Conservative Leader Erin O’Toole dismissed the federal government’s fall economic statement saying a three-year plan to provide stimulus to the economy is pointless without first revealing how Canadians will be vaccinated against COVID-19.
“The minister of finance has proven their government has no plan. Without a plan for vaccines, there can be no long-term plan for our economy,” O’Toole said in the House of Commons on Monday.
Deputy Prime Minister and Finance Minister Chrystia Freeland responded that enough vaccine has been prepurchased to ensure there are up to 10 doses for every Canadian, but she did not provide details on how vaccines will be rolled out in Canada.
“We don’t know the first date vaccines will be received. Almost, most of our allies do, in fact the U.K. and the U.S. will start receiving them in the next few days. Canadians are going to be asking questions and they deserve answers,” O’Toole later told CBC News Network’s Power & Politics.
“This is a debacle,” he told host Vassy Kapelos. “We’re pushing because there is a real problem here.”
WATCH | O’Toole pushes for vaccine plan:
O’Toole also said the government’s efforts to provide economic support to both companies and individuals could have been more effective if implemented sooner.
“The truth is the Liberals’ economic response has been erratic and confused. Millions more Canadians were put on the CERB than necessary when their jobs could have been maintained if the Liberals had implemented a wage subsidy earlier,” he said.
In Monday’s fiscal update Freeland projects that the deficit will reach $381.6 billion by the end of March 2021 and could climb higher, depending on the rate of COVID-19 infections.
The Liberal government said it is preparing to spend up to $100 billion to kick-start the post-pandemic economy over the next three years, promising it would provide details in the coming months.
Bloc Québécois Leader Yves-François Blanchet said there should be much more detail about the government’s plan to provide economic stimulus, especially when the government is so deeply in debt.
“They have renounced the very idea of controlling deficits,” Blanchet said. “They basically say there is no limit to what they will spend without saying, or without admitting, how badly sometimes they do spend it.”
WATCH | O’Toole claims government’s slow response led to job losses:
NDP finance critic Peter Julian told the House of Commons that the economic statement should be a signal to Canadians that “austerity is coming.”
Leader Jagmeet Singh was later asked by Kapelos to clarify that position. He said the government’s plan to reduce supports as the economy recovers is evidence Canadians should be concerned.
“If you look at their economic update in the next years, past Year Two and Three, we see clearly cuts to the help that people need,” Singh told Kapelos.
Singh was particularly critical of the Liberal government’s decision to put off directly taxing web giants such as Amazon and Google until 2022, while starting to collect GST/HST on goods and services provided by foreign-based digital companies.
Watch: NDP Leader Singh says Fall Economic Statement shows future ‘cuts to the help that people need’
Singh said the application of the GST was important because it put Canadian companies on an even footing with foreign companies, but was meaningless because it failed to directly tax those corporations.
“Why is it, six years into their government, they still have not actually made web giants pay a single, effectively a cent, of corporate tax? Actually revenue-based taxes that they make off of Canadians in Canada?” he asked Kapelos.
Singh said he wanted to see a wealth tax that targets people that have more than $20 million and also “pandemic profiteering taxes” levied on companies that have “made massive profits off the backs of Canadians,” during the pandemic.
Green Party Leader Annamie Paul welcomed some of the environmental initiatives in the economic statement, particularly issues that help the federal government achieve its net-zero objective.
“There are also enhanced investments in the infrastructure, projects and those sectors which will move us toward net-zero by helping to reduce Canada’s greenhouse gas emissions,” she said.
However she criticized the failure to deliver a plan that would see emissions cut by 60 per cent from 2005 levels or the implementation of a carbon budget setting out the maximum level of emissions Canada can emit and still keep global temperatures from rising.
Watch: Green Party leader says Liberal government is delaying many initiatives past the next election
Joe Biden and the ‘great rebalancing’ of the US economy – Financial Times
“It’s time to reward hard work in America — not wealth.” That statement from US president Joe Biden is perhaps the most concise expression of the new administration’s economic policy plans. Mr Biden wants to increase the national minimum wage, raise taxes on corporations, and start to tip the balance of power between labour and capital.
The labour share of national income — the amount of gross domestic product paid out to workers, in wages and benefits — has been declining in the US and many other developed countries since the 1980s. The fall since 2000 has been particularly precipitous, leading to stagnant pay, growing inequality and a loss of consumer purchasing power.
But, in many ways, this is a difficult moment for the Biden administration to turn the tide. With unemployment still high due to the pandemic, there is no natural upward pressure on wages. And some economists argue that intervening to raise minimum wages now would discourage hiring.
In addition, many companies that survive the pandemic will be looking to cut costs by replacing workers with technology. Indeed, automation is one of the key factors behind the multi-decade decline in labour’s share of GDP, according to a 2019 study by the McKinsey Global Institute.
However, there are three big reasons why we may still be at a key inflection point in the US labour-capital divide.
First, the Biden administration has just invoked the Defense Production Act to force the private sector to speed up vaccine production and distribution. This will immediately create more demand for jobs — a trend that could continue beyond the pandemic, as there are bipartisan calls to strengthen domestic supply chains for other pharmaceutical products, and for food.
Second, there is a trend towards increased unionisation, particularly in high-growth industries such as technology. While the impact of a few hundred Google workers in California forming a union should not be overblown — they are still a fraction of the 100,000 workforce there — it was an important cultural marker. Labour activists are now having similar discussions with other Silicon Valley companies. Amazon workers in Alabama will vote on unionisation in February. At the same time, global labour organisations, such as the International Trade Union Confederation, are pushing the US and EU to include provisions for workers’ rights in any new regulation of Big Tech.
Mr Biden is already using his powers as president to insist that private companies awarded federal contracts use better-paid labour — something unions are lauding.
And the power of organised labour is likely to expand. Some policymakers believe it could play a role in helping individuals — not just workers, but also consumers — recapture the value of their personal data, by forming “data unions”. These unions would act as independent overseers of data pools, realising their commercial value for members. While snippets of data from individuals are not worth much, data pools are — and a more equitable sharing of the intangible wealth held in such data could change the balance of power between corporations and individuals.
Third, global demographic trends that have disadvantaged workers are finally reversing — and, for labour in the US, this may prove the biggest tailwind of all. As Charles Goodhart and Manoj Pradhan explore in their book The Great Demographic Reversal, the balance of power between labour and capital is all about supply and demand. Over the past four decades, the full entry of baby boomers into the workforce, including a growing proportion of women, plus the rise of China and other emerging markets, has created the largest positive labour supply shock ever seen. Given this, a weakening of labour relative to capital was inevitable.
Now, all of those trends that so depressed wages for 40 years are largely tapped out. Birth rates in most countries are falling. Geopolitical and economic shifts have led some nations, such as China, to create more independent supply chains. Baby boomers are ageing. All of this means that the deflationary headwinds to labour are at last decreasing.
What’s more, an ageing population will make the healthcare industry a huge net job creator. While roles in remote diagnosis — so-called “telemedicine” — can be outsourced to lower-wage countries such as India, most healthcare positions are close-contact jobs that cannot be sent abroad. No wonder six of the 10 jobs that the US Bureau of Labor Statistics expects to grow fastest in the next decade are in nursing, therapy and care services.
These jobs are part of what the new Biden administration has dubbed “the caring economy” — a key economic campaign plank. The president has proposed bolstering not only healthcare for the elderly, but also childcare for families — another task that cannot be offshored. He suggested that the spending might be paid for by closing loopholes in real estate transactions.
Of course, rising labour costs would hit corporate profits. But, in rich countries — where consumer spending is the majority of the economy — business also stands to benefit. There is much to be gained, then, from a rebalancing of power between labour and capital.
Op-Ed: Xi is positioning China as the world's indispensable economy — and Biden's greatest challenge – CNBC
It’s now Biden’s America, but whose world will it be?
Expect China’s President Xi Jinping to answer that question unequivocally on Monday with his keynote at the World Economic Forum’s first global virtual meeting. It will leave little doubt that managing relations with China will be both President Joe Biden’s most immediate and most defining foreign policy challenge.
It’s hard to imagine more dramatic timing for Xi’s “special address,” coming in the wake of Biden’s inaugural, Trump’s second impeachment and the Capitol insurrection that prompted it.
Whatever words Xi chooses, his message will be clear: this is China’s historic moment. With modifications for global listeners, it will echo the theme he delivered a few days ago to a gathering of provincial and ministerial level officials at the Communist party school.
“The world is undergoing profound changes unseen in a century,” Xi said, kicking off a celebration-strewn hundredth anniversary year of the Chinese Communist Party’s creation. He declared that the “time and situation” had turned in China’s favor. “This is where our determination and confidence are coming from.”
In a relieved Washington this week, all eyes were on President Biden. He sounded his determination to heal and unify the United States, and he announced his audacious move to unleash the U.S. economy with a $1.9 trillion Covid relief package, and infrastructure spending bills to follow. Internationally, Biden’s focus will be on rallying democratic partners and allies to counter China’s authoritarian gambits.
Yet 2021 may instead be more the year of Xi Jinping than of Joe Biden. The Chinese leader is leveraging the centennial of his Communist Party and China’s emergence as the first major economy to return to growth after Covid-19 to strengthen his individual authority, to tighten the party’s unrivalled control, and to accelerate China’s rise and increased global influence through new investment and trade deals.
At the same time, Xi is laying the ground work for the 20th Party Congress in the second half of 2022, which could formally seal his long-term tenure as China’s paramount leader. Along the way, he has been crushing dissent and rivals, reigning in the country’s biggest private businesses starting with Jack Ma, and deploying digital and surveillance methods to assert control in a manner that he hopes will be more enduring, efficient, productive and less violent than that of Mao Tse-tung.
The world won’t like all of what it sees, but Chinese officials are drawing the comparison of their economic resilience and political stability in 2020 with the dramatic dysfunctions of American democracy and the reality that the pathogen China unleashed has been far less effectively managed, and thus far more damaging, in the United States.
China drove home that narrative through this week’s announcement that the country achieved 2.3% GDP growth in 2020, far outperforming an expected U.S. decline of 3.6 %, a European Union downturn of 7.4% and a global economic pullback of 4.3%. For the first time ever, China passed the United States as Europe’s leading trading partner through the first eleven months of last year.
Most challenging for President Biden is that China has taken a series of pre-emptive steps through trade and investment deals that will complicate his efforts to reinvigorate Asian and European alliances and partnerships. These will be difficult to counter due to his Democratic Party’s reluctance to negotiate new trade arrangements and the detritus of President Trump’s punitive tariffs and sanctions.
Shortly after Biden’s election in November, China signed the Regional Comprehensive Economic Partnership (RCEP) with 14 other Asia countries. Then in December, Beijing offered surprise concessions to break a negotiating deadlock and close an investment agreement with the European Union shortly before Biden’s inauguration.
To ensure the significance of the deal wasn’t missed, Chinese Foreign Minister Wang Yi at a lunch for EU ambassadors praised this demonstration of Europe’s “strategic autonomy.”
President Xi even has expressed interest in joining the higher value Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), a trade liberalization pact among Canada and ten Asian-Pacific Countries that the United Kingdom is applying to join. The U.S. continues to suffer from Trump’s withdrawal from negotiations that created that agreement during the first days of his presidency.
Xi’s underlying message: the U.S. may once have been what former Secretary of State Madeleine Albright called “the indispensable nation,” but China now has become “the indispensable economy.”
President Biden’s opportunity is that Xi may overplay his hand internationally through bullying and at home through an over-concentration of power. His crackdown on private business will render his economy less productive. And history is littered with examples that excessive authoritarianism is ultimately unsustainable.
The Biden administration approach to the China challenge seems to be one of urgent patience, leading with the reinvigoration of the U.S. economy and the prioritization of alliances and partnerships.
For deeper insights, it’s worth reading the impressive recent body of work by Kurt Campbell, who President Biden has brought into the White House as his right hand on China and Asia matters. Campbell sees the need to rise to the China challenge as “a rare area susceptible to bipartisan consensus” that can be leveraged to steer a path away from U.S. decline.
With co-author Rush Doshi in Foreign Affairs, Campbell wrote in December: “Meeting this challenge requires the kinds of reinvestments in American competitiveness and innovation that are also critical to domestic renewal and working class prosperity. Policy makers should link these two agendas, not to amplify American anxieties but to make clear that accomplishing the country’s most important domestic tasks will also have salutary effects abroad.”
As Biden’s presidency enters its first 100 days, he can’t take his eyes off President Xi’s efforts to leverage the anniversary of the first 100 years of the Communist Party’s power. Biden faces a wide array of international challenges, but this contest will be the one that will define his place in history—and whether democracy or authoritarianism will be the ascendant system for the future.
Frederick Kempe is a best-selling author, prize-winning journalist and president & CEO of the Atlantic Council, one of the United States’ most influential think tanks on global affairs. He worked at The Wall Street Journal for more than 25 years as a foreign correspondent, assistant managing editor and as the longest-serving editor of the paper’s European edition. His latest book – “Berlin 1961: Kennedy, Khrushchev, and the Most Dangerous Place on Earth” – was a New York Times best-seller and has been published in more than a dozen languages. Follow him on Twitter @FredKempe and subscribe here to Inflection Points, his look each Saturday at the past week’s top stories and trends.
For more insight from CNBC contributors, follow @CNBCopinion on Twitter.
Vaccine delays in poorer nations threaten rich world’s economy – Financial Times
Advanced economies face a significant hit to their economic recovery from the coronavirus pandemic unless they help developing countries speed up their vaccination programmes, according to a report that will be published by the World Health Organization on Monday.
If the rollout of vaccines in developing countries continues on its current trajectory, advanced economies face output losses of up to $2.4tn — 3.5 per cent of their annual gross domestic product before the pandemic — because of disruptions to global trade and supply chains, the study said.
“The longer we wait to provide vaccines, tests, and treatments to all countries, the faster the virus will take hold, the potential for more variants will emerge, the greater the chance today’s vaccines could become ineffective, and the harder it will be for all countries to recover,” said Tedros Adhanom Ghebreyesus, director-general of the WHO. “No one is safe until everyone is safe.”
The research illustrates the interconnected nature of the global economic recovery and means that even if the world’s leading nations succeed in vaccinating their vulnerable populations promptly, they still face significant economic vulnerabilities from the pandemic.
“Emerging and developing economies are linked to advanced economies through exports and imports, and not just of finished goods,” said Sebnem Kalemli-Ozcan of the University of Maryland, lead author of the report.
“If those countries don’t get the vaccine or get it late, they are not going to recover, they are not going to supply the intermediate goods needed by advanced economies and they won’t have the same level of demand for advanced economy exports.”
Overall a delay in bringing the pandemic under control in emerging economies would wipe about $4.4tn off the world’s output this year, or about 5.7 per cent of annual global output before the pandemic, according to the research, which was commissioned by the International Chamber of Commerce and has been seen by the Financial Times. More than half the impact would fall on high-income countries, the study found.
The WHO has warned of a global “catastrophic moral failure” as poorer countries fall behind richer ones in accessing vaccines.
The Covax facility — which was set up last year by the WHO, Gavi and the Coalition for Epidemic Preparedness Innovations to ensure equitable distribution of vaccines — has struggled to mobilise support from rich nations and faces a $27bn funding shortfall.
The finance ministers of Norway and South Africa have called on fellow ministers of the G20, the OECD and Covax member countries to meet on January 29 to discuss plugging the funding gap.
That would deliver a return on investment of more than 166 times by avoiding the forecast loss of output, the ICC study said.
The research looked at trade links and supply chains for 65 countries and 35 business sectors and estimated the impact on trade and economic output in various vaccination scenarios, based on whether workers in each sector need to operate in proximity to one another.
Under the most extreme scenario, in which rich countries receive vaccines this year but emerging and developing countries do not, the hit to global output would be $9.2tn.
The base-case scenario, causing a $4.4tn loss of output, assumes that advanced economies vaccinate their vulnerable populations by the end of April and that emerging and developing economies reach the same point early next year.
Ms Kalemli-Ozcan warned there were some risks which that estimate did not cover, including the possibility that it would take longer than a year to reach vulnerable populations in poor countries, and that the virus could mutate and continue to spread in advanced economies even if they reached critical levels of inoculation.
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