TGIF

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Who among us, after a hard week at work, has not bellowed (or at least muttered): TGIF? Depending on your point of view, the G stands for either God or Goodness and we are thankful the weekend has arrived. Unless of course you are in the service industry in which case you have long hours and rowdy customers to contend with (and the faint hope of decent tips).

In any case, neither God nor Goodness has anything to do with having two days a week to ourselves. While the Bible (and other religious texts) calls for a day of rest, this was generally interpreted as a day spent in service to the church. Certainly, serfs in the middle ages didn’t sit around watching sports and drinking beer (although it was a fairly common breakfast food). When their work for their feudal Lord was done, they spent most of Sunday working in church fields for their heavenly one.

As for goodness, the owners of the means of production have never been driven solely (or at all) by altruism. These are the people who brought us sweat shops and child labour.

Few societies have valued leisure time as much as our own. Sure the Romans were notorious for their frequent holy days and mass celebrations – but their economy was run by slaves, who only got a break for one day a year when during Saturnalia,  they got to give the orders. Though, of course, they were careful not to go to excess. After all, it was back to the yoke the very next day.

The weekend, like almost everything we value in modern society, was gained for us by the struggle of working people, almost always organized into collectives called unions. A quick perusal of the newspapers of the nineteenth century and you will see endless diatribes about the evils of workers’ organizations. By God, they were teaching factory workers how to read! What next, the vote?!

Days off, shorter working hours, coffee breaks, unemployment benefits, health care (no matter how mediocre), pensions and disability insurance – all of these were wrested from society (that is, the rich) by the collective actions of workers and their allies in the intellectual class and the more progressive churches. Yeah, social gospel used to be a thing before most churches lost their way and became more concerned with limiting human rights than expanding them.

Nowadays, people like to say that unions are a relic of a by-gone era – even though they haven’t been around as long as capitalism or consumerism – and have outlived their usefulness. We should get rid of them or break their power. But every American state who has followed that route has sunk into a quagmire of lower employment, greater poverty and more rich people filling their pockets at the taxpayers’ expense (cause you know the first thing on a billionaire’s list of things to do is: avoid taxes).

So as you kick back and enjoy your weekend, maybe you should spend a moment thanking your grandfather and mother for the struggles they went through on your behalf. And maybe take a look at your own workplace and wonder if a little collective action wouldn’t do some good.

But that’s ten minutes.

What Journalists Know

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Very few journalists understand how politics work. Even fewer have a clue how governments work. Almost none grasp the complexities of public policy. Not surprising – they were never trained to know and were actively discouraged from taking part. Even when they have acquired some understanding, they assume none of their readers and listeners are interested or capable of following them, so they dumb it down. Better to report on a well-developed cliché than do any deep analysis. It improves your chance of hosting your own show or appearing on page one.

Take the recent response of reporters to the Federal budget. Their initial reaction was to focus on the deficit and on the ‘path to a balanced budget.’ They also noticed that the budget was a lot shorter than in previous years. Deep.

Of course, it wasn’t a lot shorter. The government had provided two volumes – the first the budget proper and the second the fiscal background, which they knew that no-one but policy wonks would care about. They also thinned down the political rhetoric – though they certainly didn’t eliminate it. Maybe the question should have been: why were Conservative budgets so needlessly long?

It is the fiscal analysis that gets at the issue of the deficit and the debt. It is pointless to talk about raw numbers, since, because of inflation and economic growth, they aren’t based on the same calculation from year to year. Think of it this way. In 1980 you made $20,000 but spent $30,000. You had a deficit of $10,000 or 50% of your income. In 2010, you made $60,000 but spent $75,000 (by now your banker should be worried). You had a deficit of $15,000 but that was only 25% of your income. Not good, but better.

But here is the number that really counts. In 1980, you ran your first debt so your total debt was 50% of your income. This puts you in a position similar to France. But in 2010, your debt (let’s say you overspent by $10,000 a year) has reached $300,000 which is now 500% of your income. This places you in roughly the position of Argentina just before the country went bankrupt. By the way, if you are worried about government debt in Canada, you should be terrified by personal debt which now stands at 164% of disposable income. Fortunately most of that debt is in mortgages.

Canada’s current debt to income (GDP) ratio is 31% (this is only federal debt; count in provincial debt and it’s not so rosy) one of the best in the world – much better than our European and North American friends. You might think this is because of the fiscal prudence of the previous Conservative governments but you would be wrong. While the Conservatives did shrink the ratio initially – though not as quickly as the previous Martin government had – it began to rise again in 2008. While the Conservatives claim to have left the country in surplus, it was accomplished, if at all, through financial tricks that actually left the country in worse shape than it had been even a year or two before. It was, as they say, good politics but lousy policy.

The current fiscal plan is a steady state one. The debt ratio won’t rise – though it won’t fall either. Given the huge contingency fund, the low estimate of the price of oil and the pessimistic forecasts for economic growth, the deficits might actually be smaller than projected – or the government may have the fiscal room to fulfill those of their election promises, like homecare, left out of this budget, without running up big bills.

But that – the real story – is apparently too hard to explain or to figure out how to dig into. So, when they interview the PM or the Minister of Finance, they constantly interrupt and return to the tired old shibboleths of the evils of the deficit, as they were trained to do by Reform and Conservative rhetoric — Stockholm (or Stockwell Day) syndrome, maybe. Meanwhile they let the opposition blather on with nary a question even when the union-bashing, poverty-shaming neo-con Ms Ambrose spouts Tea Party language – calling the request for the rich to pay their share “class warfare.” They are only slightly tougher on Mr. Mulcair. Maybe they just feel sorry for them both, since neither of them are likely to be leaders for long.

Journalists need to up their game and trust their audiences to follow along. Or just give up and admit they take their orders from on high. And, though I’m writing this on Easter, I don’t mean from Jesus.

And that’s a bit more than ten minutes.

Zero Interest

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The European central bank just lowered the interest rate to 0%; Japan has been in negative interest rate territory for some time. Anyone who has a saving account knows that interest rates have been below 1% for quite some time. With inflation running at roughly 2%, this means your money loses value while you wait. It’s better than putting money in a sock but not much. If banks start passing on negative rates to customers (they haven’t yet, somewhat to the chagrin of central bankers) a sock will become a viable option.

The stock market isn’t doing much better. While you might be lucky or smart enough to pick winners, the overall returns from investing has barely done better than inflation this past year. Count in broker or mutual fund fees and even that advantage goes away. Someone may be getting rich (hint, it’s your investment banker) but it ain’t you.

There is lots of money around. Multinational corporations are sitting on trillions – holding for better times or, more likely to buy out their rivals during bad times. It’s not being spent on making jobs.

The economy is broken and no one, it seems, knows how to fix it. This is largely because in the 21st century capitalism has turned from a system designed to increase societal wealth and promote innovation and progress into a tool to funnel the wealth of a shrinking economy into fewer hands. And yet, people continue to hold onto the mistaken belief that the ‘free market’ is an impersonal and rational system to promote efficiency. But in fact it twitches and jerks to the strangest stimuli.

Take the price of iron in China. You may recall, that Mao said that democracy grows out of the barrel of a gun. Protestors in various countries riffed on that by putting flowers in those same barrels held by soldiers sent to ‘watch’ them. In China – where the economy is struggling – the price of iron suddenly jumped 10%. How could that happen? Apparently a massive international flower show was being held in a large iron smelting city. Local officials fretted about pollution levels. Iron company executives – suspecting a temporary shutdown – began hording their product. So the price went up. An ideologue might say it was a ‘rational decision’ but I would reply: You keep using that word; I don’t think it means what you think it means.

So if the market system is broken – what do we do? Especially if we are trying to buy a house, whose price will either spiral out of control (in part because of insider trading and speculators) or languish or even fall in many markets. What’s the point of pouring good money after bad? Why not rent and let someone else take the risk? And what about saving for the future when our savings are worth less every day? Maybe we should do what the central bankers want and spend, spend, spend. Or maybe we should give up on the idea that tomorrow will be richer than yesterday and learn to live with less. Easy enough to say when you are somewhat well off – but what if you are already living on less?

Or maybe we should start to reform the system by admitting nothing is too big to fail and that speculators don’t have a God-given right (let alone a legal one) to game the system. Maybe we could start by sending a few of the worst to jail.

But that’s ten minutes.

Property

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There are few things more contentious than the question of property. For those on the far left, property is theft. For extreme conservatives, it is a sacred right. Most of us come down somewhere in the middle. In Canada, while we guarantee the equality of the sexes in the Constitution, we don’t guarantee the right to own property. The state can – and frequently does – expropriate property for the public good and there are a number of other less formal ways that your property rights can be infringed.

In fact the biggest property owner in Canada is the Crown, which controls vast tracts of land from coast to coast to coast. In most situations, the Crown continues to own subsurface rights to land even if the surface rights are owned by individuals.

For artists and other creative types, the big issue is copyright – that is, the right to own the product of their mind and imagination. In Canada, copyright persists for fifty years after the death of the creator; in the USA, those rights extend for 70 years and there are some – notably big creative corporations like Disney – who would like that extended even further.

The simplest argument people make is that if they own a house they can pass that property down to their children and grandchildren and so on in perpetuity so why shouldn’t intellectual property be the same. Property is property right?

Well, no. We already distinguish between different kinds of property. There is real property, generally referring to land but can also be ascribed to other forms of wealth, and there is chattel property, things like cars or the furnishings in your house. This distinction becomes particularly relevant when you go bankrupt, when most chattel property is forfeit (unless it is the tools of your trade) whereas some real property (such as your primary residence) can’t be touched.

We also make a distinction – in the tax system – between different kinds of real property. Primary residences are exempt, for example, from capital gains tax. Some lucky folks who bought a house in downtown Toronto in the 70s are now millionaires because of soaring house values. When they sell, none of that money is taxable. Not so the people who own a cottage on Georgian Bay (unless it is their primary residence); their property is subject, on sale, to taxes on the difference between the purchase price and sale price.

And, finally, you can only pass down your property when all estate taxes (in the USA) or probate fees (in Canada) are paid. Failure to pay those and your property can be forfeited to cover the cost. As far as I know, probate may (or may not) be applied to intellectual property but it is difficult to estimate its value and hence ascribe a percentage tax or fee to it.

There are some arguments against extending rights to intellectual property beyond a reasonable limit. Extending patents (which are different and shorter than copyright) for drugs for example may – at a certain point – raise prices for consumers without significantly increasing innovation by pharmaceutical companies, which would rather spend their R&D on modifying existing properties than inventing new ones. The same suppression of creativity may well apply to other forms of copyright as well.

And that’s ten minutes.

Click on This!!!

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A man wrote 600 short essays. And you won’t believe what happened next!

We’ve all read the overheated headlines promising some amazing revelation of human nature. But human nature being what it is – the results are seldom amazing.

Still, hope springs eternal and, despite our determination never to be sucked in again, we click on the link of 25 pictures that broke the Internet. Most of them don’t even cause me to break into a smile.

Everything is designed to try to get you to follow the link to this or that site. And why? Well, apparently, the more people that visit a site, whether it is a pseudo-legitimate news site like Buzzfeed or the Huffington Post or much less reputable portals to a life poorly wasted, the more they can charge for the advertisements that appear on them. Because that’s what they really want you to click on. The endless ads, carefully (ha ha) selected to match your tastes and habits.

But I never click on the ads, you say. I’m not influenced by such things. I wonder how the advertising industry has managed to sustain a multi-billion dollar business if no one pays attention to ads.

But of course you do. Most of us can sing a dozen ad jingles from our childhood – back when jingles were a thing – but not a single number one hit of our teenage years. Of course, advertising has an impact. You may not notice it but every time you are looking at a shelf of nearly identical goods – especially if you are in a rush and aren’t really focused – you will almost always reach for the one whose name – whose brand – you recognize. And you will, from time to time, believe that you do so because it is better quality than its cheaper competitors.

Years ago, when I was in chemistry class, we did a blind experiment to see which detergent was best at removing dirt. We stained identical scraps of cloth with identical and carefully weighed samples of dirt and grease. We then washed them for identical periods of time in identical amounts of water.

Guess what? The cheapest brand did the worst job. But not by much. And the most expensive one was slightly worse than the one in the middle. And none of them did a worse job when it came to the naked eyes. That is you could weigh the remaining dirt but not see it.

Most of the students were outraged by the results; some because they wanted the cheap brand to do best, proving a corporate conspiracy. Others wanted the brands to do exactly as well as the price attached to them. Because that’s how the market works, right?

Actually the market works exactly like that – on false information and inflated expectations. All driven by advertising.

There are those that think money doesn’t make a difference in politics and cite studies to show that high spenders don’t always win. But when you consider that in a perfect world those high spenders would not even be in the running based on their non-monetary characteristics…

Click on this to learn the real story.

And that’s ten minutes.

OMG, A Deficit

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The Canadian Finance Minister yesterday announced that the federal deficit will be at least $18B this year – before factoring in the election promises of the new government. The real deficit could expand to $28B. Or it could be less. The estimates are based on fairly pessimistic projections and includes a $6B contingency fund, which may not in fact be spent.

Predictably, the Conservatives are pointing fingers and claiming the Liberals are irresponsible. They say that they left the country in surplus. Well, sort of. It took some fairly creative – and highly questionable – accounting to make that claim. They booked nearly a billion in savings from public service sick leave – though that might well have been reversed in court. Such things have happened before. They also reduced the normal contingency fund well below $3B and held some fire sales of government assets in order to project a slim surplus of a billion or so – all based on $50 a barrel oil. And even that surplus came after seven straight years of deficits, some of which went to stimulus but part of which was due to overzealous tax cutting. It may (or may not) be true that Canadians want lower taxes but they want to pay their bills too.

Or do they? Household debt in Canada is at record highs. Some of this is undoubtedly because of people struggling to make ends meet but some of it is also because credit is cheap and we hardly live in a society where people are willing to put off till tomorrow what they can spend to day.

In any case, what is the implication of a return to deficit? The government argues that spending in a time of economic slowdown is essential to stimulate the economy and that seeking a balanced budget at this time would clearly make matters worse. The Conservatives argue things aren’t that bad. But these are the same people who tried to claim there wasn’t a recession in Canada last year – by changing the very definition of recession they invented. Their reputation as good fiscal managers relies mostly on editorial claims of the corporate media.

Meanwhile the NDP, who also campaigned on balanced budgets, are singing a slightly different tune. They accuse the Liberals of including a large contingency fund so they can dampen expectations and renege or delay some of their election pledges. The government tells them to wait and see – the budget will be released on March 22nd.

To put it in perspective, a deficit of $18B for the federal government (which raises about $275B in revenues) is the equivalent of a household with $60,000 income running up a debt of $4000. That’s not something you want to do year after year but it is certainly not unusual. More significantly, the percentage of federal debt to GDP is hovering at 25%, better than most countries in the world and not considered dangerous by more economists.

From another point of view, the US government has run deficits every year since 2002 and last year that deficit was $439B – a lot of money but less than a third of what it was the final year George Bush was in office. Is it a good thing? Hard to say but I do know that the American economy is doing better than most of those in Europe who have been practicing austerity for the last five years.

And that’s ten minutes.

Pipedreams

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To hear some people tell it, the future of Canada depends on the completion of a pipeline from Alberta to the East Coast. Alberta independence is right around the corner – as if an independent Alberta could force its former countrymen to move their oil when they couldn’t get it done inside of the country. The logic, if you want to call it that, is baffling. But that’s politics.

While the Prime Minister wants Canada to be known for its resourcefulness and not, as the previous one did, for its resources, he knows full well that part of our resourcefulness is our ability to extract resources and export them to people who want and need them. That includes oil and gas but also a wide range of minerals and, as well, energy products such as hydroelectricity.

Quebec mayors have stated they don’t want a pipeline running past their cities when they should be far more wary of trains full of volatile petroleum products. Lac-Megantic is a dreadful reminder of the dangers of rail transport – which we are told is the only real alternative to pipelines. While pipelines are hardly perfect, their safety record is superior to every other form of transporting oil.

So it would seem a no brainer, right? The government needs to find a way to get east and west to both agree (and when I say east I mean Quebec because most people in New Brunswick are pretty keen to get that oil to their refineries) on the need for a pipeline while getting the majority of Aboriginal leaders onside and the public satisfied that the environment will be protected. They have no choice.

Well, maybe they do. The real choice is not between pipelines and trains but between petroleum and other energy sources. While I don’t for a minute believe our world will drastically reduce its consumption of energy – which remains linked to economic growth and human progress – there is some doubt whether we will continue to demand vast quantities of oil. If we are really committed to a low carbon future 10 or 20 years from now, then why would we build a pipeline designed to carry oil for 40 or 50 years?

Obviously, pipeline proponents – who are in my experience very fiscally cautious – don’t believe the world can wean itself off oil. They fully expect that the Rona Ambrose’s of the world (I’m amazed she didn’t chant ‘Drill, baby, drill!’ in the House of Commons this week) will be on the winning side – even if it means the world will be on the losing one.

The next few years should interesting ones for all concerned. If the government can make real progress on reducing greenhouse gas emissions – or more importantly if the USA and China can – the urge to build pipelines both by governments and by the bankers who will be expected to finance the pipe may diminish.

Then Canada will truly have to show its resourcefulness.

And that’s ten minutes.