Rampant Partisanship

It has been a while since my last post and for that I apologize. I have become one of those infrequent posters that irritate me. That being said, I have not felt the pressing need to comment on anything in particular, so consider the previous dry spell a well-deserved brake for my readers.

Today's topic was triggered by a Facebook post that I saw yesterday. The actual link leads to a post from a CBC advocacy group who is critical of Stephen Harper's policies as they relate to the public broadcaster. I believe their point seems to be reasonable and well thought-out. My issue is they presumably thought that the topic did not have enough of a wow-factor and therefore promoted it using the headline, "CBC Sold to a U.S. Wrestling promoter!"

Now, having a family member in journalism, I am well aware that writers frequently have no input in the headlines on top of their stories, but I don't think that detracts from the overall issue: demonizing political opponents through fictional accusations cheapens debate and detracts from actual policy-based arguments, ultimately ending in a he-said-she-said conversation that only further entrenches people in their own beliefs.

I have personally noticed this in particular against the Conservative government (Stephen Harper wants to privatize EVERYTHING...and probably eats babies) no doubt in part because they are the incumbents and due to my own political biases. I am sure this occurs on all parts of the political spectrum. Rick Mercer had a wonderful bit of satire back in 2006 regarding the ridiculousness of some of the liberal attack ads of the time (http://www.npr.org/templates/story/story.php?storyId=5168834 click the listen link at top of the page, the mock ad is in the first minute, "Stephen Harper has a dragon...").

The particular problem with this tactic on either side of the political spectrum is that it means that the actual issues get lost in the fray. For instance, the current conservative crime bill has been widely critiqued by a number of sources and appears to be regressive, ineffective and cruel. However many of the sources that are critiquing it now have consistently criticized every Conservative initiative and therefore are suffering the same fate as the boy who cried wolf: people have tuned them out.

People are often passionate about politics and rightly so: I would rather people cared enough to engage in the democratic process than stood by in idle apathy. However, this intense passion often leads to personalizing political fights and the need to deify one's own party leader while demonizing the opposing side. We have seen evidence of the approach of this tactic in the American Presidential nomination process: those candidates who do not tow the party line in rampant partisanship are ostracised by their parties, leaving the fight between the most polarized of opponents and leaving independents with no centrist choice.

While I have no expectation of any of this changing overnight, I do wish that there was room for a rational middle ground, a truly non-partisan critique of policy both left and right. Until then, remember that few things are black and white and few people are purely good or evil. Most politicians enter politics genuinely hoping to change things for the better, it is the job of the electorate to determine when they are truly doing so and when they are falling short.

The 99% and the 1%

Over the past couple weeks, a movement known as "Occupy Wall Street" has been gathering a lot of press. It presents itself as a leaderless uprising modeled on the Arab Spring that wants to take the world back from those who have abused their power. As the website occupywallst.org states, "We are the 99% that will no longer tolerate the greed and corruption of the 1%". It is certainly an understandable reaction and a compelling narrative. The only problem is that it is a false one in many respects.

I do not mean to say that there has not been greed and corruption on Wall St. and indeed elsewhere in the financial world. You need only scan a newspaper to see countless anecdotes of the Bernie Madoff's of the world. The problem is that the economic crisis that we are in right now is not the result of the actions of 1% of the population.

While there were certainly some illegal practices in mortgage signings and some shady derivative trading, the ultimate crux of the crisis was that we are spending more money than we make and are relying on ever-rising house prices as the means to fuel this debt. While perhaps not everyone bought into this philosophy and lifestyle, it was far more than 1% of the population who may not have been corrupt, but were certainly greedy. The reason I say this is not to take responsibility away from those culpable on Wall St, I certainly think they should face justice if they committed crimes; but rather to point out that if we are unwilling to address the broader failings of overspending and undersaving that are endemic in the developed world, we cannot hope to get back to a robust, job-producing economy.

We are the 99% and we are almost all responsible for the mess we face in whatever small way, so let us also take the responsibility of cleaning it up and stop looking for quick fixes. We can take a page from those who lived through the great depression and relearn prudence in the face of consumerism. This is the only way to regain prosperity for all.

Reexamining Risk

In life generally, and in light of recent economic uncertainty more specifically, the word risk is often used to mean a number of things.

In a financial context, risk is usually used to mean the chance that a given investment will decrease in value, also called investment risk. In more general circumstances, risk is often used to communicate the possibility that a given course of action might end poorly, whether it be a new job, a new relationship, or a new course.

What often isn't addressed, or certainly addressed much less frequently, is the idea that there is a converse to this perception of risk. In the financial context this would be the risk of not investing or under-inventing. While putting money into an investment creates the possibility it will lose value and not leave you with enough money to reach your goal (let us take retirement as an example), not investing, or under-investing can mean you also will not reach your goal because you are not earning the necessary rate of return.

In a general context, I believe this risk also applies in our decisions not to undertake a given course of action. If you decide to turn down a job in a new city because you are afraid of leaving your comfort zone or decide not to explore new relationships because you have had a negative experience, you are functionally limiting your return in new experiences and friendships. While you may not ever find out what you lost in not taking a risk, it is certain that by choosing to turn down opportunity, you have limited yourself.

Next time you are faced with a decision that might lead you into uncharted waters, I would ask you to contemplate both kinds of risk and remember that risk is a part of life and can often lead to unexpected rewards.

The end of the world as we know it?

A couple years ago, around the height of the financial crisis, I had an interesting conversation with some friends at a pub.

At that time it did truly seem that the world as we understood it was crashing down while all kinds of too-big-to-fail institutions looked as if they were in the process of failing. I remember a heated debate as to whether the financial system as we knew it could survive this turmoil or if we were truly witnessing the end of an era, entering into some brave new world. At the time I fell strongly on the resiliency side of the debate, arguing that despite the real perils around us, the system would bounce back. It always had.

Looking back at that conversation now, I ask myself the same question again and find myself, more or less, with the same answer. Technically speaking, the recession in the U.S. has been over for a long while, even if unemployment numbers don't seem to back up that claim. Canada has remained somewhat insulated from the full force of the housing market and economic collapse, sheltered largely by our abundant natural resources and to a lesser extent, prudent regulation.

However, as the recent debt ceiling scare and more recent still stock market volatility has filled front pages of newspapers the world over, it does seem prudent to ask what the future holds. The first answer, of course, is that we cannot know and that for every glass-half-full type who speaks of recovery just around the corner you will find a doom-and-gloomer ready to explain how we are going to hell and the hand basket is quickly unraveling.

What tools do we have to assess who is right and who is wrong? To what extent is it reasonable to defer to experts in decision making today that will in part dictate our future prosperity? First, I would look to historical experience, both recent and more distant. It is perhaps a moot point to say that so far our society has not collapsed, however I do think that stepping back from the present moment is useful. Many times in history people have been convinced of the impending destruction of society whether it be from the threat of atheism, communism, immigration, totalitarianism, or any number of other threats both past and present. What has typically been overlooked, in my opinion, is the capacity and ingenuity of the human mind and the societal will to stand at the precipice and find the strength to turn things around.

Second, I would question both the expertise and track records of most prognosticators in the public forum. Most often, for every correct prediction they have made there are ten others excused away by context, lack of information, or misunderstanding. To avoid being the pot that calls the kettle black, I would like to clearly state that I do not pretend to know any better than anyone else in this regard. However, in the face of uncertainty I would rather believe in the eventual competence of our institutions and citizens to get their acts together rather than wallow in the much easier belief that partisanship, small mindedness, greed and foolishness will triumph over bravery, community, reasonableness and intelligence.

Is this the end of the world as we know it? We cannot know until the world ends, and by then it will be too late. In that light, I choose to continue the day to day tasks of living: seeing friends, enjoying good food, going for walks and dreaming of a future that holds opportunity even in the face of crisis.

Brief Post Script: Those of you who loyally read my blog (thanks!) know that I have on a number of occasions criticized the policy positions of the late Jack Layton. While I am sure it is evident to those of you who know me well, I would like to extend my condolances to his family and friends and my gratitude for his patriotism and broadening of the Canadian political debate. May he rest in peace.

The American Debt Ceiling: A Primer for Canadians

Unless you have been under a rock for the last month or so, you have likely at least heard mention of something called the debt ceiling in the paper or on the news.

Essentially the issue on the table is that the American Federal Government, on or around August 2nd, 2011 will officially be out of money. Technically speaking, this means that any expense typically paid out via the Federal Government will not be paid. The most talked about reprecussion would be a default on American debt, and in particular treasury bills which have long been considered risk-free. However, on a practical level, a number of other expenses would also cease to be paid including welfare cheques, government worker salaries, and the operating expenses for libraries, museums, courts, etc.

For a number of years the US Government has been running a deficit, most recently exascerbated by the financial crisis, but present for many years before as well, meaning that year after year it is borrowing more money to finance its expenses. The legislative solution to the immediate problem of getting money is to raise something called the debt ceiling, essentially a federal debt limit imposed by Congress and raised occasionally on an as needed basis. Raising the debt ceiling is not an unusual thing
(See this graph http://http//www.washingtonpost.com/blogs/ezra-klein/post/thirty-years-of-the-debt-ceiling-in-one-graph/2011/07/11/gIQAEJdEGI_blog.html) however what is out of the ordinary is the brinkmanship that seems to be taking place in both parties as they get closer and closer to the end.

A number of misunderstandings have surfaced in discussion of this issue and while I have neither the time nor the energy to address them all, I will try to tackle the most glaringly inacurate. The first, and perhaps most fundemental misunderstanding is that raising the debt ceiling is an indication of new spending. It is not. As it happens, the debt ceiling must be raised simply in order to pay the bills on spending that has already been legislated, much of it under previous governments.

The second misunderstanding is that the debt ceiling drop dead date (August 2) is some kind of scare tactic by the US Treasury and that the government could really continue paying its debts long after this. This belief requires either a misunderstanding of the financial responsibilities of the American Government or else a belief that Obama and/or the rest of the government is actively lying and intentionally deceiving the global public. As for myself, I am not much of a conspiracy theorist and given the large degree of independent verification from non-partisan institutions, I find the August 2 date to be credible.

The third and final falacy I will try to address is the notion that even if the debt ceiling is not raised and the US Government does default, this would be just the kick in the backside the government needs to motivate it to finally get spending under control and the short term cost now would pale in comparison with the benefits of cost cutting that would follow. This point is one degree more difficult to address as it is essentially speculation and cannot be proven one way or the other until it happens. However, given the historic nature of a US Government default coupled with the global tendency to see said debt as risk-free, I think it is more likely than not that interest rates would rise substantially causing further burden on an already struggling economy. I know if I had $14 Trillion in debt, I would do everything in my power to avoid an interest rate increase.

So what does all this mean for Canada? I think it is important to note that the Bank of Canada, the Canadian Government and most international institutions still believe that the likelyhood of a default is low. That said, were it to happen, a number of consequences would likely impact Canada. Initially the Canadian Dollar along with a basket of international currencies seen to be stable would rise verus the US Dollar as investors sell it in favor of more solvent countries. Soon after, there would be a noticable drop in cross-border trade with the US (assuming an extended default) as those goods and services usually purchased by the Government would no longer be purchased. Eventually, likely sooner than later, an agreement would be made to increase the debt ceiling and pay overdue debts at which point things would gradually move back towards something approaching normality though the repercussions would be felt for a long time.

You have likely noticed that I have not addressed the political issues of Democratic versus Republican bills, philosophies, and posturing. That is because, not only would that require an entirely seperate blog post, but it also detracts from an apolitical understanding of the underlying issues. If you would like to explore those issues, I would recommend the following sites:

http://www.economist.com/blogs/democracyinamerica

http://www.nytimes.com/pages/business/index.html

http://www.forbes.com/

As always, if you have any other questions, comments, or anything else please let me know.

Labour relations in Canada

Disclaimer: The following may seem unfair, biased and/or plain wrong to some of you. Feel free to comment and let me know.

I am sure those of you who read the newspaper, watch the news on TV, listen to the radio, or generally interact with other people are well aware of the Air Canada and Canada Post strikes in recent weeks.

The issues seem to be largely framed as either money-grubbing unions putting a stop to productivity in Canada or money-grubbing corporations trying to step on the little guy. In my opinion both sides are oversimplifying a challenging issue and reinforcing entrenched views that bring the issues farther away from resolution rather than closer.

Public sympathies seem to varry according to who you talk to, but unless you are reliant on air travel or mail delivery for time-sensitive or work-related issues, it is likely that you may have only barely noticed the effect of the strike. I know for myself it mostly just means less junk mail and waiting a little longer to get the things I ordered on Ebay.

However, apart from the effects of the disruption there is a much larger, fundementally more challenging issue that I believe will increasingly be affecting employers and employees in almost all fields. The crux of both strikes seems to be mostly based on the issues of defined benefit pension plans, retirement ages, and two-tiered wage systems.

Let me not pretend that any of these issues are simple or have a single answer, but as a broad generalization most Canadian employers, both goverment and private, are moving from defined benefit (You contribute x now, you get y later) to defined contribution (you contribute x now, you get whatever x is worth later) systems, assuming they continue to have a pension system in place at all.

The labor reaction to this seems to be that employers are taking advantage of recent economic weakness to claw back the benefits that unions have fought so hard for over the years. The corporate reaction is that as people continue to live longer and the demographic trends advance to a point where there are less active workers than current retirees in a given company, the math simply does not add up anymore to continue promising these plans that cannot realistically be paid in perpetuaty.

For the most part, it seems to me that both sides have a point, however it is not possible for both to get what they want. The best compromise I can conceive of is to try to gradually implement the change in a transparant way so as to set expectations for those younger workers that they will need to carry more of the weight of their retirement while not pulling out the rug from under those older workers who have been promised one system most of their working lives only to be suddenly told that it is changing to another.

The unfortunate fact is that for most companies, the only real choice is to reform pensions now or face bankruptcy (or in the case of crown corporations, higher taxes) in the future. There is, in most cases, no magical pot of money that employers are sitting on that could be used to fund these increasing obligations. Even to maintain current benefits would often require increased productivity at a rate that is entirely unrealistic.

While I take no particular position on the government's role in legislating back-to-work bills, I do think that until both sides come to the table with these unfortunate realities in mind we will continue to see standoffs in increasly more sensitive industries. I sincerely hope that a dose of pragmatism can be taken by both parties.

Two paths to a digital future

Over the last few days in particular, and for much longer in a vaguer sense I have been increasingly considering the digital ecosystems that we inhabit. While there are a number of different companies and services vying for influence it seems that two juggernauts in particular come to the forefront.

I refer to Apple and Google, two companies that increasingly both define and expand our digital existences. While both companies share a number of similarities, among them starts in Silicon Valley, roots in making things work better, not to mention almost cult-like followings; they seem to represent almost polar opposite philosophical approaches to how we should perceive, consume, desire, and innovate.

To my mind Apple, and by direct extension Steve Jobs, takes on the role of benevolent dictator guiding us through a walled garden of shiny, beautiful products that "just work", removing all of the hassles and much of the learning curve so typical of most technology. Conversely, Google and its founders take a rather different, I would argue more democratically-inspired approach. Invariably it leads to an ecosystem that is at once chaotically messy while being wildly successful. Google will release half-cooked products that remain in so called beta for years while they gradually smooth out imperfections through feedback from the masses while Apple will release each product once fully-formed as a marvel of engineering perfection.

Both companies have fanatically devoted followers, from those who line up outside their local big box store for the dramatic release of Apple's latest product to those who zealously preach the virtues of Google's "Don't be evil", open-source philosophy. Moreover, each company espouses a different set of ideals. Apple caters to those who want simple, beautiful and contained; an environment in which Uncle Steve ensures that everything is seamless and you are protected from the great unknown. Google meanwhile, through its signature product of search, invites you into the same great unknown with passion, unafraid to experiment and very often take the wrong path in order to reach sucess.

This philosophy is played out in all of their product iterations, but perhaps most apparent in the relatively new domain of smart phones. While Apple arguably created the category with its release of the Iphone which was immeasurably different from anything that came before, Google responded with its release of the Android operating system for mobile phones that has been taken up by countless manufacturers and is currently the most used system, even if its growth has been as messy as it has been fast. Apple's App Store provides a currated shop of applications that have passed muster by Apple's gatekeepers, ensuring that the products live up to Steve's high standards, but occasionally excluding products for less clear reasons as well. Google's store, in contrast, sets almost no barrier to any would be developers and as result contains every kind of software imaginable, good, bad, and ugly.

It remains to be seen which, if either of these titans prevail in the future, whether the world ultimately prefers the expensive, luscious world of Steve Jobs that asks little of its consumers except to stay inside its walls, or the free, chaotic world of Google that offers nothing but choices with no guarentee of safety and no hand to guide one through the dizzying maze. As the world becomes increasingly immersed in the digital realm it will be telling to see whose world we choose to live in.