Sunday, 11 January 2015

Canada's economy: nothing to brag about

Considering the ghastly events in Paris this past week, it's no surprise that the economic data that were released in Canada and the US received less media coverage than usual.  However, the two countries' employment reports for December merit a bit of attention, since they show that the Canadian economy, at least in job creation terms, continues to underperform its southern neighbor to a startling degree.  This will have a significant impact on Canadian politics and economic policy during 2015.

First, a quick look at the data. The US ended its best year of job growth since 1999 by adding more than 200,000 jobs in December.  In contrast, Canada shed 4300 jobs in the month, the second consecutive monthly decline.  Some analysts took consolation from the fact that there were 54,000 full-time positions added in the month, with a more-than-offsetting decline in temporary employment, while others preferred to focus on the falling percentage of the population holding any kind of job.

The Harper government has for years planned to use its stewardship of the economy as its key election plank for the vote expected in October 2015. A couple of months ago it became so excited at the prospect of running a budget surplus this year that it announced a slew of new tax cuts timed to hit voters' bank accounts just before voting day. Largely as a result of plummeting oil prices, it now looks as though the Tories won't just be spending the surplus before it's actually been recorded: they'll be running the deficit back up, because there won't be any surplus to spend. In general, voters have little appreciation of matters fiscal, particularly if they're the recipients of a nice fat cheque, but it's certain that the opposition parties will try to turn the Tories' past bragging against them.

Looking at the broader economy, the employment data are deeply worrisome. Surprisingly, given the oil price collapse, it was Alberta that saw the best job gains in December.  However, first signs of layoffs in the oil patch are starting to emerge, and the province's job picture is likely to darken considerably as long as oil prices remain weak.  Alberta's provincial finances are already the worst in a generation.

Across the country in Ontario and Quebec, there are (or were) hopes that the fall in the exchange rate caused by lower oil prices could give a boost to the manufacturing sector. It's hard to hold out much hope for this.  The huge auto and steel plants in southern Ontario that have been shuttered over the past couple of decades are not going to reopen just because the Canadian dollar is weaker:  you only have to drive past one of these hulking relics to realise that the only question about their future is whether they fall down before anyone gets around to demolishing them.  With the Harper government bound and determined to conclude more free trade pacts, the long-term direction of Canadian manufacturing employment can only be downward.

This largely unexpected darkening in Canada's near-term economic outlook makes it risky for Harper to pin his re-election campaign on his party's economic management, though it has to be said that the incoherence of the opposition parties on such matters may help him ride out the storm.  However, it's no surprise that Harper is talking up his foreign policy credentials in order to provide an alternative story at election time. His main foreign policy moves -- saber-rattling over Ukraine, support for Israel that's so inflexible that it even embarrasses the government there -- are inconsistent with Canada's past dealings with the rest of the world, but play well with large ethnic groups within Canada that Harper is anxious to court.

And what about the Bank of Canada?  Governor Stephen Poloz always seems to be looking for reasons to keep policy ultra-accommodative, and the weak employment trend certainly plays into that bias. Falling retail gasoline prices may well drive headline inflation much lower in the first part of the year, giving the Bank further leeway to avoid tightening. And yet....Deutsche Bank released a report this past week warning that the Canadian housing market is overvalued by 63 percent.  That was just one of seven reasons why Deutsche believes that the Canadian economy is in "serious trouble" -- and all of those reasons come back in the end to the pernicious effects of ultra-low interest rates.  Unlike Stephen Harper, Poloz doesn't have to face the voters this year, but both men have plenty of reasons to keep their fingers and toes crossed that nothing goes badly awry in the next few months.

** Nothing to do with all this doom and gloom, of course, but I will be heading south for a couple of weeks for a respite from winter.  Posting should resume at the start of February.    

Thursday, 8 January 2015

Justice and vengeance in the era of social media

As you read through this post, please keep one thing in mind. I think the fact that women are finding the courage to come forward about sexual violence and abuse is a good thing.  However, the way that social media are piling on to alleged perpetrators is deeply disturbing.

Have you ever heard of Ched Evans?  He is, or was, a professional soccer player in England. In 2012 he was convicted of rape and given a five-year sentence.  With the usual time off for good behaviour, he served half the sentence and was released in October 2014. It's worth noting that to this day, he denies the crime, and indeed the conviction is being investigated by the authorities, who fear it may be "unsafe".  Regardless of how that pans out, Evans was dealt with by the law and took the punishment that the law imposed.

Since his release, Evans has been trying to resume his playing career.  However, any club that has been linked with him, even tentatively, has been subjected to campaigns of vilification in the media and even threats of violence.  The most recent team contemplating hiring him, Oldham Athletic, has had to step back. For the social media lynch mob, it's not sufficient that he's done time for the crime; his entire life must be ruined. A separate set of internet trolls has been determinedly making the life of Evans's victim a misery, even though she has supposedly been granted anonymity.

Meanwhile, at the school of dentistry at Dalhousie University in Halifax, Nova Scotia, there's a nasty little scandal over a sexist Facebook group run by some of the male students. Judging from the details that the media have seen fit to publish, the discussions among the group were nasty and tasteless, though arguably they're just Animal House-era sexism updated for the age of social media. There doesn't seem to be any prospect of criminal charges; being unpleasant and boorish is not a crime.  However, the university is under tremendous pressure to throw the book at the students involved.  A normal type of academic punishment, such as suspension for a term or a full year, is not seen as sufficient: there are demands that the names of the "guilty" be made public, so that regulatory boards across Canada can block them from ever practicing their profession.  Proportionate punishment is not enough: these people's entire lives must be laid waste.

Staying here in Canada, former CBC radio journalist Jian Ghomeshi appeared in court today for the latest stage of proceedings against him relating to allegations that he engaged in violent, non-consensual sex with a series of women. The number of charges against him has now risen to six, all dating back several years. Ghomeshi intends to plead not guilty, but regardless of how the legal process eventually pans out, he has lost his job and has zero chance of ever working in Canada again: the court of public opinion, stirred up both by the traditional media and the internet, has spoken.    

Three separate cases with three separate legal situations.  Ched Evans: convicted, sentence served.  Dalhousie students: nothing illegal has taken place. Jian Ghomeshi: awaiting trial, so still innocent in the eyes of the law.  But they're all the same in the eyes of the self-appointed moralists hiding behind the anonymity that the internet allows.  The heck with the justice system: there must be vengeance. There's nothing new about the lynch mob, of course, but its ability to wreak lasting harm on its chosen prey in the age of the internet is deeply disturbing to anyone who believes in justice.  

Friday, 2 January 2015

Reality check

I got my hair cut during the holidays.  It really made me think.

I frequent a haircutting place in St Catharines, a smallish city just down the road from us. It's a proudly blue-collar place with a strong trade union tradition, built on manufacturing.  Historically its foundations were family, faith, the factory and hockey, though not necessarily in that order.  Like other towns in this area, and like many similar regions across the northern tier of the United States, it's fallen on harder times in recent years.  My hairdresser's story is a microcosm of what happened to the place.

A couple of decades ago, she worked in a food processing plant operated by a major multinational company.  The union was strong, wages were good -- would still be good by today's standards, in fact -- and there was a full benefits package. There were thousands like her all across the city: at its peak, General Motors alone employed more than 15,000 workers in St Catharines, in two vast factories.

Then along came the Canada-US Free Trade Agreement. The soft fruit that the processing plant handled could still be grown here, but it could be grown cheaper further south, so the multinational shuttered the place and headed for a "right to work" jurisdiction south of the border.  That put the soft fruit farms out of business: if you try to buy table grapes in this area today, you'll find they come from Mexico or Chile.  My hairdresser and all her colleagues had to retrain, at their own expense, for less secure and much lower paying jobs, like cutting hair.

Today St Catharines has only one GM plant still operating, with a payroll of about 2,000. The principal source of new jobs in the area is call centres.  In the prosperous little town where I live, just about every person who serves me at a restaurant, or the grocery store, or the bank, drives the 15 or so kilometres from St Catharines every day.  Most of them seem to be holding down two jobs just to make ends meet.

The soft fruit farms have been replaced, either by new housing -- the land my own home is on was an orchard ten years ago -- or by vineyards.  Those provide employment, of course, but a lot of it is seasonal work and it's done by workers flown in from Jamaica or Mexico to work 12-hour days in the fields at minimum wage.

So I was wondering.  When the economists in the big bank towers in Toronto -- which you can see across the lake from St Catharines on a clear day -- publish reports on free trade, and talk about comparative advantage and such things, do they ever think of the human aspects of it?  When the politicians and bureaucrats up in Ottawa -- the most white-collar town in the world -- conjure up new free trade deals with Japan and Korea and China and anyone else who'll sign up, do they ever think about what it may mean for what's left of the economy in St Catharines and a host of other similar places?  I wonder if they think about that, because I know that when I was working in those bigger cities, I never did.

Tuesday, 30 December 2014

Making the case for higher taxes

No politician in Canada, and few in the rest of the world, can get elected these days on a tax-and-spend platform.  But that doesn't stop left-wing think tanks from trying to make a case for a return to the perceived halcyon days of yore, when happy citizens forked over a large chunk of their earnings to beaming politicians, who in turn provided efficient and effective public services. The op ed page of today's Toronto Star has a piece on these lines, by a father-and-son team named Himelfarb.

It's not clear to me that people are opposed to taxation per se; rather, they've lost faith that politicians will keep their side of the bargain by using public money wisely.  A look back at the past several decades here in Canada provides ample grounds for this skepticism, and there are similar tales to be told in other rich countries.

Back in the 1950s and 1960s, Canadian taxation rates were relatively low, yet governments were able to construct a social safety net, establish medicare and create all kinds of infrastructure, especially highways, all without going into debt.  By the 1970s and 1980s, however, it all started to go wrong.  Taxes were on the rise and so was public borrowing, yet services began to erode and it proved harder and harder even to maintain the infrastructure, let alone add more.

The 1990s saw the worst of all possible world for most Canadians. Marginal income tax rates were well north of 50 percent even on relatively modest incomes, yet services were being slashed as governments at both the federal and provincial levels struggled to service the mountain of debt taken on in the preceding decades.

With that fiscal crisis out of the way (mainly thanks to strong growth and low interest rates in the United States), tax rates have generally fallen in the past decade. Yet evidence of the inability of governments to manage the public's money effectively, or even ethically, continues to abound. Here in Ontario we have seen $1 billion of taxpayers' money frittered away on the cancellation of two power station projects, solely to win political advantage for the ruling party. As much as $3 billion is being spent to host next year's Pan Am Games, a third-rate (I'm being kind) sporting event that is of virtually no interest to the public. A scheme to provide an "incubator" just across the street from the provincial legislative building to foster scientific research has been an abysmal failure and is being bailed out to the tune of hundreds of millions.....the list goes on.

At all levels of government there's venality. Expenses scandals have roiled the federal Senate for years, leading to calls for the chamber's abolition. Municipal politicians across the country have been caught in similar hand-in-the-till scandals, with the recently ousted Mayor of Brampton, Susan Fennell, the highest-profile example. Brampton is a satellite city of about half a million residents just northwest of Toronto, a nondescript place that justifies dusting off Dorothy Parker's old insult about Oakland: "there is no there, there".  It's only about the fifth or sixth largest municipality in Ontario, yet Ms Fennell was by a wide margin the best-paid mayor in Canada for many years -- and a serial waster of public funds, particularly on first-class travel for herself and her bloated entourage.

Given this track record -- and this is a very partial list -- it's impossible to feel any sort of surprise that the public has adopted a "won't get fooled again" attitude to taxation. People like the Star's two columnists today may like to think otherwise, but it's hard to see where any kind of consensus will emerge for a higher taxes/better services approach to the economy.

Perhaps in a sign of despair that the message is not getting across, the Himelfarbs try to put a green spin on their case: pay more tax, save the planet.  Well, good luck with that.  There's rejoicing across the land that the price of gasoline has fallen below a dollar a litre for the first time in years.  Woe betide the politician (or columnist) who sees this as a good moment to hike gas taxes.

Sunday, 28 December 2014

Trip and fall

There was an enjoyable little movie that came out in the UK a few years ago, called The Trip. It basically followed two comic actors (Steve Coogan and Rob Brydon), playing very slightly fictionalized versions of themselves, as they drove around the north of England, staying in fancy hotels and eating elaborate meals.  The notion was that Coogan was to review the restaurants for The Observer newspaper. It was part travelogue and part food porn, but the real pleasure was its unscripted feel, as the two protagonists discussed all manner of topics while airing their favourite impersonations: Michael Caine, Al Pacino and many more.

So this year we have the inevitable sequel, now available on DVD: The Trip to Italy.  And it's an epic fail.

Coogan and Brydon are both back, as is the conceit that The Observer has commissioned a series of restaurant reviews.  This time the journey is to take the pair from Turin to Rome and ultimately to Sicily. Italian scenery, Italian food and wine, killer impersonations -- what could go wrong?  The answer, alas, is just about everything.

The scenery is wonderful, of course, but the movie was clearly not made in the sun-baked summer months.  The weather is frankly a bit grey throughout, which does nothing to enhance the dolce vita vibe that the producers were obviously hoping for.  There's food, but it gets a lot less screen time than in the original movie. And there are duelling impersonations, but those fade into the background as the movie progresses, because a fatal mistake has been made: instead of relying mainly on the quickfire comedic talents of its stars, The Trip to Italy has a worked-out-in-advance plot.  The loss of spontaneity makes the movie far less enjoyable than its predecessor, and even a bit mean-spirited.

Even worse, the movie unerringly aims for the cheapest gags. Brydon and Coogan make the drive in a Mini, mainly so that they can do the obligatory Michael Caine/Italian Job line,  "you were only supposed to blow the bloody doors off" -- but this is pretty much thrown away right at the start of the film. Later, at Pompeii, Brydon hauls out one of his moldy-oldie party pieces, an odd little vocal thing called "small man in a box", to have a conversation with the calcified corpse of a victim of the Vesuvius eruption. Not, perhaps, in the best of taste, but worse than that, not funny.

A quick look at Rotten Tomatoes reveals that critics quite liked The Trip to Italy, but regular audiences were much less impressed. I'm with the paying customers on this one.  My three word review: non mi piace. 

Monday, 22 December 2014

Merry Christmas!

Compliments of the season to all* readers of the blog, and best wishes for a healthy and happy 2015.

* Including the mystery reader from Italy who hits the same three posts several times each day.  What's that all about??  

Friday, 19 December 2014

Rule of Schlock

You may think that the most depressing news out of the entertainment world this week is Sony's capitulation over the release of The Interview, but trust me, this is worse!

With new ideas ever harder to find, I suppose it's no surprise that someone has hit on the notion of a Broadway production of School of Rock. The movie was an enjoyable though lightweight Hollywood feel-good fantasy, made watchable mainly by the reliably off-kilter presence of Jack Black in the leading role.

The movie's soundtrack was mostly unoriginal, featuring killer tunes by the likes of The Doors and Led Zeppelin.  So guess who the producers of the stage version have chosen to write new material for the stage version.  Yes, it's a man whose very name is synonymous with rock'n'roll -- Andrew Lloyd Webber!  Truth to tell, it's hard to think of any living composer with less rock sensibility than old Andrew, but his name in lights outside the theater will certainly pull in the punters, at least those who did not run screaming into the streets from Starlight Express or Cats.

And of course the story itself has to be adapted for the stage, and who better to do that than...Julian Fellowes! Yes, the plummy British toff whose tin-eared dialogue and preposterous plots have mysteriously attracted a global following for the execrable Downton Abbey.  Who better than a man who can't write believable dialogue for people of his own race and class to put words into the mouths of a misfit American teacher and a group of feisty teens?

Two creaky members of the British House of Lords writing a rock musical for Broadway -- by all that's logical it should have about as much chance of success as Springtime for Hitler.  It's scheduled to open next November at the vast Winter Garden, where it will replace the equally implausible stage version of Rocky.

I think I may start a rumour that their Lordships are inserting Kim Jong-Un into the storyline.