First-Past-the-Post: Government by the 30%, for the 30%

According to ThreeHundredEight.com, the Harper Conservatives have averaged just under 30% in the polls over the past year.

That’s about as low as Harper can go. The 30% makes up the hard-core Cons who will vote for the party no matter what.

When the Reform and PC parties united under the Conservative banner in 2004, the new party came to represent the 30%’s hard-core values. Moderate conservatives were marginalized, many forced to vote for the Liberal party.

What’s worse is that the 30% — which controls the Conservative party — now controls the entire country!

Broken voting system

Thanks to our distorted voting system, First-Past-the-Post, the Cons were able to win 54% of the seats on 40% of the vote — giving them 100% of the power.

If we modernize our corrupt voting system — with either proportional representation or ranked ballot voting — the 30% will represent the 30%. No more, no less.

In 2015, we need to bring real democracy to Canada. What we have now is a farce.

Fascist approach to voting reform self-defeating

Fair Vote Canada has decided to take, what I call, the fascist approach to voting reform.

They are proportional representation zealots who think they’ll win by waging a war against the other option, ranked ballot voting. They even delete posts on their Facebook page that mention RBV.

Not only is this approach ethically bankrupt, it’s self-defeating.

Anti-democratic

For one, this scheme is anti-democratic. Canadians are split between PR and RBV. So in order to represent Canadians on voting reform, both systems should promoted. This will get more Canadians involved in the cause.

We need a rigorous debate so voters can make the right choice. It’s arrogant to tell RBV supporters their position is wrong. In a democracy, it’s up to voters to decide how we should vote.

Invisible-option vote splitting

Second, two-way referendums are deadly producing First-Past-the-Post false majorities. Over the past decade, 5 two-way referendums have gone down in flames in Canada and the UK.

This is because of invisible-option vote splitting. In a PR referendum, RBV voters think PR goes too far and opt for the status quo. In a RBV referendum, PR supporters feel RBV is a false reform and opt for the status quo.

Fair referendum

The only way to have a fair, winnable referendum is to put all three options on the ballot: PR, RBV and FPP.

If one option doesn’t win with a majority, a runoff vote is held to ensure the choice of Canadians is respected. Given most people feel our voting system is broken, odds are FPP is not going to win.

Conclusion

The fascist approach to electoral reform will end up cementing corrupt FPP as the democratic choice of Canadians — which is the opposite of the truth.

In order to bring real democracy to Canada, electoral reformers must be principled and cooperate for the greater good.

Developing a sustainable, democratic economy

The purpose of economics is to find a system that allocates resources in the most effective way for the greatest benefit of society.

Even right-wing, free-market ideologues like Ronald Reagan said they had a better way of creating prosperity for all. But considering 30 years of free-market reforms have created a lopsided economy where only the wealthy benefit — at the expense of everyone else — his vision was an obvious failure.

Let’s explore the main economic systems and the results they produced. We’ll discover that we don’t have to reinvent the wheel to create a responsible, sustainable system that benefits all segments of society.

Three economic systems

No matter which way you slice it, there are only three kinds of economic systems. They are defined along the left/right political spectrum.

On the furthest left is communism. This means full government control over the economy.

On the furthest right is free-market capitalism. This means minimal government involvement in the economy.

In the center is the mixed-market system. It’s a compromise between the other two: half-way government control over a market-based economy.

Failure of communism

Since communism means government takes control over the entire economy, individual freedom is threatened. Historically, communist governments produced what George Orwell called a “full-circle revolution.” Egalitarian goals fell by the wayside as the new ruling class exerted totalitarian control over the populace.

Communism is also very inefficient. A centralized bureaucracy is not capable of meeting or anticipating the needs and wants of society. Inherit political corruption stands in the way of talent and creativity.

Failure of free-market capitalism

Free-market ideology tends to produce a pyramidal society where most of the wealth accumulates at the top. Although, theoretically, this boundless freedom should allow people be the most they can be, the real-world outcome is that poverty and oppression deprive most people of real opportunity.

To get a picture of how a free-market system allocates resources, think of an untended garden. Big weeds emerge hogging up most of the resources that could be put to better use with a little upkeep.

Historically, the chaotic nature of “boom-to-bust” free-market capitalism caused the system to collapse twice in two global economic meltdowns. The first was in 1929 — a stock-market collapse which produced the Great Depression. The second happened in 2008 — a financial-market collapse which caused the Great Recession we have yet to recover from 6 years later.

Success of centrist economics

In the midst of the Great Depression, John Maynard Keynes created the centrist, mixed-market system. This was founded on “demand-side” economics.

When people don’t have enough money to spend, this kills jobs and wealth in a deflationary spiral (“paradox of thrift”.) But with “big government” spending on infrastructure projects and social programs — funded by progressive taxation — wealth is created in a virtuous circle through a multiplier effect.

The centrist system has been the most successful in history — hands down. It created modern living standards in the post-WW2 era. During this time, economic and productivity growth were at their highest; inequality at its lowest; living standards were constantly on the rise for all; and governments paid down most of their debts.

Too much of a good thing

The centrist system actually worked too well. By the 1970s, labor became too powerful and inflated wages caused high inflation and stagflation. That set the stage for Reagan’s free-market counter-revolution that caused all the economic problems we face today.

Conclusion

The only way to develop a responsible, sustainable, green economy — that relies 100% on renewable energy and recyclable materials — is with strong government control (centrist regulations.) The only way to put everyone’s talents to use — while maximizing wealth creation, innovation and individual freedom — is with a centrist market economy.

Therefore we don’t have to reinvent the wheel to provide a solution to the economic crisis we’re in. We just need to improve upon the centrist system which worked wonders in the post-war era.

A centrist economy is a democratic economy that serves the people. It allows a society to stop destructive behaviors, forge its own destiny and evolve without limit.

Support hope not fear

One of the lines of persuasion Liberal supporters like to use on voters is what I call electoral blackmail: either vote Liberal or Harper will win a majority!

Well that's not exactly how our election system works. If the Liberals win the election, but don't win a majority, they will be forced to work with the NDP — which certainly isn't a bad thing if you're a progressive voter.

Ontario example

In Ontario, the McGuinty Liberals were leaning towards austerity measures and corporate tax cuts. But when he failed to win a majority, and was replaced by Kathleen Wynne, the Liberal party needed NDP support and all-of-sudden became centrist again.

This pissed off right-leaning Liberals among their ranks who leaked the latest Liberal budget to the neo-con party because it included $5.7-billion in new spending measures. (For shame! For shame!)

Best government in history

If one looks back to the best government in Canada's history — which was an informal coalition between Lester B Pearson and Tommy Douglas — Liberal-NDP cooperation was a wonderful thing for Canadians. It brought about universal health care, the Canada Pension Plan, Canada Student Loans, the 40-hour work week and two weeks paid vacation.

If Pearson had won his coveted majority, Canada would probably be a very different country today.

Trudeau not exactly progressive

Given Justin Trudeau has vowed not to reverse any of Harper's $44-billion/yr in "starve the beast" tax cuts and is writing Alberta a blank check on tar-sands development, the NDP is sorely needed to keep the Liberals honest if they form the next government.

Conclusion

To quote Jack Layton, hope is better than fear. With real hope we can bring real change to Canada and undo the damage Harper has caused. Don't let them tell you it can't be done.

The Stephen Harper story we may never have heard

Maclean's author Paul Wells won a political-writing prize for his book on Stephen Harper, The longer I'm Prime Minister.

As a person who likes to curl up with an e-book on my Android tablet, I can say this is a book I have absolutely no interest in experiencing. It's painful enough having to read about Harper every day in the online media.

Story of Canada

Maclean's ran a story with Wells' acceptance speech titled with an excerpt, ‘Each of us writes the story of Canada every day’.

That got me thinking: how many Canadians are enamored with the Stephen Harper story we get to hear about every day in the news? I imagine not many. After 8 long years, polls suggest Canadians are sick of Harper and his disgusting story.

If Canada was a real democracy, like most developed countries, the Stephen Harper story is one that may never have been inflicted on Canadians.

Story of democracy

Democracy means rule by the people. Since people can't agree on everything, matters are decided by a majority vote. That means government is supposed to represent an actual majority of voters.

But in Canada (and the UK) we indulge in the bizarre practice of doling out 4-year dictatorships to minority parties.

In the rest of the developed world, however, multi-party coalition governments are the norm. The party with the biggest block of voters means nothing since parties arbitrarily divide the political spectrum.

Unlikely Harper coalition

Given Harper's US-Republican vision of Canada, it's unlikely he would've been able to put together a coalition in 2006 on 36% of the vote.

Even when Harper got 40% of the vote in 2011, he would've been ousted by an NDP-Liberal coalition if we had a democratic voting system.

So if Canada was a real democracy, odds are Harper never would've came to power.

Conclusion

In order to save ourselves and future generations from experiencing another wretched Stephen Harper story, we must embrace the story of democracy.

Either proportional representation or ranked ballot voting will tell the real story of Canada.

How hard would a ‘soft landing’ be in Canada's housing market?

Some Canadian economists are saying we don't have to worry about a housing bubble. For example, Stephen Gordon from Maclean's blogs, “Odds are on a soft landing for the Canadian housing market”.

But one very important number these economists are leaving out is real house prices. (Real prices are corrected for inflation.)

Real house prices dangerously high

Last year, Nobel Laureate Paul Krugman looked at real Canadian house prices and concluded the Canadian economy is susceptible to a “deleveraging shock.”

This graph shows the trouble:

Over the long term, real house prices tend to stay around 100%. Today they are higher than 200%.

US comparison

Canada has no chance of suffering a US-style housing collapse. Theirs was founded on predatory, sub-prime, mortgage lending. These fraudulent mortgages started off with affordable payments that skyrocketed after a few years — that's why the market collapsed so fast.

Japan offers a better model

The Japanese experience offers a better comparison. The following (descriptive) graph on real home prices shows a housing bubble that took 15 years to form — and 15 years to deflate:

Hard soft landing

But Japan's “soft landing” was anything but soft. It created an economic catastrophe the country is still reeling from today. They have suffered a shocking 20 years of near-zero interest rates, deflation and anemic economic growth.

Conclusion

Japan shows it doesn't matter how soft the landing is, it's how far down the ground is that really counts. Considering Canada is now as high as Japan got, it's a long way down.

Will real house prices fall back down to 100% in Canada 15 years from now? No economist can say squat about that. But if Canada suffers a hard soft-landing, we'll know who's to blame: Stephen Harper.

Harper to blame for Canada's housing bubble

Jim Flaherty tried pawning himself off as a prudent manager of Canadian banks and diligent tamer of the housing bubble. But in reality, he was trying to undo damage the Harper Government caused in the first place.

US banking-deregulation catastrophe

While in opposition, Harper demanded the Liberal government get in on the red-hot action of America's financial sector by importing US banking deregulation.

Thankfully, the Liberals did not. In 2008, financial-market meltdowns crippled the US and many other countries, requiring massive bailouts.

Harper's banking deregulation

In 2006, when Harper came to power, he implemented his own deregulation scheme by loosening rules governing mortgages and the CMHC (federal mortgage insurance agency.)

According to the Globe and Mail these measures acted

like rocket fuel for the real estate market in a low-rate environment. They triggered a rapid expansion of risk-free mortgage credit, and, arguably, drove the rapid runup in house prices in the past decade.

Summary

Here's a summary of Harper's actions:

• Maximum mortgage periods raised from 25 years to 40.

• Minimum down payment reduced from 5% to 0.

• CMHC insurance provided for 40-year no-money-down mortgages.

• CMHC insurance cap raised from $250,000 to unlimited.

• Banks allowed to offload risk by buying insurance on homes with more than 20% down-payment (which the owners, themselves, don't require.)

CHMC train wreck

The CMHC was originally created to help first-time home buyers. Under Harper's “steady hand,” banks were permitted to offload risk from inflated house prices onto taxpayers:

CMHC Insurance

Kind	2005	2006	2007	2008	2009	2010	2011	2012
(Billions of $)
Home owner			219	232	246	271	286	290
Bank			103	148	196	209	243	230
Multi-unit			23	28	31	34	38	46
Total	274	291	345	408	473	514	567	566

Under Harper, the CMHC's total liabilities more than doubled.

From 2007 to 2012 (where data is available,) home-owner insurance increased a modest 32%.

But the amount of bulk insurance banks bought — on homes that didn't require it because owners paid a large down payment — increased a whopping 123%!

Conclusion

As the Financial Post points out, the Harper Government

has been creating a housing bubble in Canada with taxpayer money, which is why residential real estate prices rise in defiance of high unemployment and recession.

Before stepping down, Jim Flaherty said the CMHC should be privatized. That's rich coming from him. Under his watch, the CMHC nationalized over $150-billion of private-sector risk.

Canadians have yet to discover the true cost of this moral hazard. But we should know that Harper has involved us in a contemptible bet: heads, banks win; tails, taxpayers lose.