Statement in advance of its release at 4 PM. All of the other leaders were present, ready to demand to know what was in the update before its release. Pierre Poilievre led off in French, returns to the Scotiabank report he raised yesterday, and blamed the federal government for driving inflation, before demanding a balanced budget in the fiscal update. Justin Trudeau responded that the solution to this difficult period is not austerity, but strategic investments in helping families. Poilievre switched to English to repeat his same question, and lo, got very much the same response from Trudeau. Poilievre blamed the federal government for fast-rising rents, and demanded that the government cap the carbon price until the next election. Trudeau said the solution to rising rents is to build more units, which the government is doing, before mocking Poilievre’s assertion that the government is doing “damage” to Canada through child benefits, child care, or dental care. Poilievre then pivoted to the Stellantis plant and the overblown concern that it would use temporary foreign workers.  Trudeau noted that Poilievre would use any misinformation to denounce plans he doesn’t like, but he didn’t actually debunk the assertion. Poilievre said that no, it was Trudeau who spreading misinformation, and repeated his same overblown and false assertions. Trudeau said it was flat-out false and fear-mongering, but again, didn’t actually explain what the truth was, because of course not.

Yves-François Blanchet lead for the Bloc, and he demanded that the government include an increase in old-age security and an extension to CERB repayments in the economic update. Trudeau noted that they have been increasing payments for seniors, and that they supported those small businesses in COVID, but Blanchet would have to wait a couple of hours. Blanchet wondered if he should send his questions in advance so that he could get a real answer, before he repeated his same demand. Trudeau said he would be happy to send Blanchet a schedule that shows the update is released at 4 PM.

Jagmeet Singh rose for the NDP, and he too raised the spectre of temporary foreign workers at the Stellantis plant, to which Trudeau said that while nobody was surprised that Poilievre would fall prey to disinformation but it was disappointing that Singh did too—but again, didn’t explain the truth. Singh switched to French to demand a competition changes to target grocery giants. Trudeau patted himself on the back for their plan to summon grocery CEOs, and said that there would be competition measures in the economic update.

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Roundup: Graphing some drivers of inflation

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Just how much are the price of raw materials contributing to headline inflation? Well, the raw materials price index was released yesterday, and economist Stephen Gordon was curious, so he made some graphs.

Things I noticed: While gasoline is a big driver of headline inflation, the prices of wheat and beef are worth taking a look at because of the price spikes. What caused those spikes? Drought. Drought killed 40 percent of the wheat crop in 2021, and also meant a shortage of feed crop for livestock, which meant that ranchers had to cull herds to be able to afford to feed the remaining animals (because importing feed is expensive). This year we also saw more drought, which is having the same effect (and that drought has been persistent in southern Saskatchewan, which has to be in danger of turning into a dustbowl soon). And yes, there is a direct correlation to these more frequent droughts with climate change.

Also worth pointing out is the price of chicken also spiking, which was because of avian flu that meant culling flocks to prevent transmission. Again, that drives up prices. This is just more data to show that it’s not the carbon price driving up food prices—it’s climate change and its knock-on effects.

Ukraine Dispatch:

Ukraine’s largest private energy company says that they need more missile defences to protect power plants in advance of more Russian attacks over the winter. Ukrainian forces have confirmed that they have established several beachheads on the eastern banks of the Dnipro river, which is an important step in the counter-offensive. In Kharkiv region, the government is now building fortified underground schools because of the constant attacks. A Yale study says that more than 2400 Ukrainian children from four occupied regions have been taken to Belarus.

https://twitter.com/zelenskyyua/status/1725490287160529137

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Roundup: No, that’s not how inflation works

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Because some of you at the back still don’t get it, no, carbon pricing does not contribute 16 percent of inflation. It contributes 0.15 percent, because inflation is a year-over-year measure, and when the increase is steady and holding, the actual impact on inflation is negligible, because that’s how inflation works. But several of you you keep insisting that your math is correct when it’s not, and so here’s economist Trevor Tombe to try and get it through to you:

https://twitter.com/trevortombe/status/1720919364172697678

Ukraine Dispatch:

Ukrainian missiles struck a shipyard in occupied Crimea, damaging a Russian warship there. There are conflicting reports about the state of the counter-offensive in the Zaporizhzhia region, where Russia claims they have halted any advance, while Ukrainians say that they continue to advance, albeit slowly. President Volodymyr Zelenskyy pushes back against the notion that they have entered into a stalemate, and says they need more air defences so that Russia can no longer dominate the skies. Here’s a look at Ukrainian soldiers who have turned to jiu-jitsu after losing limbs in the war.

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QP: A bizarre false version of reality with a draconian coalition in place

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The prime minister was present today, which has become unusual for a Thursday, but since he wasn’t here yesterday it was good that we at least got a second appearance in the week. Not every leader was present today, and neither was the deputy PM, for what it’s worth. Pierre Poilievre led off in French, and name-checked Catherine McKenna, Mark Carney, and Senator Percy Downe in pointing out people disappointed with Trudeau, and pounced on Downe’s call on Trudeau to resign, as if Downe’s opinion carries any weight at all. Justin Trudeau stood up and recited prepared lines that they are focused on helping Canadians while tackling climate change, and that the team is togetherness. Poilievre noted that he didn’t answer the question, and accused the government of not caring about Canadians who need heating. Trudeau listed things that the Conservatives would cut if they got into power. Poilievre switched to English to say that Trudeau hadn’t denounced the things Gudie Hutchings said about people voting Lineral, and demanded a yes of no answer to whether they would support his supply day motion whether his MPs would have a free vote. Trudeau rambled about phasing out heating oil and called on provinces to sign up to the heat pump programme. Poilievre noted he didn’t answer the question and wondered if the NDP would also get a free vote, which should have been out of bounds. Trudeau instead talked about how many people in Alberta, Saskatchewan and BC use heating oil and called on those provinces to partner about heat pumps. Poilievre asked if they would make his Supply Day motion a confidence vote, but Trudeau again rambled about heat pumps and said that Poilievre was making a mistake if he thought Canadians didn’t care about the environment. 

Yves-François Blanchet led for the Bloc, and raised the issue of immigration levels, and consulting Quebec on them. Trudeau read that Quebec has their own targets and that the federal government provides resources to the province for integration. Blanchet again demanded proper consultations before firm targets were set, but Trudeau repeated his response.

Peter Julian rose for the NDP, and in French, he called on support for their call to take the GST off of home heating (which, again, is unworkable administratively and disproportionately benefits the wealthy). Trudeau responded that the thousand of people in BC who rely on heating oil should take advantage of the heat pump programme. Taylor Bachrach took over to relay a constituent’s problems with the heat pump rebate and wanted the same programme for Atlantic Canadians extended to the whole country. Trudeau said they wanted to, but provinces need to partner with them.

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Roundup: A primer on inflation calculation

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Bank of Canada governor Tiff Macklem testified at the Commons finance committee earlier in the week, and a whole lot of people, including a certain “Food Professor” charlatan and numerous Conservative MPs, demonstrated that they don’t understand math or inflation as they all misconstrued the numbers that Macklem gave. And they’re the same number he has given before—that the carbon price has had a 0.15% effect on inflation, and if you removed it, going from $65/tonne to 0, it would have a temporary effect of reducing inflation by 0.6%.

A whole bunch of people–said charlatan, those MPs—insisted that because 0.6% is 16 percent of the 3.8% of headline inflation, that it means that the carbon price is responsible for 16% of inflation, which is wrong and not how inflation is calculated. Removing it wouldn’t actually mean inflation would go from 3.8% to 3.2% because the carbon price is not driving it. Energy and food prices are doing a lot of the driving there (and food prices are being hugely affected by climate change), and even if it did move to 3.2%, the Bank isn’t going to start lowering interest rates until it reaches the two percent target. Essentially, you’d be killing the carbon price and undoing the work it’s doing to lower emissions on the basis of a bad lie that it has made life unaffordable.

Meanwhile, here’s economist Stephen Gordon breaking down how inflation is calculated, with the inevitable conclusion that the carbon price is just noise—it’s not driving inflation, and it’s better to focus on the things that are.

A threat to democracy

A bunch of people got the vapours yesterday when Mark Miller called Pierre Poilievre a threat to democracy. Apparently these same people have convenient amnesia, or wishful thinking that he’s only kidding in what he’s doing and saying, because nobody learned a gods damned lesson from the Trump years.

Ukraine Dispatch:

While rallying Ukrainian troops, president Volodymyr Zelenskyy counselled patience and not to expect instant success (the latter comment directed primarily toward Western allies). A UN report says that 40 percent of Ukrainians need humanitarian support as a result of the conditions brought about by Russia’s invasion.

https://twitter.com/ukraine_world/status/1719348496640200777

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QP: The plan to phase-out heating oil

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The prime minister and all other leaders were present, albeit temporarily. Before things got started, Speaker Fergus gave another exhortation to improve their decorum, following a disruption during Members’ Statements. Pierre Poilievre led off in French, and he talked about the so-called “second carbon tax” that doesn’t exist, and switched to English halfway through to call on the PM to denounce what Gudie Hutchings said on the weekend. Trudeau read a script in French to praise their programme to help people switch to heat pumps, including free pumps for low-income households. Poilievre was fully in English to denounce the so-called “two classes of Canadians” that this heating oil pause created, and demanded the whole price be cut. Trudeau insisted that this was a step toward getting everyone off heating oil and onto heat pumps. Poilievre insisted that this was an attack on national unity, to which Trudeau denounced this as disinformation, and pointed out that most people get more in a rebate than they pay in carbon prices. Poilievre then misquoted the PBO on the costs of the carbon price, and mischaracterised what Trudeau said about the heating oil pause, to which Trudeau tried to more emphatically insist that they wanted to get free heat pumps to low-income households in provinces where they have an agreement. Poilievre insisted that he wanted to get rid of the price for all people in all places, and wanted it paused until the next election so it could be put to the public. Trudeau insisted that the Conservatives have lost three elections in a row on denying climate change and that the Liberals would show them that once again.

Yves-François Blanchet led for the Bloc, and he wanted a concession on reducing immigration targets, given that it was the subject of the Bloc’s Supply Day motion. Trudeau launched into a paean about how great and necessary immigration is for the country. Blanchet demanded support for their motion, and Trudeau talked about how they engage with stakeholder, and indicated their support for the motion (which is surprisingly considering that the motion is entirely concern trolling).

Jagmeet Singh rose for the NDP, and he demanded the government remove the GST on all home heating—a programme that is largely unworkable and disproportionately benefits the wealthy. Trudeau talked about how years ago they agreed to phase out coal, and now they are doing the same with heating oil. Singh repeated the question in French, and got much the same response. 

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