Economists: Improve the Economy by Empowering Workers

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Attacks on unions isn’t anything new, even when workers are asking for safer conditions or a little job security. What is new is that economists are starting to realize that we need stronger worker groups to advocate for labour or the economy as a whole suffers. Over the last few decades we’ve witnessed the rise of massive corporations that bully governments and workers; inevitably this process will gut the productive parts of planet (with fantastic short-term gains!). So, if we want our economy to do well for decades on end we need to ensure that all people involved in it get a share of the benefits.

A complementary approach would be to increase workers’ power. Historically, this has been most effectively done by bringing more workers into unions. Across advanced economies, wage inequality tends to rise as the share of workers who are members of unions declines. A new paper examining detailed, historical data from America makes the point especially well. Henry Farber, Daniel Herbst, Ilyana Kuziemko and Mr Naidu find that the premium earned by union members in America has held remarkably constant during the post-war period. But in the 1950s and 1960s the expansion of unions brought in less-skilled workers, squeezing the wage distribution and shrinking inequality. Unions are not the only way to boost worker power. More radical ideas like a universal basic income—a welfare payment made to everyone regardless of work status—or a jobs guarantee, which extends the right to a government job paying a decent wage to everyone, would shift power to workers and force firms to work harder to retain employees.

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Big Boxes Have Failed us; Supporting Downtowns will Save us

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We’ve all heard about how downtowns have failed in smaller cities while big box stores like Walmart succeed; what we don’t really talk about is why and what’s the solution. First we need to establish that suburban big box stores are horrible for people and the economy (which is easy); then we need to address those core issues. The folks over at Strong Towns do exactly that and recently published a great piece exploring how the costs of running a big box operation from the perspective of a city is high. The solution then should be easy: reinforce local economies for success.

And we should also recognize where our wealth really comes from. It comes from our downtown and our core neighborhoods (those within walking distance of the downtown). It certainly doesn’t come from people driving through those places. It doesn’t come from people commuting in. It doesn’t come from tourists or developers or the potential of land development out on the edge. Our wealth — the wealth built slowly over generations — is slowly seeping away in our downtown and its surrounding neighborhoods.

Put these things together — the need to build resilience and the historic wealth that still remains in our core — and the strategy becomes too obvious to ignore: We need to piece our economic ecosystem back together. We shouldn’t spend a penny on the mall — we should be willing to let it fall apart and collapse if the market can’t support it. But we should support those investments in the core that are already paying our bills.

And here’s the really sweet thing: the downtown doesn’t need millions of dollars of investment. There are some trying to force that down the city’s throat, but we don’t need it. It’s already the most successful area in the region. We just need to start reconnecting things.

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Global Economy Becoming Efficient

Usually when economists talk about efficiencies they means firing people so executives can get better returns, this time efficiency is found by using electricity in smarter ways. The myth that increased energy consumption means a better economy has been “decoupled”. The global economy is using less energy for every dollar produced – a sign that economic progress doesn’t have to mean the destruction of the environment.

The EIA also measured energy productivity, which is the inverse of energy intensity, measuring units of economic productivity for every unit of energy consumed. The world also saw significant increases here over the past two and a half decades. China came out far ahead, with a 133 percent increase in energy productivity between 1990 and 2015, largely due to the fact that increases in economic output were twice that of increases in energy consumption. The US saw a 58 percent gain in energy productivity over the same 25 years as well.

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Canadian Government Think Tank: Renewables Win Over Fossil Fuels


When the Conservatives were in charge of Canada they didn’t conserve at all, instead they rallied behind fossil fuels to power Canada’s economy. That foolish gamble contributed to a lame economy (sent the country into massive debt) and a dying planet (even sabotaging global discussions about carbon and fossil fuel. Canadians are hopeful that the new government led by the Liberals will reverse the Conservatives anti-common sense approach to energy policy.

Last week, a federal think tank release a report on the near term growth of Canada’s economy and global influence. They project that fossil fuels will be less important to the global economy with every passing year and that the benefits of switching to renewable energy for the planet are obvious.

At the core of the report’s forecasts is a growing number of indicators that suggest growth in the world’s demand for electricity — particularly renewable-based electricity — will outpace other energy types, while the costs of its production and storage fall faster than previously believed.

The demand is expected to be driven largely by the emerging and rapidly urbanizing middle class in developing countries.

Wind and solar systems have the advantage of being “highly scalable and distributable,” the report states, making them appealing for communities of virtually any size, with or without an existing electrical grid.

As a result, emerging economies in Latin America and Africa may follow a different development path than the West and “leap-frog” directly to renewables as a primary energy source in a relatively short timeframe.

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Read the full report.

Economic Growth No Longer Tied To Increased Carbon Output

People used to (and some lacklustre individuals still) argue that environmental regulations will wreak economic havoc, hopefully we’ll no longer listen to such irrational arguments. For decades environmentalist and knowledgable people have used data to prove that economies can grow while also protecting the environment. Turns out, the data was right.

The International Energy Agency has announced for the last two years carbon dioxide emissions remain unchanged even though the global economy has improved. There is still room for improvement around the world so it’s even possible to see a decrease in carbon dioxide output while having an increase in economic activity.

“The new figures confirm last year’s surprising but welcome news: we now have seen two straight years of greenhouse gas emissions decoupling from economic growth,” IEA executive director Fatih Birol said in a news release.

The change is because of the rapid adoption of renewable energy, especially for electrical generation, the IEA said.

Electricity generated by renewables accounted for around 90 per cent of new electricity generation in 2015, with wind alone producing more than half of new electricity generation.

The IEA’s conclusion that economic growth can continue without needing increased amounts of fossil fuels is preliminary, like its data, which will be explored in a more complete report in June.

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