War Zone

Toronto, Ontario, Canada is not generally considered a war zone, and our politics are not nearly as amusing / appalling as the Republican Primaries. However, to paraphrase Leonard Cohen, we do have our comforts in Toronto.

Our mayor stormed into office with the announcement that “the war on the car is over”. Flummoxed councillors and civil servants believed him. Great transit plans were shelved. Unfundable (Sheppard extension) subways were deemed funded, from mysterious private sources that failed to materialize. Large penalties for contract cancellations were invoked.

Then our mayor set out to find, and remove, all that gravy he claimed was in the city system. No luck. Consultants were hired who also could not find much. One letter to the editor of the Star claimed that the gravy was in fact in the tiers of civil servant management. This was ignored. However Mayor Ford’s surreal grasp of civic finances finally led his Transit commissioner to, in effect, try to revert to the original plans for Toronto transit – Transit City, et cetera.

The results were predictable. Rather than back down on cuts, our mayor Ford went to a vote and lost it in council. He will probably lose on transit as well. A legal opinion has been obtained that says he can’t actually cancel Transit City; he needs council to do that. Council has become recalcitrant.

Today, Toronto Council is effectively at war. It could be named,

The war on the Fords. {8;^>}

addendum, February 1, 2012. Apparently council blindsided the TTC chair. It is unclear who has power and control. It is possible that the half-cocked, absurdly expensive, all-subway and not-all funded Ford vision might prevail. It that happens,

the war on the Fords is over. {8;^<}

on Life and Taxes

In the Toronto Star the other day were two news items, both about business in Canada and how things are progressing.

((As often happens, an ordinary observer might wonder if the writers in this publication ever read each other. (I have the same problem with Nature: the issue with the article on Bill Gates and artemisenin (possible cure for malaria) synthesis in yeast, was in the same issue as an article detailing the biosynthetic pathways of Plasmodium falciparum (key malaria parasite species in Africa) which pointed out that it has several weaknesses / dependencies unlike anything in mammals.))

In this case, the two articles were in contrast as follows:

  • Business has in Ontario been given tax breaks on the promise of job creation, and has instead either sat on that cash, or increased dividends. Dividend payouts have gone, in some cases, from 30% to 50% of net income.
  • Companies in Ontario are noticing the impact of “activist shareholders”. These “individuals” are causing changes in the boards of directors, executives, and policies of these publicly held companies.

It is not too hard to put these two together. Here’s my cynical synthesis.

Activist shareholders are generally corporations controlled by rich individuals. These individuals alter the policies of corporations to make themselves richer individuals. They also lobby the provincial (and federal) government to lower their corporations’ taxes. They promise to create jobs, but instead find cheaper ways to source their inputs.

I quiver every time I read that we are not “productive” enough. Productivity is a synonym for unneeded labour. It means, jobs get lost.

Eventually all our wealth will be in the hands of activist shareholders. All our jobs will be done by robots or labourers in distant countries.

I think perhaps businesses should get some form of incentive based on salaries paid. And this should exclude all executive salaries, bonuses, and car allowances.

Before there is no society for them to live in, these rich activists should get a life. And they should allow their community’s citizens to live one. A decent life, that is.

Whole Earth

“We are as gods, and might as well get good at it.” Amazingly, that quote is from the Whole Earth Catalogue of decades ago – before the personal computer. The Catalogue was sub-titled, “access to tools”, and did indeed suggest ways and means of doing things that were advanced, seeming almost radical at the time: a screw that drills its own pilot hole, for example. Stuff that made enormous sense once you knew it was possible.

Today, almost any piece of information can be accessed online at will. Websites enable collaboration, communication, and exchange of goods and services. We seem to live in the information age. The key is to ask the question, to seek the information. It is there, and essentially free.

Yet we live in an age of increasing inequality, at risk of global warming, global pollution, global overfishing, global famine – with world leadership interested only in austerity – for the 99%, not for themselves. We have the absurdity (imho) of a nomination for Presidential candidate, in our neighbour to the south, in which it would be fun to grab a few people off the street and ask them which of the eight original candidates they would trust to park their car, or drive a bus in traffic, or make a difficult legal decision. Yet one of these will end up trying for the job of leading the United States.

The absurdity of superPACs has been exposed by Stephen Colbert and Jon Stewart, and there is a CRS (Congressional Research Service) report on the superPAC. This report can still be found by going to www.fas.org and searching through the archives of Secrecy News blog. So all of congress knows, or should know, that a couple of legal decisions has made it possible for elections to be swayed by large, unlimited contributions whose reporting requirements aren’t that timely. I know this, and anyone signed up for Secrecy News eMails should also know it.

But nothing is going to be done about it. A mediocracy has captured the means of gathering and spending money, and it does not care about the other 99% or the 99.9%. It is in charge, intends to stay in charge, and doesn’t care about non-members.

We are as gods, and darn well should try to get good at it. Sadly, I will end with a quote from Shakespeare, Julius Caesar:

The fault, dear Brutus, is not in our stars, but in ourselves, that we are underlings.

The meek shall inherit the earth? Not at this rate.

Debit Card Fees

RBC is beginning an initiative with Shoppers Drug Marts to have a wonderful, everything available, debit card – for a fee.

Beware. Today, the debit card is a miracle of efficiency. Because there is little settlement risk, transactions can be done literally for a few cents. The banks have long been trying to fix this – either to shift us to credit cards, or to increase fees for debit cards.

Now for the dumb question. Do you suppose these two institutions are doing this because it is a poorer deal for them?

Even dumber: is this the beginning, the precedent?

Investor Fairness

I remember the letter from Enbridge very well. They explained why our gas bill would be going up. Apparently, Enbridge guarantees their ? bondholders? a return of eight percent. Apparently Enbridge was going into some investments that would not earn eight percent. So, to make up for the shortfall, all our gas bills were going up.

This makes it sound amazing to be on the right side of this Enbridge returns business. They can invest as badly as they wish, and make the homeowners (who essentially are at the mercy of a monopoly) pay for their misjudgments.

Now for the dumb question: Does this seem fair to you? Is this another part of the war on the middle class: pay the insiders, raise fees for mere homeowners? And what do you suppose our various governments did about this?  All dumb questions.


Fair warning: this is a political rant.

I watch the Republican primaries with dismay. Who are these people, and how were they selected? This is the cream of the contenders for one of the most visible, powerful, elected posts in the word?

I watch the executives of ORNGE and Sino-Forest with dismay. Who are these people, and how did they get these jobs? These salaries? The articles make them look like crooks, or fools.

Now for all those debating the Euro Crisis. None of these wonderful politicians, central bankers, captains of finance, not one of them will feel much of the pain the ordinary citizens are going to feel. The link (which see) makes a case that this is another continuation of an attack on the middle class by the .1 or .01 percent.

How did these individuals get selected? There are some clues: the estate tax changes in the US were part of a maneuver to make wealth more completely inherited. Company boards of directors mostly consist of members of other company boards. We seem to have a self-selecting, self-defending elite.

There are notable, and noble exceptions. Warren Buffett asking to be taxed at the same (higher) rate as his secretary. Bill Gates actually funding malaria research, among many worthy efforts. These are noteworthy but relatively rare exceptions.

For the majority of the rich and powerful minority, “greed for more than one’s share” seems to dominate.

I submit that any economic arena is a bit like monopoly. After awhile, one player has most of the assets and the others pass go to pay rent.

The Euro zone is a group of monopolies that have been linked together. The larger winners will now monopolize the lesser ones.

Free Trade is a linking of all the lesser players so they can have their jobs moved across or off the board at a moment’s notice.

Patent and copyright are tools to (legally) divide markets. See the book Information Feudalism for more on that. A licenses B, B licenses A. Prices get set.

This leads to a sad set of conclusions. The winners will economically oppress the losers until somebody breaks the entire set of rules. The disaster of the middle class will become the disaster of no-middle-class, merely a poor anti-elite with nothing to lose.

In the French Revolution, there were, er, reversals of fortune of many, including during the reign of terror. If it comes to revolution, how will the victims be selected?

Pipelines, Tar, Sands, and Royalties

Perhaps our government should take a lesson from Evo Morales. He changed the royalties his country (Bolivia) gets for oil and natural gas. They said it couldn’t be done, but it was.

One of the pipelines proposed would cross from somewhere near Edmonton, over the Rockies, to Kitimat. This Northern Gateway is estimated to cost perhaps $5.5 billion. This is a threatened alternative to the Keystone project, which would take the same tar/oil into the United States.

Both pipelines have environmentalists concerned.

In the US, certain watershed areas are claimed to be at special risk. Rerouting requires re-assessing and that seems to guarantee that nothing will happen in 2012. A cynic would expect that, the US election over, this hot potato will move forward rapidly.

In Canada, aboriginal groups are fearful of all the streams to be crossed; west coast naturalists think 200 extra tankers a year is too much risk. Meanwhile the Federal government seems to be trying to force the volume of dissent down, forcing similar complaints to be heard as one (one tactic being discussed), or changing the environmental assessment / debate rules altogether.

Doubtless this is an understatement of both the risks and the complex political and environmental maneuvering.

Now for the dumb question. The revenues expected from this pipeline (Northern Gateway version) seem to be about $1.2 billion. May I point out that this is projected, and over 30 years of operation. This is the stated tax revenue benefit to be expected.

Meanwhile the Alberta government has a report that says the oil producers could lose $72 billion over 9 years if the pipeline is not built.

I submit that the numbers above, if even approximately correct, show that we, as Canadians, are being shafted. A project priced at less than six billion will make the oil producers an extra 72 billion over nine years, and our taxes will capture 1.2 billion over thirty years.

Now for the dumb question: should we get Evo Morales to show us how to change the royalties equation? Should all Canadians be compensated for the environmental risk, with funds for extra monitoring, and excess funds for (God forbid!) things like lower tuition, affordable housing, and decent (e.g. hydro, water) infrastructure?

Is is such a dumb question to ask, what’s in it for us, and why is it such a small slice of the pie?

ORNGE: how are they paid?

This is not to beat to death the salaries of some executives; the Toronto Star has already done that, and done it rather well.

I want to ask how the government pays them $150 million per year. Is that a fixed fee? No matter how many (or few) flights? Is there some sort of performance guarantee?

I have seen nothing on the basis of this payment. Is it a standby fee?

What exactly have we agreed to pay for?

Crocs: stylish shoes now?

I note with truly mixed emotions that Crocs is now going to make “stylish shoes”.

Crocs used to be made in Montreal. The wikipedia article says they have manufacturing in Canada, but I happen to believe that that was closed down a year or so ago. A charity I work at used to get donated Crocs but that stopped. The last boxes said they were produced in China; I think they were a test lot before all the manufacturing equipment was shipped there. I am guessing on this.

We were glad to get these shoes donated, because in some countries walking barefoot can invite parasites. Now they have moved downmarket in manufacturing costs, and upmarket to more complex shoes.

So we have cheaper workers making more expensive footwear. None of the jobs are for us. This is typical of far too many consumer goods. Just for laughs? the joke is definitely on us.



Enron Executives, and their trial

A Google search for Enron CIBC fine finds these two links:

The first fine, in 2003.

The settlement, in 2005.

It appears that these misdemeanours occurred in 1998-2001.

Amazingly, two executives involved are actually going to trial – now, in 2012.

This should really be a dumb question, or two dumb questions. First, why does it take so long for the criminal case to come to court? And, just as fascinating, what exactly did it mean for CIBC to pay a very large fine, to admit no wrongdoing, and to have the SEC agree to go away?