Tar sands terrible for environment and economy

Both Stephen Harper and Justin Trudeau believe that getting Alberta’s bitumen to the US Gulf Coast and China is in our “national interest” and is the “Canadian economy’s future.”

Not only is this idea terrible for the environment — Alberta plans on tripling tar-sands development — it is terrible for the economy.

Alberta gets most of the benefits

As the Globe and Mail pointed out, the tar sands are hardly in our “national interest.” Alberta gets 94% of the benefit:

While provinces other than Alberta are projected to benefit, modelling by the Canadian Energy Research Institute projects that 94 per cent of the GDP impact of oil sands development will occur within Alberta. With so much benefit concentrated in one province, one can hardly call fast-tracking oil sands expansion a nation-building project.

Dutch Disease

The tar sands boom has caused the value of the dollar to skyrocket: a 60% increase from 2003 to 2008. Although this might seem like a good thing, fact is Canadians never benefited from lower prices. According to the Globe and Mail:

A decade ago, a product that cost $1 (U.S.) in the United States cost, on average, $1.20 (Canadian) in Canada. A decade later, there has been little change.

But the overvalued dollar made labor costs and exports much more expensive and therefore less competitive. This resulted in many companies packing up shop and moving south of the border — which caused the loss of 500,000 manufacturing jobs.

Terrible job creation

According to the Alberta government’s website, the tar sands employ a total of 112,000 people nation wide. Clearly it was not a good trade off losing 500,000 jobs across the country for far less open-pit mining jobs in remote locations.

Tripling tar-sands development will turn many Canadians into migrant workers who get separated from their families for months at a time to work in remote areas and send their paychecks back home. This is few people’s idea of good job creation.

Low productivity

Canada is suffering from dismal productivity growth. According to the Conference Board of Canada, low productivity growth “hits every Canadian in the wallet.” It says, “productivity growth and innovation must remain a national priority if we hope to maintain our high living standards.”

According to the Financial Post, the overvalued bitumen dollar and focus on the tar sands is hurting Canada’s productivity growth:

“You look at the energy sector and its productivity is just falling apart,” Mr. Cross said. “ The oil sands is a tough way to extract oil. But that just goes hand in hand with the increase in prices. We have found all the easy-to-find cheap oil and the oil you’re going to exploit now is the more expensive stuff.”

That tradeoff may simply be inherent in an economy with strength in resources. High commodity prices, which have pushed up the value of the Canadian dollar, may also provoke a deterioration in competitiveness, Mr. Lascelles said.

Inflated wages

The Conservative party is bragging that “Canada has the richest middle class in the world” based on a recent report from the New York Times.

All propaganda aside, Statistics Canada showed a steep rise in real hourly wages from 2003 to 2010 which is largely founded on two economic shocks: “a strong construction sector, and an increase in the world prices of oil and other commodities produced in Canada. ”

In short, rising wages were caused by a construction boom based on a housing bubble; and rapid tar-sands development fueled by a resource boom — not productivity growth which would make wage growth sustainable.

But the flip side of rising wages is that it makes Canada less competitive. According to the Globe and Mail:

Canadian unit labour costs rose by 67.6 per cent in U.S. dollar terms between 2002 and 2010, while south of the border, they fell by 10.8 per cent. Needless to say, this puts Canada at a huge competitive disadvantage and illustrates the dilemma our country is facing.

Although Harper brags of inflated wages, he is actually using the Temporary Foreign Worker program to drive wages down!

Carbon Bubble

The carbon bubble is another reason it’s bad economic policy to put most of our economic eggs in the tar-sands basket.

Tar-sands proponent Andrew Leach writes how quickly the oil sands can become unviable from carbon policies set outside of Canada (that effect 80% of total emissions from tar-sands oil,) and Canadian carbon pricing as low as $16 a ton (of which oil corporations would pay $3.20.)

The Globe and Mail sums up the carbon bubble conundrum:

Oil sands growth and falling CO2 output are incompatible. … In 50, even 25, years, Canadians will wonder why Alberta and the federal government devoted so much financial, political and regulatory capital to one industry, and a highly polluting one at that, while so much of corporate and industrial Canada received the B-list treatment.

The wonder will intensify when the oil bust comes, and one will surely come.

Conclusion

Rapid tar-sands development is terrible economic policy that threatens our living standards. It’s also terrible for the environment making it impossible to reduce greenhouse gas emissions according to international standards and treaties.

We need real leadership willing to stand up to Alberta, not go “all in” on their dirty, unethical oil.

Can Trudeau be trusted to legalize marijuana?

Justin Trudeau made a bold move by coming out in favor of legalizing marijuana. But is he bold enough to follow through if elected?

Mandatory minimums

Although Trudeau said he smoked up while an MP in 2008, the fact is he voted in favor of mandatory minimum sentences for people growing a few plants back in 2009. You would think if he felt strongly about the issue, he would’ve, at least, abstained from voting.

Bold promises — quietly abandoned

Another thing voters should consider is the tendency of the federal Liberals to make big promises before an election, then abandon them right after getting elected.

In 1993 the Red Book was full of big promises, like national daycare. Although the Liberals were in power for 13 years, for some strange reason they let the daycare promise die. It certainly wasn’t for a lack of funding: they handed Harper a $14-billion surplus.

Fool me once...

Trudeau wouldn’t be the first Liberal leader to campaign on liberalizing marijuana laws. In 2004, Paul Martin ran on decriminalization. When he got elected: thanks for the votes, but…

Distraction

Last, voters should consider if this legalization promise is just a distraction. Trudeau recently rolled out his economic platform which is big on tar-sands development, Chinese foreign investment in the tar sands and exporting resources to Asia: what Trudeau calls “the Canadian economy’s future.”

Trudeau has also ruled out fair taxation. He has vowed not to undo a single one of Harper’s $44-billion/yr in “starve the beast” tax cuts for the rich. He said, “the federal government is taking in enough taxes.”

Conclusion

Trudeau is trying to portray himself as modern and progressive by showcasing marijuana legalization. But not only does this intentionally distract from his right-wing economic and environmental agenda, Canadians might not even get legalization if he gets elected.

Trudeau says the Liberal party is the party of free trade. So what if, like Paul Martin, Trudeau does the “moderate” thing and backs down on the faulty premise legalization threatens trade with the US? Would that be at all surprising?

Only the NDP and Green parties have been consistent in their long-held opposition to marijuana prohibition.

Mulroney and Trudeau need to stop lying about prosperity that never happened

Recently, both Brian Mulroney and Justin Trudeau claimed free-market reforms brought great prosperity to Canada.

Mulroney said his tax reforms (that primarily benefited the wealthy) and trade initiatives were the “pillars of record prosperity for Canada.” Justin Trudeau said this free-market “growth agenda” had the only shortcoming of benefiting the rich more than the middle class.

Growth didn't happen

But the fact is both of them are full of it. The free-market reforms of the past 30 years amounted to an anti-growth agenda. Both economic and productivity growth fell sharply over the past 3 decades:

Clearly the centrist, Keynesian economic policies of the post-war era brought real “record prosperity” to Canada.

The free-market reforms of the past 30 years caused prosperity to wither, culminating in the 2008 global economic meltdown we have yet to recover from.

Lopsided economy

The reason the centrist system worked is because it ensured all segments of society benefited from economic and productivity growth. The free-market reforms let the rich hog up all the gains:

Government debt

Not only did inequality skyrocket, but so did government debt (which we paid down during the centrist era):

Why conservatives lie

Free-market ideologues like Mulroney believe that self-interest is a virtue: if everyone acts in their own self-interest, an “invisible hand” will magically balance everything out producing the most prosperity.

So clearly it's in the self-interest of rich people and businessmen to create economic policy that's entirely self-serving. It's also in their self-interest to use rhetoric — or even lie — to promote their self-serving agenda. And when their one-sided ideology inevitably fails to work, it's in their self-interest to lie about the results.

Conclusion

So normal people have to understand where these free-market con men are coming from. If they have no problem exploiting child labor in sweatshops to make a buck, lying and cheating to get their way is no biggie.

If Canadians want a real growth agenda we will have to return to the centrist policies that created modern living standards and ditch the free-market reforms that are destroying them.

Notes

I got GDP and productivity numbers from the Conference Board's: Total Economy Database (Growth Accounting and Total Factor Productivity, 1990 - 2013.) I arbitrarily chose the "EKS" series on GDP and labor productivity. To calculate annualized growth I used the formula: "a = (e - s)^(1 / y) - 1" where, a: annualized growth; e: end amount; s: start amount; y: number of years. So for the 1950s, the end amount is from 1959, the start amount from 1950, and the number of years is 10.

For the history of top 1% income shares I referenced The World Top Incomes Database. For the Canada's total gross net debt burden I used the IMF's Historical Public Debt Database.

Little progressive about Trudeau's economic platform

Justin Trudeau has rolled out his economic platform in a speech to Vancouver's Board of Trade. It's a 5-point plan that focuses mainly on trade with Asia and exporting resources.

Given the speech is very similar to Brian Mulroney's recent speech to Canada 2020, this bolsters my theory that the Liberal party has become the Brian Mulroney party. If you believe Mulroney was a “progressive conservative,” I guess you could say Trudeau's vision is “progressive.”

I transcribed most of Trudeau's speech so activists can take a look at what he's really planning.

In order to get government that represents Canadians, we will need a rigorous policy debate over the next year or so leading up to the next election. If Canadians want real change, we must demand it.

The speech:

Excerpts from the speech:

Free-market “growth agenda” (9:44)

Middle class Canadians voted, over the past decades, for a growth agenda because they were told that growth would benefit them. If it doesn't they will withdraw their support.

And we are already seeing the evidence of the start of this. Protectionism is rising in some quarters. While in others we hear doubts about the value of resource development.

At the ballot box, we're seeing people vote for leaders who offer stories about who to blame for our problems, rather than ideas on how to solve them. It's a very windy world view.

First: Post-secondary education and immigration (11:30)

There are five things, in particular, that need our attention.

First, we have to remember that Canada's greatest strength is Canadians.

I used to teach here in Vancouver, so this is a special interest of mine.

But if we can raise our post-secondary education attainment rate to 70%, we will have a workforce ready to meet Canada's future job market needs.

If we better support Canadian students through loan payments geared to income, personal RESPs and public-private not-for-profit partnerships we will improve opportunities for all Canadians.

We also have to remember that Canada has flourished because of people coming here from every corner of the world. And choosing to work hard to build success for themselves, their families and their communities.

Immigration has always played and will always play a central role in our economy. We need to welcome nation builders. Help them thrive. And encourage their entrepreneurial spirits. Not just hire workers or employees.

Second: Trade (12:52)

We need to be more strategic about foreign direct investment and trade.

I don't need to tell you that. You're here in BC. You're facing the Canadian economy's future.

The US will always be important to us. But the present and future of global growth is in Asia.

No place in the world is better positioned to take advantage of that growth than Vancouver and BC. We need smart policy to help you do that. And for all Canadians trade is a good thing. An essential thing.

Jobs in competitive export sectors pay 50% higher wages than in industries that are not trade intensive.

That's good news for the middle class. And the communities they call home.

That's why we chose not to play politics with the recently announced free trade agreement with South Korea. As well as the agreement in principle with the European Union.

We're broadly supportive of those agreements as a party. And I said so to Mr. Harper on the floor of the House of Commons.

Third: Resource development (13:56)

A third opportunity, and one that is also of special interest to British Columbians, has to do with Canada's natural resources. How to reconcile economic growth with environmental stewardship.

Because, let's be perfectly clear, pretending in the 21st century that we have to choose between one or the other is not only wrong, it's actually harmful.

But this challenge is made even more difficult when the government's preferred way of dealing with its detractors is to demonize them. Dismissing those with genuine concerns as foreign radicals or terrorists.

Building partnerships between industry, First Nations and civil society as has been done with great success in the BC forest industry — well that takes hard work. It demands real courageous leadership. Pipelines and LNG [liquid natural gas] projects call for that same hard work.

The federal government's role is to create a framework, that helps Canadians grow the economy and protect the environment.

It's not the government's role to put its thumb on the scale of any particular project in favor of the proponent or opponent. If it does, as Mr. Harper's government has done far too often, it compromises the integrity of the process and prevents proponents from getting the social license they need to build the project and create the jobs. But it also undermines the public confidence that the environment is getting the protection that it needs.

And let's be very clear on this point: governments issue permits but communities grant permission.

Last October I surprised a lot of people by going to Washington D.C. and telling a room full of American Democrats that this Canadian Liberal supports the Keystone XL pipeline. I do. But I also understand their issues with it. If Canada had stronger more credible environmental policies in place the Americans would've approved Keystone XL a long time ago.

It's increasingly clear to everyone but Mr. Harper, consensus building is the only responsible way to turn resource opportunities into economic realities.

We need to draw on our intelligence, on our abilities and willingness to solve problems as much as we draw on the resources themselves.

As prime minister, I would see it as one of my core responsibilities to facilitate this kind of engagement. Over the long term, that is the only way we can leverage our natural resources in a way that is sustainable, maximizes economic opportunity, and strengthens the middle class.

Fourth: Innovation (17:10)

Fourth, we need to take a hard look at what we can do to foster innovation. We spend billions on research but lag behind our competitors on productivity.

I'm proud that Wilfred Laurier shares space with Canada Arm II and Dexter on our new five dollar bill. But I'm also eager to find out what technology might be featured there 10 years from now, 20 years from now. Those new ideas and the high-paying skilled jobs that come with them will be critical to our future growth.

Fifth: Infrastructure (17:46)

And finally we need new leadership when it comes to infrastructure investment.

At a time when our cities are starved for capital, the government cut its core infrastructure program by nearly 90% to spend more down the road, but I think you'll understand my multiple levels of skepticism on a promise Mr. Harper won't need to keep for 5 or 6 years.

I believe it's unrealistic for the federal government to ask our towns and cities to wait another half decade to repair crumbling bridges and make other necessary upgrades to roads, water and transit systems.

Infrastructure investments do more than create good jobs. They improve our quality of life.

Look at the dividends from the Pacific Gateway. Look at the Canada Line.

Flaherty: Not-so nice guys finish last

A couple days ago, I wrote a blog on Jim Flaherty that took the politically correct position: Flaherty was a good person, but not-so-good finance minister.

Today that got me thinking how political correctness tends to make hard-right conservatives, like Flaherty was, want to puke.

Therefore, I thought, why not walk a mile in the shoes of your typical angry, white, male conservative and take the politically irreverent position that Jim Flaherty was actually a mean, nasty son-of-bitch?

Not-so nice

I base this on an article written by fellow Progressive Blogger Warren Kinsella which was published in the Toronto Sun three weeks ago: Not-so nice guys finish last.

Here’s an excerpt (taken without the author’s permission, of course — like any ranting and raving blogger is going to bother with that!):

In federal Conservative circles, stories about Flaherty’s temper and temperament are legion. Just before his sudden resignation last week, in fact, one Conservative very close to Prime Minister Stephen Harper told this writer about how disliked Flaherty was by Hill staff and many of his colleagues.

Flaherty had a bad temper, the Harper loyalist said, and he did not ever hesitate to rain opprobrium on those below his station. He could be, and frequently was, “very nasty to those with less power,” said this veteran Conservative.

Bonus indignity

While Canadians take pause to remember Jim Flaherty on this solemn day, let us not forget last December when Flaherty — on the floor of the House of Commons — screamed “Shut the fuck up!” at Jason Kenney for daring to suggest Rob Ford should resign.

Happy ranting! And just remember: being conservative means never having to say your sorry — or ever believe you did anything wrong!

Proportional Representation: beginning of real majority government

Although I probably disagree with everything Andrew Coyne has to say on economic issues, he has great insight on Proportional Representation:

“It’s true, as opponents point out, that PR would make majority governments unlikely, given how rarely a party wins more than 50 per cent of the vote. But would it really? It would certainly make one-party majorities less likely.

“But nothing would prevent the formation of stable multi-party majorities—real majorities, that is, not the phoney ones we have today—as is the norm in the dozens of countries around the world that use some form of PR. In this sense, PR would not mean the end of majority government, but the beginning of it.”

Minority majority fallacy

FPP supporters say PR is flawed because it makes majority governments improbable. Of course the fallacy is they believe minority parties should get majority power — specifically, their minority party.

But when we dole out absolute power to a minority party, it leaves the actual majority of voters out in the cold — which is the literal opposite of democracy.

In the rest of the developed world — 29 of 34 developed countries use PR — multi-party coalitions are the norm. They form stable majority governments that usually serve out the entire election term.

Better government with PR

PR puts an end to the cutthroat, hyper-partisan politics that plague Canada under FPP. It ends frequent minority government elections. And it fosters inter-party cooperation and compromise, ensuring true democracy and real majority rule.

Flaherty: good person, not-so-good finance minister

Jim Flaherty is being remembered by Canadians across the country as a kind, decent person and dedicated public servant.

But some pundits are taking things too far. In a shallow attempt to promote the Conservatives’ agenda, some are claiming he was one of the best finance ministers in our country’s history.

If one looks into the facts, however, it becomes clear he was anything but.

Starve the beast

Flaherty implemented a neo-conservative “starve the beast” agenda with massive, reckless tax cuts that primarily benefited the rich. That blew a whopping $44-billion hole in the budget. The purpose of this “tax relief” was to cripple future governments and bankrupt the social safety net.

He brought in phone-book-sized omnibus budgets that amended dozens of pieces of legislation to bypass scrutiny and neuter the democratic process. He withheld public budget documents from the Budget Office his government created.

Cuts, cuts, cuts

He unilaterally gutted health transfers by $36-billion; slashed EI benefits after raiding a $54-billion EI surplus; he dismantled social programs built over generations. According to the Budget Office, he balanced a budget mess — he created — on the backs of the provinces.

Housing bubble

Then there was his mortgage deregulation scheme that caused the Canadian housing bubble. He nationalized over $150-billion of banks’ mortgage debt by deregulating the CMHC. So if the housing bubble bursts, taxpayers could be on the hook for hundreds of billions of dollars.

After doing all that, he had the gall to say the CMHC — whose original mandate was to help first-time home buyers — should be dismantled.

Financial crisis

Flaherty is given a lot of credit for his handling of the 2008 financial crisis. But this is really a case of being born on third base saying he hit a triple.

As The Economist pointed out in 2010, “Much of the country’s resilience stems from policies—such as bank regulation and sound public finances—which predate” Flaherty.

In the fall of 2008, Flaherty planned austerity measures that would’ve made the recession worse. He was forced to adopt a stimulus package by opposition parties who nearly voted his government down.

Conclusion

The destruction Flaherty caused with his neo-con wrecking-ball agenda shows Canada desperately needs a democratic voting system.

If we had government that represented an actual majority of voters — instead of a dictatorship controlled by a 40% minority party — none of this would’ve happened.

It’s time to ditch our corrupt voting system First-Past-the-Post as most develoed countries have done. Either proportional representation or ranked ballot voting will bring real democracy to Canada.