Introduction to the Opinion-Editorial Section

We are introducing a new feature on the Post Carbon Toronto website – blog articles written by PCT members. These articles reflect only the opinion of the writer, and do not represent the official position of either the Executive or the group at large.

2 comments to Introduction to the Opinion-Editorial Section

  • ***Our April 27 event, ‘Canada Votes’: http://www.meetup.com/PostCarbonTorontoMeetup/

    CANADA VOTES

    On May 2, 2011, the Canadian people will go to the polls to elect their national government. Given the number Canadians new to this process and its history, and the importance of Canada on the international stage both economically and politically, a little background at this time would be useful I think.

    It is well known abroad that Canada is a parliamentary democracy. Canada has also been well known as a nation that championed “soft power” at the UN, and was integral to the creation of “UN peace keeping”. We are also justly famed for the Montreal protocol on CFC’s, and the international effort to limit landmines. What is less well known are the changes that have been taking place here since the beginning of the Thatcher/Reagan revolution some thirty years ago. A revolution that was imported to Canada and Australia by the Mulroney and Howard governments, and continued in pretty much all of its essentials by the three term Chretien majority.

    The most important of these changes are easy to list: NAFTA and the ensuing electoral destruction of the Progressive Conservative Party of Canada. Reduced from the largest majority government in our history to just two elected representatives in the House of Commons in less than a decade. The rise of the Reform Party/Canadian Alliance. An Alberta based party very similar in ideology to the U.S. representatives dedicated to “smaller government and state’s rights.” So much so that they have used many of the same political consultants. They are also similar in their dedication to increasing the influence of religious rhetoric in society and politics. Their electoral success led to a Progressive Conservative – Reform alliance. The renamed party calling itself the Conservative Party of Canada. The dropping of the word ‘progressive’ from the name being reflective of the new party’s further right ideology. Something they themselves claim and so not a point of contention. The final two major pieces of the Canadian puzzle are opposing sides of the fossil fuel coin. The ‘Declaration of Opportunity’ by the provincial government of Alberta, and the decision in 2008 by the Liberal Party of Canada to campaign on a carbon tax.

    All of these but one have been spoken about openly and at great length by the media here in Canada. The one that has been essentially invisible is ‘The Declaration of Opportunity’, and its effect on the Alberta oil sands and the Canadian economy. Penned in 1995 and ‘declared’ by the government of Alberta in 1996. That it was written in close collaboration with the energy sector is a simple statement of fact nowhere contested least of all by industry. What it says however is essentially never talked about by our national leaders or our media. More on this declaration later.

    Along with other important legal changes the North American Free Trade Agreement gave multi-national corporations the right to “national treatment”. In other words they were to be given the same treatment as if they were homegrown enterprises. The flip side to this is that Canadian and Mexican companies would no longer be allowed to receive preferential treatment. In other words the ability of our national governments to promote national development was significantly reduced. Some might say that this is perfectly fair – sauce for the gander and all that – as the same is true for Canadian and Mexican businesses entering the U.S. market. That is they might say so but know if they do they risk being openly laughed at for obvious reasons. Chief among those reasons being that the vast majority of the multinationals being advantaged by the deal are U.S. corporations. An obvious outcome given the balance of powers.

    The fight over the issue of ‘continentalism’, what its promoters prefer to call ‘free trade’, has a long history in Canadian politics. Ironically the traditional party stances were reversed for the 1988 election. The PC’s having been traditionally against the continental integration of our markets for goods, services and energy. Not least because this plank in the PC platform was perhaps the most longstanding and surest vote getter in the party’s history. This time around despite the fact that it was campaigned against by both the Liberal party, and the New Democratic Party, was opposed by the majority of Canadians, and was the dominant issue of the campaign, vote splitting allowed the Mulroney government to win a majority of the seats in the House of Commons with 43% of the vote. They did however fall from 211 to 169 seats. A foreshadowing of the electoral apocalypse to come.

    In Canada the level of foreign ownership of our energy sector is unequaled anywhere in the world. It is something the U.S. would never allow. If any evidence is actually required for so obvious a statement of fact it can be seen most recently with China’s national oil company being denied the right to purchase Unocal. It is also something that Mexico does not allow. Nor do the Saudis, Norwegians, Iranians, Iraqis, Venezuelans, Bolivians, or Libyans. To name but a few of the 122 major oil extracting nations that do not operate like Canada. You name them, they don’t allow it. Canada’s energy sector is in fact uniquely dominated by foreign ownership. This is also not the only way in which Canada is unique in the energy sector. Unsurprisingly given this foreign dominance the nation of Canada also recovers a uniquely small amount of the economic rent from the extraction of oil.

    Nowhere is this more true than with the extraction of oil from Alberta’s tarsands. Some commentators have estimated that the people of Alberta and Canada have for the most part been receiving less than a dollar a barrel in royalties for this oil. It is passing strange in a country that believes itself to have one of the strongest democracies on earth that this number is so completely unknown even to experts. Irrespective of the actual number what is certain is that no nation on earth receives less in royalties from oil extraction than Canadians do from the tarsands. This is doubly troubling given the fact that no oil extraction is more damaging to the environment. Although it can be said after the Horizon event in the Gulf, and Fukushima’s nuclear disaster, that the oil sands are not unique in the energy industry in their capacity for causing internationally recognized environmental damage.

    What is also not in doubt is that the corporations who are walking away with all but all of the economic rent are also leaving the provincial treasury a mere fraction of the monies that will be required for the multi-decade effort that will be required to remediate the surface damage caused by the mining of the sands. Not to mention the multi-century effort that will be required to contain the toxic tailing ponds. CO2 emissions must of course also be mentioned in this context. Alberta’s oil extraction representing the fastest growing emissions sector in the nation.
    These outcomes are a direct result of the policies put in place by the Alberta government’s ‘Declaration for Opportunity’. Ministers from this government have openly crowed “We’re giving it away.”, and “Where else on the planet can you get oil for one cent on the dollar?”. The answer of course is nowhere. What the Canadian people, our media, and our leaders should be asking themselves – and in this election are not – is whether this is the best or even a reasonable outcome.
    There was however a recent effort by one of Canada’s two major parties to ask this very question. The electoral result of this effort going a long way towards explaining why the issue is today next to invisible.

    It is difficult to find parallels in Canadian history to the Liberal party’s 2008 decision to campaign on a carbon tax. This moment is singular here in Canada from at least one perspective. I.e. It was the first time that an environmental policy measure was front and center for one of Canada’s two ruling parties. Part of the reason for this decision on the part of the Liberals was due to the fact that the Liberals were out of government. On the outside looking in after three straight majority and one minority government. (1993-2006) More significant still was the surprise winner of the Liberal leadership convention, Stephane Dion.

    Dion had been backed by precisely none of the traditional power brokers within the party. They had instead lined up behind either Ignatieff or Rae. The rub for these decision makers being that this convention had been designed for the first time in the party’s history with an eye to encouraging increased participation by the delegates in the leadership selection. The primary goal of this initiative was to increase a flagging party membership base. At the same time it was hoped that it could serve to strengthen the Liberal brand’s democracy credentials. If subsequent events are any indication – e.g. the very different selection process used to anoint Ignatieff as party leader – this convention proved that for some in the party at least there can be a thing as too much democracy. The result in 2008 being a grassroots convention floor campaign that vaulted Dion into the leadership based largely on the strength of his environmental credentials.

    Worries about climate change were at this moment high. Al Gore’s ‘Inconvenient Truth’, Tim Flannery’s ‘The Weather Makers’, and the IPCC’s latest Assessment Report (AR IV) had created a great deal of international concern and media coverage about climate change. Dion’s leadership campaign sought and found support among those Liberal delegates who believed both that this was the time for Canada to do something about climate change, and also believed that this issue was an electoral winner. I.e. What better way to differentiate yourself from a Calgary school trained economist, an unequivocal supporter of the tarsands, and a man who publicly declared that science had yet to be prove that climate change was manmade? What better way also to cut the nascent Green Party of Canada off at the pass? Environmental issues dominated the Montreal convention that selected Dion, a first for the Liberal party.

    Given subsequent events it seems reasonable to assume it may well be some time before they will do so again. It seems equally safe to say if they had approached this issue from the point of view insulating the Canadian people and economy from energy price shocks and supply interruptions much more could have been accomplished. So many of the necessary transitional steps are after all the same. That an energy security focus would be much more palatable to Canada’s western provinces and Canada’s business community is beyond doubt.

    To put not too fine a point on it the decision to put a carbon tax front and center was an electoral setback from which the Liberal party, Canada’s ‘natural’ ruling party since 1867, has yet to recover. In fairness to the Liberals who chose this direction for their party few could have predicted that the Canadian media would attack this climate change initiative with such fervor and unanimity. If this election was a contest between Canada’s fossil fuel extractors and Canada’s conscience then the extractors won by a margin that Secretariat would have envied.

    Today the concern over climate change has fallen from its once lofty perch here in Canada and elsewhere. Canadian’s primary concerns in this electoral cycle being the economy and health care. Not surprising given how much better off Canadians are in comparison to their neighbour to the south thanks in no small part to a national health care plan. And given the fact that the global economy came very close to meltdown of historic proportions not very long ago.

    The 2008 election resulted for the second time in a row in a minority government led by the Conservative Party. On May 2 we will discover whether or not Stephen Harper and his Conservatives finally achieve their goal of a majority government. The national media having declared from the outset that the only conceivable outcomes for this election are a Harper majority or a Harper minority.
    In Canada we do not have a President nor do we elect our national leader directly. Instead the leader of the party with the most seats is the one who is given the right to the mantle of Prime Minister. Given this indirect mandate it is at least a somewhat odd that our PM has in fact much greater power to shape the country than does for example the U.S. President. This has become ever more the case with the rise of the PMO (prime minister’s office) from a handful of advisors in the time of Lester B. Pearson to a paid staff of hundreds. The only time this is less true is during a minority parliament. I.e. One where the other parties together elect more representatives to the House of Commons than does the party who forms the government. The outcome here in Canada since 2004.(‘04, ‘06, ‘08)

    With this election Canadians will be going to the polls for the fourth time in seven years. It is not at all improbable that this may lead to enough “voter fatigue” to put the Conservatives over the top that they have failed to climb in the last three elections. If this outcome does come to pass the Canada that the world thought it knew will almost certainly cease to be recognizable. And while it is fair to say that this process was not started by this government it is equally fair to say that what they will do will not be easily undone. Like NAFTA and ‘The Declaration for Opportunity’ the changes wrought by a Conservative majority will not be undone for many years if at all. They will also cause a great deal of division within the country in either case. Like the Republicans to the south the Conservative Party of Canada has adopted wedge politics as its primary means of solidifying and expanding its electoral base. Given Canada’s demographics, its regional divides, and the increasingly skewed distribution of income within the country, from a purely partisan advantage point of view it is impossible to fault them for this choice.

    Going forward on the basis of a Conservative majority, whether one sees these as good or bad policies, the following are some of the planks in the Conservative Party’s platform that will come to pass:
    A) Public election money will be out, and private money will regain the influence it recently lost in Canadian elections. This will not be as significant as the ‘Citizens United v Federal Election commission’ decision taken by the U.S. Supreme Court but it is undeniably a step along that path. In this context it should be remembered that when he was out of government Stephen Harper launched a legal battle against the government of Canada – Harper v Canada – in the attempt to inject third party advertising into Canadian elections.

    B) Canada will escalate its war on drugs and crime and will begin to incarcerate more of its citizens for longer periods of time. It is intriguing how often the putative “law and order” parties choose policies that create more criminals. One might have thought that the hallmark of an effective law and order program was that one led to less not more criminals once the many billions were spent, but this is not what the data tells us.

    C) Our military spending will continue to climb and more of it will be spent on the ability to “project force”. E.g. The purchase of 65 F-35’s.

    D) Alberta’s oil production will continue to climb as will Canada’s emissions.

    E) Canada’s manufacturing sector will continue to suffer from the effects of Dutch economic disease, and the deindustrialization of Canada will continue. *322,000 jobs lost 2004 – 2008. 53% a direct result of our dollar being pegged to the price of oil .

    F) Canada’s long form census will suffer a much greatly diminished utility in perpetuity.

    G) It is impossible to predict the influence of the evangelical Christian supporters of the Conservative party. It is however safe to say that their influence will be greater on this party than any Canadian political party in living memory.

    H) There will also be countless ‘opportunity costs’ that are too numerous to list here.

    Principal among them will however be the profound effects on Canadian society by this government’s reliance on the “efficient market hypothesis”, and the “substitution principle”. Articles of faith to which they will adhere to the exclusion of all conflicting data, economic considerations and social priorities. Up to and including whatever evidence is marshaled by the scientific community.
    This last point bringing me conveniently to my close and my favourite of all moments in political theatre. I.e. When our business leaders and their politicians and economists tell our physical scientists to “get real.”

    Jeff Berg

    Jeff is a part-time freelance writer whose focus is principally on energy and emissions and their impact on economics and the environment. He is also the Chair of Post Carbon Toronto. He can be reached at jeffberg42@gmail.com

  • Are the Conservatives Conservative?
    Politics in Canada
    by Jeff Berg / April 18th, 2011

    It is intriguing to see an economist flying in the face of Stats Canada data. That is Stats Can data showing that investment is declining irrespective of corporate tax cuts while economics professor Stephen Gordon asserts that these very same tax cuts are spurring investment. His argument being I presume, “Things would have been worse otherwise.”

    This is reminiscent of nothing so much as it is the now thirty year long mantra and practice of tax cuts as the cure regardless of the illness.

    Government surplus? Tax cuts. Government deficits? Tax cuts. High growth? Tax cuts. Low, no or negative growth? Tax cuts. Record corporate profits? Tax cuts. Low corporate profits? Tax cuts.

    Discussions of the drawbacks to monomania aside, how is this “tide that will float all ships” working out so far?

    Well south of the border where this program was first and most fiercely implemented thirty years ago the results are in and extremely clear. The investment and corporate classes are unsurprisingly making out very well indeed thank you very much. Meanwhile those who make up the bottom four quintiles have at best kept up with inflation. Many not doing even that well.

    At the same time these same folks have seen their government saddle the country with an ever rising debt that will have to be repaid in some manner or other. Meantime decent pensions and employer paid medical care are disappearing. The other indisputable facts are that value added jobs have disappeared in the millions, exacerbating an already debilitating trade deficit. Unemployment, foreclosures and bankruptcies are very close to historic highs, and people’s principal asset – their homes – lost on the order of $8 trillion in value. This right on the heels of a multi-trillion write down on their 401K’s due to the bursting of the tech bubble.

    Here in Canada we are witnessing a reprise of the American model. Like Reagan and the Bushes before him ‘The Harper Government’, self-avowed fiscal conservatives, have run up the largest deficit in the history of the nation. And like Bush Jr. doing so after inheriting a surplus. Also like the Americans we have tax cuts for the investment and corporate classes, and here too they are as a result making off with pretty much all of the economic gains. Meanwhile the bottom four quintiles of the population are finding themselves burdened with high levels of debt both public and private. There being perhaps no better example of this than the level of personal debt that students are now being expected to take on, at the same time that they will be on the hook for repaying most of the national debt being run up to fund said tax cuts. We are also seeing a rapid reduction in worker pensions, a reduction in the quality of social services, and an attack on the “luxury lives” of the public sector and private sector union workers.

    None of these facts are in fact in dispute. What I’ve presented is instead by now an all too common laundry list of the poor economic outcomes that have been the direct result of the economic policies chosen by our leaders over the last thirty years. Stephen Gordon, and Stephen Harper for that matter, might well say in response, “Yes, well, things would have been a lot worse otherwise.” Even more likely is their saying, “The problem was we didn’t go far enough.”

    Presumably by this they’d mean with deregulation, less social services, and more military spending. These being after all by general consensus the hallmarks of the last thirty years.

    There would also be no shortage of expert commentators to echo this opinion about our putative timidity. With our media right there to present their “fair and balanced” point-counterpoint. All of which perfectly exemplifies Albert Bartlett’s famous pith, “For every Ph.D. there is an equal and opposite Ph.D.”

    It is at this point that most Canadians who got this far in the debate, and most don’t, throw their hands up in despair at yet another “He said – She said” with dueling eggheads.

    This despite the fact that – of course – most of us live in the bottom four quintiles. 80 being larger than 20 and all. It is amazing really that one can even talk about “the bottom four quintiles” in a democracy without getting laughed out of the room. Instead this is a highly respectable and well paid way to talk about, well, pretty much the whole of the country be it here or south of the border.

    Meanwhile the Canadian government is choosing policy after policy that cuts the taxes of those who pay the most taxes. Aka. The wealthiest among us. Adding billions to our largest ever deficit, tens of billions to the national debt, and sorely stressing the services that the bottom 80 are truly dependent on. (Aka. ‘Austerity’) I don’t know about you, but if my enterprise had a cash flow problem I wouldn’t begin addressing the issue by telling those in the best position to pay to stop. Which is precisely the case with income splitting and corporate tax cuts.

    I don’t know what’s more odd. That the Conservatives are running on the basis of being the best managers of the economy and fiscal conservatives or that this is the general consensus about their economic management bona fides. Yes their policies are best from a certain self-interested point of view of a few, factually the case. But it’s passing strange in a democracy to see so many of the “bottom eighty” in agreement with the Conservatives self-opinion.

    At the same time military spending is at the highest levels since WWII and climbing. Billions more are being spent by every level of government on police, surveillance, and prisons. Again irrespective of the facts. In this case, the fact of the matter being that crime was in decline before this splurge and so as a taxpayer one would have expected a break as oppose to a rapidly rising burden. No such luck. Instead like the much proclaimed “peace dividend” after the fall of the Soviet Union the directional arrow seems stuck for our ships of state when it comes to such expenditures.

    What is instead to be sacrificed are what the Americans call “entitlements”, what Canadians say defines them, and “luxuries” like pensions and wages. Be they public or private sector.

    Economics is quite obviously not a science in the sense of physics or chemistry. This does not however mean that a few truths cannot be divined. For example, when you are trying to pay off your debts maintain your cash flow if you can’t increase it, and don’t spend money on things you can’t afford. Especially high-tech gadgets which provide no revenue streams. By the same token when you are flush, save for a rainy day.

    On both of these elementary economic tests of sound management and fiscal conservatism the ‘Harper Government’ fails. The question of why this is not the received wisdom about this government, and very much the opposite opinion from the elite consensus, is a question for another time.