There's an increasing amount of chatter amongst the chattering classes about how universities are spitting out too many Arts graduates and not enough STEM (Science, Technology, Engineering, Mathematics) graduates. The chatter has picked up as a study by CIBC confirmed what Arts graduates already understand: a BA gets you very little in the workplace. Maclean's has a piece today arguing that students should be more aware before they go into university about what their degree will get them.
There's one important factor that has been ignored in all of the discussion that I've read: arts programs pay for STEM programs. STEM programs are expensive. They require the maintenance of expensive labs which have to be kept up to the highest standard to remain current. On the other hand, Arts courses are cheap. One prof a few TA's and some PowerPoint slides can take care of a 500 student Intro Sociology lecture. Sure that course may not be the most useful thing in the workplace but it's of huge importance to the university who can clear hundreds of thousands of dollars on the course. While STEM students will generally pay more than Arts majors, the difference doesn't pay for all the high priced equipment they use. The way universities keep STEM tuition down is by having a large majority of their students in Arts. That's why the easiest programs to get into are usually Arts programs. An extra Arts student doesn't put a huge strain on university resources. For programs that cost more, universities try to be more selective with the candidates they admit. They can only admit so many students because they only have so much laboratory space.
We can sit on the sidelines and chastise universities for not giving the economy the workers it needs but as long as university economics remain as is, there's no incentive for the universities to change.
Friday, August 30, 2013
Sunday, March 10, 2013
The Policy Delusion
A lot of ink has been spilled recently about Justin Trudeau's lack of concrete policy positions. The complaint, mostly from Conservatives and his leadership opponents, would appear to be an honest concern about not knowing enough about Mr. Trudeau before we entrust him with the leadership of the Liberal Party of Canada. The not so subtle inference is that Mr. Trudeau is all sizzle and no steak. If we only knew, the critics seem to say, exactly what his spending projections are for Ministry of Agriculture in fiscal 2016-2017, then we could reasonably evaluate his ability to be Prime Minister. My example is perhaps absurd but asking a leadership candidate what his precise policy would be more than two years before he could even theoretically be in position to make any such decisions is equally absurd. I would hope that any leadership candidate's position's would evolve in the light of changing circumstances. History is littered with the wreckage of politicians who have over-promised early in their political careers.
You would think the Liberal Party would be particularly sensitive to bringing out policy too quickly. Stephane Dion used the warm weather of December 2006 to ride a green wave into the OLO, when the number on the thermometer became less important than the losses in the TSX, Dion's green initiative looked like a job-killing monstrosity, deaf to the concerns of average Canadians (Note: I said looked like, green folks; I'm not writing about the validity of his plan, only the politics). Jean Chretien nearly lost the 1997 election after his early promise to eliminate the GST became impossible in light of the huge deficit facing the country. In Ontario, Dalton McGuinty lost almost all of his initial honeymoon to the health tax. Saying I will do X no matter what is bad politics and frankly, poor leadership. It's easy for pundits to disparage Mr. Trudeau for a lack of specifics but at the end of the day, his values, all that soft mushy stuff will tell us more about what he would actually do if elected two years from now than any concrete policy positions dreamed up in the midst of a leadership race. If it seems like a front runner being risk averse, it is but it also makes a lot more sense than people seem to credit.
You would think the Liberal Party would be particularly sensitive to bringing out policy too quickly. Stephane Dion used the warm weather of December 2006 to ride a green wave into the OLO, when the number on the thermometer became less important than the losses in the TSX, Dion's green initiative looked like a job-killing monstrosity, deaf to the concerns of average Canadians (Note: I said looked like, green folks; I'm not writing about the validity of his plan, only the politics). Jean Chretien nearly lost the 1997 election after his early promise to eliminate the GST became impossible in light of the huge deficit facing the country. In Ontario, Dalton McGuinty lost almost all of his initial honeymoon to the health tax. Saying I will do X no matter what is bad politics and frankly, poor leadership. It's easy for pundits to disparage Mr. Trudeau for a lack of specifics but at the end of the day, his values, all that soft mushy stuff will tell us more about what he would actually do if elected two years from now than any concrete policy positions dreamed up in the midst of a leadership race. If it seems like a front runner being risk averse, it is but it also makes a lot more sense than people seem to credit.
Wednesday, January 23, 2013
Less Hope, More Change?
A lot of ink has been spilled over the past few weeks describing President Obama's new approach in Washington. His second inaugural address was certainly less conciliatory than the President we saw cave to Republicans repeatedly in the first term. I think what we see is the Obama team coming to grips with the reality of American, and frankly, most politics. There are very few leaders that can work effectively across party lines by being seen as giving in to their opponents. When Presidents and other leaders work well with others it is generally because the leaders on the other side are seen as coming to them. President Clinton's success in the 2nd term of his presidency came after he broke the back of Newt Gingrich's Congress over the government shutdown. President Bush worked with Ted Kennedy on No Child Left Behind because Kennedy bought into the test first, right-wing approach Bush made famous in Texas. What I think Obama learned after having to scale back the stimulus and health care reform and being boxed into a corner on the debt ceiling, is that offering to move to the centre doesn't work politically. Politicians, like sharks, can smell blood when a President blinks first. They'll keep pushing for more and more.
The new approach seen on the fiscal cliff, the debt ceiling and now in the inaugural address is one that is far more confrontational. Gone is the Illinois state-senator willing to reach across party lines. The new Obama is going to stand on principle and win or lose on those grounds. The results so far have been promising. Republicans caved on the fiscal cliff saying that they would use their leverage on the debt ceiling. Now they've abandoned the debt ceiling and say they're going to use the sequester and budget as their point of leverage. Most retreating armies won't admit that they're in full retreat. To my knowledge President Obama has never even come close to vetoing a bill. The Democratic controlled Senate helps with that. However, the threat of the veto, was barely used in his first term. Now, he seems keen to let the Republicans hang themselves. If they do something too dangerous, he can always block it with a veto or other executive action. It may be more cynical, but on issues like immigration and tax reform, the less conciliatory more aggressive Obama may actually have more success than his first term doppelganger.
In the long run, the inaugural address signaled Obama's faith that his electoral victory is a long-term game plan. He believes that by running to the left on things like gay marriage, gun control and immigration he can give the Democratic party a much stronger base for future elections. Marco Rubio may be a key figure on immigration reform when it happens but it will be the President and his party who will get the lion's share of the credit in 2016. The electoral coalition that Obama built will be tested in 2016, if he can deliver for his base in his second term, the odds of a third consecutive Democratic victory for the first time since FDR and Harry Truman becomes a lot more likely.
The new approach seen on the fiscal cliff, the debt ceiling and now in the inaugural address is one that is far more confrontational. Gone is the Illinois state-senator willing to reach across party lines. The new Obama is going to stand on principle and win or lose on those grounds. The results so far have been promising. Republicans caved on the fiscal cliff saying that they would use their leverage on the debt ceiling. Now they've abandoned the debt ceiling and say they're going to use the sequester and budget as their point of leverage. Most retreating armies won't admit that they're in full retreat. To my knowledge President Obama has never even come close to vetoing a bill. The Democratic controlled Senate helps with that. However, the threat of the veto, was barely used in his first term. Now, he seems keen to let the Republicans hang themselves. If they do something too dangerous, he can always block it with a veto or other executive action. It may be more cynical, but on issues like immigration and tax reform, the less conciliatory more aggressive Obama may actually have more success than his first term doppelganger.
In the long run, the inaugural address signaled Obama's faith that his electoral victory is a long-term game plan. He believes that by running to the left on things like gay marriage, gun control and immigration he can give the Democratic party a much stronger base for future elections. Marco Rubio may be a key figure on immigration reform when it happens but it will be the President and his party who will get the lion's share of the credit in 2016. The electoral coalition that Obama built will be tested in 2016, if he can deliver for his base in his second term, the odds of a third consecutive Democratic victory for the first time since FDR and Harry Truman becomes a lot more likely.
Saturday, January 05, 2013
Employment v. Unemployment
If you haven't already noticed, I'm a bit of a numbers geek, so I love looking at Statistics Canada when it comes out. One of the more interesting monthly reports is of course the Labour Force Survey that comes out on the first Friday of each month. The more I read through the tables, the more I'm convinced that we use the wrong number to describe the health of the job market. The unemployment rate which is the headline grabbing number is kind of a silly number. It's taken as a percentage of the labour force and this means it only counts people who are considered to be "actively looking for work." What is really important for a society isn't so much how many people are "actively looking for work" but how many people are actually working. The Employment Rate also called the Employment-Population Ratio (by the Bureau of Labor Statistics in the US for example), tells you what percentage of the working-age population is actually working. After all, it is the people working that pay the taxes. The more people working the more easily governments can provide services to those who aren't working and the fewer people who may have to rely on government assistance.
December provides a particularly good example of this when you compare Canada's job market to the one south of the border. Even allowing for slightly different methodologies, the unemployment rate really fails to illustrate the difference between the two economies. The American unemployment rate is 7.8% and the Canadian unemployment rate 7.1%. That alone would give you the idea that the two job markets are pretty similar. The employment rate for Canada in December was 62.1% or 61.7% depending on whether or not you adjust for seasonal differences. In the US the Employment Rate was 58.6%. All of a sudden you can see that the 0.7% gap in the unemployment rate is hiding the real story. Even with the unemployment rate dropping over the last couple of years, the employment rate in the US hasn't really come off of recession lows. Take a look at the chart below:
Data retrieved from Statistics Canada and the Bureau for Labor Statistics for Canada and US respectively
As you can see, Canada never really suffered the job losses that the US did, and has recovered much closer to pre-recession highs. The unemployment rate just doesn't show this kind of weakness. The reason is pretty simple: people dropped out of the job market. Part of this is demographic. However, demographics should be impacting Canada and the US relatively evenly. After all, we both had baby booms after World War II and we both still actively allow immigrants into our countries in large amounts. Birth rates are also fairly comparable. So while we may ascribe part of the decline to demographics, most of the decline is purely economics. This is shown in greater detail when you look at the provincial breakdowns:
Employment Rate for December 2012
As you can see, there's a huge gap between top and bottom. Job markets that are going full tilt like Alberta can have an employment rate of almost 70% even with the demographic pressures at play. That's why I don't buy a demographic argument for the steep decline in the US. I think this is a much more revealing picture of the state of the North American job market than the Unemployment Rate you'll read about elsewhere.
December provides a particularly good example of this when you compare Canada's job market to the one south of the border. Even allowing for slightly different methodologies, the unemployment rate really fails to illustrate the difference between the two economies. The American unemployment rate is 7.8% and the Canadian unemployment rate 7.1%. That alone would give you the idea that the two job markets are pretty similar. The employment rate for Canada in December was 62.1% or 61.7% depending on whether or not you adjust for seasonal differences. In the US the Employment Rate was 58.6%. All of a sudden you can see that the 0.7% gap in the unemployment rate is hiding the real story. Even with the unemployment rate dropping over the last couple of years, the employment rate in the US hasn't really come off of recession lows. Take a look at the chart below:
| Employment Rate at Year End | |||||||
| 2006 | 2007 | 2008 | 2009 | 2010 | 2011 | 2012 | |
| Canada | 62.7 | 63.2 | 62.7 | 61.1 | 61.4 | 61.4 | 61.7 |
| US | 63.4 | 62.7 | 61 | 58.3 | 58.3 | 58.6 | 58.6 |
As you can see, Canada never really suffered the job losses that the US did, and has recovered much closer to pre-recession highs. The unemployment rate just doesn't show this kind of weakness. The reason is pretty simple: people dropped out of the job market. Part of this is demographic. However, demographics should be impacting Canada and the US relatively evenly. After all, we both had baby booms after World War II and we both still actively allow immigrants into our countries in large amounts. Birth rates are also fairly comparable. So while we may ascribe part of the decline to demographics, most of the decline is purely economics. This is shown in greater detail when you look at the provincial breakdowns:
Employment Rate for December 2012
| Newfoundland and Labrador | 54.2 |
|---|---|
| Prince Edward Island | 59.5 |
| Nova Scotia | 57.4 |
| New Brunswick | 55.3 |
| Quebec | 60.0 |
| Ontario | 61.5 |
| Manitoba | 65.6 |
| Saskatchewan | 66.0 |
| Alberta | 69.4 |
| British Columbia | 60.1 |
As you can see, there's a huge gap between top and bottom. Job markets that are going full tilt like Alberta can have an employment rate of almost 70% even with the demographic pressures at play. That's why I don't buy a demographic argument for the steep decline in the US. I think this is a much more revealing picture of the state of the North American job market than the Unemployment Rate you'll read about elsewhere.
Monday, November 05, 2012
Prediction Time
For posterity, my state-by-state predictions for Tuesday night:
Alabama (9 EV): The deep south never warmed up to Barack Obama. It will enthusiastically support Mitt Romney on Tuesday.
Romney 9, Obama 0
Alaska (3 EV): Out of the spotlight after a crazy 2008 where Sarah Palin was only part of three ring circus, Alaska remains firmly Republican.
Romney 12, Obama 0
Arizona (11 EV): There's a demographic case for Arizona being competitive in the near future. Obama may have been able to make that happen in a stronger economy. As it is, Romney wins comfortably.
Romney 23, Obama 0
Arkansas (6 EV): Bill Clinton has been a huge part of Obama's late push. He isn't spending a lot of effort on his home state of Arkansas which hasn't supported a Democrat for President since he left office. No change here.
Romney 29, Obama 0
California (55 EV): California has produced two Republican presidents in the last 50 years. The polls close at 11 PM EST in California, Obama will be declared the winner there at 11:01 PM EST.
Obama 55, Romney 29
Colorado (9 EV): Generally speaking I think the Obama ground game is going to be a huge positive for him. The early voting in Colorado tells me that the Evangelical churches and the rest of the Romney ground forces are equal to the task. The polls call it a toss up and we might not actually knows who wins on Tuesday but I'm giving it to Romney.
Obama 55, Romney 38
Connecticut (7 EV): Connecticut is the first of the Sandy effected states on this list. Barring a major poll problem, Obama wins here easily.
Obama 62, Romney 38
Delaware (3 EV): Corporations have most of the legal rights of people. Voting isn't among them. Mitt Romney wishes they could so that all his corporate friends could make Delaware competitive. Biden's state stays blue.
Obama 65, Romney 38
District of Columbia (3 EV): The District may be central to American politics but it's also the left edge of American Politics. Obama by some ridiculous number.
Obama 68, Romney 38
Florida (29 EV): This will be close, but then again Florida usually is. I don't really know why I think Romney is going to win there. I just do. Rubio's brought some of the Cubans who voted for Obama back into the Republican fold? Jeb Bush needs to deliver to set up 2016? The economy is horrible? Pick a reason.
Obama 68, Romney 67
Georgia (16 EV): Georgia may be coming into the political centre but not in this election.
Romney 83, Obama 68
Hawaii (4 EV): Hawaii like three things politically: Democrats, incumbents and their native son, Barack Obama. Oh also for some reason, Spam. Although I'm not sure that's political.
Romney 83, Obama 72
Idaho (4 EV): An excuse to talk about the Mormon vote! Idaho's usually insanely large Republican majority will be made stronger by having a Mormon candidate on the ballot.
Romney 87, Obama 72
Illinois (20 EV): There's less excitement in Chicago this year but they still love Obama.
Obama 92, Romney 87
Indiana (11 EV): The strangest thing politically about 2008 was Obama carrying Indiana. No repeat this year.
Romney 98, Obama 92
Iowa (6 EV): The Hawkeye state isn't the most obvious of states to support Obama. It's largely white and rural with no city larger than Des Moines. Still it will continue its support of the President.
Romney 98, Obama 98
Kansas (6 EV): Former Governor and current Obama cabinet member Kathleen Sibelius may be an unfortunate political casualty of Obamacare which is too bad because she has all of the political talent to become President. Maybe if she's the Democratic nominee in four years Kansas is competitive. Until then there's still something the matter with Kansas.
Romney 104, Obama 98
Kentucky (8 EV): The Democrats seemed to be on the verge of something in Kentucky when they almost knocked off Mitch McConnell. Since then Kentucky elected Rand Paul to the senate.
Romney 112, Obama 98
Louisiana (8 EV): Louisiana may be the first state in American history to have its political culture changed by a storm. The African-American population never really came back in full and Louisiana is now slightly further to the political right.
Romney 120, Obama 98
Maine (4 EV): You will hear for about the first two hours of Tuesday night about the fact that Maine splits its electoral votes and the 1st Congressional District is competitive. Then around 9:00 or 9:30 all 4 electoral votes will go to Obama. You heard it here first.
Romney 120, Obama 102
Maryland (10 EV): The Baltimore Orioles made the playoffs this year. It was a huge shock. There's no huge shock here on Tuesday night politically: Obama by a wide margin.
Romney 120, Obama 112
Massachusetts (11 EV): Everyone made a huge deal about Al Gore losing Tennessee in 2000. No one is talking about how badly Romney is losing his home state this year. Down ballot, a great microcosm of the political debate in the United States is happening between Tea Party darling Sen. Scott Brown and liberal darling Elizabeth Warren. It may also decide the balance in the Senate.
Obama 123, Romney 120
Michigan (16 EV): Can't anyone just be from one state anymore? Seriously though, I think the Obama campaign get the African-American vote out in Detroit and if they do that they win. Plus, you have to be of a certain age to remember the days of George Romney in Michigan.
Obama 139, Romney 120
Minnesota (10 EV): There are whispers in Minnesota that Michelle Bachmann may be in trouble. Late outside money coming in to her re-election campaign. That's probably more intriguing than how this state votes for President. It will be closer than '08 but still comfortable for Obama.
Obama 149, Romney 120
Mississippi (6 EV): There are fewer states more conservative than Mississippi. Expect a Romney landslide.
Obama 149, Romney 126
Missouri (10 EV): I'm not really sure why Missouri stopped being a bell-weather and started voting reliably Republican. I do know that Obama lost narrowly here in '08 with a stronger wind at his back. Romney wins. Missouri may prove to be a disappointment for the GOP if Todd Aikin fails to unseat Claire McCaskill. Take comfort Mr. Aikin, if you lose on Tuesday it's just part of God's plan.
Obama 149, Romney 136
Montana (3 EV): There's this sneaky Democratic streak to Montana. It's not sneaky enough to give Obama a win here though. If you want a deep dark horse for 2016 look at Gov Brian Schweitzer (D).
Obama 149, Romney 139
Nebraska (5 EV): Nebraska was so aghast about giving an electoral vote to Barack Obama 4 years ago, they tried to amend the rules. As far as I can tell, they didn't actually manage to do that. Or at least CNN doesn't think they did. Omaha won't give Obama anything this time out.
Obama 149, Romney 144
Nevada (6 EV): The early turnout in Nevada has been excellent for the Democrats. Huge turnout in Clark and Washoe county where the Democrats need the votes to come in. Early voting has completely changed American presidential politics but no one talks about it. 70% of the vote in Nevada is already in and people still talk about it like it's completely up for grabs.
Obama 155, Romney 144
New Hampshire (4 EV): There's a political philosophy argument that makes a ton of sense about Romney being a perfect fit politically in New Hampshire. Unfortunately for Romney elections aren't just about political philosophy.
Obama 159, Romney 144
New Jersey (14 EV): All of America's (and the world's) hearts are with the people of New Jersey and New York. All of New Jersey's electoral votes are with Barack Obama.
Obama 173, Romney 144
New Mexico (5 EV): New Mexico is the canary in the coal mine for the Republican party and Hispanics. Unfortunately for the future of the GOP, the canary's been dead for a few years now and nobody seems to notice.
Obama 178, Romney 144
New York (29 EV): Staten Island is traditionally a Republican bastion in Democratic New York. If the devastation depresses turnout there, expect a larger margin for Obama statewide.
Obama 207, Romney 144
North Carolina (15 EV): Call it a huge hunch. The late polls seem to be trending the President's way. The early vote is up from 2008 levels. Picking Colorado and Florida for Romney and North Carolina for Obama may make some statisticians heads explode but that's what I keep thinking so I'm going with it. I'm probably dead wrong.
Obama 222, Romney 144
North Dakota (3 EV): North Dakota probably upset about the NHL lockout. They're also not thrilled with the President. Obama might beat Bettman here, not Romney.
Obama 222, Romney 147
Ohio (18 EV): I know the Governor is guaranteeing victory for Romney. The governor is wrong. Too many votes already cast in Cleveland and Columbus for Romney to pull this out.
Obama 240, Romney 147
Oklahoma (7 EV): Remember when I said Mississippi was the most conservative state in the union? Here's the number 1 contender.
Obama 240, Romney 154
Oregon (7 EV): Oregonians are focused on whether or not the Oregon Ducks can finally get to a National Championship football game. They know their state is voting for Obama.
Obama 247, Romney 154
Pennsylvania (20 EV): I think the late push by Romney into Pennsylvania will be remembered as the moment the Romney campaign realized they'd lost. Too little, too late here. Obama holds on.
Obama 267, Romney 154
Rhode Island (4 EV): Tiny Rhode Island pushes Obama past 270 and into a 2nd term on this alphabetical list. It will be called very early on election night.
Obama 271, Romney 154
South Carolina (9 EV): South Carolina will vote Democratic when Strom Thurmond come back from the dead and tells them to.
Obama 271, Romney 163
South Dakota (3 EV): Is it me or would all 4 presidents on Mt. Rushmore vote for Obama? I know Teddy Roosevelt and Abraham Lincoln were Republicans but I can't see them voting for the current incarnation of the GOP. South Dakotans will vote happily for Mitt Romney.
Obama 271, Romney 166
Tennessee (11 EV): The Volunteer state is surprisingly cold to Obama's ideas of public service.
Obama 271, Romney 177
Texas (38 EV): I firmly believe that within the next 20 years the Democrats will carry Texas in a Presidential election. Maybe then Republicans will realize that they have to do outreach to Latinos.
Obama 271, Romney 215
Utah (6 EV): It really is significant that a Mormon is the Republican candidate for President of the United States. The largely Mormon people of Utah will enthusiastically endorse him.
Obama 271, Romney 221
Vermont (3 EV): There are Romney ads talking about Obama as a socialist. Vermont actually elected a socialist to the Senate.
Obama 274, Romney 221
Virginia (13 EV): There were some big pre-storm early voting returns in Northern Virginia. Early voting isn't as important in Virginia but it does tell me that the Democratic party is hard at work on the ground. There's a tight senate race here too so turnout should be high. I'm giving the edge to Obama.
Obama 287, Romney 221
Washington (12 EV): The pacific northwest may be the most politically ignored part of the country this year. At least people go to fundraisers in California, New York and Texas. Washington is being ignored because it will vote for Obama and do so by a decent margin.
Obama 299, Romney 221
West Virgina (5 EV): Obama never did figure out coal country. No matter.
Obama 299, Romney 226
Wisconsin (10 EV): To Paul Ryan's credit, he made Wisconsin somewhat competitive. To his discredit, Romney's gong to lose Wisconsin.
Obama 309, Romney 226
Wyoming (3 EV): Dick Cheney apparently doesn't need to be on the ballot for Wyoming to go overwhelmingly Republican. Huh. I guess Bush didn't pick him for his charm.
Obama 309, Romney 229
Alabama (9 EV): The deep south never warmed up to Barack Obama. It will enthusiastically support Mitt Romney on Tuesday.
Romney 9, Obama 0
Alaska (3 EV): Out of the spotlight after a crazy 2008 where Sarah Palin was only part of three ring circus, Alaska remains firmly Republican.
Romney 12, Obama 0
Arizona (11 EV): There's a demographic case for Arizona being competitive in the near future. Obama may have been able to make that happen in a stronger economy. As it is, Romney wins comfortably.
Romney 23, Obama 0
Arkansas (6 EV): Bill Clinton has been a huge part of Obama's late push. He isn't spending a lot of effort on his home state of Arkansas which hasn't supported a Democrat for President since he left office. No change here.
Romney 29, Obama 0
California (55 EV): California has produced two Republican presidents in the last 50 years. The polls close at 11 PM EST in California, Obama will be declared the winner there at 11:01 PM EST.
Obama 55, Romney 29
Colorado (9 EV): Generally speaking I think the Obama ground game is going to be a huge positive for him. The early voting in Colorado tells me that the Evangelical churches and the rest of the Romney ground forces are equal to the task. The polls call it a toss up and we might not actually knows who wins on Tuesday but I'm giving it to Romney.
Obama 55, Romney 38
Connecticut (7 EV): Connecticut is the first of the Sandy effected states on this list. Barring a major poll problem, Obama wins here easily.
Obama 62, Romney 38
Delaware (3 EV): Corporations have most of the legal rights of people. Voting isn't among them. Mitt Romney wishes they could so that all his corporate friends could make Delaware competitive. Biden's state stays blue.
Obama 65, Romney 38
District of Columbia (3 EV): The District may be central to American politics but it's also the left edge of American Politics. Obama by some ridiculous number.
Obama 68, Romney 38
Florida (29 EV): This will be close, but then again Florida usually is. I don't really know why I think Romney is going to win there. I just do. Rubio's brought some of the Cubans who voted for Obama back into the Republican fold? Jeb Bush needs to deliver to set up 2016? The economy is horrible? Pick a reason.
Obama 68, Romney 67
Georgia (16 EV): Georgia may be coming into the political centre but not in this election.
Romney 83, Obama 68
Hawaii (4 EV): Hawaii like three things politically: Democrats, incumbents and their native son, Barack Obama. Oh also for some reason, Spam. Although I'm not sure that's political.
Romney 83, Obama 72
Idaho (4 EV): An excuse to talk about the Mormon vote! Idaho's usually insanely large Republican majority will be made stronger by having a Mormon candidate on the ballot.
Romney 87, Obama 72
Illinois (20 EV): There's less excitement in Chicago this year but they still love Obama.
Obama 92, Romney 87
Indiana (11 EV): The strangest thing politically about 2008 was Obama carrying Indiana. No repeat this year.
Romney 98, Obama 92
Iowa (6 EV): The Hawkeye state isn't the most obvious of states to support Obama. It's largely white and rural with no city larger than Des Moines. Still it will continue its support of the President.
Romney 98, Obama 98
Kansas (6 EV): Former Governor and current Obama cabinet member Kathleen Sibelius may be an unfortunate political casualty of Obamacare which is too bad because she has all of the political talent to become President. Maybe if she's the Democratic nominee in four years Kansas is competitive. Until then there's still something the matter with Kansas.
Romney 104, Obama 98
Kentucky (8 EV): The Democrats seemed to be on the verge of something in Kentucky when they almost knocked off Mitch McConnell. Since then Kentucky elected Rand Paul to the senate.
Romney 112, Obama 98
Louisiana (8 EV): Louisiana may be the first state in American history to have its political culture changed by a storm. The African-American population never really came back in full and Louisiana is now slightly further to the political right.
Romney 120, Obama 98
Maine (4 EV): You will hear for about the first two hours of Tuesday night about the fact that Maine splits its electoral votes and the 1st Congressional District is competitive. Then around 9:00 or 9:30 all 4 electoral votes will go to Obama. You heard it here first.
Romney 120, Obama 102
Maryland (10 EV): The Baltimore Orioles made the playoffs this year. It was a huge shock. There's no huge shock here on Tuesday night politically: Obama by a wide margin.
Romney 120, Obama 112
Massachusetts (11 EV): Everyone made a huge deal about Al Gore losing Tennessee in 2000. No one is talking about how badly Romney is losing his home state this year. Down ballot, a great microcosm of the political debate in the United States is happening between Tea Party darling Sen. Scott Brown and liberal darling Elizabeth Warren. It may also decide the balance in the Senate.
Obama 123, Romney 120
Michigan (16 EV): Can't anyone just be from one state anymore? Seriously though, I think the Obama campaign get the African-American vote out in Detroit and if they do that they win. Plus, you have to be of a certain age to remember the days of George Romney in Michigan.
Obama 139, Romney 120
Minnesota (10 EV): There are whispers in Minnesota that Michelle Bachmann may be in trouble. Late outside money coming in to her re-election campaign. That's probably more intriguing than how this state votes for President. It will be closer than '08 but still comfortable for Obama.
Obama 149, Romney 120
Mississippi (6 EV): There are fewer states more conservative than Mississippi. Expect a Romney landslide.
Obama 149, Romney 126
Missouri (10 EV): I'm not really sure why Missouri stopped being a bell-weather and started voting reliably Republican. I do know that Obama lost narrowly here in '08 with a stronger wind at his back. Romney wins. Missouri may prove to be a disappointment for the GOP if Todd Aikin fails to unseat Claire McCaskill. Take comfort Mr. Aikin, if you lose on Tuesday it's just part of God's plan.
Obama 149, Romney 136
Montana (3 EV): There's this sneaky Democratic streak to Montana. It's not sneaky enough to give Obama a win here though. If you want a deep dark horse for 2016 look at Gov Brian Schweitzer (D).
Obama 149, Romney 139
Nebraska (5 EV): Nebraska was so aghast about giving an electoral vote to Barack Obama 4 years ago, they tried to amend the rules. As far as I can tell, they didn't actually manage to do that. Or at least CNN doesn't think they did. Omaha won't give Obama anything this time out.
Obama 149, Romney 144
Nevada (6 EV): The early turnout in Nevada has been excellent for the Democrats. Huge turnout in Clark and Washoe county where the Democrats need the votes to come in. Early voting has completely changed American presidential politics but no one talks about it. 70% of the vote in Nevada is already in and people still talk about it like it's completely up for grabs.
Obama 155, Romney 144
New Hampshire (4 EV): There's a political philosophy argument that makes a ton of sense about Romney being a perfect fit politically in New Hampshire. Unfortunately for Romney elections aren't just about political philosophy.
Obama 159, Romney 144
New Jersey (14 EV): All of America's (and the world's) hearts are with the people of New Jersey and New York. All of New Jersey's electoral votes are with Barack Obama.
Obama 173, Romney 144
New Mexico (5 EV): New Mexico is the canary in the coal mine for the Republican party and Hispanics. Unfortunately for the future of the GOP, the canary's been dead for a few years now and nobody seems to notice.
Obama 178, Romney 144
New York (29 EV): Staten Island is traditionally a Republican bastion in Democratic New York. If the devastation depresses turnout there, expect a larger margin for Obama statewide.
Obama 207, Romney 144
North Carolina (15 EV): Call it a huge hunch. The late polls seem to be trending the President's way. The early vote is up from 2008 levels. Picking Colorado and Florida for Romney and North Carolina for Obama may make some statisticians heads explode but that's what I keep thinking so I'm going with it. I'm probably dead wrong.
Obama 222, Romney 144
North Dakota (3 EV): North Dakota probably upset about the NHL lockout. They're also not thrilled with the President. Obama might beat Bettman here, not Romney.
Obama 222, Romney 147
Ohio (18 EV): I know the Governor is guaranteeing victory for Romney. The governor is wrong. Too many votes already cast in Cleveland and Columbus for Romney to pull this out.
Obama 240, Romney 147
Oklahoma (7 EV): Remember when I said Mississippi was the most conservative state in the union? Here's the number 1 contender.
Obama 240, Romney 154
Oregon (7 EV): Oregonians are focused on whether or not the Oregon Ducks can finally get to a National Championship football game. They know their state is voting for Obama.
Obama 247, Romney 154
Pennsylvania (20 EV): I think the late push by Romney into Pennsylvania will be remembered as the moment the Romney campaign realized they'd lost. Too little, too late here. Obama holds on.
Obama 267, Romney 154
Rhode Island (4 EV): Tiny Rhode Island pushes Obama past 270 and into a 2nd term on this alphabetical list. It will be called very early on election night.
Obama 271, Romney 154
South Carolina (9 EV): South Carolina will vote Democratic when Strom Thurmond come back from the dead and tells them to.
Obama 271, Romney 163
South Dakota (3 EV): Is it me or would all 4 presidents on Mt. Rushmore vote for Obama? I know Teddy Roosevelt and Abraham Lincoln were Republicans but I can't see them voting for the current incarnation of the GOP. South Dakotans will vote happily for Mitt Romney.
Obama 271, Romney 166
Tennessee (11 EV): The Volunteer state is surprisingly cold to Obama's ideas of public service.
Obama 271, Romney 177
Texas (38 EV): I firmly believe that within the next 20 years the Democrats will carry Texas in a Presidential election. Maybe then Republicans will realize that they have to do outreach to Latinos.
Obama 271, Romney 215
Utah (6 EV): It really is significant that a Mormon is the Republican candidate for President of the United States. The largely Mormon people of Utah will enthusiastically endorse him.
Obama 271, Romney 221
Vermont (3 EV): There are Romney ads talking about Obama as a socialist. Vermont actually elected a socialist to the Senate.
Obama 274, Romney 221
Virginia (13 EV): There were some big pre-storm early voting returns in Northern Virginia. Early voting isn't as important in Virginia but it does tell me that the Democratic party is hard at work on the ground. There's a tight senate race here too so turnout should be high. I'm giving the edge to Obama.
Obama 287, Romney 221
Washington (12 EV): The pacific northwest may be the most politically ignored part of the country this year. At least people go to fundraisers in California, New York and Texas. Washington is being ignored because it will vote for Obama and do so by a decent margin.
Obama 299, Romney 221
West Virgina (5 EV): Obama never did figure out coal country. No matter.
Obama 299, Romney 226
Wisconsin (10 EV): To Paul Ryan's credit, he made Wisconsin somewhat competitive. To his discredit, Romney's gong to lose Wisconsin.
Obama 309, Romney 226
Wyoming (3 EV): Dick Cheney apparently doesn't need to be on the ballot for Wyoming to go overwhelmingly Republican. Huh. I guess Bush didn't pick him for his charm.
Obama 309, Romney 229
Wednesday, August 15, 2012
Canada: Where The World Learns
I'm absolutely thrilled to see the government of Canada moving on the issue of opening Canadian universities and colleges to the world. I mean what a novel idea. I mean it's not like I was talking about this 18 months ago or anything. Seriously though, this is the kind of thinking we need to be seeing out of our government. I'm not afraid to give a government, even a Conservative one, its due when they do something right. Now, we just need them to follow through. Hey, Liberals, do what opposition parties are supposed to do: hold their feet to the fire and make sure they follow through.
Wednesday, June 27, 2012
For Less Than A Dollar a Day...
Don't worry. I'm not trying to sell you insurance. I'm trying to sell you on Karen Stintz's super-awesome new transit plan. Yes for just $180 a year or $15 a month, Toronto could actually have a transit system worthy of the name. Okay, I'd like more subways because no one ever gets on the subway and thinks, "Damn, wish this was an LRV!" I also don't get the Scarborough subway that doesn't go through Scarborough Town Centre but rather just a little east of it. But there's no point in quibbling with minor details. There are new subways on this map including a very necessary downtown relief line and the extension of the Sheppard Abortion Subway out to Downsview. There's also the re-insertion of the very necessary Lakeshore LRT and the extension of the Yonge line up to Steeles. A whole lot of good. For 360 easy payments of $14.99, you too could have a transit system that works. Ms. Stintz, I know you keep saying you aren't running for Mayor, but this is one hell of a platform.
Tuesday, April 17, 2012
Housing Market Hypocrisy
Yesterday brought new house price numbers showing that the Canadian housing market has not, as yet, fallen off a cliff. Prices are down a little in Vancouver while still rising in Toronto. The coverage was accompanied by the standard doom and gloom about a catastrophic housing bubble. The Globe ran an interview with a blogger on the front page of their Focus section on the weekend promising fire and brimstone for Canadian homes. Maclean's used one of its sensationalist cover stories to warn of impending catastrophe in house prices. Leading the fire and brimstone brigade is the Governor of the Bank of Canada, Mark Carney and the Minister of Finance, Jim Flaherty. Whether or not there is a bubble in the Canadian housing market is a discussion which, while I could discuss at length, I won't. My personal view is that prices may be a little high but there's a lot of non-bubble contributing factors. One of the more bubble-like factors, however, is the ridiculously low interest rates we are currently enjoying in Canada. This is where the hypocrisy comes in. The Governor of the Bank of Canada and his political master (albeit at a fairly long arm's length) the Minister of Finance, have decided that it is in the country's national interest to have interest rates at this level. They have absolutely no business criticizing Canadians for taking advantage of the low rates.
Mr. Carney doesn't set interest rates for fun, he does it to try to keep the economy growing in a nice low-inflation environment. That's his job. Interest rates are a great way to manage an economy's growth because they have profound on how actors within the economy act. The reason that you lower interest rates to absurdly low levels, and the reason that you keep interest rates at absurdly low levels is because you want people to borrow. In fact, you want people to borrow in a way that they wouldn't if interest rates were higher. That's the whole point of having low interest rates. Now, admittedly, Mr. Carney really wants businesses to borrow money to spend on equipment more than he wants Joe and Jill Canuck to buy a house but you can't get one without the other. If you sustain a low interest rate environment, more and more people will take you up on the offer of cheap money and yes, this may cause home prices to go higher than they would in normal circumstances. This is basic economics. Mark Carney is a very smart man and a pretty darn good economist. He knows that reasons 1, 2 and 3 that there may be a bubble in the Canadian housing market is the ridiculously low interest rates that he sets. It's absolute hypocrisy for him and Mr. Flaherty (who has to be on board with Mr. Carney's plan) to criticize Canadians for doing exactly what they told Canadians to do by lowering interest rates. If Mr. Carney and Mr. Flaherty were really worried about the housing bubble, they'd raise interest rates. If they aren't worried enough to do that, they need to stop preaching doom and gloom. It won't make them less responsible if the doom and gloom actually comes.
Mr. Carney doesn't set interest rates for fun, he does it to try to keep the economy growing in a nice low-inflation environment. That's his job. Interest rates are a great way to manage an economy's growth because they have profound on how actors within the economy act. The reason that you lower interest rates to absurdly low levels, and the reason that you keep interest rates at absurdly low levels is because you want people to borrow. In fact, you want people to borrow in a way that they wouldn't if interest rates were higher. That's the whole point of having low interest rates. Now, admittedly, Mr. Carney really wants businesses to borrow money to spend on equipment more than he wants Joe and Jill Canuck to buy a house but you can't get one without the other. If you sustain a low interest rate environment, more and more people will take you up on the offer of cheap money and yes, this may cause home prices to go higher than they would in normal circumstances. This is basic economics. Mark Carney is a very smart man and a pretty darn good economist. He knows that reasons 1, 2 and 3 that there may be a bubble in the Canadian housing market is the ridiculously low interest rates that he sets. It's absolute hypocrisy for him and Mr. Flaherty (who has to be on board with Mr. Carney's plan) to criticize Canadians for doing exactly what they told Canadians to do by lowering interest rates. If Mr. Carney and Mr. Flaherty were really worried about the housing bubble, they'd raise interest rates. If they aren't worried enough to do that, they need to stop preaching doom and gloom. It won't make them less responsible if the doom and gloom actually comes.
Friday, February 10, 2012
Fit the Narrative or Die Trying
The still mandatory part of the 2011 census is coming out. We start with the basics: how many people are there in Canada and where do they live. The media has decided that the take away from Wednesday's Statscan data dump is that the West is Best and poor Ontario is in decline. This is a narrative that we've been hearing for a while and there are those in the media who like to take times like this to keep telling their little story. Yes, if you believe the papers the centre of power is moving West. Unless the centre of power was Windsor, ON, I'm not sure I'm buying what they're selling.
The story in Ontario overall is that yes, it grew at a slightly slower pace than the national average. However, all this talk about percentages ignores the raw numbers. High flying Alberta grew by about 350,000 people in the last 5 years. Declining Ontario grew by about 700,000 people. If there is a decline in Ontario, it is highly localized. Southwestern Ontario is a problem. Factory towns like Windsor and St. Catharines either declined or showed anemic growth. Northern Ontario is similarly stagnant. These aren't particularly new developments, especially in the north. Ignored by the media is the fact that the Greater Toronto Area is still booming.
If the centre of power is anywhere, it's Toronto and the GTA is doing just fine, thank you. Almost 470,000 more people called the GTA home in 2011 than did in 2006. To put that in perspective that almost equals the entire population of booming Saskatoon and Regina, combined. The GTA added more people during this period than the entire province of Alberta. Admittedly, most of that growth is in the suburbs as people search for space and affordability but not exclusively. The condo explosion led the very downtown riding of Trinity-Spadina to grow by 25.5%, ranking 7th in the country (5 of the top 7 fastest growing ridings in the country were in the GTA). Overall, the population of the city of Toronto grew by a larger number than any other city in the country, bar none. The media can keep telling themselves that Alberta is the new centre of power. The numbers, however, are telling a completely different story.
The story in Ontario overall is that yes, it grew at a slightly slower pace than the national average. However, all this talk about percentages ignores the raw numbers. High flying Alberta grew by about 350,000 people in the last 5 years. Declining Ontario grew by about 700,000 people. If there is a decline in Ontario, it is highly localized. Southwestern Ontario is a problem. Factory towns like Windsor and St. Catharines either declined or showed anemic growth. Northern Ontario is similarly stagnant. These aren't particularly new developments, especially in the north. Ignored by the media is the fact that the Greater Toronto Area is still booming.
If the centre of power is anywhere, it's Toronto and the GTA is doing just fine, thank you. Almost 470,000 more people called the GTA home in 2011 than did in 2006. To put that in perspective that almost equals the entire population of booming Saskatoon and Regina, combined. The GTA added more people during this period than the entire province of Alberta. Admittedly, most of that growth is in the suburbs as people search for space and affordability but not exclusively. The condo explosion led the very downtown riding of Trinity-Spadina to grow by 25.5%, ranking 7th in the country (5 of the top 7 fastest growing ridings in the country were in the GTA). Overall, the population of the city of Toronto grew by a larger number than any other city in the country, bar none. The media can keep telling themselves that Alberta is the new centre of power. The numbers, however, are telling a completely different story.
Thursday, February 09, 2012
Mitt Romney's Very Bad Day
It is no great revelation that Mitt Romney had a bad night on Tuesday. He showed poorly in Colorado and Minnesota. However, I think the results on Tuesday are more than a mere flesh wound for Romney. Let's be clear, I still believe there's about a 75% chance Mitt Romney will be the Republican nominee. However, before Tuesday I would have put those chances at around 90%. Let's deal with what Tuesday means for the rest of the nomination fight first. As far as I can tell, Santorum, Gingrich and Paul all have the same goal: get to the convention without Romney having a majority of delegates. Gingrich wants to be a close second to Romney in delegates with hopefully a couple of big state wins under his belt (watch for Gingrich to spend a lot of time in Texas). He then hopes to be seen as the only alternative to Romney and win after Santorum endorses him. Santorum has a similar strategy. However, I don't think Santorum would be devastated to be third after a first ballot. I think of Santorum as the Stephane Dion of this race (Romney's Iggy in this weird analogy; Gingrich is Rae). He may not be the most popular guy at the convention, but he may be the least objectionable and that may be enough. Ron Paul, with all due respect, has no delusions of being the nominee. He wants to be the kingmaker and extract some promises out of the nominee. He needs a brokered convention for that. Given, that his opponents need to keep Romney at 50%-1, we start to see the problem with losing races in states like Colorado and Minnesota.
Nate Silver has an excellent piece up over at fivethirtyeight in which he wonders out loud about why Romney didn't spend more money in these two states. I have a theory. I think Romney's campaign assumed that the fight they had to worry about was the fight against Newt Gingrich and Gingrich was going to be a non-factor in these states. They underestimated Santorum and it cost them. It presents a real problem for Romney. Without directly coordinating, Santorum and Gingrich are playing quite well off each other. Santorum prefers to fight in caucus states where he can get on the ground and make a difference. Gingrich wants to fight his battles in big primary battles where he can be his own messenger. I think one of the reason Gingrich is showing so poorly in retail states is that no one can quite sell Newt Gingrich like Newt Gingrich. Righteous indignation is not an easy quality to impart in a surrogate. That leaves Romney fighting two candidates who are a) not going to spend money against each other and b) aren't going to leave a lot of freebies like Nevada (and possibly Maine, we'll see how Paul does there) for him to collect. I firmly believe that neither Gingrich nor Santorum can win more delegates than Romney by themselves. However, if they pick their battles and let Ron Paul siphon off a couple hundred himself, they may be able to keep Romney down below 50%. That's the challenge that faces Romney after Tuesday. He has to fight everywhere, spend money everywhere, and pray that he can wrap up the nomination when California votes in early June. Let's say he wins California in June and secures the nomination. Roll that forward. What does it mean for the general election?
The talking heads are starting to compare this race to the Obama-Clinton nomination fight in 2008 but the analogy is weak at best. Yes, Clinton went after Obama hard. In fact, she went after him harder than John McCain did. The difference was that Obama built an army for the general election everywhere he went. Romney received about 23,000 votes last night in Colorado. Obama got 80,000 in 2008. The results are fairly typical. The Democratic contests in 2008 featured record turnout, the Republican contests this year are getting average to below average turnout. Caucuses in particular are a great way to get contacts for a general election campaign. If someone is willing to sit through a caucus meeting for you, they are probably willing to go out and knock on some doors or at least write you a cheque. Romney will not have the resources in Colorado and Minnesota that he could have had he contested the caucuses more aggressively and started identifying his volunteers and donors in these key states now.
Colorado isn't just any state, it is crucial for Republican hopes in November. If Obama is able to match his 2008 victories in Nevada, New Mexico and Colorado, the Republican road to the White House gets a lot narrower. The Republican party is clearly struggling in that part of the country. Even in the landslide in 2010, tea party candidates failed to beat vulnerable Democrats in Colorado and Nevada senate races. Assuming Romney is the nominee, he needs to be able to overturn this recent history if he is to become President. He failed to lay the groundwork in Colorado on Tuesday. In Minnesota, Tuesday night exposes a different problem. Obama is going to have more money than he frankly needs to get re-elected. The billion dollar number is not unreasonable as a war chest(and that doesn't include a Super PAC that will be flooded with union money). Having said that, it is crucial for whoever the Republican nominee is to get the President to spend a little bit of his war chest playing defense. Romney may be able to do that in Michigan (where his father was Governor) or maybe even in New Hampshire but there is no evidence Minnesota will be on that list. If Romney can't scare Obama in states like Minnesota, he may not be able to keep up with him in swing states like Ohio and Florida. If this is going to be a long nomination and Romney doesn't at least take advantage and start building reasonable campaign infrastructures in key states, he will be even further behind when he finally secures the nomination. That's the threat to Romney. A long nomination fight isn't necessarily a bad thing as Obama proved in 2008, but you need to be able to come out of the race with a general election infrastructure in place. Romney's infrastructure is looking a little patchy at the moment.
Nate Silver has an excellent piece up over at fivethirtyeight in which he wonders out loud about why Romney didn't spend more money in these two states. I have a theory. I think Romney's campaign assumed that the fight they had to worry about was the fight against Newt Gingrich and Gingrich was going to be a non-factor in these states. They underestimated Santorum and it cost them. It presents a real problem for Romney. Without directly coordinating, Santorum and Gingrich are playing quite well off each other. Santorum prefers to fight in caucus states where he can get on the ground and make a difference. Gingrich wants to fight his battles in big primary battles where he can be his own messenger. I think one of the reason Gingrich is showing so poorly in retail states is that no one can quite sell Newt Gingrich like Newt Gingrich. Righteous indignation is not an easy quality to impart in a surrogate. That leaves Romney fighting two candidates who are a) not going to spend money against each other and b) aren't going to leave a lot of freebies like Nevada (and possibly Maine, we'll see how Paul does there) for him to collect. I firmly believe that neither Gingrich nor Santorum can win more delegates than Romney by themselves. However, if they pick their battles and let Ron Paul siphon off a couple hundred himself, they may be able to keep Romney down below 50%. That's the challenge that faces Romney after Tuesday. He has to fight everywhere, spend money everywhere, and pray that he can wrap up the nomination when California votes in early June. Let's say he wins California in June and secures the nomination. Roll that forward. What does it mean for the general election?
The talking heads are starting to compare this race to the Obama-Clinton nomination fight in 2008 but the analogy is weak at best. Yes, Clinton went after Obama hard. In fact, she went after him harder than John McCain did. The difference was that Obama built an army for the general election everywhere he went. Romney received about 23,000 votes last night in Colorado. Obama got 80,000 in 2008. The results are fairly typical. The Democratic contests in 2008 featured record turnout, the Republican contests this year are getting average to below average turnout. Caucuses in particular are a great way to get contacts for a general election campaign. If someone is willing to sit through a caucus meeting for you, they are probably willing to go out and knock on some doors or at least write you a cheque. Romney will not have the resources in Colorado and Minnesota that he could have had he contested the caucuses more aggressively and started identifying his volunteers and donors in these key states now.
Colorado isn't just any state, it is crucial for Republican hopes in November. If Obama is able to match his 2008 victories in Nevada, New Mexico and Colorado, the Republican road to the White House gets a lot narrower. The Republican party is clearly struggling in that part of the country. Even in the landslide in 2010, tea party candidates failed to beat vulnerable Democrats in Colorado and Nevada senate races. Assuming Romney is the nominee, he needs to be able to overturn this recent history if he is to become President. He failed to lay the groundwork in Colorado on Tuesday. In Minnesota, Tuesday night exposes a different problem. Obama is going to have more money than he frankly needs to get re-elected. The billion dollar number is not unreasonable as a war chest(and that doesn't include a Super PAC that will be flooded with union money). Having said that, it is crucial for whoever the Republican nominee is to get the President to spend a little bit of his war chest playing defense. Romney may be able to do that in Michigan (where his father was Governor) or maybe even in New Hampshire but there is no evidence Minnesota will be on that list. If Romney can't scare Obama in states like Minnesota, he may not be able to keep up with him in swing states like Ohio and Florida. If this is going to be a long nomination and Romney doesn't at least take advantage and start building reasonable campaign infrastructures in key states, he will be even further behind when he finally secures the nomination. That's the threat to Romney. A long nomination fight isn't necessarily a bad thing as Obama proved in 2008, but you need to be able to come out of the race with a general election infrastructure in place. Romney's infrastructure is looking a little patchy at the moment.
Monday, January 16, 2012
Hungary and the Death of Democracy in Europe
In October 2006, I took a trip to Budapest for a vacation. Unbeknownst to me at the time, October 2006 was an interesting time to be in the Hungarian capital. In May 2006, Prime Minister Ferenc Gyurcsany's MSZP party had been re-elected under the shadow of a collapsing economy and ballooning budget deficit. In September, an audio tape was discovered which featured the Gyurcsany bragging to confidantes how he was lying about the size of the deficit. This sparked outrage in the country and in Budapest in the fall of 2006 large protests filled the area around the Hungarian parliament, including during the time I was in Hungary. At the time, I remember thinking how amazing it was to see people so engaged in their politics. I thought about how Hungarians who had fought for so long and so hard to have a voice, would not stand for corrupt politicians. I am increasingly worried that I was wrong. In 2010, Gyurcsany's party was defeated handily (he had already resigned) in the wake of not only that scandal but the full force of an economic crisis that his Hungary about as hard as it hit anyone. The current Prime Minister, Viktor Orban an his Fidesz Party took over. Fidesz holds a huge majority and has used it to pass laws which border on undemocratic. Orban learned from the scandal of his predecessor not that he should be honest but that the media, who leaked the scandal, were dangerous and should be control. The new media laws in Hungary are effectively censorship (newspapers published blank front pages in protest when the law passed). Now, Orban is updating the Soviet era constitution and using his super-majority to instill his right-wing political values upon the constitution itself.
Orban's less than democratic tendencies have been roundly criticized by his European neighbours. Their is increasing talk in Europe of Hungary verging on dictatorship. I don't necessarily disagree, I do it find it somewhat hypocritical considering the massive democratic deficit being exposed by the European financial crisis. Take Italy. Please someone take Italy. Italy has had a democratic deficit for a while. Any country being run by a man who is both the richest man in the country and the owner of the largest media empire in the country as Italy was under Silvio Berlusconi is not exactly a paragon of democratic virtue. Now, Italy faces a new democratic deficit. The Prime Minister Mario Monti is described as a technocrat. He has appointed a cabinet without including a single parliamentarian contrary to Italian tradition (this isn't the US). Monti's austerity agenda is being pushed through parliament at the point of a gun. Any time the Italian parliament questions Monti's plan he threatens economic doom and gloom and the markets back him up by raising Italy's lending costs. The parliament has been effectively neutered. The question here is not whether or not Mario Monti is doing the right thing for Italy. Frankly, there aren't a lot of good options right now and his plans look about as good as anything else. The question is how exactly can we call this democracy. Yes, technically Monti is democratically legitimate. He holds the confidence of the Italian parliament and the parliament was duly elected. However, when the parliament's confidence seems to be built solely on fear it becomes murkier as to how democratically legitimate that confidence is.
This is how democracy is fading away all over Europe. It isn't that there aren't free and fair elections; there are. However, big decisions are increasingly being made either at the less than democratic European level or being pushed through less than enthusiastic parliaments under a cloud of fear. The EU which has brought peace to Europe, increasingly threatens its democracy. In Greece, George Papandreou's attempts to bring austerity measures to a referendum were snuffed out by furious fellow EU leaders. The most recent treaty updating the EU's structure was quickly pushed through parliaments after it failed miserably in referenda. I'm no fan of direct democracy but if you do go to the people and they say no, you better damn well listen. European governments are increasingly unable to act in the best of interest of their own people because of restraints imposed by Brussels. To be clear I'm talking about the only government that seems to function in Brussels. That would be the European one not the Belgian government which was finally formed last month a mere 589 days after the last election in June of 2010. As the economic imposes more and more upon European governments, one wonders whether or not when this crisis clears, whether those governments will be able to regain their democratic legitimacy.
This threat to democracy is far more dangerous than an IMF Structural Adjustment Program or similar program like the kind imposed on Argentina after its economic collapse. The IMF has no real place in a functioning economy. Once the economy is back on its feet and the loans are being repaid, the country can do as it pleases. The IMF has no power to stop a government from making decisions it disagrees with in good economic times. The EU is a far more integrated institution that seems to build itself on mission creep. The European Union's natural growth seems to stem from moments of crisis when governments decide to let the EU handle a problem. This wouldn't be an issue if the EU was viewed as even vaguely being a democratic institution. It is responsive to its member governments to a certain extent, but its connections to the people, mostly through the joke that is the European Parliament, are weak on a good day. If people believe that decisions are being made by a government over which they have no control, there is no point in protesting like Hungarians did back in 2006. There's not even much point in voting. Democracy will die a slow death.
Orban's less than democratic tendencies have been roundly criticized by his European neighbours. Their is increasing talk in Europe of Hungary verging on dictatorship. I don't necessarily disagree, I do it find it somewhat hypocritical considering the massive democratic deficit being exposed by the European financial crisis. Take Italy. Please someone take Italy. Italy has had a democratic deficit for a while. Any country being run by a man who is both the richest man in the country and the owner of the largest media empire in the country as Italy was under Silvio Berlusconi is not exactly a paragon of democratic virtue. Now, Italy faces a new democratic deficit. The Prime Minister Mario Monti is described as a technocrat. He has appointed a cabinet without including a single parliamentarian contrary to Italian tradition (this isn't the US). Monti's austerity agenda is being pushed through parliament at the point of a gun. Any time the Italian parliament questions Monti's plan he threatens economic doom and gloom and the markets back him up by raising Italy's lending costs. The parliament has been effectively neutered. The question here is not whether or not Mario Monti is doing the right thing for Italy. Frankly, there aren't a lot of good options right now and his plans look about as good as anything else. The question is how exactly can we call this democracy. Yes, technically Monti is democratically legitimate. He holds the confidence of the Italian parliament and the parliament was duly elected. However, when the parliament's confidence seems to be built solely on fear it becomes murkier as to how democratically legitimate that confidence is.
This is how democracy is fading away all over Europe. It isn't that there aren't free and fair elections; there are. However, big decisions are increasingly being made either at the less than democratic European level or being pushed through less than enthusiastic parliaments under a cloud of fear. The EU which has brought peace to Europe, increasingly threatens its democracy. In Greece, George Papandreou's attempts to bring austerity measures to a referendum were snuffed out by furious fellow EU leaders. The most recent treaty updating the EU's structure was quickly pushed through parliaments after it failed miserably in referenda. I'm no fan of direct democracy but if you do go to the people and they say no, you better damn well listen. European governments are increasingly unable to act in the best of interest of their own people because of restraints imposed by Brussels. To be clear I'm talking about the only government that seems to function in Brussels. That would be the European one not the Belgian government which was finally formed last month a mere 589 days after the last election in June of 2010. As the economic imposes more and more upon European governments, one wonders whether or not when this crisis clears, whether those governments will be able to regain their democratic legitimacy.
This threat to democracy is far more dangerous than an IMF Structural Adjustment Program or similar program like the kind imposed on Argentina after its economic collapse. The IMF has no real place in a functioning economy. Once the economy is back on its feet and the loans are being repaid, the country can do as it pleases. The IMF has no power to stop a government from making decisions it disagrees with in good economic times. The EU is a far more integrated institution that seems to build itself on mission creep. The European Union's natural growth seems to stem from moments of crisis when governments decide to let the EU handle a problem. This wouldn't be an issue if the EU was viewed as even vaguely being a democratic institution. It is responsive to its member governments to a certain extent, but its connections to the people, mostly through the joke that is the European Parliament, are weak on a good day. If people believe that decisions are being made by a government over which they have no control, there is no point in protesting like Hungarians did back in 2006. There's not even much point in voting. Democracy will die a slow death.
Thursday, December 22, 2011
If the Facts Don't Fit Your Narrative...
Just ignore the facts. The Globe and Mail ran a story yesterday on its front page about how the West and in particular Saskatchewan is drawing more and more immigrants away from Ontario. The story is one of many in a media narrative that mighty Ontario is in decline. The impetus for this particular piece was, at least in theory, release of third quarter immigration stats from StatsCan. What amazed me about the story was how few actual numbers accompanied the dribble about Saskatoon being a boom town, so I decided to get the numbers. First, the national picture:
International Net Migration (2011):
Q1: 49,372
Q2: 79,020
Q3: 78,457
It is useful to note at this point that these numbers are down significantly from recent years. We haven't been below 80k in the second or third quarter since 2007. Now for the "dreary" picture out of Ontario (which accounts for just under 39% of Canada's population):
International Net Migration (2011):
Q1: 22,229 (45%)
Q2: 31,792 (40%)
Q3: 33,733 (43%)
As you can see, Ontario actually increased in both real terms AND in terms of national share the number of international immigrants coming in from Q2 to Q3, but I'm sure you would've realized that by reading the article. Apparently, the other prudent "new" stat is that Ontarians are leaving for greener pastures. This would have been true... if it weren't for those pesky statisticians
Interprovincial Net Migration (Ontario, 2011):
Q1: -690
Q2: -1880
Q3: 543
The third quarter of 2011 actually saw Ontario have a positive interprovincial migration number for the first time in years. While Saskatchewan did have a big month in terms of migration, the loser in this situation was actually Quebec which saw its immigration decline from 19,657 in Q2 to 11,893 in Q3. None of this of course fits the "centre of power is moving from Toronto to Calgary" narrative so it can be safely ignored.
International Net Migration (2011):
Q1: 49,372
Q2: 79,020
Q3: 78,457
It is useful to note at this point that these numbers are down significantly from recent years. We haven't been below 80k in the second or third quarter since 2007. Now for the "dreary" picture out of Ontario (which accounts for just under 39% of Canada's population):
International Net Migration (2011):
Q1: 22,229 (45%)
Q2: 31,792 (40%)
Q3: 33,733 (43%)
As you can see, Ontario actually increased in both real terms AND in terms of national share the number of international immigrants coming in from Q2 to Q3, but I'm sure you would've realized that by reading the article. Apparently, the other prudent "new" stat is that Ontarians are leaving for greener pastures. This would have been true... if it weren't for those pesky statisticians
Interprovincial Net Migration (Ontario, 2011):
Q1: -690
Q2: -1880
Q3: 543
The third quarter of 2011 actually saw Ontario have a positive interprovincial migration number for the first time in years. While Saskatchewan did have a big month in terms of migration, the loser in this situation was actually Quebec which saw its immigration decline from 19,657 in Q2 to 11,893 in Q3. None of this of course fits the "centre of power is moving from Toronto to Calgary" narrative so it can be safely ignored.
Monday, November 14, 2011
Stop Gouging Canadian Consumers
Stephen Harper is doing his best John Kerry impression, flip-flopping on his position on Canada's "supply management" program for dairy and poultry products. Supply Management is one of those fancy terms governments use to avoid saying "gouge the consumer." Stephen Harper claims to support the free market. He even supports the free market for agriculture (when it comes to dismantling the Canadian Wheat Board), so why does he maintain a practice which costs Canadians thousands of dollars a year in food costs? Canada's practice on dairy and poultry is to restrict the importation of dairy and poultry products through the use of a Tariff Rate Quota (TRQ). A TRQ, for the uninitiated, is an update to the now outlawed quota system. A quota system restricts the amount of goods that importers may bring into the country, full stop. A Tariff Rate Quota system restricts the amount of goods that importers can bring into the country at a reasonable tariff rate. After the quota is exhausted, the duty rate for poultry and dairy products is over 250%. This TRQ system allows the government to artificially maintain a high price for eggs, milk, chicken, butter and cheese in the Canadian marketplace.
Under this system, a tiny number of dairy and poultry farmers (often large factory farms) benefit while Canadians pay prices well above the market rate for basic groceries. It is the kind of classic distortion of the free market that should make red-blooded conservatives like Mr. Harper furious. However, Canadian politicians are too scared to stand up to the farmers. Yes,"Farms Feed Cities" but never forget that Cities Pay Farmers, Clothe Farmers, Build Farm Equipment for Farmers... well, you get the point. There are large numbers of Canadian farmers, perhaps even some dairy and poultry farmers, that can prosper in a free market. The government needs to stand up for Canadian consumers and put an end to this absurd relic. It is bad for Canadian consumers, impedes the potential signing of a hugely beneficial free trade deal in the Pacific and contributes to the stagnation of developing economies who find their products barred entry from developed world markets by such prejudicial practices.
Under this system, a tiny number of dairy and poultry farmers (often large factory farms) benefit while Canadians pay prices well above the market rate for basic groceries. It is the kind of classic distortion of the free market that should make red-blooded conservatives like Mr. Harper furious. However, Canadian politicians are too scared to stand up to the farmers. Yes,"Farms Feed Cities" but never forget that Cities Pay Farmers, Clothe Farmers, Build Farm Equipment for Farmers... well, you get the point. There are large numbers of Canadian farmers, perhaps even some dairy and poultry farmers, that can prosper in a free market. The government needs to stand up for Canadian consumers and put an end to this absurd relic. It is bad for Canadian consumers, impedes the potential signing of a hugely beneficial free trade deal in the Pacific and contributes to the stagnation of developing economies who find their products barred entry from developed world markets by such prejudicial practices.
Monday, October 24, 2011
Submitted Without Commentary
Number of people per seat under Harper's new plan (per StatsCan Q2 2011 Estimates):
PEI: 36,464
Newfoundland and Labrador: 72,940
New Brunswick: 75,546
Saskatchewan: 75,563
Nova Scotia: 85,949
Manitoba: 89,327
Québec: 103,631
Alberta: 111,157
British Columbia: 111,544
Ontario: 112, 778
PEI: 36,464
Newfoundland and Labrador: 72,940
New Brunswick: 75,546
Saskatchewan: 75,563
Nova Scotia: 85,949
Manitoba: 89,327
Québec: 103,631
Alberta: 111,157
British Columbia: 111,544
Ontario: 112, 778
Friday, October 14, 2011
Occupy Main Street
The protests that have broken out south of the border and are apparently moving north are misguided in their rage. What people remember about the financial meltdown of 2008 was the crashing of the market, the credit crisis and the bank bailouts. They seem to forget that while the banks were certainly a major player in the financial disaster, they were nowhere near alone. I remember shortly after the meltdown CNN was ran some overly dramatic top ten villains of the financial crisis. On the list Ali Velshi presented back then was the American People. They should not be forgotten. The current financial mess is not a result of the rich becoming too rich. It's a result of the average American trying to act like the rich.
The financial crisis of 2008 was upon any amount of sober reflection about the unrealistic expectation of the American dream. For the last twenty years, Americans convinced themselves and their politicians that everyone should have the house in the suburbs with the white picket fence the 2.5 kids and the 1.5 pets. Maybe not my dream, but for a lot of Americans it was the dream, and one that they felt entitled to realize it. Government responded to demand by encouraging home ownership and loosening mortgage rules. Banks responded by loosening lending rules and finding creative instruments to try to water down the worst of the debt. Asset backed credit paper is not a bad idea if you properly assess the risk of the product. The crisis was because no one saw the true value of the product and the underlying mortgages (or at least very few saw it). A society deluded itself that you could own your dream home on minimum wage. The banks were among the deluded. Singling out the banks for outrage doesn't make any sense. You certainly can't blame them because Congress decided to bail them out. Blame Congress. What did you think the banks were going to turn Congress down? The entire society is to blame for the financial mess, no amount of scapegoating will change that.
Being angry with the rich is not productive. Then again, protests rarely are productive. Bluntly, collective consensus driven mobs don't have a great history of affecting change. Particularly, when they have no idea what they want. Yes, there is a growing gap between the very rich and the rest of the country. What should Americans or Canadians do about that? The accumulation of wealth in the hands of a small minority may be discomforting but in a capitalist democratic society, there isn't much that can be done. I don't think there are a lot of people in downtown New York who want to seize the assets of the rich in spite of the "occupy" tone. After all, they didn't loot the Upper East Side, they just walked by angrily. If the protestors want to raise taxes a couple points on the wealthiest Americans, then they should get out of New York, go down to Washington or better yet their local congressional campaign office and start lobbying for change. Urban camping will not close the income gap or restart the economy (okay, maybe a slight boost to the urban camping industry). If the protestors feel disenfranchised and disconnected from their country, they should exercise their franchise and connect. Sitting outside in the cold won't get them anywhere.
The financial crisis of 2008 was upon any amount of sober reflection about the unrealistic expectation of the American dream. For the last twenty years, Americans convinced themselves and their politicians that everyone should have the house in the suburbs with the white picket fence the 2.5 kids and the 1.5 pets. Maybe not my dream, but for a lot of Americans it was the dream, and one that they felt entitled to realize it. Government responded to demand by encouraging home ownership and loosening mortgage rules. Banks responded by loosening lending rules and finding creative instruments to try to water down the worst of the debt. Asset backed credit paper is not a bad idea if you properly assess the risk of the product. The crisis was because no one saw the true value of the product and the underlying mortgages (or at least very few saw it). A society deluded itself that you could own your dream home on minimum wage. The banks were among the deluded. Singling out the banks for outrage doesn't make any sense. You certainly can't blame them because Congress decided to bail them out. Blame Congress. What did you think the banks were going to turn Congress down? The entire society is to blame for the financial mess, no amount of scapegoating will change that.
Being angry with the rich is not productive. Then again, protests rarely are productive. Bluntly, collective consensus driven mobs don't have a great history of affecting change. Particularly, when they have no idea what they want. Yes, there is a growing gap between the very rich and the rest of the country. What should Americans or Canadians do about that? The accumulation of wealth in the hands of a small minority may be discomforting but in a capitalist democratic society, there isn't much that can be done. I don't think there are a lot of people in downtown New York who want to seize the assets of the rich in spite of the "occupy" tone. After all, they didn't loot the Upper East Side, they just walked by angrily. If the protestors want to raise taxes a couple points on the wealthiest Americans, then they should get out of New York, go down to Washington or better yet their local congressional campaign office and start lobbying for change. Urban camping will not close the income gap or restart the economy (okay, maybe a slight boost to the urban camping industry). If the protestors feel disenfranchised and disconnected from their country, they should exercise their franchise and connect. Sitting outside in the cold won't get them anywhere.
Saturday, October 08, 2011
Ontario's Back to the Future Election
It was a strange night on Thursday as Ontario re-elected Dalton McGuinty's Liberals to another term at Queen's Park. Much has been made that the majority is over and that the Premier should be chastened by the result. Yes, McGuinty lost votes from his obliteration of the inept John Tory in 2007. It would have been virtually impossible for a Liberal leader to do better than he did 2007. If the Grits had won 3 more seats and were sitting with a relatively stable majority, this would be viewed as a win of historic proportion. Even without the majority it is still an historic win. Historic, yes, because the last Liberal leader to do it was the great Oliver Mowatt but mostly because it represents a real defining moment not for the Liberal Goverment but for the Progressive Conservative opposition.
Tim Hudak had an awful night on Thursday. He had the extraordinary good fortune of having the extremely low benchmark of John Tory to exceed. Otherwise, Tim Hudak would have probably had to resign last night. He isn't under tremendous pressure today because PC's are content to have a leader who was at very least able to unite his party's base behind him. The base came out in droves. The Tories were able to win huge victories in rural Ontario on the strength of Hudak's anti-Green energy act platform. Absolute majorities (over 70% for John Yakabuski) in rural ridings helped prop up the PC's share of the popular vote. What it masked was a disastrous night for Tim Hudak's Tories in the GTA. The Tories failed to win a single seat in Mississauga or Brampton. They didn't come close in Toronto. This isn't a coincidence. Tim Hudak ran a campaign targeted in Rural Ontario and won in Rural Ontario. He failed to speak to urban voters and lost decisively in the GTA. As the Premier said, Hudak seemed to want to take the province back to some point in the golden past. This wins votes on the farm, not in the city.
Why is this such a disaster? Well, the 2011 census is now complete. Since the provincial legislature south of the French River is dictated by how Elections Canada draws the new federal maps and Stephen Harper has promised Ontario a more accurate slice of the pie in the new alignment, there will likely be a whole bunch of new ridings on the electoral map come sometime in 2013, 18 more according to one Harper plan. These ridings won't be in a farmer's field either. According to the projections I ran last year, 10 of the new ridings will be in the 905 largely in Mississauga, Brampton and Markham (three places the Tories didn't win a seat). Another couple ridings will be in Toronto itself. That leaves just six ridings outside of the GTA versus twelve within. This means that if the same election results were played out on the new map, the Liberals would probably have the majority they crave.
Tim Hudak had an awful night on Thursday. He had the extraordinary good fortune of having the extremely low benchmark of John Tory to exceed. Otherwise, Tim Hudak would have probably had to resign last night. He isn't under tremendous pressure today because PC's are content to have a leader who was at very least able to unite his party's base behind him. The base came out in droves. The Tories were able to win huge victories in rural Ontario on the strength of Hudak's anti-Green energy act platform. Absolute majorities (over 70% for John Yakabuski) in rural ridings helped prop up the PC's share of the popular vote. What it masked was a disastrous night for Tim Hudak's Tories in the GTA. The Tories failed to win a single seat in Mississauga or Brampton. They didn't come close in Toronto. This isn't a coincidence. Tim Hudak ran a campaign targeted in Rural Ontario and won in Rural Ontario. He failed to speak to urban voters and lost decisively in the GTA. As the Premier said, Hudak seemed to want to take the province back to some point in the golden past. This wins votes on the farm, not in the city.
Why is this such a disaster? Well, the 2011 census is now complete. Since the provincial legislature south of the French River is dictated by how Elections Canada draws the new federal maps and Stephen Harper has promised Ontario a more accurate slice of the pie in the new alignment, there will likely be a whole bunch of new ridings on the electoral map come sometime in 2013, 18 more according to one Harper plan. These ridings won't be in a farmer's field either. According to the projections I ran last year, 10 of the new ridings will be in the 905 largely in Mississauga, Brampton and Markham (three places the Tories didn't win a seat). Another couple ridings will be in Toronto itself. That leaves just six ridings outside of the GTA versus twelve within. This means that if the same election results were played out on the new map, the Liberals would probably have the majority they crave.
Saturday, August 27, 2011
Direct Democracy Fails British Columbia
I've said it before, and I'll say it again, direct democracy doesn't work. With apologies to Kent Brockman, the result of the HST referendum demonstrates why direct democracy is a terrible way to determine public policy. The argument here is not necessarily about the HST itself. I happen to like the idea. I think it creates a simpler and less obtuse business environment. That's actually not the point. The point is that governments will have to do unpopular things in the course of doing what is best for the long term success of the country, province or city. The GST is an excellent example. Extremely unpopular when it was introduced and still unpopular today, the GST is a major contributing factor to Canada's relative fiscal strength today and our fiscal strength during the Chretien and Martin governments. In fact, it was Stephen Harper's cuts to the GST which first compromised our surplus position. If the people had been able to vote directly, the GST would never have been introduced, would have been recalled in 1993 and every year subsequent.
We elect governments because a) 34 million people can't come to agreements in any sort of town hall way and b) because we don't have the time to govern. Canadians are too busy working and taking care of their families to consider the long term fiscal and economic implications of doing something like scrapping the HST. We pay our politicians and civil servants to study these things and come to a decision. Yes, periodically we choose which path we want the government to be on, but we can't as a people make the little calls along the way. British Columbians may be celebrating the death of the HST but they should take a long hard look at their cousins in California before they go too far down this path. People, if asked directly will almost always vote for lower taxes and better services. This is a path that leads only to fiscal ruin. We elect governments to make the tough choices necessary to get to a better future. If they fail in that task, vote them out and elect somebody who will undo the damage. There was no reason the NDP couldn't have run on this platform, won and then repealed the HST. However, they would have done that knowing that they would be held responsible for the ensuing budget deficits and fiscal problems that. No one will hold the people of BC responsible for their blunder. Democracy without any responsibility for bad action leads only to chaos.
We elect governments because a) 34 million people can't come to agreements in any sort of town hall way and b) because we don't have the time to govern. Canadians are too busy working and taking care of their families to consider the long term fiscal and economic implications of doing something like scrapping the HST. We pay our politicians and civil servants to study these things and come to a decision. Yes, periodically we choose which path we want the government to be on, but we can't as a people make the little calls along the way. British Columbians may be celebrating the death of the HST but they should take a long hard look at their cousins in California before they go too far down this path. People, if asked directly will almost always vote for lower taxes and better services. This is a path that leads only to fiscal ruin. We elect governments to make the tough choices necessary to get to a better future. If they fail in that task, vote them out and elect somebody who will undo the damage. There was no reason the NDP couldn't have run on this platform, won and then repealed the HST. However, they would have done that knowing that they would be held responsible for the ensuing budget deficits and fiscal problems that. No one will hold the people of BC responsible for their blunder. Democracy without any responsibility for bad action leads only to chaos.
Tuesday, August 23, 2011
Death of a Leader
The Member of Parliament for Toronto-Danforth is dead. Jack Layton's life was cut short far too quickly. My heartfelt condolences to his family and friends. Jack Layton was for better or worse a dominant force in Toronto politics for the last thirty years. Jack Layton served the people of Toronto-Danforth since 1982 as either city councilor or as member of parliament and he died doing so. Any person with that kind of devotion to public service should be applauded. Let us celebrate the life of a man committed to serving the people of Canada.
Friday, July 29, 2011
A Deficit of Progress
That the United States should find itself in this position is not exactly unexpected. The US Congress has been loathe these last 10 years to pay for the foreign adventures, tax cuts and new entitlements that they have proven all too willing to fund. The thing is the chickens have not yet come home to roost. Instead, the Republican party and perhaps more specifically the TEA party wing of the Republican party seems bound and determined to bring the roost to the unsuspecting chickens. The roost in this strange avian metaphor is the limit on the US national debt and the chickens are the unfortunate people to whom the US owes money. Yesterday, in the latest bureaucratic twist in this absurd tale of self-inflicted economic destruction, Republican members of Congress refused to back a bill put forth by Speaker Boehner designed to little else than make the people voting for it look good to their constituents come 2012. Basically, this was Boehner's attempt to ensure that he would have something to placate his base with when it came time for the actual compromise still to be determined. In the crazy world that is current US politics even stunt bills can die on arrival.
There is an increasing likelihood that the US will fail to raise its debt ceiling. The shortening timeline and lack of any sort of progress make it more and more likely that nothing will get done. The real question is how will the markets react to a failure to raise the debt ceiling and therefore a de facto default on US debt. Let's be clear bond holders will get paid, at least in the short term. The US Treasury will turn off the lights at the White House before they fail to pay off their bonds. However, the market will view a failure to raise the debt ceiling as a default and will look to move its money away from the contaminated American market. The question will be which market comes under attack first? There are four options for the market to vent its spleen:
There is an increasing likelihood that the US will fail to raise its debt ceiling. The shortening timeline and lack of any sort of progress make it more and more likely that nothing will get done. The real question is how will the markets react to a failure to raise the debt ceiling and therefore a de facto default on US debt. Let's be clear bond holders will get paid, at least in the short term. The US Treasury will turn off the lights at the White House before they fail to pay off their bonds. However, the market will view a failure to raise the debt ceiling as a default and will look to move its money away from the contaminated American market. The question will be which market comes under attack first? There are four options for the market to vent its spleen:
- Ditch US Stocks: This option is the one that will immediately translate to the American people and perhaps even their elected officials in Washington. A 500 to 1000 point drop in the Dow Jones Industrial Average may be enough to shock the Congress into action. This actually might be the best case scenario as faith in stocks is easily restored and there are mechanisms to easily halt trade.
- Sell US Bonds in the Secondary Market: This is also a fairly painless option. The price of US bonds in the secondary market has very little impact on the US treasury directly. If people are paying 90 or 85 cents on the dollar for 30 year US bonds issued 10 years ago, the market can handle that. The problem is that directly impacts the next option:
- Refuse to buy new US bonds: Okay, technically with the debt ceiling capped the US can't issue new debt. However, they do perennially turn over old debt (I believe the next major batch is scheduled to be in the middle of August). If the debt ceiling is not raised, the market will undoubtedly demand a premium well above the historically low interest rates available today. A run on US bonds in the secondary market would probably trigger massive interest rate hikes to try to stem the tide and make the new bonds marketable.
- A Run on the US Dollar: Investors may decide that the easiest way to get away from the risk inherent in the US market is to sell greenbacks and fast. A run on the green back would cause massive inflation and also force the Fed to raise interest rates to try to beat back the barbarians at the gates. A run on the US dollar is the worst case scenario as it would cripple the US market with inflation and cause untold disaster in the rest of the world.
Monday, June 13, 2011
The Canadian Economy's Strange Success
On Friday, Statscan reported that the Canadian economy added another 22,000 jobs in May and that the unemployment rate fell to 7.4%. The economy grew in the first quarter at a healthy annualized clip of 3.9% and according again to statscan it did so in all the right way. Huge investments made in plants, machinery and equipment points to a growth in manufacturing and other goods producing industries. Service industries like retail trade actually shrank. Growth due to personal spending (an indicator of a possible debt bubble if too large) was negligible in spite of all the stories about Canadians carrying too much debt. This is all remarkably good news. In fact, it's so remarkable, no one seems to believe it. Unemployment in Canada being at 7.4% is actually, historically, pretty darn normal. This is not great recession catastrophic unemployment. In really good times Canadian unemployment is between six and seven percent. GDP growth between 3 and 4% is also pretty darn good. It isn't BRIC double digit expansion or anything but it's enough to keep people working.
Why then, you might ask, has the Bank of Canada not moved interest rates closer to a normal level? There doesn't seem to be the need for big stimulus. Nor it would seem is there cause for governments to delay tackling their recession exacerbated massive deficits. The Canadian economy could actually probably withstand a little austerity right now. I think the short answer may be that Canadian officials both political and bureaucratic can't believe the good times can last. They can't believe it, because they see the carnage that continues to be the US economy. American unemployment, usually a couple of points below Canada in good times, sits a couple points above. The jobs report for May showed only about 50k created (that would translate to about 5-6k in Canada pro-rated to the population) which is not enough to keep up with the growing labour market. The housing market, which continues to boom north of the 49th, is on life support down south. What we are witnessing is complete disconnect between the economic fortunes of Canada and United States. All this and the loonie is worth more than the greenback. Ottawa and Bay St. can't believe it.
Why then, you might ask, has the Bank of Canada not moved interest rates closer to a normal level? There doesn't seem to be the need for big stimulus. Nor it would seem is there cause for governments to delay tackling their recession exacerbated massive deficits. The Canadian economy could actually probably withstand a little austerity right now. I think the short answer may be that Canadian officials both political and bureaucratic can't believe the good times can last. They can't believe it, because they see the carnage that continues to be the US economy. American unemployment, usually a couple of points below Canada in good times, sits a couple points above. The jobs report for May showed only about 50k created (that would translate to about 5-6k in Canada pro-rated to the population) which is not enough to keep up with the growing labour market. The housing market, which continues to boom north of the 49th, is on life support down south. What we are witnessing is complete disconnect between the economic fortunes of Canada and United States. All this and the loonie is worth more than the greenback. Ottawa and Bay St. can't believe it.
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