GST on poppies

I was doing the recycling when I noticed a newspaper editorial (that appeared back in November throughout the Sun Newspaper chain) by Kalvin Reid entitled, Tax on Poppies is Pure Poppycock.

Welland NDP MP Malcolm Allen introduced a private member's bill to eliminate GST on poppies and the conservative newspaper chain's columnist urged readers to lobby their MPs to support this bill.

This is all very strange to me.

We wear poppies to honour and remember those who sacrificed for Canada, and yet we are so unhappy to pay taxes to support our country, that we are willing to go to considerable expense to introduce legislation and then create an exemption for poppies?!

I say that I'm happy to wear a poppy and find it particularly appropriate to pay a tax on poppies to fund my government. I'll put in a little extra into the Royal Canadian Legion's box next time.

Can taxes be too high? Sure, but the problem is in how efficiently or effectively they are spent, not in the fact that we pay them in the first place.

And most ironic of all? That an NDP member of parliament would be the one to introduce such a bill. NDP?! Hey, NDP, it's like when folks complain about how union dues are too high! You of all political parties should know that if people do complain about high union dues, they need to be reminded about the struggles and sacrifices so many people have made in the past just so that they could have unions.

Sociology of climate denialism

I've been struggling to understand this, and a letter to the editor of the Kingston Whig Standard today is worth noting.

Local climate denier, G.F. Millar writes:

Re: Gwynne Dyer's "History will repeat itself," Nov. 2.

So the bad news is coming fast, according to the intrepid Mr. Dyer. Last year the "bad news" was: CO2 had reached the tipping point at 350 ppm, (head for the hills!). This year it seems we can live with 450 ppm. Can't wait for 2010.

In 1975, the NAS "experts" exhibited the same hysterical fears -- this time, however, asserting a "finite possibility that a serious worldwide cooling would befall the Earth within the next 100 years."

In The Cooling: Has the Next Ice Age Already Begun? Can We Survive It?, published in 1975 by Prentice-Hall, its author, Lowell Ponte, captured the then prevailing mood: "The NAS report was shocking, for it represented a warning from some of the world's most conservative scientists that an Ice Age, beginning in the near future ... was not impossible." Contending that we may be on the brink of a (100,000 year) period of colder climate, the NAS urged an immediate near quadrupling of funds for research. "We simply cannot afford to be unprepared for either a natural or man-made climate catastrophe."

Mr. Ponte lectured the public: "Global cooling presents humankind with the most important social, political, and adaptive challenge we have had to deal with for 110,000 years. Your stake in the decisions we make concerning it is of ultimate importance: the survival of ourselves, our children, our species."

Any of this sound familiar?

This is basically a cut and paste job (with some little changes for exaggeration) a May 1998 (!) letter to the editor of right-wing newspaper, the Washington Times, by noted climate change denier, S. Fred Singer.

He writes:

But this exaggerated concern about global warming contrasts sharply with an earlier NAS/NRC report, "Understanding Climate Change: A Program for Action." There, in 1975, the NAS "experts" exhibited the same hysterical fears—-this time, however, asserting a "finite possibility that a serious worldwide cooling could befall the Earth within the next 100 years."

The 1975 NAS panel claimed to have good reason for their fears: Global temperatures had been in steady decline since the 1940s. They considered the preceding period of warming, between 1860 and 1940, as "unusual," following as it did the "Little Ice Age," which had lasted from 1430 to 1850.

In "The Cooling: Has the next ice age already begun? Can we survive it?", published in 1975 by Prentice--Hall, its author Lowell Ponte captures the then prevailing mood: "The NAS report was shocking, for it represented a warning from some of the world's most conservative scientists that an Ice Age beginning in the near future . . . was not impossible." Contending that we may be "on the brink of a [10,000 year] period of colder climate," the NAS urged an immediate near-quadrupling of funds for research. "We simply cannot afford to be unprepared for either a natural or man-made climatic catastrophe [of global cooling]."

At about the: same time, as Mr. Ponte relates, a group of "leading climatologists," meeting in Bonn, Germany, warned that "the facts of the present climate change are such that the most optimistic experts would assign near-certainty to major crop failures within a decade [because of global cooling]. If national and international policies do not take these near-certain failures into account, they win result in mass deaths by starvation and probably in anarchy and violence that could exact a still more terrible toll . . . ."

By 1975, the climate had indeed been cooling for about 35 years and many scientists were becoming increasingly convinced that another Ice Age was imminent. These experts included climatologist Stephen H. Schneider, who later demonstrated his intellectual flexibility by becoming one of the strongest proponents of global warming. Lester R. Brown, head of the Worldwatch Institute, was then a major enthusiast for cooling, crop failures and famine. Whether freeze or fry, he is still predicting global famine.

Mr. Ponte's book claims that "since 1970, half a million human beings in Northern Africa and Asia have starved because of floods and droughts caused by the cooling climate. . . .In the continental United States severe floods have destroyed billions of dollars' worth of property in the Mississippi Basin, the Great Lakes region, Pennsylvania and New Jersey. . . . Parts of the nation were hit with what the National Weather Service called 'record cold.'. . . Rain and floods described as 'the worst in a century' struck large areas of Washington state."

In Europe, the 1960s were years of unusual cold, but the "odd warmth" of the 1970s was also considered a feature of global cooling. Warned British climatologist Hubert H. Lamb, "Like chills and fever, these are an signs of a planet catching climatic cold."

Mr. Ponte lectures the public: "Global cooling presents humankind with the most important social, political and adaptive challenge we have had to deal with for 10,000 years. Your stake in the decisions we make concerning it is of ultimate importance: the survival of ourselves, our children, our species."

Any of this sound familiar?

I've marked the places where they diverge with a different colour. Mr. Millar, it appears, wasn't satisfied with the misinformation of Fred Singer. He had to make up some more with his little changes. His changing "could" to "would" and round brackets to square brackets are pretty significant changes.

I wonder how much of global warming denialism is really just copying and pasting of old S. Fred Singer stuff that has been thoroughly debunked.

As for the question of global cooling "hysteria", it is well documented that
in the 1970's only the popular press was pushing the notion of an imminent
ice age. Climate scientists were not. The 1975 National Academy of Sciences
report, that Millar refers to, simply says that scientists of the time did not
think they had a good quantitative understanding of the earth's climate.
They could not predict how the climate would change in the future and
therefore they had to admit a finite (a technical term used by scientists to
mean non-infinitesimal, that is, non-zero) probability of global cooling -
and lots of other possibilities.

Nowadays we do have climate models and immensely better historical climate
data to check them against. These models all show that, unless some serious
changes take place, we are headed for a hotter earth.

Must see video on ocean acidification

This video has wonderful production values (I had never seen a school of rays before) and introduces the issue of ocean acidification.

M. Coderre is not really the problem

I believe that there is a deeper cause for the unrest in the federal Liberal party leading up to Denis Coderre's unfortunate resignation as Quebec Lieutenant and ill-considered words. The deeper cause is an insufficient focus on vision, principles and policies, and too much focus on people, political tactics, and the shortcomings of other parties.

Why do for-profit corporations invest resources to craft mission and vision statements? Couldn't they save some money by skipping that exercise? Couldn't "Let's maximize profits" be good enough?

It's not good enough. The corporation that does not have a mission and vision is more likely to fail, even at making a profit. There are always difficult decisions to be made when running a business. For example, there are compromises between quality and price. Or, managers must decide between investing in the research division or investing in sales and advertising. In such cases different stakeholders have competing interests and you need unifying ideas and a road map to help get everybody to pull in the same direction and build a winning team.

Back to the federal Liberal party. I believe that it's all too easy to focus on personalities and power structures inside the organization and external threats from other parties (and the press is happy to help with these) when we're not sufficiently focused on our vision for Canada, the principles our party stands for, and our policy proposals to serve the people of Canada. We have all of these. Let's work on presenting them to the people of Canada.

The Iraqi who is "perhaps the greatest value creator Norway has had"

When I worked in the financial world, the joke the sales people told me about folks from the Norwegian Petroleum Fund was that you couldn't even offer them a bottle of water when they came to visit. They had strict rules about accepting gifts from their brokers. That's a smart, if extreme, policy because, as you might know, a lot of money (most of which the customer ultimately pays) goes to food and entertainment for building personal relationships in the business world. But none of that really matters to figuring out which institutional brokerage could minimize transactions costs for the people of Norway. Talking to them in person confirmed that these folks from Norway were more attentive to detail and interested in real costs than most.

So this article in the Financial Times entitled, "The Iraqi Who Saved Norway From Oil" , pointed out to me by a friend, is wonderfully consistent with my own little experience. It's the story of Farouk al-Kasim, an Iraqi geologist who married a Norwegian woman, moved to Norway to seek treatment for his son's cerebral palsy, avoided Saddam Hussein and the Iran-Iraq war, and helped build the Norweigian oil industry.

This extract, on an example of successful government regulation, is worth highlighting:

"Farouk is perhaps the greatest value creator Norway has had," says Olsen. And with good reason. Most of the oil found in the world is never recovered: the average extraction rate worldwide is around 25 per cent. Norway averages 45 per cent, and for that, Olsen gives al-Kasim much of the credit: he pushed the government to increase extraction rates; insisted that companies try new technologies, such as water injection in chalk reservoirs or horizontal drilling; and threatened to withdraw operating licences from companies that balked. “It is this culture, a culture of ‘squeezing the last drop out’, which he cultivated,” says Olsen.The extraction rates al-Kasim forced through significantly boosted oil and gas revenues – and so indirectly, the size of the savings fund. But the culture of pursuing the “last drop” brought greater benefits than just money pouring in. It spurred the development of technological expertise that has enabled Norwegian companies to compete with the best in the world. This, then, is a striking case of strong state regulation ultimately benefiting the private sector. “Norway is the only country in the world where the state and the capitalistic entities work together as partners, and the co-operation works, really works,” says al-Kasim. Paradoxically, state involvement makes this easier. “To put it very simply, you put your wallet where your mouth is … When you take 50 per cent of the risk, and other companies take maybe 15 per cent tops, it is hard for them to say you’re crazy, right?”

The U.S. is doing better in a vision for sustainable energy

This video of Van Jones speaking recently at the Clean Energy Summit in the U.S. shows clearly how the Americans, well, at least the Obama administration, "gets it" about the compound returns from investing in clean energy and energy efficiency. Contrast that with the shotgun economic stimulus that the Stephen Harper PMO has been doling out, and the lack of vision in the 2009 federal budget. So I have to say, Yes, we can do better.

"I hope a lot of people run against me": dealing with vote splitting using "Approval Voting"

A Kingston City Councillor recently was joking, in a serious way, that the best strategy for an incumbent to keep his or her Council seat was to encourage as many people as possible to run against him or her. The incumbent's name recognition would be worth a good chunk of votes and the other candidates would split the rest. In a municipal election, with no opinion polls, it would be very hard for support to coalesce around just one of the challengers.

You might recognize this as the classic problem with plurality or first-past-the-post voting systems. The problem is a common one.

Here is another municipal example, and I'll explain below why I mention it. In the 2006 municipal election for mayor of Kingston, there is a good chance that a third place candidate played a spoiler role:

Harvey Rosen: 16,278 votes

Rick Downes: 15,548

Kevin George: 5,870

I bet many voters in Kingston would be interested in doing something about vote splitting.

So, what to do?

Well, attempts at voting reform for provincial elections in Ontario and British Columbia have failed at the ballot box recently and I can't see a lot of enthusiasm for mounting another top-down voting reform effort in the near future.

But what if we allowed municipalities to experiment with different voting systems? That is, allow voting reform to be driven at the grassroots level, and perhaps spread to provincial and federal elections later on.

I have been reading a new book that came out last year called "Gaming the Vote" by William Poundstone. It's a very well-written book about the problems with voting systems. One of the voting systems considered there is a very simple change from our current voting system and gets rid of the vote splitting problem. It is called Approval Voting and is used by the UN to select the Secretary-General.

The way approval voting works is simply this: voters can vote for more than one candidate. You simply vote for the candidates that you approve of. Voting for the candidate that you really prefer does not preclude you also voting for your preferred choice out of the front-runners. The candidate with the most number of approval votes wins.

I would draw your attention to the results of a simulation displayed in a graph on page 239 of Poundstone's book (created by a friend of mine from graduate school, Warren D. Smith) which shows that approval voting does quite well in that it tends to have a low "Bayesian Regret". Loosely speaking, it's good at minimizing the unhappiness of voters on the whole towards the results of the election. First-past-the-post is one of the worst systems by this measure.

Approval voting would also be easy to implement on a legal level in Ontario. As far as I can tell, we would not have to modify the Municipal Elections Act. We would only have to delete Ontario Regulation 101/97 subsection 3(2)(b) which says "The deputy returning officer shall reject from the count...all votes in a ballot for an office, if votes have been cast for more candidates for the office than are to be elected."

Of course there are other voting systems, but most of them would require amending the municipal elections act because vote counting is slightly more complicated.

Let the grassroots begin voting system reform in Ontario at the municipal level!

Sometimes I wish I could be Jon Stewart

Neil Reynolds, Toronto Globe and Mail columnist, former global warming denier and now, it seems, a mitigation skeptic, wrote on Friday:

Without heroic government intervention, [economist Richard Tol] says, climate change will probably cause damage equal to losing two years of economic growth [a few percent of income according to the abstract of Tol's paper] - co-incidentally the same damage caused by an average recession.

Neglecting the fact that Tol's paper, published by Bjorn Lomborg's Copenhagen Consensus Centre, omits the Stern Review from its Table 1. list of studies on the 'estimates of welfare loss due to climate change', and underestimates damage from climate change...

If there were a flood and 50 million people in Bangladesh perished, world 'wealth' would decrease less than 1 percent - they would mostly be poor people. Lomborg and Tol would then claim that we could make that up with a year or two of economic growth?!

I wish I were Jon Stewart so I could sit there in stunned silence, as only he can, and then say, "Yeah... flood... 50 million poor people die, then after a year or two of global economic growth we'd be all square again ... WTF".

Parliament High?

Jane Taber writes that

Senior Liberal strategists are now referring to the Ignatieff OLO (Opposition Leader's Office) as “Parliament High” because of the legions of inexperienced young people who populate it.

Is this really a fair assessment? I hope not because the OLO is a Prime Minister's Office (PMO) in waiting and more and more in the last few decades the PMO functions like the Canadian federal government's executive branch (as opposed to the full cabinet).

Ms. Taber's article is worth responding to, I would think.

Don't underestimate young people!

The NDP is making it hard for me to be sympathetic

I hope NDP candidate Michael Byers had a recent change of heart about pricing fossil carbon emissions with a carbon tax considering what he wrote yesterday in this article, and I hope he wasn't believing one thing and helping to destroy it by saying another during the 'green shift' debate last year.

The point was brought to my attention today very clearly here and here.

What to do about the Poker Run?

I wrote a letter to the Kingston Whig Standard today concerning an event this weekend in the Kingston Canada and Thousand Islands region called the "Poker Run". Large powerful motorboats are shown off to spectators while they travel up and down the St. Lawrence River. About 100 boat crews and tens of thousands of tourists come to the area to see the boats and come especially to Kingston, Ontario. On the other hand, this event and its gas-guzzling marine craft are not very compatible with Kingston's official vision of being Canada's most sustainable city.

For a little background, read this article in the Whig
and this TV news report and This editorial in the Whig

I've tried to propose an idea that I think could help make some progress. It's based on local greenhouse gas offsets and triple bottom line accounting: finding solutions with financial, environmental, and social benefits.

Dear Editor,

Several readers of the Whig-Standard have written about this past weekend's
Poker Run event.

I would like to take the discussion about the Poker Run, its greenhouse gas
emissions, and Kingston's vision to be Canada's most sustainable city, in a
different direction.

First, I would disagree with one of the letter writers. The planet is not
doing fine. Global warming is a real threat, especially to future
generations. The greenhouse gas emissions from the Poker Run impose a real
cost on the whole world by contributing to global warming.

On the other hand, the Poker Run contributes a lot to local economic
activity in the Kingston region.

I would suggest that if we, the City of Kingston, benefit so much from the
Poker Run, it is only fair that we assume the responsibility for its
greenhouse gas emissions. I would further suggest, therefore, that we, and
perhaps not the powerboaters, purchase high quality greenhouse gas offsets
that cause the reduction of the greenhouse gas emissions elsewhere, and
cancel the emissions from the Poker Run.

That elsewhere could be in Kingston itself. In fact, based on some
calculations that I have done, the total amount of greenhouse gas emissions
from the Poker Run boats is roughly comparable to the greenhouse gas
emissions coming from one year's venting of anaesthetic gases from surgeries
at Kingston's hospitals. Technology, from an Ontario company called
Blue-Zone, exists to recover and recycle these expensive chemicals, but it
costs a little money up front, and who can blame our hospitals for having a
hard time coming up with extra money to recover anaesthetic gases. So (and
this is the crucial point) if someone provided the funding to do that every
year, then emissions would be prevented that otherwise would continue. As an
aside, hospitals would actually benefit in the future from being able to
obtain anaesthetics at lower cost.

Perhaps there is a way for local merchants, people concerned about global
warming, Kingston hospitals, powerboating enthusiasts, an Ontario technology
startup, and Kingston's branding as a sustainable city to make a little
progress together?

If the New York Times is so sloppy...

A friend and a brother brought this and its implications to my attention. It's a brief retrospective of Walter Cronkite that appeared in the New York Times. What's disturbing is the long list of corrections that was made to the original article, reproduced here:

Correction: July 22, 2009
An appraisal on Saturday about Walter Cronkite’s career included a number of errors. In some copies, it misstated the date that the Rev. Dr. Martin Luther King Jr. was killed and referred incorrectly to Mr. Cronkite’s coverage of D-Day. Dr. King was killed on April 4, 1968, not April 30. Mr. Cronkite covered the D-Day landing from a warplane; he did not storm the beaches. In addition, Neil Armstrong set foot on the moon on July 20, 1969, not July 26. “The CBS Evening News” overtook “The Huntley-Brinkley Report” on NBC in the ratings during the 1967-68 television season, not after Chet Huntley retired in 1970. A communications satellite used to relay correspondents’ reports from around the world was Telstar, not Telestar. Howard K. Smith was not one of the CBS correspondents Mr. Cronkite would turn to for reports from the field after he became anchor of “The CBS Evening News” in 1962; he left CBS before Mr. Cronkite was the anchor. Because of an editing error, the appraisal also misstated the name of the news agency for which Mr. Cronkite was Moscow bureau chief after World War II. At that time it was United Press, not United Press International.

If the New York Times can make so many errors of fact, many of which could have easily been checked, what does that say about the regular news where you are relying on the newspaper to tell you something new, a piece of information that isn't already stored somewhere for you to check against?

Liberals shouldn't have followed Conservatives on partisan ten percenters

The Globe and Mail carried a story on July 30, Liberals slapping back against Tories' partisan flyer tactics, about how Liberal MPs have now also started to send out partisan "ten percenters" after complaining about the Conservatives' ten percenters to no avail.

Other Liberal bloggers have applauded this move, but I disagree.

The partisan ten percenters had been energizing and motivating Liberal party supporters and other voters. A lot of people were angry at these mailings, told us so, and I think we could have capitalized (were capitalizing!) on them to build up our own organization.

Instead, this is looking like out-of-control, pre-writ, partisan mud-slinging funded, unwillingly I am certain, by the tax-payer. It's not going to help us solve some of the structural problems with Canadian democracy like voters getting turned off by politics and disengaging from the political process. (problems that Conservatives are less concerned about, since it serves their interests)

My feeling is that Liberals are not going to realize a net profit by choosing this route. I can't see, for example, that it's going to help the Liberal party pick up members and supporters.

Rex Murphy's gaffe today

Rex Murphy's column in the Globe today, "So where's that global cooling alert?" was composed a bit hastily. He should have done a little research on global temperatures first.

Mr. Murphy failed to check measurements of global temperature before writing that, "things have gotten cool" and complaining that no meteorologists have spoken up about how solid the "theory of global warming" can be given that Toronto seems to be "having a Newfoundland summer".

Let's look at the actual measurements. The US National Oceanic and Atmospheric Administration's National Climate Data Center has data showing that this past June had the second highest globally averaged land and sea temperature ever recorded. How can that be given that those of us in the middle of North America have been experiencing a cool wet summer? Well, It turns out that other parts of the world - the north and eastern Pacific, north-western Atlantic, Africa, Southern Europe, and Siberia were much warmer than normal. Averaged over the globe, the relatively cooler interior of North America got canceled out and then some.

There has been no global cooling alert this summer because there hasn't been
any global cooling.

Cool here but globally the second warmest June ever recorded

The US National Oceanic and Atmospheric Administration's National Climate Data Center reports that this past June had the second highest globally averaged land and sea temperature ever recorded. Yet folks in many parts of Canada and the US experienced a cool and wet June.

This figure explains how it happened. It turns out that other parts of the world, the north and eastern Pacific, north-western Atlantic, Africa, Southern Europe, and Siberia were much warmer than normal. Averaged over the globe, the relatively cooler interior of North America got canceled out.

Of particular interest is the warmth of Siberia. That's where one of the feared tipping points could happen: melting permafrost could release large quantities of methane and carbon dioxide and accelerate global warming.

For more, read this post by Joe Romm

Wrong but very useful: the efficient markets hypothesis

Personal finance tip to folks who have some money saved up: Don't throw the baby out with the bath water by completely dismissing the Efficient Markets Hypothesis (EMH). See the end of this post for what I mean in practice.

I cannot resist commenting on an article in today's Globe & Mail (Taking Stock, Brian Milner) entitled, "Sun finally sets on notion that markets are rational". Milner is reviewing a new book, by Justin Fox, whose cover appears in the figure. In summary, Milner writes that EMH, "has finally been buried under an avalanche of unforeseen calamities, uncontrolled greed and other seemingly irrational behaviours it couldn't possibly explain."

What's this all about? Well, the idea behind EMH is that you can't beat the market. Efficient means that the price of an asset that you observe in the market is all you know and you can't predict the future price. Why? Because if a stock or some other asset is under-priced, somebody would take advantage of that and buy it, pushing up the price until there was no longer any profit to be made. So the prices you observe in the market are the "right" prices in some sense. Economists have thought quite deeply and extensively about this idea.

Now, we also know in practice that this hypothesis is wrong. But it is nevertheless an extremely useful hypothesis in the sense of the physicist Wolfgang Pauli, who once famously ridiculed a theory by saying that it, "wasn't even wrong". Let me give you an example of why we know this hypothesis is wrong. As a trader I would often get customers who were not interested in maximizing their profits solely in the financial markets. For example, they would tell me to buy X shares of a stock now. I might tell them if they took a few hours to work their order they could get a better price. They would come back to me and say, well, my staff is busy and they need to work on other important things, so I don't care if you buy X shares and drive up the price somewhat, just fill my order now, please. After I fill the customer's order, I'm 90% certain that the share price is going fall back down, contrary to the efficient market hypothesis.

So why is the EMH wrong but still useful here?

The answer is that anybody else looking at the market for the stock cannot know that the stock is going to rise or fall. They don't know if I'm finished with my order, or if I have a lot more shares to buy. Unless they can deduce something about what I am doing, the market appears to them to be efficient, meaning there is no profit, on average, to made by betting on the direction that the stock price moves. Furthermore, EMH is useful because it implies that you should always have a healthy respect for the market and the prices you observe in a freely trading, liquid market. It leads to the following rules, which I think of as the trader's practical version of the efficient market hypothesis (applicable to liquid markets):

The market usually knows more than you do. You will lose money if you casually think otherwise.

And a corollary,

Unless you do your homework, the best you can do is rely on the prices you observe in the market.

So, what practical advice can I give, especially to all those people who have some money saved up but have better things to do with their lives than worry about their investments? Well, I'm pretty confident (i.e. I would tell my mother to do this) that markets are still efficient enough to say, don't pay somebody to pick particular stocks, bonds or other investments. Invest passively in index funds that have low management fees. Think twice before spending a lot of your own time on stock-picking, market-timing or trading instead of on something else that might be more valuable to you and other people in your life.

Toronto Island, now and 25 years ago

The Globe and Mail's Report on Business 25th anniversary issue this past Saturday contained a two page spread by John Daly comparing photos by photographer Elizabeth Jones of downtown Toronto on May 21, 2009 and May 21, 1984.

Here are the photos:
2009 on top, 1984 below. The article pointed out all the new buildings that have gone up. Toronto sure has changed. But look at Toronto Island. Notice how much greener the trees are compared to the grass in 2009 vs. 1984. Nature has changed too.

These pictures don't prove anything about global warming, but it is interesting to note that the foliage is quite a bit more advanced in 2009 compared to 1984. This colour change is amplified by the fact that it's spring and the colour of trees changes rapidly during May. If it's a couple of degrees warmer, on average, then everything grows something like ten days earlier. Look carefully at nature and you'll be able to pick out the signs of global warming.

And yes, in case you were wondering, according to the National Climate Data and Information Archive, in Toronto, March, April and May 2009 were on average about 3 degrees warmer than those respective months in 1984.

US fuel and emissions standards

The new US fuel and emissions standards for cars and trucks being announced today will be like putting a yellow "Support Our Troops" ribbon on every light vehicle in the United States.
Yes, consumers will pay billions more for more fuel efficient cars, but that's billions that will go into advanced automobile manufacturing, and many more billions of petro-dollars staying in the pockets of consumers and not going to overseas powers. Canada will benefit too.

There are a few good things coming out of this recession...

Another chorus

What a strange but welcome confluence of Op-Ed pieces in today's newspapers.

First, Tom Axworthy writing in the Toronto Star can be summarized by its opening lines:

Stéphane Dion announced at the recent Liberal convention in Vancouver that he would be staying in politics. This is a good thing because a future Liberal government will have great need of his intelligence, commitment and stubbornness in dealing with climate change.

Elgie, Boyd, and Waddell, writing in the Globe and Mail (How a B.C. carbon tax rose from Dion's ashes) gave six lessons from the BC and Federal election results after summarizing things:

Although widely regarded - by both environmentalists and economists - as an essential tool in growing green jobs and combating climate change, many Canadian politicians perceived carbon taxes as toxic after Stéphane Dion's defeat. The results of this week's B.C. election should help put that notion to rest.

Finally Paul Berton writing in the Ottawa Sun(!) The True Costs of Car Travel wrote what many experts know all too well:

Not only should we not reduce gasoline taxes, it is inevitable, though undoubtedly unpalatable politically, that they will rise in the future to better reflect reality and the true costs of car travel [road building and maintenance, health and pollution, accidents, traffic congestion, insurance, urban sprawl]

What could be more Canadian...

This promotion got me thinking: would I be willing to stand in line to get one?

Try a FREE small Tim Hortons Iced Coffee!
Drop by your local participating Tim Hortons store on May 21, 2009, and enjoy a new small Iced Coffee for FREE!*
It’s a creamy, sweet blend of Tim Hortons coffee on ice. It’s a refreshing way to enjoy your Tim Hortons coffee!
*No purchase necessary. Limit one small Iced Coffee per customer. Offer valid in Canada only, at participating stores.

What could be more Canadian than Tim Horton's?
Being willing to stand in line at Tim Horton's. Go Michael!

Stephane Dion's Private Member's Motion

I had a chance to drop in on Stéphane Dion last week in Ottawa after giving an oral presentation to the legislative committee that's working on the Ontario Green Energy Act.
Stéphane is forging ahead and introducing a private member's motion on May 6 as follows:

That in the opinion of the House, the government should increase its support of Canada's renewable energy sector, allow our country to participate in the worldwide effort to develop renewable energy sources and enlist Canada as a full member of the International Renewable Energy Association (IRENA).

The last Conservative budget was very disappointing in this respect because it did not increase the total funding pot for the federal EcoEnergy for Renewable Power Program. The current funding pot is all spoken for, so that no new renewable energy developments will be stimulated by this program. It's a lost opportunity that, by contrast, the new U.S. administration is taking up enthusiastically.

Bravo to Stéphane Dion for continuing to push for action on energy security, sustainable economic development, and global heating.

On borrowing from the Bank of Canada

A letter I sent to the Kingston Whig-Standard rebutting a letter that promoted the idea of having the federal government borrow from the Bank of Canada (orginal article follows):

The letter, "Borrow from Bank of Canada", January 24, 2009, propagates a misconception that there is a costless way to pay for government spending by borrowing from the Bank of Canada (BoC). I would like to point out some problems with the author's reasoning.

To begin with he writes, "Banks must be finding it hard to contain their glee at the propect of the federal government running deficits that could amount to $100 billion..." (in anticipation of all the interest income). There are two problems: first, banks usually are not the ones that lend to the federal government. The money comes from investors such as people saving for
retirement through pension funds, mutual funds, and life insurance policies. Banks are in the business of making riskier and higher yielding loans such as to businesses, entrepreneurs, and home buyers. Second, investors holding government bonds won't be gleeful. On the contrary, when the federal government sells bonds to finance its spending, that extra supply will push down the value of investors' bonds.

The author is correct in saying that financing government spending by borrowing directly from the BoC is like telling the BoC to print money and give it to the government. Printing $100 billion certainly could be inflationary. As the author suggests, to prevent inflation, the BoC could force commercial banks to put an extra $100 billion in reserve but that would be $100 billion no longer available to finance the investment and job creation that we sorely need now. It would be like slamming the brakes on the economy. The BoC could raise interest rates to prevent inflation, but that would have the same effect of slowing down the economy.

On the other hand the BoC could be instructed to stand back and let the Loonie inflate. That is a valid policy choice, but we should be clear to Canadians what is really being proposed in that case. People on fixed incomes and indeed the whole economy would have a certain price to pay. Also, the independence of the Bank of Canada from political influence would be threatened.

The unsurprising truth is, there is no free lunch. But it's also true that the Government of Canada can borrow money at the lowest possible interest rate on Canadian dollars because there is no risk of default - it could always print the dollars needed to repay those loans. The cost of borrowing money is not the issue. The issue is, in this time of economic crisis, whether our federal government chooses the right things in which to invest that money.

Original Article:

Borrow from Bank of Canada

Banks must be finding it hard to contain their glee at the prospect of the federal government running deficits that could amount to $100 billion over the next few years. Even at 3% interest, that would amount to a perpetual income of $3 billion and a perpetual charge to the government. This interest would be added to the $63 billion we are already paying every year on the debts of our three levels of government.

The sad part is that the added cost of this interest is entirely unnecessary. The federal government could borrow money interest-free from the Bank of Canada. The government owns the Bank of Canada, so profit from the bank is returned to the government as a dividend.

When the government borrows from a bank, the bank creates the money it lends simply by entering a credit in the account the bank has set up for the government. The government then draws upon this credit and pays whatever interest is charged. When it borrows from commercial banks, the interest charged remains with the bank. When it borrows from the Bank of Canada, the interest charged eventually returns to the government minus a tiny amount for the cost of administering this process.

So why does the government borrow from private sources? Ask your MP. The answer, if you are not ignored, will likely be that doing so would cause inflation by putting too much money in circulation. To counteract this, the government must reinstate the statutory reserves that were disring the Brian Mulroney government. This would require the commercial banks to put money in reserve to reduce the amount in circulation. Richard Priestman Kingston

A new year's chorus calling for a revenue neutral carbon tax

I hear a chorus. Is something up? Some sort of conspiracy or liberal-conservative-economist-environmentalist coalition?

Or just an effort to put a good idea in front of Barack Obama?

Dec. 26, New York Times lead editorial: A call for a revenue neutral gas tax
Dec. 27, New York Times Op-Ed: Republicans Bob Inglis and (economist) Arthur Laffer call for a revenue neutral carbon tax, writing, "We need to impose a tax on the thing we want less of (carbon dioxide) and reduce taxes on the things we want more of (income and jobs)."
Dec. 27th Thomas Friedman calls on Obama to implement a gas tax: A gasoline tax “is not just win-win; it’s win, win, win, win, win,” says the Johns Hopkins author and foreign policy specialist Michael Mandelbaum. “A gasoline tax would do more for American prosperity and strength than any other measure Obama could propose.”
Dec. 29, 2008: NASA's James Hansen calls on Obama to implement a revenue neutral carbon tax at Guardian.co.uk
Jan 1, 2009: Financial Times of London uses its first issue of the new year to call on Obama to implement a revenue-neutral carbon tax.
Jan 1, 2009: Whoa, so does the Boston Globe in its New Year's wishes.
Jan 5, 2009: neo-conservative journal, The Weekly Standard cover story by Charles Krauthammer calling for a revenue-neutral gas tax.