Another One Of History's Ironies

There are those who believe that engaging in "what might have been" speculation is wasted energy. But Linda McQuaig does precisely that in today's Toronto Star. Doug Peters -- the former chief economist for the TD Bank and former Liberal cabinet minister -- died last week. Peters grew up in Brandon, Manitoba during the Great Depression. That experience -- and the training he received on the way to getting a PhD in finance from the University of Pennsylvania -- made him a committed Keynesian.

But it was Peters misfortune to be at the the cabinet table when Milton Friedman was all the rage. McQuaig writes:

Despite his Bay St. pedigree and a PhD. in finance from University of Pennsylvania, Peters rejected the business world’s obsession with deficits and smaller government.

From his seat next to [Paul] Martin at top-level budget meetings, the soft-spoken, articulate Peters repeatedly challenged the deficit hysteria that gripped the Finance department and increasingly controlled government policy. To Peters, the key problem was unemployment — which hovered above 10 per cent — not the deficit.

Indeed, the way to solve the deficit problem was to reduce unemployment, Peters argued. As he once told a parliamentary committee: “Unemployed people pay less tax. That is one of the most certain laws of all economics. It should be inscribed on plaques and hung in the offices of prime ministers and premiers across the country.”

There were some who sided with Peters:

He got support from an unlikely source — a Goldman Sachs report in September 1994 identifying unemployment, rather than excessive government spending, as Canada’s key problem, and noting that once full employment was achieved, “the budget gap of Canada vanishes.”

But Friedman had received the Nobel Prize. How could be be wrong?

Time has proved Friedman wrong and Peters right. Another one of history's ironies.

Image: Toronto Star

The Last Person Standing

Yesterday, Tony Clement dropped out of the Conservative leadership race and Chris Alexander dropped in. The Conservative ranks are teeming with ambition. But ambition is expensive. Brent Rathgeber writes:

Running for the leadership of a Canadian political party is no modest undertaking. Including the registration fee and a subsequent charge for access to the membership list, it costs $100,000 to play.

But that’s only the beginning. Canada is a big country. Given that the leadership contest is weighted — that is, the 338 electoral districts are each assigned an equal number of points in the final vote — it’s important that serious candidates at least show up in most ridings and regions. That’s a lot of flights, a lot of hotel rooms.

In the end, it's money that will determine who will leave and who will go. And money is tied to an MP's record. Clement's Achilles Heel was his record:

He will never be able to walk back the reputation he picked up during the 2010 G8 Summit. Clement was in charge of a $50 million infrastructure program intended to reduce border congestion; some of the money was used to build parks, walkways and gazebos in Clement’s riding in advance of the summit. To a lot of people, he’ll always be ‘Gazebo Tony’.

Although that pork barrel episode probably guaranteed his re-election as MP in Ontario Lake Country, it also destroyed his credibility with fiscal conservatives across the nation.

Clement is only the first contender to drop out. There will be others. It's impossible at this point to guess who will be the last person standing.


Image: Huffington Post

Not A Comforting Thought

While Donald Trump huffs, puffs and sniffles -- and while the Republican Party tears itself apart -- there will be those who take solace in The Donald's Demise. However, Michael Den Tandt writes, Trump's defeat will not put Trumpism to rest:

Trumpism is bigger than the man. For evidence, juxtapose a map of the two parties’ current support, with one of regional income distribution.

The safe red (Republican) states swing from the Deep South (Louisiana, Mississippi, Alabama, Georgia, South Carolina) northward in a band through the Midwest (Oklahoma, Kansas, Nebraska, South Dakota), and into the upper Midwest. These are also the regions with the highest concentrations of Americans living below the poverty line (about $24,000 for a family of four).

The key swing states (Michigan, Ohio, Pennsylvania), where Trump and Democrat Bernie Sanders launched their respective insurgencies, are regions where traditional economies have been disrupted by globalization. Hence Trump’s repeated promises to “bring back our jobs,” resurrect heavy manufacturing and re-open shuttered steel mills. He’s giving voters in populous, influential states precisely the comfort they want to hear.

What Trump is selling is "pure fantasy." But that makes no difference:

Trump has given voice to a new constituency. That he is personally unfit to be president is a historical fluke. His losing next month will not prevent states such as Ohio or Pennsylvania from going full nativist in future, unless more people there can see the hope of a better economic future.

Trump's people are not going anywhere. And Hillary -- deplorable though they may be -- will have to deal with them:

A future President Hillary Clinton will need something like a Marshall Plan — a New Deal might be a better term — to bring hope to the Rust Belt. Or she’ll face another revolt in four years, likely led by someone more personally fit, and capable, than Trump.

Not a comforting thought.

Image: Forward Progressives

In War, Soldiers and Sailors Get Killed

When Justin Trudeau brought Canada's CF-18's back from Iraq, Canadians might have thought that our armed forces personnel were out of harm's way. But, Tom Walkom writes:

On Thursday, a senior general acknowledged that, over the last few months, Canadian special forces operating in northern Iraq have become increasingly involved in front-line skirmishes against Daesh fighters.

“The mission has changed,” said Brig.-Gen. Peter Dawe. “We are more engaged on the line … the risk has increased.”

The truth, whether the government wants to admit it or not, is that Canada's soldiers are in harm's way: 

Both the current Liberal government and the Conservative one it replaced have gone to great lengths to assure Canadians that Iraq is not another Afghanistan. So these semantic debates over the definition of word “combat” have taken on great political meaning.

The Conservatives used to say shooting in self-defence was not real combat.

Under the Liberals, the military brass is engaging in similar linguistic contortions to avoid the dreaded word.

According to one, Canadian troops have to be the “principal combatants” to engage in combat. 

According to another, combat only occurs once soldiers have crossed an imaginary line on the battlefield.

In Iraq, it's always been hard to distinguish the difference between enemy and ally:

But in the real world of war, the differences become blurred — particularly when the battle lines are fluid.

Sunni, Shiite and Kurdish forces don’t trust one another. Moreover, as the Financial Times reported last week, the fissures that have always existed within these three major groups are beginning to widen.

It’s not that long ago that rival Kurdish parties in northern Iraq were involved in a murderous shooting war with one another.

 

So let's stop fogging things up with semantic distinctions. Canada is at war. Our troops are in the middle of it. In war, soldiers and sailors get killed.

Image: Michelle Clelland Toronto Star

Once Again, Look At The Facts

It was an ugly night. The kind of night that -- after it's over -- leaves you with the feeling that you've got to hit the shower. This morning, The New York Times published a page which fact checked statements from the debate. Not everything that Hillary Clinton said -- particularly about her emails -- was true.

But what was disturbing was the tsunami of lies which Donald Trump unleashed in the space of ninety minutes:

Trump said Clinton wants "amnesty for everybody, come on it, come on over." -- Not True. 

He claimed,"Clinton was there for Obama's line in the sand"  -- Not True

Trump said the United States signed a "peace treaty" to bring an end to the war in Syria. It was a ceasefire.

Trump said "growth is down to 1%" and the United States and that country has the highest taxes in the world. Absolutely false.

Trump said that Clinton wants to go to a single payer health care system -- as we have here. Again, absolutely false.

Trump said Clinton has never used the phrase "radical Islamic terrorism." That, too is a flat out lie.

You get the idea. I don't know if truth matters anymore in American elections. And, as Trump paced the stage, it was clear that he has the attention span of a five year old child.

Incredible.

Image: qz.com

The Forest And The Trees

When it comes to taxing carbon, the Conservatives are into self-flagellation. Foremost among them is Brad Wall. Stephen Maher writes:

Like the previous federal Conservative government, Wall seems to represent the view held by some fossil fuel companies — that climate change likely isn’t caused by carbon emissions, but even if it is we shouldn’t do anything about it, since little Canada can’t have much impact on global emissions and we’d be certain to lose revenue and jobs.

That seems to also be the view of Calgary MP Michelle Rempel, who took to Twitter to attack Telus and other companies that support Trudeau’s carbon plan.

On Friday, even the  Globe and Mail came out in support of the prime minister's plan:

Economically speaking, the Trudeau government’s approach is the right one. Environmentally speaking, too. The question is whether, over the long run, it can be sustained politically. That’s up to you, dear reader and dear voter.

Ottawa is creating a national standard and leaving it up to each province to decide how to meet it. Beginning in 2018, carbon will have to be priced at $10 a tonne, with the price rising by $10 a year until it hits $50 in 2022.

What’s all that in plain English? A $10 tax on a tonne of carbon is equivalent to a tax on gasoline of 2 cents per litre. A $50 per tonne price means a gas tax of 11 cents a litre.

And the Globe pointed out that, if Wall so chose, that money could go to tax cuts:

A conservative provincial government, like Mr. Wall’s Saskatchewan Party, could decide to take advantage of higher taxes on gasoline, diesel, natural gas and coal to lower taxes on things everyone wants more of, like income and investment. A conservative-minded premier could promise to turn every dollar of carbon levy into a dollar in tax cuts. That would make for an interesting contrast to Alberta and Ontario, which are largely planning on spending their carbon billions.

As usual, Conservatives can't see the forest for the trees. 

It's About Sharing The Wealth

On October 1st, the minimum wage went up in Alberta, Saskatchewan, Ontario and Prince Edward Island. It was Alberta's increase that caused a lot of howling. Alan Freeman writes:

Following through on an election promise, the NDP government there is raising the minimum wage to $15 an hour by late 2018 on an incremental basis. This week’s raise to $12.20 amounted to a rise of $1, or more than 8 per cent over the previous level, and leaves Alberta with the highest provincial rate. (Nunavut, at $13, is higher still.)

The business lobby -- predictably -- was apoplectic:

Restaurants Canada, the industry lobby, claimed that 78 per cent of its members in the province would cut hours and 50 per cent would lay off workers, based on a survey of members.

Express Employment Professionals, a temporary help agency, said a 10 per cent increase in the minimum wage could cut national employment of minimum-wage workers by up to 20 per cent.

The Canadian Federation of Independent Business (CFIB) claims that the $12.20 hourly wage could lead to up to 50,000 job losses in the province. That’s quite the alarming prediction, since there are only 60,000 workers currently earning minimum wage in Alberta.

And the CFIB, always looking out for the best interests of low-wage employees, also warned ominously that once the minimum wage goes up to $15 in Alberta, a full-time worker at that rate will have to pay $700 a year in additional provincial taxes.

Recent studies indicate that raising the minimum wage doesn't bring on Economic Armageddon:

In an oft-cited U.S. study, Princeton University economist Alan Krueger looked at the impact on fast-food employment of the 1992 increase in the minimum wage in New Jersey. He conducted a telephone survey of fast-food outlets in the state and in neighbouring Pennsylvania, where the minimum wage was unchanged, before and after the wage hike in New Jersey. He found no discernible difference in employment in both states.

John Schmitt, an economist with the Center for Economic and Policy Research in the U.S., sought to explain why modest increases in the minimum wage have little impact on employment. Surveying a raft of studies, he found that employers can opt for alternatives that don’t necessarily mean layoffs. They can raise prices. They can cut hours. They can reduce pay or bonuses for higher-paid employees or managers. They can also take measures to improve productivity by using labour-saving devices or insisting on better performance from employees. Or they can accept lower profits.

Schmitt adds that employers also can benefit from a minimum wage spike — because when wages go up, employee turnover declines. Better-paid employees are more loyal employees. Lower turnover leads to a reduction in training costs.

Henry Ford proved a hundred years ago that raising employee wages can be good for business. He realized that, if his business was to survive, he would have to share his wealth.

The New Cold War

We are engaged in a new Cold War. Tom Walkom writes:

In the West, the old Cold War was portrayed as a battle between Communist dictatorship and capitalist freedom. Given that Russia has now embraced capitalism, those categories are no longer quite so neat.

As a result, the new Cold War is a little vaguer. It is portrayed as a battle between thuggery and the rule of law — brutality versus niceness.

In this scenario, the U.S. and its allies are said to be the nice ones. Russia, personified in its president, Vladimir Putin, is said to represent brutality.

Calculated brutality is not a new tactic. It's as old as Sherman's March to the Sea: 

Students of the American Civil War will recall Gen. William T. Sherman’s march to the sea through Georgia in 1864, during which his Union army burned crops, slaughtered livestock and laid waste to the Confederate countryside.

As Sherman said at the time, his aim was to make “a hostile people … old and young, rich and poor feel the hard hand of war.”

As a tactic, sometimes it works. It worked for Sherman. Sometimes it doesn't. Carpet bombing Vietnam didn't work. But we miss the point unless we understand what is behind the sound and fury:

The real reason for Russia’s increasing involvement seems to be that Moscow now sees Assad as the only political figure able to keep Syria from falling into chaos.

Syria is not far from Russia’s Caucasus, a region with its own Islamic insurgencies.

More to the point, the chaos in Libya that followed Western military intervention there — as well as the civil strife in Iraq after Washington’s removal of Saddam Hussein — have served as a reminder: Getting rid of dictators can sometimes make things worse.

From time to time, the U.S. has understood this. That’s why, after a brief fling with the reformers of Egypt’s Arab Spring, President Barack Obama threw his support to the coup plotters who now run that country’s brutal military regime.

But for Obama, Assad has been a step too far. Perhaps his brutality is too blatant. Egyptian strongman Abdel Fattah el-Sisi merely executes his political opponents. He doesn’t barrel-bomb them.

It's hard to predict where and when it will all end. Both sides have huge arsenals -- enough to leave Syria completely in ruins. 

Image: allnewspipline.com

Beware Third Choices

Hillary Clinton is a flawed candidate. All presidential candidates are. I have argued in this space that, given who Donald Trump is, voting for a third party candidate is highly dangerous. I have pointed to the history of Weimar Germany as a cautionary tale. Gerry Caplan points to recent American history to make the same case:

The most infamous case in recent history was 16 years ago, when Ralph Nader argued that Al Gore was no worse than George W. Bush. Nader got a derisory 2.74 per cent of the vote, just enough to ensure Gore’s defeat. The world got Bush and Cheney, the U.S. invasion of Iraq, and a great deal of the chaos and horror in the Middle East from which we all still suffer.

But the 2000 election isn't the only example of how voting for a third party candidate brought on disaster:

In modern times, this phenomenon goes back to 1956, when Adlai Stevenson challenged Republican president Dwight “Ike” Eisenhower’s bid for re-election. Ike was a natural small “c” conservative, while Stevenson was widely considered to be a principled liberal. But in the paranoid atmosphere of Cold War America, no seriously ambitious politician, let alone the urbane Stevenson, could take liberalism too far.

He was therefore easy enough to criticize by the wonderful Democratic socialists represented by the magazine Dissent, who explained how Stevenson would sell out the left if he ever won. I was easily persuaded, but America was not. Ike was overwhelmingly re-elected, and with him came Richard Nixon as his vice-president and an unleashed CIA to continue its dirty work around the world.

Another problem for the left came [twelve] years later, when Hubert Humphrey sought the Democratic nomination to replace president Lyndon B. Johnson. Humphrey was both the best and the worst of American liberalism. He was mostly strong on civil rights, trade unions and social welfare, but as LBJ’s vice-president during the Vietnam War he made himself a despicable apologist for the war.

When Bobby Kennedy was murdered, Humphrey won the nomination at the Democratic Convention. Many progressives boycotted the election. In the end, old Tricky Dick finally won the presidency by a hair, even though it’s possible the progressive vote could have defeated him. Next stop: the continuation of the Vietnam War, the secret war against Cambodia and Laos, the first-ever “gate” and the subversion of the American Constitution.

It was George Santayana -- not me -- who wrote that those who refuse to learn from history are doomed to repeat it. 

Image: theconservativetreehouse

It's Never Been Easy

Saskatchewan, Nova Scotia, Newfoundland and the Northwest Territories walked out of the room  when Justin Trudeau announced a couple of days ago that he was putting a price on carbon. Chantal Hebert writes that the tax is no cash grab. What Trudeau is doing is filling a vacuum:

For this is not about replenishing the coffers of an impoverished federal government.

Trudeau’s planned introduction of a national floor price for carbon in 2018 marks the belated end of a federal vacuum that has seen successive prime ministers — from Jean Chrétien onward — make climate-change commitments on the international scene and then do little to ensure Canada meets them.

And most of the provinces already have schemes in place that will meet the $10 a ton threshold:

For example, B.C. started off with a carbon tax at the $10 level … almost a decade ago. That provincial tax now stands at $30. Under the plan announced by Trudeau on Monday, the federal floor would be raised by $10 a year for five years to reach $50 a tonne by 2022.

(As an aside, by the time Ontario, Quebec, Alberta and B.C. have to up their game to keep up with the national escalator clause, the 2019 federal election will be over.)

Moreover, despite the caterwauling, the the program is not a top down creation:

Provided they meet or exceed the federal floor price on carbon emissions, the provinces will also continue to be free to pursue climate-change mitigation schemes of their own choosing.

At some point, though, the onus will be on them to demonstrate that they are meeting or exceeding the federal floor price. Quebec and Ontario, for instance, have opted for a cap-and-trade system. Over the summer, the provinces and the federal government failed to reach a consensus on equivalencies between carbon taxes and cap-and-trade pricing. The two will eventually have to be reconciled. 

But "if the federal government does tax emissions in their place, it will return the proceeds to the provincial treasuries, presumably leaving them free to use the revenues to offset the cost of carbon pricing with tax breaks."

The tax on carbon is a classic Canadian conundrum. It's never been easy to make the confederation work.

Image: theguardian.pe.ca

Could We Have Been Had?

Tom Walkom gives the Trudeau government some credit for reversing the direction of the previous government:

The new Liberal government negotiated a deal with the provinces to expand the Canada Pension Plan, something the Harper Conservatives were dead-set against. It also replaced Harper’s universal baby bonus with one targeted to income.

It established the inquiry into murdered and missing indigenous women that Harper refused to set up. It reduced the eligibility age for full old-age security back down to 65.

But in many ways, the new government is very much like the one it replaced:

The country got a taste of that last week when Ottawa approved a liquefied natural gas plant on British Columbia’s Pacific coast, as well as a pipeline to that plant.

It was the same decision Harper would have made. And it angered the same critics.

Environmentalists pointed to the massive increase in carbon emissions that will result from the decision. Some First Nations said it will destroy the local fish habitat.

It was a reminder that Trudeau, like Harper, sees energy exports as crucial for the Canadian economy.

And like Harper, the new prime minister is willing to sacrifice environmental and aboriginal concerns in order to get things done.

 On terrorism and national security, it's more of the same:

The Liberals promised to roll back elements of Bill C-51, Harper’s addition to anti-terror laws. But so far they have done no such thing.

In fact, as Canada’s privacy commissioner has noted, under the Liberals, police and the security services are using some of these new powers apace.

Militarily, the Trudeau government kept its promise to remove Canada’s fighter planes from the war in Iraq. But it compensated by tripling the number of Canadian military advisers who are on the ground in that war.

The means may differ from those employed by Harper. But the aim — to militarily support the U.S. in the war against Islamic radicals — is unchanged.

 And, on healthcare, it also appears to be more of the same:

Health spending? The Harper government had unilaterally decided to cut the annual increase in health care transfers to the provinces by roughly 50 per cent next year. The Liberals seem prepared to go ahead with this, although they say they do have some additional money on hand for home care.

Could we have been had?

Image:  globalnews.ca

Hogtied By Their Own Hypocrisy

The Conservatives started a fire when they accused Gerald Butts and Katie Telford of sticking taxpayers with exorbitant costs for moving from Toronto to Ottawa. Now they're caught in their own backdraft. Michael Harris writes:

The Conservative Opposition had fun with the PMO expense scandal until the issue bit them in the ass. Tory MP and leadership candidate, Brad Trost, led the charge against his own party’s hypocrisy. Trost went on Twitter to demand that Guy Giorno, one of former PM Harper’s chiefs of staff, follow the lead of Butts and Telford by repaying part of his estimated $93,000 move from Toronto to Ottawa. Again, it was not because Giorno had done anything unethical or illegal; it was just that Trost thought Canadians were being sucked dry by people, well, who believed that they were entitled their entitlements.

And then Rona Ambrose came under scrutiny:

Ambrose charged the public $8,000 in condo rent and a further $869 for a three-night stay in an Ottawa hotel, a bill made necessary because Stornoway was apparently not ready for her to occupy. The Huffington Post reported that the bulk of these expenses were incurred from January to March 2016 — after she had moved into her official residence.

The CPC and Ambrose have since insisted that the interim leader did not claim expenses for accommodation while living rent-free at Stornoway. The Tory damage control line was that all of the expenses claimed by Ambrose were incurred before she moved to the official residence and were therefore admissible under the rules.

But they miss the point that Trost seems to have grasped: the issue for Canadians is not only a question of regulatory compliance, but of fairness. Why should the public have to pay for breaking the lease on her $2000 a month condo when Ambrose is making a quarter of a million dollars a year in publicly financed salary and moving into a taxpayer-funded mansion? What possible difference does it make to the average Joe and Jane whether Ambrose — the interim leader of the opposition — is resident in a Rockcliffe mansion or living out her condo lease that was perfectly fine when she was a cabinet minister? 

The solution is to have the Auditor General look at MPs' expenses -- as he examined Senators' expenses.

But, once again, the Conservatives have been hogtied by their own hypocrisy.

Image: jashow.org

The Voice Of The Downtrodden

Someone recently sent the New York Times a brown envelope which contained photocopies of three pages from Donald Trump's 1995 tax returns. Not much, given Trump's voluminous tax records. But 1995 was a disastrous year for Trump. He declared a $916 million loss for that year. The Times reports:

The 1995 tax records, never before disclosed, reveal the extraordinary tax benefits that Mr. Trump, the Republican presidential nominee, derived from the financial wreckage he left behind in the early 1990s through mismanagement of three Atlantic City casinos, his ill-fated foray into the airline business and his ill-timed purchase of the Plaza Hotel in Manhattan.

Tax experts hired by The Times to analyze Mr. Trump’s 1995 records said that tax rules especially advantageous to wealthy filers would have allowed Mr. Trump to use his $916 million loss to cancel out an equivalent amount of taxable income over an 18-year period.

Mind you, it was all legal. The IRS allows wealthy taxpayers to declare a "Net Operating Loss:"

The provision, known as net operating loss, or N.O.L., allows a dizzying array of deductions, business expenses, real estate depreciation, losses from the sale of business assets and even operating losses to flow from the balance sheets of those partnerships, limited liability companies and S corporations onto the personal tax returns of men like Mr. Trump. In turn, those losses can be used to cancel out an equivalent amount of taxable income from, say, book royalties or branding deals.

The $916 million loss certainly could have eliminated any federal income taxes Mr. Trump otherwise would have owed on the $50,000 to $100,000 he was paid for each episode of “The Apprentice,” or the roughly $45 million he was paid between 1995 and 2009 when he was chairman or chief executive of the publicly traded company he created to assume ownership of his troubled Atlantic City casinos. Ordinary investors in the new company, meanwhile, saw the value of their shares plunge to 17 cents from $35.50, while scores of contractors went unpaid for work on Mr. Trump’s casinos and casino bondholders received pennies on the dollar.

Mr. Trump's lawyer has threatened the Times with "prompt initiation of appropriate legal action."

Trump has pledged to the downtrodden that he "will be your voice."

Right.

Image: conservativeoutfitters.com

Could They Have Been Wrong?

The smart folks who sold us on Neoliberalism are having second thoughts. Murray Dobbin writes:

If recent mainstream economic reports are to be taken seriously, some of the big brains managing global capitalism these days are starting to lose faith in their neoliberal ideology. Some come close to sounding like virtual heretics -- like Jonathan Ostry, the IMF's deputy director of research and lead author of an article ("Neoliberalism: Oversold?") in the IMF's official publication. He stated, with a childlike innocence: "[s]ome aspects of the neoliberal agenda probably need a rethink. The [2008] crisis said: 'The way we've been thinking can't be right.'"

The IMF underscores two huge missteps:

The IMF bravely identifies two aspects of neoliberal policy for scrutiny: the elimination of capital controls (allowing for capital flight to be used as a political weapon against poor countries) and fiscal austerity. While "cheering" aspects of the "neoliberal agenda," according to the Financial Times, [Ostry] also acknowledged some "'disquieting conclusions" including that they resulted in "increased inequality that undermined economic growth."

And the UN recently weighed in on the subject:

Just last week the annual report of the UN Conference on Trade and Development (UNCTAD) has leapt ahead of any cautious "rethinking" and calls for a virtual reversal of the whole neoliberal "edifice." The report contains some of the most alarming warnings UNCTAD has ever issued. And that warning relates, in part, to the near-zero interest rates developed countries are using to try to restart their economies. There are unintended consequence of low interest rates, says the report: "Alarm bells have been ringing over the explosion of corporate debt levels in emerging economies, which now exceed $25 trillion. Damaging deflationary spirals cannot be ruled out."

Certainly, what the UN sees around the world applies here at home:

This latter criticism describes the Canadian corporate sector in spades. Instead of investing its record profits -- and its tax break windfall in the billions -- it is sitting on over $600 billion idle cash. But the situation with Canadian corporations is actually much worse than in most OECD countries, particularly compared to their main competitors in the U.S. In previous columns I have quoted past studies done by Harvard Business School's Michael E. Porter. He concluded: "The U.S. is just much more entrepreneurial (than Canada)... Research uncovered key weaknesses in the sophistication of (Canadian) company operations and strategy." He went on to describe Canadian business as cautious and risk-averse, unwilling to spend money on research and development, and addicted to exporting almost exclusively to the U.S.

Could it be that the high octane brains were wrong?

Image: funslurp.com

Xenophobia And Political Ambition

 
Bob Hepburn warns that those of us who think that Kellie Leitch is on the political fringe, whipping up wing nuts, should think again. Xenophobia is gaining political traction all around the world. After his recent visit to Britain, Hepburn reports that:

In Oxford and Portsmouth, well-educated middle-income people, the type of voters I thought would see the advantages of being closely linked with other European nations, talked to me about why they voted to leave the EU.

Their main reason? Too many immigrants in recent years from the continent, many of whom they felt didn’t want to “be British,” who didn’t respect “British culture” and “British traditions” and who could be potential terrorists.

They also wanted to “send a message” to the political elite in London, who they felt ignored their concerns about immigrants working in jobs that once were filled by old-stock Brits.

The same thing is happening throughout Europe and the United States:

Similar anti-immigrant sentiments are rampant across Europe and are altering the political landscape from Greece to Germany, France and on to the United Kingdom.

The same xenophobia is a driving force behind Donald Trump’s campaign for the U.S. presidency, with his rallies fuelled by crowds roaring their approval whenever he vows to build a towering wall along the Mexican border to stop illegal immigrants.

In Europe, countries such as Turkey, Romania and Bulgaria are fed up with other nations demanding they take in more refugees fleeing the conflict in Syria. Greeks are trying to prevent migrant children from attending schools with their sons and daughters and talk about “a different look” now in Greek schools.

And, in Canada, the same sentiments are just under the surface:

The lone public poll on Leitch’s proposal found 67 per cent of Canadians, including 87 per cent of Tory voters, like the idea of screening newcomers for “anti-Canadian values.” The Forum Research poll for the Toronto Star also found 57 per cent of Liberals and 59 per cent of New Democrats like it.

It doesn't matter that potential immigrants are already heavily screened. What matters is that xenophobia is the handmaiden of political ambition.

Image: huffingtonpost.ca

That's When It Gets Tough

The pundits are increasingly sceptical about Justin Trudeau. Nevertheless, Gerry Caplan writes, the public's love affair with him continues. Even columnists for The Toronto Star -- which generally supports his initiatives -- are beginning to show their cynicism:

Take a column this past weekend by the scrupulously non-partisan Susan Delacourt. Like so many of her peers, Ms. Delacourt did not at all appreciate Stephen Harper’s open contempt for the press gallery. So for most reporters, Mr. Trudeau’s openness and accessibility was a breath of fresh air. Now his shtick has turned to hot air.

Mr. Trudeau’s press conference last week, Delacourt wrote in last Saturday’s Star, “was a remarkably answer-free encounter with the parliamentary press gallery, in which one had the sense the Prime Minister was trying to prove that he could smile and speak for 20 minutes without saying anything.” She offers this warning to the PM: Voters can “take only so many platitudes and winding, wordy detours around hard truths.” Harsh stuff.

And, likewise, for Tony Burman, the bloom is coming off the rose:

Similarly, Tony Burman, former head of CBC News, ridicules Mr. Trudeau’s speech at the UN last week (to a hall two-thirds empty, it was not often enough noted). Mr. Trudeau was peddling his usual “We’re Canadian and we’re here to help” rhetoric. Mr. Burman comments acidly: “If only life were that easy.” And a Globe cartoon shows Mr. Trudeau as all sizzle, no steak.

Smiling images will only get you so far:

These scornful and disappointed observations seem to me to encapsulate much of the reaction these days to Mr. Trudeau’s endless sunny days. Nothing is as easy as Mr. Trudeau always implies, from pipelines to reconciliation with our indigenous peoples. Yet he must produce something, indeed many things, in the next few months, or he’ll be a laughingstock. But of course he risks being a laughingstock if he fails to live up to his own hype. This is a man who increases expectations every time he speaks, who can’t seem to distinguish between aspiration and reality, and he’s doing himself no favours.

 All political honeymoons come to an end. And that's when it gets tough.

Image:  cbc.ca

It Only Stokes Anger

In what Lawrence Martin calls The Anglosphere, conservatism is in crisis. He writes:

In the United States, the conservative brand has gone from Dwight Eisenhower to Ronald Reagan, to George W. Bush, to Mr. Trump, who was on display in full floral gory or glory (take your pick) in Monday night’s presidential debate. Canada has gone from the moderate Toryism of John Diefenbaker, Robert Stanfield and Brian Mulroney to the vanquishing of Red Tories and the conservatism of Stephen Harper (with Toronto’s Rob Ford thrown in for bad measure). In Great Britain, the Conservatives are in the thrall of those who want to put up walls.

The brand is increasingly about identity tests and xenophobic strains. It is home to, if not climate-change deniers, then many who are close to it. It is soft on guns. Its appeal is to aging whites, to the prejudices of the less-educated, to religious fundamentalists. It’s a time-warp version of modernism, one many Canadian Conservatives apparently think they can thrive on.

Rather than building a big tent, conservatives have doubled down on their base:

In recent years, Canadian Conservatives have been like some of the others with their obsession with appealing to the party base, to the prejudices of the base, for milking it for everything it’s worth. In this sense, the crisis in conservatism reaches beyond Mr. Trump. The “base” fixation was rarely what it is now in these countries. The parties normally sought to broaden their pitch, not narrow it.

Democracy requires openness to ideas and to people who are not like you. But for modern conservatives, people who are not like them are considered  members of the elite. That's Donald Trump's pitch line. It was also Stephen Harper's line.

That mindset doesn't encourage renewal. It only stokes anger.

Image: pinterest.com

His Word Is Not His Bond

Following last night's debate, NPR fact checked the statements of both candidates. It should come as no surprise that much of what Donald Trump says is patently untrue. Consider just a few examples:

Trump said, "You look at what China is doing for country in terms of making our product, they're devaluing their currency and there's nobody in our government to fight them."

According to Anthony Kuhn, NPR's International Correspondent, "In fact, over the past two years, Beijing has been selling off some of its roughly $4 trillion in foreign exchange reserves to prop up the value of its currency, the Renminbi or Yuan. This has contributed to a lower U.S. trade deficit with China. Beijing allowed the RMB to appreciate against the dollar for about a decade until 2014, leading the IMF to judge the RMB as fairly valued in May of last year."

Trump said,"Thousands of jobs leaving Michigan, leaving Ohio, they’re all leaving."

Marilyn Geewax reports, "Unemployment in Michigan is 4.5 percent; Ohio rate is 4.7 percent. Both are better than the national average of 4.9 percent." 

Trump said, "Under my plan I will be reducing taxes tremendously from thirty five percent to fifteen percent for companies, small and big businesses." 

Danielle Kurtseblen writes, "The conservative Tax Foundation estimates that his plan would reduce federal revenue by $4.4 trillion to $5.9 trillion over the next decade, which is a lot, but down from $10 trillion in his original plan.

Some of that could be offset by economic growth, but even using “dynamic scoring,” the foundation says the plan cuts tax revenue by $2.6 trillion to $3.9 trillion over 10 years. (The higher figure is if the 15 percent business tax rate is applied to “pass-through” entities.) The biggest beneficiaries of Trump’s tax cuts are the wealthy. The top 1 percent of earners see their after-tax income rise by between 10.2 percent and 16 percent. Overall savings would be less than 1 percent.

Trump claimed that he never called climate change a "hoax."

According to NPR, "Actually, Trump has called climate change a "hoax" on several occasions. He said on Meet the Press that he was joking about China's role. As PolitiFact noted: "On Dec. 30, 2015, Trump told the crowd at a rally in Hilton Head, S.C., 'Obama's talking about all of this with the global warming and … a lot of it's a hoax. It's a hoax. I mean, it's a moneymaking industry, OK? It's a hoax, a lot of it.' "

The original source for the “hoax” quote was a tweet Trump sent in 2012. He said the concept of global warming was created by the Chinese to make U.S. manufacturing noncompetitive. 

Take a look at the NPR link. Trump is a serial fabricator and a serial bankrupt. His word is not his bond.

Image: cnn.com

Ottawa, A D -- After Duffy

Last week, two of the movers and shakers in the Prime Minister's Office announced that they were giving back part of the money they had received to move from Toronto to Ottawa. They were followed by two other staffers -- for Ministers Dion and Bains -- who refunded another $55,000 to the federal coffers. Michael Harris writes:

After asserting that they had broken no rules, the PM’s prodigal aides followed a step further in [Mike] Duffy’s shoes. They both claimed that there were elements of their relocation expenses that made them feel uncomfortable at the time, just as Duffy had testified in his own defence. 

But then they went further:

Butts and Telford expanded the Duffy Doctrine. In their ‘mea culpa,’ they said they now felt strongly that the rules they followed in filing their moving expenses were so utterly, egregiously, and inherently wrong that they voluntarily returned a portion of their jammy reimbursements. 

The Conservatives, of course, were cackling -- forgetting that it was they who made the rules:

If the rules are, as Conservative MP Candice Bergen claims, a personal ATM for the current government and its minions, it was Stephen Harper who handed out the debit cards. In fact, Harper’s PMO approved nearly $325,000 in relocation expenses during its tenure, including $93,000 in moving expenses for one senior ministerial aide. In court, they call that a precedent. 

But arguing over who made the rules is pointless. Since Senator Duffy's trial, things have changed. Our age is still officially recorded as "A.D." But, in Ottawa, that acronym has taken on new meaning. From henceforth it will mean "After Duffy."

Image: orleansstar.ca

Putting Money Where Her Mouth Is

Recently, Health Minister Jane Philpott informed the province of Quebec that she intended to enforce the Canada Health Act. Tom Walkom writes:

The Canada Health Act is the federal statute governing medicare. It lists the standards provinces must meet if they are to receive money from Ottawa for health care. And it gives the federal government the right to cut transfers to any province that doesn’t meet these standards.

In particular, it imposes a duty on the federal health minister to financially penalize any province that allows physicians operating within medicare to bill patients for extra, out-of-pocket fees.

However, the federal government has only rarely penalized provinces which allowed extra billing:

Compared to the billions the federal government spent on health transfers over the period, these penalties were pittances. But they did make the point that medicare is indeed a national program.

And in every province except B.C., where the issue has morphed into a constitutional court case, the extra-billing problem was apparently resolved.

There, Dr. Brian Day has launched a court case, claiming that extra billing is a practice that is protected under the Charter of Rights and Freedoms. If the case succeeds, medicare -- as a defining Canadian institution -- will be finished. Someone has to meet the challenge head on. That task has fallen to Philpott.

But it's imperative that Justin Trudeau stand behind her by providing the money to defend medicare. Originally, medicare was a 50/50 proposition. Half of the costs were to be born by the provinces and half by the federal government. In 2013, CUPE released a report on Healthcare spending. The fifty-fifty split was ancient history. According to the report,

the federal government covers only one fifth of provincial health spending, where it used to cover half – and it wants to scale back further. The 2004–2014 Health Accord provided stable funding after deep cuts in the 1990s. It has brought the federal government’s cash share of provincial health spending up to 20 per cent1 from a low of 10 per cent in 19982 and part way to its original 50 per cent share. The current federal government wants to reverse this progress. 

The "current federal government," of course, was the Harper government. When Stephen Harper headed the National Citizens Coalition he advocated dismantling medicare. These days, Dr. Day has taken Harper's place.

Minister Philpott has signalled that the line has been drawn. But, if she is to succeed, the prime minister is going to have to put money where her mouth is.

Image: The Canadian Press