If you think about it, there are probably few things as richly irrelevant as Canadian politics. The big issues (global finance, global trade, global warming, the price of oil, the coming pandemic, etc) are beyond our control. The parties are indistinguishable apart from their self-important heads; if the Conservatives and Liberals swapped everything except their leaders and colours it would be months before anybody noticed. Jack Layton might as well be in the prison dimension with General Zod for all that the average person knows or cares. Government spending is all spoken for – debt, transfers to provinces, individuals, etc. Set in cement. There probably isn’t more than $1.3 million in discretionary funds. Let’s see, to fund the Court Challenges program, or revive NAC, or maybe something new and different, like rent a Predator to hover over Ellesmere Island for three months (standing up for Canada!) or establish a chair in family law at the University of Malawi (building the global rights culture).
And imagine the campaign. EI. Omar Khadr. Saving the auto industry in Southern Ontario. Carbon capture and storage between now and 2050. Unbelievable and unbearable. If ever there was a time for total, supine apathy, now is it. Election response: don’t watch, listen or participate. It's like feeding the baboons. It only makes them behave worse.
For most of human history work meant manual labour, often difficult, dangerous and wearing. With the rise of machines and cheap energy to fuel them, forward-looking thinkers began to speculate about a future age of leisure, where people freed from toil would cultivate philosophy and the arts and other higher pursuits. We know how that turned out, of course. We’re busier than ever, leisure time is shrinking, and the highly paid elite – bankers, doctors, lawyers and so on are working even harder than everybody else. In short, another famously wrong prediction.
Except, if you look closer, those utopian dreamers weren’t actually that far off the mark. Physical labour really is pretty much done. Almost all of the heavy lifting it is now done by machines. We even have devices like the Segway, designed to replace walking – the ur-activity which marked us off from our chimp-like ancestors all those millenia ago. For more and more people work means interacting with customers or sitting in an office. But then, anyone who ventures out in any major city during “business hours” will find the streets, sidewalks, shops and cafes packed. People are sightseeing, strolling around, window shopping, snacking, slurping on lattes while surfing on their Netbooks. Who’s working?
Well, ok. Not everybody is out lollygagging; there is a noticeable weekday afternoon surge down Bay St in the direction of the GO trains, starting at around 3:45 pm. But then again, what are these employees actually doing? A nice little piece in the Post today by Rudyard Griffiths of the Dominion Institute makes the point. About 30,000 municipal workers are on strike in Toronto, and the city has not exactly been brought to its knees. In fact, apart from only a very slight increase in the amount of trash on the sidewalks an out-of-towner probably wouldn’t notice anything amiss at all. Griffiths states that economists who research this kind of thing believe that about a quarter of all government workers are actually “pseudo-workers”, who show up for the paycheque but do little or no meaningful work. (Of course, it isn’t hard to imagine that this estimate might be on the low side).
But the numbers in corporate bureaucracies are likely to be sizeable also. Then there are jobs which are completely unnecessary – like tax law and accounting, which produce nothing of net social benefit and would cease to exist if governments rationalized the tax code. Or the “work” being done in the justice system, where it takes 5 times as long to get a homicide conviction as it did 50 years ago, with no noticeable improvement in accuracy. The education system meanwhile churns out half-educated high school “graduates;” what is the productivity of a teacher whose students leave school as functional illiterates? Many of the better grads go on to fill up the institutes of higher employment-avoidance, er, sorry, higher learning and acquire degrees which they never apply. If the economic value of extra degrees in unnecessary subjects is nil, then so is the productivity of the professors who produce this surplus. Add in the economic value of Wall Street, now believed by many to be close to zero (as are ancillary activities like financial regulation and risk management). And all the non-work being performed in subsidized industries all around the world, producing products nobody wants – at least in the sense of being willing to pay for them.
The reality is that the number of people really needed to produce the goods and services we consume is not that great. Take away the young, the old, students, pseudo-workers, the semi-productive, people in useless jobs or doing busywork, the “officially unemployed” (really just the tip of the iceberg of the non-producing sector) – and there’s not a lot left to make up the numbers of the truly productive. The problem is that to acknowledge this by action – i.e. canning the unproductive and terminating their useless activities – could have a major negative impact on demand. The leisure society envisioned by yesterday’s dreamers had one major flaw: how to distribute the wealth. We have solved this by creating a system of fake work on a large scale, under a variety of pretexts, to soak up what would otherwise be massive unemployment. A Keynesian Ponzi scheme that continues to run and run.
While the history of warnings of terminal depletion is almost as long as the history of oil production itself, it seems that this time the Chicken Littles really are coming home to roost. The bare facts are not encouraging. As oil wells are depleted pressure drops off and what remains becomes more and more expensive to extract. Most wells still have about half their oil left at the point at which they become uneconomic. Over time the US, the world’s largest single consumer of oil, has gone from being largely self-sufficient to heavily dependent on imports. In 1970 it was guzzling about 15 million barrels per day (mbd), but produced about 10. Now it needs 19 and produces only 5. In the UK, North Sea oil production peaked in 1999 and was down 43% from that peak by 2007. The UK is now a net importer of oil, as is Indonesia, formerly but no longer a member of OPEC. Mexico has slipped from being the number two supplier to the US to number three; its exports declined by 20% in 2007 alone and barring new discoveries are expected to skid downwards by 80% over the next five years, by which time the country will have ceased to be a significant exporter. The massive Ghawar field in Saudi Arabia, discovered in 1948 and still the world’s most productive single field, is now reputedly dependent on pumped-in seawater to maintain pressure. Overall, exports from OPEC barely grew over the first half of this decade and are expected to decline. This has been balanced mainly by Russian exports, up 60% since 2000. But Russian production did not grow in 2008 and is expected to remain flat over the next few years. With global total output at around 80 mbd, current production is declining at a rate of 4 mbd per year. So over the next 5 years the world will need to add 20 mbd just to meet current demand.
And that new oil is getting harder to find and produce. In one of the earliest wells, Spindletop in Texas, discovered in 1901, oil was struck at just 1,100 feet below ground. The recently discovered offshore Tupi field in Brazil, by contrast, sits under 2,000 feet of sea water, 10,000 feet of rock and 6,600 feet of salt. The Thunder Horse platform in the Gulf of Mexico is 120 miles off the Louisiana coast, a mile above the seabed, with the oil 3 miles below that. It was knocked over by Hurricane Dennis in 2005. Cumulative hurricane damage resulted in Gulf of Mexico production in 2008 being 20% less than in 2005. Globally, offshore fields now represent the single largest source of new supply; but because of wider pipes, they deplete about twice as fast as wells on land. In the Kashagan field in Kazakhstan the levels of hydrogen sulfide force workers to carry gas masks against the danger of asphyxiation. Other new developments are in hostile environments like Alaska or Siberia, or politically chaotic locales like Nigeria where 20 to 40 per cent of productive capacity at any given time is off-line because of attacks on pipelines or rigs. Alternatively, oil production in places like Iran or Venezuela is in the hands of nationalized companies whose limited technical abilities make it harder to add new capacity. In brief, the old conventional oil – from large accessible onshore fields in politically stable countries – is running out. Replacement oil – technically, politically and geographically ever more problematic and available in ever-decreasing quantities, demonstrates by its very nature that we are moving from the era of cheap abundance to that of expensive scarcity.
In terms of problematic oil a special mention needs to be made of Canada’s oil sands. The reserves are thought to hold about 165 billion barrels, or about 2,000 days of current global consumption. The exact nature of this horrifying gunk represents unequivocal evidence of how desperate the world is getting in its search for fuel. Every barrel’s worth of oil is mired in two tons of sand. The stuff near the surface can be mined by giant steam shovels which each gulp 4,250 gallons of diesel per day. This conventional sand mining has a terrible return on energy, requiring one British thermal unit (Btu) of energy for every three produced. A conventional oil well in the Middle East, by contrast, has an energy return of 100 to 1. The stuff (i.e. bitumen) which is too deep to dig out has to be extracted by applying steam at 1,000 degrees to make it hot enough to flow. And it isn’t as good as conventional oil: bitumen contains less hydrogen, so refining it into gasoline essentially requires the addition of hydrogen, making it more expensive in terms of both energy and dollars than conventional refining. The production of one barrel of synthetic oil requires the consumption of 1,400 cubic feet of natural gas, pollutes 250 gallons of fresh water and emits 220 pounds of carbon dioxide. Admittedly, some of these problems could be ameliorated: carbon sequestration could be implemented and nuclear power might eventually substitute for the natural gas used to create steam. But these fixes might take years or even decades to put into place and would drive up costs even more. It is all an awfully long way from just sticking a pipe in the ground.
But if the supply side is depressing, the demand side isn’t any cheerier. Rubin dispenses with a couple popular misconceptions, in particular that the heart of the problem is that the residents of the developed world just need to get out of their SUVs. The reality is that OECD oil consumption is price-sensitive and stagnant. In the developing world it is neither and this is where the future of demand lies. Regional consumption is as follows: US 19 mbd, OPEC + Mexico + Russia 13; Western Europe 12; China 7.5. So the developed part of these regions outconsumes the rest by only about 3 to 2. The growing populations and demand for cars in the developing world will run ahead of stagnant OECD levels. And while free-market economies impose the realities of supply and demand on Western consumers, their counterparts in producing countries do not face the same restrictions. Gas may have hit $4 a gallon in the US, but in Venezuela it is only 25 cents and just 50 cents in Saudi Arabia and Iran. While the Iranian government seems to be willing to take a hard line against cosmopolitan pro-democracy demonstrators in Tehran it quickly learned the folly of trying to ration gas in 2007 when it backed down in the face of riots. Estimates are that half the world’s population receives some form of oil price subsidy, affecting a quarter of global production. As the price of oil rises, of course, the producers become wealthier and are therefore better able to consume or subsidize even more. And even if production goes up, it may all be soaked up by increased local demand, so that exports remain flat. Because of an absence of alternative power sources in the Middle East, for instance, oil is actually a major source of electric power. Saudi Arabia is planning to triple electricity production by 2020. At the same time it is running out of water, as it is draining its aquifers. The future water supply will come from desalination, an energy-intensive process powered by oil. All this increased demand will be met by greater oil consumption, putting more pressure on global prices.
Another misconception which Rubin skewers is that conservation will help us out of this mess. This sounds sensible, but actual experience has been paradoxical. The developed world has already made great strides in energy efficiency. In the US home heating and cooling are 30% more efficient than in the 1970s. Fuel consumption per mile flown is down by 40% since 1975. And energy consumption per dollar of US GDP is down by almost 50% since then. The problem with all this is that as energy costs for a given activity go down, consumers simply respond by consuming more. So we have more air conditioners, drive bigger vehicles and fly more. Under stable energy prices, which the world enjoyed until relatively recently, conservation is offset by greater consumption. Under a regime of continually rising prices (the likely future), conservation simply delays the final resolution of the supply problem.
The only remaining option is substitution. Unfortunately there is currently no effective replacement for gas and diesel, which are essentially the world’s only transportation fuels. Ethanol is a charade, representing nothing but a transfer of wealth from taxpayers to agribusiness; the only thing it really fuels is food price inflation. The problem with switching the car fleet to electricity is that electricity is an energy carrier, not an energy source. Putting the US fleet on batteries would require an enormous new power source. Wind and solar are too weak, nuclear is a logistical and political nightmare and coal presents the unpleasant alternatives of massive carbon emissions or expensive carbon capture.
With the first half of the book laying out the problem, the second half considers the implications. According to Rubin pricey oil is going to punch a hole in global trade, on account of increased shipping costs. The fuel surcharge on a standard 40-foot container shipped from China to the US was $455 in January 2007 and $1,055 a year later. Extra shipping costs are economically equivalent to a tariff on imports. The rise in the price of oil from 2004 to 2008 offset the reduction in global tariffs over the last 3 decades. So the trade liberalization of the era of globalization, driven by tariff reduction, is now going to be neutralized by higher transport costs. The consequence, supposedly, will be at least a partial reversal of globalization, with factories returning to the US from China as the offshore wage advantage is wiped out by transport costs; America’s trade deficit will vanish as the nation reverts to the self-sufficiency of the 1950s.
The other problem with fossil fuel is of course carbon emissions. The pattern is the same here as with oil consumption: slow growth in the developed world, rapid growth everywhere else. The developing world may eventually surpass the developed world in oil consumption; in coal consumption it is already far ahead. Rubin recommends a carbon tax, to be imposed on domestic producers and on imports alike. This will, supposedly, be a win-win solution for the developed world. Because of its far superior productivity per unit of carbon emitted it has a huge competitive advantage over the low-wage regions. The carbon tax/tariff will cut emissions at home but at the same time encourage the return of long-lost overseas manufacturing. How the developed world will react to this proposal is not discussed.
Overall, the best part of the book is the first few chapters, which provide a concise summary of the oil supply-demand problem. This is peak oil in a nutshell, and a good introduction to the issue for people who haven’t read much about it. But much of the rest of the book misses the target. The chapter on shipping costs and the purported demise of the globalized economy is short and sketchy. It doesn’t emphasize sufficiently that the higher marginal cost of transport will fall mainly on low-value goods. A container of stuffed toys headed for the dollar store will suffer a much heavier tariff in relative terms than a container of memory chips. And as a counterexample, the yen went up 40% against the US dollar in the 1970s – that is, there was an effective 40% tariff on Japanese goods. But Japan continued to export. To the extent that production does shift back to North America for certain goods it is more likely to move to Mexico or to new, robot factories. The old jobs are not coming back.
More broadly, Rubin seems unreasonably sanguine about the demise of cheap energy. In some ways he seems to view it as little more than opening the door to a smaller but more liveable world of walkable urban neighbourhoods, bicycles and farmer’s markets. But the implications of peak oil are anything but comforting. The price spikes of the last couple years, with oil riding from $40 to $140 and back are likely to be repeated, only with even higher highs. The effect on the world economy will be chaotic. Reduced consumption doesn’t mean making do with less, turning down the air con, taking our vacations at home and so on. It threatens a deflationary spiral. As car makers and airlines, say, lay off workers they cut their own consumption, which affects all the businesses they buy from, resulting in lower profits and yet more layoffs. Add in higher transport costs and depressed international trade. While some American unions might welcome higher-priced Chinese goods, most low-income Walmart shoppers will not. The standard of living of America’s bottom quartile has been both undercut and propped up by globalization; expensive oil may raise prices for this group without increasing employment. While Rubin does have a point in observing that peak oil will do more to reduce US carbon emissions than a hundred Kyoto treaties, his suggestion of slapping a carbon tariff on Chinese imports seems plain batty. This is not the way to deal with a rising major power, which already holds a couple trillion dollars of US bonds.
Overall, the book has a slapdash feel, as though the author was in a rush to add to his list of publications. One suspects that it was quickly glued together from a bunch of CIBC research reports. Among the minor annoyances: the fact of global depletion progressing at a rate of 4 mbd per year is mentioned at least 5 times; Senator Phil Gramm is misnamed Gram; the figures for projected oil demand to desalinate water in Saudi Arabia in Chapter 2 are nonsensical. Chapter 1 is all about supply, and Chapter 2 about demand; except that at the end of Chapter 2 Rubin suddenly goes back to discussing supply again. The Middle East is characterized as “the highest per capita users of electricity in the world.” Apart from the syntax, this is presumably applies only to parts of the Middle East, like Kuwait or Dubai; it is hard to imagine that Egypt or Iraq are world leaders in the consumption of anything. In addition, Rubin skirts the really big picture, namely that oil depletion is just a part of a broader resource squeeze caused by the master driver of population growth. Well, it’s good to be outspoken, but one doesn’t want to go too far.
Bottom line: this is a decent quick summary of peak oil; the end of globalization is sketchy and speculative. Jeff Rubin could have written a much better book. As an economist perhaps he calculated that working out his arguments more thoroughly wasn’t worth the extra time and effort. On the other hand the topic isn’t going away and there won’t be any shortage of books about peak oil; readers may want to wait for the next one.
Meanwhile the Toronto Board of Trade estimates that city labour costs have been growing at over 6% per year since 2003; if they had just kept pace with inflation at 2% the city would have an extra $1.5 billion on hand. More broadly, the city, like the storied automaker, is drifting towards insolvency, without a clue as to what comes next. To quote:
Turning around big, bureaucratic, unaccountable organizations like GM and the City of Toronto is a challenge. They have layers of hierarchy, dug-in unions and semi-independent sub-organizations that act as independent principalities – think Pontiac in GM's case, the Toronto Community Housing Corporation in ours. Toronto is further hobbled by a political system stocked by independent councillors with no party allegiance and no common platform to campaign under.Finally, a great line (also from the Globe) where former ambassador to the US, Alan Gotlieb, cites Lester Thurow: “The greatest challenge in public policy is dealing with incremental decline.” Somebody should put up a banner in the Metro Convention Centre, or whatever temporary venue Toronto City Council chooses to hold its meetings at.
Such organizations easily lose sight of their original purpose. Instead of serving customers or taxpayers, they serve themselves. They become like a bland version of an autocratic Third World regime whose only purpose is to stay in power. Clinging to a stagnant status quo, they rot from within.
As a note, unions have really come a long way since the bad old days of the 19th century, where child labour was a fact of life, the working week meant unlimited hours at starvation wages, and you could be prosecuted for quitting your job. And not much in the way of benefits, back then. Compare that to today’s demands for bankable sick days (18 per year), lavish defined-benefit pension plans, retirement at 55 and being unfireable once you’ve got enough seniority. In the old days unions had to face off against rapacious robber barons and their strikebreaking private security forces, as well as unsympathetic courts and police. Today, with labour rights set in concrete, the demand for unions to protect the working person has melted away. In the private sector in Canada only about 20% of the work force is unionized. The only arena in which the workforce needs the extra level of protection (or “protection”) that unions can provide is the public sector, which is about 75% union. Is this because the government is so oppressive, flint-hearted and powerful that the working stiff can’t get a fair shake? If you believe that you might also be interested in buying up a few tranches of collateralized mortgage obligations, guaranteed AAA.
Public sector unions are nothing but an open conspiracy to shake down the government. Unions strike, the public gets irate, and since there is no point venting at the unions the government takes the heat. Under pressure to settle and restore peace they cave. This last part can happen in two ways. Either directly, or, if that is too embarrassing, the government can save face by declaring the service in question to be essential and ordering the strikers back to work. The dispute then goes to arbitration. Since the strikers right to strike has been taken away the arbitrator awards them compensation, which usually turns out to be most of what they were asking in the first place. A short strike and a quick and favourable settlement; the elected representatives get the monkey off their back and services are restored. It’s win-win-win. And public finances are chipped away, by, oh, so small an amount you’d hardly notice.
This strategy has been quite successful. So much so that the old social compact relative to the private sector, where government employees took lower wages in return for greater job security, has been overturned. The new trade-off is guaranteed employment in exchange for higher salaries and better benefits. This is much too fair and equitable for the unions to give up without a fight.
While some commentary has taken the view that the mayor has enough public support to stand tall should he choose to do so, in the big picture what counts is not how this particular strike plays out but how to fix a chronic problem. What the city really needs to do is privatize. Starting with trash pickup, which is already private sector in all of Etobicoke as well as for condos and businesses throughout the city, to say nothing of most other municipalities in Ontario. After that there should be a review of all other city services. Anything and everything which can practicably be contracted out should be. Until this is done Toronto will be overpaying for municipal services and further handicapping its own economic development.
Sadly, the reality is that the residents of Toronto are prepared to accept a lot more of this kind of public sector union abuse. While there are reports of public “anger” at the strike in general, and pickets blocking access to trash drop off points in particular, this is the kind of anger that leads to extended griping, not political activity. The voters have no appetite for reform, and the unions know it. Their gamble that a few weeks of very temporary public displeasure are well worth years of future benefits is quite sound. We get the unions we deserve.
Immigration is just as bad: an impoverished population of about 100 million in Mexico and Central America, desperate to get in; a permeable border which cannot be controlled; the domestic cluster of a Latino voting block, left-leaning Dems, nativist Republicans, low-wage workers under never-ending pressure from even lower-wage illegals, the immigration bureaucracy, employers in meat-packing, fruit-picking and other low-margin businesses relentlessly seeking to cut costs even further, high-income earners (even in the upper reaches of government or progressive academia) who need cheap nannies and affordable domestic staff.
And then there’s crime. And prisons. Homeland Security. The insoluble problems of the underclass. Infrastructure, already underfunded by many years and trillions of dollars. Education, with its stagnant test scores, rising international competition, intransigent teacher’s unions, millions of kids with issues, millions of kids on pills, millions of kids who don’t want to be anywhere near a class room; no viable approaches to dealing with disruptive behavioural problems in class; a totally polarized debate about charter schools.
And the War on Drugs. A failure, to which the alternative is most likely just a different kind failure. The underlying issue is that America has, in spots at least, a deeply-rooted drug culture. As with guns, homicide and prison population, so with recreational drug consumption: the US is just running away from the rest of the developed world. While decriminalizing pot might be a sensible palliative option, for full effect complete legalization, including taxation, would be required; otherwise organized crime will retain the revenues. The question of what to do about crack, smack and crank is well beyond anything any elected official will even consider mentioning. The problem is that if there are enough people in the habit of taking these substances to be a problem, well, then you’ve got a problem . . .
Energy and the green economy. Holy. Switching the power consumption habits of a third of a billion people. Running mass transit on a suburban and exurban network built for the car. Nuclear liability insurance. Nuclear waste and NIMBY. Clean coal. Wind farms. Cutting CO2 while a certain large, well-known Asian nation roars ahead and sucks up even more manufacturing capacity. How to stop funding the gallery of quasi-criminal states (well, excluding Canada) who supply the oil; without making it even cheaper for foreign competitors, specifically aforesaid large country in Asia with extensive manufacturing capacity. Toss on expanding debts, bankrupt states, trillion-dollar deficits for as far as the political cycle can see. The military budget. Tort reform. The uncontrollably metastasizing tax code. Regulation. Banks right now are struggling with waves of mortgage refinancings and having to hire new staff to cope with the enormous amounts of paperwork for what should be an elementary financial transaction. Waves of financial regulation to come and armies of bureaucrats and bankocrats to implement them. Regulators for “systemic” financial risk. It might be unmeasurable, or even undefinable, but that doesn’t mean we can’t get our people on it. Lots of them. A 25-year expansion of credit, which has ended with financial sector debt standing at about 120% of GDP, compared to 20% in 1980. Overlevered governments, corporations and individuals who will need many years to delever their balance sheets, if in fact they ever do.
Which means, finally, that the robust growth which kept the system oiled over the last two decades is likely to dry up. No more consumers to keep it going. And without the extraordinary economic vitality which has hitherto covered up the multitude of its sins, America is suddenly going to start looking a lot less attractive. Some commentators have compared the US to GM – dynamic in youth, still robust in middle age, but finally overtaken by the sum of its misjudgments and all at once old, frail and perhaps incurably sclerotic. From California, arguably the quintessence of America, the rumour is that governor Schwarzenegger has grown sick of politics and can’t wait to get out, evidently recognizing that the tectonic gridlock is far beyond the power of a mere gubernator to affect in the slightest. America has deep and serious issues, a mass of politically intractable problems whose significance has been grossly underestimated during the long boom of the last two decades. As Jack Rebney would have it: no more.
A flat tax, by contrast restores accountability to public decision-making. Voters who want more swimming pools, buses, hospitals or whatever can have them - but they actually have to pay up. Yikes. Yes, the flat tax as proposed by Elliott adheres to the usual meaning of the term - that is, it is a flat rate after a basic exemption (in this case 8% on income over $18K), so not a pure flat tax; but it shifts the fulcrum. Instead of trying to crowbar more money out of the top earners (who are also the top producers) most taxpayers would be facing some level of tax increase if the flat rate went up. More spending would mean more tax - for almost everybody, which is the point.
Most Canadians like their public services. Unfortunately, not everyone is completely forthright about facing up to their fiscal responsibilities. We like to push the weight off onto somebody else - onto Ontario, Alberta, Toronto, the oil industry, the banks, other corporations, commercial property, the rich in general. While utterly inconsequential instances of venality like Adscam envelopes or MPs padded travel allowances never fail to raise the national gorge, the gross political corruption of our tax system, the bloated hippo in the room, parades about in the open without attracting any notice at all. The GST - an honest tax which everyone is expected to pay (even though there is almost no one who won't try to duck it if they think they can get away with it) - is, by the same token, reviled.
Of course, flat tax in Ontario is a political non-starter. But, still, it's nice to see somebody with the backbone to actually mention it out loud; and more so at a time when fiscal conservatives in Canada seem to be heading for the endangered species list.
Of course, that doesn’t quite wipe out the growth it experienced in the last decade, to say nothing of the decades before that. According to figures here, the real growth rate (excluding inflation) averaged about 5.6 percent from 2000 to 2008, for a compounded total of 63 percent. So giving back 8 percent doesn’t exactly vitiate the pro-growth regime. In fact, if the Irish economy remained flat for the next ten years it would probably still outperform Canada over the 2000-2020 window. But never mind the facts. They got what was coming on account of their stupid corporate tax cuts.
Although when you dig a little deeper, the real reason that Ireland did so well pre-2008 wasn’t corporate tax cuts at all. It was EU subsidies:
Those who spoke with such confidence about the salutary effects of Ireland's pro-business climate had little understanding of what actually yielded Ireland's brief super-prosperity. Joining the European Economic Community (which eventually became part of the newly formed European Union in 1993) unleashed a flood of subsidies to pay for transportation and other basic infrastructure, and to support Irish farmers under Europe's notoriously protectionist Common Agricultural Policy.This used to be the progressive line (sweeping under the carpet the failure to explain why half a century of subsidies never turned Quebec or the Atlantic Provinces into “Tigers”). Mr Olive is maybe so used to repeating it that he can’t stop blurting it out through force of habit. So to summarize the whole position: tax cuts and other free-market reforms caused a fake prosperity which lead to overheating and a devastating collapse –so devastating that it may offset several whole years of the last two decades of growth; except that the prosperity was really caused by EU assistance because corporate tax cuts never work. Well, never mind the logic. It’s mud in the eye for capitalism and the Fraser Institute and that’s all that really matters.
If we do not dwell on the risk of sudden calamity, in the money markets or elsewhere, and pay a price for our innocence, it is because reality comprises two cruelly confusing characteristics: on the one hand, continuity and reliability lasting decades; on the other, unheralded cataclysms. We find ourselves divided between a plausible invitation to assume that tomorrow will be much like today and the possibility that we will meet with an appalling event, after which nothing will ever be the same again. The Goddess of Fortune can scatter gifts, then watch as with terrifying speed a 50-year-old company disappears or a balance sheet is destroyed by toxic assets.And:
We should, of course, instead remember the great pessimistic voices of history. There are two quotes I cherish for these sorts of times. One is from Seneca: “What need is there to weep over parts of life? The whole of it calls for tears.” The other is from the French moralist Chamfort: “A man should swallow a toad every morning to be sure of not meeting with anything more revolting in the day ahead.”But read the whole thing.
The Conservatives have now veered so far from the good graces of many of their core supporters that they may never recover. That's not to say they will defect to the Liberals, but it may be that in the coming months, contributions to Conservative coffers start to dwindle and there is less enthusiasm to turn out at election time.
Mr. Harper has shown himself to be a pragmatist without parallel in recent weeks -- which is not necessarily a pejorative term. But leaders must deal in hope, and the hope for many Conservatives is that they live in a country that rewards exceptionalism.
The partial nationalization of a dying company couldn't be further from those hopes.
While there is a great deal that could and has been said about the various issues involved one of the most noteworthy and telling is the degree of arbitrariness in the procedures of the human rights apparatus. The following irregularities are documented by Levant (many of them are neatly summarized in Appendix A at the end of the book):
The checks and balances which have been incorporated in the traditional legal system over generations need not apply in human rights (for brevity, HR) proceedings. For example, there is apparently no principle of double jeopardy. An accused can be charged with a complaint, then a nearly identical complaint can be submitted again by someone else. A complaint at the provincial level can be repeated at the federal level with its separate commission, or in another province, or several others, or, in principle, in all of them. HR investigators can, at least in some provinces, enter the home or workplace of a subject of investigation without a search warrant signed by a judge, something the police are not allowed to do. In addition, they can also inspect any document or other property (such as computers) without a search warrant. Subjects of interrogation may be required by law to answer all questions put to them. Investigators are not fire-walled from the police; they have in the past asked for and received confidential information acquired by the police using search warrants. HR processes do not always obey normal judicial restrictions. In a criminal trial, for example, the prosecution must reveal its entire case to the accused in advance. Failure to do so can result in the case being quashed. In some HR cases, however, information was disclosed only once the proceeding were underway; in one case after all the witnesses had testified, and then those documents which were disclosed turned out to have been partially blacked out, an act performed at the sole discretion of the HR commission. In a court of law, hearsay evidence is not admitted; HR tribunals are apparently not subject to this restriction. There is no clear requirement for HR proceedings to be public; hearings are made open or closed on an ad hoc basis. In one case an HR commission asked for reporters to be temporarily banned from court, a request the tribunal granted. On another occasion the commission even requested that the accused himself be barred from a part of a hearing against him (although this batty motion was not actually successful). Under criminal law, slow-moving as it is, there are at least some limits to how long a process may take, and cases may be dismissed if they do take too long to go to trial (as illustrated in the Askov case in Ontario). HR proceedings are apparently not subject to any such restrictions and may therefore drag out indefinitely. One set of proceedings (not a free speech case) involving a rape relief centre in Vancouver took 5 years to get to a HR hearing (and ten years to finally conclude). The Stephen Boissoin case was sparked by a letter to the editor written in 2003; the HR ruling was not made until 2008 and the appeal is still underway. Proceedings against Ezra Levant for republishing the Danish cartoons took place two years after the act. In Manitoba B’nai Brith was subject to a 5-year investigation for fomenting hatred. By way of thickening the police state atmospherics around the case the name of the complainant has still not been made public, nor the contents of the allegedly offensive speech nor the member of B’nai Brith who was allegedly responsible for it. HR investigators have acted as both investigators and as complainants (although the ultimate degree of irregularity whereby investigators investigate the claims they themselves have advanced has apparently not yet been reached). HR staff have launched lawsuits and law society complaints against critics of the HR process. They have also acted as agents provocateurs, creating bogus accounts on neo-Nazi websites and posting extremist comments there. (Your tax dollars at work). There appears to be no policy at HR commissions regarding the ethics or legality of investigators attempting to entrap offenders into committing speech crimes, or on the ethics or legality of investigators posting remarks which would be considered actionable under HR standards if posted by a private citizen. Investigations have been carried out against political websites against which no complaint has been made. There do not appear to be any restrictions on the sanctions which HR tribunals can levy. Perpetrators of prohibited speech may be subject to blanket bans of indefinite duration on publishing disparaging remarks not only about protected groups but also HR complainants or witnesses. (This is not only draconian, but more than a little bizarre, as “disparagement” would appear to be a stricter standard than that expressed in the original HR speech code. In other words, if this kind of thing stands up, there will be two criteria for prohibited speech: what is said and who said it (i.e. are you already under an HR gag order?). So much for constitutional principles). In addition, HR tribunals can demand that people publicly apologize for their previously stated opinions, a penalty which does not appear to be applied anywhere else in democratic legal systems. And finally, the crimes of expression which HR tribunals prosecute are far from clearly defined. Forbidden expression, according to the infamous section 13 of the HR act, includes “any matter that is likely to expose a person or persons to hatred or contempt by reason of the fact that person or those persons are identifiable on the basis of a prohibited ground of discrimination.” This could be almost anything, based not only on the generality of the term “likely,” but also on the wide net cast by “prohibited grounds of discrimination” which may include not only the usual statuses such as race, gender or disability but also things like source of income or political beliefs. So think before you speak.
All of this could be viewed as just the sloppy and amateurish attempts of people without formal qualifications (which the HR industry by and large does not require) to run something supposed to resemble an adjudication system. Levant notes that in an audit of its management practices the national HR Commission did not once get a grade of “best practice” or even “advanced practice” in 33 areas audited. But a better explanation is that the organization of the HR shadow legal system on the principles of totalitarian legality is neither inadvertent nor coincidental. Totalitarian legal systems claim the authority of the law, but without any of its limitations. Arbitrariness is central to such systems: after all, state power is really unlimited only if the state can do anything it wants. That is, accuse or arrest anyone at any time, drag out the proceedings without limit, charge the same offence multiple times, and impose any penalties it thinks fit. Other time-honoured features of police state policing include agents provocateurs who seek to entrap citizens, civilian denouncers who can report anyone else at a moment’s notice and at no cost or consequence to themselves, and widespread surveillance in case incorrect thoughts are expressed anywhere. The incorrectness of such thoughts is never clearly defined, of course; this helps to keep the citizenry on its toes. Other hallmarks of totalitarian law include forced retraction of opinions and self-denunciation, important for enforcing correct thinking and humiliating those who have the effrontery to voice their own views. And it is political imperatives, not actual violations, which are the driver for prosecutions. This is echoed in Ontario HR head Barbara Hall’s self-revealing remark that the number of HR cases is not high enough and “may have to spike.” Quite right. If you’re Himmler.
In short, the HR speech control apparatus is implicitly totalitarian in its roots: in its view that all expression can be categorized, namely as either permissible or impermissible; that impermissible expression needs to be controlled, that the thinking underlying it in turn needs to be suppressed and, since it has no legitimate justification, ultimately extirpated. Since hate speech has no legitimacy there need be no concern about the means used to get rid of it. Procedural abuse follows. In fact it is difficult to imagine any organization with the mandate of the HR speech control apparatus not adopting an abusive prosecutorial style.
But having said all that, we probably don’t need to keep the shotgun ready in the bedroom in anticipation of the 3 am knock on the door. The HR apparatus is an example of the totalitarian mentality in embryo, proving, as if any new evidence were needed, that this way of thinking will always be with us and that there will always people ready to step up to fill the slots in the inquistional bureaucracy. On the other hand, it’s kind of like a baby alligator. Not dangerous unless it gets a lot bigger.
What will keep the HR speech control system in check is openness and a sense of the ridiculous. Shakedown does an excellent job in the cause of both. In fact, aside from the plight of the victims dragged into this mire, the whole HR business is risible. There isn’t a single case in the book which isn’t silly. Probably the best stuff is the Nazi-hunting, the HR system’s number one priority, which amounts to the spectacle of one little gang of Gestapo wannabes snooping on another. Nazi chat sites are where our bureaucratic Web-surfers hang out, trying to raise the temperature. Levant even suggests the possibility that there may have been times when there weren’t any genuine neo-Nazis on these sites at all, only Canadian government employees trying to entrap each other (it’s not clear if they all knew each other’s fake identities). Nazi kooks, wacky bureaucrats, deeply offended oddball complainants, foaming imams: that is what comes out of the HR barrel of monkeys.
To close on the downside, however, while it isn’t very likely that the HR speech tribunals are going to grow into a full-fledged threat to freedom of speech it is not clear that they are going to go away either. While many of their practices, and even their existence, may ultimately turn out to be unconstitutional such a conclusion cannot be reached without many years or even decades of litigation, and, with all respect to Ezra Levant’s persistence and determination, it isn’t clear who has the motivation and resources to fight and win such a battle. The alternative, and more direct, route to the elimination of HR speech tribunals is political, but the obstacles here look just as formidable. The Conservatives voted to abolish HR speech tribunals at the convention in Winnipeg last fall, but this is really nothing more than the PM allowing the rabble let off steam. There is little reason to think that the Tories (or any other party) are going to come within a mile of this radioactive issue. And despite the mutterings of various MPs cited by Levant the old saw applies: backbenchers are nobodies. For movement on this issue the PM or at least the Leader of the Opposition is going to have to come out with an unequivocal stand on the matter. This isn’t going to happen, or at least not without a great deal of pressure from the public. Mere disapproval, as is clear from the example of the parallel “justice” system for young offenders, doesn’t get the job done when something is set in cement. So we are quite likely left with a standoff. The HR speech creature will have to lay off prey that it can’t swallow, like Maclean’s (too big) or Levant (too prickly), but it will continue to slither around in the weeds hunting various right-wing crawly amphibians and wiggly neo-Nazi worms of the online ecosystem. Despite Levant’s optimistic characterization of HR speech codes as being fundamentally un-Canadian there is more truth in Mark Steyn’s observation that many Canadians, like many Europeans, view unfettered freedom of speech as an American and suspect concept. Shakedown is an important contribution to defending our democratic rights, for which Ezra Levant deserves congratulations. But it isn’t the end of the battle, although it may be the end of the beginning.
To support the cause of freedom of speech in our wonderful country by buying Shakedown click here.
To contribute to Ezra Levant’s legal defense fund (sadly still a necessity) click here.
When we expect something to make us ill – electrodes wired to our temples, for example, or, more routinely, a medicine with known side-effects – we start looking for signs of illness. And we’ll probably find some, says [psychologist Brian] Hughes, even if the pill is a dummy one or the electric field a sham. That is because unpleasant physical symptoms are a normal part of life for perfectly healthy people. Headaches come and go. Some nights it is hard to get much sleep, and some days it is difficult to keep our eyes open. We might feel light-headed one moment and in a bad mood another. These are all experiences that we would not think twice about were we not looking for signs that things are wrong. But when we are looking, it is easy to interpret a bad night’s sleep as insomnia, tiredness as fatigue, light-headedness as dizzy spells or a bad mood as depression – and then to reattribute those symptoms to whatever it was that we expected to harm us. And once we start believing that something is making us ill, we get anxious, which can itself exacerbate existing symptoms or induce others. “Anxiety generally leads to elevations in blood pressure and immune deficiency,” says Hughes. And more symptoms mean more anxiety.A telltale sign is that the symptoms produced by any particular alleged cause are often manifold, so electrosensitivity, for instance, may result in headaches, insomnia, nausea or depression in different people; but then the whole symptom cluster is reproduced by multiple different causes: electromagnetic fields, chemicals, allergens, dietary imbalances, chronic fatigue viruses and so on all produce the same symptom cloud. (The usual list pops up again, for example, in this story about wind farms). On the other hand, measurable physical symptoms don’t seem to be produced with any regularity.
This is not to say that these kinds of unspecific symptoms never have an objective cause. Just that this is not the case anything like as often as claimed. The odds are that the well-publicized concerns of the worried well (in the developed world) about the ubiquitous wellsprings of toxicity are themselves the source of real distress and suffering on a wide scale. This also suggests that the alternative health industry, which specializes in treating the cases which flummox conventional medicine, is, by focussing people’s attention even more on their nocebic suffering, actively helping to make things worse.
- The poorest 5 billion people in the world already produce more carbon than the developed world. In the future the gap will grow.
- The poor are motivated almost entirely by price. Unless the developed world pays them to not use oil, coal and wood for fuel they will do so.
- Alternative energy sources such as wind and solar may cost 5 to 10 times as much as the cheapest conventional source, coal. Regardless of any possible technical breakthroughs collecting energy from these sources will require major infrastructure costs and huge areas of land (for wind or solar farms), making them even less attractive to less developed regions.
- Increased use of expensive alternative energy in the developed world gives the rest of the world a competitive advantage in industries based on cheap and dirty energy. In particular, reducing Western oil consumption by a significant amount would simply make oil even cheaper and more attractive. With much of the world’s oil supply costing only $10 per barrel to produce it is impossible to imagine it sitting in the ground.
Cut to the chase. We rich people can’t stop the world’s 5 billion poor people from burning the couple of trillion tons of cheap carbon that they have within easy reach. We can’t even make any durable dent in global emissions—because emissions from the developing world are growing too fast, because the other 80 percent of humanity desperately needs cheap energy, and because we and they are now part of the same global economy. What we can do, if we’re foolish enough, is let carbon worries send our jobs and industries to their shores, making them grow even faster, and their carbon emissions faster still.Also:
We don’t control the global supply of carbon.
Poor countries all around the planet are sitting on a second, even bigger source of carbon—almost a trillion tons of cheap, easily accessible coal. They also control most of the planet’s third great carbon reservoir—the rain forests and soil. They will keep squeezing the carbon out of cheap coal, and cheap forest, and cheap soil, because that’s all they’ve got. Unless they can find something even cheaper. But they won’t—not any time in the foreseeable future.And:
The United States would be in compliance with the Kyoto Protocol today if we could simply undo [anti-nuclear activists’] handiwork and conjure back into existence the nuclear plants that were in the pipeline in nuclear power’s heyday.Finally:
The grand theory for how the developed world can unilaterally save the planet seems to run like this. We buy time for the planet by rapidly slashing our own emissions. We do so by developing carbon-free alternatives even cheaper than carbon. The rest of the world will then quickly adopt these alternatives, leaving most of its trillion barrels of oil and trillion tons of coal safely buried, most of the rain forests standing, and most of the planet’s carbon-rich soil undisturbed. From end to end, however, this vision strains credulity.None of which is to say that environmental issues, and global warming in particular, are to be dismissed. And like most commentary on the environment, this sidesteps the central issue (too many people). But it's still a bucket of cold water over green daydreams.
And yet ... even as a comparative Luddite, I find myself bewitched, bewildered and deeply bothered by the number of minutes, hours, days I spend circling the online drain. As anyone who spends most working days staring at a computer screen knows, there is no such thing as sitting idle anymore. Those little desk toys they used to sell -- the plastic bird who teeters and totters until its beak finally dunks into the water glass -- are relics at this point. Like the notion of being unreachable at certain hours of the day or night, they are laughable reminders of a world long gone. Who would have the patience to wait for the beak to hit water? We'd all be hitting "reload."This is right on the money. The whole cyber-experience appears to be deteriorating into a devils’ playground of nonstop diversion. The positives of instant access to supposedly edifying and relevant content out there are increasingly outweighed by a large scale destruction of attention spans. Old habits – at least among the literate – of reading for hours at a stretch look like they’re going the way of the printed newspaper. Eye-movement studies have discovered the notorious F-pattern used by many readers of Web pages: read the first two lines, scan halfway down, read another line, scan to the end. Done. Speed-browse the comments. Skip to the next article and then hare off on some totally random collection of links with no discernible thread at all the end of which you can’t even remember where you started.
. . .
Instead of watching plastic balances, we stare idly into a scrim of ever-updating images, words, videos, letter threads, some that calm us, some that raise our blood pressure, until finally the day is over, and we go home, log on, and do it again. Or at least I do.
Martin Amis’ the term “The Moronic Inferno” (originally intended as a description of the US) was evidently ahead of its time. But it’s not just the Net. The explosion of entertainment options, music movies and gaming seem to be creating for more and more people a new normal of 12 or more hours a day of screen time – a life of onscreen work, surfing, gaming, flat screens, iPods and smart phones embedded in an ADD culture which leaves less and less time for reflection and in which no individual cultural artefact really matters much because there is just such an overwhelming and incessant stream of output.
Paradoxically, the onslaught of electronic modernity seems to be undermining one of the key attributes needed to cope with it, namely the ability to focus, which is the common element to most high-skill, high-paying “top jobs.” The elite will no doubt continue to master the skills they need to attain the wealth they covet, include the skill of concentration. And they’ll teach them to their kids. So it isn’t inexorable doom: we’ll still have doctors and software architects. On the other hand the learning and studying capacities of the lower socio-economic 50% don’t look so likely to improve in the new attention-deficit world order, which may create widening social gaps in terms of both culture and life opportunities. The status of literacy, at least literary literacy, as opposed to being able to read a menu, as a defining element of middle class identity likewise seems to be facing long odds of coming through the intensifying cyberian gales. The consequences of this remain to be seen. But apart from the broader social implications, simply on a personal level, it is just not very appealing to spend more and more of one’s time in something like the mental state of a baboon on amphetamines, which is what the online experience tends to induce. If a little backlash is building up it’s not past time.
At the same time the big picture is less than rosy. Real change is coming – not the kind rung in by soapy politicians but by large-scale economic trends. The days of this province’s have-notness are probably just beginning. The global storm that has swept aside many things, including the levees of automotive overconsumption, may leave North America with new-car demand pounded down from the old level of 17m new cars per year to a new long-term level of maybe just 9m. The barriers that sheltered Ontario from the global marketplace are gone. Will there be any room at all for Ontario in the new manufacturing order? If the CAW is making concessions, we probably really are close to game over. And in that case what will the role of our provincial leadership be, except to squat outside Parliament Hill and rattle the begging bowl even louder? Canada will survive; there’s oil in Alberta and diamonds up north, and potash in Sask or Manitoba or wherever it is, and the deprived provinces will have to get their cut, by equalization or however else. Our premier has already made clear that his number one priority is getting our fair share. Hell or high water. The two new leaders will certainly follow suit, so they will all three be on the same page as far as that is concerned. Meanwhile, the little matter of how we are actually going to earn a living, and make up for the partial or total loss of the auto sector is something that doesn’t seem to be attracting a lot of interest. As the rusting out process plays out it may never. Not a happy prospect.
Crime and non-punishment: How can prisoners improve their chances of getting back into the community? Being psychopathic seems to help. UBC psychologist Steve Porter found that in a sample of 310 prisoners those classed as psychopaths were two and a half times more likely to get early release. These offenders are typically more dangerous than ordinary parolees, and therapy may make them more dangerous still by teaching them more effectively how to pretend to be rehabilitated. Your correctional system at work.
More on fraud watch: Ontario lottery “insiders” won at least $198 million in prizes over the last 13 years. This would not even be a rounding error on Wall Street, but it is still kind of sad that so many hapless dreamers have been getting clipped for so long. The estimate, by Deloitte & Touche, is double what the foot-dragging OLG had previously estimated. Your Lottery Corporation at work.
Not getting it: Back to real fraud. The National Post’s own Pap Daffy sounds off about the Obama crackdown on executive compensation. “It’s a bad time for an exodus of talent.” Caps on executive pay will drive top talent from Wall Street at a time when they are needed most. While this site takes the view that executive pay is basically a matter for managers and shareholders to settle between themselves, in this case the government actually is a shareholder. Since they’re recapitalizing the financial loonie bins that used to be called banks they really are entitled to say how the asylums are going to be run. As for “talent” what in the world does this mean? The ability to single-handedly destroy more wealth than Hurricane Andrew? And where is all this amazing “talent” going to go anyway? The NBA?
But sprained metaphors aside, what is there? A few cranky writers in the print media (the wave of future – 200 years ago) and a rag-bag of Internet pamphleteers who are already on the trailing edge of cyberspace. In politics, by contrast, there isn’t a single elected spokesperson for fiscal restraint or productivity growth in the whole country. The two main parties, that is, the Red-tie Party and the Blue-tie Party are for all purposes one and the same. A student of political science who had access only to the contents of the country’s budgets over the last decade but not electoral results would be hard pressed to deduce whether or when a change of government had ever taken place.
Stephen Harper’s pursuit of the political centre has been relentless. That this has cost the party whatever character it ever had as an alternative to the Liberals no longer seems to figure in the strategic formulations of Canada’s Unnatural Party of Government. When it really comes down to it, what matters is power. Naive Reformers didn’t really understand this. But they do now. Jean Chretien, Canada’s grandmaster of parochial realpolitik, must be laughing his saggy ass off.
The Conservatives could have cut corporate taxes, raised the sales tax (or at least left it alone), accelerated debt repayment, held the line on spending and simplified the tax code. Instead they ran vote-buying budgets, complicated the tax code and dragged their feet on debt. They weren’t ready to stare down a weak opposition on a single matter of fiscal principle, although the PM was willing to risk the survival of his government on the less-than-critical issue of party funding.
Now the Blue ties have passed a budget which John McCallum and Michael Ignatieff could have written, which will do nothing to remedy the macro situation (which is beyond our control), and will, at best, simply lighten the load for some (but not all) of those whose boats are in danger of being swamped by the rough tides of the next twelve to eighteen months. This at the price of wiping out the last 13 years of debt repayment and turning politics into a big-government monoculture on the eve of what may be a global debt and currency crisis.
But not all the credit should be lavished on the “Conservatives.” The Toronto Star lauds our indomitable premier Dolton for elbowing his way to the front of the soup line, no mean feat when you think about the competition, those hardened panhandlers from Quebec and Down East who have been doing this for years. The strategy of doing nothing to improve Ontario’s productivity while loudly complaining about the unfair distribution of federal “booty,” as Jacques Parizeau so aptly termed it, is clearly starting to pay off.