
Why Canada's productivity has been underestimated for decades - soundsop
http://www.theglobeandmail.com/report-on-business/economy/canada-competes/why-canadas-productivity-has-been-underestimated-for-decades/article6546888/
======
redthrowaway
It'd be nice if we gave StatsCan, our National Boffins, the ability to make
mathematically justifiable claims about the nature of Canada. Unfortunately,
the current government decided that voluntary surveys were a perfectly
sufficient form of data collection for our national bean counters, and has
proudly proclaimed their disinterest in the use of stats to form policy. Don't
worry though, the guy who came up with the previous idiocy has a Masters' in
Econ. Joy.

~~~
cwan
Sarcasm notwithstanding, can you explain how the long form survey would have
helped here? Adding to this, the short form survey is still mandatory where
"mathematically justifiable claims about the nature of Canada" can still be
made particularly with respect to demographics. Furthermore, compared to the
census requirements elsewhere, the long form _was_ unnecessarily intrusive
(which included _mandatory_ questions like how many rooms in your home have
"missing or loose floor tiles.")

The decision to cancel the mandatory long form survey and make it voluntary
was made June 17, 2010. The issue raised by Diewert suggests "that Statistics
Canada has badly underestimated the growth of so-called multifactor
productivity as far back as the 1960s."

~~~
cwp
It's only related insofar as both problems stem from the Harper governments
general disinterest in, and declination to fund, accurate data collection and
analysis.

~~~
felixc
Are you saying Statistics Canada's alleged underestimation of productivity
since the 1960s stems from the Harper government's policies?

~~~
cwp
Apparently I did. How silly of me.

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kennywinker
> The paper also challenges the reliability of official data from Statscan,
> which has been hit with deep budget and staff cuts in recent years. It said
> the agency is beset by “data problems.”

Big understatement. The current government (incidentally, elected to a
"majority government" by 37.65% of the popular vote... which is 23.1% of
eligible voters) has completely crippled Statscan by killing the mandatory
long-form census... the thing that gave their statistics a basis in fact
([http://www.theglobeandmail.com/news/politics/statistics-
cana...](http://www.theglobeandmail.com/news/politics/statistics-canada-chief-
falls-on-sword-over-census/article1320915/)).

------
otoburb
>>But he said the numbers could mean a lot to Canadian monetary and fiscal
policy going forward.

Although I tangentially understand there could be implications to "monetary
and fiscal" policies I would suspect these possibly revised productivity
numbers will only weakly influence such policies.

The main thrust of Canadian economic policy since I can remember has been to
control targeted inflation rates, which is presumably easier to measure, or at
the very least uses a more widely accepted measuring process (e.g. basket of
certain goods or other inflation indices).

With a renewed interest to control unemployment as opposed to inflation (more
in line with the USA), I find it hard to believe that revised productivity
measures over the past 50 years will much impact cabinet, Parliament or Bank
of Canada decision making.

Can any HN economists comment on whether productivity measures would really
have any impact on policies given overriding concerns on inflation or
unemployment targets?

~~~
cryptoz
> Can any HN economists comment on whether productivity measures would really
> have any impact on policies given overriding concerns on inflation or
> unemployment targets?

I'm not an economist, but I'm a Canadian. And I'm going to give you an answer
that's not what you're looking for, but it's important:

 _No impact_. Our government has been very, very clear about this. Measures,
data, and statistics are intentionally buried and ignored during policy
making. So if they exist, no, they won't have any impact. I'll quote our
government for you:

"We don't govern on the basis of statistics"

~~~
redthrowaway
It's unfortunate, but true. Harper wants to be able to implement policy
without pesky reality-based counterarguments getting in his way.

I'm pretty heavily slanted towards the economic liberty side of things, but I
simply can't abide a prime minister who so proudly proclaims his disdain for
stats. _Especially_ a PM who has an MA in Economics.

~~~
jdougan
Perhaps his Econ degree is the reason Harper disdains stats...

------
rpm4321
This is a bit of a tangent, but I was wondering if anyone on HN has any
experience moving from the US to Canada?

I'd like to live in Toronto at least for a couple of years, but I'm not sure
how involved the redtape would be, especially because I'm a freelancer and I
won't really have a Canadian employer, clients, or a business purpose I can
claim for my residency.

~~~
mcrider
I did the move for school. In that case, it is very easy (and working after
school is easy as well). For you, you'd probably need to find an employer
sponsor your work permit. This is difficult unless you're highly qualified
since they can find employees without the extra paperwork in Canada (and
Canadian companies are legally obligated to fill slots with Canadians unless
they can't find any, which is easy enough to get around but still a PIA for
employers). Your other option is to have a canadian partner/family member
sponsor you to move to Canada (not super complicated, but takes over a year).
There are more options, such as 'skilled worker' immigration, but I forget the
specifics. Basically you'll need to wait a long time (unless you can cough up
half a million dollars for business class immigration). I am back in the US
for a couple years but I intend to move back using my Canadian partner to
sponsor my immigration (I miss Canada!).

~~~
idm
The "skilled worker" immigration is the ticket for anybody trying to move from
the US. However, to qualify for this, you will probably need an employer to
sponsor it. This route also depends on credentialing, so academic transcripts
and whatnot will be scrutinized.

------
Someone
Can anybody explain how that could happen?

The difference between "shrinking since 1977" and "growing a percent a year
since 1977" is so huge (at least 50% productivity) that I cannot believe that
this is true.

Are people working fewer hours than the statistics bureau is aware of? If so,
what do these people do in their spare time that does not show up as a "hey,
that's funny" at the statistics bureau?

Or are there scores of 'died, but still reported as working' workers?

Alternatively, if the productivity is in "output per unit of capital": how do
they hide using fewer resources from the government? Stockpile oil amd
machinery? Or do they produce more, but sell on the black market?

For at least one of these, the estimates that the statistics bureau makes
about them would, by now, have to be off by at least 20% or so. I think they
would have noticed that.

On the other hand, I can easily see them as underreporting productivity growth
by a few tenths of a percent each quarter, especially when reporting shortly
after each quarter ended.

~~~
yummyfajitas
Most likely mistakes were made when calculating inflation rates. This is
actually a pretty easy thing to do and will easily go unnoticed.

As evidence that this can occur, consider the US - inflation was known to be
overstated by 1.3%/year before 1996.

<https://en.wikipedia.org/wiki/Boskin_Commission>

We probably do better by now, but there are still fairly well known upward
biases in our inflation calculations. For example, consider the lack of
hedonic adjustments to medical care in CPI. If an laparoscopic surgery today
costs more than living in pain in 1970, the BLS counts the cost increase in
"medical care" as inflation.

<http://www.bls.gov/cpi/cpihqaitem.htm>

~~~
Someone
Ah! That makes sense, as inflation rate computations, in the end, are
somewhat/largely/almost entirely subjective.

What's today's equivalent of the $800 20 inch CRT television set of 1990? A 40
inch LCD tv? With ($700) or without ($500) 3D? Or maybe a television and a
$600 tablet?

So, it looks like a disagreement about the way to calculate inflation, with
the challenger shouting hard, as he should, since it is the only way to make
an impression.

If the challenger's arguments have merit, I guess the statitics bureau will
slowly react by incorporating them into their computations. 'Slowly', IMO, is
a virtue here. These computation methods should be designed by committee.

~~~
yummyfajitas
Today's equivalent of the 20" CRT is a 20" CRT, or at the very least a 20" TV.
If that now costs $500, that means that the inflation rate was negative (or at
least the TV's contribution to inflation was).

I don't know if inflation calculations were the problem in Canada, I'm just
pointing out that it's one possible way.

Incidentally, there is a completely non-subjective way to calculate inflation:
choose a fixed basket of goods. I.e., look at what someone in 1970 actually
purchased, and then look today at what those goods/services [1] cost today.
The only problem with this is that to calculate inflation from 1980 to today,
you need to pick a 1980's basket rather than a 1970's basket, i.e. CPI stops
being a single quantity you can push forward and backward in time.

[1] Also, don't choose categories of goods like health care - choose actual
goods like appendix removal or aspirin.

~~~
Someone
_"Incidentally, there is a completely non-subjective way to calculate
inflation: choose a fixed basket of goods."_

That 'choose' part is subjective. <http://www.bls.gov/cpi/> (stress added):

 _"The Consumer Price Indexes (CPI) program produces monthly data on changes
in the prices paid by urban consumers for _a_ representative basket of goods
and services"_

Your _'or at the very least a 20" TV'_ acknowledges that, too. How do you
objectively choose between the two?

Similarly, _"like appendix removal or aspirin"_ : who determines that
"aspirin" is the actual good, and not "pain killing" or "prevention of
strokes"?

------
mcartyem
Can anyone who read the article say in less than ten words why Canada's
productivity has been underestimated for decades?

~~~
otoburb
Claims of multi-factor productivity underestimated in labour productivity
calculations.

------
Ramonaxvh
Am I reading it right that America has to import skilled workers, but Canada
has so many they try to keep them out?

~~~
gavingmiller
Anecdotally that appears to be correct. My company tried to sponsor a graphic
designer to come up from the States. We were denied because the gov't said
there were more than enough skilled graphic designers available.

~~~
blindhippo
To be fair though, there really are enough skilled graphic designers around -
especially in the cities.

Software developers on the other hand...

~~~
alsocasey
Obviously depends on the market, but... in Vancouver for example, median wages
are simply not competitive when compared to what's available 3 hours south of
the border.

------
mef
Sidebar, why didn't the reporters ask Statscan to respond to the allegations
in this story? Seems a bit one-sided.

~~~
sliceof314
The article quoted the official response to the paper. Canadian government
officials are routinely muzzled, the official response is all you get these
days.

