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Mark Carney – Values (Book, 2021)

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I finished reading Mark Carney’s book Values, written in 2021, a couple of weeks before he won the leadership. I haven’t had time to summarize it properly and I still don’t so this will be short with quotes. When I read, I flag passages to read again. The quotes below are a small subset of those that gives flavor for the book and more importantly, his ideas and how he thinks.

Flagged passages in Mark Carney's Values (Book)

The overarching idea of the book is that markets themselves aren’t a goal. They are a powerful tool that should be pointed to achieving goals good for society. The latter is covered by talking about values, hence the title of the book. The former, how to structure markets to achieve good is discussed in a few ways including setting up the rules and incentives that align rewards with the goals (vs other activities like rent seeking).

At 531 pages, Values is not a short book. It covers a lot of ground from philosophy to markets to complex financial instruments to leadership to a plan for Canada. I found some parts dense, especially the early portions on philosophy and the deeper dives into how complex financial markets work. None of that was unreadable, just dense and required extra focus. Outside of that minor complaint, I found the book educational and even inspiring in some places. The leadership section is surprisingly good (I’ve read many leadership books).

More importantly, given the current election, I came away from reading this book with a lot of confidence that Mark is a strong candidate for the situation we find ourselves in today. I have no delusion that the next few years will be easy or that Mark Carney will make all the problems go away or even make every decision perfectly but he’s clear thinker with a LOT of experience both in finance, the wider economy and international relations. These are all things we need right now.

Below are quotes from the book presented in the order they appear. I have typed these in myself. All typos are mine. Note that many of these quotes are separated by dozens of pages so don’t expect them to flow from one to another.

The market is essential to progress, but it doesn’t exist in a vacuum. It is a social construct whose effectiveness is determined partly by the rules of the state and partly by the values of society. It requires the right institutions, a supportive culture and the maintenance of social license. If left unattended or allowed to capture the political sphere, the market will corrode those values essential to its effectiveness.

When economists promote policies solely on the grounds efficiency, they are making moral assessments. But the judgment of whether a policy initiative is right for society often requires more than the simple utilitarian add-up favoured by economists of costs and benefits that are priced in the market. At a minimum, it requires the highly complex assessments advocated by Sunstein that take into account estimates of a wide range of non-priced attributes, such as mental health, human dignity and agency.

It is critical to remember that banking is not an end in itself, but a means to promote investment, innovation, growth and prosperity.

…, hope is not a strategy and to quote Tim Geithner’s refrain ‘plan beats no plan.’ And a plan that is actually executed is the best one of all. Searching endlessly for the best is the enemy of the good.

This leads to the final lesson I learned about managing crises: the importance of overwhelming force. Fighting a financial fire with half-measures is futile.

This depressing cycle of prudence, confidence, complacency, euphoria and despair reflects the power of the three lies of finance: this time is different, markets always clear, and markets are moral. To break their seductive power, we need to reinforce the underlying values required for the financial system to fulfill its role as a servant, rather than master, of society.

Three components to restoring morality to markets:

aligning compensation with values;
increasing senior management accountability; and
renewing a sense of vocation in finance

As this book has made clear, I am not a market fundamentalist in that I do not reflexively think that the market is the answer to everything. At the same time, I have seen the market’s immense power in multiple situations, and I know that the market is a critical part of the solutions to many of humanity’s greatest challenges.

Trust in the very wealthy and – as discussed in Chapter 7 – the financial sector is also quite low. The response to this lack of trust in institutions has been to look elsewhere. ‘A person like yourself’ is now as credible as a technical expert and for more credible than a CEO or government official…

On social media:

This reliance on news delivered by algorithms which guess users’ preferences based on content they have previously read and liked increases the risk of living in an informational echo chamber. These risks are compounded in a world in which clicks mean revenue. This can reward the shrillest voices and promote the most extreme views.

So run towards the sound of gunfire. Seek to solve your clients’ biggest problems. Take on complex situations, set clear agenda for resolving them and get on them fast.

On leadership and changing the culture at the Bank of England:

From that conversation, Andrew and I had everything we needed to change how we made decisions at the Bank (of England). The essence of the new approach is straightforward:

  • Define the purpose of the meeting, including whether it is for decisions, discussions and brainstorm or debriefs
  • Include everyone necessary in the meeting and identify who needs to be informed of the outcome. Be as inclusive s possible.
  • Ensure everyone has all the necessary information beforehand, that they read it and that they all expect to participate.
  • Take clear decisions and ensure immediate follow-up

They (leaders) have to be careful not to bring all those problems with them during every interaction because part of a leader’s job is to absorb the stress so that the rest of the organization can focus. Leaders also need to remember that each of their (many) meetings each day is probably the most important for the others involved. These individuals will carry the experience forward, sharing and even amplifying the values that they discern the leader demonstrating. These tests of authenticity and trust can set in train positive or negative dynamics.

An essential part of clarity is to simplify the complicated, to reduce complex problems to their essentials and then communicate them to your team so that they can be addressed. Say it straight, say it simply. Say it over. (new paragraph) This was a lesson that it took me years to absorb. My nature is to take a deep dive into analysis to understand an issue. This required reading widely, speaking to lots of different people and attempting to synthesize conflicting viewpoints or data. But then having done so, I would be tempted to dump the lot on the audience in an attempt to convince by analytic volume rather than reasoned argument and anecdote. I found over time that while the homework was still essential for trying to come to the right conclusions, people would at best remember the anecdote not the analysis.

The final essential leadership quality is humility. Recall what I said about this chapter being a target-rich environment? Good leaders combine personal humility, self-knowledge and the ability to learn. That means admitting mistakes, seeking and accepting feedback and sharing the lessons. When leaders become overconfident (or turn to writing books), they stop learning.

The boundary of the firm is determined by the balance of these factors, with those activities that can be performed more efficiently and best done by command and control occurring within firms and the rest mediated by through markets.

Finance is utility, a means to an end with the ends determined by society.

As a central banker I had a unique (but sometimes frustrating) vantage point during this time of great change. Armed with reams of data, brilliant colleagues and access to people from all walks of life domestically and globally, I could see much but do relatively little in the face of these big drivers. As we have seen, central banks provide part of what’s needed for prosperity: sound money, a financial system that works in bad times and good. In these respects, central banks are responsible for some basic aspects of the state’s duty to protect. This work is necessary, important and foundational. It is what people should expect. But it is far from sufficient to achieve sustainable growth.

This one is fun, writing in 2021, he predicted the coming inflation:

At the same time, authorities need to recognize that inflation will return, particularly because Covid represents a major negative supply shock.

The public school system must become the route for social mobility and excellence. Allowing a parallel system for the elites is economically, socially and morally disastrous.

Blessed with diverse energy sources including hydro, oil, natural gas, uranium, solar, wind, tidal and biomass, we (Canada) have become the world’s fifth largest energy producer. Our success came from the hard work and ingenuity of our energy industry that has reinvented itself over many years in multiple ways. Building on that long track record of innovation, we are now developing some of the most exciting emerging energy technologies. We have the people, skills, drive and entrepreneurial spirit to realize their potential. But this time we will want greater control over our destiny. Too often we have been a price taker on less-than-advantageous terms, from electricity to heavy oil. We now have the opportunity to help shape a continental energy strategy that achieves a zero-carbon future through a transition that supports all our people in every region.

Many remember Schumpeter’s phrase creative destruction but forget its context. The core of his voluminous writings was his view that capitalism was prone to ossification. In ‘the treason of the clerks’, large companies tend to become self-perpetuating bureaucracies. When coupled with the natural tendencies incumbents towards rent seeking – seeking the rewards of the value created by other people – the treason of the clerks can quell the creative gale. (new paragraph) This is more likely to happen if public policy is pro-business rather than pro-market…

Countries would do well to heed this cautionary tale. It is a gentle slow towards cosy oligopolies. The cost of this quiet life are not immediately apparent, but they grow with time through lost innovation, stilted ideas and growing rent seeking. Eternal vigilance in the name of competition is essential. The future will be made by entrepreneurs we do not yet know.

In recent years, both globalists and nationalists have too often devalued these ideals, and in the process reinforced a narrow, transaction-based sense of nationhood in which nations either cede sovereignty to join larger markets or take it back to win trade wards, respectively. Patriotism is the opposite of such egotistical nationalism. As Emmanual Macron stressed, “By putting our own interests first, with no regard for others, we erase the very ting that a nation holds dearest, and the thing that keeps it alive: its moral values.”

But (as Luke records) of those to whom much is given, much is expected. Recognizing that none of us truly succeeds entirely on our own points to our responsibility for improving the systems in which we work and live. It is the first mark of humility.

Canadian Federal Election 2019 – My Vote

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Warning, Canadian politics ahead. I generally try to avoid politics here but hopefully one or two posts per election isn’t too annoying.

I’ve voted Conservative as many times as Liberal and I try not to be partisan.

This time I will vote Liberal – perhaps with a bit less enthusiasm than last time. There are a bunch of reasons for and against but the main ones are: climate plan, taxes, deficit and that, in my view, the current Conservative party isn’t really a conservative party anymore.

Let’s start with the approaches to climate change. The Liberal plan has a carbon price. Putting a price on something and letting individuals and businesses optimize it away is fundamentally a conservative approach that is based on the key principles of our market based economy. It is widely accepted by economists as the most cost effective way to tackle climate change. Sadly, the current Conservative party has chosen to ignore their own principles and demonize this approach because it’s easy to talk about a ‘tax’ and scare people. They also take advantage of the fact that the rebate approach which leaves >80% households better off is counter intuitive to most people who don’t investigate how it works. Instead of this small government, market based approach, the Conservative party has settled on something with no targets and more government intervention. Bluntly, I don’t see principled conservatism here. I see opportunistic populism. One of my biggest fears of this election is that if the Liberals lose, no major party will touch carbon pricing for a long time.

On to taxes. I’m not someone who votes for tax cuts and certainly not tax cuts for people like me who don’t need them. I’m quite fine with the taxes I pay and what I get in return – things like schools which train my employees and the roads that get them to work and free healthcare (that doesn’t mean I’m OK with waste but that is another discussion). That said those who do care about tax cuts should know that in the last four years the small business tax rate has been cut and most people pay less federal tax than when the Conservatives formed the government. On the small business front, the Liberals reduced the small business tax rate but also made some changes which were designed to target professionals like doctors who used small businesses to avoid paying their fair share of income tax (like everyone else with a job does). In this campaign, the Conservatives have used these changes to try to paint the Liberals as anti-small business. As someone who in theory ‘lost out’ in those changes, I 100% disagree. Business owners get to keep all the profits of the business, that’s the point. We don’t need and shouldn’t get special benefits on the income tax front for ourselves or our family. Cutting the small business tax rate as a trade-off to close these loopholes seems more than fair to me. On a side note, the idea that there were (are?) enough loopholes that ‘tax planning’ exists is very sad. Simple is better. Also, the Conservative party’s love of non-refundable tax credits (only those wealthy enough to pay tax benefit) for stuff like sports is in-efficient and gimmicky.

Deficit. I’m not a fan of deficits and this is definitely a point against the Liberal plan – at least if you believe the Conservative plan. I especially don’t like the increased spending promises that happened during the election campaign. That said, the current government’s spending is actually *lower* as a percent of GDP (comparing total dollars over time makes no sense because of inflation) than when the Conservatives last formed government so when I hear them talk about the current level of deficit being the end of the world, it falls on (my) deaf ears.

At just 1 per cent of GDP, federal debt-service costs in 2018-19 were lower than at any time since at least the mid-1960s. Ottawa is currently spending less on debt servicing than during the Stephen Harper era.

https://www.theglobeandmail.com/opinion/editorials/article-the-debt-the-deficit-and-other-things-this-election-isnt-about/

The deficit has been growing more slowly than the economy so the debt burden is actually doing *down*. Finally, the ‘good financial stewards’ message that the Conservatives tout is marketing not truth.

Image result for debt by prime minister

More important to me than all the above is that current Conservative party is now more of a populist party than a true conservative party and at least some people at CPC HQ have some pretty questionable morals.

On the populist side, I’ve already mentioned one area, climate policy, where they are quite happy to ignore real small government and market principles and leap to populist messages and more direct government intervention. Promising to bring back the tax loopholes, under the populist guise of helping small businesses, is in the same category.

Regarding party morals, I could go on at some length about the things I’ve seen during this campaign that bother me but a couple highlights are:

When I mention these things the first retort is usually that all sides are doing this. Since these tactics bother me a lot and I don’t want to vote for anyone that goes down this path, I spent a couple hours comparing the CPC and LPC Facebook pages to get a sense of the tone and fact check the posts. The CPC page is so much worse in this regard that it is hard to talk about. Try this exercise for yourself and I’m confident you will reach the same conclusion. I don’t know if my local CPC candidate is as morally bankrupt as the central CPC team is but as leader, Scheer gets to wear the stink of this from my point of view.

In the end, what I really want is a fiscally conservative party without the crazy. Until that party exists (again?), I will live with (small) deficit spending to get a climate policy that has a chance of helping, tax cuts for lower income people and much less repugnant election tactics. In actuality, I’d like to see the current Conservative election campaign fail just to discourage others from trying these tactics again.

For anyone thinking about voting Green or NDP on environmental grounds, I understand that position but I think it’s dangerous to let idealism win out over practicality. The Liberal government would continue to move in the right direction on climate change and other environmental dimensions much more quickly than a Conservative government will. It may not be as fast as you would like but it’s in the right direction and from that point, it will be easier to push farther. I am also concerned that the Green party’s aggressive plan will be so disruptive that it will turn the tide of public opinion against climate change action. Society can only absorb so much change at once and people who are scared for their jobs will choose their economic security over environmentalism every time.

Dishonest or lazy?

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How can these be squared? Dishonest or just lazy?

CPC – dishonesty (or at best actively misleading) isn’t going to get my vote back.

https://www.huffingtonpost.ca/jordan-stjohn-/let-me-break-down-what-canadas-escalating-beer-tax-will-really-cost-you_a_23340121/

 

Canada Summer Jobs Controversy – Can we add some critical thinking?

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It’s sad I have to do this but I feel I need to preface the text below with an outline of my (lack of) political affiliation. I have voted in every provincial and federal election since I was 18. Sometimes my vote has gone to the Progressive Conservatives, or Conservatives and sometimes to the Liberals. In past Federal elections I voted Conservative but in the last election I voted Liberal. I try to make an informed decision each election based on the circumstances and I despise the trend towards treating your vote like choosing a sports team that must be supported against all reason and at any cost no matter what because it has become some part of your identity.

I don’t write a lot about politics here, mostly because I don’t want to add another partially informed opinion to the cacophony of people who talk in certainties about things they know little about. In the case of the Canada Summer Jobs Program, I do know a bit about it because I applied for it on behalf of a local organization and I think the lack of critical thinking involved in the current controversy is amazing.

Bear with me as walk through a little thought experiment.

The Canada Summer Jobs Program application required that our organization attest that:

Both the job and my organization’s core mandate respect individual human rights in Canada, including the values underlying the Canadian Charter of Rights and Freedoms as well as other rights. These include X rights and the right to be free from discrimination on the basis of A, B, C, D or E, F, G or H or I or J or K.

Obviously I have replaced the examples in the text with placeholders.

Read the above again. What there doesn’t make perfect sense? The Federal government is saying that it will not provide money to organizations that are actively trying to take away rights that are the law of the land.

Let’s try another version:

Both the job and my organization’s core mandate respect individual human rights in Canada, including the values underlying the Canadian Charter of Rights and Freedoms as well as other rights. These include freedom of religion rights and the right to be free from discrimination on the basis of hair color, salary, age, disease or disorders, income or favourite sports team or shoe size or IQ or employment status.

Does that seem unreasonable?

Now, let’s look at the word-for-word version in the application:

Both the job and my organization’s core mandate respect individual human rights in Canada, including the values underlying the Canadian Charter of Rights and Freedoms as well as other rights. These include reproductive rights and the right to be free from discrimination on the basis of sex, religion, race, national or ethnic origin, colour, mental or physical disability or sexual orientation or gender identity or expression.

If this version bothers you and the other versions don’t, think about why. It can only be because you wish one or more of the items used as examples were not the law of the land.

Now, let’s imagine that there is an organization who’s core mandate is to abolish freedom of religion. Fortunately, the wording on the application means that such an organization wouldn’t get Federal funding to pursue this goal. That’s a good thing right? I suspect that the people complaining the most would be the first to complain if an organization trying to take away the right to freedom of religion got Federal funding.

More importantly, the alternative world where the Federal government funds organizations that aim to take away rights that are the law of the land is nonsensical.

In a recent National Post article, Andrew Coyne argues that abortion is not a right in Canada.

Most of that article is conspiratorial click bait but his assertion did cause me to do a little digging. I’m not a legal expert and I openly admit that my research on this was an hour of reading but it seems unlikely, based on past rulings, that the supreme court would accept a complete prohibition on abortions.

From Aborition in Canada (yes, Wikipedia):

The court noted that “[f]orcing a woman, by threat of criminal sanction, to carry a fetus to term unless she meets certain criteria unrelated to her own priorities and aspirations” and that the law “asserts that the woman’s capacity to reproduce is to be subject, not to her own control, but to that of the state” were essentially a breach of the woman’s right to security of the person, which is guaranteed under Canada’s Charter of Rights and Freedoms.

For the purposes of my argument above, I feel it is correct to say that ‘some abortions’ are a right in Canada. For the same reason, I feel it is reasonable for the Federal government to interpret abortion as a right.

If there are any constitutional law experts reading this, I’d love to hear a more knowledgeable opinion.

Incidentally, if you are reading this thinking I’m a 100% anti-abortion zealot, you are wrong. I accept the premise that a late term abortion is a very different thing from an early term one. I can’t imagine having one of my two children terminated late in pregnancy – my stomach churns just thinking about it. That said, I think there is a big leap from not liking something to thinking that I have the right to take it away from someone else.

I highlighted core mandate a few times in the above text. The Canada Summer Jobs 2018 Applicant Guide says:

NOTE: That an organization is affiliated with a religion does not itself constitute ineligibility for this program.

Basically, being affiliated with a religious group that doesn’t believe in abortion isn’t a problem as long as the mission (core mandate) of the organization isn’t to take away rights.

I bet all of this controversy is because a well-meaning bureaucrat thought that by listing examples they could avoid trouble later when funding was denied based on these conditions and the conditions were not explicit in the application.

Processing the U.S Election

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Like a lot of people, I’m still trying to process the U.S. presidential election results and understand what it means for the future. Writing this is part of that process.

Before delving into the results and how they were achieved, I want to make it clear that I’m not a big fan of Hillary Clinton. While she certainly represented less risk than Donald Trump, that reduced risk comes from more of the same which clearly isn’t working well for a part of the U.S. population. I’m quite sympathetic to the idea that a non-politician or Washington outsider is required to change how things are done. Read Republic Lost for some insight into how things now are very broken.

Additionally, I very strongly dislike the trend towards recurring political families. Hereditary privilege is a cancer in all forms – the world moved forward when we removed ruling families. This trend also smacks of cronyism and the power of brand over substance. In Canada, we’ve seen this trend with the election of Justin Trudeau, the son of a Prime Minister from 32 years ago. In the last federal election, I very seriously considered not voting for the Liberal Party despite my general support of their policies just because of the stink of a new class of ‘ruling families’.

When reading the rest of this, please understand that it doesn’t come from a place of being angry or sad that Hillary Clinton lost.

It seems that there were three high level concerns, desires or ideas that drove the election’s outcome:

  1. A general dislike for Hillary Clinton. I don’t know how much of this is sexism or the result of years of anti-Clinton messaging. I’m not going to say anything else about this.
  2. Enormous, and legitimate, dissatisfaction from the middle to low-end of the economic spectrum. Globalism and technological change have left these people behind.
  3. Racism. Both real and as a scapegoat for #2.

I don’t know the ratio to which these three ideas affected the outcome. 33-33-33? 10-45-45? To whatever extent the reason was #1, it is not a long term problem. Hillary Clinton won’t run next time. #2 and #3 are real, structural problems that present a risk to the future.

It is very clear that some part of the Trump vote was driven by pure racism. It’s hardly a representative sample but it is unreasonable to say that racism played no role given some of the incidents that have happened in the last few days:

It’s impossible to rationalize with or about this kind of hate and irrational behavior. I’m not going to even try other than to say it makes me sad and angry that there are still human beings alive in 2016 that feel this type of behavior is acceptable.

What scares me, is the interplay between #2 and #3.

I do believe there is a legitimate case to make that the low-skilled and uneducated (not lazy, not unintelligent) worker has a right to be angry. Globalism has moved jobs to other countries with lower employment standards and technology has contributed to fewer low skilled jobs even when the manufacturing remains in rich countries. Canada faces a very similar problem. In Ontario, the country’s equivalent of the rust belt, hundreds of thousands of good paying manufacturing jobs have disappeared. The small town and city I grew up near have experienced this and I fear that they are, in part, still surviving on the wages earned and homes bought many years ago. [In these particular cases, the in-flux of retired farmers who were able to do very well on increased land values has also reduced the effects of fewer manufacturing jobs] Despite the loss in high paying manufacturing jobs, it does seem that the effect on the population in Ontario has been less severe than in the U.S. – I’ll get back to that later.

Let’s assume for a minute that racism played no role in Trump winning the election and that these disaffected workers voted to get good jobs back. That, indeed, is a big part of what Trump focused on and promised to do. He promised to accomplish this by renegotiating NAFTA, by labeling China a currency manipulator and by applying tariffs to imported products.

The problem is that none of this will work – certainly not in a time frame that will matter to his presidency.

Even if these measures are successful in motivating companies to move production back to the U.S. these types of changes take years, maybe decades. Think through the time line:

  • Policy and law changes such as tariffs or renegotiating NAFTA make it more profitable to build products in the U.S. At best, these changes make it into law in one year.
  • Once these changes are in effect, companies start seeing changes to their bottom line and this motivates thinking about changing where they build products. It will take a year for this to really hit most companies (yearly results). Some companies may feel the impact in a quarter or two. So realistically, most companies won’t start thinking about making changes until 6 months to a year after the impact starts.
  • Presumably, the changes make it more profitable to manufacture in the U.S. Now the company needs to balance the loss in profit against the cost of building new manufacturing plants. To simplify, let’s say the law changes make it $1000 cheaper to build a car in the U.S. and the cost to build a new assembly plant is $1B. This means 1M cars can be built at the existing plant before the bottom line impact makes it a good business decision to build a new plant. Let’s call this 2 years.
  • Once the decision is made to build a new plant, it takes years to plan and build a large manufacturing plant. Free land has to be located and a new supply chain created. 5 years?

Add that up – it’s nearly a decade. Just like it took decades for manufacturing to move out of the U.S., for practical reasons, it will take decades for it to move back even if the financial incentives are in-place.

The march of technology must also be considered. Modern manufacturing takes much few employees than it used to. Any newly created U.S. manufacturing capacity will need fewer people than the plants currently operating in other countries because these new plants will have the latest technology. In a perfect world where the incentives align to drive all the lost manufacturing back to the U.S., far fewer people will get good jobs out of this than the jobs that have been lost.

And the loss of jobs for low skilled workers is only going to get worse. Consider the effect that just one new technology, self driving vehicles is going to have. There are roughly 3.5 million professional truck drivers and 233K taxi cab drivers in the U.S. As for profit businesses, I believe these sectors are going to aggressively switch to self-driving vehicles as soon as the business case makes sense. To do not do so will put the laggards out of business. Additionally, a transportation company doesn’t have a sentimental attachment or ‘like’ driving the way consumers do.

So, policy changes cannot drive manufacturing jobs back to the U.S. in a time horizon that benefits an 8-year Trump presidency. And what manufacturing is incentivized back to the U.S. will employ far fewer people than it did when it left. Technological advancements are about to put new groups of workers into the same situation as workers from the manufacturing sector. Finally, new manufacturing capacity is unlikely to be built in the northern areas where it previously existed because the plants that moved to the southern U.S. already pay much less than the northern, unionized plants they replaced.

In summary, there is no chance of Trump keeping his promise to return good, high paying jobs to the justifiably angry people he committed to.

This is where I get scared and it involves the interplay with #3 – Racism.

When Trump fails to deliver relief to the people who cried out for change by voting for him, these people are going to be angry. The confidence in the institutions that hold society together will be further undermined and someone, something or some group will be the scapegoat. I don’t know if Trump himself will blame ‘the liberals’, or foreign governments, or the Republican establishment that loves trade, or the immigrants – but someone will. And given that racism was used by Trump to stir up the support that won him the presidency, I believe there is a good chance it will also be the driving factor in which group gets will be the scapegoat. Fear of the ‘other’ is something that just comes to our species too easily.

What could bring relief to the people affected negatively by globalism and technological change? Sadly, it’s pretty much the opposite of what Trump has promised and the affected people bought into.

Trump has promised huge tax cuts and changes to school systems. Let’s take each of those in turn. Less tax revenue means fewer resources for the government to effectively help these people. This will reduce what little social safety net the U.S. does have and put people in even more desperate situations. On the school front, allowing ‘choice’ sounds like a common sense thing to do but the only people who have the ability to make choices on where their children go to school are the reasonably well off. Choice in this context means more movement of wealthier students to better schools which will further reduce the attention, quality and funding for the children who need it the most to get out of the hole their parent’s find themselves in for no fault of their own.

I mentioned earlier that Ontario, Canada’s rust belt equivalent, has also experienced a decimation of manufacturing jobs. However, the impact here has been much less dramatic and I think it points in the direction of a solution to the problems at hand [1].

Canada has a free public health system. Manufacturing workers who have lost their jobs aren’t watching their friends and families lose their homes to high medical bills or worrying that it could be them next. They may not be happy that they aren’t making high union wages anymore but that’s a far better situation than being on the street.

Secondly, Ontario has a great K-12 public school system (#4 on that report vs. U.S. at 23) and great Universities which are much more affordable than their U.S. equivalents. Yes, it’s expensive to run a strong public school system. Ontario’s teachers are among the highest paid in the OECD. As a taxpayer who could easily afford to send my children to private school if I wanted to, I have no problems paying for this level of public education. In general, I believe private schools to be a net negative on society. Taking the wealthy people who have the time and money to influence politics out of the public school system results in less time and money going into the public school system. It’s a death spiral.

Public health care, good public education and other social safety nets mean that not all hope is lost for manufacturing workers who have lost their high paying jobs. If they weren’t over extended, lower paying service jobs can continue to pay the mortgage and losing health insurance isn’t a concern either. At the same time, they don’t feel like their children are stuck in the same situation. Their children can get a good K-12 education and even a good college or university education on a much lower family income.

Believing that your children will have it better than you is a powerful motivator. It’s enough that while the affected people are not happy about no longer being able to afford a cottage or boat, they aren’t crying for a revolution or looking for scapegoats either.

In summary, the U.S. now has:

This is a slow burning wick on the way to a powder keg. It’s scary.

[1] – Please don’t read this as a Canada vs. U.S. thing. We have lots of our own problems but it’s insane not to look around the world to see how other countries are dealing with this problem.

Free speech in Canada

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In The Inquisition In Canada my friend Bob outlines how Human Rights Commissions (HRCs) are being abused.

Last week’s Cross Country Checkup episode titled “Are There Legitimate Limits to Free Expression?” also delves into the role of the HRCs as part of a larger discussion on free speech. You can find a nice introduction to this topic in the episode’s introduction (text) or you can download to the whole show (MP3). Several people people close to this issue are interviewed as well callers from across the country.

There was also a quote from someone (unfortunately I don’t remember who) which sums the issue up nicely (paraphrasing):

You have a right to not be exposed to hate but you don’t have a right to not be offended.

Silencing scientists at Environment Canada

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The current Federal government has decided that federally funded scientists at Environment Canada should not be allowed to speak with reporters directly. In the past reporters could freely contact Environment Canada scientists with science questions. Now all questions must now go through an information officer. The leaked reasons for this change are particularly worrisome. I fail to see how the fact that “interviews sometimes result in surprises to minister and senior management” outweighs the public’s access to the scientists it funds.

Wasn’t this supposed to be the open and accountable government?

Environment Canada ‘muzzles’ scientists’ dealings with media

Or listen to the first few minutes of this week’s Sunday edition for a bit of commentary.