What are the Think Tanks Thinking? (May 10)

Terrance Hunsley
Terrance Hunsley

This week we look at snippets from the following:

Brookings Institution ** Fraser Institute ** Broadbent Institute ** U of Ottawa Health Law  ** Canadian Centre for Policy Alternatives **  E21 Manhattan Institute ** World Economic Forum ** Institute for Progressive Policy Research (IPPR) ** Institute for Research on Public Policy (IRPP) ** The Urban Institute ** The Conversation

 

Brookings Institution

(Acemoglu, Manera, Restrepo), Does The Tax Code Favor Automation, NBER Paper 27052  

We argue that the US tax system is biased against labor and in favor of capital and has become more so in recent years. As a consequence, it has promoted inefficiently high levels of automation. Moving from the US tax system in the 2010s to optimal taxation of capital and labor would raise employment by 4.02% and the labor share by 0.78 percentage points, and restore the optimal level of automation. If moving to optimal taxes is infeasible, more modest reforms can still increase employment by 1.14–1.96%, but in this case efficiency can be increased by imposing an additional automation tax to reduce the equilibrium level of automation. This is because marginal automated tasks do not bring much productivity gains but displace workers, reducing employment below its socially optimal level. We additionally show that reducing labor taxes or combining lower capital taxes with automation taxes can increase employment much more than the uniform reductions in capital taxes enacted between 2000 and 2018.

classnotes@brookings.edu

E21 (The Manhattan Institute)

Steve Levine (The Harsh Future of American Cities) forecasts tough times for cities in the USA after the pandemic.  He predicts that they will be debt-burdened and will need to adopt austerity budgets, with low expectations of help from the federal government. He points to a COVID effect of advancing the demise of much of the retail sector, as people turn to online ordering and delivery. The arts and culture services which enhance urban living are expected to suffer, and many cities will be tempted to declare bankruptcy. The problem, from his viewpoint, is made worse by the extreme debt position of the federal government, which was running large deficits in order to stimulate the economy and boost stock markets. With the general expectation that the economy in rich nations will slow down with baby boomers moving out of the labour force,  supporting debt on the assumption that it will be eroded by future economic growth, may be overly hopeful.  

e21@manhattan-institute.org

World Economic Forum 

Yan Xiao and Ziyang Fan summarize10 technology trends that will be boosted by the pandemic:

1. Online Shopping and Robot Deliveries

2. Digital and Contactless Payments

3. Remote Work

5. Telehealth

6. Online Entertainment

7. Supply Chain Improved efficiency and automation

8. 3D Printing

9. Robotics and Drones

10. 5G and Information and Communications Technology (ICT)

adrianmonck@e.weforum.org

Fraser Institute

reports that, despite spending less on public education, 

students in Quebec and B.C. outperform students in Saskatchewan and New Brunswick in all three PISA test subjects—math, science and reading. In fact, Quebec and B.C. have consistently led in student performance in Canada.

Why? One possible explanation may relate to the very different approaches among provinces on how to deliver K-12 education.

Quebec and B.C. have fairly simple public education systems, relying on independent schools to provide the bulk of educational choice including religious-based education, alternative educational approaches, and content-focused programs such as STEM. In contrast, other provinces (including the highest-spender, Saskatchewan) offer religious education and other programs within their public schools. And these provinces tend to have a more complex public school system (Saskatchewan has three competing school systems, for example).

In B.C. and Quebec, approximately one in eight students attend independent schools, the highest proportion of all provinces, compared to less than one in 100 students in New Brunswick (the lowest rate of all provinces).

https://www.fraserinstitute.org

The Broadbent Institute

Katrina Miller suggests five tests to ensure corporate bailouts benefit people:

1. Companies which use tax havens to avoid income tax should not be eligible

2. The money should not be used for executive bonuses or share buybacks, nor increases to shareholder dividends

3. Any long term loans should provide an equity stake in the company

4. Money should be tied to sustained jobs at decent wages, with priority on environmental improvements

5. The conditions of any bailout should be public, with public followup to ensure compliance with the agreement.

https://www.broadbentinstitute.ca

U Ottawa Centre for Health Law, Policy and Ethics

Lorian Hardcastle reports on poor conditions in long term care homes and suggests that 

There is a sizeable body of evidence indicating that the quality of care in for-profit facilities is inferior to that delivered by public and non-profit facilities. Concerningly, a recent review of AHS might further privatize long-term care. This report recommended that AHS reconsider “facility ownership in cases where private delivery may be more efficient and appropriate.”

(AHS=Alberta Health Services)

healthlaw@UOTTAWA.CA

CCPA- Canadian Centre for Policy Alternatives

Re-imagining Long-term Residential Care in the COVID-19 Crisis (Armstrong, Armstrong, Choiniere, Lowndes, Struthers)

This report  portrays the scenes taking place in long term care facilities (nursing homes) across the country and makes recommendations for both short term and long term improvements.

The report’s short-term recommendations include: making all staff permanent and limiting their work to one nursing home; raising staff wages and benefits, especially sick leave; rapidly providing testing for all those living, working or visiting in homes; ensuring access to protective equipment immediately; and severely limiting transfers from hospitals.

In the long term, evidence suggests policymakers should more effectively integrate long-term residential care into the the public health care system, through federal legislation similar to the Canada Health Act, in order to develop a universal public long-term care plan that is accessible and adequately funded; stop privatization and promote non-profit ownership; ensure protective equipment is stockpiled for the future; build surge capacity into labour force planning and the physical structure of facilities; and establish and enforce minimum staffing levels and regulations.

The critique of for-profit homes is sharp:

The research demonstrates that homes run on a for-profit basis tend to have lower staffing levels, more verified complaints, and more transfers to hospitals, as well as higher rates for both ulcers and morbidity. Moreover, managerial practices taken from the business sector are designed for just enough labour and for making a profit, rather than for providing good care.

The article also points out that people tend to enter into long term care homes when something goes wrong … an injury, or inability of family to continue providing care, or inability to pay for the private care required at home. There is a clear need for other alternatives for assisted living, but many cannot be accessed without substantial private cost.

https://www.policyalternatives.ca

Institute for Progressive Policy Research IPPR

SHAPING THE FUTURE

A 21ST CENTURY SKILLS SYSTEM FOR WALES Jack Fawcett and Russell Gunso

The report provides analysis and advice to Wales for reforming its education system. The mani recommendations are:

1. The Welsh government should set clear guidance that a key priority for the skills system as a whole is to support the delivery of a fairer Wales and a stronger economy. This will broaden the role of the skills system into efforts to reshape the economic model in Wales to help to take the opportunities and meet the challenges Wales faces over the coming years, alongside a commitment to education and training as a public good.

2. The Welsh government should replace the existing school leaving age of 16 with a new ‘skills participation age’ of 18 – this would help to ensure all children are learning whether in the workplace or the classroom.

3. The Welsh government should set a clear target to match some of the highest rates of adult skills participation in the world by 2025, seeing 30,000 additional adult learners at a cost of £60 million per year. This would help to drive a lifelong learning revolution in Wales and to manage the effects of automation, Brexit and an ageing population.

4. The UK government should guarantee full replacement of EU funding for skills in Wales following the UK’s departure from the EU. This would ensure secure funding levels to enable long-term planning for the skills system in Wales.

5. The Welsh government should pilot a new ‘master apprentice’ programme aimed at providing routes for older workers to pass on experience to younger generations. This would help to capture and recognise the learning and experience of older workers to help younger generations.

6. The Welsh government should pilot an Open Institute of Technology – this would provide flexible, modular and bite-sized learning through a mix of online and face-to-face provision across the whole of Wales.

7. The Welsh government should work with key partners to undertake reform of curricula across post-16 education and training. This should develop curricula focused on skills and capabilities rather than solely developing knowledge and testing it, helping the skills system to respond quickly to the fast pace of change in the economy.

8. The Welsh government should adopt a ‘fair work first’ approach to the skills system. This would help to influence business practices across the economy, and potentially help to drive a longer-term, sustainable economic model.

9. The Welsh government should review the tax levers within its responsibilities as to how they could better unlock skills investment from business – in particular, the small business rates relief scheme (worth £120 million) could be reformed to encourage skills investment and engagement among smaller businesses in Wales.

10. The Welsh government should pilot ‘progression agreements’ within the parts of the skills system focussed on in-work provision – this would make public investment in some forms of in-work learning contingent on successful completion of learning outcomes by learners, and agreed career progression (such as pay increases

or promotion) from employers.

11. The Welsh government should introduce outcome-based agreements across the post-16 system in Wales between national, regional and local levels – this would help to get the correct balance between accountability and autonomy for skills providers in Wales, and promote collaboration rather than competition across the system.

12. The Welsh government should undertake a review of learner and employer engagement to establish new and powerful routes for employer and learner engagement from the classroom up to the national level of the skills system.

https://www.ippr.org/ippr-progressive-review

 

The Urban Institute  How Government Jobs Programs Could Boost Employment,

suggests that, like the WPA in depression years,

(with)… a similar program today, state and local governments could use federal resources to help job centers, public schools, nonprofits, and private companies hire workers to address critical needs during and after the COVID-19 pandemic. These could include public health department staff, teachers’ aides in schools, child and elder care providers, and construction workers for housing and infrastructure projects.

It could include hiring hundreds of thousands of workers to help trace and contain the spread of COVID19. They could carry out food testing, provide health information, and other health-related services.

https://www.urban.org/features/how-government-jobs-programs-could-boost-employment#chapter-4

The Conversation

Patrick Leblond, Paying for the pandemic: Why the government’s massive coronavirus spending may not lead to higher taxes

A good explanation of how bold action by the Bank of Canada has dramatically tempered the interest rate that the government will have to pay on money borrowed to pay for COVID-related costs. Leblond suggests that $252B could be carried for 0.04% of GDP annually, with the capital debt left to be eroded by economic growth over the years. This has happened in the past and is an option that countries can use, even if families rarely get to do it.   

https://theconversation.com/paying-for-the-pandemic-why-the-governments-massive-coronavirus-spending-may-not-lead-to-higher-taxes-137862

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