B.C. Policy Perspectives

Why I don't buy Adrian Dix--and What I Recommend to Voters Instead

2012-02-02T10:30:00.000-08:00

I am supposed to support Adrian Dix because he filled the leadership vacuum that he helped Glen Clark to create?

I am supposed to support Adrian Dix because he was so good at spotting the very evasive manouevres and political games that he himself perfected when he was in the Premier's Office?

I am supposed to support Adrian Dix because he is so skilled at subordinating policy to communications and media strategy--something that was at the root of what was wrong with the Glen Clark government, and which made it worse than the Harcourt government, according to several senior former cabinet ministers?

Dix's "achievements" as Opposition critic are just the flip side of a Machiavellian coin.

As an experienced former public servant who has met Dix a dozen times and who has followed his career closely (often with morbid fascination), I am struck by the differences between him and more substantial, less purely political animals. For example, Gregor Robertson's raising a family, starting a successful business, co-founding a successful centre-progressive party that truly represents a majority better than either of the stale ideological alternatives, and actually devising practical solutions to issues of sustainable growth --is a hugely constructive record. Historically, Tom Berger and David Vickers would be other examples of people I could actually look up to both intellectually and morally.

Of course, none of those people are presently on offer. But I firmly believe that it might be worth waiting another four years in order to actually get it right. I urge my fellow educated progressives to vote for the two independent MLAs in Delta South and Cariboo North, and to consider voting Green elsewhere. And in the unlikely event that Dix's bubble bursts and the electoral chips fall in such a way as to sustain the Liberals for another term, don't worry: that could be a blessing in disguise.

Two Ways in which the Federal NDP should be improved

2012-01-30T05:10:00.000-08:00

{Back in May 2010 I was asked to contribute a short column to The Mark News as part of a series on "How to Fix Canada's Political Parties". I reproduce it here for your consideration in light of the current NDP leadership race.}

The legacy of New Labour in Britain is not one of complete failure, but it is very mixed. Specifically, it was disappointing to see a Labour government look to market-based solutions in health care almost as a panacea; it was shocking to see Blair follow Bush into Iraq with an alacrity that pleased Mrs. Thatcher. Meaningful politics needs a clear adversary (besides terrorism); that adversary for any social democratic party has to be a corporate capitalism that asserts a perfect identity of interests with the wider society even as its pathological pursuit of profit and power fouls the ocean and melts the poles. The NDP must not abandon its role as the representative of the underdogs in corporate-societal relations.

Nevertheless, if the NDP wishes to be more than just an important parliamentary umbrella group for social movements , it will need to make two improvements that do borrow more than a little from New Labour. The first is a more aggressive Social Investment Strategy that justifies social spending in economic terms: not just to protect indebted and under-employed workers and growing numbers of seniors from change, but to improve their capacity to change. This need not mean large tax cuts, the abandonment of public schools, or privatized health care; on the contrary. But it will mean recognizing that middle-class buy-in is the linchpin of the Canadian welfare state. Even the taboo subject of raising productivity (often code words for either shedding labour or making it work harder) can be given a green and social democratic slant---after all, Canada’s chronic problems in that area have a lot to do with branch-plant economics, the abysmal failure to recognize the future economic importance of climate change, and under –investment in research and development. If there is both a high road and a low road to comparative advantage, then the NDP should stand for taking the high road, even if doing so sometimes necessitates higher taxes.

The second, political change that is needed is a greater willingness to cooperate with other parties and groups outside of the NDP’s core constituency. Since the NDP is already committed to coalition–building by virtue of its support for proportional representation, one would expect this to not be a problem. But it is. Before Green Party leader Elizabeth May forged her agreement with Stephane Dion in 2008 to not run opposing candidates in each other’s riding, she was rumoured to have approached Jack Layton , but was rebuffed. In the coming election, it would be reasonable for the NDP to ask a dozen vote-splitting Green Party candidates to step down in exchange for giving May a clear run at Gary Lunn in the constituency of Saanich-Gulf Islands, but that won’t happen either.

Another example illustrates the need for both of these improvements. Paul Summerville, the former chief economist for RBC Dominion Securities who in 2006 ran for the NDP in the Toronto riding of St. Paul's, later left the party for the Liberals, complaining that the leadership would not counter the strong "anti-market rhetoric" coming from the party’s grassroots. He had a good point. Recognizing the most egregious instances of market failure, such as the private health insurance trap and deregulated financial markets in the United States, or the burgeoning crisis of global warming, need not mean blinding ourselves to the value of markets as the principal means of everyday economic coordination for ordinary Canadians, or ignoring the value of international trade as the key to our standard of living. A sophisticated appreciation of markets and the limitations of government is an appropriate starting point for better public policy, even if it should not be allowed to become the ultimate arbiter. It is also the basis for rapprochement with greens and progressive liberals—something that will be necessary in any case, should the NDP hope to be part of a governing coalition in the future.

What Canada's Pipeline Policy Should Be

2012-01-29T12:00:00.000-08:00

The problem with the government deferring to the pro-business logic of "the market" is that it ignores the truth that Albertans, as the owners of the resource, and Canadians, who own the land through which energy is transported, constitute an important part of the market; and the federal government, as the representative of all Canadians, has an obligation to consider obligations to First Nations and the Environment that the rest of the market ignores. The idea that waiting a few years to approve the most direct pipeline to China could be profitable (because of long-term increases in energy prices) is admittedly, a speculative gamble; but no more so than the idea that shipping as much as possible out quickly will generate the most long-term economic benefits. If we insist upon an effective carbon capture and storage system in the tar sands, the negotiation of treaties along the Gateway corridor, and the banning of anything less than double-hulled tankers as necessary conditions for the approval of the pipeline, then we create powerful economic incentives for each of these things to happen. But if we ram through a pipeline approval without securing those three conditions first, then we create powerful economic incentives for not putting in place effective carbon capture, for not concluding treaties, and for not banning all but the safest oil tankers.

Of course, viewing Gateway as a long-term project need not mean placing a moratorium on all pipelines. Consider the following:

"The only way to get that world price is to give Alberta oilsands products easy access to overseas markets, says Frank McKenna, former ambassador to the U.S. and former premier of New Brunswick. Even if the western Gateway pipeline, the fastest route to the Coast and on to China, gets approved, Canada also needs new pipeline capacity to Eastern Canada to truly diversify its markets and get the best price, he says. He points out that Canada's largest refinery, the Irving refinery in Saint John, N.B., already handles heavy oil and could be modified to upgrade bitumen from the oilsands."

Read it on Global News: Eastern Canada could be gateway for Alberta oil if Keystone pipeline gets nixed

Canada's policy on pipeline construction should be: (1) If the industry wants to build a pipeline in the short run, consider a pipeline to eastern Canada to improve our self-sufficiency and reduce imports and east cost tanker traffic and related pollution. (2) The Keystone pipeline should be considered a medium-term project proposal that awaits American regulatory approval--and which, if possible, should also seize the opportunity to process the bitumen here instead of in 30 year old refineries in Texas. (3) The Gateway proposal should be considered a long-term project that should wait for the implementation of an actual functioning system of carbon capture in Alberta and the the actual completion of treaties with First Nations along the pipeline route--to say nothing of an iron-clad legal obligation of double-hulled ( and not just double-bottomed) tankers on the West Coast. Besides, some very serious analysts have questioned the economic wisdom of the Enbridge proposal, based on its effects on Canadian oil prices. Robyn Allan's report to the National Energy Board concludes that "[a]s a consequence, the project will raise the price of oil with no commensurate change in production or efficiency; it will enrich a few global oil companies such as Sinopec and it will increase inflationary pressures in Canada for decades."

"Unfortunately, there are environmental and other radical groups that would seek to block this opportunity to diversify our trade."---- Joe Oliver

PM Stephen Harper and Resources Minister Joe Oliver have both blasted environmentalist protestors for being "radical" (Oliver) and "Publicly Funded"(Harper). By framing this issue as environmental radicals versus Canada's future prosperity, the government has once again illustrated its general communications strategy of both dividing and conquering through false dichotomies. That is disingenuous and incredible and it is not good public policy.

I can't recall a government being this hypocritical and biased at the outset of an (ostensibly neutral, open-minded?) regulatory hearing. All the government has to do is set time limits on public submissions if it is worried about finishing the hearings--instead of villifying environmentalists and "people like George Soros". Joe Oliver and Stephen Harper should re-read Mill's discussion of the marketplace of ideas in On Liberty ---assuming they ever read it in the first place.

Can you believe it?

While it is true that many environmentalists are bent on delaying the project for as long as possible, that is not a reflection of some ""foreign" or especially "radical" interest. And while it is hard to say no to $270 billion worth of economic activity, why not delay the pipeline until (1) carbon capture technology has been successfully implemented; and (2) First nations rights and interests have been clarified; and (3) the whole issue of the tanker moratorium can also be revisited? Delaying the McKenzie Valley Pipeline until First nations and environmental concerns could be more fully addressed was one of the wisest decisions the federal government made in the 1970s. Former Alberta premier Peter Lougheed has spoken of a planned growth strategy that puts Canada first; why shouldn't we? It is very likely that waiting until the environmental costs are lower would also mean waiting until a time when energy prices are very much higher. That could be a win-win for the economy , the environment , and for future generations. Unfortunately, it seems that nowadays even Peter Lougheed and Frank McKenna are too "radical" for this government.

A Canadian Perspective on Mitt Romney's Brand of Capitalism

2012-01-15T10:59:00.000-08:00

Back in September 2010 , I was asked by the editor of the Mark News to contribute to a series on Canada's most influential people. I chose to write a short profile of Gerry Schwartz, the founder of Onex Corporation, Canada's leading private equity (buyout) firm. Since the 2012 U.S. presidential campaign is starting to turn in part on Romney's record as a co-founder and executive at Bain Capital, it may interest readers to look at my article:

http://www.themarknews.com/series/30-canada-s-biggest-influence/articles/2444-gerald-schwartz .

What I found was that even though Gerry Schwartz is a relatively 'good' leveraged buy-out (LBO) specialist, in the sense that he prefers to grow firms rather than simply flip them for a quick profit, I couldn't entirely shake my ambivalence about his business in the context of the current economic crisis. To be sure, Schwartz, like Romney, has not made his fortune from re-packaged mortgage debt on sub-prime mortgages, or by betting against his own clients(!). But they have both exemplified the big shift in financial capitalism that started in the 1980s: away from industrial start-ups to the more lucrative areas of "take-overs" and "re-structuring". Associated with this phenomenon was the invention of the Leveraged Buy Out itself, which just threw out of the window age-old strictures about how much money one should be able to borrow on a given amount of equity. This helped to provide the context, if not the specific content, of the 2008 Financial Crisis.

Now that we are in a Great Recession--"great" because practically everyone both public and private is having to de-leverage debt before they can start buying, investing or hiring again---it would be ironic indeed if America were to turn to a LBO king for its economic salvation.

Interested readers should also follow up on these two quotes:

"Romney soon switched Bain Capital's focus from startups to the relatively new business of leveraged buyouts: buying existing firms with money mostly borrowed against their assets.... Less an entrepreneur than an executive running an investment operation, Romney excelled at presenting and selling the deals the company made.^{" ------} "Mitt Romney", Wikipedia

‘I don’t like what private equity firms do in terms of taking out every dime they can and leveraging [companies] up so that they really aren’t equipped, in some cases, for the future.’”
----Warren Buffett, quoted in the Wall Street Journal.

Neglected Issue #3: Why Not Have a Progressive Consumption Tax in Canada?

2012-01-08T12:19:00.001-08:00

It's not just Liberal attack ads that remind me of Glen Clark and the 1990s-- it's Adrian Dix that does

2012-01-04T11:49:00.000-08:00

I have just seen the new "Risky Dix" negative TV ad, and although I agree with Dix's tweet that "BC deserves better" , I also think that BC deserves better than him.

Although it is silly to attribute the problems of the 1990s economy with Adrian's role as principal secretary, I can think of half a dozen examples of where his unseemly and inappropriate ruthlessness contributed to either bad policy; or bad personnel decisions;or demoralizing, less-than inspiring leadership--including the sneaky, snake-in -the grass approach to seizing the leadership with last-minute invisible busloads of instant members. That happened only 9-10 months ago.

That episode showed that although middle-aged Dix is more careful and more knowledgeable than he was as Glen Clark's political operative, his basic character and modus operandi remains unchanged. It reminded me of his backdated memo (which was NOT out of character, but part of a general pattern of clandestine accountability evasion); his practice of delaying FOI requests; his honourable mention on page 31 of the Auditor General's Fast Ferry Report, in the context--tellingly--of his role in impressing upon a reluctant BC Ferries Board that the fast ferry project was more in the character of a ministerial priority or directive than business as usual, and in helping to create a fast ferry fait accompli before anyone could organize themselves to oppose it.

I take nothing away from Dix: he looked like a professional surrounded by amateurs in the Opposition caucus 2005-2009. But the reason for that amateurism was that the caucus had been nearly wiped out in 2001--and although any NDP leader would have lost that election, the reason for that extreme wipeout was casinogate, ferrygate and budgetgate, i.e. popular reaction to the way Clark and Dix made decisions in the premier's office. We are supposed to support Dix because he fills a leadership vacuum that he helped Glen Clark to create? I don't buy it.

Similarly, Bob Plecas and Joy McPhail were probably right to say that Dix did a terrific job on the tragedy in Children and Families. BUT it bears repeating that his skill came from his long experience backdating memos, pushing fast ferry fait accomplis, delaying FOI requests, and just generally playing games of information control and accountability avoidance. To use several apt metaphors, it was a clear case of a thief catching a thief, it takes one to know one, the pot was calling the kettle black, etc. Great if you are hiring a political operative or choosing an opposition critic, but lousy if what you want is truly more open and accountable government.

It also bears repeating that his greater skill at getting on the TV news came from his years in the premier's office implementing the subordination of public policy to communications strategy --to the detriment of both public policy and caucus and cabinet morale. In addition to my own experience as a Ministerial Assistant in 1996-97, I have had private conversations with a t least two former senior cabinet ministers that support this point, and who agree with me that the Harcourt government was better than the Clark government, largely for that very reason.

Yes, Dix's singular focus his entire adult life on getting and exercising power in Victoria has made him a knowledgeable political actor and has sharpened his political acumen. He is not the same ignorant brute that Glen Clark installed in the premier's office in 1996. He is more careful, more knoweldgeable and more mature. BUT HE IS STILL ADRIAN DIX.

If I were as partisan as David Schreck or Billl Tieleman, or if I had a financial interest in an NDP victory, I might swallow all of these reservations. But I think I can speak for a broader category of citizens and taxpayers. As a progressive, I would feel like a hypocrite if I bemoaned Stephen Harper's ability to gain a majority with 39% of the vote while relishing the thought of a Clark or a Dix preying on Liberal/Conservative divisions and getting another 36% artificial majority provincially. We should be consistent and support someone who can build a broader progressive centrist coalition that actually represents a majority of the people. And given Dix's proven character and track record, I am willing to wait another four years to do that.

Progressives should support the independent MLAs in Delta South and Cariboo North; and the Green Party candidates in all marginal constitutencies where the Liberals are vulnerable.

For God's sake, DO NOT LET THIS MAN BACK IN TO THE PREMIER'S OFFICE.

Is the Conservatives 3%+ limit on annual health care spending reasonable?

2011-12-24T08:38:00.001-08:00

On the eve of federal-provincial healthcare negotiations the federal government has unilaterally announced that after 2014, federal health transfers to the provinces will be capped at 3% or the rate of growth in the economy, whichever is higher. According to Finance Minister Jim Flaherty, anything more would be "unsustainable".

Taxpaying citizens may well consider this to be a reasonable limit. After all, simply feeding an endless provincial appetite for healthcare money may discourage provincial health care systems from making needed reforms. The federal government cannot be expected to go into permanent deficit just to help provincial governments to avoid change.

Nevertheless, there are at least three considerations that make me question the government's claim of reasonableness. They concern the constitution, the historical context, and the question of the government's ideological agenda.

First, it is a matter of constitutional fact that the provinces are weighed down with 90% of the responsibility for health care and its attendant costs, but only get 50-60% of the revenue. Even if a global cap on growth in spending of the magnitude that Flaherty envisions were necessary, it might be reasonable for the federal government's share of that spending to be higher.

Second, historically we need to ask whether the demographic bulge that occurred after the Second World War would have been cared for nearly as well had the federal government restricted itself to 3% spending growth. Would there have been as many hospitals, schools, teachers, doctors and nurses caring for our children? If not, why should we apply that restriction when the same demographic bulge is again in need of more extensive health care?

Third, we should be aware that this government is a little too comfortable with the idea of squeezing the provinces fiscally, and then not strictly enforcing the Canada Health Act (all in the name of respecting provincial autonomy, of course). The effect will to be encourage the privatization and profit orientation of health care, the consequences of which are not likely to be less expensive for Canadians overall (even if it is less expensive for them qua taxpayers).

In sum, we can defend the interests of both the single taxpayer and our single payer system for essential medical services. We need not be as fiscally hamstrung as the Finance minister avers.

Therapy or Surgery? Don Drummond's new CD Howe Report on Health Care Reform

2011-12-05T14:33:00.000-08:00

Normally, whenever a new report on health care reform comes out of a place like the CD Howe Institute, I brace myself to do battle with yet another wrong-headed prescription for privatized medicine. Yet Don Drummond's new report for the CD Howe Institute, "Therapy or Surgery: A Prescription for Canada's Health System," is an exception: a measured response that respects the potential that the single-payer system has for achieving value-for-money and sustainability.

First, let me summarize where I am coming from: A decade ago, I began my full-time academic teaching career at the University of Victoria, where I taught Federalism and Public Policy a couple of times. Coincidentally, three major reports--those of t the federal Romanow Commission, and the Senate Kirby Report he Alberta Mazankowski Report,--had recently come out and described the main parameters of future health care reform. Romanow concluded that our system is "as sustainable as we want it to be"; this was valid, but begged the question of whether Canadians should compromise the quality of other services to preserve the health system. The Kirby Report exemplified the New Public Management of the 1990s ( single payer plus competitive market delivery of health services).These conclusions were good but over-drawn: competitive , for-profit hospitals were shown by a huge meta-study to have poorer health outcomes than non-profits; in addition more competitive delivery would risk greater exposure to international trade obligations and potentially compromise governments' ability to reverse policy mistakes. Meanwhile, Mazankowski in Alberta contemplated greater private funding of health services. I took the position that the Mazankowski approach risked throwing out the baby of the single payer system (equity with efficiency) with the bath water. The way forward, I concluded, lay 'somewhere between Romanow and Kirby,' but where exactly?

Drummond's answer is divided into three parts, which he conveniently labels as diagnosis, prognosis and treatment.

THE DIAGNOSIS: Canada currently has the seventh most expensive system in the OECD--spending $192 billion on healthcare in 2010, or 11.7 percent of GDP. This looks good next to the US at 16%, but when one considers that many of the other countries in question actually have older populations, that figure is worrying. Canada shows several symptoms of a country that is not getting value for money, such as:
1) Health costs are rising approximately twice as fast as the economy.
2) Canada emphasizes treating symptoms of bad health rather than prevention; it is too reactive
3) Comparatively little adoption of cost-effective treatments--e.g. way more hospital admissions for diabetes than other countries, more caesarean sections and hysterectomies than are medically advisable.
4) 13% of all hospital days go to non-acute patients. This contributes to clogged emergencies and ambulance services, classic symptoms of a system built for acute care when the needs have shifted to chronic care.
5) The OECD noted in 2010 that Canadian generic drug prices were the highest in the OECD (why?). While some provinces are taking steps to reduce these costs, the Canada-EU trade agreement could limit Canada's room to manoeuvre in this regard.
6) A study by the Commonwealth Fund in 2010 of 7 advanced industrial countries ranked Canada second-to-last on efficiency and overall quality, and dead last on timeliness of care.
7) Canada has 19 physicians per 10,000 population, whereas the United States has 27 and European G7 countries have over 30.
8) According to the OECD, Canada has a relatively narrow scope of public coverage: essentially, medicare pays for physicians, hospitals and little else. While that may sound like a cost-saving, that encourages over-use of more expensive services and facilities.

In sum, Canada , does not deliver great value for money compared to many other countries, BUT--if you read Drummond's list of symptoms carefully--you will notice that the single payer system per se is not to blame, but rather the collective failure to understand its pitfalls (such as reactive inefficient fee for service) and to realize its potentials (broader coverage in a cost-effective fashion).

THE PROGNOSIS: Healthcare Costs will continue to rise faster than the economy

The aging of the population is not as big a factor as is commonly assumed. Drummond breaks down the 6.5% annual increase in Ontario's health costs this way:

1. 1 percentage point from population growth;
2. 1 percentage point from ageing (up from 0.5 over the past decade);
3. 2 percentage points from general inflation (current Bank of Canada target);
4. 0.5 percentage point from extra inflation in the health sector (consistent with
recent patterns);
5. 2 percentage points from an increase in intensity (down from 3 percentage
points over the past decade when one percentage point reflected catch-up after
the cutbacks of the 1990s), reflecting the greater per-person use of the system
from adopting new technologies and information systems, which allow new
opportunities for treatment.

It is difficult to escape the conclusion that healthcare costs will continue to rise considerably faster than economic or productivity growth. Nevertheless, the fact that aging per se is only 15% of the problem encourages one to think that something can actually be done about the other factors--and it can.

THE TREATMENT: " The proposed treatments can be accommodated within the parameters of the Canada Health Act... we must keep in mind it is the total cost that is important for efficiency, not some arbitrary split between public and private costs."--Drummond, 2011 p. 15.

1. Better integration of the system around the patient
2. Chronic care should be shifted closer to the patient, i.e. home care (Denmark is a good role model for investment in community supports rather than acute care beds)
3. To the extent that competitive private suppliers such as special diagnostic clinics or specialized surgeries are allowed they should be compensated based on quality-adjusted price rather than award contrast to the lowest cost providers. [ I would add that sensitivity to trade obligations ought to inform private delivery decisions as well, as for-profit clinics and hospitals from outside the country cannot be discriminated against.]
4. Research and develop strategies concerning the heaviest users of the system: 1% of Ontario's population accounts for total combined hospital and home-care costs.
5. Better information to improve lifestyles and prevention
6. Better use of evidence-based analysis--i.e. health quality councils should be further encouraged
7. Better use of health information records--from bottom up rather than top down e-health strategies
8. Better information available to patients concerning their use of the system.
9. Incentives should be changed to move healthcare into a team environment.
10. Fee for service gives an incentive to over-serve, but strict capitation gives an incentive to under-supply. Drummond suggests a mix of about 70% salary and 30% fee for service--along with a greater emphasis on outcomes rather than interventions
11. Fees need to be adjusted downward when cost is reduced--e.g. cataract surgery is now a routine procedure, so the fee schedule should pay less.
12. Use technology and teamwork to shift some of the functions now performed by physicians and practical nurses to nurse practitioners and physician assistants.
13. Establish a single purchaser of drugs, and consider pre-funding for large drug expenditures; and allowing therapeutic substitutions for drug treatment wherever possible.
14. Re-think end-of life care. It should not become an excuse for every specialist in sight to bill the government.

GENERAL CONCLUSIONS:

1. The system must shift from Acute to Chronic Care and Health Promotion
2. Canadians should be given more appropriate and equal access to pharmacare and home care. That probably means expanding the public health system. It bears repeating: what matters for efficiency is total cost, not just the cost to the taxpayer.
3. "Best to leave the Public Payer Model in Place, for Now---And at any rate, surely the incentive systems should be corrected first before the system is opened to a two -tier approach." (Drummond, 19-20).

To this I would add: "surely the incentive systems should be corrected first before raising billions more in taxes". And if we exploit the single payer system's full potential to achieve efficiency with equity, we may not be tempted to go down the other path. The statistic that strikes me the most in this report is that Canada has lagged behind other countries in producing physicians, but has not moved at the same time to download more health care to non-physicians and out-of hospital clinics. No wonder we suffer from long wait times and clogged emergency wards! But as Bob Evans has noted in his most recent editorial in Healthcare Policy , simply moving to train more doctors, without first realizing how much we can do without them, simply shows that we have not really learned our lesson yet. Evans's rueful conclusion (p.21):

" Even if the growth in expenditures per physician can be reined in, the coming increases in numbers have, once again, foreclosed for decades the possibilities for exploiting the full competence of complementary and substitute health personnel, expanding interprofessional team practice and in general, shifting the mix. It will also be difficult, and expensive, for ministries of health to reallocate resources away from "doctors, drugs and hospitals" to long-term and home care, and the care of complex chronic conditions. While others talked, Canada's medical schools have acted. The money is pre-committed."

.

Let's not forget that Carbon Taxes and Cap-and-Trade are Basically Complementary

2011-11-23T10:58:00.000-08:00

{Note: the following posting was originally written on January 16, 2010. I re-print it now in light of the current reconsideration of climate change policies by the Christy Clark government}

Alan Durning and Clark Williams-Derry have both written excellent pieces for the Sightline Daily on the issue of carbon taxes versus cap-and-trade that help to clarify the issues.

Basically, the difference between carbon taxes and cap and trade is in where they concentrate uncertainty. "With carbon taxes, the government locks in the price of carbon, and the market decides how much carbon to emit. If fossil fuel prices fall, or the economy surges, or inflation runs hot, emissions can rise despite the tax. With cap and trade, on the other hand, the government locks in the carbon emissions, and the market decides what price carbon needs to be; ideally, emissions fall, slowly and steadily, no matter what happens to the rest of the economy. I tend to think of cap and trade as a variable tax: one that fine-tunes the price to guarantee a certain level of emissions." (Williams-Derry, Sightline Daily January 4.)

I think that there is a complementarity between the "fixed" element of the carbon tax and the "variable" element of the cap-and-trade mechanism. The former has the virtue of clarity: it is a little harder to 'game' or manipulate because loopholes are generally easy to see. (It also easier for businesses and consumers to plan around.) The latter has the virtue of flexibility, providing a constant incentive for emissions reduction. The former might be better at catching small emitters--who account for half of all emissions-- and who might otherwise be oblivious to what is happening in emissions auctions. The latter catches large emitters who might otherwise just write off any carbon taxes on their inputs as a cost of doing business, without greatly changing their behaviour.

Recent news out of Europe has been encouraging to the NDP and the Sightline writers who generally favour cap-and -trade over carbon taxes. First of all, the emissions trading scheme (ETS) is finally working fairly smoothly after a 3-year period when rights allocated to polluters were evidently issued too generously. Secondly, on December 30, the French Constitutional Court struck down France's carbon tax because it was so full of loopholes that it violated the principle of tax equality!

So we now have two perfect examples of how the carbon tax can be "gamed" and the gaming in cap-and trade can be fixed, right? Yes, but note that it took five years to get cap and trade working properly, while the flaws in the French carbon tax were exposed right at the starting gate.

In other words, le Conseil constitutionnel exposed the weakness in a particular carbon tax, but still validated the concept of the carbon tax in general: that it operates in a clear, direct, transparent and (when done properly) equitable and efficient manner.

So, carbon tax or cap-and-trade? I say both.

Gregor Robertson for BC NDP leader--and Premier in 2017

2011-11-22T12:35:00.000-08:00

Yesterday's convincing general election victory for Gregor Robertson and Vision Vancouver in the Vancouver civic elections shows that competent centrist government is what voters really want--and if it can also be ethical with a green and progressive tinge, so much the better.

Applying those same precepts to the provincial scene, I have long maintained that what voters want is someone who can pick up where Mike Harcourt left off-- a more competent and effective version of Harcourt--and NOT some one who picks up where Glen Clark left off and provides us with a more effective version of him.

Since Allan Blakeney, Roy Romanow , David Vickers and Tom Berger are not available, that just leaves Gregor Robertson.

The real question is: how do we get around the problem that is Adrian Dix?

To put it bluntly--how do we get rid of him?

Sectoral Bargaining for British Columbia?

2011-11-21T12:11:00.000-08:00

I have just returned from the Parkland Conference conference in Edmonton this weekend, at which I heard a talk by Alberta Federation of Labour president Gil McGowan. He mentioned that the #1 item on the B.C. Federation of Labour wish list is a move to European-style sectoral bargaining, which would force major employers to bargain for the entire industrial sector rather than on just a workplace-by-workplace basis. This would be a radical change, and the B.C. NDP should be forced to clarify how it intends to respond to this demand.

Canadian Centre for Policy Alternatives economist Marc Lee has recently described sectoral bargaining this way:

Unions have made some headway in the low-wage service sector, but small shops and high turnover confound organizing. Sectoral bargaining is an approach to unionizing the service sector that would give broad sectors (retail, restaurants, security, etc) a vote on whether to demand collective bargaining and if approved, different unions could then make their pitches on ability to represent those workers. This would quickly increase union density across the economy and lead to wage compression. For employers, it puts all work on a level playing field, so that there are no competitiveness issues, and wage increases would generally be passed on to consumers in the form of higher prices. Another related model to study is the German model of regional wage-setting institutions, which goes even deeper to include works councils (shop-level management practices that include workers in decision making) and co-determined boards (that give workers in large companies half the seats on the board).

Would it be a good thing? My experience studying and teaching comparative political economy favourably inclines me toward broader sectoral bargaining and even centralized cross-sectoral bargaining, not primarily because it makes unions stronger, but because it makes unions both act and appear to act less like narrow interest groups. For example, in Sweden, it is not uncommon for trade union leaders to restrain wage demands or to be receptive to technological change in one part of the economy in order to help workers in another area or to save taxpayers money. On the other hand, it might not be good for employment and investment to have generally higher sectoral wages than those being bargained in the rest of Canada and the United States.

'Trade unions have always had two faces, sword of justice and vested interest ' (Flanders, 1970: 15). James Medoff and Richard Freeman make a similar point in their article,"The Two Faces of Unionism" (1979). While a change to the B.C. Labour Code to strengthen collective bargaining is a foregone conclusion if the NDP is returned to office, a more interesting question is whether social unionism can be strengthened without simply increasing the monopoly power of unions to raise wages, thereby increasing both inequality (vis a vis unorganized workers) and inefficiency (due to labour market rigidities). The reason that this question interests me is that while the economic monopoly power of unions can be expected to be curtailed as soon as a right of centre party is returned to power, a successful advance of social unionism could become a permanent achievement. At least, that is my hope.

{Economics Addendum: "International competitiveness with respect to the U.S. and other developed countries could be a problem for B.C. only under three conditions: first, if this province's wages rose much above those in the rest of the country; second, if the real cost of production in B.C. rose relative to the real cost to our competitors; third, if the Canadian exchange rate appreciated with respect to the currency of a country specializing in the production of a principal B.C. export." --Robert C. Allen, "Trade Unions and the B.C. Economy," in Restraining the Economy (1986) p.227. What needs to be said about this in the current context is that migration within Canada generally prevents the first possibility, and that the second and third conditions need to be both verified empirically. Even if the second or third conditions are met, it would be quite a leap to the conclusion that 'trade unions have too much power'.}

The Order of British Columbia's Liberal, Vancouver 'Establishment' Bias

2011-11-19T10:53:00.000-08:00

According to wikipedia, the Order of British Columbia "is a civilian honour for merit in the Canadian province of British Columbia. Instituted in 1989 by Lieutenant Governor David Lam, on the advice of the Cabinet under Premier Bill Vander Zalm ... the order is administered by the Governor-in-Council and is intended to honour current or former British Columbia residents for conspicuous achievements in any field, being thus described as the highest honour amongst all others conferred by the British Columbia Crown". The B.C. government web page states that the award is decided by the Lieutenant-Governor-in-Council (i.e. the Cabinet) on the advice of an independent advisory council consisting of:

• The Chief Justice of British Columbia – Chairperson
• The Speaker of the Legislative Assembly
• The President, in turn, of British Columbia’s Public Universities, for a two-year term
• The President of the Union of British Columbia Municipalities
• The Deputy Minister, Intergovernmental Relations Secretariat
• Two past recipients of the Order

Obviously, the Chief Justice is non-partisan and above reproach, but he just serves as the chair of the proceedings; the UBCM President can usually be expected to be quite independent of government, but everyone else (with the possible exception of the president of the Universities Council) is an appointee of the provincial cabinet.

So, armed with this knowledge, we can start to make sense of the highly anomolous treatment of former politicians and political advisors in the making of this Award. Gordon Campbell was nominated within a couple of months of leaving the premier's office , even though he still occupies a post in London as Agent -General. This is the political equivalent of Wayne Gretzky or Mario Lemieux having the usual 5-year waiting period waived for installation in the hockey Hall of Fame. Campbell was described in his citation as having been a "visionary".

But Bill Bennett, the third-longest serving premier in B.C.'s history, had to wait until 2007---21 years after he retired from politics.

And David Barrett? Who brought Hansard and Question Period and MLA research staff to the Legislature, created the Agricultural Land Reserve, gave BC a modern Labour Code, created a BC Gas Corporation that subsequent governments relied upon to balance their budgets, brought in public auto insurance, etc.? He left the premier's office in 1975 and left active politics in 1993. But when the 2011 awards were named, Campbell advisors Ken Dobell and David Emerson got the nod for their "passion for making British Columbia a better place," while David Barrett did not. Mike Harcourt, who left office in 1996 after presiding over an unusually temperate and humane government that brought in the far-sighted Land Use Plans and a Treaty Process that ended the "war in the woods" in BC--- as well Freedom of Information and a doubling of the number of provincial parks---has also been overlooked, notwithstanding his additional work on sustainability, both before 1987 (as Mayor of Vancouver) and after 1997 (at the Sustainability Institute at UBC).

This pattern reveals an attitude: one that reveres Gordon Campbell for being the most perfect representative of the business and professional elites of Vancouver since the old Liberal-Conservative coaltion left office in 1952; one that grudgingly acknowleges Bill Bennett and other Socreds as politicians they once had to hold their noses and vote for; and one that considers two highly distinguished former NDP premiers as being beyond the pale.

The government could have easily avoided the impression of partisan bias simply by appointing Barrett and Bennett at the same time. And by delaying Gordon Campbell's elevation until such time as they were ready to appoint Mike Harcourt.

In 2012, David Barrett will turn 82 years of age. No one has personified the passion for making British Columbia a better place to live more than he has. He deserved to be named to the Order of BC over a decade ago. His rival Bill Bennett was selected ---despite a conviction for insider trading. This intentional oversight is becoming a disgrace. C'mon people--do the right thing and appoint David Barrett to the Order of British Columbia.

Conservatives new Power Base Makes Dairy & Poultry Vulnerable to Trade Talks

2011-11-15T08:54:00.000-08:00

A couple of weeks I commented that the Conservatives' newfound ability to form a majority without Quebec was already starting to have profound consequences for the effectiveness of national bilingualism. Now, news reports that dairy and poultry farming are finally 'on the table' at the APEC trade talks are surfacing, alongside the government's abolition of the Wheat Board monopoly.

Although this development is presented as an inevitable aspect of international economic forces stemming from our trade partners, it is even more a product of entirely avoidable and contingent processes of domestic politics. Brian Mulroney was the champion of free trade in the 1980s, but his own riding of Manicougan was a the very heart of Quebec's highly protected dairy industry and the linchpin of his political power base. Hence for his Progressive Conservative majority, liberalizing agriculture was UNTHINKABLE. Now for Harper's new un-hyphenated Conservatives, exposing farmers has become very thinkable, not just for ideological reasons, but for very transparent reasons of domestic political calculation. Highly protected Quebec farmers are now politically expendable.

This is perhaps a textbook example of how ideas and interests have to intersect for significant policy changes to occur.

An interesting footnote to this issue is what the long-term ramifications, if any, will be for British Columbia's farmers, consumers, and land developers. Will the removal of protection for Quebec butter and milk create a local market opening for BC farmers, strengthening their local market niche? Or will the general removal of protection mean more imports from abroad, keeping the price of dairy and poultry in check for consumers but negatively affecting the commercial viability of BC farms---and therefore their viability within B.C.'s Agricultural Land Reserve? B.C.'s political leaders should be preparing themselves to deal with these questions.

Are federal Conservatives and New Democrats partners in the erosion of Canadian Bilingualism?

2011-10-29T09:17:00.000-07:00

In last year's federal election, Mr. Layton spoke openly during the campaign of applying elements of Bill 101 – the backbone of Quebec’s controversial language charter – to federally regulated industries. More recently, the NDP has re-affirmed its support for modifying federal laws to favour the use of French in Quebec in those industries--mostly in transportation, communications and the federal public sector--in Quebec.

This week, the Conservative government appointed a highly competent accountant from New Brunswick to succeed Sheila Fraser as Canada's next auditor-general--and ignored the fact that he wasn't bilingual. (While nobody doubts his qualifications, there are many highly qualified accountants in Canada who are bilingual. In addition, this appointment comes after two unilingual Supreme Court judges were appointed.)

To my knowledge, nobody has linked these two events. One person who would have was the late Rt. Hon. Pierre Elliot Trudeau, who always warned that pandering to unilingualism in one part of the country would weaken support for bilingualism in the rest of the country, with possibly grave long-term implications for national unity. At his worst, Trudeau was overly dogmatic in opposing any form of special status or recognition of "distinct society". But surely he was right to warn of a possible slippery slope in the protection of minority language rights.

Now that we have a Conservative government that can get an electoral majority without winning Quebec, the conditions are right for a decline in the support for, and declining effectiveness of, official bilingualism in our national institutions. Relaxing the enforcement of rights for anglophones working in federally-regulated workplaces in Quebec and overlooking the auditor-general's lack of competence in French are both evidence that this slide is already happening.

You read it here first

2011-10-02T10:35:00.000-07:00

Back in May 2010, I analysed both the economic problem and the political problem with the government's HST proposal, arguing that Gordon Campbell's 12% HST coincident with the Great Recession was a huge mistake--while at the same time recognizing the basic theoretical merits of an integrated expenditure tax that covered more goods and services but at a lower rate.

Back in November 2010 and December 2010 , I warned that Adrian Dix was not being honest about his intentions, and was likely going to be the ultimate beneficiary of Carole James's overthrow and become NDP leader. In January 2011, I predicted that Adrian Dix would be the next NDP premier of BC--and explained why that is probably a bad thing.

I have also drawn upon my extensive studies and work experience to offer novel resolutions to thorny debates about electoral reform, taxation, politicians' pay, and student debt.

Although I have sometimes wondered whether I should bother continuing with a blog that usually only gets about 100-150 hits per week, I regularly get calls from the media to comment on these issues, so I can reasonably infer that my blog punches above its weight.

I hope that you find it useful, and that it fills some of the gaps that you may have noticed in the mainstream media.

What was She Thinking?

2011-09-01T12:15:00.000-07:00

Memo to Christy Clark from the Ghost of W.A.C. Bennett: THE PURPOSE OF A SNAP ELECTION IS TO CATCH YOUR OPPONENT SLEEPING, NOT TO GIVE HIM A WAKE-UP CALL. If you're going to have an early election call, don't publicly commit yourself to it 9 months in advance. That kinda defeats the purpose of a snap election. It is not a mistake that wiley Wacky would have made-- nor would have Adrian Dix, who has already displayed an clever penchant for hatching ugly surprises. The main effect of Clark's rash promise was to galvanize the NDP, who launched their "Christy Crunch" commercials, chose Dix as leader, sped up their nominations, and girded themselves for battle.

Obviously, if Premier Clark had wanted to capitalize on her popularity as a "fresh face", she needed not to wrap herself up in the HST. It would have taken courage to cancel the tax and to cancel the referendum vote on the subject, but if she had, she might well have been rewarded for her boldness.

Petitioning the federal government to reverse the Taseko/Fish Lake decision was also not a wise basis for a snap election win. Like it or not, splitting the environmentalist and First Nations supporters in B.C. was one of Gordon Campbell's greatest and most unexpected political accomplishments. Premier Clark's touching concern for the mining industry may have stemmed some of the hemorraging of Liberal support to the Conservatives, but at the cost of driving many marginal voters back into the arms of the NDP.

Now, Christy's best hope is that the economy will recover by the spring of 2013, and that she can take some of the credit for it. She may also need to make some overture to John Cummins: if the Conservatives are still in the double digits, her youthful good looks and winning personality will definitely not suffice to win. But what does she do? Instead of discreetly imploring a Jack Weisgerber or a Stockwell Day to broker a rapprochement, she instead runs ads attacking (and no doubt antagonizing)Cummins. I would have done that only as a last resort.

Overall, I have not been impressed with premier Clark's political acumen. Don't bet too much on her winning a general election.

Two Thoughts About the Late Jack Layton

2011-08-24T17:34:00.000-07:00

I don't have a whole lot to add to what has already been said about Jack Layton, a man who regrettably I never met. There are two things, however, that deserve greater mention.

First, I would like to commend Ed Broadbent for putting Jack Layton's name forward as leader to succeed Alexa McDonough. Broadbent saw with remarkable clarity and prescience what kind of a leader Jack Layton would become. Specifically, Mr. Broadbent said that (1) Layton would bring a new energy to the leadership that would revitalize the party; and (2) Mr. Layton's background in civic and local politics would stand him in good stead in negotiating and forging compromises across party lines--a distinct virtue that made him the linchpin of the three minority parliaments between 2004 and 2011.

Second, part of Layton's legacy is a paradox of political style. He had been accused of being "plastic" a "gladhanding politician" and a hog for the camera and microphone. Yet he struck many Canadians as being unusually authentic and sincere in standing up for the little guy--"Bon jack" as they say in Quebec. The explanation: it may be allright to be a "politician" if you're honest about it, good at it, embrace the political life with gusto, and are genuinely sincere about the cause you are fighting for.

...Then There's the Regional List Idea

2011-08-10T14:59:00.000-07:00

A similar proposal that I had in mind would go back to having 50-60 single member constituencies in BC , like we had when I was in high school. The remaining members could be allocated to 6 different regional districts of 3-6 members each. The beauty of this system is that as the population shifts, there would not be a need to repeatedly increase the size of northern ridings; instead, one would just add members to the fastest growing regions. Having separate regional nominations for party lists would mean that the lists couldn't be controlled from party central or be dominated by a single region (e.g. metropolitan Vancouver). As an additional feature, the regional lists could be "open lists" in which voters could rank the candidates offered by their favoured party. Again, the proportionality gains would be modest, as with STV-lite; but I think that we want them to be modest. Proportionality and voter choice would be improved, without any serious sacrifice in terms of the quality of local representation.

A Brief Commercial for "STV-Lite"---and for a More Deliberative Democracy

2011-08-09T20:59:00.000-07:00

A recent posting by Rafe Mair at The Tyee on Parliamentary Reform reminds me of some of my own recommendations in light of the failed referendum on electoral reform in British Columbia. If you believe that British Columbia suffers from excessive polarization, and are frustrated by the fact that outcomes are determined more by how one's opponent's votes are "wasted" or"split", then there is still something to be said for preferential voting.

I see the problem of the Citizens Assembly as one of deliberation in isolation, without having a deliberative system. The track record of citizens' juries getting validated by the wider electorate is dismal because the wider electorate is not engaged in much deliberation at all.

Imagine if BC-STV had had the status of a legislative intiative that would have to be voted upon by the Legislative Assembly. Then each MLA would have to defend their position to the public. IF the Legislature could agree to an amendment to propose to the Citizens Assembly , the Citizens Assembly could then either accept the amendment or go to the people with the referendum. (For example, if I had been an MLA I would have proposed the "STV -lite" that I described above; if I were a member of the Citizens' Assembly, I would have accepted that as a "step in the right direction" with respect to the 3 criteria that they had adopted.)

We saw this in BC when virtually every member of the political elite avoided discussion of the referendum, killing it with silence. A better process would have been one which --like the Oregon health care reforms--would have kept legislators in the deliberative hotseat.

The result would not be highly proportional, but it would be majoritarian in the northern ridings without having to create monster ridings; and it would be mildly more proportional in the southern ridings without having to create monster ballots. There would be a more level playing field, with the elimination of most "safe seats" and the creation of constituencies that more closely resemble real communities like Richmond, Surrey, and Cariboo. While it is possible that few Greens and Independents would actually get elected, they would nonetheless be certain to become more influential as the candidates of the larger parties battled for the second preferences of voters. Something close to a true majority of voters would be reflected in the calculations of the government--even if it remained a two-party legislature! And the artificial exacerbation of political polarization by the electoral system would normally be greatly diminished.

While few educated people would regard this as an ideal system, few would deny that it would be an improvement over the status quo.

How Should I Vote on the HST? A Very Good Question

2011-08-01T23:10:00.000-07:00

Back in the day when I was still a teenager, I came across works by economist Albert Hirschman and philosopher John Rawls recommending expenditure taxes as a way of reducing the trade-offs between equity and efficiency by encouraging savings and investment. An inveterate policy wonk, I then studied the issue and began advocating a VAT for Canada--about 5 years before Brian Mulroney proposed the GST. The fact that France and Sweden had two of the more egalitarian societies on Earth while collecting nearly half of their revenue from the VAT suggested that the "regressivity" of expenditure taxes (i.e. the fact that they hurt low incomes relatively more than high incomes, since the former must spend more of their income) was not dispositive. Exemptions for basic food clothing and shelter were all that was needed to preserve a measure of social justice. The promotion of saving and investment by all income groups would be good for jobs.

Accordingly, supporting the latest version of the expenditure tax for British Columbia should be a no-brainer. A single lower tax rate of 10% over a broader range of goods is more efficient administratively as well as economically. It is easier for everyone to have a single simple tax that is easily calculated in our heads. The inherent regressivity of expenditure taxes can be offset by the improved economic trade-offs and ameliorated by exemptions on basic food, clothing, and shelter.

The problem has been the BC government's amazing ability to turn a good idea into a bad one. This stemmed from the Campbell Liberals' basic attitude: that it was important to listen carefully to big business, but everyone else's opinion was to be "managed". The successful infliction of pain in the 2001-2003 "New Era" cutbacks --which meant that voters could be made to forget in time for the next election--clearly taught Gordon to go early with the plan and to count on peoples' short memories. The successful selling of the carbon tax--a revenue neutral exercise that swapped carbon taxes for income tax cuts-- had enabled the Liberals to get away with a risky policy that no one else in North America had dared to try. These two precedents clearly guided Campbell's reasoning about the substance and timing of the HST, which turned out to be disastrously ill-conceived, ill-timed and poorly explained. No doubt he was also panicked by the need to remedy his embarrassingly large budget deficit, at least 3 times as big as he had maintained during the 2009 election.

The difficulty lay in Campbell's obliviousness and/or indifference to other features of the political context that made his version of the HST politically suicidal:

First, by using it initially as a revenue grab by extending the 12% (5% GST plus 7% PST) tax to a wider range of goods and services.

Second, by using that revenue to pay for corporate tax cuts--making the sales tax even more regressive, instead of less regressive; albeit under the cover of pseudo-justice rhetoric about "revenue neutrality".

Third, by not revealing any interest in the concept during the 2009 election campaign, and then bringing the HST in suspiciously soon afterwards.

Fourth, by introducing this regressive tax shift ($1.8 billion worth) just as the province was sliding into the worst recession in 75 years. (Deep recessions are normally the best time to reduce the tax burdens of lower income groups, not to raise them.)

Fifth, by persisting with an Orwellian referendum question in which yes to The HST means voting "no" and saying no means "yes".

Sixth, after a huge political cock-up caused by the government's inability to trust the voters, and after gouging small businesses for over a year, and forcing small businesses to change their accounting and computing systems twice, the government is now asking the voters to trust it to bring in the lower 10% rate in three years , after the next election.

SO, should you hold your nose and vote "No" for the 10% HST on the grounds that that was always the best policy? Or "Yes" on the grounds that the government has obviously not earned your trust, and that to do otherwise is to reinforce and validate bad behaviour?

Let's just say that I am glad to be in Edmonton, sitting this one out.

Personal Thoughts about the Second Stanley Cup Riot

2011-06-19T20:40:00.000-07:00

My hometown of Williams Lake, B.C. has the dubious distinction, most years, of being the "crime capital" of B.C. (At 266 offences for every 1,000 residents, Williams Lake is ahead of Whistler, which is in second spot, Quesnel, Merritt and Smithers, which round out the top five.) I hasten to add that this is no reflection on the character of our residents; merely on the simple fact that as the "hub of the Cariboo" it is the place that everyone in the outlying communities comes to on the weekends to shop, have a drink, watch a hockey game, and do other things.

I mention this only because I recognized the same basic phenomenon--on a larger scale and more irregular basis--in both the 1994 and 2011 Vancouver riots. The City of Vancouver proper is only about half the size of Edmonton. But when it decides to throw a party--for Sea Fest, the Stanley Cup Finals, or the Olympics--it has to police a crowd that is drawn from the entire Lower Mainland, and to a lesser extent from the entire province.

It was obvious that a force of 500 active duty officers was inadequate to control of 100,000. And I think the resource shortfall was reasonably knowable in advance--both Vancouver city council and the provincial government should have known that.

Basically, there are 3 options for future events like this one:

1) The City of Vancouver taxpayer pay can in advance to beef up the police force (RCMP will add officers, but then present VPD the bill)

2) Other GVRD munipalities should chip in in advance (after all, a
lot of the revellers are probably white trash from Burnaby, North Delta, and Surrey)

3) The province should at least provide matching funds for security,

since the party was for the whole province.

Another personal observation, based upon my experience of the 1994 riot. I had watched the game at my firend's apartment in the West End, and on my way home experienced the first Stanley Cup riot first hand. The VPD Riot squad marched past me and I could see the look of apprehension etched on their faces, as they did not know what to expect. Once the violence mounted to the point that it started to get scary, I started toward the Granville st. SKytrain station to head back to my brother's house in North Delta. On the subway, I found myself sitting with a group of recently pepper-sprayed rioters. Their heads were shaven, they were dressed in combat fatigues, and they were discussing the evening's battles.

Not one of them even said a word about the hockey game.

The Triumph of Politics

2011-05-03T22:58:00.000-07:00

Now that the unholy trifecta of Clark' premiership, Dix's leadership and the Harper Majority has come to pass, what do we have to look forward to?

What is scary is that the Conservative majority has ALREADY moved the goalposts of Canadian politics. The best example of this in B.C. was CBC's election wrap on TV last night (May 2). There was NDP President Moe Sihota, with undisguised acceptance and at least semi-admiration, pointing out the remarkable framing of Ignatieff and the tremendous effectiveness of hitherto unprecedented "between election" attack ads.

Sihota opined that all parties, including his own, would be doing more of this "between-election" advertising in the future. (If nothing else, Moe is a good barometer of what reflexive politicians are thinking.)

This is exactly what I was afraid of: the political lesson-learning that would happen as a result of Tory success built upon abuse of Parliament and American style character assassination.

In addition, the prime minister has already tipped his hand on health care. When asked this morning about whether he was contemplating allowing privatized delivery , he avoided the question by affirming his support for public health insurance. In other words, he didn't deny it. It reminded me of 2006, when every time the subject of global warming was raised, he would talk about all the good things that he was doing about smog.

I'll have more to say about private delivery options soon; in the meantime here is what I wrote a few years ago; it is a kind of mini-primer on the issue: http://markcrawford.blogspot.com/2008/08/between-romanow-and-kirby-and-beyond.html

Also, for anyone interested here is the mp3 file of my commentary upon the election for the radio station CFIS FM on May 2.

https://rcpt.yousendit.com/1110546561/1b5cf9fd70bb8884931d9d5f499705b4?cid=tr-cv-web-stnd-dl-gstrec-null-c-19071&s=19071

Why I am still afraid of a Conservative Majority

2011-05-01T12:10:00.000-07:00

Connecting the Dots Between Ambrose, Baird, Prentice,Kent..and Carson

2011-04-27T21:56:00.000-07:00

The blindness of the Harper Conservatives with respect to the Rule of Law and Parliamentary tradition has already received some attention in the media.There is one other comment about the Conservative record that has been insufficiently stressed, however: their attitude toward the Environment portfolio. Do they see climate change as a real, substantive issue that Canada must take the lead on? Or do they just see the peoples' flawed beliefs about climate change as a problem to be managed?

When the Government came into power in 2006 Rona Ambrose was the envy of every ambitious young politician in the Western world when she was assigned the job of tackling global warming. Only this was a Conservative government , so Ambrose's main function was to tell that incredulous world that , since the Liberals had dragged their feet on Kyoto implementation, the Conservatives would have no choice but to do the same thing. But when Harper found that the public wasn't buying, he switched to Baird, followed by Prentice, Baird again, and now Peter Kent.

The common thread that runs through all of these appointments is that they are not seen primarily as policy jobs at all, but as different communications strategies.

Rona Ambrose was the "youthful, telegenic" approach;
John Baird was the "combative and aggressive" approach;
Jim Prentice was the "soporific" approach ( and probably the most successful of the three);

When Prentice left the job was delegated to Peter Kent, who as a professional journalist would be better able to manage the media.

And finally, there is Bruce Carson. Who else would put this dis-barred backroom 'old pro' in charge of the Canada School of Energy and Environment and in charge of water contracts for First Nations reserves? Something tells me he wouldn't be David Suzuki's first choice.
What all of these appointments show is that Harper sees the environment in general and climate change in particular purely as public relations problems to be "managed" by communications strategies, not as the most serious substantive policy issues of our time. I am confident that no other major party in this country would behave in that fashion, not even the Chretien Liberals at their most cynical.

Jack Layton as PM? I doubt it....but

2011-04-24T23:25:00.000-07:00

The election of a Conservative majority of government next week will not only usher in a new period of "stability"; it will also mean that the government will have been richly rewarded for being the first to intentionally cultivate and manipulate ignorance about how parliamentary government works--for intentionally sowing misinformation about who actually 'wins' elections in a parliamentary system. Furthermore, the proposed coalition back in 2008 is repeatedly said to include the Bloc Quebecois (it never did). And don't forget the innovation of between-election personal attack ads, which apparently worked.

As someone who teaches government and politics for a living, I find these to be disturbing developments, ones that teach politicians and citizens alike the wrong lessons.

Of course, it is possible that the same NDP surge that is helping the Conservatives in most parts of English Canada will actually hurt them in British Columbia, where there are more ridings with dynamics like Edmonton Strathcona (where an NDP surge will push a New Democrat to victory and encourage some Liberal supporters to vote strategically for the NDP) than Edmonton Centre (where an NDP surge will discourage strategic voting for Liberals and ensure a Tory victory).

This could ensure a minority. But could the lIberals then combine with the NDP to topple the government? It is hard to believe that the Liberals would want to crown the NDP after an election in which the NDP has helped to remove them from any chance of power. I think that the LIberals under Ignatieff or LeBlanc would be inclined to prop up the Tories. But if Bob Rae gained the leadership.......

ADRIAN DIX'S MEMO "MISTAKE" WAS PART OF A PATTERN

2011-04-20T09:56:00.000-07:00

While the memo may have been unique in some respects (indeed Dix rarely wrote memos, in order to avoid Freedom of Information requests), it was nonetheless part of a larger pattern of obsession with information control and indifference to procedural values that was the hallmark of the Clark government, and which Dix has exemplified on practically a daily basis right down to the present day.

Consider the passage in the Auditor General's Report that mentions Clark's Ministerial Assistant's (i.e. Dix's) role in lining up ferry contractors in a manner calculated to present accountability bodies with a fait accompli. NOBODY EXEMPLIFIED THE MOTTO OF "PROCESS IS FOR CHEESE" MORE THAN DIX DID.

For me, the most telling aspect of his leadership campaign was the way he played possum in December, saying he was mulling a leadership bid, all the while having an invisible busload of ethnic voters lined up to materialize on the day of deadline for new memberships--before the competition could even respond. Once again, Dix showed his preference for secrecy and surprise over transparency or the enlightenment of dialogue. It wasn't the first time, and it certainly won't be the last.

After all, it has made him what he is today!

P.S. Have the New Democrats thought through the REAL significance of the memo? The purpose of the memo was to make it look like the premier (Glen Clark) was more recused, or recused earlier, from the casino application than he really was.

The nature of the BC Rail scandal is that the government allegedly acted in such a way as to make the bidding for BCR look more competitive than it really was.

More dollars were at stake in the BCR case, but the general nature of the ethical issue is virtually the same. Unfortunately, the accuser needs clean hands to be persuasive. Is this really the right man to be nailing the Liberals for this kind of unethical behaviour? "I resigned, you didn't" might have been an answer to Gordon Campbell, but not to Christy Clark. "It was 12 years ago" isn't very compelling either--the BC Rail prevarication was 9-10 years ago. Ethically speaking, is there really a big difference?

And Mike Farnworth, John Horgan, or Leonard Krog would be much better-positioned to do the finger-wagging.

Allan Blakeney, R.I.P.; Dix Ex Machina

2011-04-18T08:02:00.000-07:00

I remember the first thing that my mother said when I told her that I had won a Rhodes Scholarship to Oxford back in the mid-1980s. "Allan Blakeney was one of those." She was proud that her son had graduated into an elite circle of scholars and citizens that Blakeney had typified. I always had liked him-- as a thoughtful, substantial person who was never more of a politician than he needed to be. My biggest regret for British Columbia is that it never had its own Allan Blakeney as premier.

For me, the coincidence of Blakeney's passing with Adrian Dix's ascension to the B.C. NDP leadership is highly symbolic. I knew from the moment that (NDP Caucus Chair) Jenny Kwan announced the need for a new leader late nlast year that Dix would win.. The absence of anyone with the stature of an Allan Blakeney in the NDP leadership race was one of the factors that ensured his victory.

THese events constitute another missed opportunity for British Columbia. W.A.C. Bennett's early election call in 1969 pre-empted Tom Berger's bid to be premier back in 1969; in 1984 it was the NDP's own fault when it failed to choose David Vickers over Bob Skelly.

Still, Dix has evolved as a person and is fairly bright and articulate. He might even speak French well enough to play a constructive cameo role in the next installment of the National unity debate. Like Gordon Campbell, he will have the benefit of a very long learning curve and could surprise his critics.

But there is good reason to be skeptical. B.C. needs to pick up where Mike Harcourt left off, and to accomplish what he couldn't; not to pick up where Glen Clark left off and accomplish what he couldn't. Dix's success is built upon a political operative's lifelong and well-honed instincts for information control and spin, as well as the careful cultivation of allies and economic interests, especially those of the trade unions that had benefitted from Glen Clark's policies. A Dix government could not help but be highly disicplined and centralized, subordinating policy to communications and skewing economic logic whenever it conflicts with the logic of interest group politics.

Could Adrian Dix morph into another Allan Blakeney, a provincial statesman? Equally strange things have happened, but I doubt it. To repeat: Blakeney was a thoughtful, substantial person who was never more of a politician than he needed to be. Adrian Dix, like Christy Clark, represents the complete triumph of politics--overdetermination and overkill. No one could be more of a politician than either of them.

A Negative Sum Game

2011-04-07T08:59:00.000-07:00

If the United States has a corporate tax rate of up to 30%, and the average of G-20 trading partners is about 20%, is it really an urgent priority for Canada to reduce its top rate from 16.5% to 15%? My own limited economics training leads me to an analysis something like the following: in a simple closed economic system, one might simply choose to integrate corporate and personal income taxes altogther, since the burden of such taxes would fall upon citizens anyway and by just folding them into the personal income tax system, we can tax every individual according to the politically determined canons of vertical (progressive or flat?) and horizontal (equals treated equally?) equity. At the opposite extreme of a completely open and perfectly competitive world system, corporate tax rates might also tend toward zero, since we would be caught in a "race to the bottom" for capital as well as labour.

But in the real world, we know that many corporations can take income and resources out of the country, without paying for all of the physical and human infrastructure that have made their businesses profitable. We also know that it is difficult to apply the normal canons of of horizontal and vertical equity to foreign investors. We also know that any big gains we achieve in terms of investment are likely to be competed away in the long-term--the more successful we are, the more pressure on our trading partners to do the same. This leads to another problem: if we get into a race to the bottom, Canada will be hard pressed to succeed, because it already has personal income taxes that are higher than the U.S. and a health care system the costs of which are growing twice as fast as the rest of the economy. In other words, we can't win a race to the bottom.

Here is an intersting discussion about corporate income taxes in this morning's Globe and Mail:

“Although modelling strategies and data sets vary from study to study, the consensus from the peer-reviewed academic literature is clear: lower CIT (corporate income tax) rates are associated with investment levels that are higher than what they would have otherwise been.”

So, let’s skin this cat another way.

Jeffrey Sachs is the director of The Earth Institute, Quetelet Professor of Sustainable Development, and Professor of Health Policy and Management at Columbia University. (He’s also committed to fighting poverty and hunger, but he’s still a real live professor.) Here’s what he told the BBC only yesterday:

“Of course, all of our countries are caught in what you could call a kind of tax arms race or what could be called a race to the bottom in fact, which is that each country is trying to get the tax rate lower than the neighbours or the competitors. The result is that everybody is cutting corporate tax rates around the board.

“It is only causing fiscal crisis everywhere and it's a kind of negative sum game, meaning that when both sides do it, neither gains the advantage relative to the other. In fact both lose by adding to the fiscal pressures and the need to then cut the education spending or the social expenditures that are crucial for making sure that the poor half of our societies can also participate and be productive members of our economies in the future.”

He pointed as an example to Ireland, the one-time Celtic Tiger that’s now a pussycat on life support and was once the envy of Europe because of its low-tax regime.

“So you sure can make a little bubble in the short term, but it's not really building the long-term platform for prosperity. Second, I wouldn't say it to Ireland alone, I would say to the European Union, the United States, Japan, other high income countries, indeed in the G20 as a whole. Let's stop this horrendous process where we are being gamed by global companies that are playing off our governments, one against the other and ending up by depriving ourselves of the productive base of our societies which after all are our skilled and educated work forces.”

And then there’s Peter Fisher, Professor Emeritus of Urban and Regional Planning at the University of Iowa and Research Director of the Iowa Policy Project in Iowa City. He’s got a PhD in economics, and has written a few books, one published by the Economic Policy Institute.

He studied corporate taxes and the impact on state economic growth. To make a long study short, here’s what he found, and he cited 23 references:

“Proponents of business tax breaks claim that taxes are a significant factor in the location choices of businesses, and that a state can tax-cut its way to economic growth and generate tax revenue in the process. As we will see, there are good reasons to be skeptical of such a claim, and several decades of research on the relation between state taxes and growth confirm that such claims are vastly overblown and sometimes completely misleading. Business tax breaks turn out to be an expensive and inefficient way to attempt to stimulate a state economy.

“Some have pushed the argument even further, proposing elimination of corporate income taxes altogether. There is a strong case, however, for state taxation of corporations. Corporations doing business in a state benefit from the investments that state government has made in education, infrastructure and public safety services. Government is responsible for educating workers and the children of those workers, and for building, maintaining and policing the roads that businesses rely upon.”

To once again paraphrase Clemenceau: "Economics is too Important to be Left to the Economists."

Liberal Program Opens Door to $100 million Olympic Bursary Proposal for BC Students

2011-04-03T10:10:00.000-07:00

Whenever I have spoken about the need for a $200 million bursary program to bring the cost of higher education in BC down to below the national average, I have always been aware of the obvious Achilles heel of my proposal: no BC government in the forseeable future is going to have $200 million to spend on such a program. I have always known that what I was really advocating was a kind of Federal Provincial shared cost program. Not the kind of 50-cent dollar offers that effectively promoted inflationary spending, skewed provincial priorities and infringed provincial autonomy, but some kind of program in which both levels of government would pitch in.
That is what is exciting about the Liberal "Passport to Education" announced recently in the federal election campaign. In effect, it would supply the federal half of the funding (roughly $1000 per annum for eligible students) --making the idea of a provincial plan big enough that typical student debt loads would be brought down below $20,000 --where they belong.

I have argued that a bursary (voucher) scheme is more intelligent than either (1)a tuition freeze or (2)simply giving bigger grants to universities. That is because unlike the tuition freeze it would not starve universities of revenue, and unlike the larger university grant it would in effect empower students , not just by directly reducing their debt, but by giving them demand-side funding to influence university spending priorities. Having half of the money in RESPs and half in the form of "Olympic Bursary" vouchers (applicable to either university tuition or outstanding student loans) would give students a great deal of flexibility.

Of course, the province could just add more money to the Liberal scheme, which would be administratively simpler.

Or the provincial government could bring back tuition freezes, but only for a temporary one-year period while the new programs are put in place. A one-time supplemental grant to universities to make up for the tution freeze could also be employed.

The main point is: IT CAN BE DONE.

The Irony of the Conservative Economic Message

2011-03-27T12:46:00.000-07:00

Prime Minister Harper's message in this election campaign is that Canadians should fear a minority Liberal government supported by the NDP and/or the Bloc Quebecois on the grounds that this would create financial instability and jeopardize economic recovery. But this fear is not only exaggerated; it is profoundly ironic.

That is because the primary reasons for Canada's relative economic stability are not anything in the Conservatives' rather tepid "Action Plan", but because of what both Paul Martin and Stephen Harper were prevented from doing in the years before the Financial Crisis of 2008 and the Great Recession of 2009.

During that period, the banking industry, business organizations and conservative think tanks were all gazing enviously at the reforms of the financial sector that were happening in the United States, such as the 1999 repeal of the Glass-Stegal Act. The Liberal Government of Paul Martin and the Conservative government of Stephen Harper were consequently quite interested in bank mergers so that Canadian mega-banks could compete internationally with the big international investment banks as well as the new global hedge funds. The quid pro quo for this, which would be needed to compensate Canadians for the reduced competition in the domestic banking industry, would be to let more American financial institutions into the Canadian market, along with all kinds of new and innovative financial products. The "financial innovation" that the Bush administration liked to brag about was set to come into Canada; and it was in a similar spirit that the Conservatives even included the encouragement of sub-prime mortgages in their first budget in 2006. (Luckily, this policy was reversed the following year as home foreclosures started to become a crisis in the U.S.)

In other words, Canadians enjoy their superior financial stability in part because we did not have a Conservative government prior to 2006 and in part because we have only had minority governments since 2004. While we could not escape all of the effects of collateralized debt obligations and securitized subprime mortgages in Canada, since our banks still traded in these securities, we nonetheless avoided the disaster of having to bail out a merged Royal Bank /Bank of Montreal or CIBC/TD to the tune of billions of dollars; and we only promoted subprime mortgages for a year or two.

It is doubtful that we would have been as safe from that danger if Stephen Harper had come to office sooner, or if either Martin or Harper had had the policy latitude afforded by a majority government. Thank God for small favours.

So What's Wrong With Adrian Dix?

2011-03-20T14:13:00.000-07:00

Anyone who reads this column regularly knows that I have always given Adrian Dix FULL credit for everything that he has done right. He is, quite simply, the purest political animal and most professional politician in the NDP caucus. Futhermore, the selection by the Liberals of their own ultra-politician as leader might encourage some New Democrats to think that Dix is the best person to do media battles with Christy Clark. But this line of reasoning makes me feel uneasy, as the NDP looks set continue its dysfunctional passive/aggressive lurch cycle from nice-guy (Harcourt, James) to no more-nice-guy (Clark, Dix).

To quote former French Prime Minister Georges Clemenceau (1841-1929), war is too important to be left to the generals. As a military advisor, Dix represents a welcome presence. But as a leader whose claim to leadership rests on his ability to wrong-foot his opponents, to control information and to drive policy according to the dicates of media and communications strategy, the NDP would almost certainly find itself further removed from the moral high ground that it once occupied prior to 1996.

Take a step back and think of the NDP's leadership as a torch being passed from generation to generation: from Tommy Douglas to Allan Blakeney and Dave Barrett, to Mike Harcourt and Gary Doer to..... Adrian Dix? Can anyone think of that as anything other than a descent? A flight away from moral and intellectual substance and a succumbing to the logic of politics, pure and simple. The natural selection of Christy Clark and Adrian Dix, over more balanced and humane characters in both cases, reminds me of those science-fiction films where the robots and computers decide to push their more human mentors aside because of their inferior technical efficiency.

I had that same feeling back in 1998, when I realized not just that the NDP al a la Clark-Dix-Gunton was failing, but that I didn't even want them to succeed, on their own terms: highly centralized, top-down media-driven governance and an explicit attitude of "Process is for Cheese"--an anachronistic attitude in the Age of the Charter, if there ever was one. Even the ostensible over-arching purpose of maximizing well-paying jobs was pursued unintelligently for the most part, and clearly subordinated to political optics most of the time.

Consider all of the best arguments for choosing Dix currently being mooted within the NDP, and you'll realize that they each contain the seeds of their own rebuttal:

1. He was probably the NDP's most effective Opposition Critic between 2005 and 2009.
Oh sure he was. But why did he stand out? Because all but 2 or 3 members of the NDP caucus were complete political novices who probably couldn't have found their way to the washrooms of the Legislature, and who were unaccustomed to the politics of television. And why was that ? Because the NDP had been all but wiped out in 2001, reduced to just 2 seats. And why was that? Because of the way that Clark-Dix-Gunton ran the premier's office, in particular the fast ferry and casino gate scandals. In other words, Dix was the beneficiary of his own misdeeds. Clark and Dix had built their own safe bunker in Vancouver-Kingsway, but others were not nearly so safe from the holocaust that they unleashed.

2. Dix is better at getting on television and at using the media to articulate the NDP's position.
Oh sure he is. But why is he so media-savvy? It is because of all of those years of practice as Glen Clark's right-hand man, making sure that every action of the government was vetted for the six o clock news. The result was stultifying for the most talented cabinet ministers during the Clark years, and ultimately contributed to some bad public policies being made. Both Corky Evans and Paul Ramsay have opined that the Harcourt government was better than the Clark government, largely for that very reason.

3. Dix did a great job on the Children and Families child death scandal.
Oh sure he did. Did you see how he anticipated every information-concealing and accountability-avoiding move the government made? But why did he display such uncanny clairvoyance? Because for three years as Glen Clark's principal secretary he had been the NDP point man for information control and accountability avoidance. "It takes a thief to catch a thief" is a great-sounding rationale for appointing an oppostion critic or hiring a political advisor; but it is a lousy reason for choosing a premier.

4. Dix has earned the support of the trade union movement.
He certainly has! Especially the ship-building trades, the fishers and the forestry sector workers, who appreciated the efforts of Clark and Dix on the fast ferry project, the ridiculous linking of U.S. torpedo testing and fishing, the downgrading of the environment, and the ineffective Jobs and Timber Accord, to say nothing of those public sector unionists who like the idea of Dix and the NDP once again negotiating higher-than -the -rest-of Canada pay and benefits for health care workers. But these feats were accomplished at the cost of hundreds of millions of taxpayer dollars, and for the most part they have been rightly criticized as not being in the broader public interest.

I prefer both Leonard Krog and Mike Farnworth for the balance and humanity and reasonableness that they represent. They are the true alternatives to the shallow politics of image that Christy Clark represents, and to the costly subordination of policy to politics that she will surely entail. I hope that the NDP will choose to fight fire with water, shallowness with substance, and extremity with balance. And if either Krog or Farnworth do fail to win the next election, it will prove far easier to replace them with Gregor Robertson than it would be to remove Adrian Dix. Do you remember how many sticks of dynamite it took to get Glen Clark to resign? (John Horgan presents a similar problem as does Dix, but in a much milder form. He's an acceptable compromise.)

To paraphrase Clemenceau: democratic politics is too important to be left to the ultra-politicians.

A Grim Prospect

2011-03-10T11:32:00.001-08:00

A ll I wanted for the New Year was:

1) Christy Clark not to become leader of the Liberals

2) Adrian Dix not to become leader of the NDP

3) Stephen Harper not to get a majority

Yet Clark wins over her simple minions by touting her light baggage; Dix surges to the fore by taking instant memberships and ethnic bloc-voting to a new level; and the prime minister dismisses the Speakers' ruling that the government flouted the rights of Parliament by refusing to provide parliamentarians with information about the cost of its key programs, as mere "parliamentary procedure", stressing the importance of the "economy" instead. Polls suggest that he might get away with it.

Our politics is drifting into shallow waters indeed.

The Last Testament of Jim Travers

2011-03-04T17:10:00.000-08:00

One of last columns written by the late Jim Travers was also one of the most illuminating commentaries that I have read on the Harper Government. In "Harper's Changing the Country more than we realize" (Toronto Star, January 18). Mr.Travers documented the most important ways in which the Harper government has re-framed issues in this country.

Wrong-footing rivals is the Prime Minister’s favourite dance step. Those who criticize building super-prisons, Canada’s laissez-faire environment record or Canada’s diminished international reputation are quickly forced to defend themselves against message track charges that they don’t share Conservative concerns about victims of crime, energy jobs or principled values.

Other examples abound. All are connected by two national capital realities. One is that Liberals, the one other party remotely capable of forming a government, either can’t conceive or articulate an alternative vision. The other is that the only time Harper’s opponents found the courage to unequivocally say “no” was during the 2008 Christmas constitutional crisis when the Prime Minister’s plan to end public funding for parties directly threatened their interests.

Blowing through such limp reeds is light work for a minority Prime Minister who more often than not is able to operate as if he won a majority. Just as significantly, it allows Conservatives to uncouple their actions from results.

Rarely has that disconnect been more obvious than in current pre-election positioning. Conservatives are taking a stand on corporate tax cuts while lunging a second time at party subsidies. They’re not documenting how more breaks for already lightly taxed big business will create jobs, stimulate productivity or boost international competitiveness. They’re not explaining why a feel-good promise to cut the purse strings to federal parties isn’t a slippery-slope step backwards to the bad old days of backroom bagmen, influence pedalling and tollgating federal contracts for political donations. ......................

.........Missing, too, from the national dialogue are looming challenges that dwarf the importance of topics Conservatives prefer discussing. Off the table and out of mind are, among many things, are the future of universal health care, the complex transition from hewing wood and drawing water to a post-industrial economy, and Canada’s changing place in a rapidly evolving, helter-skelter worldSome prime ministers are moulded by their times, others shape them. Harper is squarely in both categories.

--------------------------------------------------------------------------------------------------
The ultimate cleverness of Harper's strategy lies in the way that he is wrong-footing the Canadian people. Even though upon assuming office he disowned his own frequently stated determination to do away with universal medicare, his determination to cut corporate taxes and the GST while building prisons and beefing up the military can only mean one thing--less money left over for health and social transfers. He is preparing the ground for his last, most important assault on Canada as we know it. Jim Travers warned us.

Leonard Krog for Premier

2011-03-03T09:05:00.000-08:00

A lot of New Democrats will be tempted to fight fire with fire and elect media-savvy professional politico Adrian Dix to do battle with media-savvy premier Christy Clark. Since this is a TV world, and Clark and Dix have had the most media exposure, they were both likely to rise to the top. The Hollow Man can beat the Shallow Woman, the reasoning goes, especially since her party has already been in office for a decade.

Resistance to this logic is probably futile, but I shall keep on trying.

I beg to differ with the conventional wisdom: fight fire with water, shallowness with substance. Leonard Krog is an intelligent man who has both succesfully raised a family (I taught his daughter, who is a fine person, when I was an instructor at Malaspina) and had his own law practice in Nanaimo. He has the warmth of personality and subtle humour of someone who is real and has led a full life. He is into his third term as a MLA, and with that plus his legal background I think that he could handle the transition to power as well as most people.

B.C. needs someone with the moderate temperment and balanced vision of Mike Harcourt, but with a bit more gravitas and personality. David Vickers or Tom Berger would have been ideal, but are not available. Joy McPhail is deserving, but tired of the business and thus not a candidate; Gregor Robertson is not quite yet ready. Leonard Krog fits the bill and should do fine.

A Short Honeymoon for Christy Clark

2011-02-27T10:38:00.000-08:00

1. Caucus didn't support her. Her first decision--does she keep her
promise and shove a snap election down her caucus's throat? Or does she break her first promise?

2. Pick another fight with the teachers, so she has something other than herself to campaign on? Does she keep another promise (lobby the feds to reverse Toseko Lake decision) and pick a fight with First Nations?

3. Does she borrow some plaid shirts from Gordon Campbell for when
ventures into the interior? Jeans and a Cowboy hat for the Williams Lake Stampede?

I still say: She will be a disaster.

Today's Leadership Contest--In a Nutshell

2011-02-26T09:48:00.000-08:00

Christy Clark and Kevin Falcon are potentially polarizing figures who could split the Liberal anti-NDP coalition, with Clark encouraging the Conservative/Interior faction to think separation; and Falcon loosening up middle of the road liberals for the NDP.

Abbott and De Jong are a bit dull but will hold the centre. As I said back on December 17, De Jong would probably make the best premier, but (as I said back on November 28) Abbott is the best compromise choice. Abbott is not only the 'insider' who is most distanced from Campbell and the HST, but is also the only candidate from the interior of the province, which held court under the Bennetts and has felt marginalized under the Liberals.

Clark is obviously the best (most colourful) media personality of the bunch, but you could have said the same of Bill Vander Zalm and Glen Clark. She shares their automatic, egotistical quality--she cannot help being herself. And she lacks Campbell's business experience or industry and intellectual curiosity about policy, which means she wouldn't profit from the same long learning curve as Campbell, even if the electorate afforded her that opportunity (which it won't).

20 people in cabinet--not one supported Clark
12-13 women in caucus--not one supported Clark
47 people in the Liberal caucus--only one supported Clark (somebody named "Harry Bloy").

I still say, she will be a disaster as premier. You read it here first.

The sad irony of Conservative personal attack ads

2011-02-21T16:11:00.000-08:00

The early poll results from Globe-CTV News following the recent Conservative government blitz of negative personal attack ads have confirmed my worst fears: that audacious and disingenuous negative personal attack ads outside the confines of an election campaign have not been rejected as un-Canadian, but swallowed as completely as if we were a bunch of NASCAR-crazed FOX-TV addicts from Mississippi.

This is sad, not because Conservatives are again leading the Liberals, but because of why they are leading the Liberals. It is because Mr. Igantieff's reputation has suffered, even though he has had no new scandals, and not because of the Tories' recent policy announcements.

It is also ironic--because the message---that Mr. Ignatieff is somehow too American and too selfish for spending all that time at Harvard--- is too hypocritical to take seriously. Conservatives are not only succeeding in Americanizing our political discourse, they are painting the kettle black.

Adrian Dix Will be the next NDP Premier---Unfortunately

2011-01-25T17:32:00.000-08:00

NDP leadership hopefuls were "surprised" when Adrian Dix caught them off guard by materializing a large number of ethnic block voters at the last minute before last week's deadline. Well I wasn't, because "surprsing" people is something of an Adrian Dix specialty. As I tried to warn people back on December 6 , Dix wasn't "mulling" a leadership bid, he was planning it. And one of the things he was planning was a secret block ethnic vote, to be sprung upon opponents at the last moment so that they could not respond in kind.

His tactics reminded me of a passage in Auditor General George Morfitt's Report on the Fast Ferries, which noted that Glen Clark's Ministerial Assistant was already lining up contractors whiile Clark was Minister of Employment and Investment in 1994-95. That Ministerial Assistant was, of course, Adrian Dix. What he and Clark were doing was ensuring that potential opponents of the scheme would be presented with a fait accompli before they had a chance to properly assess the program's merits. All in the interest of "jobs" and "getting things done" of course, but it wasn't good public policy. And in his daily modus operandi as Principal Secretary, he routinely preferred the element of surprise to the enlightenment of dialogue.

Dix may have scored a tactical victory with his latest stunt, but in so doing he may have also revealed how little he has really changed.

What Will Become of Gordon Campbell's Progressive Policy Legacies on FIrst Nations and Climate Change?

2011-01-08T07:18:00.000-08:00

Many observers of BC politics, myself included, were positively impressed by the two great policy U-turns of Gordon Campbell’s tenure in office. One was the New Relationship with First Nations peoples, in which the premier decisively put his failed opposition to the Nisga'a Treaty and the awkward and embarrassing experience of his much-criticized 2002 plebiscite on the Treaty process behind him, and instead, issued an official apology to First Nations in the 2003 Throne Speech , beefed up and renamed the Ministry of Aboriginal Relations and Reconciliation, accepted in principle shared decision-making and access to resources, championed the Kelowna Accord, and even concluded the second modern treaty, with the Tsawwassen people, in 2007.

The other great policy reversal, on climate change, was even more unexpected. The government's record on environmental issues in its first term was dismal, with its most noteworthy actions on the climate change file being its opposition to the federal government’s ratification of the Kyoto Accord and its planned construction of three coal-fired power plants. Premier Campbell then claimed to have had an epiphany in 2006 when he visited Beijing on a particularly smoggy day; as a result almost one-third of the February 2007 Throne Speech was devoted to stating the government's commitment to action on climate change and related initiatives. These included the creation of a Climate Action Team to develop sector targets and to make recommendations on how to make the government carbon neutral; establishment of a $25 million Clean Energy Fund; new legislation to capture methane emissions from landfills, and the creation of a new Citizens' Council to help raise public awareness. In place of his previous emphasis upon the costs of mitigation and adaptation , the premier now stressed that BC's actions to combat climate change were "right for the economy". Later in 2007, BC became the first province to join the Western Climate Initiative. These steps were followed in 2008 by an even more controversial step: a revenue-neutral carbon tax that was claimed to be "among the broadest and most comprehensive in the world", and the only carbon tax in Canada other than in Kyoto-loving Quebec. (Ironically, the government has done far more to combat climate change during the Great Recession than it did during its first term in office, which was ostensibly dedicated to economic recovery.)

In addition to having a similar timetable and authorship, these policy changes shared a shrewd underlying political strategy: to build support in two areas where the NDP's predominance had hitherto been taken for granted. The political risks of the carbon tax and lingering resistance to treaties were offset by the political advantages of a more divided opposition. (Unfortunately for Mr. Campbell, no such offset existed with respect to the HST).

Nevertheless, all of these parallels between the aboriginal and environmental files should not be allowed to obscure a fundamental difference between them. Although each of these policies depended upon the personal initiative and support of the premier, the strategy of reconciliation with native peoples has in fact much deeper roots in cabinet, party, and civil society, in particular the business community, which rightly sees the settlement of treaties as a prerequisite to more intensive economic development of the land base. The statement by a leading candidate to succeed Campbell, George Abbott, that he would include a question on the future of the carbon tax in a future referendum, indicates a desire to legitimate a reversal of this green policy while minimizing the environmental backlash. But returning to such a device in the context of treaties with First Nations would be unthinkable; it would no doubt prompt accusations of betrayal and create far more division and opposition than it would avoid.

Abbott's proposal in fact reflects a far shallower commitment to the climate change policies of Gordon Campbell within the Liberal Party and its supporters than there is to the New Relationship. Enlightened self-interest indicates that there can be no turning back on the Treaty process, and no desire to return the uncertainty and conflict of the past. The Liberal Party's key constituency, the business community, is far more ambivalent about carbon taxes and green regulations--its lukewarm support has come from the guarantee that carbon taxes would be offset by corporate and personal income tax reductions, but global revenue neutrality has not meant revenue neutrality for every sector. Transportation, agriculture and rural economies of every kind tend to be hit harder by fuel cost increases. Needless to say, the energy sector--which has recently surpassed forestry as the leading source of government revenues--is hit harder as well.

In short, expect the Cabinet Committee on Climate Action, chaired by the premier, to disappear some time after the Liberals anoint their new leader next spring; for the projected increases in the carbon tax to be reduced or eliminated altogether; and for British Columbia to sink to the middle rung of Canadian provinces when it comes to tackling climate change. But also expect the reconciliation between the province and First Nations to continue along its gradual but necessary historic path.

The Best Men for the Job of B.C. Premier are Lawyers: Leonard Krog and Mike DeJong

2010-12-17T16:26:00.000-08:00

Now that I have thrown poison darts at Adrian Dix and Christy Clark, let me say something more positive about someone.

As a lifelong observer of BC politics, a political scientist of a decade's standing, and as someone who was a public servant for 5 years, I have reached the reluctant, somewhat boring and no doubt unpopular conclusion, that lawyers generally make better premiers than non-lawyers. They are simply more 'careful' about what they say and do, and in more than just a 'political optics' sense. Getting things done properly in today's world of government, is a highly legalistic exercise.Process is NOT for cheese, folks. It is the basis of nearly all good policy decisions, especially in this Charter era, and good lawyers are naturally good at it.

Furthermore, if efforts at electoral reform continue to fail, and we cannot achieve moderation of government by tinkering with institutions, perhaps we can achieve it by changing the character of the leading decision-makers themselves. Tom Berger and David Vickers are not available, unfortunately, but a couple of pretty good lawyers are.

There are two leading candidates who have discharged the responsibilities of electede office after undertaking reasonably successful law practices. While they are not the only potential candidates who meet these two basic criteria, I think that they are the safest bets among the candidates on offer.

Leonard Krog has been an effective parliamentarian, particularly on the BC Rail file. He has done a little more than De Jong both in his law office and in his family life, which should hold him in good stead.

Mike De Jong has been one of the more solid cabinet ministers, holding down a number of sensitive posts with only a whiff of scandal----he, like Falcon and Clark, was close enough to someone who was close to the BC Rail decisions, and will have some questions to answer.

So, if you want to make a prudent decision, choose someone who makes prudent decisions for a living. Choose one of these two guys.

Bullet-in for Adrian Dix: Don't even think about it

2010-12-06T20:24:00.000-08:00

"We need an NDP with progressive policies and a decisive leader who can communicate these ideas to the public." ---Jenny Kwan

TRANSLATION:

By "progressive policies", Jenny means more left-wing than Carole James's or Gregor Robertson's moderate ways.

By "decisive leader" , she means a return to more centralized strong-arm Glen Clark style governing.

By "who can communicate these ideas to the public", she means the one person (other than Gregor Robertson) who can get on the News Hour on a regular basis.

She means the Hollow Man. That proven fraud artist (remember the back-dated memo? That was practically the only thing he ever put down on paper), Glen Clark's right-hand man, his partner in crime (Yes, it was Adrian who was lining up those fast-ferry contractors so that therewould be a fait accompli before anyone knew better). That "bright and amiable" fucking thug (I have direct quotes from people who witnessed Adrian blacklisting and firing Corky Evans supporters).

The one person who exemplified what was wrong with the Clark government even more than Clark himself did.

That's Right. Mr. "Process is for Cheese" himself.

Of course, he might be the perfect opponent for Christy Clark--who has two things in common with him.

First, they both were spectacular failures while they were in government.

Second, they both stand for the proposition that politics should be about the six o'clock news, rather than the other way around..

God Help Us.

First thoughts about the resignation of Carole James

2010-12-06T17:44:00.000-08:00

I thought james lacked the gravitas to be a good premier, but I feel the same way about Jenny kwan. Farnworth, Krog, Simpson and Robertson all have warts but could do the job.

Good thing about Adrian Dix: He is their purest, most professional politician.

Bad thing about Adrian Dix: He is their purest, most professional politician.

George Abbott is Good to be Lucky

2010-11-28T11:14:00.000-08:00

Christy Clark's steady and deserved fall from being the Deputy Premier and Vaughn Palmer-anointed "future of the Liberal Party" in 2000-2001 has been followed by Carole Taylor's quasi-retirement and Colin Hanson's Icarus-like doom from flying too high and too close Gordon Campbell and the HST. While Christy Clark remains popular within the party and has had a high public profile, she has been a repeated failure, whether as Education minister, one of the engineers of Stephane Dion's leadership, or as an impatient candidate for the Vancouver mayorlty. That just leaves five serious contenders: Kevin Falcon, Mike De Jong, Rich Coleman, Moira Stilwell, and George Abbott.

Moira Stilwell benefits from being both a woman and being relatively unknown--a serious advantage in a party that has been in power for nearly a decade and is in need of a facelift. But much depends on the personal relationships between the remaining candidates. Would their mutual respect and insistence that success in cabinet portfolios cause them to pull for each other on the final ballot, or would mutual animosity cause them to pull behind someone else? I think that if the personality clashes were that serious, they would have been obvious by now. That probably rules out Stilwell making it to the last round. But, of the final four, Kevin Falcon would seem to be the most compromised by his proximity to Gordon Campbell. His wings were not burned, like Hanson's, but they were badly singed.

So that just leaves Coleman, De Jong and Abbott. Rich is the least telegenic of the three, and made a big splash when as Minister of Forests his brother became rich by having his land taken out of the Forest Land Reserve. That just leaves De Jong and Abbott on the final ballot.

My hunch is that De Jong, who along with Farrell-Collins constituted the "fifth column" that replaced Gordon Wilson and David Mitchell with the Campbell crew way back in 1993, has the most favours to call. But my sense is that the avuncular Abbott, who has been quiet, competent, has more teflon and has probably tread upon fewer toes, will appeal to the Liberal Party's urge for politically expedient image renovation. Lucky, to be sure. But he also worked hard to get into this position.

So that's my best guess, right now. Unless the 65-year-old Carole Taylor tosses down her Chancellor's robes and makes a case for being the "caretaker" premier for the next 2-6 years, I'm putting my money on George Abbott.

Needed: An Insistence that the economy can be grown equitably and sustainably

2010-11-26T19:59:00.000-08:00

"Canadians need to make some hard choices to tackle the key structural problems challenging the country’s future prosperity, including soaring health-care costs and a tax system that is unfair to lower-income earners"
---Ed Clark, President of Toronto-Dominion Bank

"A Rising Tide lifts all yachts, and leaves the rowboats behind."
---Warren Buffett

If the President of theToronto-Dominion Bank thinks the tax system is unfair to low-income earners, then why should acquiesce in both federal and provincial policies that appear to assume that the only path to economic success is to shift the tax burden onto workers? If Warren Buffett appears on ABC's This Week complaining that the rich don't pay enough in taxes , and that the Bush tax cuts should be repealed, and Bill Gates is arguing for a bigger and better investment in public education in the United States, and Ted Turner is complaining that the U.S. Supreme Court made a bad decision in allowing corporations to make unlimited donations to political campaigns, shouldn't we be listening?

As Doug McArthur's Report on the BC Economy indicates, one of the distinguishing features of the Campbell government was its reliance on increased inequality as an attempt to gain competitive advantage. As I have argued on this blog, one of the great disappointments of the Campbell record has to be the failure of this 'supply-side' thinking. His top-heavy salary boosts for senior officials in government, his regressive approach to tax reform (including both the carbon tax and HST) reveal this "golden goose" approach to economics, yielded very little in terms of investment and jobs. The reasons, I suspect, are at least two-fold: (1) He was mistaken, just a smany premiers before him were mistaken, to think that he could have that big an impact when employment, investment and jobs are so highly determined outside of BC's borders. (2) Even if a large general benefit could be achieved, it would merely generate pressure for surrounding jurisdictions to do likewise --in other words, a race to the bottom.

Of course there are individual communities and industries that would appear to be exceptions to these generalizations--the coastal fish farm industry would appear to be a clear example. But even there, the benefits to the local economy have to be weighed against the larger social and environmental costs. The bent of the Campbell government was to refuse to undertake that social calculation. But what is the purpose of government, if not to perform that function?

NDP Infighting

2010-11-22T08:50:00.000-08:00

Curiously, the group of caucus dissidents within the NDP Opposition in BC actually consists of at least two very different groups--that is, one group of the usual suspects like Jenny Kwan and Harry Lali who don't like the moderate, modernizing and centrist tack that Carole James has been taking, who cater to the old line power bases in the party, and who would probably like Adrian Dix to take over as leader; and several people like Leonard Krog and Bob Simpson, who presumably approve of James's general philosophy and direction but who nonetheless think that they (or someone else) could do a better job of leading the party.

Interestingly, Dix is lying low, like a snake in the grass, letting others do the dirty work for him.

From what I can see, Bob Simpson was sacked simply for stating the obvious--that Carole James has not yet sold herself to British Columbians. On the other hand, the rift is ironic, because Bob represents a pragmatic economy-oriented wing of the party that James has been trying to appeal to.

James is reminiscent of Mike Harcourt in more ways than one. On the one hand, she has the right attitude of modern progressive economics (listening to business, stressing social investment and the environment) that is absolutely essential if the NDP wants to get and retain power; on the other hand she has an unconvincing hold on her party and an unconvincing leadership style. Paradoxically, she has the right general attitude about leadership style (finding a balance between the extremes of Harcourt and Clark, with a greater emphasis on the former than on the latter), but there are serious doubts about her ability to implement it.

It may be that Gregor Robertson is the answer, but for the time being the NDP should support its leader--after she lets Bob Simpson back into the caucus. Perhaps Bob can make it easier for her by admitting that, while there is absolutely nothing wrong with what he said, perhaps it was linen best washed in private.

If you have a comment about this or any of my other postings, contact me at markcrawf@gmail.com .

Advice for Mitt Romney in 2012: Choose Lisa Murkowski As Your Running Mate

2010-11-18T19:04:00.000-08:00

The historic victory of Lisa Murkowski on a write-in ballot in the November 2010 as the new Senator for Alaska presents a stark contrast to the former governor of that State who shot to prominence in 2008. First, Murkowski ran --and won--as a true outsider, i.e. having lost the nomination of the Republican Party. Second, unlike all those other rogue outsiders who got their feet in the door in 2010, Murlowski is a centrist moderate. Third, she is a sensible woman whom millions of middle-class women can readily identify with---at least as much as they can identify with publicity-seeking Palin.

If the establishment of the Republican Party is worried that the Tea Party is causing the GOP to tack too far to the right, a Murkowski nomination might make eminent electoral sense as well, balancing the Romney ticket in terms of gender and geography as well as ideology and temperment. If ever a vice-presidential running mate was tailor-made to attract the independent voter, Ms Murkowski is it.

Some obvious, but neglected, thoughts about Canada's Afghanistan Mission

2010-11-13T16:17:00.000-08:00

Three facts about Canada's role in Afghanistan are too often neglected or obscured in political debates.

First, Canada was obligated by virtue of its membership in NATO to participate. An ally was attacked from bases in Afghanistan.

Second, after the greatest military superpower the world has ever seen was attacked on its own soil for the first time in 60 years, the country that was picked to play a lead military role in arguably the most dangerous province in Afghanistan,Kandahar, was.....Canada.(??!!!). Some people will try to argue otherwise, but this state of affairs only makes sense when you consider that the United States had 150,000 troops tied up in a dangerous mission in Iraq. But if Canada rejected direct participation in the Iraq war on the grounds that it was unnecessary, illegal and immoral, why on Earth should we feel an obligation to pay a disproportionate sacrifice in Afghanistan, when the reason for that sacrifice was (in large part) Iraq? Since both Stephen Harper and Michael Ignatieff supported the war in Iraq, it must have been easy for them to indirectly support that war by taking on more of the burden in Afghanistan.

Third, the parliamentary resolution passed in March 2008 says that "Canada will end its presence in Kandahar as of July 2011." In other words, there is no room to argue that Canada's military "trainers" should remain in that region on the grounds that they are already familiar with it. They should set up shop in places well away from Kandahar or Waziristan, such as Kabul, where most of our NATO partners have been safely ensconced for the past several years. There will still be casualties after July 2011, but if Canada's mission is properly conceived and executed, Canadian military funerals should be a much rarer occurrence a year from now.

So What Was Wrong With Gordon Campbell?

2010-11-06T18:23:00.000-07:00

One should never presume to be able to read another person's mind, but it has always seemed to me that Gordon Campbell was badly burned in the 1996 election. He lost that contest to Glen Clark in no small part because of his own folly and naivete: what he did was speak openly, before the election, of his intention to privatize B.C. Rail. Ass a consequence, any interior towns along the BC Rail route that couldn't stomach the thought of a NDP MLA voted for the Reform Party, led by Jack Weisgerber, splitting the "free enterprise" vote. Some ill-advised candour on Campbell's part about possible restraint in social spending further contributed to the Liberals' demise. While certainly Glen Clark's ability to capitalize on his opponent's maladroitness was an important factor in the NDP's re-election, it is more true to say that the Liberals lost the election than it is to say that the NDP won it--and that it was principally Gordon Campbell's fault that the Liberals lost.

Campbell certainly learned his lesson, and never made the mistake of excessive election candour again. But he did make the opposite mistake, several times, even though he probably interpreted his election victories in 2001 and 2005 as vindication for his hard-won political acumen. In fact, those elections were won for reasons other than legerdemain: anyone could have led the Liberals to victory in 2001, and Liberals were rescued by an Asian-fuelled surge in commodity prices in 2004-2005.

So the long fuse of the BC Rail scandal and the short fuse of the HST backlash were lit with the new strategy of cautious public opinion "management" that was a central characteristic of the Campbell years. Despite some impressive legislative achievements to his credit, he never learned to trust the people, and that fact ensured that they were unlikely to fully trust him, either.

Campbell's faith was reserved for B.C. capitalism---which is why we can charitably interpret his prediction in 2001 that "tax cuts would pay for themselves" and his clinging to a belief in only a half-billion dollar deficit in 2009 as wishful thinking on his part, rather than merely crass dishonesty. He did everything he could, within reasonable political parameters, to create a good business climate. He hoped that business would return the favour. As part of this effort, Campbell's tax policies--in particular the carbon tax and HST in exchange for cuts in progressive income taxes--- appeared to shift more of the burden onto ordinary people. These are the same ordinary people who Campbell couldn't trust with a discussion of tax policy prior to the 2009 election, the same ordinary people whom he had ("mistakenly") trusted in 1996. If, deep down, Campbell wanted these people to like him, he had a flawed strategy for achieving popularity.

But was it wrong to avoid the issue before the election and then implement the tax in the first year after the election (in order for the anger over the fait accompli to die down before 2013)? Is that not the common political strategy for administering painful-but-beneficial medicine upon recalcitrant publics? My advice to political leaders in this situation was (and is) twofold. First, equity matters. If the point of the HST was primarily to achieve administrative and economic efficiencies rather than to engineer a supply-side "trickle down" economy, then design and explain the tax in such a way as to make that fact perfectly clear. France and Sweden have more equitable societies despite getting close to half of their revenue from consumption taxes; that fact suggests the possibility of a more equitable HST. Indeed, much of the opposition to the carbon tax was blunted by a similar strategy of ensuring that two-thirds of BC families would be no worse off as a result of the tax.

Second, the question of tax harmonization could have been folded into the terms of reference of a commission on taxation that would have included extensive consultations similar to the dialogue on health care that the BC government held earlier. The Commission could have reported to the legislature in 2011. Whether you could call it deliberative democracy or simply management of public expectations, it would have provided an opportunity for citizens to let off steam in an environment much more controlled and less volatile than a grass-roots populist revolt led by Bill Vander Zalm.

But hindsight, as they say, is 20/20.

The Real Lesson of the Gun Registry Debate

2010-09-23T12:18:00.000-07:00

The Conservative PMO is cynically planting the seeds of division across the country, in the hope of winning a majority government using the economy and law-and-order as the twin themes. But if we had a different electoral system--one which more closely matched the proportion of seats with the proportion of the vote, they would have to adopt a different strategy. Then, they would have to appeal to a wider cross-section of the public.

If the Liberals win the next election, the same problem will likely emerge in a different form. A Liberal-NDP cohabitation sounds stable, but if it is too popular (e.g. gets 40% or more approval in the polls), the Liberals will be tempted to engineer their own defeat so that they can springboard into a majority government. That is what Trudeau did federally in 1974 and Peterson did in Ontario in 1987.

The solution: move to a slightly more proportional electoral system that makes it more difficult to win majorities and that rewards politicians for seeking support across the country instead of rewarding them for doing the opposite.

That, for me, is the real lesson of the gun registry debate.

So What's Wrong With Gerry Schwartz?

2010-09-20T14:06:00.000-07:00

{A slightly abridged version of the following piece has appeared in The Mark News as part of a series of op-eds attempting to answer the question: "Who is Canada's Most Influential Person?" I nominated Mr. Schwartz, who has been dubbed "Canada's Ultimate Capitalist" for his success in the field of mergers and acquisitions, an area of business activity that needs sober re-assessment in light of the current Great Recession. It is perhaps also significant that a couple of weeks after I wrote this piece, it was announced that Nigel Wright, Schwartz's right hand man at Onex, was going to work for prime minister Stephen Harper as his Chief of Staff in the PMO. This was further evidence of Schwartz's close connections, and deep influence, within both of Canada's major political parties.}

From the perspective of the financial crisis and deep recession of 2008-2010, one has to look back on the great wave of mergers and acquisitions that gathered steam in the 1980s and 1990s with a degree of ambivalence. Back then, it became respectable for the first time to borrow 90% of the purchase price of an acquisition as a regular business practice. But now....let's just say that the entire U.S. economy is in a process of "de-leveraging", and that we are all feeling the pain.

Jerome Kohlberg, Henry Kravis and George Roberts—all American giants of corporate finance— and Canada's Gerry Schwartz cut their financial teeth at the Wall Street investment bank Bear Stearns (yes, that Bear Stearns) in the early 1970s. Their great innovation—obtaining highly leveraged loans (and using junk bonds whenever necessary) to buy (often under-valued or poorly managed) businesses—has provided an additional discipline on the market and has been good for many stockholders. On the other hand, it is not difficult to see how the seeds of the 2008 Financial crisis (which saw under-capitalized mortgages spilling into the leverage-financed and high –yield debt markets) were sown in the age of the mega buy-outs that preceded it. And while Mr. Schwartz was not particularly responsible for packaging or re-packaging sub-prime mortgage debt, there is a certain guilt by association.

Gerald W. (“Gerry”) Schwartz ranks about 30th on lists of Canada’s wealthiest people, with an estimated net worth of over $1.5 billion. He founded the private equity (buyout) firm Onex Corporation, which now has revenues of $26 billion and over 220,000 employees worldwide, making it one of Canada’s top ten companies. Yet even these statistics may understate Mr. Schwartz’s influence. From his early role as co-founder, along with his mentor Izzy Asper, of CanWest Global in 1977, to his founding of Onex in 1983 and his emergence in the 1980s as Canada’s Leveraged Buy-Out King, to his audacious bid to take over and merge Canada’s two national airlines in 1999, to his recent investments in the U.S. housing and auto industries (not to mention his business and philanthropic ventures with his wife, Chapters/Indigo CEO Heather Reisman), Schwartz has represented the new face of Canadian capitalism.

Onex is publicly traded, which is unusual in the buy-out world. And whereas most private equity or investment management firms “flip” companies for a quick profit, Schwartz prefers to grow firms over a number of years and help them to expand their market share. On more than one occasion, investors have complained about Schwartz having his cake and eating it too—as in 1987-88 when Schwartz raised $246 million by going public, but still skimmed a private-firm-like 20 per cent of the profits as a fee. But what shareholders have not generally complained about is the rate of return on their investments, or Schwartz’s sterling reputation as a long-term, patient investor.

Largely as a result of Reisman’s influence, Schwartz became more involved in Liberal Party politics in the early 1980s. He became a major fundraiser for Liberal leaders John Turner and Ontario's David Peterson, and became friends with finance minister and prime minister Paul Martin. Schwartz also grew personally close to prominent Conservatives, such as then prime minister Brian Mulroney, Toronto financier Hal Jackman, former federal finance minister Michael Wilson. Today, when Stephen Harper, Michael Ignatieff, and Bob Rae fall over each other to court Jewish voters, they will all have to beat a path to Gerry and Heather’s door. “Gerry has been involved with just about everybody in power," a top Liberal strategist has been quoted as saying. "But you also have to realize that this stems in part from a strong sense of public service. And that it's real, not fake."

Real, to be sure, but one need not be either a Marxist or an anti-Semite to see that Schwartz’s own ethnicity is as much at play as is altruism in his political and philanthropic activities. The Israeli military does not rank high on most people’s lists of needy charities, but Schwartz has created a $3-million scholarship for 6,000 non-Israeli born Jews serving in the Israeli Defense Forces. In 2004 Schwartz also founded the Canadian Council for Israel and Jewish Advocacy, an umbrella group that has been criticized as an attempt to “corporatize” the funding of Jewish community organizations and tie them to pro-Israel advocacy.

His advice for young entrepreneurs sounds almost hokey, but also rings true: “Get an education. Have, maintain, and don’t give up on the principle of integrity. And stick to it. Nixon put it well: it is not over when you fail, it is over when you quit.” For better or for worse, Mr. Schwartz has followed his principles.

A Nice Summary of the Current Crisis

2010-08-21T09:29:00.000-07:00

There is a tendency on the part of intelligent pundits to give up on talking about "capitalism" because of its sheer dominance and pervasiveness. That has has been my own tendency in recent years, as I have drifted toward looking at smaller and more manageable problems. Nevertheless, it is worth stepping back and looking at the big picture. One aspect of that picture is that, while it was plausible to attribute the stagflation of the 1970s in part to the strength of trade unions, that critique has been implausible since the 1980s, when blue collar trade unionism began to decline in relative size and strength and labour -intensive manufactures began shifting to the third world.

David Harvey, the author of The Condition of Postmodernity and over 20 other books, has provided a nice 11 minute overview the current crisis in a witty and accessible video:

Initial Reaction to the CMA Report: A Welcome Step in the Right Direction

2010-08-04T13:19:00.000-07:00

The CMA Report released yesterday, "Health Care Transformation in Canada" , is receiving some mixed reviews of the eyeball-rolling "not another report" variety; for example, Norman Spector accuses the CMA of "speaking with a forked tongue" --i.e. advocating more comprehensive coverage and a single payer system while at the same time approving of Quebec's movement toward deductibles and medicare premiums. While recognizing Spector's point, I have a slightly more positive reaction. I have been waiting for an analysis that cuts across the three silos of Romanow, Kirby and Mazankowski, i.e. recognizing the gravity of the cost situation without exaggerating it; confronting the problem of health costs crowding out other policy priorities; distinguishing between public financing and public delivery, without fetishizing that distinction; and taking into account the best comparative work, such as the that of Ted Marmor and the Devereaux Study.

"Forked" or not, the CMA is speaking more sense than it has in years. Unlike Brian Day and other likeminded political leaders in this professional association, the current report does not leap to the conclusion that we should open the doors not only to private for-profit delivery but private financing as well. (For example, France is a notoriously centralized unitary state in which 60 million people are squeezed into an area slightly larger than Saskatchewan, yet some people want to leap to the conclusion that its success stems from its fees at point of service, or "depassements". What little truth there may be to that judgement is itself grounded in that particular European context.)

Instead, the CMA recognizes that many of the biggest cost-drivers emanate from the 30% of the system that is still privately financed. Extending the scope of our relatively efficient single payer system to include more drug and home care is perfectly sensible--just as is the greater empowerment of physicians and patients to tailor health care to individuals' needs. Combining these two directions is a difficult balancing act, but not a full-blown contradiction. Ideally, we would each pay a medical premium that would carefully distinguish between the behaviours that we have some control over and the conditions that we do not control; incentivizing the former while co-insuring the latter all the while taking into account ability to pay. Such a perfect system does not as yet exist, and would be vulnerable to corruption by economic interests. But overall I would say that the CMA has taken a step in the right direction.

I will have more to say when I have reflected on each of the CMA's five recommendations in the light of the above-mentioned literature.

Bob Rae versus Libby Davies on Israel

2010-06-19T22:33:00.000-07:00

Bob Rae has called upon Jack Layton to fire Libby Davies. Indeed, it seems that the NDP House Leader has crossed the line that separates personal opinion from party policy, since her criticism of Israels' long occupation "since 1948" appears to call into question the legitimacy of Israel's existence; and her call for a renewed intifada--what Rae decries as "calling for more violence, more suicide bombing, more death, more destruction" -- needs some explanation. But if there had been no Palestinian resistance, wouldn't elements in Israel and in the international community regard that as tacit acceptance of Israel's authority? What would the long-term implications of that be for the establishment of a viable, independent Palestine? There are some important issues of international history and law that need to be spelled out.

Bob should know that while it is wrong to compare Israel's occupation of the West Bank to the Nazi's treatment of the Jews, there is some plausible analogy between the desire for a Greater Israel and the way the Nazis treated Poles and other occupants of ancient Germania.(Hence "Lebensraum").

In other words, there was more to Nazism than just antisemitism. And while Israel's right to exist should be accepted, I can't help but think that that small clutch of victorious allies who called themselves the "United Nations" in 1947-48, and who acted out of guilt about not liberating the death camps sooner, and sympathy for fellow educated Europeans, should have done a better job of considering everyone's interests in Palestine--especially those of the Palestinians. In other words, it was not unreasonable for Arabs and Palestinians to consider the creation of Israel as a legacy of colonialism, and not as a straightforward instance of de-colonization. And their slowness to come to terms with Israel's existence should not be taken as an excuse for building settlements all over the West bank, or for annexing East Jerusalem.

It is also important to clarify what one means by "intifada". The first or "popular" intifada was an inspired and inspirational grass roots movement that took place in the occupied territories and was aimed at Israeli soldiers and settlers. It was also the only Palestinian resistance that actually worked, by strengthening the hands of moderates inside Israel (led by Yitzakh Rabin) and deservedly garnering support throughout the world. Then Rabin was assassinated (by a Jew who wanted a Greater Israel), Ariel Sharon made his provocative march around a Muslim shrine, and all hell broke loose. Unfortunately, the Palestinians' self-proclaimed leaders (esp. Hamas) took control of the protest, and the polarization between extremists on both sides took place. The Second Intifada is an entirely different beast. Before deciding to fire Libby Davies, my question to her would be: which intifada were you referring to?

What should Canada's role be in the Middle East? To support the Rabins, the Abbas's and the Jimmy Carters of this world. Israel has a right to its 1967 boundaries--one could fudge that a little by saying that it has a right to that amount of land it had in 1967. If Israel gives Palestine enough land to build a corridor between Palestine and Gaza, Palestine could in principle agree to give Israel enough land to allow it to keep about half of its existing West Bank settlements. That is the kind of specific two-state solution that makes sense. I think that Libby Davies can be brought around to that, and should say so. The only question is: can Stephen Harper and Bob Rae be brought around to that position, or are they too busy competing for the support of the Jewish community?

Everything I always wanted to know about SEX

2010-05-29T15:03:00.000-07:00

According to a recently released study, Canada's teen birth rate has decreased 38 percent, while the teen abortion rate declined 35.7% The reasons? Teenage women are not more or less likely to have sex than they were 10 or 15 years ago. According to Alexander McKay, research coordinator at the Sex Information and Education Council of Canada, the reasons for the decline are (1) better access to contraception, (2) higher quality sex education (including the internet and planned parenthood clinics) and (3) "Canada's relaxed attitude toward toward adolescent sexual health allows teens to be better educated on the subject."

Pro-Life activists should be happy. But I wonder if they really are.

I Have a strange Confession

2010-05-13T18:25:00.000-07:00

It occurs to me that I may have been the first politician in the history of the B.C. Legislature to have advocated a Harmonized Sales Tax. Way back in 1980, I was in the Universities Model Parliament, and decided I would stump the government ministers by recommending the Value Added Tax. This naturally had them scrambling, since none of them had ever heard of the V.A.T., even though it was already commonly used in Europe.

Should I be ashamed? Efficiency pays. Harmonization streamlines the administration of the tax, and is more efficient than a straight sales tax, as it allows businesses to get credit for the tax they pay on inputs (as a deduction off the tax they collect). Exporters can reduce their prices by the amount of the tax they pay in imports that previously would have to be covered in the price. I would probably prefer a broader tax (i.e. with fewer exemptions) at a lower rate and more targetted help for low-income consumers. But, in principle,
I am not opposed to the HST.

Consider this startling passage from the Mintz Report. It suggests that 82% of the increase in capital stock and 80% of the job creation resulting from proposed changes to BC's tax regime will result from sales tax harmonization--i.e. only 18% and 20% from corporate tax cuts. Thus, if one is really concerned about the equity of shifting tax burdens onto ordinary consumers, I suggest ditching the corporate tax cuts, not the sales tax harmonization.

By 2018, when federal and B.C. corporate tax reductions and sales tax harmonization will be

fully implemented, British Columbia will have a tax regime that is more attractive to capital

than that of either Alberta or Ontario. While corporate tax reductions will have been helpful in

achieving this aim, the largest aid to British Columbia’s tax competitiveness will have been sales tax harmonization (emphasis added). With the elimination of the existing retail sales tax on capital inputs, British Columbia’s effective tax rate on new capital investments will decline by 9.1 percentage points, which will represent almost 60% of the drop in the cost of capital for businesses in British Columbia over the next four years.

By 2020, the combined effect of the corporate tax cuts and sales tax harmonization will be to

increase the capital stock by more than $14 billion, which is expected to translate into an

increase of 141,000 jobs. Sales tax harmonization alone will be responsible for an $11.5 billion

increase in the capital stock and an increase of 113,000 jobs by the end of the coming decade.

Campbell's Supply-Side Follies--and a Face-Saving Proposal

2010-05-03T14:48:00.000-07:00

If there has been one serious flaw in the record of the Campbell government, it is that it will not give up on supply-side economics. From its very first move–the 2001 20% tax cut that was supposed to pay for itself, but which wound up creating the largest deficit in history–to the carbon tax (which benefits the affluent Vancouverite rather more than other groups)to the HST tax shift, they have refused to heed either public opinion or the economic evidence. They have been loyal to their core constituency, however: the business and professional elite fo Greater Vancouver, who by and large feel that their private gains have outweighed the public’s losses.

Now that the NDP is pulling ahead in the polls, and even former Finance minister Carole Taylor has had the good sense to distance herself from these large tax increases on ordinary consumers, it is time for the Campbell Liberals to consider how they might soften the regressive nature of their policies, while still hanging on to the conceptual virtues of both the HST and the carbon tax. I have two specific suggestions:

1. Lower the HST 1%-2%---with the lost revenue made up by corporate and personal income taxes.

2. Adopt the Canadian Centre for Policy Alternatives proposal to modify the incidence of the Carbon tax, viz. the low-income credit, at minimum, should be increased in line with carbon tax revenues, and ideally its share should be increased to half of revenues. The remaining half of carbon tax revenues should provide funds for other climate actions.

Even if the loss of revenue from reducing the HST (and the corresponding hike in income taxes) is too great to permit the adoption this prescription, one could always narrow some exemptions in order to lower the overall rate or broaden some other exemptions at the current rate, or target subsidies to the poor, etc. My general point is, I think still valid: that there a number of ways of dealing with the equity issues raised by the HST and the Carbon tax, short of abolishing these taxes altogether.

A Point of Clarification about the Olympic bursary

2010-04-28T06:37:00.000-07:00

When I suggested that there should be a $200 million BC Olympic bursary, I wasn't just suggesting (in the middle of a deep recession) that an additional $200 million in taxes be raised for my favourite spending priority. This was also an argument about spending existing funding more effectively. The number of $200 million corresponds to my rough calculation about what it would take to bring the BC's average student debt load down to the national average. The kind of support--tied demand-side subsidies to students--was based on my analysis of the relative strengths and weaknesses of vouchers, grants to universities and tuition freezes as alternative policy instruments.

What if $50 million could be found in other existing government outlays, including existing universities funding? And if another $50 million could be found from the federal government? That would only leave $100 million of additional spending to found out of rising resource revenues and plugged tax loopholes. If $200 million will close the access gap for the 100,000 neediest full-time studentsover four years, then a mere $25 million will close half the gap for a single year.

Any takers?

Site C is the Big Test for Environmental Assessment Office

2010-04-18T20:47:00.000-07:00

Way back on November 30, 2006 , I worried that the three coal-fired power plants being planned by the government would be subjected to one of the weakest environmental assessment procedures in the country. Fortunately, those coal-powered plants were cancelled en route to a newer and greener image for Gordon Campbell. But now that the Site C Dam project is being resurrected, we must again ask: is this EA process up to the job?

BC’s Environmental Assessment Act was rewritten in 2002, replacing one of the country’s most progressive provincial EA laws with one of the weakest laws. Strong provisions that were eliminated included a purpose section emphasizing sustainability, requirements to examine cumulative effects, the need to detail alternatives, and innovative public participation requirements, including a mandatory role for First Nations. All of these functions are now being performed more ‘flexibly’ and ‘efficiently’ by a more ‘streamlined’ Environmental Assessment Office.

Perhaps the high profile of this project will help to ensure that the SiteC assessment will be conducted properly. But it will require vigilance and strong public pressure every step of the way.

NDP Should Play a Leading Role in Debating Healthcare Reform

2010-03-28T14:24:00.000-07:00

When the Liberal Party of Canada recently held a "thinkfest", I wasn't exactly blown away by the experts. Dont get me wrong; philosopher Daniel Weinstock, former Bank of Canada governor David Dodge, former University of British Columbia president Martha Piper and former foreign affairs minister Lloyd Axworthy are all very bright people and important leading citizens of our country. It's just that the big topic of conversation turned out to be the cost of health care, and none of these people is really an expert on health care.

The NDP spends so much of its time and energy fighting defensive rearguard battles that it could do itself a lot of good--and a bit of good for its image--if it held its own thinkfest directly confronting the question of what to do about a health care system in which costs will be rising twice as fast as the rest of the economy for the next couple of decades. It could assemble a more expert and more diverse group of speakers than the Liberals just did: How about Roy Romanow debating Janice MacKinnon on the sustainability of single payer health care? Dr. Bob Evans of UBC and health futurist Jeffrey Bauer on the potential of 'reform from within' public health care? Yale political Scientist Theodore Marmor on comparative perspectives and Dr. Marcia Angell of Harvard on healthcare reform from the perspective of the medical profession in the United States?

David Dodge? Lloyd Axworthy? Give me a break!!

My BC-STV Post-Mortem: Half a Loaf Would have been better than No Loaf--and it would have been better than a Whole Loaf, too.

2010-03-17T14:04:00.000-07:00

It is important for both proponents and opponents of BC-STV to recognize that the near-win in 2005 and the decisive loss in 2009 were influenced by party politics and the (un)popularity of governments. BC-STV supporters in 2005 got a bump because there was still a lot of lingering distaste for the Liberals; in 2009 they got a thump as Liberal supporters came to appreciate how the existing electoral system seemed to give their party a firmer grasp on power.

I have finally taken a look at Fred Cutler's data and the debate about it at The Tyee: http://thetyee.ca/Views/2009/07/08/WhoKilledSTV/ and it is difficult to argue with a statistic as stark as this: Over 60% of Green and NDP voters supporting STV in both elections, while only 20% of Liberals supporting it in 2009 (down 30% from 2005!).

To be sure, however, the more recent result was also due to the fading of memories about absurd election results in 2001; to the ease with which opponents of BC-STV could make fun of the vote-counting method; and to the size of ballots and constituencies.

I have long felt that the Citizens'Assembly should have been more cognizant of the constraints placed upon it by the Legislature (largely at the behest of the BC Liberal caucus)--namely, the 60% threshold and the 79 seat limit. Specifically, both of those factors indicated that reaching for anything close to pure proportionality would be a mistake. The perfect is often the enemy of the good, and in this case huge interior ridings and long urban ballots proved to be a turn-off for many people who were otherwise interested in electoral reform (remember, Cutler's finding was that, in general, interest in electoral reform went slightly up between 2005 and 2009.)

I think David Schreck may have been right when he said "They (the Citizens Assembly and electoral reformers) lost the opportunity of a lifetime in 2005 by recommending BC-STV rather than some more acceptable form of proportional representation." But 'more acceptable' need only have been a more moderate form of STV--what I have called "STV lite".

Had I been on the Assembly, I likely woud have tried to persuade my colleagues to keep single member constituencies in 10 or 11 of the largest northern ridings, albeit with a preferential ballot--in other words, AV for the North; 3-member constituencies in the large urban and suburban areas; and dual ridings up island and in the interior. (my preferred distribution under 79 seats in 2005 would have been: 10x1 seats for the North; 12X2 seats for the interior and small cities; and 15 X 3-member constituencies in Greater Vancouver and Greater Victoria). This would have significantly improved proportionality, but it would still not have been proportional representation--It could be called either 'semi-proportional' or 'semi-majoritarian'. And it would have had several significant advantages:

It would have made Green Party and other third party votes count, without too much risk of giving people who are "green" (in more ways than one) the balance of power in the Legislature. For example, in my home riding of the Cariboo there would have been fierce competition for the second preferences of Green voters---and every reason for Green voters to get out on election day. It would have been the same story in many BC ridings.
It would have shaken up the safe ridings, like those of Linda Reid, Adrian Dix, Jenny Kwan, and Colin Hansen, transforming them into competitive multi-party contests.
It would have given voters constituencies that correspond more closely to their common sense notions of their regional communites, rather than to artificial political boundaries--districts like "Cariboo", "Richmond", "Kootenay".
It would have been a brave political party that ran a slate of three candidates of all the same colour and gender. To do so would have invited a hemorraghing of second and third preferences. As a result, there would have been a more representative legislature.
It would have expanded voter choice without the unpalatable consequence of geographically huge ridings or unfathomably long ballots--or the unsavoury aspect of MMP, which is a party list in which candidates are competing for favour of party members, not the preferences of the citizenry as whole.

Having such a semi-proportional option might still not have satisfied partisan Liberals who had come to love First Past the Post, for obvious reasons; or those who had strenuously objected to STV or preferential voting in any form. But it would have removed the two most objectionable features of BC-STV, namely the huge ridings in the interior and the long ballots in the cities.

And that might just have sold, in 2005 if not in 2009.

B.C. Policy Perspectives: A Quote Worth Heeding

2010-02-07T20:19:00.000-08:00

B.C. Policy Perspectives: A Quote Worth Heeding

A Quote Worth Heeding

2010-02-07T20:12:00.000-08:00

" The disposition to admire, and almost to worship, the rich and the powerful, and to despise, or, at least, to neglect persons of poor and mean condition...is...the great and most universal cause of the corruption of our moral sentiments." ---Adam Smith

http://www.nybooks.com/articles/23519

New Green Energy Task Force= Another "New Relationship"?

2010-01-17T22:29:00.000-08:00

Gordon Campbell's Native Economic Development Advisory Board and First Nations Leadership Council were effective means of bringing First Nations Leaders within Liberal-led governance structures--and an effective way of defusing them as a possible source of Opposition. Now the same thing is happening with leading members of the Environmental Movement: In December Tzeporah Berman was handing Gordon Campbell an Award in Copenhagen; in January Campbell is naming Berman to his prestigious new Green Energy Task Force.

And is that such a bad thing? Co-optation is bad if it prevents something better from happening. Unless the NDP and the Greens come up with something better to produce a green energy policy and a green infrastructure, then it I am not going to complain too loudly.

Furthermore, I have already argued in my chapter in the recent B.C. Politics textbook, British Columbia Politics and Government (2009), the incorporation of interest groups and NGOs into institutionalized webs of governance is a well-established trend; premier Campbell is merely hastening that process and steering it to his political advantage. The NDP should endeavour to do likewise.

I have three suggestions for the new Green Energy Task Force:

(1) Turning revenue from carbon tax into supporting green infrastructure projects, instead of simply reducing progressive income taxes;

(2) Increasing spending on support for agriculture and agricultural production, an area where BC has lagged behind all other provinces;

(3) Shifting emphasis from promoting fish farms and private hydro to promoting wind, geothermal and bio mass on public lands and private lands zoned for agriculture--esp. since wind farms and many biomass projects are consistent with agricultural land use.

Canada's next Governor-General should be a a First Nations Leader

2010-01-16T12:30:00.001-08:00

Her Majesty Queen Elizabeth II is a hereditary chief. Why shouldn't her representative in Canada be one as well?

I haven't had the time to write a proper OP-Ed , or even a letter to the editor on this subject, but since nobody on CBC's At Issue panel will say it, I will: the next Governor-General should be a First Nations person. Alberta's Willy Littlechild would be a good choice, so would B.C.'s Wendy Grant-John. Numerous Cree and Metis leaders can speak passable French.

It is long overdue.

What Caused America's $1.4 trillion deficit and $12.3 trillion debt?

2010-01-16T00:23:00.000-08:00

#1 Google or bing "Cost of Bush Tax Cuts" for 2001 through the end of 2010, and you'll find the figure of $1.9 trillion dollars.

#2 Google or bing "Cost of the Iraq War" and you'll find an expected total direct cost to U.S. taxpayers of $1 trillion dollars and a total cost to the economy of $3 trillion dollars.

#3 Then there was the loss of revenue associated with the financial crisis---which cost close to $5 trillion dollars for various bail-outs to avert collapse and a further $ 1trillion dollars for the economic stimulus package necessitated by the recession.

#4 But don't forget that the real villain is all those liberal "entitlement" programs, like President Obama's health care reforms, whch could, according to the Congressional Budget Office, offer a decrease in the deficit of $132 billion over the first decade, and a decrease of $1 trillion or more in the decade 2020-2029. Blame President Obama for that.

Can the Left Be Trusted to Reinvent Government?

2010-01-04T15:21:00.000-08:00

This question occurred to me while I was reading a recent newspaper article concerning the federal government's plan to reduce debt by eliminating public service positions when baby-boom civil servants retire. How should a more 'progressive' government approach the same set of issues?

(1) From sunset to sunrise policy areas. One clue comes from the private sector, where the adage from industrial policy is 'protect workers, not jobs'. There is nothing sacred about a position, even when it is one's own. What is sacred is the idea of a public service career that directs resources and bureaucratic talent to where they are most needed. If we are going to expand single-payer medicine and the funding for it into home care and pharmacare, for example, it should not be necessary to raise taxes in order to do so---if the resources can be found inside government.

(2) Vouchers Where Appropriate (i.e. not schools). I have written elsewhere that the voucher concept works well in areas where there are (1) a small number of simple, discrete policy goals; (2) the relevant clients are individuals rather than institutions or complex policy communities; and (3) the relationship between policy means and ends is clear and direct--labour re-training and post-secondary tuition are the two examples I used.

(3) Putting the 'Public' Back in Public Administration , i.e. through Greater Public Sector Accountability. There are examples where corporate modes of governance have failed miserably, particularly in the health care sector---regional health boards in BC and Ontario consisting of members from the corporate sector approving the allocation of swine flu vaccine to private clinics, fo example, or nine executives in an outfit like Infoway paying themselves $3.9 million last year because of their supposed expertise in coordinating healthcare data; or the CEO at E Health Ontario receiving a bonus of $114,000 after only four months on the job. I have heard through the grapevine that similar sums of money are being earned in Alberta by new CEOs simply for making across the board cuts of a given percentage. The bottom line is short-term budgets, not quality or even the intelligent management of long-term costs.

The reasons for this state of affairs are at least twofold: (1) Witless neo-liberal obeisance to the corporate sector; and (2) gutless fear that handling these issues in -house, using line ministries directly accountable to the Minister, will result in --gulp--direct political responsibility for any mistakes that are made. In the words of the former Deputy minister of Health in BC, Lawrie McFarlane, "It is time that we rebuilt healthcare delivery around a more accountable framework. A good way to begin would be axing corporate boards."

Paul Samuelson: The Greatest Economist Since John Maynard Keynes

2009-12-20T20:21:00.000-08:00

A week ago I gave a paper at Erasmus University in Rotterdam, the alma mater of Jan Tinbergen, the first winner of the Nobel Prize in Economics. As I passed a memorial to Tinbergen in the centre of campus, I remarked to a colleague that I thought it was Paul Samuelson who had been more deserving of the honour of being the Prize's first recipient. This sentiment is no doubt being echoed around the world following Samuelson's death yesterday, at the age of 94.

No one did more to make economics a rigorous analytical discipline than did Paul Samuelson. For that very reason, some people blame him for making economics inaccessible to ordinary folk (somewhat true, but most of the basic ideas taught at the introductory level still require little math to understand) and for reducing the vagaries of social life to black and white formulas. This latter complaint is unfair, however, because Samuelson always prized subtlety and eschewed simple ideological answers. It was his near-contemporary and sometimes intellectual rival, Milton Friedman, who was far more guilty of a living in a "black and white" universe.

I can only agree with what Samuelson earlier this year in an interview with Forbes magazine:

"Today we see how utterly mistaken was the Milton Friedman notion that a market system can regulate itself," ... Everyone understands now, on the contrary, that there can be no solution without government. The Keynesian idea is once again accepted that fiscal policy and deficit spending has a major role to play in guiding a market economy. I wish Friedman were still alive so he could witness how his extremism led to the defeat of his own ideas."

(For A Christmas Coda: http://www.youtube.com/watch?v=kQES16MmFNI )

Note to NDP, Taxpayers: Two Can Play the Revenue Neutrality Game

2009-12-20T16:27:00.000-08:00

Whether it is Ignatieff, Dion or Campbell calibrating the cost of their carbon tax proposals, or President Obama costing healthcare reform, "revenue neutrality" seems to be the new gold standard for measuring tax policy. I reject this assertion, because (1) it assumes that current levels of taxation are somehow the right ones, no matter what the policy goals at stake; and (2) it assumes what philosophers call a utilitarian ethic--focusing on a global assessment of utility while ignoring the distributive consequences of a tax. Both of these assumptions ignore too many factors for 'revenue neutrality' to be a sound standard of evaluation.

Nevertheless, if "revenue neutrality" insulates a government from the charge that it is taxing society more, then the NDP can play that game too. Simply reduce the HST by 2 or 3 points , and then increase personal and corporate income taxes a corresponding amount, so as to ensure that total revenues are unchanged. There will be howls of rage on the right, of course, since "their" money will have been taken away again and given back to those middle and lower-income people. But it would not be increasing the total tax burden on society: it will simply be reversing the thinly-veiled redistribution of wealth that Gordon Campbell has been undertaking for the last 8 years.

Harper's Climate Change Strategy: Stay Just Behind the Curve

2009-12-19T09:01:00.000-08:00

Yes it is PROBABLY RIGHT to say that something is better than nothing--although it could be worse than nothing if it lulls people into thinking that it is enough. I am also willing to believe that Canada did play a constructive role in putting together a minimal agreement--since that is all that Harper and Prentice wanted in the first place.

I am a Canadian, and as such am frustrated by my government's attitude that it will only do what the Americans do--in order to avoid the economic cost disadvantage that Canadian industries would suffer if we did better. Accordingly, the only green technology that Canadian governments have invested heavily in is carbon sequestration--because that is an investment in the oil industry.

These are the actions of government that doesn't really believe in climate change. If it did, it would recognize that costs of adapting to catastrophic climate change completely dwarf the costs to industry that it is apparently most worried about. It would also recognize that there are economic benefits and opportunities galore in being ahead of the curve, instead of staying doggedly just behind it.

A Windfarm Might Be Appropriate for Boundary Airport--ALR area

2009-12-18T13:43:00.000-08:00

I recently travelled from the Amsterdam airport to Rotterdam via a high-speed train. The 20 minute journey reminded me of the drive from Tsawwassen to downtown Vancouver--except that, in addition to the quaint Vander Zalm windmill there were also several modern wind turbines and what looked like hydroponic farms. It made me wonder: am I having a glimpse of the Lower Mainland's future?

Certainly, the value of agricultural reserve/farm land cannot continue to diverge from speculative land development value forever; in addition to doing more to support agriculture per se, the provincial government might wish to look at wind farming. If it is not feasible for privately-owned lands, then it might be considered for the public lands around Boundary Bay, Boundary airport or Burns Bog (?). If, of course, it is compatible with the wild fowl who like to fly through these areas.

If a country as small and densely populated as Holland can find space for numerous "wind farms", surely British Columbia can as well? I suspect that deep down Campbell & Co still harbour a land developer's desire for commerical and residential propoerties springing up from the farmland. Which is why they don't invest the effort to think of ideas like mine, but will throw out incentives galore for less environmentally sound projects like fish farms and mini-hydro.

Carole James on Cruise Control

2009-11-28T22:11:00.000-08:00

There is nothing especially deplorable about the cautious centrist business-friendly tack that Carole James took at the recent BC NDP convention. I agree with Rod Smelser's comment on Bill Tieleman's blog that "[n}o professional political strategist in any nation in the democratic world has ever recommended any strategy other than a pragmatic, centrist one for any party that is on the doorstep of winning power and wants to go that last, extra mile." I also agree that Carole has performed acceptably well in both of the last two election campaigns--well enough to win in 2013, just as Mike Harcourt performed well-enough in 1988-1991.

My criticism is of how many NDPers are dependent on what political scientists call the "absent mandate"-i.e. the mandate that comes not from genuinely persuading the voters to support the NDP platform, but simply from waiting until the normally governing party rots from within and its ability to win local pluralities in a majority of ridings collapses. Since many MLAs and operatives can count on this happening 3 or 4 times during their working lives (i.e. enough times for their favoured legislation to pass and for their public pensions to vest), they don't bother doing the really hard job of selling their ideas to a majority of constituents. Nor do they favour an electoral system that would give them more incentive to do so ( a degree of proportionality will force governments to care about every voter). "Carole will probably win anyway, so don't worry about it."

The problem with the absent mandate is that it quickly dissolves once in office, like a castle made of sand. It was frustrating to watch the Harcourt government, with its bright youthful cabinet and impressive policy agenda, struggle to explain their policies and mobilize support from the public. I predict that Carole James, who reminds me of Harcourt in more ways than one, will experience a similar fate, even if she does succeed in being the first woman to lead a party to victory in a B.C. general election.

What Obama Should Have Said to Israel

2009-11-28T09:44:00.000-08:00

President Obama has the right priorities and he articulates them well. For that reason alone, he merited his election, and probably merits re-election as well. But he also came out of the starting blocks compromising, instead of using his power and prestige to make others compromise. He thereby wasted some of the political capital he had when he was elected, and has encouraged his opponents and adversaries at home and abroad to paint him as being 'weak'. This mistake was understandable, at least in the area of domestic policy, because he was trying to learn from the examples of Presidents Carter and Clinton, who ran into trouble after antagonizing Congress. But a President is upposed to have more latitude in foreign policy than in domestic policy---even if foreign policy touches upon some important domestic constituencies.

At the outset, President Obama should have set a new, tougher tone with Israel in order to expedite the peace process. Specifically, he should have listed a set of penalties for Israel for continuing to build settlements anywhere in the occupied territories, including East Jerusalem:

1) witholding government loans;
2)deducting the amount of aid money to Israel in proportion to the amount of money that Israel spends on settlements; and
3) indicating that henceforth the US will not automatically wield a protective veto over UN resolutions that are hostile to Israel.

Now, it is true that Israeli P.M. Netanyahu has recently ordered a temporary freeze on settlements in the West Bank ,but not East Jerusalem. That is because he was embarassing and angering the President of the United States, who had been under growing pressure to apply sanctions. So he deftly avoided that eventuality by "voluntarily" agreeing to stop some of the settlement building.

But it should be President Obama letting Netanyahu off the hook, not the other way around. And then only if all , and not just some, of the settlement building is stopped.

------------------------------------------------------------------------------------------------

It was amusing to hear former Vice-President Dick Cheney accusing Obama of "dithering" over his decision about Afghanistan. This certainly doesn't appear hypocritical when you consider how "decisive" Bush and Cheney were about Iraq in 2001-2003. But it is hypocritical when you consider that the proper focus of the War on Terror--Afghanistan and Pakistan--has been neglected for six years. All the more reason to call the Bush presidency one of the worst in history.

David Vickers, R.I.P. : The Best NDP Leader We Never Had?

2009-11-20T16:25:00.000-08:00

Did you ever wish that we could have a premier who could combine the practical intelligence and self-confidence of Glen Clark with the moderation, procedural values and common sense of Mike Harcourt? With an extra dollop of character, vision, and good judgment to boot? It nearly happened in 1969, when Tom Berger led the NDP into an election that was called early by W.A.C. Bennett precisely to prevent the electorate from getting to know the new leader. It could have happened again in 1984 when David Vickers was passed over for the likeable but soon-to-be overwhelmed stalwart Bob Skelly. "Seniority without substance is a dangerous thing," would have been an unkind cut, but the truth is, the NDP was just as prone to make the wrong choice as its Social Credit opponents were. And that is exactly what both parties did.

David Vickers had paid his dues--as an outstanding lawyer, as a briliant young Deputy Attorney-General in the Barrett government, as a tireless advocate for the homeless, as a prominent Solidarity spokesman, and later as a distinguished judge on the B.C. Court of Appeal. That he never became premier is a shame.

British Columbia still awaits its first, badly-needed Allan Blakeney.

Who Deserved the 2009 Nobel Peace Prize?

2009-11-19T16:41:00.000-08:00

1. George Soros and Bill Gates, for channelling business philanthropy in some new and highly constructive directions; or
2. Bob Geldof and Bono for channelling popular music in some new and highly constructive directions; or
3. President Barack Obama, for the intellectually defensible reason that simply having a President of the United States with the right priorities for a change is more important at this juncture than just about anything that anybody else could do.

President Obama's Show of Un-Strength

2009-11-05T09:22:00.000-08:00

If President Obama continues to try to please his opponents and to let others push him around, he will not be as successful as JFK or Reagan. That's too bad, because he has all the other qualities of being a great president.

First, he gave ground to conservatives on government health insurance. He was right and they were wrong. SO why the give?

Second, he gave ground to leftist trade unionists by needlessly provoking the Chinese on tire imports.

Then he allowed his White House to get drawn into a verbal spat with FOX news--a can't-win scenario that only boosted FOX's ratings and made his Administration look petty.

NOW he's giving in to the Israelis on settlements--allowing them to consolidate the expansion of major settlements--and 900 new homes in East Jerusalem--without a whiff of sanction.

Obama may yet get his health care bill signed into law and a climate change treaty ratified--but I am afraid that they will surface in such watered down forms that they will be vulnerable to attack from both sides-- by the Left as insufficiently drastic and by the Right as being expensive with little tangible benefit.

When the President was sky-high in the polls, he could have been bolder on all of these issues. Now that his ratings have fallen to ordinary levels, he is even more likely to behave in an 'ordinary' manner. He must resist that temptation. Be BOLD, Mr. President. Be BOLD.

The Alberta Disadvantage

2009-10-20T08:29:00.000-07:00

If a televised leaders' debate were held in Alberta today, Danielle Smith would likely mop the floor with Ed Stelmach, while making Liberal leader David Swann and NDP leader Brian Mason look like helpless waffling bystanders. She comes across as a bright, energetic, young, and knowledgeable about business and the oil patch. In pure political terms, she could be the next Peter Lougheed.

The problem is that she is not Peter Lougheed. Her party's basic message--that Alberta's problems stem from the ruling Progressive Conservatives having drifted away from the populist low-tax free-market philosophy of Ralph Klein and the Reform Party---is fundamentally flawed. Ralph Klein was the problem, not the solution. "The Alberta Advantage" largely consisted of using revenues from nonrenewable resources to subsidize current consumption. Unless of course you really believe that it was low taxes, and not high international oil prices, that was the principal source of Alberta's prosperity. Levelling the income tax and eliminating the sales tax and giving away Klein bucks merely made Alberta's public services, health care and infrastructure more completely dependent on oil revenues, accentuating the terrible rollercoaster of the past 3-5 years.

But if I am right, even if the government woke up to the truth tomorrow morning and fully corrected its policies (e.g. by bringing back medical premiums, a small sales tax and a more progressive income tax, in addition to the new royalty regime), it would only drive that many more voters into the arms of Danielle Smith and Company. Furthermore, the lower tax regimes recently put in place in Saskatchewan and BC, and improved capital and labour mobility due to the TILMA, mean that threats by business and professionals to move are not quite as easy to ignore as they once were. An avoidable situation has hardened into a dilemma for the government.

It's policy versus politics, and I think we all know which force is the stronger. For Ed Stelmach, "smelling the roses" has just taken on a whole new meaning.

The Limitations of Monetarism

2009-09-24T18:09:00.000-07:00

It seems to me that the current economic recession and the financial crisis that precipitated it are distinguished by the extent to which they were created by conservative ideology and created by misguided conservative economic policy. The events of the past year have also laid bare the limitations of monetarism, the economic credo which holds that the most important instrument of economic policy is monetary policy, and that the objectives of monetary policy are best met by targeting the growth rate of the money supply. Monetarists (most famously Milton Friedman and Alan Greenspan) advocated a central bank policy aimed at keeping the supply and demand for money at equilibrium, as measured by growth in productivity and demand. Neo-Keynesians such as Jospeh Stiglitz and Paul Krugman have argued that the relationship between inflation and money supply growth is weak when inflation is low; and, as Lord Keynes himself pointed out, monetary policy is bound to be less effective (and fiscal policy correspondingly more important) when interest rates are low. While monetarism gained credibility in the 1970s and 1980s, when inflation appeared to be the biggest problem (and high interest rates were deemed to be part of the solution), its limitations have been made all-too-apparent in the past year.

In the first place, the attitude of monetarist central bankers that they should concentrate on getting the money supply right and controlling inflation and otherwise be non-interventionist played right into the hands of financiers bent on leveraging more and more money in an ever-expanding speculative bubble that was bound to burst.

In the second place, exclusive reliance on monetary stimulus while keeping budgets balanced when interest rates are near zero would guarantee a much worse recession.

Clearly, right-wing monetarists have as much reason for humility in the face of this crisis as Keynesians did in the inflationary crisis of 25-30 years ago.

An Expert Agrees With Me (Sort of):
Hi Mark,
I’d more or less agree. The term Monetarism is used in the profession to describe monetary targeting. As there are no central banks that do that, the term isn’t used much anymore. Inflation targeting is the new approach. However, it is “monetarist” in the sense that central banks have concentrated on inflation and have advocated that it should be the only goal of monetary policy. In the abstract, this is a compelling position provided there are in place other mechanisms for controlling credit. David Dodge at the Canadian meetings argued for an umbrella institutional structure for dealing with the various dimensions of credit. In the absence of such a structure, the Bank should have been cognizant of asset price targeting.
---M.E. (UVIC Economics Department)

Is Kevin Milligan wrong about VATs being compatible with progressive outcomes?

2009-09-19T18:45:00.000-07:00

In the course of the VAT/HST debate in British Columbia, professor Kevin Milligan of the UBC Economics department made an important point.

He referred to this table of VAT rates around the world. ("VAT" or value-added tax, of which the HST is the latest example) is the term Europeans use to describe their consumption tax, which is levied on any value that is added to a product--unlike the simple sales tax, it is not levied on the entire value of a good and service at every stage as it passes from original producer to final consumer.) Milligan noted that in France the rate is 19.6%. In Sweden it is 25%. We know that these are two of the most equal countries in the world, with respect to incomes.

So, how is it that these countries have this huge VAT and yet have a very equal income distribution? Milligan suggests that the pre-tax income distribution is less extreme in those countries (e.g. executive pay is much less) and that their income tax systems are more distributive.

"So, it strikes me, looking at that VAT table, that the barrier to a more equal society is not avoiding a large VAT, it is having progressive tax rates and less pre-tax income inequality.
VATs present no barrier to having more equal economic outcomes."

I agree. I first became interested in consumption taxes as an undergraduate student over a quarter of a century ago. (Some would say that was the beginning of my indoctrination.) But the people I was reading--economists Albert Hirschman and Arthur Okun and philosopher John Rawls were three that I remember most clearly--were anything but neoconservatives. They reasoned that the trade-offs between equity and efficiency could be reduced if (for a given level of taxation revenue)the tax did less harm to incentives to invest, work and save. And there was an additional, more practical reason for liking consumption taxes: they were more difficult to evade. Income taxes are festooned with loopholes, which are exploited by corporations and affluent professionals but not by workers who are taxed at source in their payrolls. With consumption taxes, the loopholes are for the poor and the workers: on basic groceries, basic accommodation and so on.

SO, when the NDP returns to power in B.C., it should look to (1) broaden these HST exemptions and rebates, if necessary; and (2) make the income tax more progressive, if that is possible. (In fact, that could be the Left's version of a revenue -neutral tax change--use the latter to offset the former.) But I do not see the need to scrap the HST or to raise everyone's income taxes an enormous amount.

Is Bill Tieleman RIght about the "Elephant in the Room'?

2009-09-15T21:20:00.000-07:00

Bill Tieleman's criticism of my previous column makes me wonder if I don't try too hard to read the broader "public interest" in my academic tea leaves, perhaps because I wish to avoid the uncomfortable truth that much of what Campbell's Liberals do is done to advance the material interests of Vancouver's commercial elite. (The HST and carbon tax are both more easily handled by affluent Vancouverites than by us regular folks, and much preferred by them over higher progressive income taxes and corporate taxes.)

Here, in case you missed it, is what Bill said:

"Mark - I fundamentally and totally disagree with your basic premise. And as a left-wing commentator I approved of Stephen Harper's cuts to the GST.

You state almost off-handedly the central problem: "(Even though expenditure taxes are regressive compared to income taxes, that feature can be rectified by devices like the GST tax rebate for people earning lower incomes, and more targetted spending in certain areas.)"

In other words, even though there's a bloody elephant in the room, maybe we can find him some peanuts!

I can't figure out why you and other smart folks are not recognizing the obvious - consumption taxes like the GST and the proposed unfair BC HST are inherently regressive, harmful to lower and middle-income earners despite any "rebates" and are a drag on consumer spending."

All I wish to say in my defence at this moment is that (1) I don't like Harper taking his ill-timed
pro-cyclical tax cut and then, when the recession hits, dressing it up as an Economic Recovery Program; and (2) I think that $12 billion in lost revenue could be better spent elsewhere, at least for the purposes of fiscal stimulus during this recession.

But Bill's comments do make me wonder sometimes whether I try too hard to find a common public interest, simply because I am emotionally and intellectually reluctant to see an unpleasant truth about BC politics: that issues like the carbon tax and expenditure vs. income taxes and the HST are actually reducible to pure, zero sum, distributive struggles and class interests. That people who latch on to the idea that pollution and expenditure taxes are more efficient or socially optimal and harder to evade than income taxes are merely providing cover for elite interests at the expense of working people, whether they realize it or not.

In other words, they refuse to see the elephant in the room; and the positive sum game they are reaching for is, if not exactly illusory, then, as Bill puts it, just peanuts.

GST cuts are STUPID,STUPID, STUPID

2009-09-12T08:34:00.000-07:00

Well, I am not running for office, I am not an apologist for any political party, so I can say what I think. The federal government's insistence on cutting sales taxes is not a great idea.

In the short run, insisting on GST cuts merely makes a record federal deficit bigger, cuts into the EI surplus, necessitates the increase of EI premiums, and hampers the government's ability to help Canadians weather the recession.

In the medium term, (i.e. the duration of the recession), the majority of academic economists are surely right when they say that GST cuts are not the most effective way of delivering counter-cyclical stimulus (number 1 is EI , number 2 is infrastructure). When Harper is dismissive of the economics profession saying that "retailers are in favour of it", he is talking about a segment of the population that can only capture a small part of the benefits of alternative spending, but a large part of the benefit of the sales tax cuts. THEIR INTERESTS ARE NOT IDENTICAL TO THE LARGER PUBLIC INTEREST.

In the long run, surely we want to build a taxation system that 20 years from now has both (1) met the challenges of an aging population and the need for wise social investments; and (2) has shifted the burden of taxation away from earned income, savings and investment and towards pollution and expenditures. Our society will be more equitable and efficient as a result. (Even though expenditure taxes are regressive compared to income taxes, that feature can be rectified by devices like the GST tax rebate for people earning lower incomes, and more targetted spending in certain areas.)

The GST cut maybe not stupid politically though---if opposition parties were as strident as I am in this blog, Tories could then say that the Opposition favours "higher taxes"--which is misleading (under the Conservatives' GST cut, Canadians simply will pay out of their other pocket with deficit that is $12 billion higher, EI premiums that are higher and benefits that are smaller, etc.), On the other hand, if the opposition declines to take the bait, it becomes harder to distinguish their policies, or pay for all of their promises.

Pre-recession policies like GST tax cut and $1200 child tax credit feature prominently in Tory ads as part of Canada's "Economic Recovery Plan". What's wrong with that? It certainly saves money to dress up old policies in new clothing, but it makes you wonder if maybe other countries are doing more to use the crisis as an opportunity to build green infrastructure, etc. I suspect that this political management of the recession--just like the Liberal management of Kyoto--is penny-wise and dollar poor.

{BY the way, isn't it remarkable that Stephen Harper can be so responsible for giving minority government a bad name--and then use that effectively as an argument for giving him a majority? It's not that he is so terribly clever; it's simply that he has a huge structural advanatage that comes from having a unified party on the right and a high degree of fragmentation on the centre-left. May I suggest once again that the Green Party step down in 30 Liberal-designated marginal seats and in 15 NDP marginal seats, in exchange for the Liberals and NDP giving Elizabeth May a clear shot at Gary Lunn in Saanich and the Islands?}

This time, Jack Layton Should Talk To Elizabeth May

2009-09-08T12:08:00.000-07:00

Jack Layton has been a reasonably good leader for the NDP, if only because he has brought the kind of energy and forceful presence to the national stage that Ed Broadbent said that he would. But if he wants the NDP to challenge the Bloc Quebecois for third place--much less challenge the Liberals--he needs to soften his attitude towards Greens on the Left and social liberals on the right. Rumour has it that before Elizabeth May approached Stephane Dion , she approached Jack Layton with the idea of not running candidates in a pair of ridings (i.e. allowing the other party's leader to run unopposed by their party). Layton rebuffed her, saying the NDP was Canada's green party and that all 308 ridings would have NDP candidates.

But with May now taking aim at Gary Lunn, the NDP should ask whether it also has a strategic riding that could benefit from vote-swapping with the Greens. Until we get some degree of proportional representation (or some kind of Democratic Party of Canada is formed out of a merger of the NDP, Greens and Quebec progressives) this may be the best way out of the current vote-splitting impasse.

{P.S. Note the comment on this blog by Julian West at http://www.facebook.com/n/?note.php&note_id=129904416591&comments&mid=110e12aG26c845ebG28d3995Gd }.

Mr. West is correct in saying that the NDP should not simply allow a one-for-one seat swap, which would permit the Greens to split the progressive vote all over Canada as well as getting a clear run at Gary Lunn. Since the Greens only have an outside chance of winning a single seat, while the NDP has a corresponding chance of winning 40-60 seats, the NDP should offer to support Elizabeth May solely on the condition that the Greens step down in at least a dozen seats that are potentially winnable by the NDP.

There should be a focused, pragmatic, achievable goal for this election, which is to be able to form a stable minority government (LIberal or NDP) without Bloc Quebecois support. The Greens and NDP could then extract a green social contract for change that would spare people another election for at least two years.

P.S.S. Current party standings are Conservative 143; Liberal 77; Bloc 48; NDP 36; Independent 1 and 3 vacant. Liberals plus NDP need 30 seats between them to unseat the Tories and an additional 12 seats to gain an over-all majority and obviate the support of the Bloc. Since the ideal result would be about 30 seat gain for Liberals and 15 for the NDP, the Greens should offer to step down in approximately that same number of ridings in exchange for Liberal and NDP support for May in Saanich and the Islands. (A deal with the Liberals as well as the NDP, while extremely unlikely, would be sweet.)

An Unnecessary Federal Election? That was in 2008

2009-09-06T11:28:00.000-07:00

Before you get mad at the Liberals and the NDP and the Bloc for pulling the plug and triggering another fall election, remember this: it was the October 2008 election that was unnecessary, and it was orchestrated by the Conservatives, not the Liberals. Steve and the boys in the PMO saw the recession coming, and figured this was this was their last best bet for a majority government. So they wrote up guidebooks for their MPs instructing them on how to make Parliament and parliamentary committees not work. And they stepped up their personal attack ads on Stephane Dion---a new low in Canadian politics, since such ads had never been seen before between elections, before the writ was even dropped.

In contrast, the fall election of 2009, if there is to be one, is actually necessary. It will be a referendum on the way this government has managed the recession, but I suspect that the government will actually want you to believe that the issues are much smaller than they really are: that this election is about the GST tax cut and the home renovation tax credit; about the "sensible" way that this government has "managed" these issues; and about Michael Ignatieff's resume. The election really should be about the appropriateness of such a government in the middle of the worst ecological crisis in human history; in the middle of the worst recession in 75 years. The contrast between Harper's long years of denial about climate change and hostility to Kyoto and his sudden enthusiasm for responding to one of the symptoms of climate change by militarizing the arctic is, well, unseemly. In its response to the recession, the Harper government not only stumbled badly out of the starting blocks with its attacks on real and imagined opponents and talk about selling public assets. It made our politics seem smaller than they really were.

The coming election should actually about whether this government has (1) effectively responded to these crises and (2) more importantly, whether it has effectively seized the opportunities that these crises contain. Canada, as a signatory to the Kyoto Accord in 1997 and a country rich in both human and natural resources, should be a leader in building green infrastructure and pioneering green technology. Is it? Is the government using the recession as an opportunity to promote our human capital, our scientific and research potential, and diversifying our energy mix? My sense is that we are not--that we are falling behind Germany and United States while our governments "manage" the economic crisis. And that is just a shame.

The American Choice: Swiss or Dutch-Style Managed Competition or Australian Two-Tier. So Why All the Right-Wing Blather about Canada?

2009-08-20T09:05:00.000-07:00

The winner of the 2008 Nobel Prize in Economics, Paul Krugman, has again hit the nail on the head in his NY Times op-ed column, "The Swiss Menace". Krugman points out that (1) most of the talk about the UK and Canada is misleading; and (2) it's also besides the point, because really all that Obama is trying to do extend basic public sector care a la Australia and/or mandate more private insurance a la Switzerland or the Netherlands. So why all the talk about Canada? Because right-wing propagandists are aware of how ignorant most of their fellow citizens are about Canada, and are selfish and unethical enough to take advantrage of that fact.

As Krugman nicely (and bluntly) puts it,

"So where does Obamacare fit into all this? Basically, it’s a plan to Swissify America, using regulation and subsidies to ensure universal coverage. "

"If we were starting from scratch we probably wouldn’t have chosen this route. True “socialized medicine” would undoubtedly cost less, and a straightforward extension of Medicare-type coverage to all Americans would probably be cheaper than a Swiss-style system. That’s why I and others believe that a true public option competing with private insurers is extremely important: otherwise, rising costs could all too easily undermine the whole effort.
But a Swiss-style system of universal coverage would be a vast improvement on what we have now. And we already know that such systems work. "

"So we can do this. At this point, all that stands in the way of universal health care in America are the greed of the medical-industrial complex, the lies of the right-wing propaganda machine, and the gullibility of voters who believe those lies."

The only reason private health insurance works---SOMETIMES

2009-08-02T13:23:00.000-07:00

2008 Nobel Laureate in Economics Paul Krugman sums up the U.S. debate over health care very nicely in his current New York Time column, "Health Care Realities":

"Right-wing opponents of reform would have you believe that President Obama is a wild-eyed socialist, attacking the free market. But unregulated markets don’t work for health care — never have, never will. To the extent we have a working health care system at all right now it’s only because the government covers the elderly, while a combination of regulation and tax subsidies makes it possible for many, but not all, nonelderly Americans to get decent private coverage.

Now Mr. Obama basically proposes using additional regulation and subsidies to make decent insurance available to all of us. That’s not radical; it’s as American as, well, Medicare."

The Top 6 People to Replace Carole James

2009-07-27T21:25:00.000-07:00

NO, not him! And not her, either. There are only 6 people who can build and improve upon Carole James's leadership and also be acceptable as leader and premier.

1. Joy McPhail
2. Andrew Petter
3. Leonard Krog
4. Gregor Robertson
5. Mike Farnworth
6. Bob Simpson

Clealry, if Gregor Robertson proves to be a popular and successful mayor, he could rise to the top of this list. But for now, this is a better ranking. People who have raised families, succeeded outside of politics, and proven themselves in the legislature.

The U.S. Attack on Canadian Health Care

2009-07-23T21:11:00.000-07:00

Brian Day and Shona Holmes have appeared in U.S. TV ads funded by opponents of President Obama's health care reform plan in order to criticize the Canadian system. Most Americans never get to see or hear the opinions of the vast majority of Canadians, who would never want to trade their system for the American one. However well-intentioned Mr. Day and Ms. Holmes are, their messages are misleading on several different levels.

In the first place, the number of Canadians who are so sick of waiting lists that they go to the US is miniscule compared to the number of Americans who are uninsured–or the number of Americans who go north on “drug vacations” to buy cheaper medicine. Secondly, the fact that the Canadian Supreme Court required minimum wait list times isn’t an indictment of the system–it is just an example of how judicial review has helped to improve the system. Thirdly, it’s all a red herring anyway because Obama isn’t talking about creating a Canadian single-payer system –just about moving from a system of unmanaged competition (which is good for insurance companies, lawyers, pharmaceuticals and almost nobody else) to a system of managed competition.

Although Australia’s “two-tier” system isn’t great from a Canadian perspective, (since the research shows that waiting lists and quality of care in Australia actually are not improved in areas where the private system is allowed, since the private system siphons off nurses and doctors from the public system) the Australian system would still be a huge improvement for the United States. Simply extend the public Medicare and Medicaid systems in America to the 50 million or so who are now uninsured, and then let the rest buy better service from a managed private system if they wish. To denigrate that as “socialism” is just plain silly.

Is Gordon Campbell playing Divide-and-Conquer with Natives and Environmentalists?

2009-06-06T08:22:00.001-07:00

As I point out in Chapter 10 of the upcoming book BC Government and Politics , Gordon Campbell deserves credit for preventing a unified coalition of labour, environmentalists, First Nations and NGOs from coalescing. His strategic initiatives vis a vis First Nations and Environmentalists contributed to his ultimate victory. But a survey of his career suggests that this is no 21st-century triple-bottom-line Stephane Dion kind of politician. The treaties and the New Relationship with First Nations were instrumental to removing roadblocks to economic development. The carbon tax was attractive, not just because of the temporary salience of global warming in the polls, but because of the strategic aim of reducing income taxes for affluent Vancouverites. Campbell was quicker to conclude the Tsawwassen Treaty than the NDP was, not because he cared more about the Tsawwassen people, but because he cared less about the Land Reserve.

All of which suggests that many First Nations people and environmentalists may be in for a rude awakening over the next couple of years. The basic thrust of the native legislation currently being prepared for the legislature is to accelerate the painstakingly slow process of determining native title and rights--which may mean that many interests which had been staked on either litigation or negotiation are in danger of being downgraded or ignored. All so Gordon Campbell can get on with---what? He hasn't been as clear about his "vision" as either WAC Bennett or Dave Barrett were.

But then, neither has the NDP. Instead of playing electoral juijitsu with Liberals over issues like the carbon tax, the NDP needs to rebuild its red-green coalition and stake out a vision for prosperity, sustainability and justice that is just as practicable and just as comprehensive as the government's, (much as the NDP in fact did in the 1980s and early 1990s). Or it will deserve to lose--again.

Corporate Investment in Africa is Lacking

2009-05-26T13:51:00.000-07:00

Check out the following website, which investigates corporate activity ( or the lack of it) in Africa. What it has to say about Boardroom Attitudes toward Africa should raise a few eyebrows:
http://www.usafricainvestment.com/

One Sentence About B.C. Energy Policy

2009-05-22T20:55:00.001-07:00

Instead of paying private companies a premium to dam rivers, BC Hydro should pay private citizens a premium for any solar, wind and geothermal power they can generate, as Germany does.

Post-Election Analysis (2) : Is electoral reform dead or is it just STV that is dead?

2009-05-15T10:06:00.001-07:00

Of the 48% of the electorate who bothered to vote, 2/3 said they weren't interested. It sounds like the punch line to a bad joke.

Two ironies jump out at me from the long electoral reform process that we have just been through. First, it was ironic that even though the underlying premise of the whole exercise was that government was in a conflict of interest in deciding issues of electoral reform , Liberal backbenchers prevailed upon the premier to have a 60% threshold for approval--not needed to decide conscription or Quebec independence or Newfoundland's entry into Confederation, but necessary when MLAs jobs are at stake! Interesting! Second, it was ironic that the vote that finally defeated BC-STV was based on a turnout of about 48% of the population--an historic low which merely underscores the need for electoral reform. Bill Tieleman and others have proffered the solution of compulsory voting, but one gets the feeling that that solution is only treating a symptom and not the disease. To the extent that the problem is that voters are just too busy nowadays, compulsory voting is a satisfactory answer; to the extent that declining sense of voter efficacy, cultural shift, paucity of meaningful choices and unrepresentative legislatures are behind voting decline, more drastic measures are needed.

That being said, BC-STV is dead. The surprisingly low support for the system recommended by the Citizens' Assembly (39%, down from 58% in 1995), has even caused me to reconsider my own preferred solution, STV-lite. I was prepared, in the event of a "moral victory" of a 50% +1 vote, to wage an extensive campaign for a system that would be less proportional than BC-STV, but better at local representation ( 3-member ridings for big cities; dual ridings for southern interior and small cities; single rdings for the north). But perhaps the fatal flaw in STV was that its very name drew attention to a complicated vote-counting system. Perhaps the Citizens' Assembly should have understood that the perfect was the enemy of the good and that reaching for proportionality through STV was going to be a difficult sell. Better to drop the preferential ballot altogether and go back to the drawing board.

Specifically, we should go permanently back to 60 single -member constituences. The rest of the Legislature would consist of "at large regional MLAs", 4-6 larger electoral districts of 4-6 members each, depending on population densities and so on. An open list could still give voters the option of ranking the individual candidates of their preferred party, if they so wished; the "dual ballot" would be a simpler concept to understand than STV. Parties would be motivated to field lists that are ethnically and gender-balanced; local representation would hardly suffer and would arguably improve from having a "regional" dimension as well as a local one. Proportionality would be improved mildly. And minor parties would have a slightly better chance of getting elected (voter thresholds for 6-member seats being in the 16% range). Would a referendum be needed to validate such a proposal? I don't thinks so, but if so, then only a 50% threshold should be needed for this less drastic, and ultimately more sensible compromise.

Post-Election Analysis (1): It's the Economy, Stupid

2009-05-15T05:04:00.000-07:00

Vaughn Palmer hit the nail on the head in his column of May 13: " Given the paramount importance of the economic issue, would any plausible strategy have won this election for the NDP? Probably not." But wait a minute--if the Liberals take credit when times are good, and are "the best stewards" when times are bad, isn't that a "heads I win, tails you lose" sort of proposition? It sure is.

There is a fundamentally un-level playing field in this province, as this year's election results remind us. And give Campbell credit--he succeeded in pressing his advantage. Besides doing everything he could to stimulate growth in the private sector, his U-turns on First Nations and the Environment prevented a Solidarity-like United Front of interest groups from forming behind the NDP.

But there was a time in this province--in the 1980s and early 1990s--when the NDP not only fronted such a broad coalition, but had an answer to the Right's economic policies. As you may recall, the Socreds were heavily criticized by the economics profession for making the last Great Recession worse than it needed to be by "Restraining the Economy", as the title of the book put out by UBC's Institute of Economic Policy put it. These economists also argued that the province ought to place greater emphasis on human capital and less on mega-projects. As the 1980s wore on, the NDP added another leg to its economic strategy, namely the idea that by drawing upon its roots in the labour and environmental movements , engaging in wide-ranging stakeholder discussions, ending the "war in the woods" and undertaking land-use planning and treaties with First Nations, the province could move forward toward sustainable and socially just economic prosperity. This bore some fruit until external conditions hit hard, just as external conditions are hitting hard right now.

There is plenty to criticize in Gordon Campbell's economic policies. Virtually none of them have achieved the results hoped for, and few have even come close. The so-called Heartland Strategy, TILMA, privatizing BC Rail, BC Ferries and BC Hydro, the tax cuts, the fish farms, the tax shift behind the carbon tax and the compromising of the Land Reserve, the "e-government initiative", and so on have not generated much employment or growth. The key to growth remains external markets, especially resource prices. That is why a different strategy focusing on human capital and environmental sustainability as a better way to capitalize on the potential generated by external factors is still a viable option.

I have a hunch that environmentalists and First Nations are going to feel disappointed--maybe even betrayed--by the next Campbell government. The NDP should aim not only to be a vehicle for their discontent and the discontent of other members of civil society, but to be an actually better vehicle for economic policy that is also attractive for small communities and middle-class voters as well. Let's get to it.

Final Thoughts on the 2009 B.C. Election

2009-05-07T17:23:00.000-07:00

Congratulations to NDP leader Carole James for winning the TV leaders' debate. Now, after she loses the election next Tuesday I don't expect a headlong rush to replace her. Indeed, if she can improve NDP standings in the Legislature even slightly I would encourage her to stay on for at least a couple more years. But there are a couple of lessons that I hope are not lost on New Democrats and small "d" democrats as they sift through the debris of this electoral defeat.

First, let me make one last comment on the NDP's approach to the environment and the carbon tax issue. The best policies made in this province by the NDP arose during the 1980s and 1990s when the party drew on its deep roots in both the labour and environmental movements to thrash out compromises which informed the CORE process, the Land Use Plans, the parks and Forest Practices Code, the Treaty process and so on. They didn't come from some operatives in the premier's office reading political opinion polls. Making policy to appeal to average voters when gas prices and party approval ratings are fluctuating up and down is a bit like playing the stock market. It would have been wiser to forge a compromise that would have kept the red-green coalition together. I have suggested a carbon tax that would serve as an effective floor price rather than as a regressive duty on all fuel in all situations. Might environmentalists have gone along with such a proposal? Probably enough to have prevented Campbell from splitting the progressive vote.

Second, a last comment on electoral reform. It appears likely that for the second election in a row, electoral reformers will win a moral victory (i.e. between 50% and 60% of the vote). A large number of voters and representatives of minority groups have been torn in this election between the potential for greater representation of diversity allowed by BC-STV and the greater local representativeness and stability promised by our current system. I have suggested that what these election results mean is that there is a mandate for a more moderate type of electoral reform. What I have called "STV lite" would give MLAs manageable constituencies, give voters a manageable size of ballot, and ensure continued majority government most of the time. But it would also force parties and governments to worry about the majority of voters' preferences. And it would improve the representativeness of the legislature.

3-member STV in the major metropolitan areas , 2-seat STV in the southern interior and smaller cities, and single seats with preferential ballots in the North would be a far cry from perfect proportionality, to be sure, but that would be a good thing. For the demand function for proportionality is not the same as the demand functions for voter choice and local representation. Ideally, voters would like to represent themselves if time and resources permitted; they would also ideallly like an infinite variety of choices. But proportionality is an indubitable good only in small amounts; extreme proportionality backfires in the parliamentary context by giving small parties too much leverage and blurring accountability for decisions.

Another simple reform is suggested by the growing size of the legislature (now up to 85 seats). Just have 60 seats elected as they are now (when I entered college there were 57 seats in the legislature, so this represents an historically normal level of constituency representation)--and have 25-30 seats from open lists. The open lists could be split into 4 or 5 geographical regions (greater Vancouver, Island & mid-coast, southern interior and north). These at-large members would afford voters a greater degree of choice in casting their ballots and a greater degree of proportionality and fairness in the results.

CAW Wisely Agrees to a $19 Wage Cut at Chrysler--Another I TOLD YOU SO

2009-04-25T08:14:00.001-07:00

Should a trade union accept a painful $19 per hour wage cut when we are in the middle of the worst recession in 75 years, when all of the Big Three auto-makers are teetering on the edge of bankruptcy? Of course it should! As I said last November , unionized workers in Detroit make make 15% more than non-unionized workers in the sunbelt, while Canadian workers make 15% more than workers in Detroit, thanks to Canadian medicare system that makes such a wage dividend possible. That's a total wage gap of 30% more than the closest financially healthy major auto maker (Toyota or Honda). Unsustainable in these circumstances, and probably unsustainable in the long run under any circumstances.

Who has the best environmental policy?

2009-04-15T16:26:00.000-07:00

Alan Durning's recent posting in the Sightline Daily neatly summarizes the NDP's position in the environmental community as a result of its attack upon Campbell's carbon tax. For years, the NDP has received--and by and large deserved--high profile endorsements from David Suzuki, activists like Tzeporah Berman and academics like Marc Jaccard. One doubts Suzuki or Berman will even vote for the NDP on May 12, and there is little doubt that Jaccard won't.

As Durning points out, to describe the carbon tax as a gasoline tax makes about as much sense as calling the GST and excise taxes gasoline taxes. It is a comprehensive tax paid by everyone, and about 2/3 of B.C. families will get ALL of their money back in income tax reductions.

Furthermore, the BC Liberals recognize, and I agree, that carbon taxes and cap and trade are complementary strategies, not mutually exclusive ones.

But is it fair to run down the NDP on this issue alone? Surely, there are other aspects of climate change policy besides those relating to pricing and taxation. And there are other aspects of environmental policy besides climate change (as the NDP's strange bedfellow on this issue, Stephen Harper, likes to point out.) It is true that there is something very cynical about Campbell's focus on the carbon tax. He aimed to take a bow in environmental circles and in the eastern media, and to use carbon taxes to do his favourite thing---namely reduce progressive income taxes on affluent Vancouver voters. Other regulatory policies aimed at curbing emissions have not been as spectacular as his carbon tax. The continuing subsidies to gas and oil production, the twinning of the Port Mann and parts of the Cariboo Highway suggest that the Liberals seen more automobile traffic as a good thing.

But Campbell has also perhaps learned from the mistake of the sudden 20% income tax cut---i.e., that it is better to phase things in gradually and allow time for adjustment. That is what the carbon tax does. I have argued elsewhere in this blog that a floor price for fuel might be better, but that is still closer in spirit to the Liberals at this point than it is to the NDP.

It is all a little sad. There are many people in the NDP who have devoted decades of their lives to the environmental movement, (and to First Nations issues as well, that matter). The NDP could have responded to the Liberals' volte face by using its deeper roots in the First Nations community and the environmental movement to come up with better policies. Instead, it is hoping to win more votes by going after the middle class gas-consumer and taxpayer.

It may work, but probably not. Had Campbell continued his tightfisted ways, his opposition to treaties and his indifference to the environment, there would be a United Front of interest groups against him, which in the context of a sputtering economy would likely have spelled his electoral demise. Instead, he has split the Opposition beautifully.

BC-STV lite would have been an easier sell---especially in rural and northern B.C.

2009-04-14T23:42:00.000-07:00

A more modest version of BC-STV would have simply divided the province into electoral districts of 3 different magnitudes: 3 member districts in metropolitan areas, 2 member districts in the southern interior, and single member (AV) districts in the north. This would yield improved voter choice, with recognizable and manageable constituency sizes. Yes, there would be only a modest improvement in over-all proportionality under my preferred scheme. But I would argue that a modest increase in proportionality is really all that is desireable, and all that is necessary, in order to shake up the Legislature and make it more representative of the population.

It is really difficult to say whether BC-STV will improve representation for the "typical" rural voter (whoever he or she is). On the one hand, the argument has been made that, since rural and northern ridings will have fewer MLAS, they will constitute a larger proportion of the caucuses of the two major parties than will their southern and urban counterparts. This could spell more, not less influence. Furthermore, the Citizens' Assembly did their homework and looked at the evidence from Ireland, Malta and the Australian Senate: sure enough, representation in multi-member STV constituencies does tend to be evenly distributed geographically. On the other hand, it is difficult to guarantee the town council of McKenzie or 100 Mile House that they will be as sought after or as listened to in a geographically much larger riding. And then there is the simple math: the number of representatives per capita will be approximately the same under both systems.

I would have preferred to split the difference-- keep the northern ridings much the same size as they are now, but with a majoritarian preferential ballot (also known as Alternative Vote). That would improve voter choice and have the intended moderating effect upon candidates as they compete for second and third preferences. A degree of genuine proportional representation in the province would still come from the multi-member ridings in more densely populated areas, raising the bar somewhat for the creation of majority government, but not opening the door to perpetual minorites or too many Green-Party balance of power scenarios.

Having 3-member seats in Greater Vancouver and Victoria and 2-member seats in the southern interior would have two further advantages. First, the resultant constituencies would more clearly correspond to the boundaries of actually recognized communities than either the existing First-Past-the Post system or BC-STV: the Richmond riding would contain all of Richmond; the Surrey riding would contain most of Surrey; North, South and West Vancouver constituencies would facilitate the discussion of most local neighbourhood interests; while the double ridings of Kamloops and Cariboo would correspond to most residents' perceptions of where those communities are. Second, constituencies of magnitude 1-3 would present most voters with choices between a manageable number of candidates and facilitate the formation and expression of well-considered preferences.

That being said, "STV-lite" is not on the ballot. All things considered, I am still willing to follow the recommendation of the Citizens' Assembly and support BC-STV on May 12. I hope that all of my readers will do likewise.

Lest We Forget: the 2003 Bush Tax Cuts and the Folly of Economic Conservatism

2009-04-10T13:24:00.001-07:00

One of the worst examples of conservative economic policy-making in recent years was the 2003 Bush tax cuts. W and his supporters in Cabinet, Congress and the business community were reaching for that winning Reagan formula of feeding the fat cats to generate prosperity while foolishly asserting that the cuts would "pay for themselves". They were also using the recession as a pretext for trying to ideologically engineer permanent changes to the tax structure--at the same time that a very expensive war in Iraq was just getting underway. The case of the Bush tax cuts is instructive now as we watch governments deal with the 2008-2009 economic crisis, a crisis largely triggered by Bush's financial deregulation and no doubt made worse by his fiscal policies.

Not surprisingly, a prestigious group of 450 leading economists signed a statement urging Bush not to enact the cuts. The list had ten American Nobel Prize winners on it, including the two greatest living economists since John Maynard Keynes, Paul Samuelson and Kenneth Arrow.

The statement was printed as a full-page ad in The New York Times and released to the public through the Economic Policy Institute. According to the statement, the 450 plus economists who signed the statement believe that the 2003 Bush tax cuts will increase inequality and the budget deficit, decreasing the ability of the U.S. government to fund essential services, while failing to produce economic growth.

The statement reads as follows:

"Economic growth, though positive, has not been sufficient to generate jobs and prevent unemployment from rising. In fact, there are now more than two million fewer private sector jobs than at the start of the current recession. Overcapacity, corporate scandals, and uncertainty have and will continue to weigh down the economy."

"The tax cut plan proposed by President Bush is not the answer to these problems. Regardless of how one views the specifics of the Bush plan, there is wide agreement that its purpose is a permanent change in the tax structure and not the creation of jobs and growth in the near-term. The permanent dividend tax cut, in particular, is not credible as a short-term stimulus. As tax reform, the dividend tax cut is misdirected in that it targets individuals rather than corporations, is overly complex, and could be, but is not, part of a revenue-neutral tax reform effort."

"Passing these tax cuts will worsen the long-term budget outlook, adding to the nation’s projected chronic deficits. This fiscal deterioration will reduce the capacity of the government to finance Social Security and Medicare benefits as well as investments in schools, health, infrastructure, and basic research. Moreover, the proposed tax cuts will generate further inequalities in after-tax income."

"To be effective, a stimulus plan should rely on immediate but temporary spending and tax measures to expand demand, and it should also rely on immediate but temporary incentives for investment. Such a stimulus plan would spur growth and jobs in the short term without exacerbating the long-term budget outlook. "

Signatories
Over 450 economists signed the statement, including the following ten Nobel Prize Laureates:

George Akerlof, University of California – Berkeley
Kenneth J. Arrow, Stanford University
Lawrence R. Klein University of Pennsylvania
Daniel L. McFadden University of California – Berkeley
Franco Modigliani Massachusetts Institute of Technology
Douglass C. North Washington University
Paul A. Samuelson Massachusetts Institute of Technology
William F. Sharpe Stanford University
Robert M. Solow Massachusetts Institute of Technology
Joseph Stiglitz Columbia University

Lobbying in B.C. : What are the Next Steps in Accountability and Transparency?

2009-04-03T21:22:00.000-07:00

{The following responds in part to a major historical pattern of BC politics: the tendency of measures to improve transparency and accountability to come from newly elected governments, and not from re-elected ones. It is based on a section of a chapter I wrote for the forthcoming book, BC Government and Politics (Emond Montgomery 2009). In that chapter I also look at another historical pattern, the tendency of re-elected governments to reward client groups by expanding or contracting the scope for collective bargaining in the Labour Code}.

Gerry Kristianson’s 1996 article on lobbying and private interests in BC politics began by observing that the small number of visible lobbyists in Victoria as compared to Washington state or other American jurisdictions was a misleading indicator of the level of pressure group activity: “the half-dozen or so people who are to be found around the legislative buildings on a daily basis while the house is in session are only the advance guard of a host of individuals and groups who attempt to influence provincial government decisions on behalf of an endless variety of private interests.” (Kristianson 201). Kristianson’s point, echoed by more recent academic literature (e.g. Montpetit 307), was that the parliamentary state organizes a lot of interest group activity out of public forums such as US-style legislative committees or other apertures afforded by the separation of powers and into the offices of public servants and cabinet ministers, “away from the glare of public attention and media scrutiny” (Kristianson 202). To some extent, parliamentary government replaces lobbying with governance; to some extent lobbying is merely cloaked by the realities of party discipline and cabinet solidarity.

Despite the growing consensus that a registration of lobbyists, similar to the ones required by the federal government and several other provinces, was desirable in order to have a more comprehensive list of groups attempting to influence decision makers, there was also concern expressed that such a registry would still fail to resolve the issues of transparency, equality of access and the implications of partisanship, due to the many links, both informal and formal, that would continue to exist between the private sector and public officials beyond the purview of legislation. Kristianson, himself the dean of ‘government relations’ specialists working in Victoria in the 1980s and 1990s, suggested that true transparency might require something more:

"Instead of asking lobbyists to register and even to disclose their their specific contacts with public officials, it might be better to require public officials to disclose the sources of information upon which they base their decisions. Weekly or monthly disclosure of a log of contacts between decisionmakers and the public would shed a great deal more light on the flow of political influence than does the registration of lobbyists. Reducing the level of secrecy in the BC political system would be an effective way of ensuring greater transparency (214). "

The Lobbyists Registration Act (LRA) of 2001 has confirmed both the realistic hopes of its proponents and the reasonable fears of skeptics. Created early in the Liberal government’s first term in office as part of its “New Era” platform commitment to open and accessible government, the LRA established a registry in the Office of the Information and Privacy Commissioner requiring “registration of anyone who is paid to lobby the government to influence government legislation, regulations, programs, policies, the awarding contracts or the awarding of benefits.”(Plant 2001). The Act covers both “consultant” and “in-house” lobbyists, and section 4 requires not only their registration but the filing of names and business addresses of their clients/employers, as well as particulars to identify relevant legislative proposals, regulations or contracts, as well as the name of any ministry and public office holder lobbied or whom the lobbyist expects to lobby during the relevant period. The Information and Privacy Commissioner is designated as registrar, who maintains the registry and makes it available to the public and online. The LRA does not make the fees received by lobbyists available to the public, however; nor does it count as “lobbying” a wide range of actions by public office holders, or citizens or businesses contacted or consulted by public office holders, or constituents’ communications with their MLAs. It does make the contravention of the Act an offence punishable by a fine of not more than $25,000, but has not yet given the registrar clear enforcement powers, such as the ability to levy administrative penalties or ban persons who fail to comply with the Act from lobbying.

A perusal of the Lobbyists Registry permits a clearer picture to emerge of the size of the industry, the names of the most important lobbyists and their clients/organizations, and the policy issues and ministries that attract the most lobbying activity. At the time of writing, there were over 450 active lobbyists currently registered under the Act (210 senior officers of organizations,135 consultant lobbyists, and 109 In-House lobbyists), engaged in over 3300 “current lobbying activities”. Fully 243 of those activities were with MLAs, followed by 211 with the Office of the Premier. Other agencies attracting large numbers of lobbying activities include Finance (176), Environment (131), Attorney-General (116), and Energy, Mines and Development (109). Currently, the most active business lobbyists evidenced by the Registry include consultant lobbyists Michael Bailey, John Moonen, Gary Ley, Bruce Young, Kimanda Jarzebiak, Andy Orr, Andrew Wilkinson and Christopher Smith, and Senior Officers Jock Finlayson and Ed Wong of the Business Council of British Columbia. Many more are in-house lobbyists working either as public affairs specialists or lawyers for particular firms and organizations, including organizations that engage in public interest advocacy on behalf of broader social causes. Of course, this information does not indicate which contacts are most influential, but does help to point us in the right direction (one suspects that, ceteris paribus, a meeting with the Premier’s Office carries greater potential for influence than with most backbench or opposition MLAs, and that a close advisor to Gordon Campbell such as Wilkinson or spokespersons for the larger business community like Wong and Finlayson are more likely to gain an influential audience than other lobbyists.)

The Opposition New Democratic Party (NDP), although supporting the LRA as a continuation of their own policy commitment to transparency and accountability, nonetheless raised concerns at the LRA’s inception that, while trade unions and public interest NGOs would have to register in order to gain access to government officials, those whom the government asked for advice (disproportionately from the business community in the case of the Liberals—via such bodies as the Progress Board of BC , and the Premier’s Council on Science and Technology) were exempted, thereby leaving important channels of influence uncovered and creating inequities between interest groups. These criticisms may have been overstated in the sense that the vast majority of business interests that make specific claims upon the state have had to register or hire registered lobbyists to speak on their behalf, and the vast majority of entries in the register refer to specific business interests.

Nevertheless, the claims that there are inequities of influence between interest groups, and a lack of enforcement and investigatory powers on the part of the registrar, have proven to be warranted. At least two subsequent incidents clearly illustrate this. Ken Dobell was the deputy minister to the premier from his election in May 2001 until he resigned in June 2005, when he began a consultancy business through his company Dobell Advisory Services Inc. As part of that business he accepted, later in 2005, a contract as special advisor to the Premier in various areas and he also accepted, in April 2006, a contract as advisor to the City of Vancouver and the City Manager respecting development of a cultural district and social housing. Each job paid Mr. Dobell about $250 an hour. Since the LRA requires a consultant lobbyist to file a return within 10 days after entering into an undertaking to lobby on behalf of a client, and Dobell did not do so until October 28, he was clearly in contravention of the Act.

Dobell explained that he had not considered himself to be a lobbyist but rather a “content consultant” engaged in the “substantive work of policy and process analysis” (Loukidelis 2007, 2), but chose to register anyways in the interest of transparency and in order to quell controversy surrounding the question of compliance with the LRA. He also indicated that his communications with provincial government officials were much more in the nature of public policy discussions or debate than lobbying, and maintained that there was an important distinction between his services to government, which he said were in the public interest, and consulting services to private interests. The following spring, Dobell pleaded guilty in a Vancouver provincial court to the charge of failing to register as a lobbyist under the LRA and was granted an absolute discharge. His successor as deputy minister, Jessica McDonald, wrote the premier a memorandum clearing Dobell of conflict of interest.[1] The Information and Privacy Commissioner and Registrar of Lobbyists, David Loukidelis reviewed the question of Dobell’s registration and found that he while he was indeed a lobbyist within the meaning of the Act, “there was no intention by the City or Mr. Dobell to hide the consulting contracts” and that there needed to be a greater commitment to “simple and unstigmatized disclosure” and candid acknowledgment that the current system is not geared or funded to undertake active––much less extensive––compliance and enforcement measures”(Loukidelis 2007, 4).

An even greater embarrassment to the government and the Lobbyists Registry came in October, 2008 when Patrick Kinsella, former principal secretary to Social Credit premier Bill Bennett and longtime Liberal campaign advisor, refused to cooperate with the Privacy Commissioner’s investigation that he improperly lobbied the government. The investigation was triggered after Sean Holman, the legislative reporter for the Vancouver newspaper 24 Hours, obtained copies of records obtained under Washington state’s Freedom of Information legislation, which included a May 2006 contract between the Washington State government and Kinsella’s firm, The Progressive Group, in which the firm committed to "facilitate opportunities for Washington State to develop important relationships" with "key individuals within target business, political and Olympic circles" -- including cabinet ministers and senior bureaucrats. (In a 2004 interview, Kinsella had stated, "I don't consider myself a lobbyist. I hold myself up as a communications consultant. I don't do any lobbying. They don't need me to pick up a phone and talk to the government or any members of the provincial government. I make it very clear to my clients that I don't do that.")

In September 2008 Kinsella’s lawyer Paul Cassidy published a review of the LRA which found that the Registrar of Lobbyists had “no legislative or other power to accept complaints, or to conduct any investigation or reporting on the activities of individuals alleged to have contravened the Act” and that , accordingly, any investigations by the Registrar concerning the alleged lobbying activities of our client have no legal basis”. Loukidelis once again wrote to the attorney –general, pointing out that previous investigations taken unde the LRA had only been possible with the cooperation of those being investigated—i.e. that the BC system was essentially an honour system. The Kinsella case showed that the LRA needed amendments, similar to those found in the Alberta Lobbyists Act, the federal Lobbying Act, and Quebec’s Lobbying Transparency and Ethics Act, that gave the responsible officer powers to investigate non-compliance, including the power to compel production of records and testimony. The Commissioner added that in the meantime, he would no longer investigate complaints against lobbyists because of the de facto veto that lobbyists under investigation have (Loukidelis 2008, 4-5). The Opposition NDP responded by stating that in the future it would therefore ask the RCMP to conduct such investigations, starting with the “Kinsella affair”.

Largely as a result of the complaints concerning Dobell and Kinsella, both of BC’s major parties have signalled that the LRA will be expanded and improved in line with the leading legislation elsewhere in Canada. But besides providing an impetus to legislative reform, these cases also illustrate that the lines between “lobbying”, “communications” and “governance” can be very fine. The growing institutionalization of interest group influence and legalization (in the sense of growing proceduralism and use of legal norms) of the political and policy environment is continuing to alter the way that the state interacts with society and the context in which policy decisions are made.

Endnotes
[1] McDonald, Jessica. Memorandum to the premier of British Columbia, April 27, 2007. “I remain satisfied that Mr. Dobell fulfilled his obligations with respect to managing potential conflict of interest, and that the discussion he and I had and the procedure we agreed to effectively safeguarded the Province’s interest.”

Capitalist Fools

2009-03-29T17:38:00.000-07:00

Recent Nobel laureates Joseph Stiglitz and Paul Krugman have long been known as left-liberal critics of conservative economic dogma. I offer here my own summary of Stiglitz's recent article in Vanity Fair , entitled "Capitalist Fools", both because it might benefit someone who doesn't have time to read the original article, and because it accords nicely with several of my own recent commentaries.

Stiglitz's column singles out five key mistakes by policy makers which contributed to our current malaise.

1. Firing the Chairman (Replacing Paul Volcker with Alan Greenspan)

In 1987, former president Ronald Reagan This meant replacing a noted pragmatist and believer in the need for financial regulation with an ideological follower of ultra-libertarian philosopher Ayn Rand. The timing of the appointment helped to obscure the fact that it was Volcker, not Greenspan, who had done most of the work in wringing inflation out of the economy.

No. 2: Tearing Down the Walls (The Deregulation Philosophy)

The deregulation philosophy would pay unwelcome dividends for years to come. In November 1999, Congress repealed the Glass-Steagall Act—the culmination of a $300 million lobbying effort by the banking and financial-services industries, and spearheaded in Congress by Senator Phil Gramm. Glass-Steagall had long separated commercial banks (which lend money) and investment banks (which organize the sale of bonds and equities); it had been enacted in the aftermath of the Great Depression and was meant to curb the excesses of that era, including grave conflicts of interest.

Stiglitz opposed the repeal of Glass-Steagall, for reasons that now seem obvious:

"The proponents said, in effect, Trust us: we will create Chinese walls to make sure that the problems of the past do not recur. As an economist, I certainly possessed a healthy degree of trust, trust in the power of economic incentives to bend human behavior toward self-interest—toward short-term self-interest, at any rate, rather than Tocqueville’s “self interest rightly understood.”

"The most important consequence of the repeal of Glass-Steagall was indirect—it lay in the way repeal changed an entire culture. Commercial banks are not supposed to be high-risk ventures; they are supposed to manage other people’s money very conservatively. It is with this understanding that the government agrees to pick up the tab should they fail. Investment banks, on the other hand, have traditionally managed rich people’s money—people who can take bigger risks in order to get bigger returns. When repeal of Glass-Steagall brought investment and commercial banks together, the investment-bank culture came out on top. There was a demand for the kind of high returns that could be obtained only through high leverage and big risktaking.

There were other important steps down the deregulatory path. One was the decision in April 2004 by the Securities and Exchange Commission, at a meeting attended by virtually no one and largely overlooked at the time, to allow big investment banks to increase their debt-to-capital ratio (from 12:1 to 30:1, or higher) so that they could buy more mortgage-backed securities, inflating the housing bubble in the process. "

"In agreeing to this measure, the S.E.C. argued for the virtues of self-regulation: the peculiar notion that banks can effectively police themselves. Self-regulation is preposterous, as even Alan Greenspan now concedes, and as a practical matter it can’t, in any case, identify systemic risks—the kinds of risks that arise when, for instance, the models used by each of the banks to manage their portfolios tell all the banks to sell some security all at once. "...

"As we stripped back the old regulations, we did nothing to address the new challenges posed by 21st-century markets. The most important challenge was that posed by derivatives. In 1998 the head of the Commodity Futures Trading Commission, Brooksley Born, had called for such regulation—a concern that took on urgency after the Fed, in that same year, engineered the bailout of Long-Term Capital Management, a hedge fund whose trillion-dollar-plus failure threatened global financial markets. But Secretary of the Treasury Robert Rubin, his deputy, Larry Summers, and Greenspan were adamant—and successful—in their opposition. Nothing was done."

No. 3: Applying the Leeches (The Bush Tax Cuts)

Then along came the Bush tax cuts, enacted first on June 7, 2001, with a follow-on installment two years later. The president and his advisers seemed to believe that tax cuts, especially for upper-income Americans and corporations, were a cure-all for any economic disease—the modern-day equivalent of leeches. The tax cuts played a pivotal role in shaping the background conditions of the current crisis. Because they did very little to stimulate the economy, real stimulation was left to the Fed, which took up the task with unprecedented low-interest rates and liquidity. The war in Iraq made matters worse, because it led to soaring oil prices. With America so dependent on oil imports, we had to spend several hundred billion more to purchase oil—money that otherwise would have been spent on American goods. Normally this would have led to an economic slowdown, as it had in the 1970s. But the Fed met the challenge in the most myopic way imaginable. The flood of liquidity made money readily available in mortgage markets, even to those who would normally not be able to borrow. And, yes, this succeeded in forestalling an economic downturn; America’s household saving rate plummeted to zero. But it should have been clear that we were living on borrowed money and borrowed time.

No. 4: Faking the Numbers (Dishonest Accounting)

The Sarbanes-Oxley Act that followed on the heels of the Enron scandal failed to deal with stock options; it also failed to deal with a collateral problem with stock options: that they provide incentives for bad accounting. Top management has every incentive to provide distorted information in order to pump up share prices.

The incentive structure of the rating agencies also proved perverse. Agencies such as Moody’s and Standard & Poor’s are paid by the very people they are supposed to grade. As a result, they’ve had every reason to give companies high ratings, in a financial version of what college professors know as grade inflation. As Stiglitz puts it "the rating agencies, like the investment banks that were paying them, believed in financial alchemy—that F-rated toxic mortgages could be converted into products that were safe enough to be held by commercial banks and pension funds. "

NO. 5: Letting It Bleed (The Bush Bailout)

The crisis started when the US Treasury bailed out Bear Stearns--but then did not bail out Lehmann Brothers. "The original proposal by Treasury Secretary Henry Paulson, a three-page document that would have provided $700 billion for the secretary to spend at his sole discretion, without oversight or judicial review, was an act of extraordinary arrogance. " But while the purpose of this act was to "restore" confidence" , how could it do that without addressing the cause for the lossof confidence--that too many bad loans had happened and too many foreclosures were happening.

The initial bailout plan was a failure. As Stiglitz puts it, "When he finally abandoned it, providing banks with money they needed, he did it in a way that not only cheated America’s taxpayers but failed to ensure that the banks would use the money to re-start lending. He even allowed the banks to pour out money to their shareholders as taxpayers were pouring money into the banks."

Stiglitz concludes by saying that the fundamental problem was an ideological one: a naive faith in the Self -Regulating Market:

"The truth is most of the individual mistakes boil down to just one: a belief that markets are self-adjusting and that the role of government should be minimal. Looking back at that belief during hearings this fall on Capitol Hill, Alan Greenspan said out loud, “I have found a flaw.” Congressman Henry Waxman pushed him, responding, “In other words, you found that your view of the world, your ideology, was not right; it was not working.” “Absolutely, precisely,” Greenspan said. The embrace by America—and much of the rest of the world—of this flawed economic philosophy made it inevitable that we would eventually arrive at the place we are today."

enough, already: STOP THE F***ING TAX CUTS!

2009-03-22T21:45:00.000-07:00

Conservatives. They think that money grows on trees. And they think that all they need to do to make the money tree grow is prune it with tax cuts and sprinkle it with tax expenditures and tax incentives. And that is the part of their Economic Action Plan that they actually believe in. The rest is even worse: that just consists of reluctant scattergun spending on various political constituencies without any intellectual coherence. They give more money to culture ("after all we got burned by Quebecers in the last election for not doing so") but give less to social science research ("most of them are against us"); they say that they're on board with Barack Obama and the G-20 in providing economic stimulus, but then avoid investments in the green economy and wind and solar power that would keep Canada in the lead on climate change (guess where the research and development jobs in wind and solar and renewables will be?); they deal with child care and First Nations issues through more "targetted spending".

Remember when Gordon Campbell campaigned to reduce income taxes by 20% and reassured us that the cuts "would pay for themselves" and therefore would not impair social spending? Not only did he blow a huge hole in revenues and create the largest deficit in BC history, but within a few years he and Carole Taylor were claiming that "health care costs were getting out of control". Actually, international comparisons showing France spending 1.1% more of its GDP on health care than Canada and the US spending 5% more of its GDP on health care than Canada suggest that it is private and two-tier systems that are "out of control"; Canada at 10% and Britain at 8% are doing just fine (although they should spend more). So why all the bullshit? The Conservatives are leading us down the same path as the BC Campbell Liberals: cut, cut, cut, cut taxes and then complain that single-payer health care is "unsustainable".

Economists frequently make cogent arguments for shifting taxes away from income taxes (or taxes on productive activity) to expenditure taxes (in order to promote saving and investment) and Pigouvian taxes (to discourage pollution and other negative externalities). So why was the Conservative priority to have $12 billions in reduced GST instead? Because it was ideologically congenial, politically opportunistic, and the business lobby wanted it.
If most economists place less stress than the government does on tax cuts for stimulus (because tax cuts mean larger deficits, and spending on students, EI recipients and low-income households yield a larger multiplier effect), why did the government persist? Because it was ideologically congenial, politically opportunistic, and the business lobby wanted it.
If childrens' sports tax credit has been criticized because it disproportionately benefits middle-class suburbanites and doesn't help the most needy 1/3 of children; if the childcare tax credit has been criticized for not doing enough to either stimulate supply or guarantee high quality of universal early childcare learning; if 95-97% of those being subsidized by the public transit tax credit were riding public transit anyway and a consultant's report told them that the cost of the tax credit would be a wasteful $800 per tonne of greenhouse gas eliminated and would have little impact on transit usage, why did the government persist? Because it was ideologically congenial, politically opportunistic, and the business lobby wanted it.
If the Commissioner of the Environment and Sustainable Development has dismissed the $1.5 billion Clean Air and Climate Change Trust Fund as being little more than a transfer payment ot the provinces "conducted [with]almost no analysis", why did the government persist? Because it was ideologically congenial, politically opportunistic, and the business lobby wanted it.
If reliable analysis backed up by extensive international research suggests that every dollar spent on early childhood intervention can save 8 or 9 dollars down the road in improved productivity and reduced social costs; or that preventing a single fetal alcohol syndrome child can save society a million dollars in costs to health, education, and criminal justice systems; or that strategic investment in scientific research, universities, and alternative energy can make Canada a more competitive and productive country in the future, why didn't the government go for it? Because it wasn't ideologically congenial, wasn't politically opportunistic, and the business lobby didn't want it.

It's such a shame--all those years when we were light-years ahead of the conservatives in Washington and could have led the world in productive social investments. Pretty soon we'll be playing catch-up to the Americans, all because the Liberals didn't believe in half or what they were saying, and the Conservatives didn't believe in half of what they were doing.

Billions for Carbon Sequestration?

2009-03-15T21:20:00.000-07:00

From the ringside seat to the oil sands project that we have in Athabasca/Edmonton, it would be easy to take comfort in the $2billion plus committed by governments in Canada to finding improved cost-effective carbon sequestration ( or "carbon capture and storage", CSS). But, personally, I would find the announcement of two or three new nuclear reactors for northern Alberta and Saskatchewan to be more comforting. There is absolutely no guarantee that a cost-effective and sustainable CCS will ever come into being; the search for CCS also represents public resources diverted from the search for greener and more sustainable forms of alternative energy. Indeed, I am cynical enough to believe that this expenditure of money is as much about public relations as anything else.

On this subject, the recent leader in the Economist of March 7 (pp.22 and 74-75) put it quite well:

"With the private sector sitting on its hands, Western governments are lavishing subsidies on CCS. Some $3.4 billion earmarked for CCS found its way into America’s stimulus bill. The European Union, which already restricts greenhouse-gas emissions through a cap-and-trade scheme, unveiled further incentives for CCS last year. Britain, Australia and others have also vowed to help fund demonstration plants partly because they reckon the private sector is put off by the huge price-tag on a single CCS power plant, and also in the belief that the cost of CCS will fall with experience.

Burning cash
The private sector, however, is reluctant to fork out not just because of the upfront cost of power plants, but also because, tonne for tonne, CCS looks like an expensive way of cutting carbon. The cost of it may fall, but probably not by much, given the familiarity of the technologies it uses.

Politicians should indeed encourage investment in clean technologies, but direct subsidies are not the way to do it. A carbon price or tax, which raises the cost of emitting carbon dioxide while leaving it up to the private sector to pick technologies, is the better approach. CCS is not just a potential waste of money. It might also create a false sense of security about climate change, while depriving potentially cheaper methods of cutting emissions of cash and attention—all for the sake of placating the coal lobby."