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.

The place of protest in politics

Those of you who pay attention to the news in Ottawa may be aware of the actions of Brigette DePape, a Senate page, during the throne speech.

It seems that Miss DePape took the opportunity of being in the media spotlight to voice her opposition to the Harper government by displaying a placard shaped as a stop sign that read "Stop Harper". She was soon after removed from the Senate chamber and has allegedly been fired, according to media sources.

The question that this brings to my mind is two-fold. First, to what extent is protest appropriate in the forum of the Senate chamber, and second, if miss DePape has indeed been fired, is that a just recourse for her actions?

Miss DePape has apparently issued a statement outlining her concerns regarding Harper's government and referencing "a Canadian version of an Arab Spring", juxtaposing the acts of people protesting despotic rulers in the middle east to the democracy that we enjoy in Canada.

While I happen to disagree with Miss DePape's contention that "Harper's agenda is disastrous for this country", I do not dispute her right to voice her concerns, indeed it is one of the valued privileges of our democracy. The question is whether interrupting a speech by the democratically-elected leader of our nation is the appropriate means of voicing these concerns.

To my mind, firstly, it sets an ill-advised precedent: if the Senate is to become a forum for the unstructured and unorganized voices of the Canadian people rather than a place from which to conduct the business of governing, it will without a doubt decrease the already strained civility both in the chamber and in parliament at large. Conversely, Miss DePape obviously felt that her views were not being heard in other forums and certainly must have been aware of the likelihood of her dismissal and the loss of the valuable opportunity to work in the Senate page program.

I think ultimately the former must trump the latter; despite her intent and ambition, such breaches in both decorum and process cannot be sanctioned. Further, I think that while firing her may be a harsh response to a well-intentioned action, it likely sets the appropriate deterrent for anyone in the future who might consider a similar choice.

That being the case, what is the appropriate forum for political dissent? To my mind there are any number of forums, from conventional protests, to letters to the editor of newspapers, to political rallies all of which could garner equal media attention. We are fortunate to be afforded these and many other opportunities by virtue of living in what I believe to be a vibrant democracy, one that can radically change the face of parliament in a single election.

Miss DePape, I commend your passion and concern for our future, though I encourage your continued studies so as to perhaps better discern the differences between protesters taking to the streets to overthrow a despot and a Senate page interrupting the business of a democratically-elected government.

As always, I welcome comments, critiques and dialogue.

Pragmatism

Ok, consider this me having entirely given up on trying to stop making political posts. It seems I am going to continue at least for the moment.

It strikes me as odd that while I claim to be a pragmatic independent, politically speaking, I have found myself far too often writing about the Conservative party in almost exclusively positive terms. While I still believe that Harper was the most capable leader on the podium in our recent election, I also think it is necessary to voice some constructive criticism.

Harper has finally secured his coveted majority after years of meticulous planning, thought and calculation. Now he finds himself in a position in which he could potentially turn the tide on the Conservative marginalization that has gone on since the 80's in Canada. Unfortunately, I have to say I have been a little disappointed in recent developments.

In particular, I am referring to the press surrounding Insite, a Vancouver facility that offers a safe place for drug addicts to have access to clean needles and some level of supervision to reduce the spread of disease and prevalence of overdose.

The facility has been around for a few years and has largely been seen as a success within the city. Recently, a number of former mayors sent a letter endorsing its value and asking Harper to let it stay open and extend its exemption to the federal narcotics legislation. For the moment it seems that those pleas, along with previous advocation from health care professionals who presumably understand the issue far better than I, have fallen on deaf ears.

My suspicion, and I do hope I am wrong, is that the request is being denied on idealogical grounds rather than an actual reasoned critique. This is an innovative, unique project, that as far as I understand seems to be at least somewhat ameliorating an intractable situation and is only controversial to those who have not seen it first hand. Everyone hopes for a Canada in which there is no addiction, but in the mean time, it seems that a pragmatic, evidence-based approach is not a bad way to go.

If the Conservatives do indeed have a vision to take on the centrist mantle that the Liberals have held in recent times, their recent negation of this issue without a public, detailed reasoning of their case seems likely to cement the negative image that many hold of Harper as one who is more concerned about a tough-on-crime image than the more nuanced facts. I hope that this in a momentary lapse in judgement rather than a signal of future policy decisions.

The sky has not fallen

In the aftermath of the recent federal election, I was struck by the number of comments from friends and colleagues expressing shock, disgust and disbelief at the results. A number of people seem to believe that Canadians entered a state of temporarily insanity or were somehow tricked into voting a majority Conservative government, something that I strongly don't believe to be the case.

The sky has not fallen. On the eve of his electoral victory, Harper did not finally reveal his dastardly plan to repeal gay marriage, outlaw abortion and generally declare a military state as some of the fear-mongering would have had you believe. In fact, conversely, Harper made what many commenters on both sides of the aisle are calling his most prime-ministerial speach to date. His tone was conciliatory, he made a point of congratulating his opponents and of speaking about working together with the opposition for a better Canada both for those who voted for him and those who did not.

This has been a surprisingly eventful and historic election after many, myself included, initially predicted little or no change to the make up of parliament. Despite my earlier critical posts of the NDP, I think Jack Layton deserves strong congratulations for an unprecedented win for his party placing them in a position to behave admirably as a strong and thoughtful opposition.

Equally, if not more remarkably, this election has rung the death knell of the Bloc Quebecois. I see this as a profound victory for Canada, and for Quebec as well. It shows a mature electorate invested in building a country together that will be better for all Canadians and hopefully putting to bed the pettiness of the past. Congratulations to Quebec and to the NDP in their mutual victories.

Finally, as I initially mentioned, the Conservatives have been granted a majority and I repeat this is not due to Canadians somehow being tricked, but rather is due in large part to the shrewdness of Stephen Harper and what have been for the most part quite centrist policies. I do not pretend to admire or support some of his actions regarding contempt of parliament or the press, but I do believe that the majority of his policy decisions have not been indicative of a hard right government and certainly not one beholden to social conservatives.

My dream for the next session of parliament is one in which Harper strikes a more conciliatory tone, not because he has to, but because it would cement his reputation and just maybe lay to rest the wild accusations that arise from time to time. I hope that Layton and many of his very young and inexperienced MPs make use of their historic opportunity to influence the government neither through petty fighting nor ankle-biting, but instead through the kind of sober collaboration evident in the First Nations apology that he and Harper worked on together. I hope for a Liberal party that takes this loss as an opportunity for renewal, a chance to finally lay to rest the detestable notion of being a "natural governing party", a title that no party in Canada deserves. Rather, perhaps, a vibrant renewal of ideas, policy, and candidates will lead to a party that will be more representative of Canadians and one that can reclaim the nobility of ideals that the party has held in the past.

Ladies and gentlemen, the sky has not fallen. In fact, if all parties, leaders, and MPs make the most of this opportunity, we might just bear witness to a refreshing wind of change that will restore the pride of a nation to the chambers of parliament, once more demonstrating the vibrancy and beauty of a truly democratic nation.

Promises you don't intend to keep...

When I was younger my family bought the big Disney summer blockbuster every year when it came out on video. We owned Aladdin, Beauty and the Beast, The Lion King, The Little Mermaid and several others and I could still quote many sections of the scripts by heart.

As I observe the last week or so in Canadian politics, one line in particular comes to mind. In Beauty and the Beast, when the title character is smitten with Belle and trying to impress her with some sort of gift, he consults Cogsworth, his butler-turned-clock companion who lists his suggestions ever so memorably, "Flowers, chocolates, promises you don't intend to keep...."

I have written on Jack Layton once before at the start of the election and very much hoped that his wrong-headed policy measures would go the way of the dodo, but alas that seems not to be the case. As it happens, to the surprise, amusement and possible chagrin of myself and a good portion of the media, the NDP polling numbers are steadily increasing with a few recent polls indicating the unlikely possibility that they might get more seats than the Liberals and form the opposition. While I am strongly in favour a vibrant democracy and formidable debate in the house of commons, I have to say that this trend it concerning to me, not so much because I truly believe there is much likelyhood of it happening, but rather because it speaks to a profound lack of understanding in the Canadian people regarding the basic functioning of our economy.

First of all let me say that there are a number of policy initiatives voiced by the NDP that I approve of, among them the defunding of the Conservative crime legislation and the increased spending on health care and education. The fundamental problem with the platform is not so much that any of their spending initiatives wouldn't be nice in a best case scenario, but rather the way they intend to pay for it. If you look at the costing document outlined here (http://xfer.ndp.ca/2011/2011-Platform/NDP2011PlatformSS_web_en.pdf) you will see that the two major sources of funding for their initiatives are undoing the corporate tax cuts that the Conservatives put into place and implementing a Cap and Trade initiative at a federal level to make polluting industries (read: oil companies) pay a fee for their pollution.

While there are a number of problems with these proposals I would like to briefly focus on three:

1)The revenue projections for the corporate tax hikes look optimistic to me and as the underlying assumptions are not stated, I have no way of determining how those numbers were arrived at. Basic economic theory and plenty of academic research show that all else being equal, as taxes go up the incentive to produce goes down. In the case of corporations in Canada, if they are mobile this might mean moving to another country or if not, it may simply mean passing along the costs of higher taxes in the form of higher prices to consumers, less generous benefits to employees and fewer dividends to shareholders, a substantial portion of whom are large pension plans that many Canadians are relying on in their retirement. Even if these things miraculously did not occur, the total corporate tax base would shrink as the rate increased meaning that each extra dollar of increase in tax would not mean an entire extra dollar of revenue.

2)The proposed cap and trade system that is worryingly devoid of concrete details and yet somehow is expected to deliver substantial revenue in its first budget year not to mention being fundamentally a usurpation of provincial rights and revenues. No proposed cap and trade system to date has been able to overcome the many political hurdles and special interest groups in Canada, much less be applied equitably across the country. Similarly to the reviled National Energy Policy, this initiative would serve to disenfranchise the predominantly western resource producing provinces while stuffing the coffers of Ottawa in a profoundly unconstitutional manner. If we were to suppose such a policy could be agreed upon and treated all industries and provinces equally, it would still amount to a tax grab by Ottawa against provincial resources.

3)Corporations in Canada are not somehow independent of the rest of the country and Layton's policy ultimately amounts to robbing Peter to pay Paul. Any increased tax burden on corporations, either through a higher rate or through having to purchase rights to pollute, ultimately affects the Canadian people in the ways I have already described (higher prices, lower benefits and less retirement income). I am not claiming that raising taxes is always a bad idea, but I do think that more thought needs to be put into it and the consequences must be properly considered.

In conclusion, these points are all moot when one considers that Layton's best case scenario is being in the opposition. Since he has no credible chance at forming a government short of a coalition, he can promise Canadians the world with only the most suspect of a plan to pay for it all. Let us hope that Cogsworth and Jack Layton are both wrong, I would like to believe that the electorate, much like Belle, are far too smart to fall for such impossible promises.

Things Jack Layton doesn't understand (a public service message)

For those of you who weren't paying attention or don't live in Canada, we are having an election in a little over a month after the government fell on a no confidence vote on the budget. Try as I may to be politically disengaged due to not being particularly compelled by any of the current stable of party leaders, occasionally a news item forces me to sit up and take notice. In this case, a campaign platform by Jack Layton, leader of the NDP, revealed an embarrassingly poor grasp of economics so while I encourage everyone to vote, I also encourage rational, policy-based decisions which it would appear are not part of his platform.

Things Jack Layton doesn't understand volume one: basic tenants of economics

In an effort to score some points from the populist vote, Jack Layton recently unveiled a way to combat the increasing debt load of Canadian families: legislate a cap on credit card rates of prime plus 5%. Currently, that would be an 8% maximum rate. Good idea?

No. Interest rates on a variety of products, from mortgages to lines of credit and credit cards are determined by a variety of factors, including among other things, whether the debt is secured (like it would be in the case of a mortgage by the property), what the borrowing history and credit score of the borrower is, and the propensity for fraud in the product. In the case of credit cards, which are unsecured, and have a significant loss to fraud, not to mention that the most credit worthy borrowers tend to be the ones that pay off their balances in full every month so that the banks don't make any money on them, the rates are based on the risk level and costs associated with providing credit cards along with a margin for profit. The average rate in Canada is generally in the neighborhood of 20%, in some cases higher or lower based on a number of factors.

If credit card rates were capped at 8%, a few things would happen in quick succession. Low credit borrowers would lose access to credit cards entirely, or have to pay a large annual fee for the privilege so that financial institutions could recoup costs and meet their required rates of return. A few high credit borrowers might still qualify, however very likely the rewards such as air miles and cash back that have typically encouraged people to get credit cards would be gone due to cost cuts. This would mean those who need credit most would lose access to credit cards and in some cases fall victim to payday lenders who charge even more interest that starts accumulating right away rather than after a 30 day grace period as in the case of credit cards. The very people the NDP wants to help would be harmed.

Rather than simply criticize I would like to offer Jack Layton an economically sensible alternative: develop legislation that encourages financial literacy in at risk groups and teaches about lower cost credit solutions that already exist, such as lines of credit, that often offer a lower rate than he was proposing for credit cards. Additionally, encourage stronger financial management skills that boost savings rates and lower reliance on borrowing to finance living costs. Until such rational platform changes occur, I will have no choice but to confront the crazy.