Monday, October 14, 2013

Consumer Friendly Throne Speech?

So, the Harper Government is promising a "consumer friendly" Throne Speech this week.

Among the "goodies" being discussed are "a la carte cable" and a "passenger bill of rights", all as part of a "grow the economy" strategy.  More or less, the Conservatives are going to put forward a combination of incentives to stimulate consumer spending.

I have no doubt that this is in large part intended as a political "trap" for the NDP and Liberals - put a bunch of things on the table which in principle the opposition parties cannot object to, and attempt to drag the national dialogue away from the Senate Expenses scandal.

How effectively it will be able to drag people's attention away from Mike Duffy, Pamela Wallin and Patrick Brazeau depends entirely on the ability of those people to stay out of the headlines.  With Brazeau facing a series of court dates, and Duffy's audit requiring the RCMP to file for document production orders in the courts, it seems unlikely that the mess in the Senate is going to quietly disappear for Harper - as much as he might wish it to.

As for this sudden focus on the "consumer" (read the "middle class"), this strikes me as another attempt on the part of the government to persuade Canadians to "support the economy" by spending more.  

For example, consider the concept of "a la carte cable TV" offerings.  I've personally argued for this for years.  I have absolutely despised the fact that to get a handful of channels that have programming I might want to watch that I am obliged to take a package with hundreds of channels that I will never watch this side of creation.  (Really, when did fly fishing become a spectator sport?  or poker for that matter?)  I have always liked the notion that I can order the handful of channels that I want and not have to worry about the other 200 channels of content I couldn't care less about.  

Superficially, this type of scheme is appealing.  So, what you have to look at is how these things are going to be priced.  I'll put money that this will be the TV equivalent of "super concentrated laundry detergent" - an excuse to sell less product for a lot more money.  Will it really benefit Canadian consumers?  Only in terms of convenience, I suspect.  If, like me, you are incredibly picky about what you spend your time watching, then it might save you a couple of dollars a month over basic cable, but if you are more wide ranging in what you watch and follow, then chances are the total cost of a broad range package will equal or exceed what you are paying today for a package subscription.  

Watch for traps in these arrangements too - service charges being added to modify your subscriptions, or additional "equipment charges" for whatever device is used to manage what you are subscribed to.  Either way, the Cable TV companies are going to make off like bandits on this one.  There are a thousand ways they can charge more for less, and in doing so, save themselves significant costs on upgrading their infrastructure because they will be using less gross bandwidth.  Meanwhile, consumers will no doubt be paying more per channel than they are today.

The second thing to consider about the Conservatives sudden "focus on middle class Canadians".  This is an attempt to get us all spending more.  The last time we saw this kind of strategy being used to buoy a shaky economy (and yes, the economy in Canada is shaky these days) was in the wake of the 2000 "Dot Com Bubble" failure.  The Bush Republicans decided to focus on economic growth facilitated by consumer spending.  We all know how that turned out ... eight years later, the Great Recession started as a result of the housing bubble's collapse - and although the recession itself officially ended in 2009, the fact remains that the US economy has been shaky at best ever since.  

There are a lot of reasons for that, but at its core, it is because the middle class in the US has been gutted by the same economic mentality that has driven most manufacturing out of the country.  There is no doubt that the US has gutted its manufacturing sector starting the 1980s.  (When was the last time you picked up something that said "Made in USA" on it?)  We are seeing the same thing happening with today's IT knowledge work as well.  More and more it is being sent offshore to workers in countries like India, Pakistan and China where the labour is "cheaper".

So, when a government starts to focus on "economic growth" based on vehicles like consumer spending, you know that the core of the economic engine in the country has been hollowed out, and they are trying desperately to make their economic performance look better than it actually is.  If this government was really interested in economic growth, they would be fostering the growth of industry here so that the middle class have jobs they can depend on.  A stable middle class will spend money willingly, without being goaded to do so by government programs that create the illusion that it is safe to do so.

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