Latest news with #AlexTabarrok
Yahoo
28-05-2025
- Business
- Yahoo
Matthew Lau: Toronto the Good's continuing downward slide
Toronto, where I have lived my whole life, certainly has high points. There is the financial district, which is the second largest financial centre in North America and home to several good coffee shops. Toronto also features some excellent cuisine. Tyler Cowen, who in 2011 was listed among Foreign Policy's top 100 global thinkers and whose blog with Alex Tabarrok Time magazine ranked third-best financial blog, once concluded after a restaurant tour of Scarborough plus rolls from a Sri Lankan locale and lots of driving around, 'Scarborough is the best ethnic food suburb I have seen in my life, ever, and by an order of magnitude.' With all it has going for it, Toronto really should be a world-class city. But I fear if it continues on its current path, it will instead become an honorary third-world city — certainly with respect to the unreliability of its public transit system, its inept municipal management, its descent into lawlessness and social dysfunction, and its NHL team's dismal playoff performance. On this last point, explanations and proposed solutions vary; for the first three the causes are quite clear. If Milton Friedman's classic 1993 essay Why Government is the Problem were being written today, Toronto could feature prominently in it. The unreliability of the Toronto Transit Commission (TTC) has recently become intolerable. Last Wednesday during evening rush hour the TTC shut down a significant stretch of its Line 1 subway for two and a quarter hours. Just before 5:30 p.m., service was suspended from Lawrence to St. Clair due to a track-level injury at Eglinton (three stations spanning five kilometres of track). Also around that time, northbound passengers at a major interchange, Bloor-Yonge, were kicked off their train, causing significant overflow that took some time to clear. Later the initial service suspension was extended south to include Bloor-Yonge — making seven stops in all. Service was not restored until around 7:45 p.m. This was the second serious subway outage in less than a week: the previous Thursday, a significant part of the other major line was shut down for much of the day due to an oil leakage from a subway work car. Mass public transit chaos has become almost commonplace since last winter. In mid-December, the TTC experienced lengthy shutdowns during the morning rush hour on no less than three days, with varying causes, including a trespasser on the tracks, multiple signal issues and a lost raccoon wandering the rails. Then in February, extensive TTC delays were blamed on snow and ice. In a further demonstration of the City of Toronto's inability to provide basic municipal services, snow piled up everywhere, with some sidewalks taking three weeks to clear. It was later reported that of the city's 59 pieces of winter sidewalk-clearing equipment, nearly half were out of commission on average during the three days of heaviest snowfall. More evidence of a city headed towards third-world status: increased lawlessness. The joke is that TTC really stands for 'Take The Car,' but last year that became the police's recommended phrase for homeowners to tell criminals. Amidst rising car thefts, one police officer suggested homeowners leave car keys at the front door to prevent a home invasion by criminals: just let the criminals take the car. After reaching all-time highs, car thievery now seems to be abating, but there are other trends in the wrong direction. Matthew Lau: Minimum wages are even more harmful than we thought Matthew Lau: Lessons for Canada in Argentina's newly freed markets There has been an explosion of antisemitic hate crimes in Toronto in the past two years. In recent weeks mobs have continued to attack Jewish businesses and block streets, in one case forcing police to divert an ambulance. There are increasingly common news stories of attacks on and vandalism of synagogues and Jewish businesses, and even antisemitism in public schools. Don't get me wrong. It is still possible to live a good life in Toronto. Trudging 20 or 30 minutes every so often, even in snow or rain, because the TTC has again broken down is not that great a hardship for me. I am only a very casual Leafs fan, Sportsnet turfing Don Cherry in 2019 having dulled my hockey enthusiasm, while the sight of empty arenas during the pandemic killed off most of the rest. But for many other Torontonians, the unreliability of the TTC and other municipal services, the hapless Leafs, the increased crime and the growing antisemitism weigh much more heavily. Toronto still has much to offer, but only if these problems are solved. Solid political leadership and better hockey players are needed. Matthew Lau is a Toronto writer. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Mint
13-05-2025
- Business
- Mint
Why 'labour shortages' don't really exist
Talk to a business owner in any country and, before long, they will voice a familiar complaint. In low-unemployment America, a third of firms say they experience recruitment challenges as candidates lack the right skills. In high-unemployment Italy, a quarter have the same complaint. Labour shortages are, apparently, not just a problem in rich countries. Goldman Sachs, a bank, reports that officials, regulators and private-sector folk in India worry about a lack of skilled labour. From Hong Kong to Guatemala, over two-thirds of employers moan about a talent shortage, according to a survey by ManpowerGroup, a consultancy. The story is consistent over time. When jobs are plentiful, people say there is a labour shortage. It is hard for bosses to find staff. But when unemployment is high, people still say there is a shortage. 'There are 3m jobs available in America that are not filled because too many of our people don't have the skills for those jobs," said Marco Rubio, now America's secretary of state, in 2013, when the jobless rate was north of 7%. The story is also consistent across industries. Some economists say there is a lack of blue-collar workers; others worry about who will pick vegetables. Still others focus on care workers. Alex Tabarrok of George Mason University has written about 'the extreme shortage of high-IQ workers". In sum, people always say there is a labour shortage. This tells you something: the term is slippery, perhaps even incoherent. It makes most sense when related to the macroeconomic cycle. Demand for labour can run above supply, such as after the covid-19 pandemic, when high spending boosted demand for labour. In such circumstances, wages rise as firms compete for staff. Across the G10, average nominal pay is 20% higher than in 2019. For a while, higher nominal pay can eliminate labour shortages by encouraging work and discouraging hiring. But because economywide labour shortages are ultimately inflationary, higher wages do not bring demand and supply into line. Central banks must instead raise interest rates to reduce demand for labour. The micro level presents a different story. Here, a labour shortage is a question of price and distribution, rather than scarcity. If a company complains about a shortage of vegetable-pickers, what it really means is that it cannot hire them at the wage it would like to pay. The term 'labour shortage" thus implies a normative claim—that there 'should" be more workers at the prevailing wage—rather than describing an economic reality. When you dig into the data, evidence of shortages often melts away. Consider construction, a classic 'shortage occupation" in many places. America's homebuilders' trade group talks of a 'dire need" for new workers. In reality, over the past decade, the share of the American workforce involved in construction has risen from 4.5% to 5.2%, which does not scream 'shortage". Maybe the 'true" share of construction workers in America should be even higher. But this is hard to square with the data on wages. In the past decade earnings growth in American construction has been slower than the overall average. People simply do not want to pay more for their builders. As such, the market seems perfectly satisfied. Even high wages are not necessarily proof of a labour shortage. Consider Erling Haaland, Manchester City's star striker. Mr Haaland commands a huge salary because he scores so many goals. In a sense, then, there is a global shortage of Erling Haalands. But that is an absurd position. No amount of wage increases will create more of him. His ability to command a huge salary is a function of unique ability, not a failure of market supply. It is on this logic that Mr Tabarrok errs in saying there is an 'extreme shortage" of high-IQ people. There is always scarcity of very high-performing individuals—that's why they are valuable. Calling that a 'shortage" is just relabelling market-clearing price differences. A minority of professions do experience genuine labour shortages, but only when some non-market mechanism prevents the market from clearing. In Britain, for instance, there is both a shortage of doctors and a shortage of training places for doctors. The National Health Service has long faced recruiting difficulties. And yet the government, facing funding pressures, has long capped the number of places at medical schools. In America stringent occupational-licensing requirements make it difficult for workers to move to in-demand jobs. In 2020 the OECD noted that, across the rich world, driving instructors face some of the toughest licensing requirements. If you are ever struggling to find an instructor to help your child pass her driving test, blame the bureaucrats. Another list will do the trick Recognising the truth of labour shortages has important policy implications. At present officials are afflicted by shortage-itis. Australia maintains an 'occupation shortage list" to monitor which industries need state assistance. Germany maintains a similar list and gives people in these professions preferential migration treatment. In America Joe Biden tried to tackle a perceived labour shortage in certain industries via apprenticeships. Sir Keir Starmer, Britain's prime minister, wants to boost spending on training British-born workers to alleviate his country's labour shortage. Businesspeople bleat so much about labour shortages in part because hefty subsidies are up for grabs. Politicians could have more impact by getting out of the way. Economists are fond of the idea of allowing firms to bid for visas. This would ensure new workers flow to industries that have greatest need. Relaxing land-use rules would allow people to move to areas where jobs growth is strongest. Politicians should also loosen occupational-licensing requirements. Aside from that, central banks are responsible for managing aggregate labour shortages, by supervising the overall economic cycle. Next time you hear the cursed term, be suspicious. There's only one Erling Haaland. Subscribers to The Economist can sign up to our Opinion newsletter, which brings together the best of our leaders, columns, guest essays and reader correspondence.
Epoch Times
03-05-2025
- Business
- Epoch Times
Housing Crisis in Spain and Italy Goes Beyond Holiday Rental Boom
Residents in Spain and Italy, two of Europe's most popular vacation destinations, are struggling to make ends meet amid a dire shortage of affordable long-term housing. Research from the European Central Bank and the Bank of Spain notes that the Spanish housing crisis has its roots in a collapse of the real estate bubble in 2008, followed by a lag in new construction until 2023. In an analysis of Italy's housing problem, George Mason University economics professor Alex Tabarrok points to pandemic-era fiscal policy as a key factor underpinning the ongoing problem of inflated building material costs. Rental costs have also spiked due to many property owners catering to short-term holiday renters. Residents are sharing insights into the reality of what it takes to keep a roof over their heads and why, for some, it's hard to keep the lights on. A few metro stops from downtown Madrid's famous Gran Via street, Andres Fernandez is excited and a little nervous about his decision to move to Spain's capital city. Related Stories 5/3/2025 5/1/2025 'There's a lot of jobs here, so it makes sense. But the price of housing is insane,' Fernandez told The Epoch Times. Fernandez and his family are from Barcelona, but spent the past 10 years living abroad in Argentina. The 26-year-old recently moved back to Spain after finishing university. He believes his job prospects as a civil engineer are better in his home country than in Latin America. 'The jobs are better and pay better here [in Spain], but the rental costs kill you,' he said. Fernandez can't afford to live alone, so he's sharing an apartment with two roommates in the city's Chueca neighborhood. Finding a listing on social media for shared apartments in Spain is common due to the high cost of rent. While young professionals like Fernandez are drawn to Madrid for its robust job market and tech scene, the cost of living in the Spanish capital is the fly in the ointment. According to real estate listing site Idealista, Madrid has the second-highest rental costs in Spain, after Barcelona. High-rise housing along Gran Via street in Madrid, on March 28, 2025. Autumn Spredemann/The Epoch Times Supply and Demand in Spain Spain's renters and homeowners alike are feeling the pain as rents, home prices, and property-related costs rise and availability drops. The number of long-term rentals in Spain has dropped 56 percent since December 2020, while rental prices have soared 30 percent in the same time period due to increasing demand. In Madrid alone, Idealista's market index comparison showed that rental housing stock dropped 71 percent between 2020 and 2024. Meanwhile, price comparisons between December 2020 and February 2025 revealed a 44 percent price increase. Aspiring homeowners are facing similar challenges. Real estate data from 2024 showed home resale prices ballooned more than 10 percent in November last year, topping out at about $2,400 per square meter. That represents the largest per-square-meter price increase since 2006. On the rental side, a recent Fernandez said he's paying $450 a month for a private room in a shared apartment outside the city center, but close enough to commute using public transportation. He said his share of the rent doesn't include the cost of electricity, water, or internet. Utility costs are a related, growing burden on the population in some Spanish cities, especially for property owners who run businesses. 'It's getting so expensive now, the electricity bills,' a hotel owner in Pamplona named Camila told The Epoch Times. Camila—who asked to be identified only by her first name—said her family owns two properties in the historic city of Pamplona. One location is a boutique hotel, and the other is a backpacker hostel close to the popular Camino de Santiago pilgrimage trek. Camila said she has to be strict about electricity usage in both businesses. 'Our air conditioning and heating thermostats can't be made hotter or colder [when turned on by guests]; they are fixed,' she said. We ask that our guests please turn off any lights or air conditioning when they're out of the room.' Camila said she and her family don't like to be stingy with their guests, but rising electric costs have made it necessary. 'The price of everything is more now. You also have more expenses as an owner, so that extra is reflected in room prices. There's no other way to own a hotel here without going broke,' she said. Camila said the cost of providing internet for guests has also increased in the past year. In 2021, Spain's government approved a law reducing the nation's value-added tax (VAT) on electricity to 10 percent as long as the market price continued to exceed $51 per megawatt-hour. The law provided a much-needed pressure release valve on electricity prices for Spanish residents. However, the discount program ended in March last year after the market price of electricity fell below the fixed price minimum. Now, the VAT has returned to the standard 21 percent. Houses along a canal in Venice, Italy, on April 28, 2025. Autumn Spredemann/The Epoch Times The Venice Example Italy has a similar problem with affordable housing due to shortages of long-term housing and high utility costs. Moreover, some Italians say wages aren't in line with the cost of living. Venice, one of the country's—and the world's—top tourist destinations, is a prime example. 'If you're Italian, it's impossible to live in Venice,' Daniel Marino told The Epoch Times. Originally from the suburbs of Milan, Marino currently lives and works in Venice, a small island on Italy's northeastern coast that sees roughly 20 million tourists each year. 'You can't even find an apartment if you're a local and if you do, you'll pay 900 euros or more just to live in a small room,' he said, emphasizing that it wouldn't even be a 'nice room.' Marino said he's lucky because he came to Venice as part of a university program. The program included dormitory housing and a hospitality internship that provided a living stipend of 1,000 euros per month. 'If I had to pay for housing, I'd spend my monthly allowance on just that,' Marino said. 'It's a real problem for the [Italian] people here. If you work in Venice, you probably can't afford to live here with housing costs.' He said the exception is if you happened to be born into a Venetian family that already owns a home or commercial property on the island. Like most cities, Venice has neighborhoods on the mainland. Marino said he'd be living there if his internship didn't include housing in a suburb like Marghera, Campalto, or Mestre. 'But it's not cheap in these places either, and you have to be careful. It's safe on the island, but the [mainland] suburbs have some bad areas,' he warned. Adding to the cost, Marino said Venice has the highest waste removal tax in the country, something he said most people, even Italians, don't realize until moving to the City of Canals. A placard identifies a property as a holiday rental in Venice on April 28, 2025. Autumn Spredemann/The Epoch Times The Trouble With Tourists Marino said even if someone can afford the high rental prices, most property owners on the island prefer to offer short-term apartments to tourists. 'From the outside, it makes sense. If I owned a flat here [in Venice], why would I rent it for 900 euros a month to someone like me when I could get that much in a week from tourists?' As the number of long-term rentals in Spanish and Italian cities is declining, holiday rentals are a booming industry. In recent years, the rise of remote work and a shift away from traditional hotels toward more economical self-contained apartments has driven the skyrocketing demand for short-term rental units in both countries. It's been a subject of much debate and has sparked heated protests in both countries. Thousands of Spanish residents protested in more than 40 cities earlier this month over high housing costs related to the persistent demand for vacation rentals. To help relieve pressure on the housing market, cities like Malaga, Madrid, Seville, and Alicante have introduced restrictions or outright bans on short-term rentals to help relieve pressure on the housing market. Italy has witnessed similar protests over the lack of affordable housing amid a surge in short-term rentals. In November 2024, reports emerged in Rome of angry residents sabotaging realtor lock boxes used for holiday rentals. The same protest actions were taken against tourist rental lock boxes in Florence and Milan, prompting a government ban on self-check-in vacation rentals. Unseen Factors Tourist rentals have borne the brunt of resident, government, and media scrutiny in Spain and Italy's housing crisis, and it's easy to see why. The sheer volume of vacationers who opt for short-stay apartments over hotels has been growing in both countries for years. Last year, Spain saw a more than 9 percent increase in tourist accommodation over 2023. During the same time frame, Italy saw a 6.8 percent boost in non-resident overnight stays. However, both Marino and Camila believe the spike in short-term rentals is a symptom of a bigger problem that's been growing for years. 'New building has fallen behind the need for more housing,' Camila said. It's a problem even in her relatively small hometown of Pamplona, where the demand for short-term rentals has put additional strain on the housing market. A 2024 Bank of Spain Spain experienced a housing boom from 1995 to 2008, which was promptly followed by a 'bust' that lasted until 2015. At the same time, new households exceeded new residential construction until 2023, according to the Bank of Spain analysis. The resulting housing deficit could hit 600,000 in 2025. Italy's housing affordability problem is intertwined with its large population of existing property owners. With more than 75 percent of households owning a home, inflated repairs and renovation costs have created a severe hardship for homeowners. Aspiring Italian homeowners can also expect to pay an estimated 16 percent more for a home today than in 2019. 'Italy has long had a system that requires many middle-income people to rely heavily on their families for the provision of owner-occupied housing, rather than mortgage financing,' researchers at the Organisation for Economic Co-operation and Development noted in a 2023 That's coupled with the same challenge of inflated construction costs faced by Spanish homebuyers. Marino doesn't believe there's an easy answer to his country's affordable housing problem. 'Italy isn't just underbuilt, the cost of maintaining older homes is too much with inflation. Nobody wants to fix up beautiful old homes, but they can't afford to move into a new one either,' he said. Marino added, 'You can tax foreign buyers and renters all you want. It doesn't change the fact that prices are too high because related costs are also high. This isn't a simple problem.'
