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CBC Podcast on Power, Profits, and Inflation
CBC’s top-rated podcast series, Front Burner, recently featured a 30-minute interview with Centre for Future Work Director Jim Stanford on the continuing debate about whether corporate profits have contributed to recent Canadian inflation. The interview responds to recent claims of supermarket CEOs (in their appearance before a Parliamentary inquiry) that their profit margins on sales are modest and stable. In fact, compared to pre-pandemic norms, profit margins have grown by about three-quarters – and the mass of after-tax profits collected in the food retail sector has more than doubled. The podcast also considered the role of record profits in driving painful price increases in other sectors of the economy, too:…
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Yes, Virginia, Supermarket Profits HAVE Increased
The following commentary was first published by Centre for Future Work Director Jim Stanford at the Progressive Economics Forum’s blog site, and then republished by Heterodox Economics Blogs and covered by rabble.ca. Supermarket executives were up on Parliament Hill last week, appearing before the Standing Committee on Agriculture and Agri-Food’s inquiry into food inflation grocery chain profits. They repeated the now-familiar argument that supermarkets have not caused food inflation, they have merely passed along higher input costs to their customers; their profit margins have been stable, it is claimed. Don’t believe them. Here are a few data points on the argument that the chains haven’t actually profited from inflation, since their…
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Latest Interest Rate Hike Increases Risk of Recession
On December 7, the Bank of Canada increased its policy interest rate for the seventh time since March, by another super-sized increment of 50 basis points (0.50%). The rate is now set at 4.25%. The Bank of Canada has been among the most aggressive of any OECD central bank in lifting interest rates to slow economic activity. Centre for Future Work Director Jim Stanford was interviewed about the Bank’s decision in numerous media outlets. In this segment on CBC News Network, anchor Andrew Nichols asked about alternatives to higher interest rates for controlling inflation: Another CBC story, by Stephanie Hogan, provided a roundup of differing views (including Jim’s) on the…
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Fifteen Super-Profitable Industries are Driving Canadian Inflation
A new research paper from the Centre for Future Work sheds new light on the role of surging corporate profits in driving higher Canadian inflation. The report provides details on net income in 15 super-profitable private-sector industries in Canada, based on newly released data from Statistics Canada. It compares the most recent 12-month period to profit levels before the pandemic (in 2019). Combined profits in those 15 sectors grew by 89%, rising by a total of $143 billion. In contrast, profits in the other 37 business sectors tracked by Statistics Canada fell over the same time. The oil and gas industry experienced by far the largest increase in profits: up…
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Canadian Domestic Economy Fell Into Recession in the Autumn
New economic data from Statistics Canada, covering the third quarter of 2022 (July through September) indicate that the recession feared by many forecasters has already started in Canada’s domestic economy. After a year of rapid slowing, real domestic demand (excluding international trade) shrank in the third quarter at a 0.6% annualized rate. After months of rapid interest rate increases imposed by the Bank of Canada to slow job-creation and economic activity, many components of domestic spending (especially those sensitive to interest rates) are now contracting. Household consumption, residential building activity, business machinery and equipment investment, and public sector investment all declined in the third quarter. Despite the contraction in domestic…
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Saying the Quiet Bits Out Loud: Bank of Canada Aims to Raise Unemployment
It will seem irrational to most Canadians, but the surprising truth is that the Bank of Canada is explicitly trying to increase unemployment. The Bank’s Governor Tiff Macklem recently claimed that the unemployment rate in Canada was too low: “unsustainable,” in his words, and must be increased by using high interest rates to slow down economic activity and reduce employment. This idea – of using unemployment as a deliberate tool to undermine wages and protect business profit margins – has been implicit within orthodox monetary policy for many years. But it’s both rare and angering to hear that made explicit as the goal of economic policy. In this commentary, originally…
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Sector Bargaining and Broader Based Bargaining
Labour advocates and researchers around the world have been investigating the possibility of new systems of broader based collective bargaining, as a promising strategy for reversing the decline in collective bargaining coverage which has occurred in many countries. Sectoral, occupational, and other broader-based bargaining systems allow negotiations to occur at more than one workplace or enterprise at a time: across occupations, sectors, or regions. They can allow bargainers to establish common terms across multiple worksites – such as covering all franchises within a large commercial chain. And by establishing terms and conditions that apply evenly across broader sets of businesses, broader based bargaining does not disadvantage any particular company or…
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Webinar on Inflation, Recession … or Both!
Centre for Future Work Director Jim Stanford recently presented a keynote lecture to a webinar on Canada’s uncertain macroeconomic outlook, hosted by the B.C. office of the Canadian Centre for Policy Alternatives. The presentation covered the causes and consequences of the recent acceleration of inflation in Canada – stressing that higher prices cannot be blamed on rising wages or ‘overheated’ labour markets. Instead, a combination of supply disruptions, international pressures, and record profit-taking by Canadian businesses are the main forces driving faster inflation. Unfortunately, the conventional response to higher inflation (quickly hiking interest rates to reduce employment and overall spending) will make things worse. Most economists now expect a recession…
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CBC’s The Current Looks at Inflation and Food Prices
The sharp acceleration of food prices (up over 11% in the last 12 months) has sparked anger and hardship in Canadian families struggling to pay the bills of day-to-day life. It has also raised troubling questions about the corporate power of the major supermarket chains, which control a dominant share of the overall food retail industry. Centre for Future Work Director Jim Stanford recently joined Matt Galloway, host of CBC’s national radio program The Current, for an in-depth conversation about food prices, why they’re so high, the role of corporate profits in driving up prices for food and other necessities – and, most important, what we can do about it.…
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Who Wins, Who Loses in the Fight Against Inflation
The Centre for Future Work recently co-published with the Canadian Labour Congress a major new report on inflation: its causes, consequences, and how it could be tackled in a more balanced and fair manner (rather than throwing the whole economy into recession, which seems the inevitable outcome of the Bank of Canada’s current strategy). The report has generated considerable attention in print, broadcast, and social media. CBC’s daily political podcast, Front Burner, published a feature-length interview with report author Jim Stanford (Director of the Centre for Future Work) on why the Bank of Canada’s current approach is punishing workers for inflation they clearly did not cause. He discusses the options…