(Over)Stimulating an Economy

I hesitate to judge the economic rescue/stimulus packages passed by the various countries in the world. I only hesitate because I am not an economist. My knowledge of how the economy functions really relies upon what I absorb from media and what I've learned in my academic career.

That's all well and good, but as a citizen it is my responsibility to be critical of my government's action. I have no objections to the Canadian plan of action, but there is our neighbour to the south that I wish to discuss.

The Democrats and Obama has introduced some incredibly radical legislation in recent months to "deal with the crisis." I want to point out that my problem isn't in particular the Democrat's spending priorities, but with the amount of spending itself and the way the spending is being carried out.

As a student of history the most effective way to stimulate the economy is as part of a broader program. By this I mean the following, it's usually not enough to just throw money at the problem. Instead of just pumping billions of dollars into the economy it should be more targeted. For all of the problems of the New Deal many of the projects that were carried out benefits the economy to this day. Eisenhower primed the economy with the interstate system, Hoover built a certain dam located somewhere in the Southwest, the name escapes me.

Here's the trouble. The Americans have over stimulated their economy from the get go. Spending is absolutely out of control before this crisis, and even more so now. Keynesian economic policy says the ideal situation is that going into a recession the government goes into debt to revitalize the economy. During times of prosperity the government saves up, pays off debts. This is a pretty sound idea, no? In the 1990s and 2000s the American congress has been swimming in red ink, and now they are drowning in it.

I would argue that if spending had been controlled over the past fifteen years the problems today would require much less spending to recover. This is all part of the corrupt nature of American politics. There isn't corruption as in old politics of politicians pocketing government funds and handing off contracts to friends (while that still happens, but not in a systematic way). Instead elected officials are expected to get a big slice of the pie for their districts or states. These are earmarks.

The fact is that there are not that many "meaningful" projects to fund. I'm confident some of these earmarks were/are valuable, some congressmen/women get money for much needed projects, but can there be so many deserving projects. What about these research projects figuring our uses for wood, and bear DNA?

Regardless, now when it is time to push money into the economy it is already obscenely bloated, and government debt is huge so the impact of this new debt is getting truly staggering. It hampers the effective nature of these policies, because the economy is already heated up with government spending.

As a final criticism I'd like to go back to the idea of a broad program. Why doesn't Obama introduce an idea of a fundamental economy-shaking investment in the economy? Instead of just throwing money in why doesn't the American government start a real program. Begin investing money so that the American economy no longer works on gasoline. Invest in hydrogen technology, build new powerplants, and bring in this "smart grid" that has been mentioned. Invest billions in a meaningful way that will obvious profound implications on the American economy.

But like I said, I'm no economist.

Constituency of One

It has been two months since I last contributed anything on here, for which I am sorry. I have been busy. So has Ottawa.

The Canadian budget is coming to a vote. And the illustrious Liberal Party has decided to back it under their new leader Michael Ignatieff. It makes sense. The budget has a lot of money that the broad Liberal ideology cannot object to. Also, the idea of calling an election in the current climate, under a relatively unknown leader is probably - strategically - a bad idea. Bad or unstable economic times feeds two reactions amongst Canadians historically. Option one is throw the bums out, ask R.B. Bennett about that one. The other is to hold on to the party in power, and strengthen their government because they are trusted on the economy and stability is desired, Mulroney.

It's never known how the Canadian public will decide, that's usually figured out during the campaign, and how much they blame the economic downturn on the government in power.

The point isn't about the government as a whole. Or even the economic downturn. It's about four MPs from Newfoundland.

According to these Liberal MPs the budget is punative to their home province, a total of $1.6 billion in transfer payments. The Liberals under Ignatieff have already vowed to support the vote so that the Harper government doesn't collapse. To make this work Ignatieff has allowed a "one-time" protest vote for the Newfoundland MPs against the budget.

Ignatieff shouldn't have the right to "allow" these MPs to vote the way their constituents would want, to represent their interests. This is unconscionable. Ignatieff said, "I decided to permit them in the budget vote tonight a one-time vote of protest to signal their displeasure and my displeasure at these unilateral actions which, in my view, weaken our federation, cause strains in our federation at a time when Canadians should be pulling together."

MPs should care about what matters for their constituents and the business of party-line is becoming destructive to the interests of the Canadian people, especially to their regional interests. Newfoundland in the last election had a concerted ABC campaign - Anyone But Conservative - Resulting in the election of 1 NPD, 6 Liberal and no Conservative Members of Parliament. Perhaps we should abandon national parties, because of the abuse of our regional interests and follow the Bloc's lead and merely fragment ourselves.

I suppose it doesn't matter for now though, because for now they've been permitted to protest.

Letters to Leaders

Fair Vote Canada, an electoral reform advocacy group has asked members to contact their members of parliament and the leaders and demand them to uphold democratic principles. I wrote my MP, Allen Malcolm and Jack Layton. I am a member of the New Democtic Party, and so felt this was the best way to express myself.

Dear Mr. Layton,

In the previous election you informed the voters that as a condition of joining in a minority government you would demand a referendum on proportional representation. Will you keep your promise to me - a supporter, and constituent of an NDP parliamentarian and all Canadians, and demand that a vote be held? Will a reform minded leader be put into the Democratic Reform slot - Liberal or NDP? Had proportional representation been in place for the 40th Canadian Federal election we would not be having the trouble we are now, with your party and the Liberals dependent upon the Bloc for support, which is very troubling for people like myself. I am a democratic reformer first, and a New Democrat second, please keep your promise Mr. Layton. Canadian reformers are counting on you.

Thank you,
Steven J. Lee
St. Catharines

To get the information you need to contact your member of parliament click the link below:

http://www2.parl.gc.ca/Parlinfo/Compilations/HouseOfCommons/MemberByPostalCode.aspx?Menu=HOC

Also please consult Fair Vote Canada's website to see the promises we can hold the parties to.
http://www.fairvote.ca

http://www.fairvote.ca/files/Action%20call%20to%20partisan%20supporters%20-%20nov%2028%202008%20-%20final.pdf

The Big Three

Everyone I think who was born and raised in Southern Ontario, or many of the America's Great Lake States can intrinsically feel the importance of the automotive industry. The Big Three North American produces are GM, Ford and Chrysler. They have in many ways shaped the 20th century in almost every respect. Ford introduced mass production and refined efficiency that allowed for a great manufacturing boom.

The automotive industry shaped a way of life, they gave us access to a freedom of movement that was unheard of in the past. The predominance of the car in our society has changed our infrastructure, our cities, our culture, our way of life and where we live. These have been for the positive and the negative, for all the freedom there is urban sprawl, for all the employment there is pollution.

The dynamic new landscape of globalization has been felt particularly strongly through the auto industry. When globalization rears its head because a factory is moving to a far away land its impact is felt particularly hard when a plant is shut down and hundred lose their jobs devastating a community. There's another side though, and that's foreign competitors coming to North America, one only has to look on the road to see all of the Hondas and Toyotas to see what's happening. North America used to be a reliable market for the auto industry, but now the consumers look for what's cheap, and what works.

The auto industry is now in serious crisis. They have their hands out again, seeking money to stay afloat while the world economy loops about in its tailspin. On one hand I think from a business point of view it would simply be best to allow these companies to declare bankruptcy and go through the painful process to restructure themselves. They suffer terrible inefficiencies, and if they are not fixed they will merely return to our governments' capitals, hat in hand. The downside is the economic maelstrom that would unleash. So many individuals, families, communities, regions, and countries are dependent upon these manufacturers that if they fell the fallout may be incalculable.

I throwing good money in after bad, it's a bad idea as an individual and worse as a government. These Big Three need to prove that they've found a realistic solution to their problems, possibly be simplifying their operation, is it really necessary for GM to have twelve brands (Buick, Cadillac, Chevrolet, Daewoo, GMC, Holden, Hummer, Opel, Pontiac, Saab, Saturn, Vauxhall)? What are the real differences between a Buick, Chevy, Pontiac or Saturn car, it just costs more in marketing.

If the auto industry fails it would be a truly incredible and awful sight for the ramifications on life in North America. It's something that paying now merely delays it for another day, but that day may inevitably come sooner rather than later.

Our Land

It is American Thanksgiving soon, and about a month ago Canadian Thanksgiving past. Thanksgiving never struck me as a particularly important holiday, but it has gained importance in my life and the lives of my peers because it is the first major holiday on the academic calendar that allows most students to venture home. This has also led to the infamous "Turkey Dump," a phenomenon where college students grow weary of their long distance relationships and break up over Thanksgiving.

I have very much moved off the topic I wanted to discuss. Thanksgiving is about really one thing, the colonization of North America by Europeans, obviously at the expense of Native North Americans. The policies enacted under a variety of governments over a string of centuries has really only made matters worse. Policies ranged from war to active genocide, starvation, exploitation, deportation, and social engineering schemes. The legacy of our provincial and federal governments are deeply marred by our treatment toward Native peoples. It is a mark that should shame Canadians.

While I'm deeply troubled by our historic relations to the Aboriginals I have a greater concern about our contemporary relationship with Native issues. At the moment Natives live on these horrible social arrangements called reserves where according to their original intention they are supposed to eek out a living as their ancestors had in the 17th century. This is backwards. In countries across the world it is not the goal of government policy to keep aboriginal groups tied to a time and a place that is outside the modern world.

Instead of integrating Native people into our society, we've excluded them, and our attempts to integrate them have done more harm than good. If we place people in the relative wilderness and expect them to govern themselves can we really be surprised when E. coli breaks out, or there is corrupt governance.

I don't have a solution, not really, but my feeling is that the reserves are not it. How are Natives suppose to end up anywhere but the bottom of society unless they relinquish ideas about maintaining a standard of living contemporaneous with European contact? Maybe it would be best for the Canadian government to repeal the Indian Act, abolish the reserve system, divide the land between the tribe, over them the same tax benefits, and pay each Native a hefty sum, and wish them luck.

How long do we compensate Aboriginals for their land? If Canada survives that long, in 500 years do we still make noise about how we took their land, how this is theirs by rights. How long before their land is our land, Natives and new Canadians included? I think it may be time to change things and for us to acknowledge the reality of what the 21st century looks like.

Writing the Last Chapter on 2008

This Tuesday millions of American citizens will go out and vote. Record turnout is predicted, which is a positive since their turnout has been on a progressive decline for many years now. On Wednesday (one assumes there will not be a repeat of the 2000 election fiasco) we will know who the next leader of the free world will be.

Polls indicate that it will be Barack Obama who will win, not only does he lead nationally (a fairly irrelevant number) but his total lead in individual states leads to an electoral victory well over 300 points, when only 270 are needed to win. The Democrats are projected to have about 250 seats in the House, and 55-60 Senators. While we must stagger at the nature of American democracy in many respects there are some things that I'm glad we are not a part of.

The most disturbing thing about American elections is that there are only ever really two parties. With the exception of the 1912 election when former-President Teddy Roosevelt ran as a Progressive candidate no national third party has one any electoral votes (ignoring the typically racist southern-minded of the mid-20th century). Ross Perot came close in 1992 but failed to achieve this goal. There are two non-Republican, non-Democratic Senators at the moment, one is Joe Liberman, who is the former-Vice Presidential nominee for the Dems in 2000, he got booted out for his cozy relationship with the Republicans. And there's Bernie Sanders, a social democrat from Vermont, which is fine if you're from Vermont.

So really this democracy is an osilation with two political parties, which on many issues aren't that far apart.

The electoral college is another thing. It massively increases the voting power of individuals from populace states, and disenfranchises the losing candidate's voters. A voter in Pennsylvania has a vote seven times 'heavier' than a voter in Montana. Pennsylvania has 21 electoral votes, Montana 3. The states operate on a first-past-the-post system to determine the winner (except Maine and Nebraska), who ever receives the most votes wins all the electoal votes, so even if the state is split 50-50, the electoral votes break 100-0. Republicans in Washington D.C., or Democrats in Utah never really get to express their choice for President.

Perhaps most worrying of all are the dramatic reports on the failure of automatic voting machines and other mechanical and programming failures of such technology. Some are from conscious sabotage, but most is machine error, like a report of one that would record the votes opposite of what they were, McCain votes for Obama and Obama votes for McCain. Clearly the numbers we see on the screen could be entirely irrelevant.

While the American idea of democracy is very attractive with their deep passions, entrenched democracy, and active vibrant debate (most of the time) there is still a deep flaw and on Tuesday as Americans pat themselves on the back, I'm going to be keeping that in mind.

Defining Qualities: Jihad, Elections and Obamanomics

There are a variety of things I'd like to discuss today and so I shall do my best to cover them all in a brief, and concise manner.

I am fresh from a seminar, what the particular seminar about is not really important, because what we talked about could crop up in almost a dozen different disciplines. The subject had to do with a particular historical group of Muslims and their attempt to overthrow a despotic regime and replace it with one more in line with the peoples needs. The regime would not go down without a fight so they declared a jihad and began a protracted military campaign against the ruler.

The opening question of the seminar was really quite simple, "What does jihad mean?" The answer around the room was a fairly uniform "Holy War" answer. That assumption is utterly incorrect, yet the T.A. did not step in and correct them, and I thought it would be in bad form to tell seven of my colleagues that they were clearly wrong. Jihad means literally to strive or to struggle. Muslims adhere to several interpretations of what jihad is and it is expected that a Muslim goes through such a period. The most critical jihad, the founder of the religion said, was the one between you and your faith. Yes, there is a component of war, but there is also one of fighting injustice, and also the personal struggle to do the right thing.

Sigh. I just expect more from my colleagues.

On the Canadian election results I can say quite honestly that I am satisfied with the results though I wish certain things turned out differently. I wanted a stronger NDP presence in the House, and weaker Liberal, Bloc and Conservative one. The outcome is truly unknown right now. The question is how will the House of Commons operate when it returns. Also, who will staff the cabinet. Did Harper receive enough solid candidates to make a stronger cabinet, or is it him, a handful of others and another bunch of suits?

Also, will the historically low turn out push the parties in to finally enacting much needed election reform in this country, as advocated in an earlier posting on this blog. What an utter waste of time First-Past-The-Post is. With such a system you might as well just have two parties, or just anoint a benevolent dictator.

The final thing that occurred to me to write about is that a few days ago I was watching TV and I saw the speech Obama gave on the economy, and his solution to the economic crisis. I've since read the reports of what he said in the debate but I'm not sure I can agree to everything he said, but the main tenents of his economic policy is pretty much what I would do in his shoes. The technology investment fund, investment in clean energy industry (not subsidies, investments), and the best part - Infrastructure investment.

The improvement of roads, rails and whatever else is critical to the success of any economy. According to many America's infrastructure has been slowly crumbling for decades (see the bridge collapse in Minnesota as proof). A broad spectrum investment program will put lots of people to work, and if the right areas are targeted it will jump start the economy.

That being said I oppose Obama's tax increase on those making over $250,000 - at first I thought it was reasonable, but the more reading I do about it the more I realize that small businesses are critical to economic growth and recovery. Also his tax plan relating to small businesses and thought to prevent outsourcing seems like whistling in the dark to me.

His speech made me much more comfortable that I have been about an Obama presidency before now. It's not the best economic strategy in the world, but it's alright, definitely satisfactory a B- plan. Still, if I was an Ohio voter instead of an Ontario observer I don't know who I'd vote for, though I have a great deal of respect for McCain and divided government.

We can only hope for the best and try to make the decisions that work best for us and our communities economically at this point. It should be an interesting next few weeks, months and years.