New Public Policy Required Around Retirement

One of the most negative consequences of the current financial collapse is the effect on pensioners who live off savings. Their portfolios have collapsed. Government regulation forces them to remove a certain percentage of their savings every year, so they are forced to sell assets that have dropped greatly in value - resulting in an unfortunate forced situation of “buy high sell low”.

Now, back when I studied financial management, the rule of thumb was that you should have the percentage represented by your age in non-risky savings. If you’re 60, then only 40% of your savings should be in risky assets, with the rest in fixed return assets. It is obvious from the plight of seniors that this rule of thumb is no longer followed.

The reason, I imagine, is that it is not possible to get a high enough return on secure assets. The Rule of 25 tells us that to live off investment income, you need to save 25 times your desired income. To retire with $50,000/year income, you need to save $1.25M. This rule is based on a return of 4%. Where do people get a 4% real return (return above inflation)? Not from anywhere safe, certainly. That makes us have to contemplate a Rule of 50: to get $50K, you need to save $2.5M.... that kind of saving is simply beyond the ability of most people. (It also requires a higher interest rate while saving, which entails more risk.) If we moved to a Rule of 50 paradigm, we would need to rethink RRSP limits, which currently have an upper ceiling of $20K/year. But even that doesn't help when we have the severe business cycles of the last ten years, during which we have had two catastrophic market events (the tech bubble and subprime meltdown) that wiped out much of people’s savings.

Government bureaucrats and educators all have pensions and benefits till death, and many of them don’t seem to comprehend that most of us don’t have that security, and must finance our retirements through savings. That’s not the hard part though. The hard part is managing the savings so that we can actually retire on them. We are pressured to find investments with decent returns. Most of us aren’t gamblers – we try to find mutual funds that balance risk and return in a responsible way – but we’ve still lost our shirts twice in the past decade. The market bounced back after the tech bubble, but many investments were lost forever, whether we sold or not.

What is needed is a new approach to public policy around retirement savings that is based on the reality of most people. We have a crisis coming with the aging population, and it is a crisis of poverty. Affluent, hard-working people are facing a retirement in poverty – through no fault of their own. We saved, but the unavailability of appropriate savings options and the severity of business cycles have meant that we will have inadequate funds to live on. Sure, we can downsize and cut back, but how will we pay for our prescriptions, walkers and home care? The current system, designed by bureaucrats who have lifetime benefits attached to their pensions, is simply inadequate.

As the "bulge" of the baby boom is 10-15 years away from retirement, we need to make some changes to avoid human catastrophe. As we reregulate the financial industry we need to ensure the following:

* Citizens have appropriate places to invest retirement savings.
* Business cycles are less severe.
* There is more public education about investment, and better regulation of claims made by banks.

In addition, I think we need to consider some more dramatic and controversial ideas:

* Health benefits for seniors need to be improved, including prescriptions and prosthetics.
* Public service pensions should be scaled back and CPP/SocSec should be scaled up, resulting in a more equitable treatment for citizens.

Update: Funny that I wrote this just before things started to really get bad.###

The Secret of Google

It's the holidays, so I find myself reading online stuff that really is of no interest to me, but sometimes there are gems in them thar hills, or at least bits of gems.

In an article about rumors about Marissa Mayer quitting Google, I came on this line: "she won promotions first to director and then to vice president mostly by dint of a schedule of robotic overwork and an obsession with keeping the search engine's homepage sparse and free of clutter."

That's it, though: that is 99.99% of why Google triumphed in the late-90s search engine wars. It was sparse, so it loaded faster. Back when we all had dial-up, who wanted to wait for a Yahoo portal to open full of crap ads? Later, in the annoying flicker of popup ads and flash animation and other assaults on our senses, that lovely white Google page became a sort of haven. (Remember when they tried releasing a black version? Ee-yuck!)

If Google has a problem, it's that the Results page is becoming too cluttered with ads - a fault not shared by Clusty. I guess the day of Marissa Mayer is over before she is.

Comment Moderation Woes Continue

A few weeks ago, blogger stopped sending me notification that I had comments to moderate, resulting in several days where comments didn't appear (until I figured out what was going on). Now I check my blogger dashboard comment moderation page instead of waiting for notification. But as of a few days ago, comments stopped even going to comment moderation... they just disappeared into the ether. I just figured that out and have now turned off comment moderation, so now some comments are getting through - but not all. Damn. Blogger says this is a known bug and they are working on it.

Please know that unless a comment is really offensive, I never reject comments... but I seem to be getting what I paid for with blogger's free software.

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As a Candidate, Kennedy Is, You Know, but Elusive

On December 28, the New York Times front page included an article entitled "As a Candidate, Kennedy is Eloquent but Elusive". The online article linked to a 49-second audio clip in which Caroline Kennedy used the phrase "you know" 12 times. (Here's the complete transcript of the interview.) Later, the NYT quietly changed the online headline to "Forceful but Elusive". They also changed the word "eloquent" in the text of the article to "forceful" (link to altered article).

There is so much to say about this: What is the NYT doing changing the substance of articles without a correction notice? How in the world can this inexperienced society person be a serious contender for the US senate without an election? Are the authors and editors at the NYT in the pockets of the Kennedys?

The ever-delightful commenters at Gawker decided to start a game of MadLibs: Fill in the blank in "As a Candidate, Caroline Kennedy is ______ but Elusive." Some of the suggestions to date:

Inescapable
As a Candidate, Kennedy is Famous but Elusive
As a candidate, Kennedy is a frackin' actual living Kennedy and that should be enough, right? but elusive
Unavoidable
Caught-in-the-Headlights
Blonde
Intrusive
Shallow
As a Candidate, Kennedy Is, You Know, but Elusive
As a Candidate, Kennedy is Imperial and Eager to Ignore Your Questions (To Be Submitted In Writing 4 Weeks Prior) but Elusive
Toothy
Anything
Elitist but Elusive
Incoherent but Elusive
Bland but Elusive
Well-Funded but Elusive
Inexperienced but Elusive
Parochial but Elusive
As a Candidate, Kennedy Is Confused and Off-putting
As a Candidate, Kennedy Is Incoherent and Elusive
As a Candidate, Kennedy Is Snarky and Elusive
As a Candidate, Kennedy Is Verbose but Elusive
As a Candidate, Kennedy Is Arrogant but Elusive
As a Candidate, Kennedy Is Obtrusive but Elusive
Her eloquence is elusive.
Strangely Palin-esque but elusive.

Canada and the Arctic

In his latest book, A Fair Country, John Ralston Saul argues that Canadian culture is fundamentally different from US or European culture because of the strong influence of aboriginal civilizations on all aspects of Canada - our art, history, constitution, justice system, government, foreign affairs and collective unconscious.

I was thinking about Saul's thesis while reading about the recent European Union attempts to usurp Canadian sovereignty on issues of traditional hunting and fishing.

In November the EU released a report called The European Union and the Arctic Region. The report has some troubling aspects. As a recent CBC article put it, "the EU says it supports indigenous populations — except where their activities give offence to Europeans concerned about animal welfare." In particular, the EU report targets Inuit whale hunting as an area where Europe may try to impose restrictions. The report also proposes a ban on imports of seal products from Canada. While the affected sealers would not be aboriginal, Canadian sealers are following a traditional lifestyle that their ancestors have lived for 500 years.

To put all this in context, the EU doesn't protest Alaskans who hunt wolves from helicopters with machine guns. They don't protest slaughterhouses that hang pigs by their back legs and bleed them to death. They don't protest German commercial kills of wild boar and deer for restaurants and butcher shops. Yet they are absolutely up in arms about seal hunters who use the traditional hakapik to kill seals, and now they have aimed their sights at Inuit who hunt caribou, whales and other animals.

Harper is failing us in a number of ways. The CBC article says that under Harper, "Canada is being slowly pushed aside as the rest of the world sets the agenda for opening up the rapidly melting Arctic." Harper seems interested in only two aspects of the arctic: building up our military presence so we can patrol the newly opened northern passage, and extracting resources.

By not dealing with climate change, pollution, sustainable development and healthy aboriginal communities, Canada leaves the door open to groups like the EU to try to set the policy. Further, by giving in to EU pressure over the traditional use of the hakapik, he deserts traditional ways of life when he should be protecting them.

The Canadian arctic has a permanent indigenous population. The Inuit know more about arctic ecology and wildlife than anyone else. We should be working with the Inuit to create Arctic policy, not giving in to ignorant far-away protestors who are squeamish rather than rational. We should be doing much more to improve living conditions in the north to create more sustainable communities. We should be preparing for the changes to Inuit lifestyle that will come with global warming. Over all else, we need a Canadian policy on the arctic that includes a vision of the arctic as a fundamental part of Canada, not a little-populated place with diamonds that might make some southerners rich.

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More Bad News Predictions for 2009 and Beyond

Canada is still weathering the storm pretty well, but that's probably because the US downturn hasn't fully hit us yet. It will. There have been small US economic downturns that didn't hit Canada, but there is no way that a major recession in the US is going to leave Canada unscathed. Our economy is just too dependent on the US: not just exports (US exports comprise 25% of our GDP), but also US corporations operating in Canada that lay off Canadians when their US operations suffer; consumer confidence affected by the US (consumer spending is 55% of GDP); and tightening credit conditions. If the US dollar falls relative to the Canadian dollar, we will be in even more trouble.

A typical recession in Canada starts a bit after a US recession and is much longer. The US bottoms out and bounces back pretty quickly, while we continue to have high unemployment for a couple of years. The Report on Business and its ilk downplay the importance of this post-recession hardship because they're more concerned with the stock market, but working Canadians feel the pinch for a long time.

At this point, a recession with two or three years of layoffs is the "Good News" scenario. The US government is throwing trillions at the economy because they are in very great danger of a much worse situation than a recession. We are all teetering on the brink of a cliff and there may be no precedent for what happens next. Whole industries may shut down. We could be facing massive failures of banks, investment companies, manufacturers, retailers - even states and provinces. Every investment not protected by deposit insurance could be in jeopardy. We could enter a period of high inflation that would not only erode wealth, but undermine the efficieny of every aspect of the economy.

The economic downturn in China is particularly troubling. Just one small effect: if Chinese demand for oil declines, the Alberta oil industry could conceivably collapse. Similar shocks to other sectors that are affected by Chinese demand could be felt all over the world. The Chinese economy is vulnerable because it is still a very poor country with huge exports: it doesn't have domestic demand to cushion its vulnerability to global conditions. If it falters, it could fall hard.

The impending collapse of countries on the periphery of Europe will send shock waves around the world as they default on loans, and it's not clear (despite overwhelming evidence) that global economic leaders are preparing for it. World governments and economic organizations seem to be too much in reaction mode, and aren't being proactive enough.

If this great depression occurs - and at this point it's still just a possibility, not a certainty - then who knows what horrible political movements may grow. Hitler had his roots in the great depression of the 1930s. What might be the equivalent in a 2009 depression? Who might be the next great fascist state? Russia... China... the USA?

If we go into a depression and if it results in another world war, how will that affect the environment? Wars cause enormous environmental damage, with all the burning and sinking of ships and aramament manufacture and so on, while the environment is increasingly shaky. We could hasten the melting of the global ice caps, resulting in flooding of coastal areas and the displacement of hundreds of millions of people, just when international organizations that deal with disasters are too broke to operate in the way they were designed.

It would be comforting to know that there were people thinking about what may come and planning for it as best they could. In the short term we need to figure out what to do when the IMF runs out of money. But we also need to rethink everything we do in light of possible global economic collapse. It might not be a likely scenario, but there is a growing possibility that we're in for dark times ahead.

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A Glimpse of the Bad News Coming in 2009

The countries at the periphery of Europe are beginning to collapse economically - from Latvia to Spain.

Some of these countries are fragile young democracies that may become destabilized by the collapse of their economies.

Some of the governments in the young democracies are inexperienced, inept or even corrupt. Some may react in ways that threaten global stability. For example, Ukraine recently joined the WTO, but after its dramatic Q4 descent into Depression it has slapped a 13% tax on all imports. Since protectionist moves invite retaliation, this isn't a good omen.

Some of the European periphery countries are vulnerable to threats from other states - notably Russia, but the US is not averse to making power grabs where oil is produced or transported.

All of these countries have enormous foreign debt, much of which is not going to be repaid, which will cause another major hit to the global financial system and economy. Paul Krugman says that the epicenter of the world economic crisis has moved from the US housing market to the periphery of Europe. If we knew which banks and countries hold a lot of eastern European debt, we might be able to predict the next round of disasters.

Many of these countries are recent members of the EU, and many use the euro, resulting in who-knows-what down the road for Europe. The euro, which recently looked like a contender to knock the US dollar off its perch as world currency, already took a blow in this economic crisis when the failure of coordination among European central banks meant the exchange rate plummeted. More trouble is in the future for the euro and EU.

Many of these economies are highly integrated with their neighbors. For example, Latvia is going down, and is expected to take Estonia and Lithuania with it - even though Lithuania has a strong economy.

The IMF is already starting to inject money into these countries, but the collapse has just begun, and the IMF has limited funds.

Update: Latvia debt rating cut to junk

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A Personal Account of the Rwanda War Crimes Tribunal

A week ago today, the International Criminal Tribunal for Rwanda convicted Theoneste Bagosora, who is widely seen as the mastermind of the 1994 Rwanda genocide, on eleven counts of genocide, war crimes and crimes against humanity.

I was a spectator in the court on the day Bagosora was indicted, back in 1997. I happened to be in Arusha several times during the first few months of the tribunal and went to the court whenever I could. I saw the indictments of Bagosora, who ran the army, and Jean-Paul Akayesu, the mayor of a small town called Taba, and I heard a fair bit of testimony.

To imagine the court, think of a large rectangular room that is divided long-way down the middle, creating two long, thin rooms. The rooms were divided by a large glass window. One side of the window was the spectator area and had bleacher-type seating with about four or five long rows. Each chair had headphones so we could hear simultaneous translations of the proceedings. In the court area there was a long high bench in the middle, facing us, at which the half-dozen judges sat, with the chief judge in the center. To our right was a table at right angles to us with prosecution lawyers (who rarely seemed to be there), and behind them were places for a number of clerks, who were always busily doing things. To our left was an area for the accused and their lawyers.

There were never very many spectators when I was there (I don't think there were ever as many as ten) and they mostly seemed to be, like me, aid workers who had dropped in. The day that Bagosora was indicted we had a celebrity in the spectator room: Philip Gourevitch, a writer for the New Yorker. He carried a big stack of black and white photocopies of the cover of a New Yorker that identified him as the author of an article on Rwanda; this apparently is how he establishes his bona fides. He sat in the front row chatting with people nearby, to the annoyance of those of us who were trying to listen to the court. The event seemed to call for a more respectful, somber attitude than he displayed.

The Rwandans in the court spoke in Kinyarwanda, which sounded to me like a mix of French and Swahili. I mostly used the headphones but could follow along pretty well without, and did that from time to time to get a sense of the speakers' emotions. Everyone was quite dispassionate: very articulate, respectful, not nervous, not sounding at all upset - even those who described watching their families get hacked up.

The initial phase of the court seemed a bit jumbled to a spectator. Testimony came from survivors of the massacres, but also from Human Rights Watch workers and journalists who were there during and after the genocide. There was a mix of first and second hand information, some of which would not be admissible in a regular criminal court. I assumed that they were trying to get every bit of information into the record.

My overwhelming reaction was utter incomprehension. I heard one journalist describe standing at a bus stop shortly after the genocide ended. She was eavesdropping on some Rwandan housewives who were holding groceries and waiting for the bus. As the journalist described it, they were perfectly ordinary middle-class women with homes and children, but they were calmly discussing their part in hacking up their neighbors.

The eeriest moment was during the indictment of the mayor, Akeyesu. A young man testified that Akeyesu came to his neighborhood with a gang of killers and he, his family and neighbors all fled to the crop fields behind their houses. The young man climbed a tree but most people hid in the crops. He described watching the killers fan out through the crops, finding and killing the people hiding there. He described Akeyesu hacking his little sister and mother to death with a machete. Then the judge asked the young man to show where this took place. A big blown-up map was brought in on an easel, and the man stood in front of it and pointed to the various killing spots. The judge then asked Akeyesu to indicate where something happened, so the mayor went up and stood next to the young man to point at the map. The two men stood so close that they were touching, and the young man didn't flinch at all, or even seem uncomfortable.

I have read about the Rwandan genocide but I have never heard anyone explain the emotional response of the victims and killers. I can't explain it. I can think of possible explanations for the reactions of the victims - life is cheap in Africa, or the victims were so traumatized they were numb, or the victims share the emotions of the killers and so understand why they did it - but none of those seem right. Likewise, I can think of explanations for the killers - they were riled up by the Interahamwe, they believed they were acting in self-defence - but those don't seem sufficient for the frenzy of killing by perfectly ordinary people. If it were not for the ID cards that identified people as Tutsi or Hutu, it would have been difficult to even distinguish the two, as there is no ethnic or linguistic difference and they lived together in the same neighborhoods.

The court is now done - its prosecution phase ends next week, although it will hear appeals for at least two more years. In its 12 years of operation, the court convicted 30 people and acquitted five. It also amassed a record of what went on during those fateful 100 days in 1994.

Note: I took extensive notes while watching the proceedings but have lost them, so all of this is from my memory of events 12 years ago, and I may have mixed up some of the details. It would be great if anyone else who was there could correct or augment these recollections.


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Commerical Bloggerism

In my right margin, just below my email address and profile, I have a temporary section of links that I change with the times. Most recently it concerned the Canadian election. Now I'm starting a collection of links to recession-related blogs. To make this collection I've done a lot of trolling around the blogosphere, looking at blogs devoted to lifestyle, savings, poverty, finances, etc. This activity had an unexpected result: I've discovered some interesting things about the business of making money on the web.

I stumbled across blogs that are devoted to how to make money with blogging. One woman claims she made nearly $3K in one month with her blog ads and by posting on eHow, Bukisa, Commission Junction, and similar sites. Commenters on her site don't seem to be doing so well: typical commenters report making under $10 in total, ever, by following her advice (and yet they still seem positive about their future, based on that tantalizing $3,000 claim). It's a bit like those ads you used to see in the back of comic books: "Make money at home! Send $2 to find out how!" and what you get back is a piece of paper telling you to put an ad in a comic book asking people to send you $2.

Most blogs with ads are fairly benign: the blogger is writing things of interest to him or herself, and happens to have ads. But there is another category of blogs that is seriously trying to make money. These blogs seem to have a number of tricks for increasing their ad income. There are the usual ones like using words or phrases that are popular in Google searches (references to porn, health care, etc). But the trick that really got me is the attempt to attract people to the site who are more likely to click ads - gullible, unsophisticated or just plain desperate - by using ridiculous headlines like "How to spend zero dollars on groceries in 2009". There are tons of blogs devoted to this style of writing, plastered with ads.

I am disgusted by these blogs, but then I am not the desired demographic because I don't click on ads. It's like what happened to a TV show a couple of years ago called Commander in Chief, starring Gina Davis. The show was a critical success and had high ratings. But it appealed to women over 25 (like me), and that is not a demographic that advertisers pay top dollar for, so it was bounced around from night to night and finally cancelled after about 16 episodes.

Sites like eHow have a lot of truly awful posts: the goal seems to be to expend as little effort as possible writing a post, or perhaps to divide up a set of information into multiple posts to maximize revenue. The result is generally facile, contentless pages of "information". The problem with this, if there is a problem, is the proliferation of junk that makes it harder and harder to find quality writing. I don't usually run into this problem but my search for blogs of interest during the recession was really bogged down by silly sites, desperately trying to generate some income, that probably aren't. The only people getting rich are at Google.

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Rot in the Apple

René-Thierry Magon de la Villehuchet, founder of investment fund Access International, committed suicide last night after learning that his firm had lost the $1.4B it had entrusted to scam artist Bernard Madoff.

Some wit in the Globe's comments page wrote, "suicide is the sincerest form of self-criticism." In this case, there's some sense to that.

The problem seems to be that the investment community has sliced and diced risk in more ways than creating new financial instruments. Another way the rich got richer in the last ten years was to form investment companies that out-sourced investment analysis. Someone well-connected like Villehuchet could gain the confidence of wealthy people and convince them to entrust him with their money, but then he could minimize his costs by sub-contracting to someone like Madoff. I read recently about Wall Street investment companies that have no software for analysing risk or optimizing portfolios; they're essentially dumb fronts - and the people who invest with them don't know it.

Villehuchet probably justified the scam to himself as just being good capitalism: maximizing profit by minimizing costs. Free market capitalism isn't good at drawing a line between smart business and gross negligence.

The recent Globe article on Lehman Brothers had this to say about financial deregulation:

...in 1999 [the subprime sector] received another boost. On the last day before the Christmas holidays that year, U.S. law makers led by Senator Phil Gramm – a champion of deregulation – proposed an 11th-hour bill known as the Commodities Futures Modernization Act.

The 262-page bill, tucked into an 11,000-page government reauthorization bill, largely escaped the attention of Congress. But it contained a crucial change. Credit default swaps, those complex insurance products that protected investors in CDOs and other securities, would not only be legal under the proposed law – they would be allowed to trade off of exchanges and thus beyond regulatory scrutiny.

...The writeoffs for the banking industry are now expected to ultimately top $1-trillion. Economists are forecasting the worst global recession since at least the Second World War, and possibly since the Depression.

Canada During the Suspension of Democracy

The online publication of Osgoode Hall law school (The Court) wrote last July, "Canada's tradition of mostly centrist jurisprudence at the Supreme Court level seems, by comparison [to the US], to be much more levelheaded, and this is a result largely attributable to a selection process that, whatever its flaws, has tended in the past to be primarily apolitical and most concerned with good jurisprudence rather than with ideological conformity."

Yesterday's appointment of Thomas Cromwell to the Supreme Court was not an apolitical process and the appointee is not centrist. The Globe says that "Judge Cromwell... can be expected to use the Charter of Rights and Freedoms sparingly to strike down legislation, and generally place the interests of policing ahead of the rights of the accused." In other words, he's a thoroughly Conservative appointment, chosen by Harper to further Harper's pro-jail approach to justice.

Harper's activities during prorogation are scandalously undemocratic. He suspended parliament because he doesn't have the confidence of the majority of MPs and was about to be booted out of office. Now he's thumbing his nose at democracy even more thoroughly by making senate appointments and bypassing the advisory committee on supreme court appointments.

Why are we not crying foul? Far from complaining about prorogation, most of the media has taken to calling it a "time out", as if MPs were naughty school children who need to sit in the corner for a while. Lawrence Martin is one of the few media figures to write seriously about the prorogation, and he makes an excellent case that Michaele Jean should explain her decision to Canadians. He quotes political pundits who describe Canada as "Zimbabwe run by the Queen" and "a banana republic."

People may complain about the senate, but senators serve important functions: on a daily basis they sit on parliamentary committees, but more importantly, from time to time they are required to be our chamber of "sober second thought." The Governor General, or at least this Governor General, has not undertaken the serious responsibility of being Canada's representative of our head of state. She has been unable or unwilling to put any reins on the undemocratic tendencies of our corrupt prime minister, and he is riding roughshod over our democratic traditions. Docile, obedient Canadians are just letting it happen.

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Moribund

We had our local riding association AGM this week. My riding has a dynamic president who I like a lot. The candidate, who recently lost his seat, has a solid record but is less than insprirational.

This was the first AGM in this riding in 30 months. (No kidding: the last one was April 9, 2006.) When I moved to the riding I tried to volunteer, but was told that the candidate has his own group and doesn't want anyone else to be involved. I thought about running for the board but I heard from a board member that they don't meet and are never consulted. I was told I could join the women's group. The riding has a women's group that organizes a dinner dance every fall. I'm not a dinner dance kinda gal. Our candidate has a web site promoting himself but there's no riding site. I volunteered in the election and attended the one local election event I heard about, but other than that, the two AGMs and the occasional dinner dance, I have not heard of one Liberal event in this riding in the three and a half years I've lived here.

The AGM was in a legion hall and about 75 people attended. About 15% were women. There was a smattering of young people, but the room was mostly populated by old men. We had a surprise guest speaker and he spoke slower than anyone I have ever heard. He gave us 17 reasons to support our local candidate, and as far as I could tell, all of them were achievements from ten years ago or before. Our local candidate spoke and said "Brian Mulroney" when he meant "Stephen Harper."

At the meeting we heard that we have very little cash and need to raise a lot fast in case there's an election. I'm usually a pretty solid supporter but I don't know, I'm feeling sort of uninterested right now. It feels like throwing good money after bad. Sure I don't want Harper to win a majority but, truth be told, I don't like my local Liberal candidate and I don't feel any connection to the riding association. I wasn't wild about our leader in the last election and I didn't agree with his main platform policy. Meanwhile, I'm not hearing anything inspirational from the national president or the new leader. I get a lot of emails but they all just ask me for money. I just sent them more money during the coalition debacle; it seems the more I send the more emails I get asking for more.

Before the commenters start with the usual litany of "Why are you in Liblogs?", let me add that 16,000 local Liberal supporters either stayed home on October 14 or voted Green. I am not the only disheartened Liberal in Kitchener-Waterloo. Here's an equation that the Liberal leadership should think about:


Energize the base and the money will come. I'm just sayin'. We have a problem here.

See also: Anatomy of a Defeat

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Environmental Policy

Stephane Dion provided a poor vision for a number of reasons. One was that he posited that environmental policy should be a third pillar of the Liberal ethos, along with social justice and economic prosperity. In fact, it should not. It is important to elevate environmental policy only so long as we have a government that is not acting on it. After that, environmental policy is just another important policy among many. It does not have the stature of social justice or economic prosperity.

Secondly, the Green Shift was bad policy. Its justification, "Pay what you burn not what you earn" is wrong. Taxation cannot be shaped by one policy arm. Taxation must remain progressive, which means that it is based on income. The Green Shift (and the more radical all-consumption tax platform of the Green Party) can only approximate progressivity by building in a whole bunch of subsidies and exemptions that overly distort our society. For example, they propose that people who live in the country should get rebates or tax deductions for gasoline usage (to support good old country livin') but not provide any help for people living in subdivisions (who are by definition bad). As someone who has lived in the country, I can tell you that the majority of country dwellers live in subdivisions in small towns - so then, presumably, we encourage far-flung subdivisions but not close-in ones.

The Green Shift was also ass-backwards in taxing heating fuel but not gasoline. We need to increase the tax of gas at the pump, as Europe has done. That leads to smaller cars, less lengthy commutes, denser housing, more and better public transit, and - most importantly - more consciousness of the environment. It also gives us some protection from massive increases in oil costs, as we can alter the tax but not the price of a barrel of oil.

By putting forward an overly ambitious and fundamentally flawed environmental policy, Stephane Dion set back the cause of environmentalism: he let the PM win an election on an anti-environmental platform, thus giving him a sort of mandate to ignore environmental concerns. He also made it less likely that future campaigns will risk fighting for the environment.

Environmental policy should use the standard three areas of government muscle: taxation, regulation, and public education. Environmental taxation should take the form of "sin taxes," which are consumption taxes on things we want to discourage, such as cigarettes and booze. It shouldn't be a blunt sword but a scalpel, hitting specific activities, and the revenue should be used for providing alternatives to those activities, such as public transit. (Dion's approach of creating a revenue-neutral environmental tax was a sop to the old, flawed vision of "small government good, big government bad" that will be replaced very soon by the new vision of an active state).

The "Green Shift" is regressive taxation because the poor use a higher percentage of their income on consumption, and thus (under a consumption tax scheme) pay a higher percentage of their income in taxes. We should be moving in exactly the opposite direction: we should be increasing the progressivity of taxation by adding tax brackets at the upper end. Currently, the highest tax bracket starts at about $122,000, which is woefully out of date.

The fact that consumption taxes have become a mainstay of green parties around the world is further evidence that the environmental movement is being overly influenced by the right. The environmental movement has historically been in opposition to movements that promote social justice because there is a split between using public funds for the environment or to combat poverty. Both should be treated as valid and important interest groups, but neither should gain iconic status as a pillar of Liberalism.

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Towards Creating the Active State

Buried in a New Yorker profile of Naomi Klein (Outside Agitator, December 8, 2008) is a quote from Stephen Lewis: "I'm more fundamentalist now. I have no patience for capitalism at all. I see now that there is almost nothing that is positive in this ugly international system, and that's why I embrace Naomi's view of the way the world works. I'm actually tired of my rhetorical outburts - I'd like to engage in physical aggression."

I was more taken by one quote from Stephen Lewis than an entire article about his daughter-in-law because Stephen Lewis was an influence on my early political formation. I grew up supporting him as head of the Ontario New Democratic Party, arguing with my friends about his expulsion of the "waffle" (a left-wing group) from the NDP, listening to him being a pundit on CBC radio, reading his memoirs about growing up in Uganda. His influence was reinforced by my admiration of the newspaper columns of his wife, Michele Landsberg.

To see Lewis's change in viewpoint is not exactly shocking - while UN special envoy for HIV/AIDS in Africa his speeches grew increasingly angry - but it is important to me, especially at this time when the world is poised to change the nature of capitalism.

The current economic collapse has both necessitated a fundamental change in our economic worldview and created a climate in which it is possible to achieve change. The questions for us now are: how will it come about, who will bring it about, and what will the new economics be?

It is tempting to wait for Barack Obama to provide the new vision, just as the current/old vision was (arguably) created by Margaret Thatcher, Ronald Reagan and Milton Friedman. That's not such a good idea. Barack Obama used "change" as a slogan, but he's fundamentally a right-wing hawk, at least by Canadian or European standards. He doesn't even propose true universal health care. We can hope that he will offer a new, fair, sustainable vision of capitalism with which to continue, but chances are slim that he will. Bill Clinton truly wanted to bring about change but was able to do no more than improve management processes, and that was because of the right wing nature of the American populace.

Unless we get serious about defining a vision and popularizing it, change may very well be determined in the board rooms of international organizations that create regulatory standards for international financial transactions. Those bureaucrats may be well-equipped to implement the details of someone else's vision, but they should not define the vision.

In terms of creating a vision, the adage "think globally, act locally" is very apt. We need to create a new vision for Canada, and spread it through our influence as a G8 economy. Stephen Harper is an anacronism: he can't even get his head out of the 1980s long enough to cope with the idea of fiscal stimulus. He's still trying to deregulate in a world that requires more - and more creative - regulation. Harper may seem important now, but he's not. It is the next Liberal leader who will be the important historical figure for Canada.

Criticism of corporations (such as Naomi Klein's) is important groundwork for proving why we need to change to an "active state" framework, but it's not helpful to forming the vision. Our new economy must respect the fact that prosperity comes from business, and must understand that regulation can hinder and distort business operations. For example, our current financial regulations are both too weak and distorting: they don't protect against failure that requires bailouts, and they increase the chances of failure by implicitly promoting the severity of business cycles. Thus we live in a world of booms and busts: booms where the rich get richer, busts where the non-rich bail out the rich.

It's important to become more environmentally responsible, but the environment is not a fundamental part of the new economy: it is just a policy detail. The new economy must be based on a recognition that the state shapes economic activity - necessarily, and because it should. Our main problem in the last 25 years is that we tried to convince ourselves that the state doesn't necessarily have this role, and then we chipped away at a few regulations, distorting the overall operations of the economy in a way designed to concentrate wealth in the hands of the already wealthy. Likewise, we pretended that taxes were unnecessary and bad, even though our entire society is based on taxation, and we let governments reduce certain taxes in distorting ways.

Once we all come to the realization that regulation and taxes are both necessary and good, then we can start to create regulatory and tax systems that not only work for everyone, but that enhance our lives. We can reduce the severity of business cycles so that millions aren't plunged into unemployment by recessions every 5-10 years. We can fund education so that we have enough doctors and nurses, and so that we can compete with India in the world of software.

The active state that we create should be bigger government. We need more regulation and higher taxation. It must also be smarter government, with less corruption, less waste, and less acceptance of the ruling class paying itself off.

In a sense we all, along with Stephen Harper, live in the 1980s. As a society we haven't completely emerged from the Cold War. We fear big government as some sort of Soviet mass repression, with inefficient factories and few personal freedoms. In fact, the Active State should be just the opposite: it should free us from oppression by the economic elites.

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Needed: Steady Hand on the Tiller

At the APEC meeting in Peru on November 23, Stephen Harper said "it may well be necessary to take unprecedented fiscal stimulus." This seemed to signal a change from his repeated statements that the economy was fine and a stimulus was not needed. Then on November 28, in the economic update, he did an about-face and said that stimulus was not needed; avoiding a deficit was all-important; and he was announcing $4.3B in cutbacks for 2009. That statement also made the bizarre and surely unsupportable prediction that the government would have a surplus in 2008 and 2009.

In the week following the economic update, Canada's non-partisan pre-eminent political news outlet, the Hill Times, speculated whether Harper was mentally unbalanced.

The erratic behavior of our government is not easing. Today our prime minister said on TV that we may be heading into a depression (not just a recession), and he promised a huge fiscal stimulus. Meanwhile, cabinet ministers are all over the map giving confusing and confused signals. Industry Minister Tony Clement said it was important to move fast. Finance Minister Jim Flaherty said it was important to move slow.

As any first year Economics student should know, economic behavior is based on expectations, and expectations depend on confidence. Particularly in times of economic vulnerability, we need confidence that the government knows what it's doing and is on the right track. These flipflops and wild-ass statements are hurting the economy, and so are jeopardizing the lives and prosperity of Canadians.

It's not just that there is no consistency in policy. It's also that the government is exposing its fundamental ignorance of how the economy works. In times of recession when interest rates are already low, a fiscal stimulus package reduces the budget deficit while budget cutbacks increase the deficit. This is a well-known phenomenon (link, link).

To be effective, the fiscal stimulus must start early in the downturn. The longer the government delays, the worse the recession will be.

Furthermore, during a downturn you can't hurt by over-stimulating. You can only hurt by under-stimulating. As Nobel laureate Paul Krugman says, "if fiscal expansion is too little, that’s the end of the story. If it’s too much, the Fed can head off inflation by raising rates. ...we should err on the side of too much." (In another post, he gives back-of-envelope math for how to calculate how big the stimulus should be.) After the economic downturn, we need to worry about inflation: not now. Now we need fiscal stimulus: a lot, and quickly.

There are all kinds of arguments for and against every type of stimulus. Some arguments are valid and some are disingenuous. It's valid to worry about infrastructure projects that have a long lag time: they won't provide stimulus when it's needed and may even cause inflation after the downturn. But it's not so valid to worry about whether consumers spend or save a cash rebate. If they save it, the stimulus effect is not not negated but merely delayed (if they pay off credit card debt today, they'll be freer to spend in a month or two), and since rebates are a very fast stimulus method, even a delay might still be faster than other sorts of spending.

None of this is rocket science. Every international economic organization and every western country has figured it out and has implemented stimulus packages: every country but Canada. Harper and Flaherty, with their vast civil service full of economists, could surely create a coherent economic policy. The fact that they're not doing that seems to be due to the PM's obsession with political one-upmanship and ideology. He's so busy trying to bankrupt the Liberal party that he's bankrupting Canada. And maybe there's something to the notion that he's mentally unbalanced, too.

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Challenge to Coalition Objectors

If you disapprove of the coalition and think the Liberal leadership was wrong to have been involved in it, please tell me what you think they should have done. Their options were:

1. Support the government by voting in favor of the economic update and all its components (abolishing public financing for political parties, asserting that there would be no fiscal stimulus for the economy, suspension of civil service strikes, cessation of negotiation over pay equity).

2. Bring down the government, triggering another election (barely seven weeks after the last election, which would have been political suicide).

3. Exert pressure on the government with the credible threat of a coalition.

Keep in mind:

* The coalition has never been more than a threat.
* It was impossible to have a coalition threat without involving the Bloc.
* Harper has still not backed down on any of the economic update's components. He has carefully worded his comments to say things may be off the table for now, but made no commitment to keep them off the table.

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The Coalition Was Necessary... Period

What Canadians seem to be forgetting is that the coalition was necessary. Stephen Harper, after three years of bullying, disrespecting and riding roughshod over the majority of MPs in parliament, went way way too far in his November 28 economic update. Had the opposition parties continued to play along, the fabric of democracy would have been torn asunder; the statement that the economy does not need fiscal stimulus would have been allowed to stand; the government would have been allowed to give the finger to women and unions. The opposition parties would have been completely irresponsible and spineless if they hadn't said No to Harper on the economic update.

Saying No meant voting against the economic update, and since it was a confidence vote, that meant voting out the Conservative minority government. There is no other way to do it. But instead of just waiting till the vote and kicking out the government, thus triggering a second election in less than two months, they did the responsible thing and decided to exert pressure. They (1) announced in advance that they wouldn't agree to the update, giving the PM time to back down; and they (2) said they would form a coalition government so that an election would not be needed.

Talking about this as Liberal opportunism and Dion making a power grab is nonsense. Dion had announced just weeks before that he didn't want to be part of a coalition. It did not provide any benefits for the Liberal party and it was full of risk. The Liberal party took on the challenge of a coalition because it was the only responsible reaction to Stephen Harper's economic update.

Michael Ignatieff has never been a proponent of the coalition and now appears to be backing off. The question is whether he has other means to keep the PM in line, especially in his January budget. Is the threat of a coalition enough, or have the public opinion polls removed that means for exerting pressure?

Harper's current appointment of senators is puzzling and I haven't found any commentator who understands what he's up to. The most obvious explanation, which may or may not be true, is that he's playing his favorite game, "Dominant Dog," and letting everyone know that he won the scrimmage. Sort of like, after emerging victorious from a fight, the top dog pees on the loser. By doing something that constitutional scholars think is suspect during this sort of prorogation, he is demonstrating his power.

Another explanation for his bizarre behavior is that he is scared he'll lose the budget vote, and is shoring up support - support for his party, his leadership, or maybe even his career post-politics. Neither explanation seems likely. With Harper, we have a national leader whose ego, arrogance and adherence to extremist ideology transcend the rational.

Update: Chantal Hebert explains the senate appointments as being unrelated to the current crisis, and something he signaled he would do prior to this.

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The White Hotel (Review)

I first read DM Thomas’s novel The White Hotel when it was published in the early 80s. I loved it but found it extremely disturbing. It ranked in my mind with Deliverance, 1984 and Jude the Obscure as books that had upset me so much I could never read them a second time.

This week, after 27 years, I read it again. My second reading was profoundly different from the first. It was still rewarding and disturbing. I cried pretty steadily for the last hour of reading and a while after. But the world has changed so much in 27 years that it’s a different book.

The White Hotel (don’t read on if you don’t want to know what happens) is about several things, but is based in Freud’s article Beyond the Pleasure Principle, in which he posits that humans are motivated by the life instinct (creativity, harmony, sexual connection, reproduction, and self-preservation) and the death instinct (destruction, repetition, aggression, compulsion, and self-destruction) – by sex and death.

In the novel, the historical Freud is helping a young woman who has debilitating pain that doctors think is psychosomatic. As part of her treatment she writes Freud a poem, followed by a narrative explaining the events in the poem, in which she describes a passionate tryst she has in a hotel in the Alps (which she calls the White Hotel) with a man she identifies as Freud’s son. She has never met Freud’s son. In this fantasy, while the lovers have sex other guests are killed in all sorts of horrific ways. Bodies fall outside their window.

The poem is meant to be shocking: it’s obscene, erotic, sometimes gross, and jarringly personal in the way she keeps referring to her lover as “your son”. When I read the book in 1981, the sex section at the beginning of the story balanced the shocking death scene at the end. However, in the intervening 27 years our measure of what is sexually shocking has changed markedly. Now the sex can’t provide that ballast, and the brutal violence at the end of the book doesn’t fit as well – it might almost, to a first-time reader, feel a little tacked-on.

The story could be read as a novelization (and hence sort of proof) of Freud’s theory of sex and death as the two great motivating forces. It's also a repudiation of Freud, as in the story Freud has let the young woman read his papers, and then she creates a fantasy (or a free association) that perfectly proves his theory. But also, in the novel the character Freud believes in clairvoyance, by which he means the ability to read minds and see into the future. (I don’t know if the real Freud believed this, but he probably did, given Thomas's scholarship.) Given that Freud believes that, all his explanations for his patients’ problems are turned on their heads, because he was treating mainly young Jewish women 30 years before the Holocaust, which would profoundly affect all of them: if they had any clairvoyance at all, it surely would explain their hysteria.

At the end of the story our heroine is killed, along with thousands of others, by German troops at Babi Yar. Thomas was criticized for lifting some of the description of the massacre directly from the text of a survivor (although he credits him on the copyright page), but I thought it was appropriate. Certain things are so horrific that they shouldn’t be fictionalized. Thomas’ handling of this portion of the book is extraordinarily sensitive.

The book has a coda in which all the characters (Jewish or not) are in heaven, which takes the form of Palestine. I don’t see how the book could exist without this coda. It’s like Thomas is taking the reader by the hand and leading us to the end of the experience, helping us cope, reminding us that although many died, life continued.

In one sense, things feel a little over-explained in the book: explanations are a bit too pat. I think Thomas was trying to write for a wide audience that wouldn’t necessarily be able to fill in gaps. But I also feel after my second reading that I need to read it many more times. I don’t understand the purpose of the various perspectives (different narrators and the disturbing second case in “your son”) or the reason the plot unfolds as it does, or why our heroine spends so much time on trains.

Not that you need to understand any of the mechanics of the novel to feel the emotional impact. In an ironic twist, the book leaves me thinking about Freud’s rival Jung. The novel has added to our collective unconscious this image of a large, stately hotel in the mountains, a place we might unexpectedly find ourselves while on a journey somewhere else. If it hadn’t been for the coda I might have thought of the White Hotel as heaven, but instead I see it as our inner life (maybe the id). The lulling sound and motion of a train might hypnotize us into a visit to the White Hotel, deep in our psyche, where every character is an aspect of ourselves and events show us – well, that’s the mystery.

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Bailout Coordination

Finance Minister Jim Flaherty is quoted in the Globe this morning as saying that "panicking and making the wrong choices would be devastating for the Canadian economy."

There is a lot of irony in Flaherty's timing. The American administration is poised to move ahead with an auto bailout today, even without the support of Congress. In the tightly integrated North American auto industry, Canada's failure to coordinate on the bailout could have devastating effects on manufacturers north of the border. The US is essentially providing a $50B subsidy - and its goal is to protect US jobs. This is not the time for the Canadian government to be frozen in an ideological bullheaded refusal to act, and yet it is. Far from "panicking," Flaherty is lost in some rightist la-la land, hoping that if he can just keep cutting spending everything will somehow work itself out.

Update: Later the same day... the bailout is announced. Thanks goodness. I think in this situation there is really no alternative for Canada, once the US announces a bailout in such an integrated industry.

Look Out Stephen Harper...

... If you keep up with your dirty tricks the Archangel Michael will smite you.

The Bailout Trend

In this Age of Rapid Communication we all seem to be turning into lemmings. Powerful governments and great minds develop momentary bouts of "conventional wisdom" that blank out context and rationality. We all feel that one direction is the only direction - for a while.

I'm not against bailouts, but are bailouts the only way to go?

I know I'm slipping into dangerous groupthink when my reaction to a $15B auto sector bailout is "small potatoes". But after all, AIG has received ten times that amount this year, and hasn't even managed to clear up $10B in bad trades.

Now we hear that the Italian government is buying up 7.7M pounds of Parmigiano Reggiano and donating it to charity in an effort to save the great cheese from extinction. (Makers of buffalo mozzarella, who are also facing economic difficulties, are crying foul.)

There was a time when direct bailouts would not be considered. We started accepting them earlier this year because there were businesses so large and integrated that their failure would bring down everyone else, and then the trend spread because temporary economic conditions (like the credit crunch) were making it temporarily impossible for some businesses to survive. But when there are structural problems that need to be addressed to provide long-term solutions, bailouts could be the wrong approach.

For the sake of argument, let's agree that this great cheese is worth saving. (I think this is true, but there is some argument that cheaper Italian competitors are just as good and I don't want to get into that.)

Real Italian parmesan costs US$4.73/pound to produce but is wholesaled for US$4.38/pound. Zingermans in Ann Arbor sells it over mail order for US$26/pound (plus shipping), and that's not a bad price relative to other cheese shops. Parmesan is a hard cheese produced in 77-pound rounds that are not especially expensive to ship. You'd think that the Italian government could help parmesan producers lessen the markup (perhaps with a marketing board). In the winter months I can buy fresh South American cherries for $3.99/pound. They cost more to ship, suffer more from spoilage and obviously have a much smaller markup.

I'm not sure where the WTO stands on this, but perhaps bailouts are being used to circumvent trade agreements that prohibit subsidies to exported goods. Perhaps governments are just finding it difficult to shut their purse after opening it so wide for banks.

A Problem with Increasing Provincial Powers

An interesting problem emerging from the US economic woes is the difficulty of federal intervention when every state has different property laws. For example, in some cases, mortgages are "no recourse" - the lender can seize the property under mortgage but no other assets. In other cases they're "recourse" - the lender can seize other assets. Even with recourse mortgages, there are all sorts of state exemptions and differences in bankruptcy protection. This is making a big mess for federal officials who are trying to devise a mortgage bailout to help home owners and stop the downward spiral in financial markets.

In an era when capital is becoming less local, it seems a mistake to make property laws more local, and yet that is the trend. We may need to rethink it. Sometimes I read arguments that it wouldn't hurt Canada if we gave provinces more autonomy, but there are practical repercussions.

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One Weird Dude (and that's why we love him) (partly)

On the day he accepted his Nobel Prize for Economics in Stockholm, Paul Krugman posted this picture on his blog:

Proposal for an All-Party Vote that Won't Break the Constitution

Contents of an email I sent to Liberal Party President Doug Ferguson just now:

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This “compromise” to allow riding presidents and a few others to vote is no compromise at all. Party unity will be devastated by circumvention of the democratic leadership selection process.

Here is a solution that won’t break our constitution: Let all members of the party vote in a non-binding election that provides direction to the party insiders who can then make the decision. Hold this vote as soon as possible.
---

Update: It looks like Bob is going to drop out of the race in an address this afternoon.

Could We At Least Have a Debate?

The Ignatieff camp has been pushing for the party to anoint him as interim leader via a vote of caucus. The Rae camp objected that we need a more democractic approach, so the party has "compromised" and agreed to let party presidents and a few other people join in the vote.

I don't see how this is a compromise at all, but that's not my main concern. Who wins is no longer my main concern, as it seems to be a foregone conclusion.

What bothers me supremely is that the Liberal party is still running around like a chicken with its head cut off, being reactive rather than proactive, making decisions for the short term rather than the long term, and making poor decisions. It's understandable that Ignatieff wants to sew this thing up as quickly as possible. We are in the middle of a political crisis and he wants to change the direction of approach before parliament resumes.

What gets me is that there is so little leadership from the senior ranks of the party. They should be thinking long term, keeping steady, ensuring that the next leader has the support of the party, and working steadily to rebuild party unity. Instead they seem to be flapping their hands and running around in circles muttering "Oh my!"

Last week the leadership was all gung ho for the coalition; now it's the worst thing that ever happened. Those of us who stood up to support the party and fight for its policy, the coalition, are now left hanging out there like idiots, blamed for supporting a bad policy. No matter that the entire caucus (including Ignatieff) signed off on it.

After the election, the party decided we had to have a full-blown expensive leadership contest; now we can't have any democratic contest at all. Why the abrupt change in plans? The first decision was made out of pig-headed complacency and the reversal of that decision was panic pure and simple. It's not doing Ignatieff any favors to let him win this way. When Bob Rae says that anointments don't work very well, he's not speaking out of self-interest but for the good of the party. Paul Martin got off to a bad start because he was anointed.

Sober heads would do what Rae asks and have a compressed but democractic leadership race, taking a few weeks, involving debates and some sort of membership involvement. This "compromise" to allow a few more in on the decision is no compromise at all. The goal should be to increase party unity, but that whole idea seems to have been forgotten, and consequently it looks like party unity is going to be hammered once again.

What has become crystal clear is that our leader can't do everything. He needs better party management behind him. We blamed Paul Martin for missteps; we blamed Stephane Dion for missteps; at some point we have to look at what else is going on to make our leaders fail.

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The Leadership Race

I don't know what form the leadership race should take, but if a small group in Ottawa tries to force Ignatieff on us without a fair, democratic contest, I am going to be mighty pissed off.

I have tried to keep an open mind about Ignatieff, but the last couple of weeks have made that really difficult. When his party needed him he showed zero leadership and schemed for his own career. In the midst of the coalition kerfuffle I got an email from him saying that "in this time of crisis I need your support..." Yesterday I got another email titled "Winning the Leadership the Right Way" - implying that he'd already won.

I have not seen one single media interview in which he has impressed. He is pompous, pedantic and boring. I have a huge vocabulary and yet when I saw him on CTV recently I had to look up a word in the dictionary. Imagine what people who haven't had seven years of post-secondary education are going to make of him. He has been no better on the floor of the House.

Forget the fact that I'm a Rae supporter. I'm no longer sure that Rae can win. He can't seem to overcome Liberal hatred of the NDP. All the crap about baggage from his time as premier of Ontario is just that - crap. The heart of the matter is that Liberal insiders cannot accept an NDP premier leading their party. Rae has already failed to overcome that prejudice in one leadership race and the two years since. His charisma, political skill and leadership ability are all apparently lost on Liberal insiders, and it seems there is nothing he can do about it. If he had more time he might be able to attract enough NDP voters to the Liberal party to sway a vote, but that opportunity seems to have passed.

So that leaves Ignatieff. But what Ignatieff needs to do is show me that he is ready to be PM. With less than three years in Canada out of the last 33, and with less than three years of political experience, he needs to do something to prove he can lead the party.

If Ignatieff is anointed without proving himself, which is apparently what he is angling for, he will not have my support. The fact that he's trying for that shows how inexperienced he is. We need a leader who can lead. We need a winner. We do not need "Dion: The Sequel." But that's what we're heading towards.

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Michaelle Jean Should Have Quit

On Friday, the PM asked the GG to prorogue parliament so he wouldn't have to face a no-confidence vote tomorrow. We are told that she could not deny his request unless she had very strong reasons not to, and that if she denied him he would almost certainly have to quit. We are told that she was virtually forced to go along with him and prorogue.

But she had another option. She could have quit. She knew damn well that prorogation is not supposed to be used as a tool to avoid a confidence vote.

Why didn't she quit? Michaelle Jean and other Governors General before her live in the greatest luxury and priviledge of any people in the world. They are treated like royalty, have an enormous staff and budget, and have only titular duties (99.9999% of the time). She faced an enormous conflict of interest: do the right thing or keep her cushy rich lifestyle.

In the dying days of Nixon's regime, Nixon tried to save his neck by refusing to give up taped evidence of his cover-up of Watergate. The incident is known as the Saturday Night Massacre and resulted in the resignations of the special prosecutor, attorney general and deputy attorney general. All three men gave up their jobs rather than subvert democracy. Would Michaelle Jean was as principled.

British Parliamentary System

I'd be really interested to hear what constitutional experts in other countries think about the circumstances under which our government just prorogued parliament.

Also, I'd like to know if they think this action creates a precedent that would affect other parliamentary democracies. ...After all, pundits have been quoting precedent in Australia and Britain as if it adds something to the discussion here.

I'd also like to know what the precedent is in other countries for the Governor General (or Queen) to deny a request from a prime minister, and the consequences in those cases. We keep hearing that if Jean had turned down Harper's request for prorogation, he would have to resign: Where does that come from?

My guess on these issues is:
* Constitutional experts in other countries say that no other prime minister in a western democracy has ever tried to use prorogation to escape a no-confidence vote.
* They're horrified at the precedent set for other parliamentary systems.
* They think the GG should have resigned herself rather than accede to Harper's antidemocratic demand to escape a no-confidence vote.

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Moving Up the Leadership Vote

Liberal Riding Association presidents are meeting tomorrow and an item on their agenda is a motion to move up the leadership convention and allow all Liberals (rather than just delegates) to vote.

I have written posts in support of this idea before, and got a really negative reaction from some Liberals who think it will be unconstitutional, making the new leader open to a court challenge. The unresolvable problem, they think, is that the constitution states that the executive can't override a decision by the body, and the body voted down "one member one vote" at the last convention.

I am always impatient with the "it's impossible" argument. Lots of impossible things turn out to have a solution, but you can't find the solution if you don't try.

Assuming a solution is found and the vote is moved up, I have a concern about timing. It's not that an early leadership vote favors Ignatieff. I think that's fair: I support Rae, but we have to move up the vote, and if that favors Ignatieff then I'll accept it. The situation is just too dire to postpone it if we can find a way to move it up. Whoever is ahead at that time reaps the rewards.

No, my concern about timing is that there seems to be a great deal of confusion over what just happened, and we need to at least get the facts straight. A Globe article recently quoted a Rae staffer as saying that Dion didn't let anyone outside his circle participate in coalition decisions and they weren't happy with the decisions. Is that true? The popular belief these days is that Rae is Mr. Coalition and that the potential failure of the coalition should be seen as his fault. I see it quite a bit differently: that he was the one willing to stand up for the party, and that after the coalition had been announced it was craven of Ignatieff to hang back out of personal ambition. But much hasn't been disclosed yet. We need a lot more information about what went on.

The Mick Gzowski Affair

The Chronicle-Herald is reporting that Liberal sources told them "Stephane Dion’s chief of staff is firing an underling to cover her own mistakes in preparing a poor-quality video for national broadcast Wednesday." The paper quotes a veteran Liberal staffer as saying, "Email traffic will show [Dion's staff] were screwing around with text hours later than they should have been" and "They gave the video guys 25 minutes to shoot 20 minutes worth of video."

This is serious and needs to be investigated immediately: thoroughly, transparently, quickly, and with great sensitivity. It has the potential to unfairly blacken reputations and to become an enormous scandal for the party. The paper quotes a Liberal staffer as saying, "I am a f---ing Liberal and I don’t think they’re competent enough to run the government."

In his death spiral, Dion is doing more damage to the Liberal party every day.

Thanks to Challenging the Commonplace for publicizing this article.

Leaders - Can't Live With 'Em...

Let's face it, both of Canada's two dominant parties have enormous leadership problems at the moment.

The Conservative leader is a magalomaniac who hoardes all power to his own inner circle. His cabinet appointments are based on obedience and optics, and so we get incompetence that kills Canadians (listeriosis) and puts us all at risk (nuclear safety, pandemic preparation, and a host of other files). He introduces large new policies (such as everything in last week's economic update) without consulting with his caucus or anyone else in the party. His extremist ideology prevents him from taking action on the economic crisis. He is an enormous bully who can't seem to bring himself to cooperate with anyone, within his party or without. If there is anyone left who doesn't realize that he has a secret agenda, they're nuts. He is a terrible prime minister. But as long as he keeps winning, it seems impossible for his party to unseat him.

Then there's the Liberal leader, another man who won't consult with people outside his inner circle, but instead of being a consistent winner, he's a consistent loser. Noone questions his integrity or values, but he can't do anything right. Simple tasks evade him, like standing up in parliament this week and looking calm while uttering a few canned sentences (instead, he threw an enormous hissy fit, was completely incoherent, and looked like a buffoon). He wants to single-handedly negoatiate the coalition, and he makes some pretty big mistakes ("Canada and Quebec"?!) and then as soon as the going gets tough, he backs off, leaving the party hanging out over the cliff. Worse, his shoddy performance is the single thing keeping Canadians from accepting the coalition. Harper's behavior last week was so egregious that there was widespread agreement he had to be taken down, but now the dialog has changed to Harper needing to save Canada from Dion. We forced him to quit, but he won't go away fast enough and is dragging down the whole party.

Both parties are in a real pickle. Based on the effectiveness of PR campaigns, Canadian opinion might sway one way or another, but the objective reality is that neither man should be in charge of anything.

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Either Quebec is an Equal Part of Canada, or We Need to Let Them Go

The government of Canada is stating - caetgorically and repeatedly - that Quebec voters and the MPs they elect are not legitimate or equal.

Since its inception in 1993, Quebecers have elected Bloc MPs and those MPs have gone to parliament and assume their duties. They argue causes, just as other parties do. They serve on committees and follow the rules while they participate in parliament. They have supported (or not supported) governments in vote after vote.

Now, suddenly, the government is saying that Bloc MPs are dangerous and irresponsible, and their votes should not count in the House. Worse, a poll in the Globe & Mail yesterday suggests that the majority of Anglophone Canadians support the government.

Either the government of Canada has to take this back and assert the equality of Quebec in the parliament of Canada, or we have to open up negotiations in Quebec to allow them to adopt some form of independent (sovereigntist) government. We can't leave it both ways. I'm not happy about this (to say the least), but I refuse to sit by while one quarter of the population is treated as unequal.

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If We Back Down Now, We're In Big Trouble

My last post got a lot of angry comments, and I'm not sure whether the angry ones were Conservatives or Liberals or what. A couple of anonymouses pretended to be Liberal. But in case any of the anonymouses really were Liberals, I have a question: Do any Liberals really think we should just quietly back down now? Do you think that's what Dion was suggesting?

If we give in to Harper now, do you really think there will be no consequences? If he let him be dominant dog he's not going to improve his behavior - he's going to get even worse. This is a guy who has let it get around that he has a plan to drive the Liberal party into bankruptcy.

He never promised not to try to abolish the political subsidy again. He never acknowledged that subsidies are required when you have campaign finance rules. He hasn't promised to implement a fiscal stimulus to help Canadians. He removed a few things from his economic update, but he hasn't made one real concession. If we roll over for him now, do you think we'll have any ability to stand up to him the next time he tries to pull this crap? If we give in now, do you think there will be any fiscal stimulus in the January budget?

The Globe - which supports the Conservatives - has written about the damage Harper is doing in Quebec and has even published columns urging the Conservatives to replace Harper as leader. Where do you think that sort of reform is going to go once Harper learns he can subvert our democracy by forcing the Governor General to create a dangerous new precedent - and get away with it? Once he realizes he doesn't need the confidence of the House - that he can act as a majority PM even with a minority?

This absence of leadership in the Liberal party is having huge consequences. While Dion implodes and Ignatieff smirks on the sidelines (his campaign had the nerve to send out a fundraising email today), we are in one big unholy mess. Thsi isn't going to go away just because we want it to.

Update: In his statements on December 5, Harper was even more careful to say that his retractions are only temporary. He said he wouldn't move to abolish subsidies or ban civil service strikes now, and similar careful weasel-words. As soon as he can do it, everything in the economic update is going back on the table.

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To the Trenches!

Come on Canadians, let's not just gripe about Harper subverting democracy. Let's do something about it. Harper has a huge war chest and he has declared war on us. This isn't an election so there are no spending limits. A lot of money and a good PR firm change public opinion. Harper's horrid PR campaign attacking Quebec is already paying off for him in the polls, and that's stirring up separation sentiment in Quebec (no wonder!). This has gone beyond partisan politics: he's willing to destroy the country to save his own skin. We need the resources to counter his propaganda.

Give money to the Liberals (here) or NDP (here). In each year, the first $400 political donation you make gets you a refund of $300 on your taxes. So why not give $400 now and $400 in January?

I don't know if does any good, but you can join a Facebook group or sign a petition. It's really important to write your MP, newspaper, etc.

But a special thing that we Liberals have to do is think very very hard about our leadership choice in May. We made a terrible mistake last time. In this post I'm not advocating one way or the other (cover one eye if you can't avoid seeing the photo on the right - this really isn't an endorsement this time). I'm just saying: whoever you now support, put that aside for a moment and try to think objectively about who would be the most qualified, capable and effective as party leader and the next PM. We need to be more responsible and rational this time around. No more do-overs.

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Harper's Strategy (Updated)

In my last post I summarized Harper's strategy as If you won't vote for me then to hell with you, and If you won't let me play in your clubhouse I'm burning it down, and I will prevail or I will tear the country apart trying.

Now that he has made the Governor General prorogue parliament, I have an additional take on what he's doing. It's If I lose by your rules I'm suspending the rules and making up my own, or more precisely, If democracy doesn't work in my favor I'll subvert democracy.

The bully really has no way of operating other than as a steamroller. It's not just that he can't back down or reach out to other MPs; it's that he can't say one bloody word to reassure Canadians about the economy, about what's going on in parliament, or about his ability to lead. Some pathology keeps him from being able to show one iota of human kindness. In the address last night someone must have told him he had to smile, but it was the most strained, fakest, most unhappy smile I have ever seen. I am astounded that there is so much talk about the camerawork of Dion's address or the fact that it was a few minutes late. In terms of content, Dion's address was great. Are we so Americanized that all we care about is image and glitz?

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Harper's Strategy

There seem to be some big misunderstandings about what Stephen Harper is trying to do. Everyone seems to be assuming that he's fighting for his job. That's not it at all.

If Harper's goal were political survival, the content of his PR compaign would be markedly different from what it is. It is not a good tactic for self-preservation to call a quarter of Canadian voters (Quebec) "the devil" and claim that Quebec's MPs should not be able to vote in parliament. In fact, it's totally self-destructive. This seems more like a tantrum than a strategy. The message coming through is, If you won't vote for me then to hell with you, you stupid dolts.

Likewise, Harper's repeated assertions that a coalition is undemocratic and that it furthers the goals of separatists, along with being untrue, do nothing to further his cause. Harper has very little chance of stopping the coalition, and so his strategy seems to be to dupe Canadians into believing that the coalition government is illegitimate. In other words: If you won't let me play in your clubhouse then I'm burning it down.

Harper's survival rests on two things:

1. The willingness of the Governor-General to accede to his requests, whatever they turn out to be (proroguing parliament, denying the coalition's request to form a government, appointing opposition MPs as senators, even stepping aside herself if her decisions aren't to his liking).

2. Regaining the confidence of MPs, either directly by convincing coalition MPs, or (more likely) indirectly, through the constituents of coalition MPs.

Harper has lost the confidence of the House, and in that situation the majority of MPs have a perfect right - a responsibility even - to try to form a government. If he were really serious about surviving as PM, he'd be trying to win back the confidence he threw away in last week's economic update. His message would be that he can manage the economic crisis; that he is willing to reveal the true state of the federal books; that he won't ever try to abolish political financing again; that he can learn to play well with others. He might not go so far as to apologize, but he could be doing something in that direction.

The common theme of Harper's PR campaign seems to be: I will prevail or I will tear the country apart trying. Or more accurately: I have lost and so I will make an unholy mess as they drag me out the door.

Harper's fate may already be set it stone. As Bob Rae said today in a scrum, Harper has lost not only the confidence of MPs but also their trust, and that is a more difficult thing to regain. Still, I hope Harper comes to his senses. He has a chance in his national address tonight to turn things around. For the sake of the country, I hope he does.

Update: Nope, he did not change his message one iota in his address to the nation. It's still Burning Down the House.

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Take a Deep Breath

It's true that two thirds of Canadians voted for the Liberals, NDP or Bloc. But the converse is also true: one third of Canadians voted for the Conservatives. Furthermore, that one third all went for the same party and fully expected it to be the government until the next election.

I support the coalition, but I would also like to see the coalition parties' leadership reach out to Conservatives in a spirit of cooperation. Before deposing the government, we should be sure that we have exhausted less drastic alternatives.

I call on the leaders of the Conservatives, Liberals, NDP and Bloc to get together and discuss what we can do. Would it be possible for the Conservatives to replace Stephen Harper as leader? Is there anything Stephen Harper can do to restore confidence in the House that he will be competent and responsible in his approach to politics and the economy?

It is clear at this point that a budget including a fiscal stimulus is not enough. But that doesn't mean that reconciliation is not possible. Harper could promise to consult with the opposition on government response to the economic crisis. He could apologise for trying to abolish political subsidies and commit to not raising the issue again.

I am not swayed by the outrageous claims and downright lies of the Conservative PR machine. But I am concerned about Canadians who voted Conservative and who still support the Prime Minister. The politics of Stephen Harper has been dominance and arrogance. That should stop, and we should be sure the government governs for all Canadians, not just its base. We could think of the economic crisis as akin to WWII: we need to all band together.

There is more that unites us than divides us.

Update: I do not by any means intend this post to support prorogation. Action should be taken this week. The confidence vote should occur as scheduled on Monday. Stephen Harper does not have the confidence of the House and prorogation of parliament totally flies in the face of parliamentary tradition.

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Zero Sum Game?

The Liberals and NDP seem to be doing themselves some long-term damage in the west, where there is justifiable anger that their local boy is being deposed by easterners.

The Conservatives are totally screwing their chances in future elections in Quebec by calling the entire province "the devil" and railing that the votes of Quebec MPs should somehow not be counted.

So in one sense it's a wash.

In another sense it's disastrous for Canada, as it ramps up the polarization of our people an enormous amount. Would that we had someone on the horizon who could work to heal the rifts and bring us together as one people. ...Oh yeah, I think that person is Bob Rae.

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Apologies to Commenters

I have been feeling quite blue that noone was leaving comments on my blog the last couple of weeks. I greatly enjoy comments, whether they are in agreement or not, and I really missed them. Then tonight it popped into my head there might be something wrong with my comment moderation. Well duh. Anyway I just published them all and I apologise for the delay.

Bush Says Canada is Facing a "Socialist-Led Coup"; May Be Considering Military Intervention

Okay, I was going to write a fake news story but I can't bring myself to... it seemed funny till I thought of all those people in Latin America who were killed for voting for left-leaning governments.

Quebec Is Part of Canada!

Whatever their goals as a party, the Bloc is a registered federal party. Quebecers who vote for the Bloc are legal Canadian voters. To listen to the Conservative leadership today, you'd think that Quebec wasn't a part of Canada. They're shouting to the rafters that legally elected Quebec MPs do not have a right to vote in the Canadian parliament.

They have the nerve to say that the Liberals and NDP are increasing the chances of Quebec separation by cooperating with the Bloc, when in reality, it's the Conservatives (and the Prime Minister) who are denigrating an entire province, calling them "the devil" and denying their legitimacy in Canada.

As of today, it is the centerpiece of Conservative strategy that the progressive coalition is undemocratic because it includes the Bloc. (Yesterday they said it was undemocratic because a majority of the House had no right to form a government, but overnight apparently someone gave them a lesson in parliamentary democracy so they've backed down on that one.)

The Conservative leadership should back off and apologise to the people of Quebec. Heck, I'll start the ball rolling: On behalf of the rest of Canada, I apologise to the people of Quebec.

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The Canadian Version of Impeachment

The last time a leader was so godawful that the opposition had to oust him was in Ontario in 1985. The last federal precedent was King-Byng (long before my time). You have to be a really miserable sonofabitch to lose the confidence of your colleagues so thoroughly that they boot you out of office.

Getting political adversaries to reach an agreement on governing is extremely difficult, and can only occur when they are united in the firm, sincere belief that they have no choice but to find a way to work together. Prime Minister Stephen Harper was the most detestable, arrogant, incompetent, nasty and untrustworthy national leader of my lifetime. He brought this on himself and good riddance.

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Coalition Talking Points

My contribution, FWIW...

* Two-thirds of Canadians voted for parties other than the Conservatives in the most recent election.

* Opposition parties form the majority in the House. As the majority, it is their right to decide who forms the government.

* The Conservative party got 170,000 fewer votes in 2008 than in 2006.

* NDP-Liberal accords have always benefited Canada. The NDP brought us universal health care, government pensions, rent controls, and (briefly) a national day care program. When Harper refers to the NDP derisively as irresponsible socialists, he means that those policies should be abolished.

* Even if Harper backtracks on the fiscal stimulus package, we can expect it will be a "trickle down" approach where all the funding goes to big business. We need a less ideological, more practical and caring government to help Canadians through the recession.

* Even though Harper has backtracked on his proposal to abolish political subsidies, we can be sure he will try to get it past us again at the earliest opportunity. He has already changed his position on this issue four times in less than a week.

* Political subsidies replace the revenue government previously lost in tax deductions for political donations; they are standard in western democracies that have reformed political financing.

* Stephen Harper staged a hostile takeover of the Progressive Conservative party and co-opted their brand. He is an ultra-right wing ideologue whose values do not reflect those of most Canadians or even most Conservatives.

* Stephen Harper is not fit to be prime minister. He is incompetent (eg firing health inspectors and the head our nuclear safety watchdog). He lies (eg fixed election dates). He cheats (eg, secret taping of NDP meeting). He shows contempt for democracy (eg trying to abolish public subsidies to political parties). He breaks the law (eg 2006 election financing fraud). And on and on. See Scandalpedia.

* Stephen Harper has poisoned the atmosphere in parliament and made it impossible for opposition parties to work with him any longer. At this point, there is no going back. It is a situation completely of Stephen Harper's making.

* Stephen Harper says that Bloc participation in the coalition is "scary." Yet he spent billions of Canadian dollars pandering to Quebec and trying to buy their votes.

* If Harper prorogues parliament, he's just like the employee who calls in sick when he knows he's going to be fired. Proroguing parliament takes away whatever little bit of legitimacy Harper has left. And it won't work... he'll have to convene parliament sometime, and then we'll defeat him.

* If we have to have another election in the near future, it would not be such a bad thing. It would provide a stimulus to the economy, including tens of thousands of temporary jobs.

Sign the petition for a progressive coaliton.

Join the Facebook group Canadians for a Progressive Coalition.

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