What does populism mean?

February 22, 2017

Populism is a loosely defined term which seems to refer to actions taken by any group within a society which is fed up with conditions affecting them, low wages, unemployment, refugees, immigration and so on.

It is used to describe the reasons for Brexit in the UK, terrorism/racism/immigrants and unequal income distribution in the US, and refugees and related conditions in countries such as France, the Netherlands, Italy and even Germany.

In Canada, according to Wikipedia, populist movements describe the Social Credit and the Reform Party in Alberta, Creditistes, the Union Nationale and PQ in Quebec, the federal Liberal party under Prime Ministers Mackenzie and Laurier, labour parties leading up to the CCF and NDP, and support for various premiers of Ontario.

This seems to be rather all inclusive referring to any time when a group in society becomes activated and organizes politically. It merely describes contemporary political conditions. A recent case of populism today would be Ford Nation in Toronto, where one segment of the city feel that they are taxed for the benefit of another. The Ford brothers used this to their political advantage.

It does not seem to be a useful term unless the reasons for it are given.

Census helps to define Canada

February 21, 2017

A satellite view of Canada at night shows lights along the US border and precious little north of that. The 2016 Census reports that 83 percent of the population of 35 million lives in cities of 10,000 or more, 40 percent in the 15 largest cities, and 8 percent in Toronto. Immigrants have accounted for about two-thirds of the 5 percent population increase over the past five years.

These few facts show that

  1. The landmass of Canada is largely unpopulated, not unlike the eastern seven time zones of Russia. Canada’s maritime boundaries are virtually unprotected at least by Canadian forces with its under equipped navy and airforce. The US is the de facto defense provider, although the NORAD agreement has been in place since the 1950s.
  2. Recent immigrants like previous ones prefer to live in cities, and many head for Vancouver, Toronto and Montreal. They don’t want to live in rural areas where there is masses of space but limited services. (Note, all Canadians are immigrants, arriving at different times, including native peoples who are traced to Africa and migrating over the Russian land bridge to North America around 60,000 years ago. In this sense, there are no indigenous people. All arrived at different times in the past. Those that arrived after 1500 brought diseases which helped to decimate those who arrived earlier.)
  3. The immigrant wave, from say 1500, came, settled and stayed. Until recently, they had no cell phones or wifi that could keep them in daily contact with family and friends at home. Travel and communications were expensive. Today’s immigrants are less connected to Canada in this regard, especially with the reduced cost of travel and communications.
  4. Life was hard for early immigrants. Access the Doukhobor website to see a photograph of women harnessed to a plough, as evidence of the hardships faced by those who arrived in Canada around 1900.
  5. Conditions for today’s immigrants are different. Some will want to stay. Others may decide to return home when and if conditions improve and are in transit. Canadians have largely welcomed recent arrivals, although there is resistance to those crossing the US border and applying for refugee status, as is permitted by Canadian law. Unlike the refugee crossing from North Africa and the Middle East to Western Europe, North America is bordered by the expanse of the Atlantic and Pacific oceans which gives rise to different physical barriers. Policy enforcement also differs here, although it has resulted in an estimated 11 million illegal immigrants in the US and perhaps 500,000 in Canada….no one knows.

 

The latest census and geopolitical conditions are factors describing the circumstances facing Canadians today.

 

Cultural Appropriation

February 15, 2017

The Shattered Mirror

February 8, 2017

 

 

The Shattered Mirror – News, Democracy and Trust in the Digital Age proposes increased bureaucratic input and public funding for a sector rocked by new technology.

What Uber has done to the taxi business and Airbnb to accommodation, has invaded all forms of media including news reporting and distribution. Daily newspapers are haemorrhaging advertising revenues and many have been forced out of business, or to adopt different means of distribution. Many other sectors are affected by technology such as education with the offerings of online courses. Existing suppliers fight back to maintain at least some semblance of the status quo, often lobbying governments for increased support. Ultimately new technology usually wins and a new breed of entrepreneurs rise to fill any gaps to provide the desired goods and services.

The process is part of Schumpeter’s stages of creative destruction which benefits consumers, and those producers who adapt. Those who lose appeal to the government for support. Such is the case for The Canadian Public Policy Forum’s latest report The Shattered Mirror, News, Democracy and Trust in the Digital Age which examines how technology has affected traditional news media. It argues that the public is poorly served by the new digital news providers and that democracy is at risk with, for example, the reporting of fake news.

Since the 1950’s numerous reports have examined the Canadian media including news. They include:

1951 Royal Commission on National Development in the Arts Letters and Sciences (Massey Report).

1961 Royal Commission on Publication (O’Leary Report)

1970 Special Senate Committee Report on the Mass Media, (Davey Report)

1981 Royal Commission on Newspapers (Kent Report)

1982 Report of the Federal Cultural Policy Review Committee (Applebaum Hebert Report)

2006 Senate Report on the Canadian News Media (40 recommendations and 10 suggestions).

 

All recommended measures of protection and support to which The Shattered Mirror adds its contribution. Written by a person who has had a distinguished career in journalism, this almost assures that the recommendations will include further government support for the industry. It succeeds in this regard. It would be the same if dairy farmers were asked for advice on supply management or academics on university funding.

The report contains thirteen proposals. Many require additional administration of funds and rules which in total would require both added bureaucratic overhead and time spent by firms to qualify for the funding.

Two proposals provide the tenor of the report and the tortuous process that would be required to comply with the provisions.

  1. In the proposal to extend provisions of Section 19 of the income tax act to other media. Producers of eligible news will be required to show that: (Recommendation No.1).

At least 75 percent of editorial payroll and 75 percent of their eight most highly paid employees are Canadian individuals or personal-service companies.

At least five percent of the company’s revenue generated in Canada is spent on editorial operations, with a significant amount for civic-function journalism.

 

  1. Creation of a fund managed independently from the government (Recommendation No.5).

Creation of the Future of Journalism and Democracy Fund would provide financing for digital innovation, especially in its early stages, and be directed at those operators who produce civic-function journalism at the national, regional and local levels. To qualify, enterprises would have to be Section 19-compliant and deliver original news on digital platforms that are refreshed at least once a week. The fund would cover a maximum of 75 percent of the cost of a project. The ability of applicants to attract support from other partners would factor into the grant decision.

 

Proposals regarding the CBC fail to note shrinking audiences especially for English language television. CRTC Annual Monitoring Reports (available online) show the CBC’s share of the English language television market fell from 13.2 percent in 1994 to 7.5 percent in 2000 and to 5.1 percent in 2012. While government financing has remained around $1bn, this segment of its mandate has been shrinking, so that on a per viewer basis the funding has been increasing.

If the CBC is to survive, consideration should be given to it being funded only by government and not selling commercials. The latter puts it in competition with private broadcasters, allowing it to use public funds to buy programs like major sporting events. In the UK and Australia, the public broadcaster is funded almost entirely by government, with far less angst being created between public and private broadcasters. A government owned broadcaster, if one is needed, can devote its attention to its public service mandate and have a far lesser concern for audience size.

 

The Shattered Mirror focuses on the importance of civic-function journalism defined as the coverage of elected officials and public institutions, from legislatures, judicial and quasi-judicial bodies and city halls to school boards and supporting public services. That is important, but in a globalized world coverage of what happens outside Canada is increasingly important. Much of this can be accessed online from websites and blogs run by people whose judgement I personally respect in different news related fields, and superior to many traditional news sources. In broadcast media, my preference is for The Agenda on TVO and the PBS Newshour. In both instances the anchors are informed but do not insert their own opinions, unlike what prevails with the CBC and CTV.

There is much more to comment on in the report. As it stands it argues the case for supporting more of the same with increased bureaucratic input. It deserves further discussion.

Services are everywhere, some well and some less well paid

February 4, 2017

Economic policy is being driven by the belief that good paying manufacturing jobs are being lost and replaced by lower paying service sector jobs, and that the manufacturing jobs can be recovered by protectionist trade policies and subsidies.
It is the case that the share of employment classified as manufacturing is declining and that of services increasing, but the reasons and implications need to be understood. This phenomenon is occurring in all developed countries. A similar change took place in earlier times, when the share of employment in agriculture declined while agricultural output increased. The loss of agricultural jobs was offset at least in part by growth in other parts of the economy, especially manufacturing. What needs understanding today are overall changes in the economy and how jobs classified as manufacturing and services are recorded.

Employment data by firm and industry are collected on a plant and enterprise basis where the enterprise may consist of several plants. Each plant typically employs a combination of manufacturing and service sector personnel. The former include assembly line workers and the latter accounting, legal, secretarial and others. While the latter appear in national statistics as employees in the manufacturing sector, they are actually providing service-type employment.

If a firm decides to contract out the accounting and legal work to service sector firms which specialize in these activities, then manufacturing employment declines and services employment increases. Overall employment may remain unchanged.
(By the way a similar phenomenon occurs when plants and firms are allocated to industries. If a plant produces mainly automobiles but some bicycles, it will be allocated for reporting and data collection purposes to the industry where most of the production occurs, in this case automobiles. The bicycle industry will in turn under-report production of those bicycles produced in the automotive industry).

The loss of jobs in manufacturing can occur because manufacturing firms reorganize their operations by outsourcing service sector jobs. The reverse may be true if they insource certain services. The former case may be one reason for the loss of manufacturing employment. As technological change occurs, manufacturers are continually changing their production processes. The use of robots for humans on assembly lines will reduce the number of assembly line manufacturing workers, but increase the number of workers required to service the robotic equipment, positions that did not previously exist.

The services-manufacturing dichotomy means that a worker who uses a wrench on the assembly line is classified as a manufacturing employee, while a worker who programs a computer to instruct the robot to do the same work is a service worker. The distinction between what is considered manufacturing and services work can be messy.

Magnus Lodefalk, who has studied this issue for both Sweden and other industrialized countries, notes the following: (Review of World Economics (2014) 150:59-82)

Manufacturing in industrialised countries is intensifying its use of services, and there are indications that the share of services in total turnover is rising. On the input side, the ratio of bought-into value added services has increased since 1995 across all manufacturing industries, and in-house services production has also expanded. The manufacturing sector increasingly employs mathematicians, engineers, computing professionals and business professionals. Services used or produced by manufacturing firms include research and development (R&D) services but also extend to knowledge or intangible capital services more generally, as well as to services such as telecommunication and transport. On the output side, the share of services in total turnover also has grown since the mid 1990s for some countries. Regarding export, Lodefalk studies Sweden and finds that manufacturing’s service exports have more than doubled between 1998 and 2006. There are arguments for the ability of services to support exports in manufacturing. Services may help firms to overcome costly informal barriers, such as asymmetric information, in international trade. Changes on the demand side in industrialised countries are also likely to favour manufacturing firms that increase the services content of their offerings.”

 

 This is not to ignore the simultaneous growth of low paid service sector jobs in food and beverage operations and homecare businesses among other. What is happening is the simultaneous growth of highly paid skilled jobs in manufacturing and some services, and the growth of low paid service sector jobs in certain areas. The medium skilled jobs are in decline or growing slowly. A TED lecture by David Autor (Dec.2016) is worth viewing as it sets out how the skill structure of the labour force changes and is always changing.
The implications include the need for retraining existing members of the labour force and assuring that young people, new entrants, get the right skills. There is nothing new about such advice except that the speed of change may be faster now and educational and training institutions slower to provide the required skills. People can expect this to happen throughout their working lives.

Cultural Diversity

January 28, 2017

Does protection promote cultural diversity?

In 1997, I was invited to be a member of the Cultural SAGIT (Sectoral Advisory Group for International Trade for the Canadian government). Mostly the members were drawn from the different cultural sectors such as print, audio-visual and live performing arts. Lawyers advising these groups were members as well those representing industry and employee organizations. Each represented a lobby group and did so forcefully. In addition bureaucrats, mainly from Heritage Canada, were in attendance to record the views of the members.

As the lone academic unassociated with any cultural sector, unless you count education, but with an interest in public policy, I found the expressed viewpoints interesting, but almost unanimously concerned with either continuing or increasing financial support and protection for the cultural industries. Subsidies and protection should be maintained or increased was the general tone of the discussion. In international fora France and Canada were strong supporters for continued protection while the US opposed it. I questioned the protectionist viewpoint.

All this took place while two events were occurring. One was a series of trade negotiations where cultural protectionist policies were being challenged by some countries, especially the US, as in the case of subsidies and content policies for the audiovisual sector, especially for film and TV.

The second was the influence of technology on both the production and distribution of cultural content. Audiences for over-the-air programs distributed by established public and private radio and TV networks were declining as new online delivery services were being created. The latter expanded viewer choice, and with the internet allowed audiences to select content from all over the world. At the same time print newspaper distribution and associated advertising were declining and have continued to do so.

In the case of public broadcasting, for example, while financial support was maintained audiences were shrinking. Thus on a per viewer basis the subsidy was actually increasing. For example the federal government has maintained its subsidy to the public broadcaster at around a billion dollars per annum while with declining audiences, especially for English language television, it means that on a per viewer basis the subsidy has increased. It costs more to service Canadian TV audiences. Meanwhile those in favour of public broadcasting still argue for either maintaining or increasing the subsidy. CRTC Annual Monitoring Reports (available online) show the CBC’s share of the English language television market fell from 13.2 percent in 1994 to 7.5 percent in 2000 and to 5.1 percent in 2012.

Technological change has also affected the print media with a sharp decline in the distribution of hard copies of books, newspapers and magazines and the ability of consumers to obtain content from an expanding array of online content providers from around the world.

Within the past two decades, the developments have been so major that the ability to protect the cultural industries in the traditional ways – a combination of public ownership, restrictions on foreign ownership, Canadian content requirements and subsidies to Canadian producers – has lessened. Protectionist policies no longer work. Technology has undermined them.

The Cultural SAGIT members were presented with these changes, which became more pronounced with time, but chose to ignore their impact arguing that it would, or might, be possible to perpetuate the protectionist policies by negotiating in UNESCO an International Agreement on Cultural Diversity. This came about in 2005 with the UNESCO Convention on the Protection and Promotion of the Diversity of Cultural Expressions.

How the Convention has worked out will be the subject of a future posting. Much is posted on the UNESCO website, but often outsiders are unable to open certain pages related to this Convention.

Security versus Abundance

January 9, 2017

Economics is a discipline often introduced by focussing on scarcity, the scarcity of resources to satisfy human and animal wants, although the latter are usually ignored. An alternative approach is to focus on underutilized resources as illustrated by Uber and Airbnb. Both illustrate the absence of scarcity. Cars spend much of their lives parked and not providing transportation services, except as an option good for people to use when it suits them. Uber arose as owners decided that they could use their cars to make money when they were not needed to provide the owners transportation. The cars were underutilized resources and a way was found to make use of them. Scarcity was not the issue underutilization was.

The same could be argued for Airbnb where owners had space in their homes for others to use. Scarcity of living space could be reduced if not overcome in many societies if a process of sharing was organized. Bed and breakfast arrangements have been around for years and Airbnb is just a way of extending these hotel-like activities.

Anything which is a public good tends to be underutilized such as the text of a book, an empty park, road or beach. At home, wardrobes and chests of drawers hold clothing which is not being used. A surplus rather than scarcity is the issue because people want choice and are prepared to use their incomes to create options, but these require creating access to a surplus of clothing on hand.

Other examples illustrate not-scarcity, a surplus or underutilized resources include:

Cars being driven with no passengers, only the driver.

Truck owners try to avoid dead-heading by arranging full loads for their lorries travelling in both directions between two points.

Shops with unsold goods, especially when expensive and held for a long time. Annual sales are one way of disposing of surplus goods.

Buildings such as schools and universities which are only used for part of each day, and part of each year. Accommodation and lecture rooms are often hired out for other uses.

Empty warehouses and buildings of all kinds.

Trained workers unable to find paid work. OK, scarcity of jobs is the flip side to unemployment.

Underutilized resources occur with the sun in terms of both heat, light and energy as well as with wind, tides and waterfalls.

Recycling is a way of reducing scarcity by making more intensive use of resources.

This is not to suggest that scarcity is unimportant in examining economic issues, but to note that especially in high income societies, the issues are also often those of coping with underutilization not scarcity. If the focus is switched to developing countries, then there is obvious scarcity related to items like health, education, housing, safety, food, and water. And in developed countries examples of scarcity can be found. It just seems misleading to initiate the study of economics without noting that scarcity is not the only issue to address. Where scarcity is paramount is in the finite number of hours in the day, but these too can be underutilized.

Meeting with remarkable men – one occasion

January 3, 2017

In July 1966, I was fortunate enough to be introduced to and have lunch with Ronald Coase, the 1991 Nobel prize winner in economics. His citation included two articles, The Nature of the Firm and the Problem of Social Cost. Coase was a close friend of Basil Yamey his colleague at LSE and my PhD supervisor.

Coase and Yamey had undergraduate degrees in accounting and business before pursuing academic careers as economists. Both were interested in how firms worked and how and why transactions took place. For Coase, theory was derived from observation, and while he was not averse to mathematics, he felt it should come after studying actual agreements and how conditions and obligations were established.

In 2003, at age 93, Coase gave the Coase Lecture at the University of Chicago Law School. He said that he found it odd to be giving the Coase Lecture as every time he spoke it was a Coase lecture. What is of interest to economists today is his description of how the Nature of the Firm evolved, first as an undergraduate essay in 1929 which was turned into a published article in Economica in 1934, but which in 2003 he considered an undergraduate essay. At the time, he said the article drew no attention unlike his second famous article The Problem of Social Cost.

As a student while studying business and accounting at LSE Coase was awarded a travelling scholarship to the US where he visited a number of firms observing how production was organized at the plant level as well as at head office. A combination of lectures, onsite visits and interaction with other students, Coase viewed as a recipe for the development of both theories and policy alternatives. One implication today is the importance of both the school you attend and the calibre of fellow students. The two are probably related.
The lecture is posted on the University of Chicago Law School website under 2003 Coase Lecture.

Political correctness beyond understanding

November 28, 2016

Political correctness (PC) has gone rogue. Anything said by anyone that is conceived as mildly offensive to someone else is today often deemed to be off limits for discussing or even mentioning. The consequences for intelligent and informed debate are chilling, and reminiscent of what successful dictators attempt and often achieve, at least until their demise. The new Vice-Chancellor of Oxford University, Louise Richardson, in favour of promoting robust debate over contentious issues, stated that educational institutions are “places where we should hear any legal speech, and we should teach our students how to confront any speech which you (they) find objectionable.”

The Vice-Chancellor has specialised in studying and publishing on terrorism while holding academic positions on both sides of the Atlantic. Her research on terrorism and its causes culminated in an acclaimed 2006 book What Terrorists Want, described by the New York Times as an “essential primer on terrorism and how to tackle it”. In the 1970s, she was recruited by the student branch of the IRA, attended meetings and discussions but decided not to join as she could not endorse the use of violence.

If PC is given a free rein, it will ultimately restrict informed debate and support conditions for a type of theocracy to prevail that will suppress the discussion needed to stimulate understanding, especially regarding social (political and economic), cultural and scientific issues. We see this already in the field of climate change and global warming where not only deniers but sceptics are widely considered to be beyond the pale as they are told the “science is settled.” As opponents of Galileo found out, the science is never settled.

 

 

 

Where the light does not shine

November 21, 2016

One of the more interesting pieces on the 2016 US election is by David Remnick, editor of the New Yorker. It is available online at:

http://www.newyorker.com/news/news-desk/an-american-tragedy-2

The short video that follows it is worth watching as well.

 

Like others, journalists and non-journalists, Remnick failed to forecast the outcome, and is now commenting on the future, mainly for the US. He views it bleakly but cautions, as Orwell did during the 1930s, against despair.

The prospect is bleak for the US and other countries, but before peering ahead it might be useful to consider the counterfactual. What would have happened if Clinton and the Democrats had won? The outcome would have been that about half the US population that bothered to vote (turnout was 58% of the 224 million electorate, so 94 million did not vote), would be reacting with disgust and demonstrating their disappointment.

 

  1. The so-called Republican supporters (now in opposition) would consist of all those who voted Republican. They were Trump supporters and Sanders supporters, both of whom were protesting against the way Washington politics operates.
  2. This combination of Trump supporters (now on the losing side) would have protested that the election was rigged, and had resulted in the continuation of politics under Democratic leadership, which had held the Presidency for the past eight years and had failed to recognize the plight of many lower income Americans.
  3. Resentment would have increased and politics become even more toxic with unforeseen consequences at the next election. It would not have been a pretty sight.

 

Considering the counterfactual is not to welcome the actual outcome, but to use it as a warning for what might have happened, what could still happen, and what needs to change during the current administration, and by the traditional Democrat and Republican parties prior to the next election.

There are now two wings to both parties. For the Democrats there are the Clinton and Sanders supporters; many of the latter said that they would not have supported Clinton if Sanders was not the candidate. For the Republicans, there are those like McConnell/Ryan, and the Tea-Party group like Sarah Palin and possibly Ted Cruz (who may be a party of one as no-one seems to like him, although he is recognized as being smart).

Will the party structures change? I have no idea, but some sort of change seems to be in the wind. The media, traditional and online, will change as people adjust to how they receive information. At the moment, the shock of the results and a focus on Trump, his cabinet and advisers, exercises the media. In time, political and economic conditions in the US and the rest of the world will hopefully receive more attention.

In Canada, there is a certain smugness that it happened there and not here, and some Americans are talking about moving north as they did during times of slavery in the South and the Vietnam war. A fleeting acquaintance with what happened globally since 1900 should discourage a leaning towards smugness.

When your keys are lost, you look under the street lamp because that is where it is brightest.  You may need to look in the shadows. The same is the case for the fallout from the election. Some of the dark spots may be more revealing, like the number who did not bother to vote.