Category: economics

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Traffic

I was driving to Huntsville, Ontario the other day. I had a meeting scheduled at 10:00 a.m., so I had to leave Kitchener by 6:00 a.m. It is still dark at that time in this neck of the woods. I get in my car, stop by at the nearest Tim’s for a coffee, and I’m off. I’m thinking– at least there won’t be any traffic. Poor deluded me: the highway was crammed with cars.

What happened? Did I miss something? A hurricane? An alien invasion? Amway salesmen?

No, just people heading off to work. This is insane. It is six in the morning. It is dark. It is not fun getting up at six– your body wants to stay in bed. Yet, here they are, thousands of people, all racing around in their cars as if they were going somewhere interesting.

I stopped for a second coffee in Guelph. It is now 6:30 a.m., and the Tim’s is packed. There is a line-up.

Has our society gone berserk?! People are getting up at six in the morning, getting dressed, going out into these giant mechanical beasts, and racing to the coffee shop. I think they’re doing it just to annoy me.

I used to get up at 6:00 a.m. sometimes in the summer to go fishing. Now, I am not, by nature, an early riser, but there was one compensating charm. It was quiet and there was no traffic on the roads. I drove to a pier in a small village and dropped my line into the water and actually took pleasure in watching the nearby towns quietly, gradually, wake up. After an hour or so, you’d see people walking around, getting into their cars. By 8:00, there would be a few more fishermen, retirees who didn’t feel strongly enough about catching anything to want to get up any earlier.

This is sane. This makes sense.

But nowadays– 6:00 in the morning and the highways are full. There are delays. There are tie-ups, traffic snarls, enraged drivers pounding their dashboards. Racing, racing, racing— where to? That’s the bizarre thing. There are so many cars on the road at all hours of the day that you can’t go anywhere anyway. You just sit there in traffic, waiting, waiting, waiting. This is madness.

People— stay home! Don’t get up. Don’t get on the road. Don’t line up at Tim’s at 6:30 a.m. for coffee. Stay in bed. Sleep. Ignore the alarm. Quit your jobs. Join a religious order. Work at home. Spend more time with your families. Just stay off the roads.

I do have a solution. It’s so simple, I can’t believe that nobody else has thought of it before now.

You have to understand that we really do have lots of roads. There are millions of miles of roads. They go everywhere. Some of these roads are 16 lanes wide. That’s plenty. We don’t need any more. We also have enough cars. Everybody has one. That’s enough. So the problem is, that too many people are putting their cars on the highway at the same time. And you know the crazy thing: we let them! We have this big traffic jam in the 401 and people are moving about an inch an hour and somebody else wants to get on the highway— and we let them! This is insane. Let’s work it out. We need to tell these people, “sorry, there’s no more room.” It’s simple.

First, we figure out how many cars can be on the highway on any given day before we start getting traffic congestion. Then we convert this figure to what I call “driver miles”, which is, the number of miles people can drive on a given day before exceeding the capacity of our highways. In other words, at a certain point, we can calculate that we have no more driver-miles left– there is no more space on the roads. Then we take the driver miles and share it out with all the drivers of Ontario. Maybe we put a little computer in everybody’s car, with a cell-phone and a modem. And that’s it. You can only drive your allocated driver-miles on any given day. When you’ve used them up, you have to get off the roads. You’ll have to stay home. And no company will be allowed to fire an employee just because he had to obey the law and stay home. This will make the law popular with workers, if not corporations. But then, there’s a lot more workers than corporations anyway.

Simple, isn’t it? Of course, people who don’t need all of their driver-mile credits can sell them to other people if they want to. Or, you could save them up and one day make a really big trip.

And the biggest advantage of all: when you make your trip, you will actually be able to go somewhere.

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The goal, in business, is to make money by convincing people to buy your product whether they really need it or not. Leaves, for example, fall from trees all by themselves. Left to their own devices, they rot into a nutritious mulch which is good for all things organic. Your local hardware store, though, convinces you to gather all the leaves with a rake ($14.95) and put them into plastic bags ($.35 each) so a garbage truck can hall them to a dump, where they are prevented from decaying by an insulating layer of disposable diapers ($22.75 per box).

There’s pretty good money in the trinket business. But you can do much better than that if you can make people pay to not have the benefits of the use of your product. So if you sell leaf-blowers, the idea is to also get into the earplug business. If you sell enough leaf-blowers, you may also see your sales of rifles and ammunition go up.

Bell Telephone has a similar scam. As part of your regular phone service, they list you in the phone book. This must have cost them a lot of money at one time, to type in everyone’s name and address and phone number. You would think Bell would have a little charge for it, on your phone bill every month: “Directory listing: $.25”. But that’s not the way it is. If you want Bell to NOT list in you in the phone book, you don’t NOT pay Bell… you pay more.

Bell has another service: Call Display. Now, you’ll notice that they didn’t offer you a chance to say if you wanted your number to be on Call Display. Oh no. That would be too rational. Your number is on display whether you like it or not. No charge. Isn’t that nice? Maybe not. Maybe that charge is included in your monthly phone bill. Actually, without a doubt, it’s included in your monthly phone bill. You didn’t ask for it. You didn’t want it. But you’re going to pay for it.

Well, suppose you don’t want your number displayed. Bell says, “Okay. We won’t display your number.” Then they give you a discount, right, because a “service”– displaying your number on someone else’s phone– is being terminated. Uh uh. Bell charges you extra. $5.00 a month. That’s like Mr. Leaf Blower coming up to your house and blowing all your leaves into the street. If you don’t pay, he blows all the leaves back. If you ask him to stop, he’ll say, “Sure, for $5.00.” Then he’ll try to sell you an ear plug.

Anyway, you bite the bullet and pay them $5.00 a month to not display your number. How’s that for business acumen! A few years ago, you didn’t even want your number to be displayed on people’s phones! You didn’t ask for it. Now you’re paying to not have it done. This is progress. This is customer service. Bell’s mission statement must read something like: “We will persuade as many people as possible to pay as much as possible for services we don’t provide.”

I can’t wait until they offer us “Call Un-display Display”– this service will show you the phone numbers of people who are paying $5.00 a month to not have their number shown on your call display. Does that seem unfair? Well, for an additional $5.00 a month, they will un-display your number from display phones that display un-displayed numbers.

I understand business now. I am going to go into business myself. I am going to gather personal information about everyone, including gossip and rumours, and post this information on a big web site. I’m thinking of stuff like “bad breath”, “an accident last year”, “two drunk driving convictions”, “looks ugly without his hairpiece”, “stands on the porch at 7:00 a.m. in his underwear to let the dog out”, “farts at movies”. It’ll be a lot of work, and I’ll have to start mostly with people I know. I will also offer $5.00 per tip for any information other people send me about people they know. I also intend to copyright this information, since the U.S. government is now intending to allow the copyright of collections of facts. So if I put all this information into a data base, nobody else can use it without my permission. I plan to keep lots of lawyers very busy.

Then I will offer a service to the general public. For $5.00 a month, I will take your name off the website. For just pennies a day. For less than the cup of coffee! Isn’t respect and public esteem worth this tiny amount?

Then I’m going to make even more money. For $10.00 a month, I’ll let you see the information about people who have paid me $5.00 a month to not show it to anybody! What a country!

I have a second idea that’s even simpler. For a mere $2.50 a month, which is less than half the cost of call display and some other service I can’t think of, only pennies a day, the cost of a cup of coffee or less, I will install a device on your phone that shows you the number you have dialed.

Or did somebody already beat me to this one?

I plan to be very, very rich.

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Telemarketeers

A man named Bob Trottier, who worked for a telemarketing firm a few months this spring, wrote an article for today’s Kitchener Waterloo Record defending Telemarketers. “Businesses and many other services have to use telemarketing because it works, whether you grit your teeth at the intruding phone calls or not”.

This is one big piece of horse manure. Nobody has to use telemarketing. Telemarketing didn’t even exist thirty years ago, and nobody was the wiser. What Trottier really wants us to believe is that telemarketing creates new demand for products. This is good for the economy, you see. In fact, the advantage of telemarketing probably only lasts as long as it takes until a competitor with the same product starts to use telemarketing. It’s like Sunday shopping. Where’s the advantage if all the stores are open on Sunday? Thus we are led by the nose by our own short-sightedness.

The biggest mistake you can make with a telemarketer is to listen. The simplest, most effective thing to do is hang up, immediately. Don’t listen. Don’t wait for the telemarketer to shut-up, don’t ask yourself if you might actually want what they’re selling (believe me, you don’t).

I don’t necessarily believe that telemarketing should be banned. I think it would be more effective to make a law that says that the owners of a telemarketing firm must spend at least eight hours a day doing the same thing his employees are doing, calling people and pestering them in their homes. They should hear what people really think of pests.

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Homeless in Ontario

Premier Mike Harris has long made it his own particular virtue to proclaim that the provincial government will no longer support deadbeats. Get out there and find a job, says Mike. Stop sponging off the hard-working taxpayer. Pull yourself up by your bootstraps!

Well, let’s say you’re one of the uneducated poor and you do find a job. Maybe not a great job, but a job nonetheless. Maybe not even a full-time job. But at least you have a reason to get up early most mornings. Mike is happy. You’re no longer a deadbeat. Let’s say this job is half-time at minimum wage with no benefits and pays you all of about $550 a month. That’s $6,600 a year. Could you live off of $6,600 a year? Would you get up early every morning, get dressed, scrape the snow off your car— more likely, wait in the cold for a bus– and get yourself off to a job for $6,600 a year?

Until now, the provincial government realized that someone making only a little money would probably not have much left over for “luxuries” like prescription drugs or dental work. So the government, sensibly enough, has allowed these people to be eligible for a special drug, dental, and vision plan normally available only to welfare recipients. Now tell me: in your heart of hearts, does this sound unreasonable? Wouldn’t this person be more likely to improve his chances at a full-time job if he could at least take care of his teeth and replace his glasses once every two years? And if that’s all we do for the working poor, isn’t this, in fact, embarrassingly pathetic?

Well, it wasn’t pathetic enough for the Harris government. They are removing that benefit. They are also removing certain exemptions and changing other rules so that a jobless man living at home with his parents gets all of $52.00 a month to take care of all his needs. The Harris government is now also going to require that welfare recipients provide receipts for any rent they have paid. If they don’t or can’t, their welfare check gets slashed by $180. They will then receive a grand total of $195 a month basic allowance. That is $2,400 a year. How much did it cost you get through the last year? Do you feel wealthy? Most people spend about this much on movies and eating out.

Now if you really believe that we should be the kind of society that is merciless and heartless, don’t read any further. We have built this society that runs like a machine. We’re spinning right now at maximum rpm. To survive in our society, you have to keep up with a million details. You need the right education, the right clothes, the right haircut, the right forms, the right location, the right skills, the right connections, the right state of mind. Not everyone can hack it. It doesn’t surprise me that there are 30,000 people living on the streets of Toronto because they can’t keep up. So if we want to be merciless, we can say to them, “Tough. Go drop off the edge of the earth.” Or we can say, it’s a fact of life that not everybody can fit in.

It’s not a question of blame. It is true that some people abuse the system. It is also true that a lot of people pass around third-hand stories about people living the high life on welfare and unemployment insurance, double-dipping, and squandering all their money on cigarettes, lottery tickets, and booze. But there really are a lot of people out there who fall through the cracks simply because they don’t have the mental or emotional make-up to succeed in this hyper-world. So we toss them a pittance, maybe enough to eat semi-regularly, and we provide some shelters so they can sleep inside on the coldest winter nights.

The only hard research on this subject indicates that the real rate of abuse is very small, but everyone’s got a story and a lot of people are credulous. Life on welfare shouldn’t be too easy– after all, it’s not good for people to live in dependency anyway. But it’s one thing to have reasonable restrictions; it’s quite another to kick someone in the teeth when they’re already down. By steadily diminishing their access to assistance, we are pushing them into a state of desperation.

Some social workers don’t believe that the government is actually going to save much money with this latest jab at the poor anyway. It’s just another mean-spirited expression of the Harris’ government’s contempt for losers.

Our society generates enormous wealth. There was a time, in the 19th century, when it was believed that there was a fixed limit to the amount of wealth any economy could generate. If wealth was diverted to the poor, that meant that someone had to give it up. Social conservatives argued that there wasn’t enough wealth to go around, and that redistribution would simply make us all poor. Socialists played this game, declaring that, whether there was enough or not, more of it ought to be taken from the rich and given to the poor.

The late 20th century has proven these arguments false. We are, in fact, generating more and more wealth, on a scale that was unimaginable in the 19th century. The problem is, as almost every significant study shows, that more and more of the wealth is ending up in the hands of fewer and fewer people. Nobody knows what someone with ten million dollars needs another ten million for. What can you buy with twenty million that you can’t buy with ten? Isn’t this called greed? Then why does our society heap admiration and honors on people like Conrad Black and Bill Gates and Michael Jordan? And why do we heap contempt upon young mothers with children who live in brutal conditions off a tiny, tiny, tiny piece of pie? Are we that heartless?

With budget surpluses looming, a surprisingly large percentage of the voting population favours increases in government spending on social programs, education, and health care. Perhaps this is the beginning of a reversal of a twenty year trend that has seen a growing disparity between the haves and the have-nots.

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The Just War Theory

The Christian Reformed Church officially believes that there is such a thing as a “just” war. It’s there in our official church policy, right next to sensual abstinence and charitable materialism.

I liked the 1960’s. Sure there were a lot of crazy ideas in the air, and a lot of foolish ones. And sure, the hippies were naïve and idealistic. But you have to see it from the point of view of someone “coming of age”. You have to appreciate what it was like before t he 1960’s.

The 1950’s was Frank Sinatra, Leave it to Beaver, Senator Joseph McCarthy. It was Billy Graham and Richard Nixon and John Wayne. It was military bands and double-knit pants, pant-suits and Tupperware parties.  It was Bette Davis and Doris Day and Rock Hudson and, god help us, Barbara Stanwyck, who all, to me, had the sexual appeal of dried potatoes.

The 1960’s was the Beatles, Bob Dylan, Jesus Christ Superstar, and blue jeans. It was Woodstock, Janis Joplin, J.D. Salinger.  It was Natalie Wood and Ali McGraw and Faye Dunaway.  It was t-shirts and sandals and free love–whatever that was– and John Kennedy.

It was no contest.

One of the things a lot of people in my generation believed in–don’t puke now–was the PEACE movement. I remember arguing with my teachers and parents and minister about it. They all believed that war was a regrettable necessity, but a necessity nevertheless. They argued that the world was full of violent, evil people, who were just itching to conquer and destroy us, just like the Nazis, and the Communists, and, of course, Cuba. In order to preserve our God-ordained lives as suburban consumers, it was necessary to threaten to destroy all life on the entire planet. There could never be peace as long as there was sin in the world, and there would always be sin in the world.

The more sophisticated among us argued back: they are warlike because we are warlike. They hit back, because we hit first. They threaten to destroy us because we threaten to destroy them.

Hopelessly naïve, so we were told.

The Christian Reformed Church produced a thoughtful document that supported the pro-war faction. But a careful reading of it reveals that the peaceniks were gaining the high ground. This document laid out very stringent conditions under which a war could be considered “just”. The one that was most interesting: the benefits of a particular war should outweigh the cost.

Well, I suppose you wouldn’t have a hard time finding militarists who really believed that the benefits of almost any war outweighed the costs. Benefit: lots of medals. Cost: hundreds of thousands of lives. After reading this document, I came to conclusion that some members of the committee which wrote it were playing a joke on us.

It is of more than passing interest that the current generation of leadership in the West, especially Tony Blair in England and Bill Clinton in the U.S., are baby-boomers, members of the “Give Peace a Chance” generation. And guess what: they are proving us right.

The biggest difference between Clinton and Blair and their predecessors, Thatcher and Reagan, is that Clinton and Blair really do believe that peace is a good thing. (One of Ronald Reagan’s first acts as president, way back in 1980, was to restore the funding for military brass bands which President Carter had cut. Thatcher, of course, charged off to Argentina to save the Falklands for England, tally ho.)

And so we finally have peace in South Africa. Peace has a tenuous grasp in the Middle East. And so you have Blair in Ireland and Israel, and Bill Clinton lending the full support of the U.S. But it is not those two men alone. Baby boomers now hold the reigns of power in industry, commerce, education, and government, and whatever other compromises they have made in their lives, they seem to agree that peace is better than war.

Of course, there are still conflicts and civil wars and other disturbances, in places like Nigeria and Kosovo, and the Middle East could still explode if negotiations don’t make some progress soon. But over-all, has the world ever been in better shape? No, it hasn’t. Last year, there were two significant conflicts in the entire world. In any given year during the 1960’s, there were at least 20.

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Perhaps the difference in generations is most aptly summed up in a controversy that broke out several years ago between the Canadian Legion and some “peaceniks” in Chatham, Ontario. The Legion was outraged– outraged, I say– that a group of nuns and activists had decided to hold a peace rally in front of the local cenotaph. How dare they! In their protests, the Legion made transparent all their pretty rhetoric about heroism and sacrifice: the truth was, they didn’t go over “there” to die for their country. They went over there to kill for their country. And the monument was not a tribute to the peace they won; it was a tribute to the camaraderie of men who enjoyed dressing up and shooting guns off at each other, and then spending the next forty years boozing it up away from their wives and retelling the same boring stories about “Jack” and “Bill” and how splendidly they gave it to the wicked kraut.

They realized that peace activists devalued their most cherished accomplishments.

I had been brought up to respect these men for the grim work they did of defending liberty and freedom. After hanging around a Legion hall a few times, and after all we’ve heard in the last few years– about the Queen and admitting Sikhs to the Legion halls, and the flag and so on– I was left with the impression that most of these men had some skewed imperialistic notion of “liberty” that didn’t have much latitude in it for diversity or democracy. I don’t think many of these men cared much about the horrible injustices of the Nazi regime, except insofar as particular incidents could be used to paint the enemies as monsters.

More recently, the veterans complained bitterly when the National War Museum revealed plans to include a section on the Holocaust. How dare they? What’s that go to do with World War II? In the U.S., veterans complained so loudly and bitterly that the Smithsonian Institute in Washington D.C. was forced to withdraw an exhibit that merely documented– did not damn or praise, merely documented– the bombing of Hiroshima. In one sense, their actions are a glorious admission of shame. They want to pretend that Hiroshima never happened.

I mean that, absolutely, their actions were a monumental admission of shame.  If they really believed there was nothing morally wrong with Hiroshima they would not have been bothered one whit about featuring it in an exhibit on the war.

I have gone from believing that these men fought out of a sincere belief in democracy and freedom and justice to believing that most of these men still hold the same attitudes and political views that gave rise to many of the 20th century’s military conflicts in the first place, namely, that honor and national pride are worth killing for, and that material wealth must be guarded against interlopers, and that killing in the name of a nation or a flag is honorable and right.

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Sports and Taxes

Let’s see if I understand the logic of Gary Bettman.

He spoke to the Canadian Club in the luxurious York Hotel in downtown Toronto. He said this:

Cities are bidding to try and get franchises away and they’re willing to build buildings and they’re willing to not tax because they understand that there is an economic and an intangible value to having professional sports teams.

According to Bettman, the Ottawa Senators, who pay the least in Canada, a mere $3 million a year, in taxes, pay more than 20 U.S. teams.

So Bettman wants you and me, brother, to contribute our tax dollars to the Ottawa Senators, the Montreal Canadians, and the Toronto Maple Leafs, and the other Canadian teams, so they, in turn, can pay Wendell Clark two or three million dollars a year to sit in the press box, play golf, and once in a while show up in uniform to play hockey.

Are we nuts? Is he nuts?

Well, no, the truth is Bettman is pretty smart. As he points out, 20 U.S. teams pay less than $3 million a year in taxes, and get all kinds of other taxpayer sponsored concessions, like stadiums, parking, highways, and traffic police. From the point of view of professional athletes and the owners of professional sports teams, he is very smart indeed.

If someone came up to you and said, “Hey, would you please give me some money, so I can hire some athletes to play baseball?” you would probably say, “Well, how much do you need?” And Mr. Bettman would reply, on behalf of all sports owners, “Oh, about $60-70 million.” You might come to your sense about this point and say, “Why would any sane person pay someone that much money to play baseball?”

Why indeed.

This is madness, insanity, and incomprehensible idiocy. But it goes on and on and on.

The Canadian Taxpayers Federation also reported that the Canadian Government has extended more than $11 billion in “aid” to corporations over the past 15 years (1982-97). Of the $11 billion, about $2 billion is not likely to ever be repaid. Remember that the next time you hear a politician or business leader talk about those “lazy” welfare cheats and their scandalous $365 a month.

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Wei Jingsheng

Wei Jingsheng is a Chinese dissident who was imprisoned for almost 20 years because he had the courage to stand up for the basic human rights you and I take for granted as citizens of a free country. He was expelled from China in November 1997, probably because he was one of the most well-known of China’s many prisoners of conscience.

Jingsheng traveled to Paris where only the junior minister of “cooperation” would meet with him. In London, Prime-Minister Tony Blair and Foreign Secretary Robin Cook were too busy to see him– probably had a party with OAISIS scheduled or something– so only an obscure bureaucrat would agree to talk with him.

The Clinton Administration had made a point of demanding that China honor the U.N. Declaration of Human Rights, until about 1994, when more and more U.S. corporations insisted that Washington’s hard-line stance was harming business with the Communist giant. A lot of U.S. corporations salivate uncontrollably at the thought of a billion households that don’t yet have telephones, microwaves, or cable TV.

Cuba, on the other hand, only has about 7 million people, so it’s quite all right if you want to get all righteous about human rights under Castro. When it comes to China, however, you’re talking big bucks. As Bob Dylan once observed, before his own sell-out, “money doesn’t talk/it swears”.

A lot of people–especially corporate types–will argue that human rights should never be tied to commercial relationships. Oddly, this argument does not polarize along the political leanings you might have expected. Some very conservative U.S. congressmen support the demands for greater accountability for human rights abuses in China, while Clinton himself appears to be folding under pressure from the big corporations, and, as observed, Tony Blair and his Labour Party doesn’t have the time of day for a pro-union Chinese dissident.

You may recall that we went through this whole debate during the South African crisis, and Maggie Thatcher led the opposition to economic sanctions on the basis of the argument that they don’t work, and that they only harm the average citizen, not the powerful elite. Does Thatcher support sanctions against Iraq? The U.S. insists on tightening the sanctions against Iraq until they admit the U.N. weapons inspectors: isn’t Bill Clinton in a position of hypocrisy?

We ought to be more consistent on this. If sanctions worked against South Africa (they appear to have helped) and if they are believed to work against Iraq (this is somewhat questionable), and if it is hoped they will work against Cuba (dream on), then they ought to be applied to China.

What we have to do is remove the element of hypocrisy from the idea of sanctions. We constantly insist that we apply sanctions out of high moral principles, but we drop them as soon as we realize that there is fast buck or two to be made. The U.S. didn’t seem to mind the human rights abuses committed in Nicaragua or Chile, as long as U.S. commercial interests were served. Many European nations, like Italy and France, want to rebuild their business relations with Iraq, and thus they want to drop sanctions against Hussein. The U.S. won’t apply sanctions to China because U.S. corporations want to do business with the Chinese.

As China’s pursuit of the 2000 Summer Olympics demonstrated, the Chinese government does want relations with the West, and they need the technological and economic assistance only the West can provide. But such assistance ought to be dependent on well-defined and verified progress on human rights issues, democratization, and some measure of self-determination for Tibet.

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Balanced Books: Jean Chretien and the Temple of Doom

For the first time in 30 years, the annual budget of the Government of Canada will show some black ink.

The immediate response of the Reform Party was to denounce the government for spending some of the new “fiscal dividend”, instead of cutting taxes.

The Reform Party is on record as having advocated big tax cuts years ago. Had we followed Manning’s advice then, we would still be facing billions of dollars in deficits, just as the Americans, who cheerfully followed Reagan’s advice, are still a few years away from balanced books.

The Reform Party has a problem. Most Canadians regard this balanced budget as a significant accomplishment. Most Canadians, I suspect, are pleased with Chretien and Martin, and a little self-satisfied: we took the high-road, we suffered years of cuts and sacrifice, but it has finally paid off. The annual budget is balanced.

If the Reform Party could see themselves, they might hesitate before making the usual partisan jabs at the Liberals. No one knows for sure, of course, but my guess is that most Canadians are really very pleased about this achievement. We’ve gone through a lengthy period of painful sacrifices to get the federal budget under control. It was difficult, but we did it. We should be pleased and proud.

Then we see Preston Manning with his bad hair-cut, whining about how this government, the first government in 30 years to bring the budget under control, is irresponsible and shameless because it is putting a few bucks back into some of the programs it’s gutted over the last few years.

Preston Manning is being dishonest when he claims to speak for most Canadians when he demands a tax cut. Most Canadians have indicated over and over again that, yes, while they would like a tax cut, they also believe that a good chunk of the “fiscal dividend” should go back into some of the social and health programs that make Canada a civilized nation. This is not a matter of interpretation or fudging the stats: the polls are consistent and decisive on this issue. Manning is not only wrong but he is also shrill and whiney. My guess is that the next polls show the Liberals ever farther ahead of Reform than they are now.

So it took a “free-spending liberal” to bring the budget deficit under control. Mulroney, a conservative couldn’t do it. In the U.S., Reagan, an arch-conservative, not only did not reduce the deficit: he escalated it from about $50 billion to over $450 billion, by cutting taxes (at least, for the rich) and increasing spending on the military. Clinton only now has brought it back under control, though the Americans are a year or two behind Canada.

Jean Chretien and Paul Martin should get gold medals. Chretien should get a special shiny gold medal for being lavish with praise for his finance minister. This is not a leader who is insecure about his position in the party or his ability to lead. This is a leader who thought that Paul Martin was a pretty smart guy and maybe he should be in charge of getting the deficit down, so he made him Finance Minister and then did the simplest thing possible: left him alone to do his job.

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Born on Third Base

I was a little flabbergasted to discover that the reason the Government of Canada was finally able to balance their books this year was not because of all the slashing and burning over the last five years that have left Canada’s social and health care programs in a tattered wreckage. No, that’s not it, and the next time you see Prime Minister Jean Chretien beaming with self-satisfaction at a press conference, please throw a pie in his face.

No, the real reason the deficit has come down is simpler than that. It is because interest rates have come down, and because the economy is in the middle of the longest continuous growth spurt since the early 1960’s. Anyone who has renegotiated a mortgage from 10 3/4% down to 7 1/4% knows what effect interest rates have on a large amount of money. All of those budget cuts? They might have accounted for only 1/3 of the necessary savings.

There are some people out there who believe that the entire budget deficit was just a plot by the very rich to create a huge financial crisis to convince the general public that taxes are bad and that the government can’t be trusted with the management of public resources. The way the plot worked was this:

  • the government used taxes to address the massive imbalance of wealth between the rich and the poor
  • the people supported this activity
  • the government raised taxes, primarily on the well-to-do, to subsidize social programs that help everyone or just the poor.
  • the rich realized that if this system prevailed, they would only own five homes, not ten, and eleven Bentleys, not eighteen, and decided something must be done.
  • the rich, who control the stock market, the bond market, and the Federal Reserve, caused interest rates to go up, to “cure” inflation, at the cost of higher unemployment, which, of course, does not affect the rich.
  • Ronald Reagan, the tool of the rich, reduced taxes on the rich, while actually increasing government spending, especially on the military, which, combined with the interest rate hikes, thereby created a massive government deficit. The media, another tool of the rich, hammered home the idea that inflation was evil and must be fought at all costs, even to the extent of increasing unemployment and government debt.
  • the general public, not aware of the real cause of the budget deficit, became appalled at the size of the budget deficit and demand leaders who would reduce it, without raising taxes.

Here the plan goes astray: Bob Dole, Preston Manning, and John Major were supposed to be the beneficiaries of this strategy. In each case, the public, far more rational than the media give them credit for, elected relatively moderate, compassionate leaders.

Bill Clinton and Jean Chretien and now Tony Blair oblige the ill-informed public by slashing social programs, while maintaining the rhetoric of tolerant, compassionate liberals. Largely, this translates into same sex health benefits, a harmless frill, while diverting billions of dollars in wealth back into the hands of the rich.

The net result: a massive shift of wealth from the laborer to the investor. Read the newspaper, watch tv: how does the media interpret the state of health of the economy? In jobs? In pay for the average dude? In health care or social programs? No! In the value of the stock market, and in the returns on investment for the average stock-holder. When Chain-Saw Al Dunlap takes over a company and promises to slash tens of thousands of jobs, the value of the stocks of this company go up. Great news! You’re out of work! Your family can go to hell, we don’t care– as long as the stock market continues to rise! (One interesting irony: so-called pro-family politicians and religious leaders don’t seem to be “pro” your family, when your job is lost: they support the “lean and mean” economy, lower minimum wages, and anti-union measures. As far as they are concerned, you can go work at McDonalds.)

Here again, the plan has gone somewhat astray, in that growing numbers of middle-class wage-earners are investing in mutual funds, causing an unprecedented string of growth years for the markets. I don’t think anybody really knows what this means just yet.

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Sports Economics

Everybody knows that salaries for professional athletes are completely absurd, but nobody seems have any rational idea of what can be done about it. The basic argument against doing anything is that if people want to pay $55 to sit in a huge stadium and watch a bunch of spoiled athletes shoot hoops or shag fly balls or run into each other, what’s to stop them? It’s a free country.

Ah, but it’s not that simple. There are rules by which all businesses in the U.S. and Canada must operate. Most of these are good rules, designed to prevent collusion and restraint of competition. But professional sports do not abide by these rules: they have an exemption, granted by the government. The solution to the problem of outrageous sports salaries is really very simple. You remove or modify the legal exemption. Bang. Done.

Few people understand what the meaning of this exemption is. The meaning is that professional sports teams are not subject to the usual rules of competition, even though they are for-profit businesses. They are allowed to cooperate together to form a single league with a de facto monopoly over players and venues. In exchange for this exemption, the leagues are supposed to provide a commissioner to ensure that the interests of the sport are served. In reality, in practice, all the commissioners serve only one interest, that of the team owners. New franchises are handed out like lollipops because the astronomical entrance fees are divvied up among the established owners.

What would happen if the exemption were abolished? It would take a while, but we would begin to see minor leagues flourish again and some of them would grow into genuine competition for the Majors. Most medium-sized towns would be able to support a professional team because, with a multiplicity of smaller leagues instead of one, exclusive, big league, players salaries would decline to a rational level. And instead of a very small number of black athletes emerging from the ghettos to make it very, very, very big, we might have a large number of black athletes playing on a large number of professional teams, making a decent living for themselves, and helping bring business to their home communities with medium-sized stadiums, where fans will also actually get a decent view of the game.

We would have to kiss goodbye to the concept of “THE” Major Leagues. Big deal. And no more publicly-funded stadiums, one of the most insane ideas of our time (why are we taxpayers subsidizing the outrageous salaries of professional athletes?).