Poli 363 winter 2013

Poli 363   winter 2013  under construction

Poli 363 Fall 2011 . Course outline
Canadian Public Policy :Eight Policy Problems
Professor Harold Chorney
e mail chorney@alcor.concordia.ca or harold.chorney @concordia.ca
Office hours tba.
Course synopsis: This course introduces students to the analysis of selected contemporary public policy problems. We select eight policy issues and examine them intensively over the next 13 weeks. The course is research oriented and requires students to spend time seeking material on the internet and in the library as well as reading extensively in each of the areas from the list of works provided.
There is no formal text that covers all of these areas. However, several works including a collection of readings on the problems of  deficits and debt and public finance and 2 texts on introducing micro and macroeconomic analysis are assigned as texts.In addition students are expected to read a number of blog posts and internet posted articles.
Despite the large class size we will endeavour to have informed discussion and debate in each class. This, however, obliges students to do their work outside of class in order to insure that discussion and debate is well informed and based on research rather than uninformed opinion.
The world of public policy has shifted dramatically during the past few years. The collapse in the stock and financial markets in 2007 and 2008 and early 2009; the pricking of the real estate bubble; the crisis in asset backed commercial paper;the implosion in derivatives; the spate of corporate scandals, fraud and corruption; the sub -prime mortgage collapse in the U.S. and its impact upon the banking system in the U.S.and Great Britain; the general global financial paralysis that followed this collapse; the terrible events of September 11th ,2001; the wars in Iraq and Afghanistan,the revolt for democracy in the Arab world, the tragedy of hurricane Katrina on the Gulf Coast, the recent oil spill in the Gulf, the earthquakes in Haiti, Japan and Chile, the collapse of infrastructure in Montreal and Minneapolis, the riots in Britain,the spectre of global warming, the health care and economic debates in the U.S. and Canada have dramatically shifted public opinion in both Canada and the United States and to some extent globally as well.
What was once seen as impossible or passé in terms of government intervention in the economy has now once again been placed at the top of the agenda. Re-regulation, intervention,investment in infrastructure and long term planning and environmentalism as opposed to laissez-faire and growth at all costs and even budget deficits as deliberate policy are back on the agenda. After thirty plus years in the shadows, Keynesian policy is once again somewhat fashionable and even celebrated despite being contested. the election and re-election of President Barack Obama
 despite ferocious Republican opposition to him and his policies is a watershed event in shifting political trends and policy.Corporate executives from finance, manufacturing and transportation, originally participated in the call for intervention, stimulus, bailout and reregulation.The once much vaunted theory of perfectly rational markets and laissez-faire is now once again passé. In recent months there has been an attempt led by right wing Republicans in the U.S. and Conservative politicians in the U.K and Germany to reassert sound finance principles, backed by the revenge  of the bond market and argue that Keynesian stimulus has failed.
But the evidence is not convincing. The U.S. non partisan bureau of the budget has recently reported that the American stimulus was effective in both lowering the unemployment rate and promoting growth and economic recovery.The problem has been that the stimulus was on the small side and undermined by cuts at the state and local level. More is needed if results are to improve. But politically this will be difficult to accomplish.
Keynesian New Deal style policy proposals for reinvestment in infrastructure and fiscal stimulus were advocated by leading American figures like Larry Summers, the former US secretary of the Treasury and former president of Harvard university and initially President Obama’s principal economic advisor, Robert Reich, the former US Labour secretary, Mayor Michael Bloomberg of New York, Governor Ed Rendell of Pennsylvania and even then Republican Governor Arnold Schwartzenegger of California as well as Nobel prize winning economists like Joseph Stiglitz and Paul Krugman.
 President Barack Obama implemented a 787 U.S. billion dollar Keynesian stimulus which was designed to reverse some of the damage of the deep recession that followed the financial collapse.A second phase is now clearly necessary but the Congress  seems poised to reject any such plan.The Republicans seemed prior to the recent election rejeuvenated by the radical right wing tea party movement and the fact that they  had captured majority control of  the House of Representatives .But with Obama’s second term and the weakening of the tea party it seems likely that their influence will diminish.
In Canada the clash of political opponents seems less dramatic since the Harper government rather pragmatically endorsed a small but significant stimulus package and the Liberals under the pressure of events abandoned, perhaps only temporarily, their previous hostility to deficit finance. The election dramatically shifted the status of all the parties.
We have now a Harper majority conservative government opposed by a surging NDP who have replaced the Liberals as the official opposition. The tragic death of their leader Jack Layton is an enormous loss, nevertheless for the next 4 years they will lead the opposition in Parliament to the Conservative agenda.The immediate problem in Canada is the fact that this past quarter economic growth in the GDP turned negative because of declining exports. This will feed back into employment and will require more supportive monetary and fiscal policy to avoid a double dip recession.
The re-election of the Bush Republicans to a second term had significant implications for Canada.The crisis in management of the natural disaster following the tragedy of Hurricane Katrina raised some interesting questions about the balance of political forces in the US. The quagmire in Iraq greatly increased dissatisfaction with the Bush Republicans .
The race for the Presidency between Democratic candidate Barack Obama and Republican John McCain turned into not just a major debate about Iraq but also the future direction of the American economy and the role of fiscal and monetary policy.This was even more the case during the contest between Mitt Romney and Obama. The somewhat Keynesian inclined Barack Obama and the Democrats won the election decisively and policy  shifted accordingly.The American Congress at the behest of President Bush had enacted a significant stimulus package which had resulted in a modest Keynes style deficit of about 3 % of the GDP.The Obama stimulus was much larger, understandable in the light of the collapse of the housing market and the crash of derivative products and amounted to over 6 % of the GDP.
In this respect because of different circumstances, the extreme fiscal conservative orthodoxy of Canada’s political parties is now overshadowed by the rediscovery of Keynesian technique in the USA. The refusal to think about the wisdom of stimulus facilitated by deficit spending in Canada now looks and is outdated and anachronistic.
Under the pressure of the changed circumstances the Canadian Harper government finally moved to introduce and have passed a very modest 40 billion dollar stimulus to deal with the recession in Canada.It now no longer calls for an immediate balanced budget or the old now untimely call for balanced budgets ”come hell or high water” that Paul Martin and the Liberals articulated in the early 1990s. This was a major shift in policy even if now the focus has once again returned to cautious austerity.However, the  Toronto G20 meeting reasserted the  misguided claim of conservative central bankers like Jean Claude Trichet of the European Central bank that the stimulus moment had now passed and fiscal tightening was now preferred.The U.S. debt ceiling crisis  further complicated the policy scene and shifted sentiment dramatically in a pessimistic direction.
However this shift is premature and if the global economy continues to slow in response to this shift I expect that Keynesian approaches will be once again be on top of the agenda.The successor to Trichet at the European central bank has been somewhat more open to Keynesian technique but on the whole Europe remains stubbornly opposed to appropriate stimulus despite  11.8 % unemployment. As of the late summer 2011 there was already some evidence of the error of premature austerity being the case in the slowdown in Canadian and U.S. growth and the European debt crisis.

The energy crisis which saw oil prices rise to close to $150 a barrel from below $30 just two years before has had an enormous impact upon public opinion in both countries. Oil prices  then fell to the 70 dollar range.Currently (Jan. 08,2013 the NYMEX futures price for Feb. is $ 93.19   The original spike in prices contributed to the recession.

Since Canada is a net oil exporter and very rich in energy supplies, particularly in Alberta and its oil sands, while the US is a major net importer of oil the economic impact has been quite different in both countries. The issue of the cartel that controls oil prices and its impact upon employment, growth and inflation as well as environmental considerations will continue to be a hot issue in both Canada and the U.S.

Canada must now reassess its historic relationship to the
United States in the light of the on going security needs of both the United States and Canada and our increasing economic dependence upon American export markets in an era where globalization and outsourcing pose important challenges to our prosperity.The frustration of Canadian policy makers and public opinion over soft-wood lumber exports and cross border traffic may lead to a rethink about the terms of free trade with the US. The Democratic party’s apparent preference for a more protectionist trade stance will be an important factor in the years to come.

We explore a number of themes that lead logically out from this new environment in the new global economy of 2013. My goal is to help the student become a skillful policy analyst and an independent thinker about policy issues.

Texts 

Harold Chorney, The Deficit Papers,Montreal: 2010 ed..(available through me)

Joseph Stiglitz, Free Fall:America,Free Markets, and the Sinking of the World Economy

Hassan Bougrine, Ian Parker and Mario Seccareccia eds. Introducing Microeconomic Analysis

Mario Seccareccia and Hassan Bougrine, Introducing Macroeconomic Analysis

Caroline Lucas and Michael Woodlin , Green Alternatives to Globalization

Stephen Clarkson, Does North America Exist ? Transborder Governance under Globalization and the War on Terror

Owen Jones, Chavs:The Demonization of the Working Class(London&N.Y. :Verso books)

Basic background readings:

Harold Chorney, Revisiting Deficit hysteria in Labour/Le travail fall 2004.pp.245-258.(available on internet) (assigned reading)

The Finance Crisis and Rescue, The Rotman School of Management, 2008 (recommended)

Stephen Clarkson, Uncle Sam and US (recommended)

Ha-Joon Chang, Bad Samaritans :The Myth of Free Trade and the Secret History of Capitalism (recommended reading)

Joseph Stiglitz, Making Globalization Work (recommended)

Kevin Phillips, Bad Money:Reckless Finance, Failed Politics and the Global Crisis of American Capitalism Viking 2008 (strongly recommended reading)

Simon Johnson and James Kwak, 13 bankers:The Wall Street Takeover and the Next Financial Meltdown, N.Y. : Vintage, 2011.(strongly recommended)

Michael Lewis, The Big Short:Inside the Doomsday Machine, N.Y. : W.W.Norton, 2010.(recommended)

John Kenneth Galbraith, The Economics of Innocent Fraud(recommended reading)

Samuel P. Huntington, The Clash of civilizations and the Remaking of the World Order, Simon and Schuster, 1997.(recommended rerading)

Daniel Drache, Borders Matter: Homeland Security and the Search for North America(recommended reading)

John Dean , Conservatives without Conscience (recommended reading)

George Soros, The New Paradigm for Financial Markets :The Credit Crisis of 2008 and What it Means(Public Affairs)

Thomas Kean& Lee Hamilton et al, The 9/11 Report The National Commisssion on Terrorist Attacks Upon the United States (recommended reading)

Tim Lewis, In the Long Run We’re All Dead: The Canadian Turn to Fiscal Restraint. (recommended reading)

Joseph Stiglitz, Globalization and its Discontents, 2001.( recommended )

Joseph Stiglitz : The Roaring Nineties: A New Twist on the World’s Most Prosperous Decade( recommended reading)

Harold Chorney, The Economic Benefits of Linguistic Duality in Albert Breton, The Economics of Bilingualism, Ottawa:Canadian Heritage, 1998.(recommended reading also may be available on the internet)

Harold Chorney and Philip Hansen, Toward a Humanist Political Economy, Black Rose, Montreal, 1992. .(recomended reading)

Bai Gao, Japan’s Economic Dilemma:The institutional origins of prosperity and stagnation, Cambridge university Press, 2001.

Phillipe Legrain, Open World The Truth about Globalization, 2002, Abacus Books

Noam Chomsky, 9/11, NY: Open media Book, Seven Stories press,: 2001.(recommended reading)

Lewis Lapham, Gag Rule: On the Supression of Dissent and the Stifling of Democracy (recommended reading)

Doris Sommer, Bilingual Aesthetics (recommended)

George Grant, Lament for a Nation.

Lloyd Axworthy, Navigating a New World:Canada’s Global Future

The Honourable Michael Kirby &the Honourable Margorie Lebreton co chair, The Health of Canadians: The Federal Role, Final Report on the state of the Health Care System in Canada, Vol Six:Recommendations for Reform, (assigned reading)

Jagdish Bhagwati, A Stream of Windows:Unsettling Reflections on Trade, Immigration and Democracy

Jim Stanford,Paper Boom, CCPA, 1999.

Lars Osburg &Pierre Fortin, Unnecessary Debts, Toronto, Lorimer, 1996.

Andrew Jackson,et al, Falling Behind:The State of Working Canada, 2000

Bob Rae, The Three Questions:Prosperity and the Public Good, Toronto Penguin, 1998.

Daniel Drache & Terry Sullivan,eds. Health Reform: Public Success/Private Failure NY: Routledge, 1999

Michael Rachlis & Carol Kushner, Strong Medicine,Toronto:Harper Collins, 1994.(recommended)

Linda McQuaig, The Cult of Impotence:Selling the Myth of Powerlessness in the Global Economy, Viking 1998.

Linda McQuaig, Shooting the Hippo, Viking, 1995.(recommended reading)

Thomas Palley, Plenty of Nothing, The downsizing of the American Dream and the Case for Structural Keynesianism, Princeton University Press, 1998.

Colleen Fuller, Caring For Profit:How Corporations are Taking Over Canada’s Health Care System (strongly recommended reading)

Stephen McBride and John Shields, Dismantling a Nation:The transition to Corporate Rule in Canada.Halifax, Fernwood, 1997.

Jeremy Rifkin, The Age of Access, Tarcher, Putnam Penguin, New York, 2000.
The Empathetic civilization: the race to global Consciousness in a world of crisis.N.Y.:Tarcher Putnam Penguin, 2009

John Grieve Smith, There is a Better Way: A New Economic Agenda, London:Anthem Pres, 2001.

Paul Omerod, Butterfly Economics, NY: Pantheon Books, 2000.

Daniel Lazare, What’s Killing Our Cities and How We Can Stop It, New York:Harcourt, 2001

Edmund P.Fowler & David Siegel, Urban Policy Issues :Canadian Perspectives, Toronto:Oxford University Press.,2002.

Andrew Sancton, Merger Mania: The Assault on Local Government, Montreal: 2000.(recommended)

Harold Chorney, Review of Andrew Sancton’s book Merger Mania in Canadian Journal of Regional Science, vol.23 #1, 2001, pp.175-178.(recommended)

Alan Broadbent Urban Nation:Why we need to give power back to the cities to make Canada strong, Harper Collins,2008.

Harold Chorney , City of Dreams: Social Theory and the Urban Experience, Nelson, 1990

Mark Kingwell, Concrete Reveries:Consciousness and the City, Viking, 2008

Key Web sites:
http://www.cec.org, web site of the North American Commission for Environmental Co-operation.

www. ville.Montreal.qc.Ca, web site of the city of Montreal

IMF; OECD; Eurostat; U.S.Treasury; U.S. Bureau of Labour statistics; Statistics Canada.

GRADE:
The grade will be based on a final exam 50 % and a mid term test in the first week of March  or an essay due in the first week of March  50 %.

TOPICS:
1. Introduction and overview. How does public policy analysis work? The role of interdisciplinarity. Research techniques. Policy and values.Policy and the political process. Globalization and trade. Business cycles and public finance. The long recession.

Policy after the market crash, the credit crisis and the post 9/11 world.
Readings: 9/11 report; Drache.The Rotman school; Phillips, Soros, Chorney blog items on credit crisis, manias panics and bailouts, and the Keynesian revival,Ha-Joon Chang, Stiglitz.Clarkson.

2. The Return of Keynesian economics in public policy.Obama, Bush, McCain,the Tea party Republicans,Romney, Clinton (Hillary and Bill) and the revival of Keynes in the US. Canadian fiscal conservatism . Public finance.The debate about deficits,surpluses, debt and employment. The return of regulation after Enron, Madoff, the crash on Wall street, the banking crisis, the dot com bubble bursting and the credit crisis and sub-prime housing market. The current dilemma,mass unemployment and the possibility of a double dip recession.

Readings: Galbraith; Chorney on revisiting deficit hysteria; on deficits; Tim Lewis , Chorney blog items on revival of Keynes and the financial crisis.Chorney papers from the Eastern Economics association and the Canadian economics association on Keynes and the general theory and on Rediscovering Keynes and the origins of quantitative easing and the crisis. (See this blog, June 3rd, 2011 )Chorney on the role of public enterprise and regulation in The deficit papers. Chorney U tube items on Keynesianism, financial crisis and deficits and debt.

3. The Challenge of Protecting our Health care system. The Canadian, British and American models. Federal provincial disputes over health care. The Romanow Commission. Alberta versus the Federal Government. Market versus public approaches. The American health care debate. The question of affordability.

Readings:Colleen Fuller, Romanow and Kirby Reports available on the internet;Drache and Sullivan; Rachlis and Kushner.Canadian Health Information data base.Clarkson.The New York Times and the Wall Street journal, Huffington post and Salon magazine.

4. The rise and fall of the mega-city of Montreal. The background, the debate, the election and the demerger referenda.The state of politics at city hall.The Mayor and Council.Corruption and Scandal at city hall.  Infrastructure collapse.Budgetary questions.The problem of homelessness. A federal role in cities ? The challenge for local democracy and economic development.
.Readings: Sancton; Aubin; Broadbent;Chorney , Mark Kingwell.

5. Managing the global economy.Corporate behaviour. The problem of capital flows. The Argentine debt crisis.Latin American contagion. The need for new financial architecture. The Tobin tax, debt repayment standstills and reworking exchange rates. Market disorder versus regulated management. Turbulence in Venezuela. Canada and Latin America.Venezuela& oil.The Brazilian third way.The policy stance of the Japanese government with respect to globalization.Keynes in Japan. The European debt crisis and the European Central Bank.
Readings: Galbraith; Stiglitz;internet on Argentina and debt crisis and Venezuela.Clarkson on Nafta; Bai Gao on Japan, Chorney blog.

6. Environmental challenges. NAFTA and managing the environment.The tension between economic growth and the environment.The Kyoto accord. Globalization and Green Politics ? Hurricane Katrina and civil preparedness.Dion’s Green shift.
Readings: Clarkson; Drache; Bhagwati; internet, Lucas and Woodlin Green manifesto

7. Bilingualism: A Canadian defining characteristic.The” Spanish challenge ” in the United States.
Readings: Chorney in Albert Breton; Huntington on the Hispanic Challenge; Sommer on Bilingual Aesthetics.

8.. Canada in a global world; Canadian foreign policy in the era of NAFTA and 9/11. Our security. Our relationship with the United States. The Axworthy legacy. From Axworthy to Manly to Graham to Pettigrew to Baird. A new way forward ? The clash of civilizations ? Chomsky versus Huntington.
Readings: Drache;9/11 report;Chomsky ;Huntington; Axworthy.

9. The energy crunch. Alberta and the problem of fiscal federalism. Sharing the wealth of regional resources. Canadian oil and American needs and Chinese ambitions: an emerging   strategic partnership. The future of free trade.
Readings:Clarkson; tba.

Weekly assignments: September: Read the Revisiting deficit hysteria (internet) and Manias panics and bailouts essays. The first is on the net the second is in my older blog Jan.2009 Begin reading Clarkson and Stiglitz.

Readings: The deficit papers chapters; start with ch. on Keynes, the new introduction to collection, and  Revisiting deficit hysteria.

Essay assignment: Due the first week of March, Thursday class .

Write an essay of 12-15 pages on one of the following topics drawn from the course . Be sure to use a manual of style and properly cite sources and providea bibliography. You should use books, periodical literature and internet sources that are properly noted.

Topics :(under construction)

1. Discuss the debate over deficits, surpluses and debts. Evaluate the Obama stimulus as compared to the Harper one .

2. Explain the origins of the recent financial crash. What role did deregulation and laissez-faire play in this crash. What has been the experience of financial panics and crashes in history.

3. Compare Keynes’ theory of unemployment and anti-recession policy with that of the monetarists.

4. Explore the problem of inflation and unemployment  in a capitalist economy. Can moderate inflation be compatible with real economic growth and low unemployment.

5. What led to the eclipse of Keynes from 1974 to 2008.

6. Explore the oil industry and the global pricing system for oil.

7. What is the history of Canadian health care. How does the Canadian system compare to the American debate over health care and to British health care.

8. Explore the origins of neo-conservatism. How was it able to have such a lasting large impact upon western societies.

9. Discuss the debt crisis and dollar currency boards in Latin America and their impact upon Argentina.

10.Compare and contrast the argument of Noam Chomsky with respect to American power as opposed to the work of Samuel Huntington.

11. Examine the history and evolution of the debate over global warming and Canada’s policy stance toward this critical issue.

12. What has been the Canadian foreign policy orientation. what should it be.

13.Examine the state of free trade between Canada, the U.S. and Mexico.Explore the evolution of the doctrine, its consequences for Canada and its likely future evolution.

14. Explore the roots of the Tea Party in the U.S. How do they compare to Canadian neo-conservatives

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About haroldchorneyeconomist

I am Professor of political economy at Concordia university in Montréal, Québec, Canada. I received my B.A.Hons (econ.&poli sci) from the University of Manitoba. I also completed my M.A. degree in economics there. Went on to spend two years at the London School of Economics as a Ph.D. student in economics and then completed my Ph.D. in political economy at the University of Toronto. Was named a John W.Dafoe fellow, a CMHC fellow and a Canada Council fellow. I also was named a Woodrow Wilson fellow in 1968 after completing my first class honours undergraduate degree. Worked as an economist in the area of education, labour economics and as the senior economist with the Manitoba Housing and Renewal Corporation for the Government of Manitoba from 1972 to 1978. I also have worked as an economic consultant for MDT socio-economic consultants and have been consulted on urban planning, health policy, linguistic duality and public sector finance questions by the governments of Manitoba, Saskatchewan,the cities of Regina and Saskatoon, Ontario and the Federal government of Canada. I have also been consulted by senior leaders of the British Labour party, MPs from the Progressive Conservative party, the Liberal party and the New Democrats on economic policy questions. Members of the Government of France under the Presidency of Francois Mitterand discussed my work on public sector deficits. I have also run for elected office at the municipal level. I first began to write about quantitative easing as a useful policy option during the early 1980s.
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