Bias? Our Bias is the Market

By Alex Whalen, AIMS Operations Manager

The Guardian newspaper of Charlottetown wrote an editorial last week entitled “Money Talks.” In it, they discuss the potential for bias at Canadian think-tanks in light of recent stories in the New York Times allegedly exposing bias in some United States based think-tanks.

The implication of The Guardian editorial was that biases at these institutes, such as ours, may be hidden and connected to financial interests. AIMS President and CEO Marco Navarro-Génie took the opportunity to respond in an op-ed that appeared Journal-Pioneer.

Navarro-Génie starts by addressing the notion of bias, and goes on to say that at AIMS we *do* indeed have a bias. He writes:

The notion that anyone can be completely unbiased is a benevolent fiction. It suggests that we can be completely objective in relation to what we know and believe. To claim perfect objectivity, or that one has no bias of any sort, is to acknowledge that one has no singular perspective on anything. It is an admission of intellectual poverty.

Ok, so if we all have biases, what about AIMS?

The market is our bias. We choose to study economic issues that will improve markets or will raise awareness of the virtues of markets.

How exactly might such a bias play out? He goes on to say that our bias leans against unnecessary regulation, high tax burdens, cartels and subsidies that favor producers at the cost of consumers, and other forces that rob people of their creativity and entrepreneurship.

To read Navarro-Génie’s full piece, click here.

On the Composition of Canada’s Supreme Court

By Marco Navarro-Génie, President & CEO

By established convention, the upcoming retirement of Supreme Court Justice Thomas Cromwell of Nova Scotia opens the door for another Atlantic Canadian justice to be named to the Court.

SCC1

The Supreme Court of Canada

It was an anticipated outcome:

Justice Cromwell’s retirement therefore frees up that solitary Atlantic Canada seat, meaning that his replacement will almost certainly hail from either New Brunswick, Nova Scotia, Prince Edward Island (“PEI”), or Newfoundland and Labrador (“NL”).  To date, five judges were selected from Nova Scotia, six from New Brunswick, and only one from PEI.

Since John A. Macdonald named Sir William Johnstone Ritchie for Atlantic Canada, there has been someone representing the region at the High Court. Such arrangement has become integral to the composition of the Court.

The established convention is not a statement of preference in the way that one prefers chocolate ice cream instead of vanilla. The convention exists to ensure that key federal institutions like the High Court have a balance of voices and do not exclude any region of the federation.

Even though the Supreme Court of Canada is governed by statute (The Supreme Court Act, 1875), the Constitution Act, 1982 spells out in one of its amending formulae (Section 41) that the “composition of the Supreme Court of Canada” requires the unanimous consent of the Parliament of Canada (The House of Commons, the Senate and the Crown) and all 10 Provincial Legislatures.

Removing Atlantic Canadian representation from the Court alters its “composition,” which from a constitutional perspective calls into question the unilateral prime ministerial announcement.

With deficit reduced, debt should come next

NSDebt

By Alex Whalen, AIMS Operations Manager

Nova Scotia’s Minister of Finance announced a budget update this week, and to some surprise revealed the government has slashed its operating deficit. The new deficit figure is $10.7-million, significant progress from the $241-millon to end last year. We can be pleased with this progress. It is an important step.

Yet, slashing the deficit is only the first step to fiscal health. Of particular import is Nova Scotia’s high and rising debt totals—we cannot ignore this. For the first time in history, Nova Scotia’s net debt eclipsed $15-billion in 2015. That figure is a result of many years of accumulated deficits. Only five times in the last 34 years has the debt been reduced on a year-over-year basis.

Yes, the economy has grown along with the debt. However, debt is also growing as a proportion of the economy. This growth is unsustainable by definition.

The crucial measure, when it comes to household, business, or government debt, is the ability to service that debt. The debt-to-GDP ratio measures this capacity by comparing the size of the debt to the size of the economy. On this measure, Nova Scotia has a lot of room for improvement. The 2015 ratio of 38.5 percent debt-to-GDP was fourth-worst in the country, and debt-per-capita was fifth-worst. The debt-to-GDP ratio has worsened five straight years, and debt-per-capita has risen every year.

Debt cannot rise in perpetuity. Servicing debt costs Nova Scotians over $800-million each year, a staggering figure that equals nearly 10 percent of the provincial budget. Consider that for a moment: one out of every ten tax dollars vanishes simply to service debt.

Balancing the budget is a good first step. The critical second step is debt reduction. When balance is achieved, debt must be reduced as opposed to an immediate plunge back to deficit.

Progress on the deficit came as a result of higher-than-expected tax revenues. Nova Scotia should attack our debt problem by 1) as a start, holding the line on expenditure and 2) dedicating tax revenue growth to debt reduction. A lower debt burden will help Nova Scotians now by saving on interest, and helps Nova Scotians in the future by lightening the fiscal burden.

 

SOURCES:
http://www.rbc.com/economics/economic-reports/pdf/provincial-forecasts/prov_fiscal.pdf
http://www.novascotia.ca/finance/en/home/budget/budgetdocuments/2014-2016.aspx
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