Creeping Fascism in Alberta

My headline today is a little misleading.  There’s nothing “creeping” about the UCP government’s fascism - they’re practically steamrolling the province with it right now.  However, in the last 24 hours I’ve seen two things that really concern me. 

The first of these is a motion that I consider deeply dangerous from a whole bunch of angles - literally it attempts to create a “civilian militia” like structure. 

Let me quote this fully:

Be it resolved that the Legislative Assembly urge the Minister of Justice and Solicitor General to explore options to establish a voluntary civilian corps to assist law enforcement in Alberta.

We’ve had a few groups attempt to do this in the past.  Often with less than desirable results.  Often, it has basically degenerated into a small group of thugs roaming the streets looking for someone to attack in the name of “keeping the peace”.  In the deeper, darker past, these kinds of organizations have a nasty tendency to become political weapons.  Essentially they can become the next “brown shirts”.  

This is a downright terrifying proposition.  We have enough problems with policing right now as it is. Having a government seriously contemplating the formation of what amounts to a civilian militia which has been “deputized” to enforce the law is utterly terrifying.  This can be construed as the UCP government creating its own private army that it can use for its political ends.  

They’ve already experimented with this to some extent.  The “Yellow Vest” and “United We Roll” movements were clearly being encouraged and motivated by political actors.  At their height, they were clearly engaging in intimidation and implied threats to achieve their goals (I’ll point to the role that these groups have been playing in the Co-op Refinery lockout in Regina as a prime example).  

 

This is deeply concerning. 

The second bit I wish to rant about is a change that the UCP is making to our school system:

They want to introduce vocational streaming in elementary school grades.  Think about this for a moment.  That means that the school system as a whole is being re-jigged specifically to set a student’s career direction in primary school grades.  This literally puts parents in the position of having to decide their child’s direction far too early in life.  A child who is struggling to learn how to read, or do basic sums in arithmetic shouldn’t have their career path set for them based on who they are at that point in life. 

This is a very dangerous path for Alberta to walk.  Politically, it creates an environment where the government can suddenly start to restrict the material that is made available to students along socio-economic lines, reinforcing the socio-economic position of their parents as defining what will be available to their children.  

You can start to see the shape of using education to establish a rigid class structure in society.  The wealthy will be able to afford private schools which provide a rich pedagogy and prepares students for advanced study.  In the pseudo-private public system of Charter schools that Kenney is lining up to create, students will be carefully streamed according to the perceived worth of their parents.  Remember, Charter Schools can market themselves to very narrow demographics which will focus who is likely to apply to them.  A public system, such as remains, will be used to provide an absolute bare minimum to those who fall through the filters of wealth and privilege being set up.  Post-secondary opportunities are being tiered based on money, with tuition fees rising rapidly, and students being forced into increasing debt.  It won’t be long before you see a return to the indentured servitude of medieval style “apprenticeships” returning. 

Who benefits from all this?  Strangely enough, it’s Kenney’s corporate owners that benefit the most.  They get a workforce that is specifically tailored to their whims, and one that is cowed by the presence of roaming bands of pseudo law-enforcement that will conveniently be just violent enough that no individual will dare cross them.  If that doesn’t tick off a ton of the boxes that describe fascism, I don’t know what does. 

On Recession Economies

So, today the Bank of Canada lowered its prime lending rate to 0.5%.  Supposedly, this signals that Canada is sliding into a recession.

Those of us who have been watching have long ago figured out that the minute the bubble burst on oil prices, Canada was going to slide into a recession.  Arguably, if you aren't in the oil patch, Canada has been in a recession for the last four or five years.  What am I talking about here?

Jobs.  Sure, the government has posted "new jobs growth" regularly, but let's be honest with ourselves here.  Most of the jobs involved have been service jobs.  Jobs that pay poorly, have terrible hours and don't even provide a subsistence level of income.  If you're a skilled knowledge worker, you might luck out and get a contract job.  But guess what?  Contract work is unstable, and instead of paying a premium for your skills, you'll be lucky to get the same dollars you made as a full employee.

So, how do we end up with a long running "jobs recession" but still have economic growth for the last few years?  It's not really difficult to see.  If you have money invested in companies, they end up looking like they are posting profits, and the GDP numbers improve.  Basically, we're measuring two different things.  Growth in the size of the economy has become the rising tide that only floats the boats of the truly wealthy.  The rest of the "boats" are so far away from the water that the tide isn't even going to reach them.

Lower interest rates?  Well, it makes it easier to borrow money, right?  Sure ... except you need to have the income in the first place to support the loan.  So who benefits?  Once again, it makes it easier for business to borrow.  Oh, great, that means they can create jobs, right?  They could, but in today's world, they have been funnelling those funds into projects which eliminate jobs like automation projects; and as much as possible, new work that requires people gets shoved offshore wherever it is cheapest, or (until recently) assigned to temporary foreign workers instead of Canadians.  

The net effect of Harper's lovely little war on the middle class has been that those who aren't part of the privileged classes are screwed.  Lose your job?  Chances are the next one won't replace your previous income, and most certainly won't have any stability to it.  The problem is that business has decided that people are a risk, not an investment.  They are no longer willing to invest in people to solve problems.

Harper can deny that we're in a recession all he likes.  The cold, brutal reality is that we have never recovered from the consequences of the 2008 downturn, and the current crude oil price war being waged by Saudi Arabia and others is going to continue to keep things depressed.  Business may well post profits, the GDP will seem to grow, and workers will continue to be left behind.  

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.

Yikes!

Someone at the Globe and Mail decided to do some real journalism, and went digging into the subject of Subprime Mortgages in Canada.

What they found - at least in Alberta and BC calls into question the statements made by many of our politicians to the effect that Subprime Mortgages aren't a problem in Canada.

I remember seeing ads for what sounded like dubious lending offers in the early 2000s - especially in e-mail. I had always assumed that these ads were simply misdirected garbage out of the United States. Apparently, I was quite mistaken, as these lenders were moving into Canada - or at least Western Canada.

Despite having just a share of about 7 per cent of the national market, subprime lenders in Alberta accounted for 56 per cent of the foreclosures in 2008. In British Columbia, the tiny subprime market laid claim to 42 per cent of the province's 2008 foreclosures. In comparison, Canada's five largest banks accounted for 33 per cent of the foreclosures in Alberta in 2008, even though the country's chartered banks account for about two-thirds of Canada's total outstanding mortgages.

Okay, 7 percent of the total mortgage market isn't that much, but, the impact of that seven percent on the housing market in Alberta and B.C. has the potential to be significant - especially when they account for over half of the foreclosures in the region.

We would be ill advised to ignore the medium and long term impact of these loans on the rest of us. Those whose properties are being foreclosed by these predatory loan companies have been taken to the cleaners. The rest of us stand to see our investments in property devalued quite considerably while the housing market tries to absorb a sudden influx of foreclosures.

These loans should never have been created in the first place. Now that we know that they do exist as a measurable fraction of Canada's mortgages, it is time for us to examine how best to remediate these loans. These are truly toxic assets, both for the borrowers and for the rest of Canadians. I think I would like to see a program for converting these loans into more conventional mortgage structures, and reset the payment history on the revised loans. I'm not saying that the borrowers get off the hook at all, but rather that we remove the most predatory aspects of these loans (such as the surprise changes in payments) from the picture, and give the borrowers a chance to succeed in paying off the debt that they have incurred.

There will be some who simply cannot pay their debts, and those will still go into foreclosure. But we can at least remove the worst aspects of these loans from the picture and do something constructive with it all.

We'll See...

It's taken several weeks of outrage, and some pretty bleak economic numbers being published, but Harper seems to be (slowly) coming to a position of actually taking steps with our beleaguered economy.

Rumours are that the Conservative government will inject as much as $30 Billion in the January budget. That's close to the 2% of GDP number that some economic theorists are saying is necessary (worldwide). On the other side of the coin, I'm not so sure it will end up in the right hands.

A big part of the situation we currently find ourselves facing is a direct result of corporate greed ... I'm not sure that the composition of Flaherty's advisory panel (if he even listens to it) reflects that reality or balances itself against it.

I'm skeptical - we'll see what happens in six months or so. (BTW - economic theory isn't the same thing as building a budget, which is half of the reason that Harper's lost at sea right now)

[Update 15:50]
What little optimisim I had just shrank a lot. Harper continues to lie to Canadians about our government, it's hard to believe that they are going to tell us anything honest about the budget and economy.
[/Update]

Meeting Low Expectations

Heard on the news tonight:

"aim should not be more government. It should be smarter government."
George W. Bush speaking on the economic crisis

I'd say that the moment he steps aside, that he will have helped the US achieve that one goal - there's little question the government will be a little smarter for his absence.

GM's Liquidity Crisis

General Motors is in a cash crisis that has come to a head in the current credit market crisis.

As a company, GM is a child of the late 19th Century industrial era. It comes from a time when success was determined by size, and it got big. Very big. GM itself is essentially a modest sized economy in its own right.

So...when it runs into difficulties, the US economy is affected. Quite literally, what's good for GM is good for the economy. But, the sheer size of the company has enabled it to become complacent, with a 'weather the storm' attitude. It's been losing money on its automotive operations in North America since 2004.

Think about that - it's been losing money on its core business for four years - that's almost half a decade. Why? Because their offerings have been disappointing at best, and generally give the impression of being shoddily assembled. Except for the Cadillac brand which has been steadily catching up to its competitors, the mainstay of GM's offerings - Chevrolet and Pontiac - have been steadily sliding when compared to Toyota, Honda and even Nissan and Mazda.

The biggest mistake? Little or no meaningful product differentiation. Not only are the cars built on common platforms, the overall dimensions, shape and features are nearly identical. The similarities between a Chevy Cobalt, a Pontiac G5 and a Saturn Ion (mercifully extinct now) are basically nil. They look more or less similar; the features differ minimally, and they all drive about the same. The difference - a bit of trim and a few badges.

GM is a dinosaur. Big, unwieldy and unmaneuverable. Their "product optimization" efforts have hamstrung their offerings badly, and the obvious duplication across product lines is painful. I actually liked Saturn for being different from the rest of GM's line - their vehicles looked different, drove differently and so on - when they rolled out the Ion a few years ago, they essentially killed off the uniqueness of the brand - creating "yet another Chevrolet". (Bringing the Opel Astra over under the Saturn badge was a brilliant move - they need more of those kind of changes to happen)

The current credit market is essentially an extinction event for big, monolithic industry companies like GM. They need to make their various brand divisions independent again - able to move on their own, and with their own unique identity - more than just a marketing brand and a bit of custom shaped plastics. Only when the monolith allows itself to become a collection of more autonomous, smaller companies will it stand a chance of succeeding in today's climate.

The Housing Bubble ... *PoP!*

You knew the meme had to start somewhere - The US isn't to blame for the housing bubble.

Quoting from an IMF report, Neil Reynolds is busy arguing that the shockwaves we are now experiencing are actually global in their origins and not at the feet of poorly planned, questionable practices in the US market.

Canada fared well in these (and other) comparisons. But the much-maligned U.S. didn't fare all that badly. (The United States, the IMF report concluded, was among the middle-ranked countries in “vulnerability” to a bubble-busting correction.) Most European countries are decidedly worse off. Some confront the prospect of catastrophic house price crashes; some apparently confront the prospect of bankruptcy.

Really what this speaks to is the sheer size of the US economy, not the policies and practices that led to the housing bubble in the first place.

George Bush's economics (or lack of them) focused the US economy on two things - war and consumer spending. Ill-planned and misguided, the wars in Iraq and Afghanistan have driven the US government into record levels of debt and deficit.

What economic growth has occurred has depended primarily on consumer spending, not exports or manufacturing growth. This has allowed the US economy to hollow itself out from within - literally stripping it of its ability to fill the needs of its own citizens, much less produce meaningful growth. Worse, US consumers were encouraged to contribute to this growth by increasing their levels of indebtedness.

Short sighted is about as polite a characterization as I can come up with for 'Bush-o-nomics'.

An approach to economic policy by Alan Greenspan that is clearly based on the "everyone for themselves" thinking of Ayn Rand (If you haven't read Atlas Shrugged, I urge you to do so, it will give you a sense of insight into the policy and ethos we have seen among the so-called 'neoCons'.) hasn't exactly helped either.

In the last fifteen years (or more), the ethos of greed has come to characterize the US-based marketplaces. Ever more obscure "investments" were created to attract money, and obscure the investor's view of what was behind the investment. "ABC Paper" was used to bury the risks that lending institutions were taking on with Sub-Prime mortgages; NINJA loans (No Income, No Job or Assets) started to be made - purely to increase bank revenues. Both sub-prime and NINJA loans were written on terms that I can only politely call disastrous for the borrower. Interest rates that were ridiculously low to begin with would escalate well beyond the ability of most to pay - forcing people to either move, or dramatically refinance their homes constantly.

These are not mechanisms rooted in any reasoned, balanced sense of caring for those around you. They are mechanisms built to foster greed and are built upon the hubris of short term success. Banks were able to disconnect themselves (somewhat) from the consequences of making loans to people who couldn't pay them back; investment banks bought up those loans, and poisoned themselves in the process.

There were signs of this imploding two or even three years ago, as the lending practices became even more aggressive and predatory. Did the US Treasury step in and take steps to settle things down? No. Could they have? Yes, of course - but for an ethos of 'not touching the sacred free market'. The IMF is acting, as it so often has, as an arm of the US government in this report - and is attempting desperately to minimize the consequences of that government's economic policies.

I'm sorry, but Mr. Reynold and the IMF's apologetics for a failed laissez-faire, every man for himself, economics in the United States ring hollow.

Irony in the Headlines

The following headline arrived in my mailbox this morning:

Stocks Slump on Gloomy Economic Omens; Dow Sheds 733 Points

If there was ever an indication that the stock markets work on emotion rather than logic, this headline says it all. Omens? Didn't superstitious people in the middle ages see everything as an "omen" of something or another??

Blowin' Smoke

Why is it that the Bank of Canada's assessment of Canada's economy smells like some politician trying to blow smoke.

Ontario has been losing jobs left, right and center, and big ticket items like car sales are way off. The cost of simply putting gas in a car is high enough that people are beginning to cut back their vacation plans, and disposable income is starting to dwindle.

Food prices have been creeping up, and I expect that the prices will escalate even more rapidly as transportation costs make their way onto store shelves.

Add to that signs of softening in Canada's real estate market even in Calgary, and Carney's assessment that the economy is "robust" seems disingenuous at best, an outright fabrication - more of a political message than anything else.

Living Wage - A Condemnation of "Minimum Wage"

Alberta's not an easy place to live right now. Yes, there's tons of jobs, but only if you have specific skills will you garner a wage that's of any substance. Those who are in semi-skilled or unskilled positions struggle to find work that will pay them anything close to a wage that will allow them to make ends meet - forcing many to work multiple jobs just to pay the rent.

In spite of what the inflation numbers suggest, the cost of living has skyrocketed in the last few years. Modest accommodations in the city run in excess of $1,000 per month; utility costs have skyrocketed in the wake of Ralph's experiments with deregulation as has the cost of staples like food.

The provincial government has been stingy to say the least in its adjustments to the "minimum wage" in this province - it currently sits at $8.40/hr - a gross earnings of $1344/month, before taxes.

When the City of Calgary adopted a Living Wage policy yesterday, I had to think about it for a bit before I came to any kind of opinion on the subject.

Superficially, it is a noble idea, and one that I applaud from a human perspective. A full time job should pay someone enough to make ends meet - even in a boom town gone mad.

But, this comes at a price, and one we should not take too blithely. Increasing city wages will inevitably place pressure on city revenues, and thus, will no doubt have an impact on tax rates. As a homeowner, that's an additional expense that I incur every month.

For small business owners, it's a bit more of a problem. Often their cash flows simply cannot support paying a "living wage" rate. A small business often lives or dies on its monthly revenues, and bumping wages from $8.40 to over $13.00 an hour could be quite damaging to the viability of some. Yet, driving around Calgary the last few years, even the so-called "McJobs" have been offering starting wages between $10 and $12 an hour - a reflection of a job market which is starving for workers.

Of course, a blanket increase in the minimum wage could trigger still more inflation, as the costs of goods and services would go up as well (it's not like there's such a thing as a 'free lunch' here).

However, the reality is that in Alberta's urban areas, "minimum wage" is a joke. Unless you are retired, or work for reasons other than economic survival, a minimum wage job simply isn't cutting it.

The Alberta government's approach to its wage structures has been monolithic, treating economic hotspots like Calgary and Fort McMurray the same as the rest of the province. The net result has been that for those on the economic margins, life in those areas has become increasingly difficult with no relief in sight. In this regard, I applaud Calgary's city council for taking an interest in the well-being of the City's employees.

Unfortunately, I do not think that the current Alberta government will be willing to consider any such thing, and will continue to allow a set of laws rooted in a very different era to determine how Alberta's low-wage workers are compensated.

Dollars, Parity and Consumer Goods

With the Canadian dollar hovering near parity with the US greenback, we are starting to hear the inevitable "why do Canadians pay so much more for books/cars/whatever?" questions.

I'm not going to comment on the pricing disparities that emerged as the Canadian dollar sagged through much of the 1990s. Those are simply a fact of life.

Many people have wondered aloud why, for example, we see anywhere from a 25% to 50% difference in book prices between Canada and US editions. (Admittedly, I've wondered myself - especially in light of the fact that the C$ has hovered around 10% below the US$ for a couple of years now)

I suspect that we will experience a change in the difference in pricing between Canadian and US retailers in the coming few years. The gap will close, but not because the prices drop dramatically (I don't know too many businesses willing to accept a 20% drop in their raw revenues).

More likely is that we will see the US experience a dramatic level of consumer price inflation. A weakened dollar, combined with a staggering trade deficit, will make it harder for US firms to purchase the manufactured goods that they have been selling. The net result will be a significant increase in US consumer prices in the next couple of years. (Unless a miracle occurs and the current White House (or Congress) sees past the end of their own noses and actually does something constructive with the collapsing mortgage market)

Baird's Smoking ...

I'm pretty sure it must be "B.C. Bud", because once again, the Conservatives have unveiled a "do-nothing" policy on climate.

Perhaps most telling about this "policy" statement is this:

The federal plan requires all cars and light trucks built after 2011 to meet new fuel-efficiency standards, which have not yet been set. Eventually vehicles like motorcycles, snowmobiles and all-terrain vehicles will be regulated too.

The government also wants to create and improve emissions standards for items like dishwashers, dehumidifiers, hot tubs and gas-fired furnaces.

As if to demonstrate the typical non-sequitur of Conservative government policy, we find Baird claiming:

Environment Minister John Baird said despite the inclusion of consumer goods in the plan, it will not take a financial toll on the average Canadian.

"That average middle-class family in Quebec, in British Columbia, in Ontario or out east shouldn't be asked to kick in support to help a polluter," Baird told CBC News after he announced his plan in Toronto.

He's either deluded, stupid or has a diminished understanding of the vaunted market economy that his party has always worshipped. If industry has to change its costs to reduce its emissions, or produce more efficient vehicles, the purchaser is always going to find the costs passed down to them. This is not advanced calculus, it's basic free enterprise economics.

You know it's bad when your own pet news outlet is slamming you...