Privatizing Parts

"Privatization came on slowly. When something very big happens, like privatization, historians and economists like to think you must have had very big causes. That is not how it happened."
-Kenneth Baker

Transforming public assets into private ones sounds like something most moral parents would agree with, doesn't it? Like you are doing something to make the world more chaste and wholesome? Alas, the sad truth is that privatizing public assets has literally nothing to do with puritanical notions of butt-covering. Which I agree makes it far less interesting but maybe just as important.

In reality, deciding how goods and services will be provided, either by the public collectively or by people in their role as autonomous citizens seeking profit, is what a lot of human conflict has been about since the industrial revolution. It is the essential dichotomy that drove the Cold War, the fight between free-market capitalism and state-centered communism.

As usual, the correct answer appears to be in the middle since the extremes are both terrible. I don't think there are any attempts at communism that I personally would have liked to be a part of. Maybe they just didn't do it right and it would work some other way and with different leaders but I've pretty much lost faith in any centralized government running an economy and coordinating production without having to resort to sinister totalitarian methods. Cuba, the USSR, Mao's China. Those all sound terrible.

As for going to far the other direction into unrestrained capitalism, what you wind up with can be equally bad. Our form of capitalism is a liberal capitalism and is based on liberty, that is, having freedoms from government which are usually dictated in a constitution or by historical precedent. This is basically the opposite of communism where the government has total control. Liberalized capitalism is what allowed the west to emerge as the strongest bloc of nations in the world, complete with quite decent standards of living for the majority. It did this by harnessing the power of market-capitalism to create wealth while keeping society stable because governments had to be respectful of the voters or be removed.

Of course, it's worth noting that we didn't get the good standards of living for the many by engaging in pure liberalism, what is generally referred to now as libertarianism or neoliberalism. Following the industrial revolution, the situation for workers was atrocious despite all the wealth they were producing. After long, hard battles by labor, we tempered our classical liberalism with some traditional conservatism and socialism until a middle-class emerged for pretty much the first time ever. This is why liberalism today has different connotations than it did in the past when it simply meant total freedom of trade and some basic protections from the arbitrary judgments of the government and nobility.

Just so I don't get criticized for completely equating neoliberalism with libertarianism, I'll do my best to briefly differentiate the two. Neoliberalism is what the US has essentially pushed on the world since the 80s and consists of policies that intended to restore the dominant position of capital over labor, social movements, and voters. It was pushed on other chunks of the world like South America and consists of totally freeing financial flows and forcing everything into market-relations while removing the role of the state as anything but an arbiter for contracts.

The collection of policies it entails are often referred to as the 'Washington Consensus.' Generally, it tries to reduce taxes as low as possible and to get rid of things that are not controlled by market mechanisms such as welfare nets, government-provided services, organized labor, minimum wage, worker's rights, environmental protection, any forms of trade protectionism, etc. 

Neoliberalism is essentially the prescription Grover Norquist demanded when saying, "I'm not in favor of abolishing the government, I just want to shrink it down to the size where we can drown it in the bathtub." The neoconservative movement that dominated the George W. Bush administration essentially came out of neoliberalism. As neoliberalism is about corporate rights, minimizing regulatory power of government, and reducing people's obligations to each other through a total reliance on monetary market-mechanisms, there was very little in neoliberalism to attract people to its tenants since it is fragmentary by nature. That is why the theory was merged with conservative aspects like trying to undo the separation of church and state, emphasising the governing of morality, and empire building via war. As traditional US Republicans already supported these ideas, neoliberalism was able to find a base to support the dominance of capital by throwing them some bones that didn't negatively affect the profitability of transnational businesses.

Libertarianism is similar in some respects. It also believes in a very small government, one that is only able to mediate contracts and ensure people are compensated for damage to their private property. Unlike neoliberalism/neoconservatism, it believes in minimal laws, an isolationist military, and as much freedom from government as possible. This means no drug laws or government intervention when people are only hurting themselves.

People who advocate it claim it that it would truly rely on free-market principles instead of simply a corporations-first agenda. If ever enacted anywhere, it would apparently abolish the market-corrupting special deals that the biggest corporations have with domestic governments and with international governing bodies like the IMF, World Bank, and WTO. The idea would be a truly level playing field.

Personally, although it sounds nice, I have my doubts that libertarianism could ever work. It seems like it would fracture society as we are constantly reminded that we are not our brothers keepers as the bible informs us we are. In addition, the idea of allowing the infinite concentration of capital while keeping government as small as possible seems like a recipe for corruption and oligarchy, the rule of money, since the government would simply not be capable of being a counter-weight.

The US went the farthest in enacting policies that limited government's ability to regulate capital and seems to have a more of a bought-and-paid-for government than any other developed nation. Also, with such weak regulatory systems, how could libertarianism do anything to protect our environment, prevent the exploitation of people, or moderate destabilizing swings in the business cycle? Market mechanisms don't seem like they will be able to do it, at least not quickly enough. As for those few hard-core libertarians and anarchists who believe in no government, I would suggest living in Somalia for a while and seeing how much fun it is.

Capitalism is like a horse. Although it may be putting out a lot of energy as it bucks around unbroken and untethered, it's not actually doing any good until its calmed and its efforts put to work for the good of people. Regulations are necessary for this or else the powerful horse kicks the world in the face through unbridled greed like during the 2008 financial collapse. Before that, there was the Gilded Age of the Robber Barons and the severe inequality and stock-market gambling that led into the Great Depression. All examples of capitalism allowed to go wild that were terrible for the masses. After the Great Depression, regulations like Glass-Steagall were added that limited the freedom of banks to gamble with other people's money and the system would work quite well until these regulations were removed.

This has turned into a bit of an incoherent rant that has little to do with my starting premise. Which is fine. Basically, my point is that smart societies rely on the huge power inherent in private citizens interacting for their personal benefit while using government to prevent the worst excesses.


Essentially, I feel there are some things that government should provide and some that it shouldn't. The fact is that governments tend to be less efficient than the private sector as they are not forced to compete to survive. They are natural monopolies when they want to be. This means they should stick to things that cannot be safely or cost-efficiently provided by the private-sector for whatever reason. In addition, the government should provide services that society as a whole should take responsibility for like justice and a minimum level of welfare. Governments should be responsible for providing defense, police/fire services, water/road/power infrastructure, justice, a minimal level of healthcare, basic welfare, and regulatory agencies to police private-sector standards. The government should also have influence in key industries like agriculture and telecommunications while not actually running them.

As for resource extraction, personally, I believe governments should actually take a more active role in extracting and selling resources ourselves since they belong to all Canadians, not just the energy companies that control them, too many of whom are foreign-owned and wind up filtering Canadian resource-wealth away from the people who have natural right to it. Although the government would no-doubt be less efficient in running them than the private sector, considering the very limited royalties we receive and the large amount that leaves the country without helping the economy by being spent here, it seems that we would still make more money as a country even with the inefficiencies and higher wages we'd likely pay. The fact that Alberta was running big deficits even when oil prices were at record high shows that we are getting a bum deal.

However, this would likely be politically impossible as the oil industry has huge influence and the Americans would be extremely displeased with any move towards nationalizing aspects of the energy sector. I'm not even sure we could do so under NAFTA and a protectionist showdown with the US would likely result in Canada losing badly. A better idea would probably just be to have our provinces stop competing for corporate investment in a royalties race to the bottom. Our country's federal debt belongs to us all and we have transfer payments between provinces which means we share our wealth. Bargaining as a bloc to get the best return on non-renewable resources from the energy industry seems obvious and in no way violates the tenants of free trade.

The main issue is that having the private-sector provide any of the truly essential services means there are dangerous conflicts of interest that create incentives to work against the public good. Private prisons have meant corporations lobbying to change laws to fill these prisons. This has corrupted the justice system, resulting in lengthier sentences which has created a larger tax-burden with less available tax-payers. Privatized healthcare in the US resulted in expensive care, insurers trying to get out of providing services owed, huge numbers of uninsured and untreated, a lack of preventative medicine, and a generally bad system compared to countries where the point of medicine isn't profit. Obamacare doesn't change this much and is unlikely to fix things. In addition, the overly large influence of private weapons manufacturers in the US has lead to an extremely aggressive foreign policy that produces huge profits for certain companies. Ike Eisenhower, probably the last principled Republican elected president, would warn about the power and influence of this "military-industrial complex" in his farewell speech.

Privatizing key services also means losing democratic control of them. In Bolivia, Aguas del Tunari was granted a contract to provide water and waster services to Cochabama. Rates were promised to be raised by only 35% in order to expand operations and services when in reality, people's bills as much as tripled for no reason and with no regard for how little money many of the citizens had to live on. A referendum had 96% of the people wanting out of the water-privatization contract but the government refused to cancel it. It took massive protests with several deaths in order to return things to normal. Still, Boliva is being sued for $25 million for breach of contract despite the supplier lying regarding what the rates would be and being generally negligent.

Of course, sometimes it's the opposite and publicly-owned things should be privatized. My home city of Winnipeg has 12 public golf courses owned by the city that are running yearly deficits of $850,000. It seems to me that privatizing these is a no-brainer. Having everybody pay for golf courses is ridiculous and is subsidizing people who already have the money to play the fairly expensive sport. It's true golf courses may help make Winnipeg more attractive to golf-enthusiasts planning to move here. However, the private sector should be providing non-essentials like these. If the demand isn't there for the private sector to make a buck than we can do away with some of them and use the land for other things. Unfortunately, city council recently voted against leasing out four of the courses for a profit.

These are just general rules however. In cases where the government has proven itself capable of running a business properly, it is generally advantageous to leave it in in the hands of the public as it cuts out middlemen and supplies needed funds to pay for government services. When they start failing and need new blood and leadership, then it may be time to privatize as long as this doesn't create any major conflicts of interest and the selling of public assets is done in good faith.

One such idea that has been floating around Canada is to remove the monopoly possessed by the government in most provinces on selling hard liquor. Alberta did this 20 years ago and has seen a huge boom in the number of stores, the variety of alcohol available, and has enjoyed longer store hours. However, it has come at a cost. Alberta is one of the few provinces where government revenue from alcohol sales has been falling despite drinking levels remaining stable. In addition, Albertans tend to pay higher prices for hooch although the occasional sale means that sometimes they can pay considerably less than the country average.

In 2002, BC began closing some government stores and opening private ones that could sell hard liquor. What was noticed was the private stores would charge between ten and thirty-five percent more than their publicly-owned counterparts. Not surprisingly, in both Alberta and BC, they are having more problems with private stores selling to minors. In addition, wages are only about half in the private sector of what they are for unionized government LC employees. Higher wages are generally desirable in the private sector to maintain a strong consumer base while lower ones are desirable in the public sector to avoid government debt. Reducing wages for government employees working in liquor stores might be something worth mimicking in these deficit times and would allow the greater profitability to justify keeping the stores publicly-owned.

This is an interesting conundrum within the private-public debate. If the government can run an industry at a strong profit and manage it in ways that are superior to how the private-sector can do it, does that mean they should do it? Even if it is not a necessary service? It seems this way for liquor, at least for the moment, since alcohol is such an easy cash cow. Ontario was able to bring in $1.63 billion from booze sales in 2011 alone, not including the taxes on them. Considering the governments of most western nations are running deficits, it seems that bringing in more cash is more important than neoliberalism's desire to be rid of anything government-run.

An interesting example of a government operation being able to be as effective as the private sector was during the Thatcher years in the UK. Thatcher was Ronald Reagan's point-woman during the neoliberal 80s and was just as big into privatizing friggin' everything. Her opponents referred to her actions as "selling the family silver." One ironic twist was that British Energy, the largest state-owned power company in the UK, was privatized so as to be hopefully run more efficiently and cheaply. The joke is that it was purchased by Electricité de France, a French state-owned power company. In addition, French state-owned Areva now makes and controls the UK's nuclear power stations. Essentially, the energy industry that Thatcher privatized was renationalizd by their neighbors who now get to reap the profits. This seems a good lesson if anyone ever considers privatizing Manitoba Hydro.

There is also a concern about choices to privatize being made via special interest lobbying. In the last few years, there have been several cases where public assets have been sold off stupidly cheap in what were likely crooked deals. Again in the UK, they have recently sold off the Royal Mail service. While 67% of British people were against the sale and even Margaret Thatcher had thought it was too historically important to sell, the deed was finally done. The main problem was how intentionally undervalued it was when sold. The shares jumped by 38% on the first day of conditional trading which means the citizens brutally lost out on the sale. When sold, all of the Royal Mail's real estate was valued at 787 million pounds even though a single one of its depots in London has been estimated at 1 billion pounds. And there were 44 other sites. Now the Royal Mail is selling 8 of its 45 sites by 2016 and the profits are all going to the new, private owners. Even worse, the private investors left the pension fund liabilities, estimated at 37.5 billion pounds, with the public!

Of course some people made money off of this. They had promised that only 'responsible, long-term institutional investors' would be allowed to purchase shares. Lansdowne Partners was allowed to purchase a large stake and its co-head of developed market strategies, Peter Davies, was best man at UK Chancellor George Osborne's wedding. This likely explains why they were allowed to purchase shares. Lansdowne made 18 million pounds the first day of Royal Mail share trading. In addition, the horrible people at Goldman Sachs made 21.7 million in fees for advising the sale of a company that the British public didn't want sold. If people think that this will save them money in the long run, it might be worth remembering that Britain's privatized rail companies received about four times the government subsidies given to the publicly-owned British Rail.

So in conclusion, knowing what to privatize and what not to can be a tricky subject. As a rule, you don't want people's profits directly tied to society doing badly like with private prisons, private healthcare, and private weapons production. In those cases, incentives are created to make people into criminals, keep people unhealthy, and create conflicts where guns and bombs are needed.

If you want real innovation, the private sector will generally always be superior although government regulations must be in place to protect workers, protect the environment, and keep things like gambling by financial institutions under control. When privatization must occur because government bureaucracy has built itself up to an unsustainable level, make sure the process of selling is not simply cronyism and a chance to rip off the citizens.

Pragmatism needs to ultimately triumph over ideology. Communism lost and neoliberalism is showing itself to be unsustainable as it turns out that both government and corporations are dangerous when left unopposed. A middle way is needed that spreads the power around, something like what the Germans and the Scandinavian countries have. A decentralized capitalism with a hefty dose of socialism appears to be the best hope the west has.

AS

The Wealth and Health of Nations

"Blessed are the young for they shall inherit the national debt."
-Herbert Hoover

Or maybe they won't. Considering the US government's current position on paying their debts, it's kinda hard to tell. As of Oct.17th, there will be only about $30 billion left in the US treasury while the government's daily spending can be as much as $60 billion. There are also $120 billion worth of short-term bonds due on that day and a total of $417 billion worth of interest payments due by Nov. 7th. The Republican-controlled House of Representatives has so far refused to raise the debt ceiling to borrow the money needed to meet these commitments until their concerns regarding government spending and Obama's Patient Protection and Affordable Care Act are alleviated.

As of Oct.1st, the US government has already undergone a partial shutdown due to lack of funds and has given unpaid, involuntary leave to about 800,000 "non-essential" federal employees although the Pentagon is ordering 350,000 of its employees back to work. This means about 450,000 of the 2.9 million federal employees will still not be allowed to fulfill their duties. Active-duty military personnel and civilian pentagon workers on the job will continue being paid on time under a new law passed by Congress last week. Other federal workers will need to wait for the government to be reopened whether they are required to work through the shutdown or not.

Strangely, the Republican-led House of Representatives has passed a bill that will provide all federal workers with back pay for their time off, even if they are considered unessential and stay home. The Democratic Senate followed suit although questioned the logic behind such action. Honestly, why send them home then? It seems to make more sense to keep them working and just pay them once the debt ceiling is raised instead of having them sit on their butts. It's a confusing method that allows the Republicans to keep the government technically closed while still spending the money it would cost to be open, all without the benefit of any work actually being done.

If this whole situation seems familiar to you, it's because it is. There have been 18 government shutdowns since 1976 although the US hasn't actually defaulted since 1790. More recently was the 2011 showdown over the debt ceiling which seems painfully like the one occurring today. The government didn't shutdown but the United States got extremely close to defaulting on their debt which freaked out financial markets. Standard and Poor's, a major credit-rating agency, would downgrade US bonds for the first time ever and stock-markets around the world would take a hit as $6 trillion worth of stock-value was wiped. The Dow Jones fell 5.6% in one day, the worst since the 2008 financial crisis.

If getting close to a default is quite bad, let's just say that the US actually defaulting would be nigh-apocalyptic. Which is why it probably won't happen. But if ideology somehow wins out over common sense on this one, it could be many magnitudes worse than the 2008 crisis when Lehman Brothers was allowed to go belly-up. If it remains unclear for any length of time after the initial default whether the US will pay its debts, trust in the dollar could collapse and the world would likely fall into recession and depression. The US owes $12 trillion, 23 times more than the $517 billion the Lehman Brothers owed when they filed for bankruptcy. Considering the stock-market fell by almost 50% and unemployment raged after that as credit seized up, it's troubling to predict what would happen following a US default. Borrowing would certainly be much more expensive in the future which would make getting out of a recession far harder. It's even possible the US dollar could lose its status as the world's reserve currency and at the very least, other countries would do their best to work out trade deals amongst themselves in their own currencies.

Funnily enough, the group that brought the US to the brink in 2011 are basically the same group doing it today. The Tea Party faction of the Republican Party consists of about 50 members of the House of Representatives who are adamantly opposed to Obamacare and are using the threat of default as a last-ditch effort to defund it. This is quite an unorthodox maneuver considering the act has already passed both houses and been confirmed as constitutional by the Supreme Court. Obama would go on to win the election over Mitt Romney, further entrenching the bills legitimacy.

Republican Texas Senator Ted Cruz has been extremely vocal on the issue, building up emotional pressure amongst constituents who voted in Tea Party members. There has been some argument that he is looking forward to a presidential run in 2016 and is just wanting to earn his credentials with the far-right. Some people have noted he's a little bit crazy considering how he engaged in a 21-hour, filibuster-style rant, to a basically empty Senate chamber, about how bad the Affordable Care Act is The reading was complete with a rendition of Green Eggs and Ham by Dr. Seuss because he obviously didn't get the moral of that story. A filibuster is used to delay the voting on a piece of legislation, either to simply stall or to get time to get enough votes on your side to win. However, this wasn't technically a filibuster and couldn't stop legislation, thus making it basically a long, crazy rant. It even compared the fight against Obamacare to the fight against the Nazis because expanding healthcare and Nazis are pretty similar now that I think about it. 

Essentially, Obamacare has been made into a line in the sand that the Tea Party will fight to the death of the country over, even if they get blamed for it. More moderate Republican congressmen justifiably see this attempt as counterproductive and dangerous for Republican chances of holding onto the House in 2014. Polls have indicated that more people blame Republicans for shutting down the government than the Democrats. Still, Republicans have been forced to tow the line by the wealthy Tea Party backers who can fund primary challengers to have them replaced.

This is a problem since it means Republicans need some victory to take home, even if it's just symbolic, to justify voting to fund the government without killing Obamacare. Obama has fully stated he is refusing to re-fight the health-care battle and considering the Republicans are blocking any changes he wants to make to immigration and gun control, it seems clear he is not planning on budging on his main achievement. Doing so could make what is essentially extra-legislative extortion into a routine part of negotiations. Obama knows he'll be blamed less if a default did happen but extreme ideology may mean the Tea Party are willing to shoulder that blame anyway. Considering the lack of support for Obamacare amongst Republicans, many of them really are doing what their constituents want by taking this approach. This explains their 42 votes to defund the law in the House of Representatives, well-aware that the Senate would never pass it themselves.

Republican Speaker of the House John Boehner has been put in a tough spot. He knows he's being blamed for the shutdown but he's unwilling to look weak to the far-right. This means he's still refusing to hold a clean vote to refund the government without some concessions, saying that it wouldn't pass anyway. He may be right but there are at least 20 Republicans who have already agreed to side with the House Democrats in such a vote. Trying the vote makes sense and I don't think it is personally helping his position to wait until the last minute to cave. And let's be serious, he will take the blame for any economic problems that occur from spooking the markets with a last minute ceiling raise, regardless of how he feels, if he fails to try a vote. Obama has already called him out to quit being a wuss:

"The only thing that is keeping the government shut down, the only thing preventing people from going back to work…is that Speaker John Boehner won’t even let the bill get a yes or no vote because he doesn’t want to anger the extremists in his party. That’s all. That’s what this whole thing is about.”

I might as well make my own position clear here. I am adamantly opposed to this method of shutting down the government and trying to kill legislation they don't like in this undemocratic way. In a healthy political environment, they should take control of government via elections and then repeal the law. That being said, I'm am opposed to Obamacare as it stands. Not because I don't think the US health system needs an overhaul. It does. Badly. In 2010, per-capita spending for health care in Canada was $4,445 per person. This is compared to $8,233 in the US. And it's not even like Canada's health care system is very well ran. Of course if you're rich in the US, your health care will be better than in Canada. Still, for the vast majority of people, it's not.

I think most people agree it makes economic sense to provide at least limited healthcare, just like it's good sense to feed hungry children. The stresses and disadvantages associated with lacking these basic things saps a lot of energy and creates damaged people who then make up a damaged society. Essentially all developed countries acknowledge this with the exception of the US. However, assuming Obamacare will improve the situation may be premature. Obama sold out early on a single-payer system like we have here in Canada. He also sold out on a public-option like they have in most European countries where you can get your own health care from private companies but there is also a basic government option available for those who can't afford it. France uses this system and was rated as having the best healthcare system in 2000 by the World Health Organization. The US ranked 37th, right behind Costa Rica. Canada did fairly poorly also, coming in 30th.

Obamacare is instead entirely private and actually creates a mandate requiring people to buy from private-insurers. This sounds unconstitutional to me but apparently it's not. The question of why Obama stuck with private health care can probably be best answered by Otto von Bismarck's quote that, "Politics is the art of the possible, the attainable..." Considering that the health care industry spends more money lobbying Washington than any other sector of the economy, it's probably not surprising that they were never at risk of losing their cash-cow. During the health-care debates in 2009, the industry was spending $1.4 million per day on influencing politicians. This emphasis on the private-sector means that they won't get to enjoy some of the benefits of a single-payer system like we do in Canada. These are savings on administrative overhead, increased bargaining leverage for drugs and medical gear, savings on advertising, savings on shareholder dividends, reduced burden on employers to provide health coverage, savings on excessive executive pay, and no incentive for providers to weasel out of providing care owed.

So what does the act actually do? Well, on the plus side, it subsidizes the very poor/unemployed in order to get insurance and forces companies to cover people with pre-existing conditions. It also allows young adults to stay on their parents plan until age 26 and provides some preventative care in the form of free mammograms, colonoscopies, and check-ups for seniors. Very importantly, it got rid of insurance companies ability to pull your coverage for technical reasons like spelling mistakes on your forms. Insurers are also forced to provide insurance premium rebates if they spend less than 85% of premiums on health-care services or quality improvement. All of these are noble and useful things that may justify the system on their own.

On the negative side, there are as many as 20 new taxes that will be applied to help pay for it. Americans generally don't like taxes and Republicans have traditionally preferred running massive deficits instead of raising them so you can see why this makes it a tough sell. Another problem is a reduction of hours for employees. Under the act, companies with 50 or more employees have a mandate to offer health care to workers who do at least 30 a week or else face a $2000 dollar fine per employee per year. This means many of them are cutting down below 50 employees if they can and are reducing hours if they cannot. Actual unemployment in the US ranges between 14% and 24%, depending on which measurement you choose, so people will take whatever work they can get.

Depending on your company, part-time workers like those at Trader Joe's and Home Depot can be shifted from private-coverage through their employers to public healthcare exchanges. This will almost definitely cost them more than their previous work insurance, even with subsidies, while often resulting in them working less hours. This means unfortunately the poorest workers will likely be hit hardest as companies use the act as an excuse to relieve themselves of all responsibility for part-timers.

It might be worth remembering that in upstate New York, following a food poisoning outbreak, it cost $546 dollars to get 6 liters of saline into patients. Saline is just saltwater by the way and one of these liters goes for between $0.44 and $1.00 from the manufacturer, so that's a pretty decent markup. This means the main question really is whether Obamacare will reduce health care costs from their ridiculous levels? The answer, it seems, is quite likely no although nobody knows for sure. The law is designed more to generalize access to care and the cost of insurance for individuals. It was not really created to reduce the costs of procedures, drugs, or medical supplies that define the amount spent in total. Considering the lobbying power of the groups involved in writing the bill, this is not surprising.

Supporters say the larger pool of insured people and increased insurer competition will keep costs down. Detractors say there really won't be enough added to matter. Supporters say increased copays for drugs and the high-deductible plans being offered will keep people more cost-conscious. Detractors say expanding preventative care will cost more and the insurers will just take in more than ever through the deductibles.

In the end, I'm leaning towards the idea that it is not going to help much. I may be wrong and it already seems that some of the worst excesses, such as cutting insurance right as it's needed, won't be able to destroy lives anymore. Which is good. Still, the same group of illness-profiteers remain as the only ones to go through for most Americans and they were essentially gifted 50 million new customers through the mandate. The high deductibles will also mean that most people will be fairly limited in actually being able to take advantage of their coverage except in worse-case scenarios.

It's sad because the US could have simply dropped the age requirement for Medicare and they would have had a single-payer system while allowing the private-sector to provide extra care for those with the cash. Instead, all the political will to make such a change has been blown on this mess. Nobodies gonna want to open this issue again for quite a while except to possibly scrap it.

On the other hand, Canada would probably do good to open it again. Our health-care system is extremely expensive and wait times are getting too long. With our aging baby-boomers, this is going to only get worse. We could probably do with adding limited fees for check-ups and small procedures in order to prevent abuse of the system. Likely we could change doctor compensation to be more in line with quality over quantity. Having a discussion around limiting end-of-life care to something actual doctors and nurses feel is appropriate would probably go a long ways as well. Interesting fact is that doctors tend to have less money spent on them when they are dying since they know when the battle is lost and don't want to go through unnecessary painful and undignified treatment associated with desperately clinging to false hope.

We could also probably do with a bit of private-sector competition, especially for quality of life things like joint replacements. If the European countries can do it and get better results than us, than I suggest we take a look.

Tommy Douglas wanted all Canadians to be covered and we are. I don't believe he ever said anything about having the government monopolize that coverage.

AS

Saving the Endangered Red Herring

“To waste, to destroy our natural resources, to skin and exhaust the land instead of using it so as to increase its usefulness, will result in undermining in the days of our children the very prosperity which we ought by right to hand down to them amplified and developed.”  
-Theodore Roosevelt

Climate change is back big in the media in the last couple weeks and probably not in the way that the staunchest defenders of the theory would prefer. This is despite the news actually being good for the planet and the human race in general. It turns out that the increasing temperature of the world has hit a plateau, at least for the time being. The average global temperature has actually stayed constant for the last 15 years despite all of the models of the Intergovernmental Panel on Climate Change (IPCC) saying it should be increasing.

The Fifth Assessment Report by the IPCC that is coming out soon claims it is a temporary lull, that the earth is still warming, that it is almost definitely a result of human activity, and that it was just a lack of full understanding of the earth's processes that caused them to overestimate the speed at which it would warm. Essentially, they underestimated the way the ocean would absorb heat from the atmosphere. The report is basically claiming that the debate is over and the only thing still left to ponder is whether it makes more sense to spend resources trying to prevent climate change or whether they should be used to try to prepare the most vulnerable areas for the problems it will be causing.

Skeptics are using this as a chance to say that global warming is simply a big hoax to justify expensive green policies that centralize power and funds with the UN. The large number of scientists who support the theory are said to just be a prime example of herd-mentality and dogma trumping science. For example, James Delingpole at The Telegraph accusingly writes:

"The scientific reality – that global warming has paused for 15 years; that climate sensitivity appears to be far smaller than the scaremongering computer models predicted – cannot be allowed to derail all the expensive and intrusive programmes (from wind farms to green investment banks to hideous, flickery, dull low energy light bulbs) which have been introduced in order to "combat climate change."'

He rightly points out that the third, fourth, and fifth IPCC reports have been repeating a very gloomy tale of how we're all totally screwed by our C02 emissions even while the earth's temperature was straying from the predictions of the models by staying constant.

Also being pointed out is that The Associated Press received leaked documents stating that the US government and those of several European countries have been trying to pressure climate scientists into downplaying the lack of temperature increase in the newest report. The AP reported that “Germany called for the reference to the slowdown to be deleted, saying a time span of 10-15 years was misleading in the context of climate change, which is measured over decades and centuries.”

Considering that there is an international agreement that there will actually be a meaningful international agreement regarding climate change set out by 2015, it's easy to understand why some people would want this fact ignored. However, that doesn't justify trying to pressure scientists to misrepresent the facts even if they agree that it's a temporary lull and shouldn't carry disproportional weight. Good on the scientists who worked on the report for not leaving out this Inconvenient Truth. Ha, see what I did there? Gore reference yo.

Anyway, I personally feel that our emissions likely are heating the earth to some degree. I have no real idea how much but the greenhouse theory seems to make sense and it's hard to imagine our constant polluting will have no negative consequences. It's clear that we're definitely responsible for increasing the amount of C02 in the atmosphere which has jumped from 280 parts per million during pre-industrial times to 400 ppm as of this year. To those people who like to use the argument that this is a good thing because carbon dioxide is plant food, I assume you will think it equally good when I drown you in ravioli because too much of a necessary can never be bad apparently.

Either way, these findings are definitely being touted as a victory over alarmist environmentalists and will provide political cover for simply continuing business as usual. Which is a problem even if turns out that climate change isn't.

Simply put, I feel that climate change is essentially a red herring and should not be the primary issue focused on by environmentalists. Whether or not the earth is heating by a tiny amount is hard to prove is happening, hard to prove actually matters, and simply does not cause most people to care in the same way other environmental issues do whose affects are more blatant. The fact is that we are living on a big rock that spins around a massive constantly-exploding nuclear reactor in space. The cycles of the sun will have a big affect on the planet's temperature regardless of what we do as will natural cycles of the earth. Using only the temperature of the planet as our benchmark for how we're doing in our stewardship of the planet is a bit ridiculous from this perspective. It seems that spending our energy trying to force through policies that we hope will reduce that number seems like it must hurt our efforts on other aspects that may be more important.

There are two main issues that I think we should be emphasizing instead if we want more public support for environmental legislation.

1. Loss of natural life and biodiversity: Humans have unfortunately become the sixth wave of mass extinction in the last half-billion years which puts us in direct competition with a massive chunk of space-rock that slammed into the earth and resulted in a dust cloud that blocked out the sun. The natural "background" rate of extinction is supposed to be roughly one to five species per year who die since they didn't evolve to meet changing circumstances. It's now estimated that we're losing 1,000 to 10,000 more species per year than would happen naturally with dozens disappearing daily.

Most of this is occurring due to habitat destruction and introducing foreign species into areas where they are not supposed to be and that cannot handle them. Due to the interconnectedness of players in ecological systems, a snowballing effect is likely as species who are food for other species disappear. Roughly 50% of our primate brethren are at risk of extinction and of the 12,914 species of plants that the International Union of Conservation of Nature (IUCN) has been able to assess, about 68% of them are at risk of dying away. This is even more unfortunate than just forever losing cool types of life that took millions of years to evolve. It's important to remember that much of our medicine and consumer products come from these species and we have no idea what amazing biological chemistry is being lost. 

The loss of plant life is also a huge problem considering that photosynthesis is needed to transform the excess C02 from our burnt fossil fuels into breathable oxygen. Since the end of the last ice age about 10,000 years ago, the amount of forest coverage of the earth has been reduced from 45% of the earth's land area, or 6 billion hectares, to 31%, or 4 billion hectares. Although some of this loss was due to natural climate fluctuations, in the last 5,000 years, there has been a loss of about 1.8 billion hectares or an average of 360,000 per year. We've managed a slowdown on this front in the last decade as countries develop but we're still moving in the wrong direction. Remember, if we have enough plants going, we can basically dump as much C02 into the atmosphere as we want. It's kinda the equivalent of chowing down Big Macs between weightlifting sets. Still not pretty but can work.

Unfortunately, the oceans are doing equally poorly. We're eating on average 17 kg of fish per year per person, about 4 times what people ate in 1950. About 85% of global fish stocks are depleted, overly-exploited, or in the process of recovering from being overly exploited. Bottom trawling, the process of dragging heavy nets along the bottom of the ocean to avoid missing anything, have ripped up the ecosystems that support underwater life and has turned big areas of the Mediterranean and North Sea into lifeless deserts. Horribly enough, on average, 20 pounds of ocean life are caught, die in nets, and are then discarded for every pound of shrimp caught for consumption. That doesn't sound sustainable to me.

2. Ocean Acidification: Contributing to our sea problems is this next point, the acidification of our oceans via the absorption of C02. Personally, I find this to be a good rebuttal when discussing climate change and someone denies it is happening or will matter or that C02 is causing it. Simply put, it doesn't matter because ocean acidification is happening and will have serious consequences on its own.

Check out this site for a cool photographic comparison between coral growing normally and coral growing in an environment where C02 is overly-abundant due to leaks in the ocean floor. If you didn't click it, basically the C02-saturated ocean environment looks gross and unhealthy. Since the beginning of the industrial revolution, ocean acidity has increased about 30%. This is because the burning of fossil fuels releases C02 into the atmosphere and about a quarter of that, roughly 8 pounds per person per day, is absorbed by the ocean. That's about 20 trillion pounds per year and means that the ocean will saturated with enough carbon dioxide to have all coral look like the unhealthy sample in 60 to 80 years.

The changing sea chemistry is happening much sooner than expected and the decreased pH level has already started causing problems. It has killed billions of oysters, mussels, and is softening clams and killing baby scallops. In addition, it is dissolving plankton which could have huge consequences since plankton is responsible for a large amount of the earths C02-to-oxygen converting. Basically anything that relies on having a shell is in trouble.

The weakening of calcium carbonate caused by acidification also results in coral bleaching and means that coral has trouble growing naturally or reforming after being damaged by bottom trawling. This results in less of the fish who rely on these coral reefs. In addition, acidification, increasing ocean temperatures, overfishing and destruction of predatory fish habitats have also had the weird and concerning effect of causing the Rise of the Jellyfish.

Jellyfish are problematic in that they are immune to acidification and can eat things much higher on the food-chain than themselves. When a species of them, Mnemiopsis leidyi, was accidentally released into the Black Sea in the 80s, it rapidly consumed almost everything and wound up being 95% of the biomass in the area. Problems with the booming jellyfish populations have already been noted:

"(In 2011), nuclear power plants in Scotland, Japan, Israel and Florida, and also a desalination plant in Israel, were forced to shutdown because jellyfish were clogging the water inlets. The entire Irish salmon industry was wiped out in 2007 after a plague of billions of mauve stingers – covering an area of 10 sq miles (26 sq km) and 35ft (11m) deep – attacked the fish cages. Two years later, a fish farm in Tunisia lost a year's production of sea bream and sea bass after jellyfish invasions. Perhaps the most extraordinary blooms have been those occurring in waters off Japan. There, refrigerator-sized gelatinous monsters called Nomuras, weighing 485lb (220 kg) and measuring 6.5ft (2m) in diameter, have swarmed the Japan Sea annually since 2002, clogging fishing nets, overturning trawlers and devastating coastal livelihoods. These assaults have cost the Japanese fisheries industry billions of yen in losses."
  
Nuclear jellyfish. Clearly a fairly serious problem. It's not pleasant to ponder that we may be returning to the Precambrian era when the oceans basically only had jellyfish in them.

Although there are certainly other environmental aspects that need looking at, I feel these two can be major rallying points since they are so clear-cut. On one hand, putting more money towards planting trees and preventing deforestation seems like something everyone can get behind since it will reduce atmospheric C02 in addition to generate beautiful habitats for animals. On the other hand, transitioning the argument away from being that C02 possibly causes the world's average temperature to rise to being that C02 definitely turns the ocean into an acidic, jellyfish-haunted wasteland seems like a smarter way to go about things.

And remember, none of this is to say that I don't believe the earth is getting warmer or that climate change is not a real thing that we're at least partially responsible for. Last year, 15,000 warmest temperature records were broken in the US in March alone. That sounds pretty severe to me.

All I'm suggesting is that the message used to get the point across to the masses move away from abstract and complicated climate temperature science towards more complete view of the earth's health as a whole with an emphasis on things we can see and that people can emotionally relate to. Trying to make necessary policies that need to be enacted ASAP based solely on a theory of rising temperatures during a period of non-rising temperatures is simply not gonna work.

The battle for people's opinions is a fickle one. When the red herring aren't biting, jellyfish may prove an easier catch.

AS

Free for Whom?

“The words “free trade agreement” should bring to mind the response attributed to Gandhi when he was asked what he thought about western civilization: “it might be a good idea.” Same with “free trade agreements.” Maybe they would be a good idea, maybe not, but the question scarcely arises in the real world. What are called “free trade agreements” have only a limited relation to free trade, or even trade at all, and are certainly not agreements, at least if the people of a country are regarded as its citizens."
-Noam Chomsky

Free trade really is an interesting concept that tends to get people hot and bothered one way or the other. Oxford dictionary describes it as "international trade left to its natural course without tariffs, quotas, or other restrictions."

It's fairly easy to see the appeal of free trade. It's quite excellent being able to freely move goods across borders so that consumers are able to choose to purchase at the lowest price. This should breed efficiency in production everywhere since domestic industries are not protected by government subsidies, tariff walls, or quotas limiting the amount of imports coming into the country. And if, for whatever reason, another country is simply too capable of undercutting your profits in one industry, the idea is that you would switch your emphasis to something you are more capable of being the most efficient at.                                       

This concept of specializing to produce efficiency was first noted by my namesake's predecessor, the economist Adam Smith, in his 1776 work, The Wealth of Nations. He notes that: "It is the maxim of every prudent master of a family, never to attempt to make at home what it will cost him more to make than to buy.... If a foreign country can supply us with a commodity cheaper than we ourselves can make it, better buy it of them with some part of the produce of our own industry, employed in a way in which we have some advantage."

The economist David Ricardo, born in the late 18th century, would go further with this idea and develop it into the theory of comparative advantage in his 1817 work, On the Principles of Political Economy and Taxation. Essentially, he used an example where Portugal was able to produce both wine and cloth more efficiently than England. However, since Portugal was able to produce wine even more efficiently relative to England than it was able to produce cloth, it would benefit both countries for Portugal to focus solely on wine, trading its excess for English cloth. This theory has been hugely influential in world politics although it's worth noting that it has been shown to need certain prerequisites to work at all in real life and will still have problematic implications which I'll discuss later.

Actually enacting free trade has been considerably messier than these theories would imply. During Western Europe's period of mercantilism, roughly the 16th to late-18th century, protectionism was still the norm for the major powers in order to build trade surpluses of precious metals. The use of colonized nations made this much easier since they could be banned from trading with anyone else and be forced to buy your goods while providing resources unavailable at home.

Adam Smith and the classical economists would mark the move of the European powers towards supporting free trade as a global system. Of course, it's important to note that this was the equivalent of kicking out the ladder once you've personally climbed it. The major European powers had taken advantage of protectionist measures to build up their own industries, safe from being crushed early on by competition. After this, they enforced quite successfully and quite aggressively on the world a free-trade regime which meant other countries were not allowed to do the same. South America, Africa, and most of Asia have only relatively recently been able to emerge into the world economy as competitors in their own right and have generally only been able to do so via protectionist measures. The Four Asian Tigers - Hong Kong, Singapore, Taiwan, and South Korea - used protectionist measures to protect their industries and were able to rapidly industrialize from the 60s to the 90s. China has more recently started using this model to great success.

Latin American countries were forced into free-market policies by the International Monetary Fund (IMF) in order to receive additional funds to service their debt during the Latin American debt crisis of the late 70s and 80s. These policies resulted in demonstrating a troubling aspect of David Ricardo's comparative advantage theory; this being that developing an advanced economy capable of producing advanced goods like electronics will necessarily require a 'weak' period where the industry must be protected from more advanced competitors. Thus, following this theory's prescription can only result in further entrenching the status quo of nations. The Asian Tigers refused the free trade argument, chose to place barriers to imports, and were able to develop advanced industries much sooner. Latin America was forced into free trade which resulted in many of the countries there being stuck selling primitive commodities that don't have a lot of value added while needing to import more profitable and technologically-savvy goods. This could be thought of as being stuck in a commodity ghetto as it reinforces itself and is hard to get out of.

Anywho, enough of this boring history lesson. The reason I am talking about free trade is that Canada is currently negotiating two major free-trade deals. These are the Canada-EU Comprehensive Economic and Trade Agreement (CETA) and the Trans-Pacific Partnership (TPP), both major undertakings involving quite a few countries. It's important to note that free trade has changed a bit since its original conception. It doesn't just apply to creating barriers for imports or subsidizing your own exports. It also applies to flows of capital in the form of investment as well as corporations setting up branches or purchasing existing companies within foreign countries.

Few countries allow total free trade in this sense since giving up key or strategic industries to foreign control can be problematic. Canada has an Investment Canada Act which has a "net benefit to Canada" test included. The test is kinda poorly defined but it allows cover for refusing sales to foreign businesses that are politically indigestible. This was used in 2010 to prevent Australia's BHP Billiton Ltd. from a $38.6 billion hostile bid for Potash Corp. of Saskatchewan as it was considered strategically important.

The problem is that free-trade agreements are often undemocratic and tend to chip away at an elected government's ability to regulate business or enact legislation the people favor. They also tend to last quite a long time before any of the countries are allowed to unilaterally opt out of them meaning that a government can ram one though and leave the people stuck with it for quite a while. To get a sense of why this is a problem, it's useful to look back at the North American Free Trade Agreement (NAFTA), enacted in 1993 by the US, Canada, and Mexico.

NAFTA created laws that entrenched the relationship between businesses from any of the three countries and the government of the other country they are operating in. These laws supersede the domestic laws of the nations meaning that if a US company operating in Canada felt that the Canadian government didn't honor its obligations under NAFTA, they could request a review by the NAFTA Tribunal. The concerning part is that the Tribunal meets in secret, is not required to name its members for a case, and doesn't even have to fully disclose the decisions they reach or why. This extreme lack of transparency is rarely good for democracies where information is required for voters to make informed decisions. The point of NAFTA was to ensure that foreign companies and investors get treated as well by the foreign government as it would treat its own people. This confidentiality is the norm when companies are going to court but it is a huge problem when a company is going to court against a country's government and the result will have a huge impact on public policy.

There have been some quite troubling decisions made by the Tribunal and we never get the full story of how the decision was made. For instance, the Canadian government was forced to lift restrictions on the production and importation of a hazardous ethanol-based gasoline additive, MMT, because a US company said the ban hurt their business. Canada's right to disallow the poisonous substance within its boarders was overruled by a US company's right to profit. Another time Mexico had to pay a US company $16.7 million because local environmental laws that disallowed a toxic-waste-processing plant that they were constructing were seen as expropriating.

A very concerning situation was when United Parcel Service of America (UPS) tried to sue the Canadian government for $160 million. This was because they argued that Canada Post was being unfairly subsidized since its services draw on public infrastructure that UPS needs to provide on its own. This was essentially an attempt to force Canada out of providing a government service which the private-sector company wanted to provide. Fortunately the lawsuit failed but this would have set a terrible precedent. Could our public healthcare system become a liability that could result in Canada being sued since it's providing a service that US businesses could do? 

These laws are problematic since they essentially limit what our elected governments can do. Trying to set environmental laws will get us sued. Trying to have our government provide public services can get us sued. You can bet that these lawsuits will hugely alter what legislation we try to pass as a country. Currently, US pharmaceutical giant Eli Lilly is suing Canada for $500 million for voiding two of its patents early because they failed to fulfill the promises given as reason for the patents. Essentially, Eli Lilly only ran a 22 patient study to prove the efficacy of its ADHD drug, Strattera, and Canada is saying that this tiny sample is totally insufficient to prove it is 'useful,' the requirement needed in Canada to hold a patent. In the US, an invention only needs to demonstrate a "scintilla" of usefulness, ie, a friggin' tiny amount. Canada, however, is allowed to define 'useful' however it wants and the limited data presented is not capable of showing that the drug is. Thus, Eli Lilly is trying to use Chapter 11 of NAFTA, the investor-protection part, to force Canada to change its laws. If it successfully sues us, we will certainly be open to a slew of lawsuits from other drug companies.

And just for good effect, let's do a quick analysis of how NAFTA played out because free-trade agreements tend to have winners and losers. Mexico was expecting a lot of new jobs due to their low wages. Mexico certainly received a lot of foreign direct investment which had increased 70% by 1994 and was up 435% by 2004. That's a lot of money coming in. A lot of it wound up in maquiladoras, US-owned Mexican factories along the US boarder there to take advantage of cheap labor. This was supposed to give rise to a decent Mexican middle-class but it failed to do so since productivity was not high enough even for these low wages. Much of the jobs would go to cheaper China eventually. The surge of workers to these labor-towns would also problematically result in slums with high-living costs while pulling men away from their families in the rest of Mexico. Roughly 2.3 million traditional Mexican farmers were also displaced and rendered unable to compete by the flood of mass-produced, subsidized US food when their own tariffs were removed.   

Canada did much better overall. We sold more beef, oil, agriculture, and wood to the US while receiving increased investment in our own automotive factories. The US did less well. A lot of manufacturing jobs went to Mexico which meant higher profits for business and their executives and much lower wages for US workers. The larger, multinational companies did the best by far since they were the most capable of taking advantage of the cheap foreign labor. An estimated 820,280 US jobs were lost to Canada and Mexico, mostly well-paying manufacturing ones. NAFTA really hurt their middle-class and the US trade deficit would rocket up 281% between 1993 and 2002. That's a jump from $30 billion to $85 billion per year added onto the national debt.

Anyway, enough about NAFTA. Even with the scary, secretive, undemocratic aspects of the NAFTA Tribunal arrangement, I'm willing to accept that it has likely been good for Canada. The Canada-EU free-trade agreement negotiations underway are also interesting but since it is being discussed with the European Union, not exactly a bastion of cheap, job-taking labor, let's ignore if for the time being. For now, let's focus on the Trans-Pacific Partnership.

The TPP is a trade agreement that has grown to involve Brunei, Chili, New Zealand, Singapore, Australia, Malaysia, Mexico, Peru, Vietnam, Japan, Canada, and the US. It is also open for any other Pacific nation to join later. For the US, the goal of the TTP is two-fold. First, it will update the World Trade Organization's rules that haven't changed since 1994. Second, it will entrench US interests in an area of the world increasingly dominated by China's influence. The result is supposed to be an agreement that deepens trade, protects investors, addresses intellectual property protection, and deals with the conduct of state-owned businesses.

That all sounds fine but there are some legitimate complaints with the deal. Only 5 out of 29 of the chapters being discussed actually involve traditional trade. The rest cover a wide array of issues with far-reaching consequences. It is essentially an agreement on corporate rights that set out what governments are allowed to do to regulate business, what Crown corporations can do, patent and copyright terms, how the internet should be governed, when to compensate businesses for lost profits, and banking and taxation rules. Like NAFTA, these agreements will supersede our own laws and open us up to lawsuits should we hurt profits of foreign corporations.

There always tends to be a lot of protest regarding free-trade agreements. However, a lot of this one has been driven by its extremely secretive nature. It probably doesn't help that the Conservatives have been actually hiding the current drafts from the Official Opposition here in Canada. Conservative Trade Minister Ed Fast had a TPP meeting in Vancouver which he didn't disclose until the Peruvian media leaked it. Fast had also said that no corporate group got special access but then documents turned up showing his ministry had created a consultation group that included the Canadian Steel Producers Association and Bombardier, both of whom signed confidentiality agreements.

The desire to hide it likely comes from some of its troubling contents. Judging by a leaked draft of the TPP and the negotiations secretive nature, internet freedom advocates at the Electronic Frontier Foundation say that:

"The TPP is likely to export some of the worst features of U.S. copyright law to Pacific Rim countries: a broad ban on breaking digital locks on devices and creative works (even for legal purposes), a minimum copyright term of the lifetime of the creator plus seventy years (the current international norm is the lifetime plus fifty years), privatization of enforcement for copyright infringement, ruinous statutory damages with no proof of actual harm, and government seizures of computers and equipment involved in alleged infringement. Moreover, the TPP is worse than U.S. copyright rules: it does not export the many balances and exceptions that favor the public interest and act as safety valves in limiting rightsholders’ protection."

Also concerning is that the US has been pushing for more stringent intellectual property rights protection for drugs. This would result in higher profits for an already exceedingly profitable industry and in longer wait times before a drug becomes generic and affordable to the poor of the world who do die waiting and trying to save up for treatment. 

Fortunately, at least for the time being, it sounds like the differing countries will get to keep their food standard regimes and will not be forced to adopt international standards. However, the US has been pushing for simpler regulations which means in future talks, countries will likely be pressured to accept the international standard even if it means ingesting more pesticides and poisons in their dinner than they would like.

I gotta say, I'm fairly torn on all of this. NAFTA came out decently for Canada despite weakening our democracy's ability to make its own choices. It did result in a race to the bottom for wages between the US and Mexico though which is always a danger of free trade. It seems that if capital can flow freely where ever it wants without worrying about consequences then people should be able to as well. The ability to simply move to a different country that has lower wages or to just threaten to so your people accept less money is a common and problematic factor of globalization. In many cases, people and their cities spend their social and economic resources developing businesses from the ground-up only to have that business leave for cheaper-labored pastures once a brandname is established. This seems unfair and basically puts the rights of capital above the rights of humans.

Really, it sounds like the TPP is barely about trade and more about developing a corporate bill of rights that supersedes our own laws and forces us to accept a legal framework that our own governments could never successfully push through our Parliaments. Of course, there is a lot of hype on the subject online and I'm having trouble discerning what is credible or not. However, the extremely secretive nature that is being used to construct the agreement seems to be intentionally this way and our Conservatives in Canada are not helping by hiding it from the NDP who should be allowed to see, judge, and report their opinion to Canadians, even if they can't go into specifics.

Free trade should ultimately be a goal of humanity since in its perfected form, it means more freedom and increased efficiency. However, if it simply concentrates wealth and crushes the masses in a race to the bottom, it is doing quite the opposite of that. Like all trade agreements, this one will be profitable for multinational corporations who can go to the cheapest labour and will be given greater protection from the public of countries that join in the agreements. Which isn't necessarily a bad thing because as people point out, a lot of hard working people have their pensions and funds invested in these businesses so corporate profits don't only benefit the wealthy elite.

However, it's worth remembering that a lot of people simply do not have pensions. Only about 6 million Canadians do with more than half of those being in the public sector. The Canadian Pension Plan covers all workers but will provide for a pretty impoverished retirement on its own if contributions are not substantially expanded. What it is able to pay out will not cover the large numbers who simply will not be able to save up enough outside of it to retire.

In the US, only about half of private-sector workers have pensions. In both our countries, it is generally the people without pensions who live cheque to cheque and are unable to invest in the stock market. This means these corporate gains will not trickle down in dividends but the increased freedom for the businesses to move will reduce wages further. The same is happening all over Europe as western countries run massive deficits making our social security nets less able to support the increasing number of poor. In the US, between 2009 and 2010, the first year of the recovery, 93% of the gains were captured by the richest 1% of the population. Despite the fact that the number on the S.N.A.P food stamps program has jumped from 26 million in 2007 to 48 million now, the House of Representatives is voting to slash the program by $40 billion over the next decade while increasing subsidies to the agricultural industry which is already doing fine. I promise you that these 48 million who require stamps to eat don't have cash to be investing in booming stock-market corporations.

Capitalism requires buying power for the masses. If corporate profits don't turn into this buying power then it is not working and doing more to increase them won't help. Freedom for goods and capital cannot be considered more important than the freedom of people to live a decent life.

If this free-trade deal will be as good for everyone as its creators want us to believe, let's get it out in the open where it can be judged.

Democracy despises secrets.

AS

NDP Socialism is Not Done Properly

"In a country well governed, poverty is something to be ashamed of. In a country badly governed, wealth is something to be ashamed of."
-Confucius

Canada isn't doing particularly well at the moment. We may have survived the financial crisis because we didn't deregulate our banks and allow them to over-leverage themselves into the nonsensical derivatives market that so brutally whacked Europe and the US. Still, despite that and having what is supposed to be an economically conservative government in power federally, we are running large deficits. The combined debt of the provinces and the federal government is about $1.2 trillion. The provinces account for about half of that and from 2012-13, only Saskatchewan managed to avoid a deficit.

For the point of this post, I'll focus on my home province of Manitoba as we are performing extremely poorly and don't really have an excuse. At least Ontario can blame a high dollar for hurting their manufacturing exports. As of July 30th and according to the Canadian Taxpayers Federation, Manitoba's debt was increasing by 72 bucks a second or $6.25 million per day. Our total debt is estimated to be at around $30 billion by the end of 2013. Even if these numbers are being exaggerated to some degree, they are still scary figures for a province that only had an estimated 1,274,000 people at the start of this year. This equals out to about $23,548 owed per person.

You may argue that Manitoba faces some unique challenges which means we need a government that sometimes spends more than others. And you're right, we do. We have floods and harsh, snowy winters. We have some Northern Manitoba communities that need government assistance which is expensive to provide since they are scattered and remote. We have a perpetually impoverished North End filled with people having difficulty breaking out of Winnipeg's downtrodden underclass. A combination of isolated Northern communities, a ghettoized North End, and our infamously long and cold winters where people are often stuck lethargically inside means that our health care is going to cost more than in other provinces.

On the other hand, we have a fairly balanced economy consisting of agriculture, mining, tourism, finance, energy, and manufacturing which should buffer us from the commodity price fluctuations that occasionally hammer Alberta's oil fields and Saskatchewan's oil and potash industries. We already have the infrastructure in place to prevent the type of flood damage recently witnessed in Calgary. We have enough hydroelectricity from our dams to provide for our own needs quite cost effectively while being able to export the excess for a profit. Our housing market, although quite inflated like the rest of Canada, has not bubbled as outrageously as some of the bigger and less mosquito-infested cities. In addition, we're nicely in the center of the continent which should allow us to return to being the major transport hub we once were, especially as fuel prices rise and make flying less attractive.

These are some pretty decent perks and provide a stability which should allow our budgeting to be fairly predictable. This means we should be able to have balanced budgets by slashing spending when we know we won't be able to afford it. Remember folks, debt and its accumulated interest is stealing from your children unless it's being invested in a way that will provide greater returns. If you're just blindly hoping the returns will be better, that's the equivalent of gambling with Lil Jimmy's college fund which is still pretty crappy.

So why are we doing so badly? The NDP were able to continue their inherited balanced budget for a straight decade, from 1999 until 2009, under the leadership of Gary Doer. In 2008, the final year before Doer was replaced by Greg Selinger, we had a surplus of $451 million. That's pretty good and certainly helped the NDP brand-name. Doer did this while investing in education and health care and managed to keep taxes down so that they could be raised on a rainy day. Of course a lot of this came from raiding Manitoba Hydro's revenues but at least it was still balanced.

Selinger seemed to have just went nuts soon after coming into office though. His first year, the surplus immediately became a $183 million deficit. This was the period directly following the financial crisis so some economic slowdown was expected but “According to Statistics Canada, Manitoba was the only provincial economy not to experience a decline in real economic activity in 2009." This is coming from the NDP themselves (A2) in 2011 which means they are admitting they don't really have an excuse for ballooning deficits. The 2011 flood that was blamed for the almost $1 billion dollar deficit that year only accounted for about half that billion after the feds had pitched in. Then there was $583 million in deficit spending just last year and no flood to credit for that. 

The NDP's response was to raise taxes while not reducing spending, a response that could potentially work if done intelligently as it would allow the continued spending to work as stimulus. However, it was not. A lot of the funds went to a growing, unproductive bureaucracy. From 2006 to 2012, the number of provincial civil servants jumped by 1599, or 12%, well above population growth in this period. All of these except 364 of them were from 2009 onwards and so can be blamed on Selinger's administration. This number also doesn't include "nurses, hospital staff, teachers or any other public sector workers outside of provincial government departments." Some of these jobs were necessary but during deficit times, we should be doing our best to keep these numbers down and find places to make savings. The Winnipeg Regional Health Authority employs a large bureaucracy that includes 7 vice-presidents and 15 communications staff. Why would it need that many of either of those?

The Winnipeg School Division increased the wages for its bureaucrats by 20% over the last five years which is about twice the rate of inflation. Its top people received pay increases as high as 26% over the last two years. It employs sixteen consultants for some reason with ten of them making roughly $100k as of 2011. Those numbers seems insane. Even worse, we currently have the bizarre situation where the division's administration staff get the same wage increases (7.7) that are given to teachers. This means that the administrators have a cash-incentive to vote in favor of massive wage increases for the teachers which is obviously not something the taxpayers would want. Much thanks to Trustee Mike Babinksy for bringing this to light.

In addition, Babinsky mentioned that trustees and senior administrators enjoy expensive catered lunches on the public dime for their hour-long meetings at the same time school taxes are going up. These are the same people that vote in secret on little things like their $365 million budget and keep evaluations of how schools are actually doing hidden from the public because, as Chairwoman Rita Hildahl says, "I don't feel that a report card needs to be given on individual schools." Well Rita, that's unfortunate because I do. Otherwise how do I know who is doing their job poorly?
 
To go along with this spending spree, the NDP chose to raise taxes on anything they could think of, the increase of 1% to the Provincial Sales Tax, boosting it to 8%, being only the most recent. The extra $198.5 million raised by this one percent increase was supposed to go to infrastructure which everyone in Winnipeg knows could certainly use it. However, only about 40% of this money will actually do so. Infrastructure is generally a good investment as it creates jobs, involves purchasing goods from local producers which stimulates the economy, and needs to be done for the city to function efficiently. This means actually dumping all of that money into it would have been a smart idea. Considering that the Selinger government is already having the extra PST collected before passing Bill 20 to gut the Balanced Budget, Debt Repayment, and Taxpayer Protection Act which requires they have a voter referendum on tax increases, the fact that less than half of the money raised is going towards infrastructure is simply galling.

Other cheap shots for grabbing revenue to pay for out-of-control spending have included adding sales tax to items such as hair cuts, manicures, and salons; adding sales tax to house insurance because I guess we want people to have an incentive not to buy that; adding $35 bucks to vehicle registrations; increased user fees for birth certificates and child abuse registry checks; adding an additional 2.5-cent per litre gas tax and a 62 cent per litre tax on "popular beer brands."

They've also decided to allow more VLTs in Manitoba for the tax revenue meaning up to another 500 machines may be added. As anyone who has ever known a problem gambler is aware, these machines can destroy lives and make people's kids go hungry. I'm not saying we shouldn't have gambling establishments because all that means is that people would go South across the boarder to play and cost us money. Still, "VLTs are the crack-cocaine of gambling" according to former NDP cabinet minister Larry Desjardins. They have none of the enjoyable social aspect of gambling with other people and simply allowing even more of them around town will result in more problem gambling.

In addition, just to take an arbitrary shot at young people who may wish to move here, the NDP have decided that people over 65 shouldn't have to pay the education portion of their property taxes as of 2015. Because, umm, old people don't benefit from living in an educated society and old people didn't pay their own share when they were younger? This is clearly just vote buying from older folks who tend to vote more. The loss of revenue, estimated at $50 million, will need to be picked up by other people, some of whom will be worse off than many of the seniors now excluded since wealthy seniors will also be exempt.

Add all of this to the extremely troubling gamble already underway in the form of the Conawapa and Keeyask hydroelectric facilities in Northern Manitoba. They will cost about $20 billion to construct, although that is likely low-balling it since Manitoba Hydro has often been wrong on estimates in the past. It will also require the expensive cooperation of many First Nation's communities. Negotiations have already cost $224 million without having actually paid them yet.

The fact is that we are borrowing money with interest to fund these projects which won't start even potentially making revenue until 2025 and only will if energy demand rises. The US states that are near enough to buy the energy are also those with large reserves of cheap natural gas to be gained through fracking. Unless they put a moratorium on this practice due to environmental concerns, they likely won't be needing to purchase energy from us anytime soon which means the huge investments in the form of unprofitable dams could bankrupt us.

Then there is Bipole III, a major backup power-line linking the Northern Manitoban generating complex to the Southern Manitoban power-grid. The decision to build Bipole III down the West side of Lake Winnipeg will cost more than $3 billion, at least $1 billion more than it would have on the East side, and will be 50% longer resulting in increased energy losses during transmission. Bipole III alone will cause a domestic power rate increase of 30% so there is no telling what these dams may do to our previously cheap energy rates.

All of this combined means that Manitoba is losing lots of talent. Between 2011 and 2012, 5791 more people were born than died. However, these gains were almost wiped out by the net 4675 people who left for other provinces, mainly the other three western ones. We've actually ranked between eighth and last for inter-provincial migration. Those who leave tend to be young people with work ethics strong enough to dig up their roots and travel elsewhere for greater wages, often to provide for their families. We can cover this with influxes of immigrants from other countries but these new Canadians often need extensive training and socializing before they can become net contributors.    

Personally, I don't like the NDP and haven't voted for them either federally or provincially. People find this weird considering I tend to favor social-democratic policies like those enjoyed by the Scandinavian countries. However, the NDP's base seems to be unionized government employees and the poor who tend to benefit, at least in the short-term, from redistributive policies. I explained in a previous post why I don't care much for public-sector unions and while I do sympathize with the poor and believe that government assistance is often necessary for getting them out of perpetual poverty, I believe we go about it in a wrong-headed way that has proven itself here to be quite ineffective.

When reading newspaper comment sections, I notice that people accuse socialism of simply being a way for the lazy, non-working poor to redistribute wealth from the rich to themselves. They seem to forget that socialism was created for workers so that when they created wealth, they actually got to keep it. Karl Marx certainly had no love for lower-class people who didn't work or care about societal progress. Perpetual welfare bums he would have referred to as being part of the lumpenproletariat, coming from the term lumpenproletarier, literally translated as 'miscreant' and 'rag.' It seems to me that the Manitoba NDP have chosen to court unionized government workers and the lumpenproletariat at the expense of real productive workers who they were originally created to support. You know, the people who make stuff we sell to other countries which allows us to have some money to then buy stuff from them? An emphasis on big, non-productive government at the expense of workers can only be considered an extremely confused form of socialism.

Socialist concepts I admire and believe the NDP should actually pursue are more along the lines of Germany's co-determination laws. These laws require companies with 500-2000 employees to allow a third of their supervisory board of directors to be elected by the workers. For companies over 2000, this rises to almost half. The idea is that employees should have some say in the direction their company moves and should benefit when the company does well. This prevents job off-shoring and excessive concentration of wealth in the hands of owners while creating incentives for greater job satisfaction, productivity, and loyalty among employees. All of these things make for a stronger economy and less fractured society. Germany is basically preventing the collapse of the European Union all by itself so I doubt anyone can argue this.

As for having a strong social security net, we should be looking to the Scandinavian nations to figure out how to do it right. Like Confucius says, in a well-governed country, being poor makes you ashamed. That is, in a country where the government functions well and tries to boost you out of poverty through education and training instead of simply providing enough welfare to poorly live on, people will be ashamed if they don't make something of themselves and remain poor.

In a ranking of happiest countries, Norway rated first, Denmark second, Sweden third, and Finland seventh. Overall happiness seems like a pretty good indicator of how your country is doing and the Nordic model seems to work. The Swedish pay an average tax rate of 48.2%, second only to Denmark, but mostly don't mind it because they feel it is well-spent. Their safety net works but does not create a permanently unemployed underclass the way it has here and in the UK. Whether Canadians would be able to adopt such a model with our history and interconnectedness with the US is up for debate but it's worth remembering that some countries can make it work. It's probably also worth noting that these Nordic, social-democratic countries have much lower public debt relative to GDP than countries that have adopted low-taxation regimes like the US, UK, or Canada.

In conclusion, I guess all I can say to the NDP is that if you are going to adopt socialist measures in a capitalist world economy, choose the useful ones that have been proven to work elsewhere. Whatever you think about it, socialism was able to turn Russia from a backward agrarian society into a world power capable of fighting off the Nazis and competing with the US in about 40 years. It did this by elevating cooperation and sacrifice for the common good to the level of religion. Raising taxes and borrowing money from future generations because you're too lazy to tackle and cut the wasteful bloat out of the government's bureaucracy is neither socialism nor is it leadership. It is incompetence and it will cost you the next election and it should.

Well, it will if Brian Pallister can actually get it through people's heads that his provincial party of Progressive Conservatives are not actually connected to or attached with Harper's discredited federal Conservatives.

Never really thought I'd be voting for a conservative party but allowing the failure that is today's NDP to discredit cooperative forms of organizing society and production is not something I'll let myself be a part of.

AS