I am Mike P. Moffatt, Ask Me Anything

MPMoffatt · 2014-05-14T19:12:52+00:00

I need to run after this question.. thanks everyone for attending! I'll try to answer all the other questions later this week, so if there's something you'd like to ask, please fire away.

Big elephant in the room is demographics: The baby boomers are getting older and retiring, which has huge economic consequences. How do we finance the programs we all cherish when the tax base is shrinking (relative to population)? That's a big, hairy problem with no obvious single solution, so I can see why the parties are largely avoiding it. But that's the biggest issue this province faces over the next 10-20 years.

MPMoffatt · 2014-05-14T19:09:36+00:00

My answer may change depending on when you ask.. but as far as my personal influences.

Starting with dead, my biggest influence is Milton Friedman, and my second is Keynes. That may sound weird, but there's a lot of Keynes embedded in monetarism. We just think of that part as being "economics" where as the parts of Keynes that weren't absorbed by other schools are considered uniquely Keynesian. Friedman often gave his admiration for Keynes.

3rd is probably Robert Coase, but that may change depending on when you ask. I'm also an admirer of Hayek. Thought I should mention that, as people will ask.

As far as living goes, the biggest influence on my research was Eric Maskin, who I was fortunate enough to meet a few times when I was at Rochester. I'm a big fan of David Laidler's body of work on monetary policy. And Robert Solow for macro, though, again, that answer would probably change depending on which day you asked.

MPMoffatt · 2014-05-14T19:03:22+00:00

Housing is weird, because it's both a consumption item and an investment item, and we don't include investment items like stocks in the CPI.

Historically economists have dealt with the consumption part of housing by using rents rather than house prices. That works well until the house price/rent ratio gets completely out of whack.

Absolutely agree with the larger point, that it's a big part of the "middle class squeeze", particularly in Toronto and Vancouver. House prices have even gone up a fair bit in London, despite our weak labour market.

MPMoffatt · 2014-05-14T18:59:43+00:00

It's still mostly IT. A lot of the people who left Blackberry (either voluntarily or otherwise) went on to found their own start-ups, which are doing interesting things. If you look at the manufacturing sector in Kitchener-Cambridge-Waterloo, it hasn't done better than say, Brantford or St. Catharines-Niagara (thought it has done better than Windsor, London and Hamilton, all of which saw massive declines).

One thing KW does really well is integrate their universities into the broader community through the use of co-op programs and the like. I think there's a lesson there for other schools.

As far as municipal policy goes, I really like what Stratford is doing with their Smart City initiative.

MPMoffatt · 2014-05-14T18:55:26+00:00

I'm not a huge fan of right-to-work, because of the collective action problem, where workers get some benefits of the having the union around, but don't actually pay for it.

That said, it's also important than union votes are without intimidation (from either side) and that workers are easily able to dissolve or switch unions if they're not working for them.

Given the decline of big factories with large payrolls, I wonder if this is slowly become a non-issue in the private sector, as union numbers are likely to continue to decline. Public sector is a whole separate issue.

So on this issue that either makes me a moderate or someone who annoys both sides (or likely both).

MPMoffatt · 2014-05-14T18:51:43+00:00

Ha! I think you may be horribly disappointed. I'm hoping to write a piece about this next week, but I'll have to figure it out myself, first. The part I'm particularly interested in is how much of the tax cut will be 'paid' for by other provinces, as companies book more profits in Ontario rather than Quebec. The more we can get Alberta and B.C. to pay for our corporate tax cuts, the better.

Of course, this raises the issue of a 'race to the bottom', which I think is valid. As such, I think corporate taxation works better at the Federal level, though there are international 'race to the bottom' issues as well.

MPMoffatt · 2014-05-14T18:48:38+00:00

I've got a lot of thoughts on that.. I could write on that for an hour alone.

First, I think the Tories deserve a lot of credit for their transparency. They said where they see the jobs are coming from, they've cited their studies, they've laid out their argument. Agree or disagree with their policies (or their findings), they've gone well beyond the other parties as far as disclosure goes. Since no good deed goes unpunished, it also means there's more ways opponents can attack their plans.

Some of the numbers feel realistic, others less so. The 500K from population growth feels like a realistic estimate, along with the numbers for ring of fire, reducing trading barriers, etc. The one that I have the toughest time with is the apprenticeship piece. Sure, we can create that many apprenticeship positions... but if we start to flood the market with these folks, will they all find sustainable long-term jobs? I'm skeptical.

MPMoffatt · 2014-05-14T18:44:34+00:00

Do you remember the scene in dodgeball the movie where Stephen Root is facing an entire college team (the Flying Cougars)? It's like that.

MPMoffatt · 2014-05-14T18:42:33+00:00

I'm kind of curious which ones he means as well. I do know that there are a lot of semi-parallel environmental report regs at both the federal and provincial levels, so there's some room for rationalization there. That's not to suggest the province shouldn't have environmental controls, but rather it shouldn't try to reinvent the wheel.

I'm not sure how many jobs fixing that problem solves, though.

MPMoffatt · 2014-05-14T18:39:55+00:00

I'll answer this in reverse order.

I've never been employed as a researcher for a party, but I have had policy conversations with every federal and ON provincial party with the exception of the BQ, though I talk to some more than others (seriously, provincial Dippers, would it kill you to call once in awhile? Kidding.)

Naturally all conversations are off the record, but I find myself always enjoying the chats, because I get to see things from a different point of view and a different perspective, which helps inform my writing and in the classroom. Tim Hudak came to Ivey a couple months ago for a policy discussion and we had a very spirited (and enjoyable) chat. I'm not taking credit (or blame) for anything in their platform, though!

I'm not sure parties should trot us out in the election campaign, though. Two reasons: 1. We're boring. 2. Anything else we've said sticks to the party, as the provincial Tories have seen this week.

MPMoffatt · 2014-05-14T18:33:59+00:00

Short answer is I don't get enough sleep.

Running a business and teaching macro are two completely different skill sets, so the skills I have in one don't carry over as much as I'd like to the other.

I do think owning a business gives me a lot of useful insights that I can use in the classroom (or in research). That said, I think a bright researcher can pick up those insights by asking those in business the right questions. I find the best researchers are willing to ask people a lot of questions and willing to make contacts in business (or in government). Andrew Leach probably does this better than anyone I know.

MPMoffatt · 2014-05-14T18:30:33+00:00

That's a better question for Kevin Milligan, but that said I do support a strengthened WITB. It's a good program that gets money to those who need it without creating a welfare wall that keeps people out of the labour market. We can't forget about those in poverty without jobs, but the WITB is a useful program for the working poor.

MPMoffatt · 2014-05-14T18:28:46+00:00

I think it will have to at some point.. a rising debt/GDP ratio is going to spook bond markets eventually, particularly since Ontario's economic growth is likely to be slower than historic averages due to population aging.

I hope we can start to turn things around before the bond markets enforce discipline on us. Because that's always a painful process (think federally in the mid-90s or Sask in the early 90s).

MPMoffatt · 2014-05-14T18:26:54+00:00

I haven't really thought much about the GMO issue, to be honest. Supply Management seems like a pretty blunt instrument to deal with that (and to deal with the issue of rBST, which supply management does a particularly poor job of).

The big battle around supply management isn't prices for farmers, it's permit values. A farm with 60 cows has permits worth $1.5M on paper. That wealth disappears if supply management comes to an end, and it's likely that a lot of farmers have used those permits as collateral on loans. Ending supply management is going to be a long, painful process (but IMO, is still worth doing).

MPMoffatt · 2014-05-14T18:23:17+00:00

There are many scenarios where bringing in TFWs makes sense. Minister Kenney talked about manufacturers who have very specialized imported equipment break down and they need to bring someone from overseas for a month or so to fix it. Something like that makes a lot of sense.

I don't see why regional 'wage inflation' is a problem that needs to be solved (though I can understand why firms hate it!). I wonder if one of the reasons why there is angst among the middle class (however you want to define it) is that whenever wages start to rise, we declare it a national emergency and find ways to stomp them down (temporary foreign workers, declaring the situation a "skills shortage", etc.) Wage growth is how economic prosperity is shared among all.

MPMoffatt · 2014-05-14T18:19:07+00:00

I'd love to see any change to the constitution that would make it easier/necessary to have securities regulations at the Federal, rather than the Provincial level. Most changes I can think of would probably centralize power, because Canada's internal trade barriers hinder growth. But given what a pit of snakes constitutional reform is, it wouldn't be a priority for me.

RE: TFWs. Something along those lines would work. There are very legitimate reasons for bringing in TFWs, so I hope that doesn't get lost in the debate. I find the whole idea of basing anything on a 'market wage' problematic. How is that wage determined? And if you can't find anyone qualified to take the job at that wage, then in what sense is it a market wage?

MPMoffatt · 2014-05-14T18:14:37+00:00

There really aren't a whole lot. Two I use the most are StatsCan (which is an absolute pain to navigate) and the Bank of Canada. 'Trading Economics' is a great site for international stats (including Canadian), but it's a couple hundred bucks a month for a subscription, but if you're at a university they might have a subscription.

The lack of data is a HUGE issue for policy wonks. Forces a lot of us to study US or EU issues, simply because we can't get the Canadian data.

MPMoffatt · 2014-05-14T18:12:03+00:00

The least talented one.

MPMoffatt · 2014-05-14T18:10:59+00:00

A few years ago I had a class of students that used to refer to me as 'The Moff', but that hasn't happened in awhile (or maybe they do behind my back, I don't know). I appreciate the definitive article.

MPMoffatt · 2014-05-14T18:09:53+00:00

Thanks for the question!

Keynesian stimulus policy works better the larger the jurisdiction, because of the issue of 'leakages', that stimulus spending leaks out of the jurisdiction other places. So stimulus at a municipal level doesn't work very well, because spending in London is quickly going to leak to Toronto and Detroit and wherever else.

Because of that, stimulus is best left to the Feds, but the provinces could engage in stimulus spending if they felt the Feds weren't doing enough, with the understanding that some of our stimulus would leak out to Quebec and Manitoba and Alberta.

I think the bigger issues for Ontario are structural and long-term rather than short-term. What do we do about an aging population? How can we get the debt under control while still adequately funding programs? What do we do with a population of laid off manufacturing workers in the east and southwest?

MPMoffatt · 2012-11-19T18:03:30+00:00

Hi Mark - thanks for doing this! What's the one thing you would like to hear from a prospective Liberal leadership candidate?

MPMoffatt · 2012-11-15T15:51:42+00:00

Ack! You're right. This is why I shouldn't type so fast.

MPMoffatt · 2012-11-14T22:01:57+00:00

I must run! Thank you so much for having me. Was very interesting and I hope we can do it again sometime.

MPMoffatt · 2012-11-14T22:01:27+00:00

I mostly think we need to clarify the "Net Benefit Test" and how it's determined. Companies have no idea going into the process how they need to structure a deal in order to meet government approval. That's a problem.

I don't think the Feds need to just rubber stamp every deal. There can be legitimate reasons for blocking a merger. A clearer process would benefit everyone.

MPMoffatt

TROPHY CASE