Tuesday, December 30, 2008

Deficit Spending

The topic of deficit spending is again on the rise in Canada. The big question is should Canada abandon it's years of fiscal responsibility to help alleviate the suffering of a growing economic downturn? Is it even possible to remain balanced without severely hindering services even possible is probably the second question on most people's mind.
Deficit spending is probably necessary in 2009. Canadians should not just accept this as a necessary evil but understand it is an important tool. During the prosperous (almost) decade that came to an end sometime around June of this year we were able to run a balanced budget and help shrink the national debt. But, conversely, it should be understood that during economic downturns it is not being irresponsible to push the the federal books into the red. This is how we maintain a similar level of services, like education and health care, throughout the boom and bust of the business cycle.
The important factor in fiscal responsibility is to be sure to place the budget squarely in the black when the economy recovers. It would be easy two or three years down the road to continue running a deficit, even though it is not necessary, but that would be foolish. Reducing public debt helps trim excess from the budget in the form of all the fees associated with servicing the debt.
With the price of oil the lowest it has been in years foreign investment into the oil sands, a large but expensive oil source, has been stifled. Because of this Canada's economy is poised to fall more now than when the economic woes were more focused on the banking system. Canada staved off a lot of the problems with the banking crisis because the regulations in Canada are better designed than in America. This regulation meant that Canadian banks were less affected by the toxic debt. Now that oil has dropped in value, Canada's exports will start to drop significantly.
Now is a good time for the Canadian government to start spending. We cannot restrict the governments actions to what it can do with a balanced budget. Tax revenue, and especially oil royalties, are poised to drop substantially so a balanced budget would mean less spending next year than this year which would not help any one.

Tuesday, December 23, 2008

Harper names 18 new Senators

Harper named 18 new senators in one fell swoop. This is contrary to his pledge to hire no new Senators. A rather significant change. Zero, every available seat; I could see how he could get those mixed up. Pundits have argued that he his trying to gain power before a likely change of regime. Harper, on the other hand, has said it is to help jam Senate reform legislation through the Upper House to make it an elected body with mere eight year terms (opposed to the current 45 years). Many of the people he has chosen are clearly his supporters. Inside members of the Conservative Cadre, successful Conservative fund raisers and people closely associate with Harper specifically.
I hope that Senate reform is the reason. I would hate to think Harper is trying to solidify his power and influence for long after he retires from politics.
I would like to see the Senate elected by a proportional representative system. Each province would be given their quota of seats and by the popular vote in the province assign the proportionate amount of seats to each party.
I will give Harper the benefit of the doubt and say it is to push through the reform measures. Though, appointing 18 new Senators to push through democratic reform does seem a little oxymoronic.

Obama's New Spending Plan

Obama has announced that he will quickly pass a huge stimulus package upon entering office in January. Over the last week and a half there has been wide speculation to the actual figure of the package. I have seen numbers ranging from $400 billion all the way to $1 trillion. These numbers are all absurd. We have entered a point in politics where things are so bad that the citizens of the nation don't care how much the government spends so long as there is, at least a perceived, chance of things getting better.
Obama's plan is essentially JM Keynes' wet dream. He wants to invest this money into infrastructure, calling for a public works project to rival when Eisenhower made the national defense network (the interstate highways). This seems like a sound idea to me. It has become clear that tax breaks and rebates will likely be saved since so many people are in financial peril or are worried about the long term security of their jobs. America cannot rely on foreign demand for their products to stimulate the economy since demand is down everywhere. The only other option would be government spending. Since corporate output, at the national level GDP, is a product of labour and capital there is no better way, in theory, to spend money than on infrastructure. It boosts the national capital, be that rail or road links, improved harbours, airports or upgrading utility connections. These all lead to a higher capital base which increases the potential GDP in the future.
So how do you spend a trillion dollars quickly, efficiently and fairly? You can't really. State and city governments have been lining up for their chance to get their pet projects financed. The government could transfer money to the state governments that, under the zero deficit rule, have been struggling and cutting back on everything to help fill the gap and keep services up to the normal level; now that the economy is so bleak those services are even more important. Although most people would like the money spread fairly there is a lot of merit to keeping the money in the cities. The cities drive the American economy and as such improving city infrastructure will lead to a greater secondary boost to the economy from the private sector. If Obama tries to spend the money too efficiently and scrutinize all of the planned projects too much he may waste precious time. If the government saves 10% of the costs of the stimulus, at the price of an extra quarter's worth of contraction the benefits are highly outweighed by the costs. Likewise if he doesn't look closely enough at the proposals, the money may make its way to less important projects (like a proposed dog park from one big city mayor) at the cost of better project.
There is still some good that could be done by a large tax rebate. If everyone received a $500 tax rebate, approximately $150 would be spent and $350 saved (According to figures in last weeks 'The Economist' tax rebates in America have a 70% saving rate). This will do little in comparison to government spending to boost the economy but maybe help the banks keep liquid with the added deposits. That is, if people still trust the banks?

Wednesday, December 17, 2008

Soda Tax - Where fiscal policy meets moral stewardship

Governor David Paterson's proposed 2009-10 budget for New York state includes a variety of new sales taxes, including one on soda. This is not the first time a government has used fiscal policy to administer their morality. In Canada it is common to tax tobacco and alcohol heavily to offset the costs of the health care system. In this case it seems warranted since those who consume such goods tend to use the health system more often. In Canada the proposed 18 percent soda tax would have some merit for the same reason. Especially considering obesity related diseases, such as diabetes, may cost taxpayers more than the diseases related to smoking and drinking.
But in New York where there is no government health care, is there merit for specifying a particular good for higher taxes?
Certainly taxing 'bads', such as carbon emissions are a different matter. Everybody has to share the burden on utility when such 'bads' are released even though only a few people are responsible. So if a few people pollute the drinking water to produce their goods, should they not have to pay to clean the water instead of taxpayers-at-large?
Is this tax arguing that fat is a public bad? Everybody has to see it but only a few get the joy of over consumption? No I don't think so. That seems too ridiculous to be true.
Is there a way to evade taxation? Perhaps. Right now if you go to a fast food establishment you can get a 'meal'. Buy a burger and add fries + soda for $1.99 or something like that. Now what if they changed the menu to say 'buy a burger + fries and get a free pop'? Would that reduce a customer's tax burden by a 25 cents? Seems like there could be quite a few loopholes to be exploited.
With State budgets across America stretched, and New York having one of the largest deficits, perhaps this is more about the money than trying to force people into shape. This more simplistic argument gains barrings when you consider new taxes on health clubs and massages. Both, I would wager, have net benefits to people's health; both physical and mental.

Friday, December 12, 2008

Canadian Airports infiltrated by Mobsters

The RCMP have revealed that the three biggest airports in Canada, located in Toronto, Montreal and Vancouver, have been infiltrated by an estimated 58 organized crime groups. The report suggests that more than 1000 members of organized crime factions, including about 300 airport employees, were involved in this nation wide conspiracy to bring drugs, goods and people into the country.
The drugs?
Apparently the primary drug brought into the country is Khat. This is an East African plant that can be chewed to illicit a narcotic effect. This is only the second time I have heard anything about this drug. The first time was at a fair trade coffee symposium at the University of Guelph which talked about the rampant growing of Khat in the horn of Africa. The speaker thought that awarding copyright protection to high quality beans from Ethiopia would allow for a higher value placed on the community grown coffee and make it more profitable than the competing crop, Khat. It is rather surprising that such a drug would be so popular in Canada, or that the transhipment point for the product is Britain where it is apparently legal. Ottawa, Montreal and Toronto were all listed as destination ports for this product.
It was also found that Vancouver was a popular destination for Caribbean cocaine whereas Toronto seemed to be where Heroin was being shipped. I always thought that those two cities tended to have the opposing vice? Not to mention Toronto is closer to the Caribbean and Vancouver is closer to the Far East where most of the poppy seeds are grown.
Organized Crime groups apparently tried to help their spouses and members get jobs at the airport as security guards, baggage handlers and customs agents while trying to subvert those already in positions of authority.
The report stated that checking employees upon both entry and exit of the terminals and more background checks for the employees is needed to reduce the illegal shipments that manage to get through port security. When you leave work at a retail store they check your bag to make sure you didn't steal socks yet it is not considered prudent to check airport employees to make sure they aren't hiding cocaine in their pocket after leaving work?! Likewise retailers may ask for you to order a criminal check before hiring you to make sure they can trust you with a few hundred dollars so how can airport security contractors, of all profession, not do the same?

Ill. Governor charged with soliciting a bribe (among other corruption charges)

Gov. Rod Blagojevich has had allegations brought against him for trying to solicit a bribe to be appointed to Obama's vacant Senate seat. He was already under investigation for other corruption charges. Because of this ongoing investigation the phones in his office had been tapped by the Attorney General's office. Blagojevich was recorded saying "I've got this thing and it's (expletive) golden, and I'm just not giving it up for (expletive) nothing. I'm not gonna do it." I guess two things. What kind of high ranking official swears like a sailor? I mean shouldn't this kind of appointment beat the ghetto out of you? You are constantly in the public's eye and trying to be elected for a position. Show some tact. Second, how does someone this stupid get elected to begin with? He knew he was being investigated already. How could he trust the security of his phone lines? This is why shady, yet luxurious, hotels were invented. The hotels may even be bugged (Watergate?) but certainly you have the foresight to get out of your office.
Blagojevich is not an isolated case. Chicago has one of the most corrupt state buildings in America. No Less than three former Governors (of the last seven) have been convicted for their Fraudulent activities. These include:
— Otto Kerner (governor 1961-68) was convicted in 1973 of tax evasion, bribery and others counts for fixing horse races. He served one year of a three-year sentence.
— Ten years after he left office, Dan Walker (1973-77) pleaded guilty to bank fraud and forgery unconnected to his service as governor.
— George Ryan (1999-2003) covered up brides and awarded state contracts to political pals. He’s serving a six-year prison sentence.
This means four of the last eight governors of Illinois, assuming Blagojevich is incarcerated, will have served time in prison. The other four are likely on the run as we speak and hiding out on some tropical island sipping mohitos (it's just fun to say, mohitos). Jon Stewert Tuesday night made the point that committing murder will result in arrest and conviction about 48% of the time in America whereas being the governor of Illinois results in a 50% chance of incarceration.
Balgojevich, who tried to find a high paying job for his ife, as one of the conditional bribes to become a Senator, may not have been the only half of the couple procuring shady deals. It appears as though the foul-mouthed wife may have been just as guilty. She is recorded conspiring to maintain local ownership of Wrigley field, saying "Hold up that (expletive) Cubs (expletive), (Expletive) them." This is just one instance among many suspicious real estate dealings.
Did it have to be Obama's seat? The poor man is trying to quit smoking, the last thing he needs before taking on the Presidency in under a month is to hear his former position is now in the hands of a 'wise' guy. I hope that this scandal does not taint the President-elect but at the same time I am confident that Palin, as Governor of Alaska, is corrupt, like Ted Stevens its former Senator. So it is not unlikely that the Governor and Senator in Illinois would be in cahoots, though I would think a President-elect would have the foresight to stop any mutual activities as soon as it was clear he may be the next President so as to insulate himself from future allegations.

Thursday, December 11, 2008

Google Zeitgeist 2008

Google has compiled its 2008 edition of the Zeitgeist. This is their web search index of what people are 'thinking' about. The global list is not very surprising but the differences between some of the regional lists is quite interesting. An example of this is 'weather' being the fourth most popular search in Canada whereas in Australia it was the ninth. I suppose Canadians have less nice weather days throughout the year and so like to know when it is coming and plan as early as possible.
Unfortunately the categories listed for each region are different. In The UAE it lists local 'restaurants' whereas in the UK it has popular 'recipe' searches (what the hell is Eaton Mess?). There is also a lack of country by country information - only 34 nations have data showing. This could be caused by local privacy laws or the lists are not completed yet but either way it reduces the the value of the Zeitgeists.

One of the results I found interesting from the Canadian results was the popularity of the political parties, by search:
1. green party
2. liberal party
3. conservative party
4. ndp
5. bloc quebecois
Presumably the Green Party would have a boost solely because it is a newer party and so people may just be interested in knowing their policies. The Liberals and Conservatives on the other hand are well established and as such Canadians likely require less research to know their core policies. But, perhaps, this points to a greater voter base for the Green Party for the next few years.
In the UAE, a bastion of religious reverence, who was one of the biggest searches - by character name and real name? Hannah Montana. It's good to know we have things in common with the middle east. We need to build on this young Hollywood vixen affinity and work from there to gain the trust of the whole area.
The website Surf the Channel is one of the fast growing websites in the world. I find this particularly interesting because I only discovered the website a few weeks ago and I see the number of views their videos are receiving and it is not surprising that it is becoming one of the most popular websites. We will see if it goes the way or other video indexing websites.
The power of Youtube is growing very quickly. It will soon be the preeminent collector of humanities' culture. It is already one of the most popular websites in the world and is also steadily increasing its popularity. We see it listed in both of these categories on regional surveys from Brazil to Germany.
Facebook seems to be the digital border between the East and West. It is either one of the most popular websites or fastest growing or both in Countries from the Americas (North and South) as well Europe. It is, however not seen as often in the East and if it is only in the fastest growing field (Malaysia, Singapore).

Monday, December 08, 2008

The Future?

I have been watching a lot of cheesy sci-fi recently and I have noticed that one thing seems to be a part of every future whether it be a utopia or distopia; on Mars or underground. People in the future will sleep less than we do now. Their sleep patterns will be irregular at best. I, for one, do not like where this world is going. If the future means staying awake for two or three days at a time on a regular basis then we need to start acting now to prevent this. Slumber change is a very real and likely threat to humanity.

Monday, December 01, 2008

Coalition Government

There is talk of a new government in Canada. A proposed coalition between the Liberal and NDP parties, with concessions offered to the Bloc, could take over leadership from the Conservatives provided they can come to an agreement that is able to gain Royal Ascension.
Aside from the clashing colour scheme (Red and Orange?!) what would this new government look like? I think we can say with certainty that it would have some decent green policies; it would probably focus on some social issues; the Bloc will be able to gain more money for their constituents and it would probably be very expansionary during the financial downturn. Even though the Liberals were the party that balanced the budget it seems likely that, with the help of the NDP they would be more inclined to spend their way out.
This coalition could mark the beginning of a new phase in Canadian politics where parties are forced to cooperate to govern. It could, on the other hand, alienate a large portion of left leaning voters and the result being a further decimation of the Liberals perennial supremacy.
How did this all come about? The conservatives failed to offer enough money to boost the economy, at least in the eyes of the opposition, and used their initial budgets to pass some far right leaning policies. The one that is getting the most attention is the end of party financing. I think that party financing is an important institution in safeguarding our democracy. Without some level of party financing we risk our government being taken over by a few select, wealthy, interest groups.
With the Liberals in the middle of a leadership debate one must wonder who the next Prime Minister would be and how he will be chosen. If the leader is selected by the powerful Liberal cadre instead of the members-at-large it would jeopardize our democratic choice in a rather ironic twist considering one of the major excuses for this endeavor. The alternative is Dion as PM while the Liberals can hold a caucus to decide the replacement PM. Ignatieff seems to be the favoured candidate, though I think he was a few years ago too when Dion somehow managed to win. Bob Rae would likely be more popular with the NDP which may end up being important given their duel party government.
Of course this could all be moot if somehow Harper remains in control or our fearless Governor General decides a second election is more prudent.