Archive for the ‘Canada’ Category

Tribal Politics

June 29, 2018

The MSNBC news show Morning Joe is a vehement critic of the Trump administration, often to the point that it fails to recognize when something positive occurs, such as the meetings with North Korea. The show’s focus on people more than policies has coincided with polls showing a strengthening of Republican support for the President which is now in the mid 40% range, and much higher amongst registered Republican voters This seems remarkable at a time when the child separation from parents at the border issue dominates the headlines. It is a warning to Democrats, who have produced few leadership candidates to-date and need to make a strong showing in the 2018 midterm elections. It is also possible that the strong Republican support for Trump is due in part to the decline in people declaring themselves Republican, and thus the remaining hardcore results in a high percentage figure.

To return to Amy Chua’s thesis about problems created by societies being segregated into tribes (see previous posting). She makes an interesting observation that the British Empire consisted of a multitude of countries each one made up of often warring tribes.

“In India, some forty thousand British Officers and soldiers governed approximately 200 million Indians for nearly two hundred years. By contrast, America could not hold Vietnam for ten years, couldn’t stabilize Afghanistan for five, and couldn’t unify Iraq for even one.” (16)

There are many differences between the British and American situations then and now, and the British had their failures especially three times in Afghanistan, a country which no power (British, Russian or American) seems able to govern. But the concept of any society consisting of tribes or interest groups is a useful one in today’s world, where communications technology allows individuals to form tribes to pursue narrow interests. One example is the formation of tribes by sexual proclivities, from male and female “Facebook lists more than 50 gender designations…..Originally LGB, variants over the years have ranged from GLBT to LGBTI to LGBTQQIAAP as preferred terminology shifted and identity groups quarreled who should be included and who should come first.” (184).

Tribal politics has arisen in Europe with the distinction made between citizens and the influx of undocumented foreigners (not unlike the US). Germany, France, Italy, Hungary and Spain have seen the rise of populist parties and leaders. And the Brexit vote was due in part to pressures to limit the inflow of foreigners in the face of EU policies.

North America’s geographical circumstance, bordered by the Arctic, Atlantic and Pacific oceans discourages easy migration, but where the land border exists with Mexico problems abound. Canada is fortunate in a geographical sense but similar pressures of increasing tribalism could emerge here. The seeds already exist in part with French/English, east/ west, urban/rural, male/female, religious groupings, and others. These could germinate into something unsettling.

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Canada about to be sideswiped – trade, investment & asylum seekers

May 8, 2018

“Fasten your seatbelts, it’s going to be a bumpy ride”

(Bette Davis actually said night not ride)

This quote aptly describes what is about to, and probably already is happening as a result of events south of the border. With 64 percent of Canada’s merchandise trade with the US (2016 exports plus imports), the negotiations over NAFTA and threats of US tariffs on steel and aluminum create the uncertainty that leave investors in both countries sitting on their funds.

The extent of foreign direct investment in Canada by the US, and in the US by Canada results in a similar high degree of interdependence and uncertainty. Companies often organize their supply chains across provincial and state lines as though national borders did not exist. When the US suddenly threatens to impose tariffs, investors in both countries tend to look elsewhere or to sit on their cash. There are always other places to invest, buy back shares, or stay in a liquid position.

As long as I can remember, and certainly since the 1950s, Canada’s politicians supported by nationalists have argued to decrease dependency on the US market for exports and imports, as well as for inflows of direct investment. It just never happens except for a few percentage points each way. Proximity to the US market offers business opportunities and the strong interdependency prevails. When the US threatens to restrict imports Canada can be the first to feel the impact. Threats are enough to cause concern for investors and this is where things now stand.

Canada has another concern involving the US but this one is self- inflicted and relates to refugees and asylum seekers. It is one which is felt more intensely in Europe and accounts for the rise of populist political parties and their leaders. Hungary, France, Italy and the Brexit negotiations between the EU and the UK reveal pressures that arise from the influx of refugees and asylum seekers from the Middle East and parts of Africa.

Canada has a stated policy of receiving a set number of refugees and asylum seekers each year. These are screened before coming to Canada. However, others arrive at the Canadian-US border and request asylum. If the request is made at an official entry point, the applicant will typically be disallowed entry as the US is considered a safe country. If the applicant crosses at any other point along the border, according to Canadian law the person can claim asylum and have the claim assessed.

Canada’s only land border is with the US. In 2017, Canada’s Immigration and Refugee Board received 18,149 claims from irregular border crossers, that is those that claimed asylum after entering Canada illegally. This compares with 29,276 persons who applied for refugee status legally.

If a person approaches a Canadian official border entry point like an airport or a highway and asks for asylum, the official can accept or reject the claim. If the claimant comes from the US, the claim is likely rejected as the person comes from a safe country, the US. In order to avoid such rejection, the person crosses the border at a non-official point and claims asylum. There is an easy solution. Make any point of the US border with Canada an official point of entry and all claimants coming from the US can be turned back, although they will first have to be detained.

Hit by ideological traffic going in opposite directions – Year end 2017

December 30, 2017

I fully expect this to happen and it will affirm that many people can easily be annoyed. Start with my favourite Christmas card featuring three women on a motorbike with a sidecar. The caption reads:

“Three Wise Women would have asked directions, arrived on time, delivered the baby, cleaned the stable, made a casserole… and there would have been peace on earth.”

Alternative wording (mine) reads:

Three politically correct women would have ignored gender equality when forming their committee, returned the diapers because they were the wrong colour, sent Joseph out to get coffee after he had cleaned the stable….and there would be slim prospects for peace in the home.”

One of the joys of growing old is to say things that will irritate people; another is to ignore warnings about what to drink or eat. So here goes:

  1. As a result of a recent hospital stay, it is clear that positions requiring a range of skill levels (doctors to cleaning staff) could not be staffed without encouraging some level of immigration. The same is true for employees in shopping malls and fast food outlets. One public policy issue is how to integrate newcomers into Canadian society and what is reasonable to expect from them.
  2. A prime issue is making sure that non-French or English speakers get language training. Without it employment opportunities are minimal except to live and work in a ghetto where their native language is spoken. Young arrivals who enter the school system will quickly adapt linguistically and act as interpreters for their elders.
  3. Newcomers need to be made aware of Canadian values…. this is where it gets interesting. At this time of year there are many summaries of what Canadian society looks like after 250 years as a nation. One I found interesting was penned by Jonathan Kay (read especially the last two columns on page NP2 of the National Post for Dec. 20, 2017)

“Will Canada come to regard itself as a sunny forward looking, pluralistic democracy that champions a generous social contract on a colour-blind basis…or a guilty grievance-infested patchwork of racial communities perpetually publishing angry manifestos and living in the shadow of bygone horrors?”

The latter gets the most public attention because angry people with grievances make the news, sell papers and attract eyeballs. Examples of social harmony don’t make headlines or tweetable epithets. One example, I suggest, of a well-functioning multicultural society is New York City, population 8.5 million. The country, state and city have no overt multicultural policy. The citizens from all over the world just get on with doing their jobs and living their lives. At least up to 2017, this has worked well. In contrast, Canada has a closely defined multicultural policy at least at the federal level, unfortunately ill-formed and implemented.

  1. Those seeking to evaluate existing Canadian multicultural objectives carefully avoid asking the difficult questions. Gilles Paquet is an exception in his Deep Cultural Diversity (University of Ottawa Press, 2008)
  2. An associated puzzle is why there is no discussion of the overall desired size of Canada’s population. Immigration acts as a tap for the flow of people into the population bath tub. Does Canada need to open the tap? If so I would like to see the rationale. Countries like Norway and Switzerland with smaller populations and land area have remained prosperous with small populations – for Norway 1990 and 2017 – 4.2mil and 5.3mil; for Switzerland 1990 and 2017 – 6.1mil and 8.5mil. In a sense Canada is similar size-wise in that almost all immigrants want to live in urban centres such as Montreal, Toronto and Vancouver. These cover a far smaller area than either Norway or Switzerland.

What might a post NAFTA world look like?

December 13, 2017

It is time to think about life after NAFTA. Since we don’t know what the details will be, all that can be done is to try to map out the factors, other than the revised terms, which could be no NAFTA, needing consideration. For this I refer to the methodology pioneered by Ronald Coase (Nobel Prize Winner in Economics 1991) focusing on how firms organize factors of production.

 

The term supply chain seems to have displaced vertical integration to outline how firms organize the production of goods and services. In general, firms weigh a make versus buy decision for the various goods and services needed, where make versus buy may involve a cross border transaction. An aluminum smelter may source bauxite and alumina from its own operation abroad or from an independent supplier abroad (or domestically). Both involve a transaction between the two stages of production. One is an intrafirm and one an interfirm transaction. Multiply these alternative opportunities for one stage of the supply chain by all the inputs required at different stages of production, and you get a large number of decisions to be made. A firm’s management has to get input from engineers, tax accountants, shipping specialists and others in order to reach the least cost way to organize the supply chain.

 

A similar situation exists when organizing the production and use of services, as opposed to goods. Input from lawyers and accountants, for example are needed to aim for the least cost way of production and distribution for a firm’s supply chain. For both goods and services, tariffs and non-tariff barriers are ingredients to take into account, hence the importance of the terms written into trade and investment agreements like NAFTA.

 

With ongoing technological change, it has become easier and cheaper to undertake crossborder transactions for goods and services, but especially for services such as finance, technology, accounting and advertising. The service alternatives available to many firms provide a similar challenge for those monitoring the operations of firms such as tax collectors.

 

What has this all got to do with the outcome of current NAFTA negotiations? Technological change has given firms more ways to organize domestic as well as international operations. The extent to which a NAFTA with new terms will raise costs for individual firms depends on the numerous alternative ways in which the supply chains can be organized.

 

The items to focus on include the ease with which capital, labour and technology can be moved across borders before and after a new international agreement is reached. At one time, Canadian manufacturing industry was protected by tariffs from imports. This lead to US firms hopping the tariff wall by investing in Canada, and more often than not setting up plants on a smaller less efficient scale in Canada, thereby creating what was called the miniature replica effect (plants that were too small to achieve scale economies in production and distribution). With lower tariffs due to NAFTA, imports could flow across the border in both directions. Similar opportunities opened up to Canadian firms selling into the US market as a result of NAFTA. If lower tariffs are removed, firms could be forced back into less efficient (higher cost) means of production.

 

It is highly likely that the abolition of NAFTA would lead to higher production costs and prices in Canada and the US, but the harm may not be as great as would have taken place a decade ago as firms have developed more ways to reduce costs. Where do these new opportunities exist? A combination of inward and outward investment, inflow of cheap labour (temporary foreign workers), and outsourcing abroad of work are areas to monitor and study.

 

When Ronald Coase researched similar issues, he did it by visiting plants and interviewing plant managers and workers on the shop floor who made the decisions about how to produce and ship goods and buy services. Others tend to do this by examining published statistics which is a step removed from the people actually handling the goods and making the decisions. Alfred Marshall, another economist used a similar methodology in research for his major work Economics of Industry (1879).

 

Of course, the cancellation of NAFTA will raise the costs of production for certain firms and industries, but the consequences may not be as dire as some predict.

Trumpmania

December 8, 2017

I confess I am addicted to following the antics of Comrade Trump, partly because it is such good theatre with the curtain rising on a new scene almost daily. But partly because events south of the border are already impacting our lives. Regardless of the outcome of the NAFTA re-negotiations, business will delay or cancel investment opportunities for the time being thereby slowing the economy. I am still amazed about why the US stock market is doing so well.

My addiction is fed by watching excerpts from Morning Joe on MSNBC for the anti-Trump view, and Fox News for opposing commentary by pro-Trump supporters. Add a puff of Steve Bannon and Breitbart News and the day can be shot without doing anything else, except to wonder whether Little Rocket Man or Humpty Dumpty (HD) will light the fuse for a nuclear holocaust. The Daily Show is another channel I watch. Hardly a day goes by that host Trevor Noah does not have a clip about the President and his supporters.

Each day Humpty Dumpty on Twitter offends someone personally, and as soon as the reaction gets out of hand he changes the channel –  from the charges laid against former campaign manager Paul Manafort, to Michael Flynn’s guilty plea, to testimony to Robert Mueller’s investigation, to the meeting of son Donald Jr with the Senate Committee on Russian election interference, to the decision to move the embassy in Israel from Tel Aviv to Jerusalem, to name a few. What will it be tomorrow?

The news media grab any story involving the President and his cabinet, and we the audience dutifully follow assuring that network audiences remain high. After a year in office, I conclude that one needs to watch both sides, in my case that is MSNBC versus Fox News with a touch of Breitbart. If one only listens to the MSNBC viewpoint then one misses the reason why HD won the election (OK with fewer votes), and why it is that over 30% of the electorate continue to support him, and apparently quite strongly. The majority of the electorate is fed up with the way Washington is run and support him as someone who could shake things up. Unfortunately, he is doing it for the benefit of his wealthy friends, not for the masses.

Michael Moore was one of the few people outside the President’s close supporters who called the election correctly. Moore spent time attending rallies for both candidates, noting that Clinton often had small and unenthusiastic audiences. And when Sanders’ supporters were asked if they would vote for Clinton, if Sanders was not the candidate, they often said no. Twenty-five years of Bill and Hillary in Washington was viewed as enough by many. And when Obama later accepted $400,000 for a speaking engagement five months after his term ended, this seemed to reinforce the need to drain the swamp.

HD is now behaving like a dictator. He asks the head of the FBI to drop the inquiry on Russian interference in the election; his legal advisor says he is above the law; his son claims client-counsel privilege when neither of them are lawyers; and he tweets his feelings daily. One hopes that the adults around the White House can keep him in check. They are mainly military men who must be wondering why they took their jobs. Tillerson from head of Exxon has become little more than an errand boy. Males groping females has now become headline news with the resignation of Al Franken, and the forgotten news that a president boasted about his groping.

These stories fill the headlines, and there will be more. Meanwhile important events are taking place in Europe and Asia which could ignite economic and political tumult around the world. Today our attention is drawn to the resignation of Senator Al Franken for behavior that HD boasted about. What will it be tomorrow?

The Swamp in Canada

October 28, 2017

So, Trump’s support has fallen to 38% from the mid-forties. That seems to me like a considerable chunk of voters including I suspect some, who in the run up to the election liked Sanders. Both appealed to voters who felt they had been dealt a raw deal and had few future prospects. That group still exists. Do similar circumstances exist in Canada?

To many voters Trump’s appeal was his promise to drain the swamp of lobbyists and hangers-on who benefit from the operations of government. In the process he has managed to fill the swamp with his own noxious creatures rather than to expel those already there. A Bannon is there to destroy the legislative process, at least the way it has operated to-date. Past dictators have used similar means to gain power for themselves and for those supporting their views.

Some blame the checks and balances built into the US constitutional structure. They forget that it was set up to offset what was seen at the time to be the failure of British rule by an hereditary monarch and elected parliament. It is more likely that all representative political systems develop flaws and weaknesses over time, as politicians learn how to work the system to the benefit of certain groups and the expense of others. This seems to be the case in the US where income has become redistributed to the top 5% of the population.

Figures for income inequality by country show 46.1 for the US and 33.7 for Canada, where a higher figure shows greater inequality. (Figures of inequality by country can be found in Wikipedia under “List of countries by income inequality”). This does not mean that Canada is swamp-free, but more likely that it may be less infested than south of the border, and may have different inhabitants.

Canadian interest groups are adept at lobbying not just for basic needs such as education and health care, but for low-cost (subsidized) transit fares, free on Wednesdays in Ottawa for seniors like myself, doubtlessly a deserving group, and attractive to politicians appealing to an increasing older population. Students lobby provincial governments to abolish fees for higher education without taking into account how it might be financed and what it might do to the quality of the service provided. Canada has its own swamp but with different residing creatures than south of the border. A weakness of any democracy is that voters learn how to play the system.

The Politics of Resentment

October 18, 2017
After watching and reading about Trump during his first ten months in office, I have gone from thinking him dangerous and mentally unstable to a feeling that he has a personality disorder. This still makes him dangerous because of how people may react to his antics and statements.
While no psychologist, I find his behaviour as petulant and childlike. But while a child can be disciplined and quarantined, this is not the case with an elected politician in a democracy. Hitler and Mussolini were elected via a democratic process and then overturned it. I am not sure about Franco and Stalin, but both had a core of strong supporters.

A mistake now is to focus too much on the man rather than on his supporters. After ten months, between 35 and 40 percent of the US electorate continue to support Trump. Many are not traditional Republican voters but people who feel that they have been getting a raw deal from their elected politicians. Like Hitler’s supporters, they are willing to follow a leader who offers them prospects, because it can’t be any worse than their present situation. The party label of the leader matters much less to them than the promises made. Eventually they may feel betrayed by their leader; the alternative could be a more extreme leader or a manning of the barricades as in Les Miserables.

What motivates the 35 percent is that over the past few decades their real incomes have declined, and the gap between the top 10 percent of families and the rest has widened with few prospects of better times. They are willing to support someone who offers better times ahead even if his manner is a bit rough up close. Of course if he does not deliver they may switch their support, perhaps to someone with more radical views and exhibiting more outrageous behaviour……caveat voter.

Trump connects with the 35 percent by understanding and appealing to their feelings of resentment. He feeds off it and so do they. I found the works of Michael Sandel, Professor of Politics at Harvard, and J.D.Vance author of Hillbilly Elegy provide good explanations of the American scene. The electoral success of right wing parties in Europe manifest similar political forces.When the Economist considers that Jeremy Corbyn could be a future UK prime minister you know something is afoot. Canada has a version of this with the Ford brothers in Toronto.

University Funding

October 7, 2017

A generous donation to Carleton University by the Nicol family is to fund a new commerce building to house the Sprott School of Business. One has to wonder whether this is the best use of the $10 million input to a $48 million building. Throughout universities many faculty offices are occupied only a few hours a week, as faculty work at home connected worldwide with their own computers. This has been the case since the early 1970s. University office sharing is an option as takes place in many businesses.

Another practice is online teaching which, while it will never altogether replace in class attendance, is increasingly being used in many disciplines. Check the Khan Academy website for one online example. Over time schools and universities will learn how to grant diplomas and credits which employers will recognize. This trend also works against creating more university space.

There will be no lack of suggestions as to how the Nicol donation could be used. An obvious one, at least to me, is financial support for students. Rising fees and reduced government funding increases the burden on students and their families. Nicol Fellowships could be created thereby spreading and perpetuating the Nicol name over numerous recipients rather than one building. Fulbright Fellowships, established in 1946, were named after Senator Fulbright. Although he provided none of the funding, his name lives on with fifty-four Fulbright alumni going on to win Nobel prizes.

Voting Systems – be careful what you wish for

March 25, 2017

There are numerous voting systems, none without bias. It is just that the bias favours different groups and so explains who supporters and opponents are. The recent Dutch national election reveals how proportional representation (PR) can work, and the implications if Canada chose a similar system. At present, the federal government has decided not to make changes. While criticized for reneging on an election promise, the government should be congratulated for retaining the status quo.

The Dutch example

The Netherlands adopted PR for its recent election. It works as follows. The country is treated as one constituency with 100 members elected according to the number of votes received by a party. There were 28 parties on the ballot and members elected for thirteen of them. It will take a coalition of four or five parties to achieve a majority for legislation to be passed.

A Dutch voter has no member representing her or his district if the voter has an issue to discuss. Maybe this works with a population of 17 million in a relatively small homogeneous land area, but I doubt whether it would in the widely distributed and varied Canadian situation. A voter in Newfoundland, Quebec and BC for instance would each want to be able to contact someone familiar with conditions in their location. This is one reason why a constituency system is more suited to Canada. There are others. It is possible to have a mixed system with some members elected in constituencies, and some chosen from a list of candidates proposed by parties. How the latter are chosen to be party representatives raises all sorts of issues.

In Canada it is sometimes thought that only the existing parties would run candidates if PR was adopted. This is unlikely as the case of the 28 parties on the Dutch ballot reveals. Under PR, The NDP and the Greens would have collected more seats, and the Liberals fewer seats in the 2015 Federal election, but only assuming that no other parties had formed and were on the ballot, an unlikely event.

With the existing first past the post Canadian system, you can end up with members elected with less than 50 percent of the constituency vote, but it seems to have worked out pretty well over the years not only here but in the UK and a number of other countries, …….and in contrast to the system south of the border where creation of an electoral college to elect a president and gerrymandering of Congressional districts have subverted representation.

When Provinces have held referenda on changing the Canadian voting system, there has been no strong support for change. Maybe the voters are smarter than those supporting change. To repeat, there is no unbiased voting system. Each favours some groups at the expense of others both in electing members and in the passage of legislation. A main check of the existing system is elections required at certain dates or with the defeat of the government.

A Real Global Problem

March 7, 2017

The Environment

There is a problem with the environment which does not depend on conflicting opinions based on computer driven models as is the case with global warming. It is air pollution, clean air or whatever you call the ghostly daytime scenes in cities like Beijing, Delhi and now London.

The World Health Organization estimates that seven million people died from air pollution in 2012 which was about one in eight of all deaths in the world that year. It confirms that air pollution is the world’s largest environmental health risk. Most of the deaths are due to heart disease, stroke, lung cancer and acute respiratory infections.

London’s air pollution today is similar to that of the 1950s which was due to coal burning power stations and coal used to heat homes. Today a main reason is the use of wood burning stoves for heating. The pollution is visible and a health hazard.

Environment Canada publishes an Air Quality Health Index and on most days there are no problems similar to those found in the cities of some other countries. As a global issue it is large and visible where it occurs.