Friday, March 30, 2012

Budget Day Aftermath

Canada is currently a country in which dogma, superstition, fear, religious belief, and agenda rule the day over rational, reasonable, evidence-based decisions.

I have written previously about how Canada's Minister of State for Science and Technology is igorant of basic science like evolution. The man appointed to oversee science-funding decisions in the country doesn't even know how long humans have been around, or where we come from. He does, however, believe that putting on a pair of running shoes or high heels involves evolution.

So one might assume that the latest Conservative government budget was full or equally ridiculous policies. One would not be disappointed if one did so.

Canada's projected budget deficit, following the latest budget, is about $21.1 billion dollars. A lot of money, to be sure. It is no enviable task that the Finance Minister, Jim Flaherty, has over the next few years to bring that deficit back to zero by the time the next election rolls around in 2015, as the Conservatives have pledged to do. (I'm still trying to figure out what they did with the record surpluses they inherited when they came into office and managed to turn them into record deficits). No one likes to see their programmes cut, and there are no popular cuts, just less unpopular ones. Everyone can always find a problem with the budget, no matter how carefully it is put together. I'm sure I could go through Canada's budget carefully and point out all the silly waste of money (e.g. corporate tax cuts, huge prison costs associated with the lastest un-needed crime bill), but one needn't go that far to point out the irrational, fear-based approach to this budget.

The deficit is around $20 billion or so. Yet, the Conservative Party plans to spend anywhere from $35 - $90 billion (depending on cost overruns) on F-35 fighter planes for the military. That means, they plan in the next few years to throw away anywhere from 1.6 to 4.3 times the annual budget deficit. At the highest end, that means that they could do away with that one expense, and balance the budget for the rest of their mandate until 2015. With one expense cut they could avoid cuting funding to any other department in government, they could avoid cutting health-care transfer payments to provinces, they could avoid raising the retirement age from 65 to 67 (as they just did). Will they? Not a chance.

Why? Fear. Irrational fear of the same sort that keeps people scared as hell of hell and buying into religion. Canada has never once been invaded by air. We have not been invaded at all since the 19th Century. And yet we will spend between 1.6 and 4.3 times the annual budget deficit to buy fighter aircraft in case we need to repel an air attack for the first time. If we did ever face an air attack, which country(s) would be potential candidates to invade? Possibly, Russia or China, and conceivably India or the United States in a much changed world in the future where water is scarce. Would any number of F-35 fighter jets help in that case? No. Canada will never own enough fighter jets to repel an air invasion by any of those countries. It is an utter and complete waste of money based on irrational fear.

And what is the long-term cost? Well, every year that we continue with a budget deficit, as the Conservatives have committed to do until at least 2015, increases the national debt which we currently pay $30 billion annually to service with interest payments. The numbers keep going around and around like a washing machine, but somehow the laundry never quite comes out clean.

Wednesday, March 28, 2012

The Myth of Government Job Creation

Seemingly every political campaign nowadays boils down to the economy and jobs. Most conservative leaning parties make it their number one issue. The Conservative Party of Canada is widely acknowledged to have been elected in 2011 due to their incessant messages indicating that they are the only party capable of "strong" stewardship of the economy and of job creation. In America, the Republicans sound like a broken record on two issues: cutting government spending and job creation (never mind that the two are in conflict). The Republican message is one of massive tax cuts to corporations and leaving the market to itself so that the big employers can create lots of jobs. Many provincial governments in Canada mimic this pattern of the job creation message in election campaigns. Who can blame them? After all, it has proven very effective. People are motivated by fear and the fear of not having a job tops the list for many people.

But there are some major problems with this approach of governance. Firstly, governments are not traditionally in the business of creating jobs. Certainly the government is a very large employer itself, but in order to create government jobs there must be increased government expenditure (and therefore taxation) and most conservative minded voters are against "big government" in which the government itself employs lots of people. Traditionally the role of government is to implement law, and to run social services with tax revenues, not to "create" jobs. Now, of course, government legislation can have an effect on the economy and on job creation and unemployment rates. But, not nearly as much as people think.

The first myth is the one of corporate tax cuts. There is a belief that cuts in taxation to corporations will actually create more jobs and therefore decrease the unemployment rate. While there is some truth to this, the link is not nearly as strong as most voters think it is. In Canada, the Conservatives cut the corporate tax rate by 2% to bring it down to one of the lowest rates in the Western World. Yet, it has had virtually no effect on the unemployment rate whatsoever. In fact, the latest numbers in Canada suggest that the unemployment rate has inched upwards a bit. Many, many corporations these days are in the business of moving money around with relatively few employees rather than in the business of employing large numbers of people in manufacturing or service positions. We all know that large manufacturing corporations produce their goods in China and other places outside the country, so giving them a tax break doesn't help employ Canadians (or Americans in the States). Even of the large corporations in Canada, many do not have a massive effect on the employment rate as the corporate tax rate changes. Many of the wealthiest Canadians and Americans are in the business of trading stocks and investing, not in the business of employing people to make things. As many as 85% of the wealthiest North Americans aren't in the business of making anything at all. Cutting corporate tax rates does two things: it makes corporations richer and, not surprisingly in the modern economy of very little competition, that wealth is usually not passed on to consumers by way of lower prices. The rich get richer. Secondly, the tax cut to corporations must be made up elsewhere by the government, and of course the place it is made up is in personal tax revenues. The poor get poorer.

The second myth is that we need constant growth and job creation. Think of the unemployment rate over the past several years or even decades. It really doesn't change dramatically. It shifts up and down a few points here and there as the economy goes up and down in cycles. But an economy that creates many jobs really doesn't ever get rid of unemployment. Even in relatively negative economic times, there are always job ads in the newspapers. There are almost always jobs available. Only in the Great Depression (and not since) were there basically no jobs even for those willing to work at anything. So, a government that is elected on a "job creation" mandate is destined to fail even if they are successful in the short term by "creating" some jobs (or allowing the free market to do so). Because in the long run, the population simply goes up, immigration increases, and the actual number of unemployed stays roughly the same. At the next election cycle, the same old message of job creation can be run again, often with the same success. Nothing changes.

The third myth is that there is actually any difference between political parties in terms of job creation. Recently in Canada, a new leader was chosen for the New Democratic Party. The NDP, traditionally a left-of-centre party that has never been in power was most recently elevated to become the Official Opposition in the 2011 federal election. The new leader, Thomas Mulcair, was immediatly (on the same evening as his election to party leader) attacked by the Conservative Party as being a socialist who will raise taxes and kill job creation. The NDP undoubtedly will raise the corporate tax back up by the 2% that the Conservatives lowered it, should they be elected. But that will provide some tax relief to the rest of Canadians in their personal income taxes. The effect on job creation will be nill.

Ultimately, as so often in politics, it all boils down to fear. Without fear amongst voters the Conservatives never would be elected in Canada. Without fear the United States never would have invaded Iraq (or become involved in the Vietnam War, or countless other engagements such as the first Iraq war in 1991). Without fear, people like Rick Santorum or Newt Gingrich would never stand a chance in politics. I wish for a day when more and more voters can think for themselves rather than having politicians tell them what to think. Sadly, we seem to be going in the opposite direction.

There is an old adage that the best salesman is one who begins by selling you the problem and then conveniently has the only solution to the problem they created. That seems so true in many walks of life. In religion people are sold the solution to hell after the same salesman has created the problem for them. In politics, the modern successful politician sells voters the problem of job creation and then tells them that he alone has the solution. 

Wednesday, March 7, 2012

The F-Word

Fuck. There, I said it. Now if you were planning to read this post in the hopes of catching a glimpse of the word "fuck" in writing, you can stop right here fully satisfied.

The dirtiest F-word in the English language, however, is actually "faith". The word faith, or rather the concept of faith, is inexplicably revered in our society. When there is no evidence to explain someone's position or belief, the concept of faith is put forward as a trump card to justify one's belief. "You just have to have more faith" is a common catch phrase eminating from anyone of religion who is trying to convince that their religion is true. When you have faith, it all makes sense.

Where would we be if we applied the concept of faith to every aspect of our lives as, well religiously, as the religious do?

Imagine you visit the doctor's office with a nasty respiratory infection that turns out to tuberculosis. The doctor tells you that there is evidence that a lengthy treatement with specific types of antibiotics will have a positive effect, but that alternatively you can go home and drink six glasses of water each night before bed and have faith that the water will flush the TB out of your system. Which option would you pursue?

Imagine the Wright Brothers had never existed. No one had ever successfully applied Bernouilli's Principle to the wing of an aircraft to produce lift and flight. Yet, imagine that by the 1960s or so, technology somehow existed to still build a Boeing jetliner that resembled the jetliners of the 1960s but without the proper technology to actually fly. Would you trust a Boeing executive who asked you to join on the maiden trans-Atlantic flight, and urged you to just have faith the great beast would fly?

Imagine for a minute that you are about to graduate high school. You have one exam left, a calculus exam in one week's time that you must pass in order to graduate. You have two options: you can either study calculus all week or you could have faith that God will help you pass the exam even though you know you really don't deserve to. Which do you do?

These ludicrous examples are, of course, all easily dismissible. So why is faith not dismissed so easily elsewhere in society. Why are political candidates not dismissed outright as viable candidates when they promote faith-based programmes instead of programmes based on evidence and research? Why are the terminally ill told to take courage in the fact that everyone is praying for them and that they should have faith that God can heal them?

Why is faith not recognized as the absurd and even evil idea that it really is? Faith asks that you set aside all knowledge and evidence, and believe in something just because you want it to be true or because someone else wants you to believe it. A dirty, dirty word that should never be taught to children.

Canada's Watergate Will be Swept Under the Rug..."Democracy" Continues

I'm no conspiracy theorist. I am no radical. I am an educated person with a stable long-term career who makes investments in mutual funds and real estate like any other good capitalist. I'm no "left-wing nut-bar", as Kevin O'Leary rudely labels Chris Hedges at 3:30 of this video:

No, I consider myself part of the traditional establishment. I believe in the fundamentals of capitalism that have made the Western world so wealthy and have increased life expectancy and quality of life. And yet...I find myself growing ever more sceptical about the "system".

Two things about our current system make me very uncomfortable. The first is the modern approach to capitalism. Capitalism is supposed to provide opportunities for all through a free market. The success of sellers of goods and services that are bought and sold on that market is, in theory, to be determined by the quality of their products. If you sell a nicer loaf of bread that someone else does, then more people will buy your bread. Cost, of course, also has a large bearing on that success. If someone else undercuts your price and  their product is still acceptable to the consumers, then likely they will be more successful. That is how the system is supposed to work.

But in practice what we have is a market all driven by marketing, not by quality or price of products. Think about it. When you go to by a product, be it a new computer or a pair of shoes, how often do you consider buying a product from a manufacturer that you've never heard of? No, you buy a Toshiba, Sony, or some other major name-brand product. That is all fine, and the name-brand is supposed to assure you of a certain level of quality. But, where is the opportunity for the new fledgiling capitalist in the computer market. Someone who has significant skill in manufacturing high quality computers has zero chance of any success on the open market. The major manufacturers will out-market that individual, and if that doesn't work, then they'll simply buy up his company thereby making the individual very wealthy, and put an end to their competition. This is the real key to the problem in modern capitalism: complete lack of competition. How many choices do I have if I want a cell phone provider? Maybe three. How many choices do I have if I want to open a bank account? Maybe five in Canada (all with identical products and services). How many choices do I have if I want electricity to flow into my home? One.

The second thing that makes me uncomfortable about our current system is the process of democracy, or lack thereof. I don't even have time to get started on the problems in the United States, but what is going on in Canada is equally frightening. In the last federal election, in May 2011, the Conservative Party won a majority and have been in power since. Now, in the past few weeks, reports have surfaced indicating that tens of thousands of Canadians may have had their right to vote illegally tampered with. Many Canadians receive automated telephone calls prior to the election asking them what party they were likely to vote for. If they responded that they were likely to vote for anyone other than the Conservative Party, then they were often directed to false voting addresses thereby decreasing their chances of actually being able to vote. On top of that, the automated callers often falsely identified themselves as being from Elections Canada, an independant non-partisan body. This is, of course, all illegal in an election.

The normal reponse to these reports, one would assume, would be to assist a full investigation to find out exactly what happened. No matter what party one supports, surely everyone can agree that we want a fair election process. We want all the votes to count and we want everyone who wants to vote to have their say. Yet, the government's response to this scandal has been the exact opposite of aiding an investigation. First they dismissed a young twenty-something party supporter and claimed that it was all his fault and claimed that it was an isolated incident. As reports came in or more and more fraud in tens of electoral ridings all across the country and it became obvious that a single 24-year old was probably not capable of organizing this kind of fraud, the government then blamed the opposition parties. They claimed that the Liberal Party was responsible since they had hired an American company to manage some of their election phone calls and some of the fraudulent calls had been traced to an American company. Then, it was pointed out in debate in the House of Commons that the American company hired by the Liberal Party was not the same one used in the fraudulent calls, the Conservatives did not apologize but simply claimed that it was all part of a vast smear campaign against their party by the opposition parties who were sore losers in the election. Most recently, a Conservative dominated parliamentary committee voted not to give Elections Canada more power to investigate the issue properly.

Wouldn't the simple and right answer be to investigate this openly and fully and find out what actually happened? The Conservative Party, though they have yet to be found actually guilty of anything, are certainly behaving as though they don't want the scandal investigated openly and fully. Why not?

The implications of this are enormous. My prediction is that, given there are another 3 years or more until the next election, the whole issue will be swept under the rug and voters won't care by the time the next election rolls around. In the next election campaign, the Conservative Party will claim that it is all about the economy and that they are the best suited party to foster a strong economy (despite the fact they are running massive deficits leading Canada in the same failed path that countries like Greece, Spain, and even the United States are on). Voters will not care about some theoretical scandal that happened a few years ago. They just won't care.

And yet the implication is that the Conservative Party possibly never was actually elected. We will never know who actually should have won the 2011 Canadian federal election, just as we will never know who should have won the 2000 American presidential election. No one actually knows whether Gore or Bush won more electoral college votes because the Supreme Court stopped the recount. Republicans and Democrats alike will argue until they are blue in the face that they each should have won, but the truth is that no one will ever know. The same goes for the most recent election in Canada. No one will ever know how many seats the Conservative Party should have won, and whether they actually won a majority or not.

But, this whole scandal might help explain one thing: how during the election campaign, absolutely no one, except the leader of the Conservative Party, predicted a Conservative majority. What did he know that the rest of us didn't?