The next few months are going to be brutal, and the second week of the next few months is going to be excruciating. StatsCan releases the Labour Force Survey numbers on the first Friday of the month, and those numbers will almost certainly be worse than the month before. Apocalyptic headlines over the weekend will ensue, thus preparing the ground for a press conference in which an interest group will make a proposal that will be (unsurprisingly) in the interest of said interest group, but will be sold as an anti-recession measure.
February's entry was the USW-CAW "Buy Canadian" proposal, based on Paul Krugmans' point that during a recession, protectionist policies cannot be dismissed out of hand (although they should still be dismissed anyway). Unfortunately, the proposal made no mention of abandoning these measures when the recession ends.
And so we can expect more of this. As interest groups make their pitches for anti-recession measures, ask yourself the following questions:
- Does anyone else benefit? (Beware of 'trickle-down' arguments.)
- Is the proposed policy explicitly temporary?
If the answer to either of these questions is 'No', then you're looking at an interest group that is using the recession to advance the interests of its clientèle at the expense of everyone else.
Worthwhile Canadian Initiative 
“Beware of ‘trickle-down’ arguments.”
Why?
“Is the proposed policy explicitly temporary?”
Why? If it’s good policy today, wouldn’t it still be good policy tomorrow?
Because their ideology tells them that a protectionist policy (ie, controlled trade, subject to equal labour standards) should not be assumed as a matter of course, quite the opposite.
The rent-seekers, in this case, are a heck of a lot of people. Would that more groups sought such rents.
1) ‘Trickle-down’ arguments are almost always designed to distract attention from the fact that the main beneficiary is the interest group in question.
2) If it’s a good policy, then it doesn’t need the excuse of being a weapon to fight the recession.
Oh, let’s not forget more NAFTA-bashing for, ah, peculiar reasons, e.g. http://www.thestar.com/News/Canada/article/587628
Like the money pit called carbon capture? Or wind turbines?
2) If it’s a good policy, then it doesn’t need the excuse of being a weapon to fight the recession.
Bwuh? You mean that you think that good policy just floats to the top? Surely even you don’t believe that.
By the way, Greg Clark has an excellent post whose spirit I mostly agree with in the Atlantic. I got it via Brad DeLong, who proceeds to interrogate him about a triviality.
I think it should be made explicitly clear that although any protectionist measures that produce barriers to international trade when it comes to economies of scale benefiting from economies of scale is a bad idea, that is not to say that local procurement projects cannot and should not be granted to aid particularly troubled communities.
Economic devlopment at the ground level is downloaded to municipalities; however, many of which who are in the most trouble, i.e. manufacturing towns will need a serious injection of capital to find a new niche in whatever new economy we end up with.
Explicitly temporary measures that procure a percentage of stimulus to local businesses that can produce a long term plan for growth that justifies such a procurement should be able to secure some capital even if they, at present, cannot compete in pricing.
If not, there is a potential for municipal a level poverty trap involving deflation, insolvency and mass urbanization in regions that were not prepared… Manufacturing towns Windsor, Smith Falls, Owen Sound etc. for the scale of this recession.
The last Labour Force Survey was the worst month on record, so I hope you are wrong that each subsequent month will be progressively worse. In any case, we are certainly in for months of cumulative bad news.
Union support for a “Buy Canadian” policy is indeed motivated by manufacturing-job losses. However, the timing of last week’s USW-CAW statement was prompted more by the preceding “Buy America” controversy than by the Labour Force Survey release.
Stephen, I understand that you prefer Krugman’s version of the analysis because he ultimately comes out against “protectionism”, but let the record show that I simultaneously posted a very similar analysis of the international free-rider problem with fiscal stimulus during a recession.
It’s funny that you emphasize that there was “no mention of abandoning these measures when the recession ends.” Did you read William Watson on February 6th? “Writing in the National Post yesterday, the Steel Workers’ (sic) Erin Weir almost seemed to accept that in good times Buy Canada policies aren’t needed.”
Your “explicitly temporary” criterion for policy responses to a demand-constrained economy constitutes a glaring double-standard. Proponents of policies that assume a supply-constrained economy are never asked to make them temporary (or even to demonstrate that the economy is currently supply-constrained.)
On your “Does anyone else benefit?” criterion, many if not most of the immediate beneficiaries from the CAW-USW proposal would be non-union workers and firms in Canada. It’s not a “Buy Union” policy.
And for some horrible, horrible rent-seeking down in Michigan.
I was going to write a comment in reply to Erin’s: “Your “explicitly temporary” criterion for policy responses to a demand-constrained economy constitutes a glaring double-standard. Proponents of policies that assume a supply-constrained economy are never asked to make them temporary (or even to demonstrate that the economy is currently supply-constrained.)”
But it got far too long, so I did a whole post. So that one was for you, Erin!
By the way, I checked Erin’s: “…but let the record show that I simultaneously posted a very similar analysis of the international free-rider problem with fiscal stimulus during a recession.”.
I think Erin’s claim is well-founded. It is very similar. (No Nobel yet though 😉 )