Hopefully worth writing down

Launching a new blog

2012-01-26T23:09:00.000-05:00

I won't be posting to this blog for the foreseeable future. Thanks to those who have read it in the past.

I'd like to invite you to join me on my new website for Ted Hsu, Member of Parliament for Kingston and the Islands where I have established a new blog, plus lots of other stuff.

Ted

The uncommon candidate

2010-07-12T16:46:00.000-04:00

Yet another reason why this Liberal nomination contestant is an uncommon candidate?
An enthusiastic supporter went and wrote a campaign song!
(thanks Neale!)

Video record: Nomination campaign launch

2010-07-08T13:24:00.000-04:00

A video record of my nomination campaign launch in Kingston and the Islands earlier this week:

Ted Hsu campaign launch event from Theodore Hsu on Vimeo.

My Nomination Campaign Launch Speech

2010-07-07T12:45:00.001-04:00

Yesterday we launched my campaign to become the next federal Liberal candidate for Kingston and the Islands. I was energized by our launch event and am looking forward to an exciting summer of campaigning. I wanted to share the text of the speech that I gave:

Ce soir, le voyage commence.

Tonight I, and I hope many of you, we begin a journey.

The first step of that journey is to acknowledge the many accomplishments and
years of service of the Honourable Peter Milliken as the Member of Parliament
for Kingston and the Islands. The person who succeeds Mr. Milliken will step out
of a big shadow and then must aim high if he or she aspires to represent
Kingston and the Islands as well as you have come to expect.

Tonight I want especially to thank my family for being here. I want to thank my
parents, my uncle and aunts, my wife Tara and my daughters Ella and Vera-
Claire – my children who set me on my journey.

My journey into politics did not begin in a boardroom. Or at the office. Or as an
intellectual exercise. It began after my older daughter was born, during the three
years I spent as a stay-at-home Dad, changing the diapers, doing the care and
feeding.

And that means that many of you will recognize where I'm starting from, my
motives, since I am certainly not the first person to look down at little children and
be moved to ask a big question.

How is everything going to turn out for them when I'm gone?

- Will Ella & Vera-Claire be able to work and earn a living wage from a
meaningful job?
- Will their society be productive enough to properly care for the ill, the elderly?
- Will they be heavily taxed by the burden of environmental damage?

As I studied economic, social, and environmental trends, I realized that I, and my
generation, had to provide a different kind of ‘child-care’. I had to help make sure
that our children and grandchildren don't have to clean up our messes.
It's as simple as that. And it's as difficult as that. We have to take care of
business in a way that we do not hand on a debt of troubles to our children, and
their children.

Our present federal government has no vision beyond taking and holding political
power! If we ignore that, future generations will bear the burden of our
inattention. If we let a government buy power by feeding consumption today and
forgoing investments for tomorrow, future generations will be deprived of the
returns from sorely needed investments in people, knowledge, social institutions,
and preservation of the natural environment.

No! We must harness political power to develop the incredible opportunities that
lie all around us. We must invest in tomorrow so that our children and
grandchildren will inherit a wealthy portfolio of wise choices.

You know, we Canadians have common goals - facing them need not divide us
along party lines.

- Social Justice and fairness to future generations do not belong to any one party.
- Fiscal foresight and responsibility do not belong to any one party.
- Environmental protection does not belong to any one party.

The urgency of these challenges motivates us all.
So I’m talking about common goals.

But I am a Liberal.

- We Liberals believe that every person’s potential should be realized to the
fullest extent possible and that every person’s potential should have an equal
chance to be realized.
- We believe that government should be responsible for ensuring that equity.
- We believe that the government must unite Canadians in order to achieve these
aspirations

When I say unite I mean giving all Canadians access to things like shelter, a solid
education , decent health care, a healthy natural environment, safe communities,
and security in old age.

With this in mind,
I believe ... that Canadians living tomorrow must be united with Canadians living
today.

I believe the Liberal Party is the best party to take on the job of uniting Canadians
living tomorrow and today, and I believe that I am the best person to help the
Liberal Party take a step towards doing that by winning in Kingston and the
Islands.

And so I stand before you today, sustained by my family, friends, and colleagues,
and love for the place where I grew up, to declare that I am a contestant to
become the next federal Liberal Party candidate for Kingston and the Islands.

The first duty of a member of parliament is to serve his constituents and my first
qualification for that job is that I grew up in Kingston and, after working abroad, I
chose to come back to Kingston. Not because I got a job here but because I
chose to come back to the city I love, to my family, to the place I want to raise my
children.

As a member of parliament I will advocate for the interests of my home riding. I
will be at the service of municipal leaders in Kingston and the Islands to work for
local priorities. As Executive Director of SWITCH I'm already working to promote
local job creation and investment in the sustainable energy sector, a sector that
has great potential for the Kingston region in the 21st century. My work as a
manager in the financial industry gave me real life business, management, and
economic experience and I will put that to work for Kingston and the Islands.

With your support, I will be a hard-working member of parliament who stands out
in the House of Commons. I will stand out as somebody who instinctively thinks
about facts and numbers, and enjoys creative problem solving more than kneejerk
partisanship. That comes from my background as a scientist. We could use a
few scientists and engineers in our legislatures!

When you compare me to other candidates, you'll see that I am an uncommon
candidate:

- a Canadian who is grateful to this country and its people for welcoming his
Chinese immigrant parents;
- a physicist whose years in research taught him the value of careful, quantitative
thought;
- a business manager, whose global experience has given him a special
perspective on his home town;
- a father taking care of his children's everyday needs, worrying about the world
they will inherit.

When you compare me to other candidates, you'll see that I am an uncommon
candidate who will work for our common goals.

We must have a government with vision - an honest and progressive vision - that
recognizes the dangers of "business as usual".
We must have a government that is willing to ask Canadians to pay their fair
share to ensure the welfare of future generations.
We must ask Canadians for their attention... so they will choose political leaders
capable of doing this important job.

What do I mean by ‘attention’? It’s what you are doing tonight: participating in this
democratic process, the process of choosing a candidate for the Liberal Party in
Kingston and the Islands. When you leave here tonight, this is what our
campaign needs you to do: please go and ask others for their attention. Convince
them to join the Liberal Party so that they can vote at the nomination meeting.
Talk to them and ask them to join up, for you, and vote, for me.

Il s'agit de mes idéaux. Je suis conscient des défis quotidiens auxquels un
député doit faire face. Votre député se devra d'abord de résoudre les problèmes
des particuliers de sa circonscription, défendre Kingston et les Iles, et assurer les
autres tâches parlementaires pour le bien-être de tous les Canadiens. Les
idéaux dont j'ai parlé ne constituent pas une "fiche de poste" décrivant par le
menu le travail quotidien. Mais, à l'heure des décisions politiques difficiles que
j'aurai inévitablement à prendre, ces idéaux seront une boussole et ils m'aideront
à prendre les bonnes décisions en tant que député.

I've spoken about my ideals. But I'm aware of the daily challenges that a member
of parliament faces. As member of parliament, I must solve problems for my
constituents; I must be an advocate for Kingston and the Islands, and I must
attend to parliamentary duties for the good of all Canadians. That's the job
description. These ideals I've spoken about aren't the job description. But ideals
are crucial. When the inevitable tough political decisions need to be made, these
ideals will serve as a compass, to help me make those decisions on my political
journey.

Si vous partagez ces idéaux, alors venez, venez, partons ensemble et
appliquons-nous à faire de ces idéaux une réalité.

If you share these ideals, if you are inspired by these ideals, then come – come
make the political journey with me, to make them a reality.

Let the journey begin!

What or where are we driving in Kingston, Ontario?

2010-05-26T23:45:00.004-04:00

A recent analytical paper from Statistics Canada claims that Kingston, Ontario has the highest per capita private vehicle greenhouse gas emissions of all census metropolitan areas in Canada

Kingston, the city farthest to the right, sticks out quite a bit! (you'll have to click on the link to get a clean looking graph).

This prompted an article in the local newspaper, the Kingston Whig-Standard
entitled "Unsustainable" which focused on the environmental sustainability and climate change implications of this study.

But these days it pays to remind people of the dollar cost of our use of motor fuel, hence my letter to the editor as follows:

Kudos to the Whig Standard for reporting on last week's Analytical
Paper from Statistics Canada showing Kingston's per capita greenhouse
gas emissions from private vehicles to be the highest amongst all
census metropolitan areas in Canada ("Unsustainable", May 15). I wish
to point out that this fact is important for Kingston's economy too.
All those extra greenhouse gas emissions imply tens of millions of
dollars extra spent on motor fuel each year.

First of all, could the numbers from StatsCan report be wrong? After
all, it is strange that Kingston and, to a lesser extent, Sudbury,
have substantially more per capita emissions than all other
metropolitan areas. Kingston's private vehicle emissions were 3035 kg
per year per person , Sudbury's were 2844 kg, and in third, far
behind, was Barrie at 2221 kg, with the median for all cities being
about 1800 kg (Thunder Bay and Moncton were near the median).
Kingston's total private vehicle emissions figure of 462,000 tonnes/yr
roughly agrees with the result of a study that I did a couple of years
ago on Kingston's greenhouse gas footprint. That study, "Trends in Kingston's Community Greenhouse Gas Emissions (2000-2006)" which is available online at the City of Kingston website, used a completely
different methodology for calculating the emissions from vehicles
(StatsCan used the Canadian Vehicle Survey. I used data on how much
gasoline was purchased in the City of Kingston), but arrived at
roughly the same answer. So it's hard to believe that StatsCan made
some sort of mistake.

Now to the economic implications. The 460,000 tonnes of greenhouse gas
emissions from private vehicles comes from burning motor fuel - about
190 million litres of it every year. If Kingston's per capita vehicle
emissions went down to the median level for all cities, our motor fuel
use would decrease to about 110 million litres. With gas at about 90
cents a litre, that's $70 million dollars every year that we could be
spending on something else or just saving up for the future. One could
also think of it as 1400 jobs at a salary of $50,000 going out our
vehicle tailpipes every year.

Let's find out why Kingston's vehicle emissions are so high. Is it our
vehicle mix? Our public transportation system? Our city's layout? Are
we getting any benefits from this extra consumption of gasoline? If we
are not getting $70 million of benefits every year, what should be
done about it? Is this something that can be affected by our municipal
government's policies? If so, should it be an issue in this year's
municipal elections?

It is my sincere hope that this Analytical Report is, as the opening
line of the Whig story suggests, a shot of inspiration to Kingston in
its quest to really become Canada's most sustainable city -
environmentally and economically.

We must allow scientists to be free to talk about science

2010-03-15T12:43:00.000-04:00

There is an article by Canwest News reporter, Mike De Souza today about a newly released document from the Canadian federal government (Environment Canada)

A dramatic reduction in Canadian media coverage of climate change science issues is the result of the Harper government introducing new rules in 2007 to control interviews by Environment Canada scientists with journalists,

Scientists have noticed a major reduction in the number of requests, particularly from high profile media, who often have same-day deadlines," said the Environment Canada document. "Media coverage of climate change science, our most high-profile issue, has been reduced by over 80 per cent."

The Harper government's new policy has required senior scientists to get permission before communicating to the press. Because the press is usually working under short term deadlines, this policy practically cuts off a source of information for them. The result - less media coverage of issues like climate change, and less political pressure for action.

This is unacceptable. Scientists must be free to talk about science. The government could put restrictions on what its employees say about policy, but it should not be controlling the flow of information about what is going on in the natural world.

Maybe the politicians on the Conservative side of the House don't understand this principle. Are there any scientists sitting over there at all?

GST on poppies

2009-12-02T07:06:00.003-05:00

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

2009-11-07T09:46:00.005-05:00

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

2009-10-18T23:54:00.004-04:00

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

2009-09-30T09:48:00.002-04:00

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"

2009-09-09T06:43:00.005-04:00

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

2009-09-05T07:16:00.005-04:00

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"

2009-08-31T00:16:00.006-04:00

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

2009-08-24T00:49:00.005-04:00

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?

2009-08-15T09:43:00.002-04:00

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

2009-08-13T00:11:00.003-04:00

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?

2009-08-09T00:12:00.005-04:00

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...

2009-07-31T00:29:00.003-04:00

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

2009-07-31T00:00:00.005-04:00

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

2009-07-25T17:51:00.003-04:00

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

2009-07-17T19:37:00.007-04:00

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

2009-07-04T12:29:00.008-04:00

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

2009-06-28T19:31:00.006-04:00

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

2009-05-19T09:38:00.004-04:00

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

2009-05-18T22:57:00.003-04:00

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...

2009-05-17T08:40:00.004-04:00

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

2009-04-21T00:05:00.003-04:00

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 Will Happer and Lorne Gunter

2009-03-09T13:45:00.004-04:00

Global warming deniers have a champion of the day in Princeton physics professor Will Happer who testified before the U.S. Congress a couple of weeks ago that we are in a carbon dioxide famine, and that we evolved as a species when CO2 levels were 3 or 4 times what they are now (see the video here). As one might expect, National Post columnist Lorne Gunter has happily used him to argue against the existence of a scientific consensus on anthropogenic climate change.

I have a personal angle on this development because I got my physics PhD from Princeton and I was familiar with Professor Happer. I learned at Princeton not to be intimidated by titles or prizes and to try to argue things on the merits. I'll discuss some science later, but first, here are some facts about Dr. Happer:

1) Dr. Happer was a proponent of the Reagan administration's heavily criticized and eventually abandoned "Star Wars" (Strategic Defense Initiative) project.
2) He was appointed by George H.W. Bush as Director of Energy Research in the U.S. Department of Energy
3) Soon after the Clinton administration took over in 1993, Happer was fired by Al Gore for not having any urgency in dealing with ozone depletion and climate change.
4) Happer is currently chair of the George C. Marshall Institute , an organization that has been funded by Exxon (but apparently even Exxon had enough of them) and has been supporting climate change denialism.

Now some science:

Happer is an atomic physicist. So he understands a lot about how atoms interact with light, and that, he claims, makes him an expert on climate change. However, of the hundreds of things that go into understanding the effect of greenhouse gases on the earth's climate, the interaction of infrared radiation with carbon dioxide is one area where we don't need much expertise. That stuff is all well understood.

Going back to the first paragraph, our species did not evolve in an atmosphere with 3 or 4 times the CO2 concentration of today. We evolved in the Pleistocene, in the last 2 million years or so, when the climate has been relatively cold and the CO2 concentration has been around 200 ppm (compared to 380 ppm today). Back in the age of the dinosaurs the CO2 concentration was higher, like 1000-2000 ppm but there were no big mammals then and the CO2 concentration certainly didn't get to that level in the blink of eye (geologically speaking) like what is happening today (to the atmosphere and the oceans).

From Lorne Gunter's article: he told Congress, "additional increments of CO2 will cause relatively less direct warming because we already have so much CO2 ... that it has blocked most of the infrared radiation that it can."
That's only true at the surface of the earth, but the real action is taking place higher up in the atmosphere where there is little water vapour, the CO2 is not blocking most of the infrared radiation, and any additional CO2 can act like an extra blanket over the earth.

Over the past decade, while carbon dioxide concentrations have continued to grow, there has been "a slight cooling,"
Well, convenient for deniers, 1998 was a relatively hot year for the earth's surface because of a strong El Nino, so even though the ensuing 10 years have been the hottest decade we've ever recorded, focusing on 1998 allows deniers to talk about a slight cooling. We just went through a La Nina. Let's see what the deniers say when the next El Nino hits.

My prediction: tomorrow's denier champion will be somebody else because Will Happer's views will be thoroughly debunked just as tomorrow's denier argument will be something else, because today's argument will be debunked. They'll keep changing. Well, except, deniers will still be taking personal pot shots at Al Gore in the future because, a) Taking personal shots is easier than making a scientific criticism, and b) The deniers can't knock him down and they will continue to be unable to do so.

Can you see the pattern, and how to detect which side the Truth is on?

On borrowing from the Bank of Canada

2009-01-25T13:19:00.003-05:00

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

2009-01-05T00:13:00.005-05:00

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.

U.S. Neo-Con calls for revenue-neutral gasoline tax

2008-12-30T18:45:00.005-05:00

I can't resist bringing attention to this article appearing next week in the neo-conservative journal, "The Weekly Standard". Columnist Charles Krauthammer calls for a "net-zero gas tax", in a rather detailed piece subtitled, "a once-in-a-generation chance". It's ironic, but utterly unsurprising to me, how neo-conservatives (albeit thinking neo-cons) are favouring a policy so close to what Stephen Harper and his supporters tried so hard to trash (Stéphane Dion's Green Shift) this past summer in Canada and during the Canadian election campaign.

When conservatives, liberals, economists, and environmentalists are all pushing for the same thing, you gotta believe there's some validity to it.

Update Dec. 29, 2008: James Hansen calls on Obama to implement a revenue neutral carbon tax at Guardian.co.uk
Update 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.
Update Jan 1, 2009: Whoa, so does the Boston Globe in its New Year's wishes.
And even this from an AP story today:

Charles Whittington, chairman of the American Trucking Associations, which supports a fuel tax increase as long as the money goes to highway projects, said Congress may decide to disguise a fuel tax hike as a surcharge to combat climate change.

Transportation is responsible for about a third of all U.S. carbon emissions created by burning fossil fuels. Traffic congestion wastes an estimated 2.9 billion gallons of fuel a year. Less congestion would reduce greenhouse gases and dependence on foreign oil.

"Instead of calling it a gas tax, call it a carbon tax," Whittington said. "As long as we label it as something else we may have the momentum and acceptance to move forward."

Wow - this coming from truckers, the same people who, in Canada, opposed the Green Shift, even with some special provisions for the industry.

One idea for economic growth: fight spam

2008-12-19T10:36:00.004-05:00

I'm going to talk about spam. Yes, email. But first a little background:

To get out of this recession, one of the things we need to do is find worthwhile investments. It's only half a strategy for the government to try to stimulate the economy by spending money. If you don't do anything productive with that stimulus money you'll just end up creating inflation down the road. A conservative commentator suggested reducing income taxes to get us out of recession. My reply to that is the same. If there aren't any good investments, people who have income will just hold on to the extra money. No jobs will be created, no investments will be made. That's what's happening right now. Prices are falling. US treasury bills were recently auctioned at 0% interest!

(I'm not saying that the government should not spend until a good investment is identified. Obviously we have to help out families where, say, a job has been lost)

So, let's look for riches that can be unlocked. In history, the availability of new resources such as land, energy sources, technology, or trade opportunities were a source of economic growth. Where is the next big opportunity? I'm not sure, but here is a small one.

Cisco recently put out their 2008 Annual Security Report. They find that spam accounts for 200 billion messages a day, about 90% of all email messages. An enormous amount of time and infrastructure is wasted because of spam.

That's a store of value that can be unlocked, and can serve as a magnet for investment. I'd recommend fighting spam (e.g. figuring out how to implement a charge, say, of 0.1 cents per message) as a worthwhile opportunity to create economic growth. If we can put together a hundred of these ideas, perhaps we'd have a reasonable plan for spending our way out of this recession.

Now, the City of Kingston, Ontario spends $300 million a year on energy. That's $300 million that leaves the Kingston economy every year. Perhaps there's some value to be unlocked there...

Ten weeks later...

2008-12-16T06:09:00.002-05:00

Ten weeks ago we read this during the election campaign:

The Conservative official, who refused to speak on the record during a conference call with journalists, accused Liberal leader Stephane Dion of "fear-mongering around the economy for his political gain."

The opposition leaders are "cheering for a recession," the Conservative official charged.

and this

Conservative Leader Stephen Harper accused his Liberal opponent of cheering for a recession as he notched up his appeal for a majority government to run the economy his way.

I've already blogged about how listening to the signals the financial markets are giving is not fear-mongering. Stéphane Dion was willing to listen. Now, long after the signals started flashing red, we have this admission

Stephen Harper has delivered his bleakest forecast yet for the Canadian economy, warning yesterday the future is increasingly hard to read and conceding the possibility of a depression.

"The truth is, I've never seen such uncertainty in terms of looking forward to the future," the Prime Minister told CTV News in Halifax.

"I'm very worried about the Canadian economy."

Get ready for a sweetheart Conservative budget next month!

When Joseph McCarthy took on the U.S. Army...

2008-12-12T20:59:00.004-05:00

... it was the beginning of the end.

Here is a letter to the editor that appeared in the Kingston Whig Standard this morning:

Every time I hear about another of our young soldiers being killed in Afghanistan, it breaks my heart. I am so grateful to the young men and women fighting on our behalf to uphold the way of life many of us take for granted. I am also grateful to the families that have raised such dedicated soldiers, and to the wives, husbands and children they leave behind to fight on the side of freedom.

It is mainly for this reason, but certainly not only for this reason, that I am appalled at the way the Canadian opposition in Parliament is trying to take over leadership of Canada.

To unseat the government by way of a coalition is to throw mud in the face of democracy - the same democracy that these young people are dying to protect. It is, therefore, also a slap in the face to the soldiers and their families if we let this happen.

We, as Canadians -regardless of which party we voted for in the recent election -must stand up and fight for all that our votes stand for: freedom, democracy and the right to choose how we live our lives. Don't let the loss of 100 Canadian soldiers be in vain.

Laurie Campbell

and here is my letter to the editor in reply (it could use some more work but I don't have a lot of time!):

Dear Editor,

It was disturbing to see the letter from a reader (Coalition scheme is anti-democratic, December 12, 2008) who showed disrespect for our courageous soldiers in Afghanistan by attempting to use them as pawns to advance her political views, and in particular to misrepresent our Westminster system of government. It is one thing to support the political party forming the government in parliament. It is quite another to accuse elected opposition MPs of being anti-democratic and un-patriotic, as the letter writer, certain members of parliament, and a parade of other editorialists have done. How much longer should we allow these people to damage our public institutions? Perhaps it is time to ask them the question, "You have done enough. Have you no sense of decency?"

Kingston Liberals/NDP/Greens continue to meet

2008-12-11T22:55:00.003-05:00

Following up on a rapidly organized and successful town hall (literally) meeting last weekend in Kingston, Ontario, members of the Kingston and the Islands Liberal Party, New Democratic Party and Green Party met again tonight to discuss how to work together over the next seven weeks (and beyond) to promote the proposed coalition government.

What is most amazing is how well we get along and how smoothly we have worked together (I'll admit I was ready to throttle the NDP over a couple of issues during the recent federal election campaign). Hats off to Mr. Harper and the Conservatives.

Stay tuned for more developments...

Progressive Coalition Event at City Hall, Kingston, Ontario

2008-12-04T22:40:00.003-05:00

Progressive Coalition to Host Meet and Greet in Kingston

This Sunday, December 7 at 2:00PM, Kingston's Memorial Hall will play host to a 'Meet and Greet' in support of the proposed Progressive Coalition Government.

The event has been coordinated by representatives from Kingston's Liberals, Greens and New Democrats, and is supported by the Kingston District Labour Council. It is aimed at helping concerned Kingston and area residents to better understand what is behind the current political crisis and how we can best work together to resolve it. Speakers will include prominent local political figures and an expert on Canadian constitutional practice.

According to Kim McFarlane, President of the local federal Liberal Association, “Only a week ago, all parties signalled their willingness to work with the current Government by accepting its Speech from the Throne. Rather than building on that, Mr. Harper responded with destructive partisanship that irretrievably cost him the confidence of the House. Under our parliamentary system, that requires his resignation. The Coalition Accord represents a sincere effort on the part of the majority of the members of the House of Commons to make this Parliament work for Canadians to deal with the real problem, which is the state of the economy. We fail to understand how Mr. Harper’s move to shut down Parliament for almost two months will help those Canadians facing job losses.”

Eric Walton, the Green candidate in the last election added that “by proroguing Parliament primarily for reasons of self-preservation, Stephen Harper has deeply damaged Canada's democratic system and for that reason alone should be voted out at the first opportunity.”

The local gathering has been designed with a focus on socialization, education, and community spirit. The event is open to the public and refreshments will be provided.

“We all agreed that rather than holding another rally, the wide-range of political support in Kingston might be best-served by a more social event where we can get to know one another and commit to working together on a local level.“ said Daniel Beals, President of the local New Democrats.

It should be noted that Kingston has a history as a site of unification and cooperation, having hosted the first meeting of the Parliament of the united Upper and Lower Canadas on June 13, 1841.

"Now is not the time for political posturing. In the face of an economic crisis it is crucial that we work together for the good of all Canadians. Nobody can question the sincerity that underlines the Coalition Accord." said Debi Wells, President of the Kingston District Labour Council.

- 30 -

Inquiries: Ron Hartling

Policy Director - Kingston & the Islands Federal Liberal Association

613-384-5710

Daniel Beals

President - Kingston & the Islands New Democrats

613-549-8399 (h)

Eric Walton

International Affairs Critic - Green Party Shadow Cabinet

613-542-9365

Debi Wells

President - Kingston District Labour Council

613-548-4952

A smart comment about Stéphane Dion in the Globe and Mail

2008-12-01T20:25:00.002-05:00

Here is a smart comment by one "d s from Canada" in the Globe and Mail.

Let me also add that Stéphane Dion is the go to guy who can make sure some good policies are worked out and ready to go when Canada's new coalition government begins.

Who should lead the coalition?

2008-12-01T00:48:00.004-05:00

I don't pretend to know what's going on. I just read the news, cautiously. So when I read these lines from the CBC from a report by Keith Boag on the details of the coalition agreement:

"The real obstacle to this deal going through is still within the Liberal party," Boag said, adding the deal is being negotiated by Dion, who believes he has the right to be prime minister.

But it's unclear whether the party wants him to continue, and the leadership candidates were meeting Sunday evening to discuss the matter, Boag said.

I tend to assume that the reporter is just smelling around for some conflict to report on, as they are wont to do.

But, just in case, I wish to declare that I, as one individual among the many who make up the Liberal party, support Stéphane Dion as our interim leader and the leader of a possible coalition government. The Liberal party's membership should be the ones who choose their next leader.

NDP and Bloc pre-coalition talks: as it should be!

2008-11-30T15:16:00.004-05:00

CTV has broken the story that the NDP and the Bloc have had talks for a "considerable period of time" about a coalition. CTV is taking the angle that this means there are "political motives" to bringing down the government. That is, CTV and their favourite commentators (I'm listening to Ezra Levant right now) are implying that they were not really motivated to act by Flaherty's financial update.

I disagree. In a minority parliament, when minority governments are likely to be the norm in the foreseeable future, and when we've just had an election, I believe that opposition parties should be ready to present an alternative should the governing party try to act unilaterally to do something which the opposition thinks is harmful to Canada. The alternative can't be an election at this point in time, and so the opposition should be ready to govern, if necessary.

Even though the Conservatives have now retreated on public funding of political parties, and on taking away the right of civil servants to strike, and are moving up the date of the budget, the organization of an alternative, coalition government should continue. It is needed to keep the government honest and focused on the important issues of the day.

Prepare the coalition and keep the engine running to, at the very least, keep the party in power honest and focused on governing.

Coalition Government: one reason to go for it

2008-11-29T13:01:00.003-05:00

A number of commentators have been using chess metaphors to describe what's going on in Ottawa this weekend. Well, I'm a chess player and here is a very relevant chess proverb:

"The threat is stronger than its execution"

I think that the exercise of readying a coalition government is a good one if only to provide a credible alternative to the Conservative government and thereby to help the opposition parties do their job.

In a minority government, an effective opposition must be willing and able to present an alternative. Otherwise they have no way to induce the comprises that voters have given them a mandate to negotiate. Usually the alternative is to return to the polls, but with an election having been held so recently, and with the prospect of minority governments being the norm in the foreseeable future, opposition parties must be ready with a credibly viable alternative government, if only simply to be able to do their jobs effectively.

What did Pierre Poilievre just say?

2008-11-29T10:01:00.002-05:00

Did I just hear what I thought I heard? I believe MP Pierre Poilievre (Nepean-Carleton) just said on CBC's The House that a year ago Stephen Harper foresaw the economic problem that Canada finds itself in right now.

Can anybody confirm that?

Fighting the Conservatives Together

2008-11-27T23:16:00.004-05:00

There is talk today about opposition parties perhaps being willing to form a coalition government. This is in response to the Conservatives' lack of definite policies to address the global economic crisis and use of the crisis as a screen to seek political advantage. They want to save $30 million by cutting public funding for political parties - a move that would, in the short term, greatly favour the Conservative party, but do nothing to address the economy. The government may fall on a confidence vote in the next few days and the possibility of a coalition amongst the current opposition parties would be a very strong bargaining chip.

Today I received an email from Steven MacKinnon, Michael Ignatieff's national campaign director. The email draws attention to the Conservatives' move to cut public funding and then asks for donations to Mr. Ignatieff's leadership campaign because, "Michael Ignatieff can only succeed with your support."

That rubs me the wrong way. It rubs me the wrong way because it's taking a direct and imminent threat to the Liberal Party and the Canadian political system, and using it to appeal for funds to a particular leadership candidate's campaign. Even though we have a Liberal Party leadership race under way, in the House of Commons we, the Liberal Party, should still be fighting the Conservatives together. If we do not fight them as one team, we won't win. If the NDP, Bloc Quebcois and the Liberal Party can get together to form a coalition, surely the Liberal caucus could work tous ensemble.

Fight the Conservatives as a united party. Support Stéphane Dion in the House. Fight the leadership race elsewhere.

What is the true cost of nuclear energy?

2008-11-22T06:51:00.005-05:00

I wish I had an objective assessment of the true cost of electricity from nuclear power in Ontario (in Ontario because that's where I live). I haven't seen a careful analysis of that from either friends or foes of nuclear energy.

Here's an example of a slightly hidden subsidy and an example of why it's important to look at the numbers when you read the news.

Star reporter Tyler Hamilton wrote an article for today's edition pointing out significant investment losses in an account whose funds are set aside for the decommissioning of nuclear plants. He mentioned another account whose funds are set aside for managing nuclear fuel waste. Both funds were created five years ago in 2003 and Ontario Power Generation pays into them annually.

The fund managing waste fuel, currently valued at $4.792 billion, has grown. The province guarantees it a rate of return of 3.25 per cent annually above inflation.

The good news, I suppose, is that the money for managing waste fuel has not been lost in the recent stock market meltdown. What I want to point out is that over the last five years the yield on the long term (30 y) Canadian government real return bond has ranged from 1.44% to 2.79% with an average of 1.95%. Most recently it has been around 2.5%. But the province of Ontario has guaranteed a rate of return of 3.25% above inflation.

That's a subsidy.

Now, I'm not accusing anybody of trying to hide a subsidy. In 2003 the long term real return bond yield ranged from 2.8% to 3.2% so it's possible 3.25% above inflation was a fair guarantee for the initial deposit of funds into the waste fuel account. But payments in subsequent years have benefited from an above-market rate of return and that's where the subsidy lies.

What's so bad about subsidies? Well, Ontario has a nascent renewable energy industry. If that industry has to compete with subsidies to nuclear energy and subsidies to fossil fuel energy (i.e. being able to emit greenhouse gases for free), it will have a hard time growing -- which is the case! To counter that, the government of Ontario is subsidizing renewable energy and energy conservation, but it takes extra work to figure out where all the counter-balancing subsidies have to be applied and in what amounts.

National Post flubs global warming denial attempt

2008-11-17T06:55:00.010-05:00

National Post writer, Lorne Gunter, has written a column today following other global warming skeptics in trying to make a mountain out of a molehill about a data entry error. Some September temperature data were copied into October, making a report from the Goddard Institute for Space Studies seem to indicate that October was very warm. In fact, GISS pulled the report after less than a day, got a new report from the source that sent them the erroneous data (about 10% of their data stations were affected), and fixed their report a couple days after that. From a scientific point of view, it's good to have skeptics (good scientists are skeptics, especially of their own work, which is more than I can say for most global warming deniers). The more skeptics do their work, the more solid the scientific conclusions become. That's how science works.

Mr. Gunter seems to think this incident is evidence of bias by researchers at Goddard. He writes, "...unscientific bias at GISS and elsewhere in the global warming community -- has been exposed by this incident." He doesn't think that a quickly identified and corrected programming error or data entry error could have simply been just that.

Now Mr. Gunter, look at your own article:

Look at the fourth paragraph (and the reason I included an image is in case the Post corrects their online article:

"Moreover, sea ice expanded so rapidly it covered 30% more of the Arctic than at the end of October, 2007. (Of course, you saw few stories about that, too, since interest in the Arctic ice cover is reserved for when it's melting.)"

Wait a minute, we're talking about October 2008, not October 2007. Would that be a data entry error on your part, Mr. Gunter?

Selling on the lows, part 2

2008-11-15T04:47:00.004-05:00

This is a continuation of my last post on Conservative finance minister Jim Flaherty's plan to sell government assets now, after a historic crash in asset prices, to balance the federal government budget during the coming global recession.

It looks like Prime Minister Stephen Harper has had to backtrack, according to this report from The Canadian Press on ctv.ca:

Prime Minister Stephen Harper insisted Friday there will be no fire sale after his finance minister, Jim Flaherty, said the government is considering an asset sale to raise cash and try and stave off a budget deficit. "The government of Canada will never engage in a fire sale of assets," Harper said prior to heading off to Washington for an emergency summit of global leaders on the economy.

But I think wasn't hard for the CP reporter to find people with credentials to agree that the Conservatives have a bad idea:

"It's hard to believe this is an ideal environment to sell any asset," said Bank of Montreal economist Douglas Porter. "And it raises the bigger issue of just how hard should the federal government press to keep its books balanced. My view is if it comes down to selling the family silver at a discount rate just to make the books balance, that doesn't make sense."

Scott Brison, the new opposition finance critic just appointed by Stephane Dion, is a pretty sensible and knowledgeable fellow:

Brison said Canadians should be especially concerned because Flaherty was finance minister in Ontario when the provincial Conservative government of former premier Mike Harris sold the electronic toll Highway 407 north of Toronto for $3.1 billion in 1999. Three years later, a private investment bank valued the property at four times the sale price. "After three years of bad tax policy, and big spending, Flaherty has put the country in deficit. Now he wants to sell the house to pay for the groceries," said Brison.

There are still groups with tunnel vision, though. The CP reporter was able to count on the Canadian Taxpayer's Federation (CTF) for this quote:

Adam Taylor of the Canadian Taxpayers Federation said the government should do whatever it needs to -- including selling assets -- to balance the budget. "The government owns things that have no strategic value to Canadians and they could be sold," he said. "Property values haven't completely bottomed out and when the government owns thousands upon thousands of acres, there's a legitimate argument for selling a lot of it."

If Mr. Taylor really meant what he said (do whatever it needs to...to balance the budget), he'd advise the government to also consider the possibility of raising taxes (or rescinding promised tax cuts). But that's the last thing the CTF would ever say, so they can't be that serious about balancing the budget, especially since they've been applauding the various tax cuts that helped get us to our current fiscal position.
There are, moreover, a lot of economists who are questioning the rationale for balancing the budget right now (and I agree with them). In a severe recession, balancing the budget may come only at the price of a lot of pain for economically vulnerable Canadians, and reduce the number of options the government has to manage the economy and plan for its eventual recovery.
I see that Mr. Taylor is a market-timer who thinks he knows that, after a sale sometime in 2009 or 2010, property prices will continue to fall. If that's so obvious, I'd challenge the CTF to open a trading account, put its money where its mouth is, and sell some S&P Case-Schiller home price index futures on Jan 1, 2009. Hey guys, bet the house because maybe you'll be right!
Finally, the whole idea of balancing the budget by selling assets is based on their being valued on the government books at old, below-market prices. Any revenue you get from their sale is purely accounting revenue - not real added value for Canadian taxpayers.

Selling on the lows

2008-11-13T20:25:00.003-05:00

I used to be a trader many years ago, so I can't resist commenting on the story today from the CBC:

The federal government is considering the sale of some of Crown assets as a way of balancing its budget and avoiding a deficit, Canada's finance minister said Thursday.

I thought Mr. Flaherty was smarter than that! World asset prices have just collapsed and now he wants to sell?!?!

I further suspect that selling assets to avoid a budget deficit is only a bookkeeping trick to take advantage of certain assets being valued on the books at very old, below-market values. Perhaps he wants to hide behind the economic crisis while he pursues his real agenda of downsizing the federal government. Or, perhaps we had better quickly set up the "sweetheart deal" detector.

Minister Flaherty, let's compromise. How about if you get some expert disinterested parties to independently value the federal government assets whose book value seems way too low. Then you mark to market, and presto, you get to avoid a deficit without having to sell for real into the worst market in decades.

Greenhouses burning coal

2008-11-12T12:08:00.003-05:00

Tyler Hamilton of theToronto Star had an excellent piece yesterday documenting how Ontario greenhouses are turning to burning coal because of higher oil prices. This piece documents critical examples that illustrate why high oil prices are no substitute for a carbon tax when it comes to an incentive to reduce greenhouse gas emissions.

Here is an excerpt:

The Toronto Star has learned that dozens of other greenhouse operators in Ontario ... have switched or are considering a transition to coal as a way to save on fuel costs.

The impact so far appears small, but the trend is gaining momentum. As it does, it could undermine the environmental benefits of an Ontario government plan to wean the province off coal-fired power generation by 2014.

"Coal is expanding in the province, despite a policy to phase out coal," says Roger Samson, executive director of REAP-Canada, an independent group that encourages sustainable farming practices. "The Ontario government has no plan on how to mitigate this."

...

It's estimated that greenhouses in Ontario cover 2,823 acres, and that the average greenhouse requires 9,500 gigajoules of energy per acre every year. This works out to 26.8 million gigajoules annually.

Convert that energy into electricity potential and it works out to 7.44 terawatt-hours a year – more than three times the 2004 electricity output of the Lakeview coal-fired generating station in Mississauga (which has since been closed down and demolished).

To those of you participating in the local food movement: don't forget to think about the possible implications of greenhouse-grown food.

Remembrance Day and reducing consumption

2008-11-11T23:09:00.005-05:00

Msgr. Don Clement gave the benediction at the City of Kingston's Remembrance Day service today and he provided, I'm glad to note, a wise exhortation. To paraphrase Msgr. Clement, he called on us to use the liberty won by the sacrifices of our soldiers to ensure that the resources of the world be utilized for the benefit of all people, in all nations, now and in the future.
How can the average Canadian support our troops overseas?
The more I learn about the economic drivers of conflict around the world, the more I appreciate the contribution of the consumption of material goods by people in developed countries. As an example, most recently in the news, the humanitarian crisis in eastern Congo has, as an underlying cause, a struggle to control valuable mines.
So I would venture to say, one way of supporting our troops is by making a personal sacrifice. Cut your personal consumption of "stuff". You'll be making a small but real contribution to peace around the world and making future peacekeeping efforts a tiny bit easier.

0.7% of GDP development aid target = revenue from a $30/tonne carbon tax, numerically and morally

2008-10-27T22:59:00.008-04:00

At the recent Carbon Pricing and Environmental Federalism conference in Kingston, Ontario, one thing that was brought up by a couple of speakers (one of them was Matthew Bramley of the Pembina Institute) was the idea that taxes on greenhouse gas emissions, "carbon taxes", are actually a "recovered subsidy", and that, as a consequence, one could argue that it was more fair for the federal government to collect this tax (as opposed to provincial governments).

Let me explain this a bit before getting to my idea. Greenhouse gases are causing climate change, and that will be bad for everybody. Right now, people get to emit greenhouse gases (from burning fossil fuels) for free. But it's really not free because people in the future that will be burdened by climate change will pay the price. In effect, those people are giving a subsidy to the people who pollute for free today.

Money collected from a tax on fossil fuels would recover some of this subsidy. Who should get the proceeds? Well everybody benefits from reduced greenhouse gases, and the federal government would seem to have a better claim to represent "everybody" than individual provincial governments. Therefore, from this point of view it makes more sense that the federal government deserves the money.

Now to my point. Why stop there? We know that people who will really pay the price for climate change are the poor who live (or could have lived) in certain developing countries in the future. Aren't they the ones who are morally entitled to the proceeds of our carbon tax (in whatever form it is implemented)?

If you agree with my point then consider this: a $30/tonne tax on CO2, as proposed by the third year of Stephane Dion's Green Shift plan, would generate about $11b in revenue. That's coincidentally about 0.7% of Canada's $1.6 trillion GDP. Perhaps we should be considering fully funding Lester Pearson's (and the U.N.'s) suggested international development aid target using a $30/tonne carbon tax, and concentrating that aid on development that will prepare future generations to deal with climate change. What a great way to try to settle our debts and respect intergenerational equity.

Carbon Pricing and Environmental Federalism

2008-10-19T23:34:00.004-04:00

This weekend I attended the Carbon Pricing and Environmental Federalism conference in Kingston, Ontario. This meeting, organized by Queen's University's Institute of Intergovernmental Relations, brought together many of Canada's experts in the field of public policy on climate change.

Needless to say, Stephane Dion, the Green Shift and the recent election were not far from everybody's thoughts. The mood was a bit somber in this respect as exemplified by Prof. Kathryn Harrison of UBC, a political scientist, who said that with last week's vote, optimistically, action in Canada on climate change will be pushed back by at least ten years. Various people had unkind words for the NDP and the Conservatives for campaigning against the Green Shift with misinformation and scare tactics. More than one person told me that the best use of my time now, as an activist, would be to talk to kids, with the sad implication that changing the minds of older generations, as a whole, was a lost cause (although as a younger person and somewhat of a kid-at-heart, I am not willing to give up so quickly).

Economist Nancy Olewiler (an organizer of the letter signed by 250 economists during the election campaign supporting a carbon tax) of SFU, however, amid her own observations of the difficulties that the fight against climate change faces, did say that we should celebrate one thing: that the recent federal election in Canada was the first Canadian election where pricing policy (as opposed to voluntary initiative or incentives) for carbon emissions was a major issue.

Climate change will be challenging us for a long long time. How to reduce greenhouse gas emissions will be a political issue for a long long time. As long as we have a market economy, the price of emissions, however it is generated, will also be a political issue. And so I think that Canadians will be talking about Stephane Dion and the Green Shift for many years to come.

Stephane Dion put a clear policy forward for carbon pricing as a first step to combat climate change. It was supported by environmentalists and economists. It was roughly in line with the Green Party's proposal, and it was based an old idea going back in the political arena at least as far as a policy proposal by a US Republican party presidential candidate in 1979, John Anderson, and implemented in one form or another in many countries since then.

In my opinion we are indebted to Stephane Dion for bringing some intellectual honesty to Canadian politics. Perhaps his mistake was to be so honest as to call a tax a tax. One of the conclusions of this conference was that, politically, Canadians are not ready for that. Conference participants concluded that we should never again associate carbon emissions pricing with the word "tax", and simply disguise it with names such as, "cap and trade", "public benefit funds", "renewable portfolio standard", or "foreign oil security fee".

I believe that history will show that Mr. Dion should be accorded more respect than he has been receiving from certain (close) quarters in the last week. We need more people like him in Canadian politics.

On the Harper government's plan to purchase mortgage securities

2008-10-11T09:21:00.007-04:00

The $25 billion purchase of mortgages announced by the federal government was described as follows:

From the Toronto Star: "Under the plan, the government is buying $25 billion of mortgage-backed securities to ease the liquidity problems of Canada's major banks. Harper described the securities as solid, government-insured investments..."

From the Ottawa Sun: ' "This is a transaction in which the government of Canada, the taxpayers of Canada will not lose money," Harper said. "Quite frankly, because the costs of our borrowing are lower than the value of these mortgages, we'll probably make money when this transaction is over." '

I'm not an expert in Canadian mortgage securities but here's my simple risk-return thinking:

Let's suppose these mortgage securities have an expected return that is slightly higher than the interest rate on Canadian government bonds, as Stephen Harper says.

Now Harper says that the Canadian government can buy the mortgages, financing the purchase at the interest rate paid on Canadian bonds, and earning the difference between the rates of return on the two legs. A profit for Canada?

But wait, these mortgage securities are probably insured (presumably through the CMHC) by the government of Canada! In this case, if anybody but the government of Canada purchases them, it's a purchase of insured mortgages. But if the government of Canada purchases them, there is no insurance any more for the purchaser. In fact, there is no free lunch. If the government expects to make a little money from this investment, it's only because it is taking on the risk of mortgage defaults because it is insuring its own investments.

I hope that the government takes a haricut on the price of these mortgage securities to account for how much the CHMC mortgage insurance is worth, and the fact that the CMHC is the government. If not, Stephen Harper's claims might be false and misleading. Again, I would caution the reader that I'm not an expert in mortgage securities - just knowledgeable enough to be worried about Stephen Harper's plan.

"buying opportunity": not just an insensitive statement from Harper, but unjustified

2008-10-10T10:36:00.005-04:00

Anybody who knows financial markets would know that unless you really do your homework, you cannot say when there is a 'buying opportunity'. Certainly it would be wrong to say that, based on a casual application of the (economically unjustified) notion that stocks always bounce back after they go down, there was a buying opportunity back on Tuesday. That's what Stephen Harper did. Professionals who have done a lot of trades will tell that, unless you have done your homework and understand why a market is not being efficient, you won't make money betting on any simple strategy like mean reversion.

Now this post is not just about Stephen Harper. It's about commentators like Susan Riley of the Ottawa Citizen, who wrote, "...his logic is impeccable: stock markets go down, but eventually go back up", and Andrew Coyne who wrote of, "...Harper’s perfectly sensible observation that the present panic on the stock markets presents a remarkable buying opportunity ". Experience trading in the markets will tell you that, unless you figure out why somebody sold a stock down too aggressively, you don't have a better than even chance betting on it bouncing back. Right now, I'd say very few people, if any, really know exactly how bad the financial crisis is, and certainly not casual commentators who are mainly focused on Canadian politics.

Don't tell me that if you wait long enough, stocks will bounce back. If you wait, you have inflation to worry about. Look at the inflation adjusted return on stocks in the 1970's. Moreover, you can only wait until you die. In the long run we are all dead, as Keynes observed. For single stocks, consider an extreme example -- look at Lehman Brother's share price. Is it going to bounce back?

No, Stephen Harper's statement was not a sensible or logical statement that was simply insensitive. It was just wrong. As an economist, Harper should know something about market efficiency and how difficult it is to predict whether a stock price will go up or down. But I guess it was just too good an opportunity to try to express to voters his belief that the economy is probably okay.

Explaining the crisis in LIBOR

2008-10-09T06:44:00.002-04:00

A nice article that explains a bit what is going on with the London Inter Bank Offered Rate (LIBOR) is here. LIBOR is an important global interest rate benchmark. LIBOR is high because banks want to avoid lending to one another. They don't know if one of their counterparties is going to be the next bank to become insolvent.

LIBOR is a benchmark that is used to set a lot of floating rate business and consumer loans. When it goes up, as it is right now, loan payments go up.

From that Bloomberg article:

The spread charts and financial acronyms mean real pain for people like Maureen McNally of Trenton, Florida. The monthly payments on her Libor-linked mortgage from Countrywide Financial Corp. have climbed to $769 from about $500.
``I had to give up my cable television, I had to give up my house phones, because I had to cut back completely,'' said the 53-year-old gift processor at the University of Florida in Gainesville. ``I am so disgusted with this whole mortgage thing I never want to own a home again.''
McNally says she's had her house on the market for nine months without an offer.

It's (already) a disaster, not a buying opportunity, Mr. Harper.

2008-10-08T04:35:00.006-04:00

A lot of people have already commented but here is my take on Stephen Harper's statement to reporters yesterday (Oct. 7, 2008), "I think there are probably some great buying opportunities emerging on the stock market as a consequence of all this panic" and the statement on the Conservative Party website related to the belated release of their election platform, "The Liberals and the NDP are both a vote for financial disaster" (their emphasis).

Look, it's already a financial disaster (I won't quote somebody else. I'll back that statement up with my past years of experience working in the financial markets). If the Conservatives really believe a vote for the Liberals is going to turn this situation into one, they don't understand what's going on. Maybe they don't want to, or can't. Hey, C's! It's already a disaster guys.

Note how the Conservatives are lumping the Liberals and NDP together so that they can criticize the Liberal Party on economic management. From the Financial Post, Stephen Harper said, "The Opposition proposes raise taxes. In particular, and look at the stock market today -- where the big hits are on energy and commodity prices. And the Opposition proposes carbon taxes. The Opposition proposes to raise taxes on companies in the energy business and other commodity businesses." They have to add in the NDP's plan to cancel planned business tax cuts. They can't simply criticize the Green Shift any more, especially with the publication of the open letter from 230 economists supporting a carbon tax as the best way to fight global warming.

Look, nobody is blaming the financial disaster on the government. This is an international problem, but it is a disaster. Hey, C's! It's already a disaster guys.

The questions Canadians should be asking themselves as they head to the polls on October 14th are, "Who is going to acknowledge the economic crisis as more than a buying opportunity on the stock market? Who has economic management experience? Who will, given that a recession is a near certainty, also look out for the vulnerable members of our society?". That would not be the Conservative Party.

Harper and energy prices

2008-10-07T08:12:00.010-04:00

Yesterday, Stephen Harper was quoted in the Globe and Mail saying, "What I worry is this is just the tip of the iceberg if we get a carbon tax on energy." If he is implying that higher energy prices are bad, I have this to say:

Let's forget about taxes (and the fact Harper is yet again ignoring the shift in the green tax shift) for the moment. Hasn't Mr. Harper noticed how much the price of oil and the Canadian dollar have dropped as this economic crisis progresses? That's real dollars lost to Canada as a whole because we are net exporters of oil.

If Stephen Harper only cared about the Canadian economy, especially in the short term, he should be worried about lower energy prices. That would make Canada poorer. If the worst predictions, like those made by bank economists yesterday, come to pass, we might enter a depression where low commodities prices and not high prices would be part of the problem.

But, apparently, he may not care about the economy because he has an election to worry about.

Listening to the markets is not fear-mongering

2008-10-06T08:10:00.006-04:00

The Conservatives have been accusing Stephane Dion of "fear-mongering around the economy for his own gain". I used to work in the financial markets and one of the fundamental things you have to know there is that market prices contain information. Nobody has to "fear-monger". Prices in the stock and bond markets make it clear that there is a serious risk of global recession.

Almost everybody is used to following the stock markets, but almost nobody follows something called the interbank offered rate (e.g. LIBOR, the rate set in London). This is the rate that banks use as a benchmark to charge each other for loans. LIBOR is also a reference rate for businesses and consumers borrowing money and is a critical number in the international money markets. What is unprecedented is that difference between ('risky') LIBOR and the interest rate on ('riskless') US treasury securities has exploded and halted a lot of financing of business activity around the world. The stock market drop is nothing compared to what is going on in LIBOR. Do not think that this stock market decline is the same as any other you've seen in your lifetime.

Canada is not the master of its own fate as to the question of whether or not there is a recession. All of that depends mostly on the U.S. economy. Our choice on October 14th is whether or not to acknowledge the possibility of a serious recession, how ready we want to be for it and for protecting our most vulnerable fellow Canadians.

Conservatives have been saying that there is no serious financial crisis amongst Canadian banks. That may be true. But even if the world's financial problems do not impact the Canadian financial system, the slowdown in the world's (especially the U.S.'s) economies will impact (or already have impacted) Canada's economy - and that means job losses. We should be getting ready to take care of each other.

Doing nothing is the risky option. Not admitting the real possibility of a painful recession makes it worse. The choice between a Conservative government and a Liberal government is even clearer.

Conservative candidate fabricates "facts"

2008-10-02T07:49:00.001-04:00

(gosh, if the Conservatives are going to manage Canada's economy, maybe plagiarism isn't so bad, at least not as bad as acting on purely fabricated "information")

Have a look at this posting by Conservative candidate Brian Abrams in Kingston and the Islands. I took the screen shot in the early morning hours of Oct. 1, 2008. Look at the very bottom where he attacks the carbon tax by using that "fact" the German unemployment rate is 12%. The number immediately struck me as high. In fact, you can easily check online that the German unemployment rate was 7.6% in September and 7.7% in August. Brian Abrams just made up his unemployment number out of the blue.

The link is here but who knows how long it will remain uncorrected.

You know if Mr. Abrams is elected and if the Conservatives are returned to power, he may very well become a cabinet minister. Harper's bench is not very deep. Anything could happen.

With the economic storm clouds gathering, it would be a lot safer to send one less "economic fact fabricator" to Ottawa. Vote for Peter Milliken in Kingston and the Islands!

If Chantal Hebert says so too...

2008-10-01T22:43:00.003-04:00

I thought Stephane did well in tonight's French language debates, but I can't trust my own objectivity. In the discussion segment during the subsequent CBC/Radio-Canada news broadcast, Chantal Hebert also said that Dion did well, so, it must be true :-)

The Economy: keeping on track may mean being run over

2008-09-29T08:06:00.006-04:00

I think the point has to be made that the Conservatives' "keeping Canada on track", steady-as-she-goes, economic management philosophy may be just the wrong thing for an economy threatened by a global recession.

Sometimes staying the course is the most risky thing to do.

The financial crisis that began with the collapse of the (mostly US) housing bubble, spread to subprime mortgages and the credit markets, and became a systemic threat to the financial system is not over. I'm looking at the Interbank Offered Rates in the financial markets this morning and the high rates there show that despite the US government's rescue package, international banks are still reluctant to lend. The effect of this financial crisis on the overall (global!) economy has yet to be revealed and we must be prepared to take action to deal with a possibly severe recession.

Look at the dramatic moves to lower interest rates, open up lending, and take over illiquid mortgage assets that US authorities have had to take.

In the face of an imminent economic crisis, I'm worried that a Conservative government could only imagine sitting tight, like a deer caught in the lights of an on-coming freight train, 'keeping Canada on track' only to let us be run over by a global recession.

The Conservatives' inability to imagine taking bold action: that's risky. Don't let them win votes by taking advantage of the current financial crisis to scare Canadians away from making a change to a government with the ability to admit to the truth and to take decisive, informed, and well-considered action.

Cross Country Checkup went well

2008-09-28T17:55:00.004-04:00

Stephane Dion's appearance on Cross Country Checkup went very well I thought. It had an intimate 'fire-side' feel, and the discussion didn't seem rushed. The questions were pointed but Dion could take the time to explain his policies and show how much he cares about Canadians and their future. I can't explain it, but the radio show seemed to go much better than any television interview I've seen.

Sign wars

2008-09-14T01:13:00.003-04:00

Yesterday we discovered that our lawn sign had been stolen after only being out for a couple of days. We have some Dion signs in our front window so perhaps, for the next four weeks, if I need to drive my daughter somewhere then I should be checking our car's brakes first...

Why a mandatory cap and trade system would take time

2008-09-14T00:39:00.004-04:00

Jack Layton claimed recently that his cap and trade proposal for limiting greenhouse gas emissions would not take a long time to set up. This claim is important to rebut because the reason Stephane Dion decided to change his mind and to go with both a carbon tax and cap and trade, is because a mandatory cap and trade system would take a long time (a few years) and lots of resources to set up.

First, let's show Mr. Layton's quote from the Globe and Mail:
“The forcing of big polluters to pay, taking that money and investing it in solutions which is the cap-and-trade system, has already happened. It's already going on in Canada on a voluntary basis.”

The crucial point is the difference between a voluntary cap-and-trade system and a mandatory one. In a mandatory system, here are some of the headaches you are going to have to deal with, and find answers that everybody across the country can agree to:

Who is in and who is out? Where are you going to set the boundary between large emitters and small emitters? Everybody is going to try to be exempted, either partially or wholly (lots of people/institutions will feel it's unfair to them). What's your plan to 'consult with the public'? Are you going to include non CO2 greenhouse gases? What are the standards you are going to apply to offset projects?
What new regulatory and operational body are you going to construct to oversee the mandatory emissions market?
How is the auction going to be conducted? How many emissions credits are you going to auction? If you try to limit the supply of credits and push down the total cap on emissions, the price for credits might go up. Is there no limit on the price for emissions credits? If there is a limit or safety valve, what is it? (notice that in this case the cap-and-trade system becomes a hybrid cap-and-trade/tax system without the hard limit on absolute emissions that Mr. Layton wants.)
What do you do about early action? How, exactly, do you reward, or at least not penalize those who have already taken action to reduce emissions? How do you set baseline levels for offset projects in a way that people will agree is fair?
Are you going to harmonize with the various US markets and/or the European emissions market? Are you going to allow CDM or JI projects to sell offsets? How long will negotiations with them take?

Mr. Layton is picking a fight between a cap-and-trade proposal and a carbon tax proposal that is not going to help Canada deal with climate change. Splitting the non-Conservative Party vote is bad enough, let's not have an unproductive fight about climate change policy that will distract Canadian voters from the critical point that a Conservative Party government will not do anything substantial to fight climate change.

MKJA report also shows GHG reductions

2008-09-13T20:56:00.005-04:00

The MKJA report quoted in the Green Party press release yesterday also answers the question (in a political sort of way because the Conservative government was in possession of this 'secret' report) that many critics have posed about how much and when greenhouse gas emissions would be reduced under a Green Shift or Green Tax Shift.

Check out Table 3 of the report, entitled "Emissions Reductions Under GHG charges". The authors of a report have a model with which they can give a rough idea of when and how much emissions will be reduced under a certain level of carbon tax.

Of course all of this is less important than the fact that this report shows that the economic impact of the proposed carbon tax, either by the Liberals or the Greens, would be to reduce GDP by only about one-tenth of one percent in the first five years or so, but then actually increase the GDP 15 years down the road. The Conservatives knew that this information was in the report by MKJA that they did not make public, and yet they persisted in claiming in the first week of the election campaign that the Green Shift would "plunge Canada into a recession" and threaten national unity. If you can't be honest with yourself, how can you be trusted to run somebody else's (the country's) affairs?

Source of skilled people to do all of those energy retrofits

2008-09-12T15:36:00.004-04:00

Grumpy Voter's comment on my last post deserves a response in a separate post.

I'd like to let you know about a program called the,
"Energy Systems Engineering Technician and Technologist" program at our local community college in Kingston, Ontario: St. Lawrence College.

Students in this program are trained in areas like energy audits, building insulation, renewable energy equipment, environmental impacts and life-cycle analysis. They just graduated their first class this past year and every student got a job in the energy field (talk about green jobs!). What's also nice is that these students are particularly energetic and inspired. Similar programs are being created in other post-secondary institutions.

It's not coincidental that Kingston, a city of 100,000 people, is blessed with five local businesses that install renewable energy equipment (solar PV panels, solar hot water systems, wind turbines, wood stoves etc.).

Reinforcements are coming!

New Home Retrofit Program Proposal

2008-09-12T13:35:00.002-04:00

I'd like to applaud the announcement today of a home retrofit and green mortgages program by Stephane Dion.

As the director of a sustainable energy association, I hear over and over again that a major hurdle to doing home energy retrofits is paying an upfront cost and waiting for the payback in the future, even if the net cost of the retrofit is expected to be negative. Now this is not necessarily irrational because any construction project has risks associated with it. The risk-adjusted cost of a retrofit project may not be negative.

Grants and green mortgages will help very much in making projects move forward, unlocking value in our economy (that's what I mean by costs of certain building energy retrofit projects being negative), helping to develop businesses, and creating jobs.

One thing I would caution about this proposal is that I think we also need to have more trained and experienced tradespeople to do these energy retrofits and installations. Anecdotally, (and people who know the labour markets will be able to make this statement more solid), there is a serious shortage out there of good tradespeople, and it might not be a bad idea to put some resources into nurturing more of them.

Elizabeth May's book coming out on Oct. 2

2008-09-11T12:30:00.003-04:00

I received a notice from amazon.ca that Canadian Green Party leader Elizabeth May's book, "Global Warming for Dummies", part of the extensive "... for Dummies" series, is being released in the middle of this federal election campaign on October 2. Coincidentally, it's the same date as the English language party leaders' television debate, one of two debates that were recently the source of so much public outcry when Stephen Harper and Jack Layton tried, unsuccessfully, to exclude her.

Shaving diesel taxes: Stephen Harper joins a retail bandwagon

2008-09-10T23:08:00.003-04:00

Free gas is being used to sell stuff
As I've mentioned before, gasoline subsidies are now being used by retailers to sell all sorts of things: not only big gas-guzzling vehicles and hotel and resort stays (you have to drive to get to your vacation spot), but even prescription drugs and financial services. All of this amounts to a negative carbon tax. These promotions are encouraging the production and consumption of fossil fuels, not to mention consumption in general - exactly the opposite of what we should be doing to prepare for the future.

Even by some churches?!
It is also amusing to see that in the U.S., even some (non-mainstream) churches have been giving away free gas to boost attendance and attract new members. Needless to say, that has attracted criticism from church groups.

Stephen Harper too
Well I guess Stephen Harper has joined this retailing bandwagon in order to sell his election platform, such as it is. Yesterday he announced an election promise to cut the federal excise tax on diesel by 2 cents per litre over the next four years. This amounts to a roughly $8/tonne negative carbon tax on diesel.

More greenhouse gases
This would be an incentive to consume and produce fossil fuels and greenhouse gases. This would be an incentive to put off the transformation that Canada must undergo to prosper in the 21st century.

And who will have to pay for it?
The cost of these cuts to the federal treasury is estimated to be $600 million annually. How are we going pay for that? Will there be stealth income tax increases like the one from 15% to 15.5% on the lowest tax bracket that accompanied the first GST decrease in 2006? Or perhaps we should ask what federal government programs will be cut? The recent cuts to arts funding programs that caused such an outcry were to save $46 million annually. How many more such cuts would the next Harper government make?

Don't make future generations pay for our energy subsidies
Or, would a Harper government borrow the difference and let future generations pay for it - future generations that will be struggling with the consequences of our delays in transforming Canada's energy economy?

Why Dion's election campaign carbon offset makes Canada richer, fairer, and greener

2008-09-10T05:25:00.001-04:00

There has been some criticism coming from Conservatives about the Liberal Party's purchasing of credits to offset the greenhouse gas emissions of Stephane Dion's election travel. Basically the criticism is that the purpose of this purchase is simply to appear environmentally friendly, while the jet that the Liberal Party procured for this election is older and less efficient than the jets obtained by the NDP and the Conservatives (it's the only jet the Liberals could get).

The criticism is invalid and here are the reasons:

First of all, Dion committed the cash-strapped Liberal Party to offsetting his campaign travel as far back as February-March 2007. The point is that this commitment was made before decisions were made about campaign travel. Therefore, it gave an extra incentive for the cost-conscious Liberal Party to make his campaign travel as efficient as possible.

Second, the projects that generate voluntary offsets should satisfy a property called "additionality". This means that the money from the sale of offsets (or the anticipated sale of offsets during project planning) should make a difference in whether the project goes ahead or not. The offset vendor used by the Liberal Party, Carbonzero, says that all of its projects are additional. (By the way if you are interested in their voluntary offset methodology document, which contains a very good definition of additionality, look here.)

So the money from the Liberal Party's offsets really made greenhouse gas emissions go down somewhere else. That is how voluntary offsets are supposed to work. According to a Carbon Zero news release, "The offsets purchased by the Liberal Party of Canada will be directed by Carbonzero to a Quebec project which replaces inefficient gas boilers in heating systems with new units employing heating controls and new energy efficient piping systems...the project includes new solar heating collectors and retrofits the buildings to allow heat recovery from domestic wastewater, and switches heat generation systems from natural gas to electricity."
I'm also told that the offset project involves retrofitting non-profit housing - these are people who would have a hard time putting money upfront to make energy retrofits. Money spent on retrofits would otherwise be taken out of money spent on providing non-profit housing. So we can see why this project satisfies "additionality".

Look at what is happening with the money from Stephane Dion's campaign travel offsets:

Stephane Dion is reducing Canada's greenhouse gas emissions and fossil fuel consumption. Good for the environment, making Canada greener.
Stephane Dion is making it cheaper for low-income people to live in non-profit housing. Good for social justice, making Canada fairer.
Stephane Dion is supporting businesses and workers that do energy retrofits, and supporting Canadian manufacturers that build green technology (e.g. see Enerworks, Renewability Energy, ECO GFX, Quantum Renewable, Ecoalternative Energy) Good for the economy, making Canada richer.

Making Canada greener, fairer, and richer: these are the promises that Stephane Dion has been making for a long time, and I think that he has kept his promise in deciding to purchase voluntary greenhouse gas offsets for his campaign travel.

Joe Clark and Kim Campbell support a price on carbon!

2008-09-09T08:16:00.004-04:00

A group of prominent Canadians called Canadians for Climate Leadership, including former Progressive Conservative prime ministers is calling for a price on carbon and that revenue from an emissions tax should be redistributed to those hardest hit.

This story just out this morning from the CBC!

The news release is here.

A quote from Joe Clark:

"I am very concerned by the lack of decisive action by Ottawa on climate change," said the Right Honourable Joe Clark. "We are falling further behind other comparable nations, and simply cannot afford another round of posturing and denial in this next election - more than ever, we need a clear and honest commitment by all parties for strong, simple and effective climate laws."

The Economy: Stephen Harper has cast away any intellectual anchor

2008-09-09T00:00:00.004-04:00

One claim that Stephen Harper is making on the campaign trail is that he has, "the 'sensible balance' to handle uncertain economic times", according to the CBC.

On the contrary, I would say that Mr. Harper cannot be trusted to be a good manager for the economy because he has cast away any intellectual anchor in that field.

This should have been obvious in his desire to cut the GST (a consumption tax) in the face of the overwhelming opinion of economists that cutting income tax would be better at stimulating productivity and growth. More recently, Mr. Harper also over-ruled his Finance Minister, Jim Flaherty, (who, wisely, is [was] wary of the government choosing investments and trying to pick winners and lowers, a sentiment I seem to remember that is shared by former Saskatchewan NDP Finance Minister, Janice McKinnon) to dangle an election goodie - $80M for a Ford Motor Co. plant.

But what I want to mention today is that Mr. Harper has even cut his intellectual links with free market titans like Milton Friedman. Friedman said, "The legitimate role for government is, in so far as it can, to control and check negative externalities." Polluting for free, greenhouse gas emissions in particular, is a perfect example of a very serious negative externality that threatens the planet. On this, Friedman continues with, "...government should be involved by setting a fee on the activity concerned. And that is something else that has increasingly developed. You have markets now in pollution abatement."

Now, what did Mr. Harper have to say about Stephane Dion's Green Shift? He simply dismissed the Green Shift (after misrepresenting it by reducing it to a carbon tax) by saying that it would, "screw everybody across the country", in complete opposition to almost all economists, even ones that might be considered libertarian, right-wing, or conservative.

Where is Mr. Harper's intellectual anchor when he's thinking about the economy? What are his terms of reference? Perhaps he's just out to get votes? What else could there be? If economic times are uncertain, a guy like Stephen Harper is not a good person to rely on for sound management of the economy.

Conservative campaign workers are easier to train

2008-09-07T22:45:00.004-04:00

Yesterday I got my first taste, I think, of the Conservative Party ground campaign for the 2008 federal election. I had on my Tournant Vert button and was walking around downtown Kingston, Ontario. A fellow out of the blue turned to me and muttered some anti-environmentalist stuff ending with "... green shaft" before walking away.
Then it occured to me that the C's have an easy time training their volunteers. I can imagine it now. One guy with a bullhorn shouting, "Repeat after me, 'greeen shaaaft'".

Stephen Harper and the conversation the Governor General needs to have with him

2008-09-01T21:56:00.006-04:00

Her Excellency, the Governor General (HE), needs to have this conversation with Stephen Harper (SH) when he comes to visit Rideau Hall later this week (in the style of Andrew Coyne):

HE: Mr. Harper, you've come to ask us to dissolve parliament and call a new election, we are told.

SH: Yes, your excellency.

HE: We trust that you are not doing so because you think you could win a majority in the next parliament?

SH: Oh no, your excellency! Certainly not. That would be against the spirit of Bill C16, the fixed election date legislation that my government proposed and parliament passed last year. No, parliament is dysfunctional. It's dysfunctional now. That's why I'm here. We passed a bunch of legislation before but now, now it has become dysfunctional.

HE: We are glad to hear that you are respecting the spirit of Bill C16. We suspected as much when we read what you said, "My expectation would be that we will have another minority. I think that's the reality of the current political environment," when you visited Tuktoyaktuk. Pray tell Mr. Harper, how do you know that parliament is dysfunctional now?

SH: Well, your excellency, I've just had meetings with the leaders of the three opposition parties. We disagree so much on the issues that I believe our government doesn't have the confidence of parliament.

HE: But what if we get another minority government? What will have changed?

SH: Like I said in Tuktoyaktuk, I want to get a fresh mandate out of an election, even if it's another minority government.

HE: But, assuming you win a minority government, the opposition leaders will still be the same, and they will still have the same disagreements with you.

SH: Your excellency, parliament will be different. There will be new MPs, new ministers, new critics, new committees. Parliament will be different.

HE: But you haven't consulted parliament. You've only consulted the party leaders. Mr. Harper, perhaps we should consult with this parliament before we spend $300 million on another election just so that you can empty the opposition parties' coffers, and so leave them in the position of not being able to threaten to go to the polls. (Yes, we have been reading Mr. Flanagan's exposition of your battle plan.) Is that what you really mean by a "fresh mandate"? We are going to have to think about all of this for a few days before we would be able to grant your request to dissolve parliament.

Lisa Raleigh for Florida Circuit Court Judge

2008-08-31T23:59:00.006-04:00

I've been helping my dear friend, Lisa Raleigh, run for Florida circuit court judge this summer. Lisa is a special counsel in the Florida Attorney General's office. I've been volunteering some time to do data processing for Lisa. In Florida you can get information on who voted in recent elections (e.g. who bothers to vote in primaries), their address, age, gender, party affiliation, how they voted (early, absentee, or election day), and even race. So there's a lot of things you can do to choose which voters you'd like to target. Lisa doesn't have a lot of money so this sort of targeting is very important to her.

Well, the amazing thing about Lisa's campaign is not that she made it out of a three way primary race and will be on the November ballot (along with Barack Obama and John McCain) for the run-off, but that she did it while being outspent about 12 to 1 ($159,000 to $13,000) by her run-off opponent, Frank Sheffield (shown here on the campaign trail).

Now, Mr. Sheffield is probably a good guy, but I know that Lisa is smart, hard-working, honest, caring, and a very experienced public prosecutor. If there are any Americans reading this, please consider helping to make sure that we have one more high quality public servant in the world by having a look at Lisa's campaign website and donating to Lisa's campaign.

Watch this video

My Suggestion to Her Excellency the Governor General of Canada

2008-08-30T11:35:00.003-04:00

The amendment to the Canada Elections Act of 3 May 2007 (Bill C-16) sets a fixed federal election date of roughly four years after the preceding election. The purpose of this Act is to take away the power of the governing party to call an election when it is to its own advantage to do so. The amendment begins, however, with an affirmation of all of the powers of the Governor General, including the power to dissolve parliament at his or her discretion. By tradition the Governor General also acts on the advice of her prime minister.

What is expected to happen in Canada shortly is that the prime minister, Stephen Harper, will ask the Governor General, Michaëlle Jean, to dissolve parliament and call a new election before the next fixed election date of October 19, 2009. He will claim that the current parliament is "disfunctional", a matter of considerable dispute and, I would say, if true, then certainly caused by his own party who, for example, wrote a 200 page handbook for its members on how to disrupt parliamentary committees.

Mr. Harper will be at least circumventing the spirit of his own government's newly passed law, if not breaking it.

I don't know if Her Excellency the Governor General would consider this transgression sufficient to justify denying the prime minister's request, but I would suggest that she at least assert her long-standing role as the ultimate safeguard against abuses of the law and abuses of our democratic system by taking a few days to "consider" her prime minister's request before granting it.

Is the amount of resources devoted to the Olympic Games getting out of control?

2008-08-27T20:23:00.006-04:00

Well, the summer Olympic Games are over. I enjoyed watching some of it on television, but now I feel a bit guilty!

The August 18th issue of Business Week contains an article which states that $6.5 billion was spent on security for the Games in China. It goes on to say that much of that has gone to foreign firms, which suggests to me that the $6.5 billion was real money as opposed to an internal accounting figure.

Wow, that's enough to finance a small war or make a dent in any of the world's pressing problems. According to the Center for Arms Control and Non-Proliferation, $6.5 billion is more than Sweden's projected military spending in 2008. The United Nations Peacekeeping Operations budget in the current fiscal year is only slightly more: $7.1 billion.

The money spent on the Olympic Games sure seems out of control here.

Good news for the Green Shift from the Canadian Taxpayer's Federation

2008-08-19T09:06:00.004-04:00

The Canadian Taxpayer's Federation (CTF) released yesterday a "Green Shift impact analysis for Ontario Businesses". They said that new costs of $1.5 billion per year would be paid by 111 power plants and that tax cuts of $811 million would be shared by 365,649 Ontario businesses.

Why is this good news for the Green Shift?

If you look a little more carefully than they did at their own figures, you'll see that about three quarters of the extra tax paid is accounted for by the four coal burning power plants of Ontario Pwer Generation, owned by the people of Ontario.

But the McGuinty government's plan is to phase out these coal plants! A lot of the slack will be taken up by conservation and renewable energy. The Green Shift contains business tax breaks for using green technologies (accelerated depreciation) and a 25% refundable science, research and experimental development credit.

Furthermore, Ontario Power Generation's take of the federal income tax cut would be insignificant (OPG's annual report for 2007 shows income before taxes of $477M and $576M for 2007 and 2006 respectively) compared to all the businesses operating in the province.

So, very roughly but not so much more rough than the Canadian Taxpayer Federation analysis I would say, after the coal plants are shut down (or stop burning coal - there are plans to use biomass to fuel them) the carbon tax paid by the companies than own Ontario power plants would be about $380M while the business tax cuts would still be about $800M (and this economic stimulus does not include the stimulus from developing the green energy sector).

It is interesting to note that while publically owned Ontario Power Generation's plants occupy positions 1,2,4,5,6 on CTF's top greenhouse gas producers list, position 3 is occupied by a plant owned by TransAlta Corp., an Alberta company; position 7 is occupied by Exxon Mobil, the US based corporation; and in position 8, ATCO, is an Alberta company. So some of the private businesses the CTF is shedding tears for aren't even Ontario based businesses.

BigCityLib Strikes Back: High Gas Prices As A Natural Carbon Tax, Part Whatever

2008-08-14T02:43:00.001-04:00

Big City Lib asks the question (I'm paraphrasing), "Does the recent drop in gasoline prices (over the last 3 weeks) make the Green Shift an easier sell?" in this blog post:
BigCityLib Strikes Back: High Gas Prices As A Natural Carbon Tax, Part Whatever

I think the answer might be very slightly yes. There is a concept from behavioural finance called "anchoring". When gas prices went up over the last few years, people felt that prices were too high because they were used to lower prices in the past, and did not take into consideration how the supply and demand for oil has changed in the past decade.
Now that prices have fallen somewhat, people may feel that gasoline is relatively cheap. Gas prices may not make the news headlines until a new high is reached. A tax on non-gasoline fossil fuels may be more palatable (in combination with the Green Shift's tax cuts)
Of course gas prices are not the full story, especially as the Green Shift proposal does not increase the federal tax on gasoline, consumer electricity and natural gas prices are regulated (and so don't follow global energy prices in the short term), and there hasn't been a winter heating season since the spike in oil prices in the spring and early summer.
Nevertheless, the economic focus of the average consumer might now be on whether or not there is a recession coming, and not so much the price of energy. For that reason the tax cuts and credits of the Green Shift might be appealing to some voters. This is just a suspicion of mine, not a claim of fact.

Global warming allows Lyme disease to invade Canada

2008-08-11T10:56:00.005-04:00

The Kingston Whig Standard carried an article today by reporter Jennifer Pritchett about the spread of Lyme disease across Canada. An aunt of mine in the U.S. has suffered from it for many years. It wasn't treated soon enough or aggressively enough and got into her heart. This nasty disease is carried by the blacklegged, or 'deer' tick. Ticks are bad enough - seeing a creature with its head burrowed into your flesh is a bit distrubing - but those deer ticks are tiny little buggers and really hard to check for. Believe me, I have had to do it for friends.

(Image from the Public Health Agency of Canada website)

Canadians are especially susceptible because they are relatively ignorant about Lyme disease.

The Whig Standard article concludes with a warning from one scientist:

Jim Sutcliffe, a medical entomologist at Trent University, said bird migration has been the source of the ticks moving north into Canada. Global warming is enabling those ticks to survive and reproduce in more northern latitudes.
"The thing that's different is that the climate is changing - it's warming gradually so our summers are getting warmer and our falls are becoming warmer," he said. "The temperatures stay higher for longer throughout the year and that's making southern Canada receptive for the blacklegged tick."

We have to worry about not only greenhouse gas mitigation (reducing the concentration of greenhouse gases) but global warming mitigation. Global warming has already started and we'll have to deal with (pay for) the consequences.

Do you want to pay for a government program to deal with Lyme disease? If so, where would you divert resources from? Would you cut spending elsewhere ? Raise taxes? Borrow from the future?

Explaining the Green Shift from another vantage point

2008-08-04T21:06:00.001-04:00

This is based on a piece I wrote recently for a local newsletter:

The Liberal Party of Canada just put out a major policy initiative called the Green Shift. I’d like to explain how the Green Shift will help make taxes fairer and position Canada to succeed in the 21^st century.

Have you ever thought about why the government chooses to collect revenue in certain places but not others? Let's ask the question, “What taxes should be collected to pay for government programs?” I think you’d agree that taxes are a drag. Whenever you tax something you discourage that activity. But you’ve got to raise money somewhere. One place where governments raise money is excise taxes on tobacco and alcohol. Taxes on consumption of those products are not as harmful to society as taxes on other activities. So it’s “safer” to tax those things.

Well then what about income taxes? If you think about it, income taxes discourage people from hiring workers and from earning incomes. Workers are more expensive to hire, and they take home less pay.

Are there things we don’t mind discouraging, that we could tax instead of income? Why not pollution? If we taxed pollution we would only be discouraging something which we don’t want anyways. So let’s lighten, a bit, the taxes on our income and shift the burden over to one kind of pollution: greenhouse gases! Greenhouse gases are emitted when we burn fossil fuels. There’s already a federal excise tax on gasoline, so we can leave that alone. But there is no such tax on, for example, coal, the dirtiest fossil fuel of all. Let’s phase in the shift over four years to let people adjust. That’s the idea behind the Green Shift. The tax on greenhouse gases is called a carbon tax because when you burn a fossil fuel, like coal, you emit carbon dioxide and contribute to climate change. Climate change is threatening the welfare of our children, grandchildren, and many generations to come.

We are shifting taxes in the Green Shift, not raising them. So income taxes will be lowered using the money raised from the carbon tax. There are also a number of protections built into the Green Shift plan for those who are especially vulnerable to energy price increases. Seniors, children, middle and lower income earners, rural and northern residents all get extra money back. A $1 billion contingency fund will be set aside to help out municipalities, schools, hospitals and other non-profit institutions. Everybody, including individuals and businesses, will get a tax break. A 50 year old with an income of $30,000 would get $350 a year. Make it a rural resident and they would get $500 a year. Add a child and that goes up to $1078.

More importantly, everybody will be working together. Everybody will pay for the greenhouse gas pollution for which he or she is responsible. Everybody will earn a reward if they consume less. The Green Shift is just one step. We have to develop technology, build infrastructure, and change our habits. But with the Green Shift, everybody will have a financial incentive to do his or her part to change how we use energy, to energy-proof our economy by reducing our dependence on fossil fuels, and to position Canada for success in the 21^st century.

You want to avoid having Climate Cops?

2008-08-03T22:07:00.004-04:00

There was an article in this past weekend's National Post entitled, "Children enlisted as 'Climate Cops', U. K. utility ad campaign raises Orwellian fears". I won't comment here on whether or not the reaction to a U.K. utility's climate change and energy conservation campaign has been blown out of proportion. But I will say this to readers of the National Post (especially to those who are principled conservatives): if you don't want the government telling you how to live, if you don't want your friends and neighbours looking over your shoulder and checking your energy consumption habits, if you don't want the problems of climate change and fossil fuel dependence being turned over to the 'Climate Police', then support the implementation of a carbon tax. For conservatives who like less government, the best way to deal with climate change is to tilt the playing field, and eliminate the current, unfair advantage that burning fossil fuels enjoys, that of being able to pollute for free. People will then be 'free to choose' (C'mon C's! Put a smile on Milton Friedman's face. Join your economists who support a carbon tax!) how to respond to this tilt - change driving habits, use less hot water, conserve electricity, heat with wood, insulate, or whatever.

Ugh! Here come negative carbon taxes - gas subsidies from the automakers

2008-07-16T00:35:00.003-04:00

I see that automobile companies are giving out gas cards worth roughly $1000 (got a flyer from Chrysler Canada in my mailbox recently saying they were giving out cards with $750 to $1,500 in gas depending on the model you buy) in an attempt to sell their big cars. Let's do an order of magnitude calculation and see what level of subsidy that amounts to. Let's assume that this vehicle gets 10 litres/100 km and is driven for 200,000 km over its lifetime. Then, over its life, it would use 20,000 litres of fuel. A gas card worth $1000 means a subsidy of 5 cents per litre of fuel over the life of the vehicle, order of magnitude.
Hmmm... the car companies, who are the best people in the world at selling cars, think that 5 cents per litre, equivalent to a negative carbon tax of about $20/tonne, will allow them to sell their gas guzzlers, that otherwise would rust on their lots. So, couldn't a positive carbon tax of that amount (roughly what's happening in BC) do an equivalent amount of good by causing people to buy fuel-efficient vehicles?

Okay, that was a pretty simplistic and rather rhetorical statement, but the point I want to make is that consumers do respond to price signals, and businesses even more so. It is quite incorrect to claim, as some do, that a carbon tax won't do anything to reduce greenhouse gas emissions.

How old is the green tax shift idea?

2008-07-14T04:59:00.003-04:00

I just noticed this entry on the Carbon Tax Center website:

In August 1979, Rep. John Anderson (IL) called for a 50-cent-per gallon energy conservation tax on motor vehicle fuels to reduce consumption and dependence on foreign oil. He proposed using the revenues from the tax to reduce payroll taxes by 50 percent, increase Social Security benefits, compensate those who were not on a payroll and thus not subject to the payroll tax, exempt farmers and allow tax credits for businesses "unfairly penalized."

Older folks (like me) might remember John Anderson as the Republican congressman from Illinois who was an independent candidate for U.S. president in the 1980 election. What a gutsy guy! Gasoline was about $1 a gallon back then so he was calling for a 50% increase in the price of gasoline.

The Green Tax Shift idea has been around for a while.

Canada's greenhouse gas emissions do matter to the world

2008-07-12T06:44:00.005-04:00

A paper in Nature that has attracted some attention this week reminds me that I've been meaning to write about why it is important for Canada to reduce its greenhouse gas emissions, even though they represent only a few percent of the total world emissions. You sometimes hear critics of devoting resources to fight climate change say that reducing our emissions is not going to make any difference. However, "doing our part" to reduce emissions isn't like voting, obeying the speed limit, or playing a team sport. These examples are missing a crucial dynamic, that of competition and of a limited, public resource.

The problem of climate change caused by human emissions of greenhouse gases is an example of a tragedy of the commons. The image this term is meant to evoke is that of pastoral villagers, each with cows that graze on a shared grassy commons. What one villager's cows eat is lost to the others so every villager is tempted to use up the commons as quickly as possible. As for climate change, we all pay when someone uses the atmosphere (the commons) as a 'free' dumping ground. When a single person pays to reduce emissions, everybody else benefits. Sensible individuals might conclude that the best thing to do is to take advantage of the free dumping ground (burn fossil fuels) as much as possible. But if everybody were to think that way, everybody would lose in the end.

The way out of such a tragedy is cooperation. In the case of greenhouse gases, this might take the form of an agreement between all parties to limit emissions, or to pay for emissions. It is very important in this dynamic that everybody is seen by others to be cooperating. Nobody should be seen as 'getting ahead' by cheating because then everybody else would be encouraged to do the same and cooperation would break down.

This point is the key to why Canada must reduce its greenhouse gas emissions. Canada has one of the highest per capita emissions of greenhouse gases in the world. Cooperation can't happen when a few people are taking advantage of the commons a lot more than others. Cooperation is fostered by people providing moral leadership. In this respect the small, the weak, or the small-in-number have always, historically, had opportunities to lead.

Canadian examples of why, with high oil prices, we still need a carbon tax

2008-07-03T23:14:00.003-04:00

A letter to the editor by one Bruce McCallum from Hunt River, PEI, in the Globe and Mail today contains two good examples of how higher oil and gas prices can cause increased emissions and pollution by shifting use to cheaper, dirtier fuels. He writes,

"the district heating plant in Charlottetown recently switched from relatively clean, but increasingly costly light oil, used for peak heating in the winter, to much dirtier, higher-carbon bunker oil, costing roughly half as much."

"Greenhouse owners from across Canada frequently contact me ... frequently mention that they are also considering switching to coal. Coal is cheap and plentiful, but it is the dirtiest, highest-carbon fuel available."

There is no federal tax on the burning of coal presently. It's enjoying a free ride at the expense of cleaner sources of energy.

Mr. McCallum's conclusion is also worth quoting, "Without carbon taxes to level the energy playing field and steer people toward green energy alternatives and efficiency, Canada's GHG emissions will to continue to rise."

PriceWaterhouse Coopers says... $40/tonne

2008-07-03T22:41:00.003-04:00

In today's The Guardian is an article about an updated report from PriceWaterhouse Coopers that quotes John Hawksworth, PWC's head of macroeconomics, as saying that, "the carbon price that would be needed to be set to encourage the switch away from carbon towards cleaner energy sources was around $40 (£20) a tonne, close to where it is now. 'It does not need to go much higher than it is now [in Europe] to achieve the sort of carbon reductions we are talking about.'" PWC was looking at cutting long term emissions in developed countries by about 80%.

That $40 a tonne is the Green Shift's target price on carbon by the fourth year. Now these numbers are uncertain and will probably change, but the basic point I want to make is that when people say that Stephane Dion can't tell them what amount of greenhouse gas emissions reductions will result from the Green Shift, the answer perhaps should be, "If we [kick the C's out and] start now, the Green Shift may accomplish just the emissions reductions we need."

Thanks to Neil Reynolds for supporting a carbon tax

2008-07-02T07:15:00.002-04:00

Neil Reynolds of the Globe and Mail has written another column (Pointless to Rush Carbon Emissions Plan, July 2, 2008) against doing something about climate change. He has tried to use a paper by William Nordhaus to argue against the Green Shift plan. What Reynolds has, strangely, not appreciated is that Nordhaus is in favour of a carbon tax! Nordhaus uses an economic model to try to guess the optimal carbon tax given certain assumptions about economic growth and greenhouse gas goals. Here is a quote from his paper (from the Major Results and Conclusions section):

"...the 2010 carbon prices associated with CO2 doubling and 2½ ° C cases are $40 and $42 per ton carbon"

What he is saying is that his computer model gives the result that if, by 2100 with certain assumptions, you want to limit the increase in CO2 concentration to a doubling, or the rise in temperature to 2½ ° C, not very ambitious goals according to scientists, the optimal carbon tax now should be about $40/tonne. That's coincidentally what the Green Shift proposes.

Mr. Reynolds, do you support the Green Shift's carbon tax now?

India worried about carbon tariffs from the European Union

2008-06-25T07:17:00.004-04:00

This article from yesterday's Economic Times of India entitled, "Exports to Europe may trip on carbon barrier", shows why Canada should be prepared to have carbon taxes. The article begins with:

"Indian goods being exported to the European Union may face higher barriers if the 27-member grouping goes ahead with a proposal to place a carbon tax on goods imported from advanced developing countries."

Of course, all is not cut and dry. The article notes that a bilateral agreement between the EU and India contains a national treatment clause which says that, "bilateral trade partners have to treat goods from partner countries in the same way as goods originating from the home country." The problem, I think, is that, because the EU's cap and trade system awards credits for free, and does not auction them off, it could be argued that goods orginating in the EU do not pay all of the carbon burned in the fossil fuel energy that goes into their manufacture. In addition, some EU countries have their own carbon tax, but some do not.

If Canada had a carbon tax, then exports to the EU would not be faced with a carbon tariff.

The take-home message is that carbon tariffs are coming. You can pay them to a foreign government or you can pay them to your own government (which, in the Green Shift plan, is going to return it to the people in direct tax breaks). Let's get ready.

Isn't "Green Shift" a generic term?

2008-06-23T21:45:00.006-04:00

Apparently there is (or isn't?) some controversy over a possible trademark infringement involving the name "Green Shift". There is indeed a company called "Green Shift". In fact I have a box of their stuff in my basement (sugarcane fibre plates, cornstarch cups, potato starch utensils, and napkins) that we used at the Kingston Liberal Party barbeques last summer.

I have to say that I viewed Green Shift as a rather generic term so I'm surprised that this controversy over a trademark infringement has come up. I did some Googling and besides my favourite vendor of barbeque supplies, I came up with:

1) Green Shift is a project of ecoPerth with support from Transport Canada’s MOST program. Green Shift sets out to tackle household vehicle use in small town and rural situations.
2) GreenShift (greenshift.com) develops and commercializes technologies that facilitate the efficient use of natural resources. We do so today by developing and integrating new clean technologies into existing biofuel production facilities, by selling equipment based on our technologies, and by using our technologies to directly produce and sell biomass-derived oils and fuels.
3) The Green Shift Project: A proposal from the Silicon Valley Institute for Global Sustainability

4)Green Shift: Changing Attitudes in Architecture to the Natural World (Paperback)
by John Farmer (Author), Kenneth Richardson (Editor) "This book is an account of how buildings from the eighteenth century to the present time have reflected the momentous changes

5)Reducing carbon dioxide emissions from the production, operation and disposal of computers is to be the aim of a new government taskforce. The public-private "Green Shift" taskforce will be led by Manchester City Council.

6) Michigan students demand green shift from automakers

Published by ninarizzo, January 13th, 2008 Clean Cars , Climate Challenge , Events , Oil , Transportation , global warming

7) Cranfield expertise could drive forward green shift

Written by Sam Fountain
Wednesday, 05 March 2008
Expertise at Cranfield University could be driving forward the world’s move toward green cars, providing high-end testing capabilities which could attract industry investment to the region.

8) Green Shift: Economics of Going "Green"
April 19, 2005
Produced by Robbie Harris

Building environmentally friendly homes and buildings is the buzz among developers these days. This report investigates the meaning of building green, who is doing it, and whether it can be cost effective.

Well, you get the idea. There are lots more instances of the term "green shift" being used in various places so it seems like a generic term to me. I hope they don't spend many resources fighting over it.

More economists Stephen Harper might think are crazy?

2008-06-19T19:34:00.005-04:00

I'm inspired by a nice post at Far and Wide today

Let's begin with the Stephen Harper reaction to the Green Shift.
From the Canadian Press: "This is crazy economics. It's crazy environmental policy," Harper said at a news conference in Huntsville, Ont

Let me add some crazy economists to Far and Wide's list, namely, the Pigou Club:

(I'm copying from their website here)

Pigou Club is described by its founder as “an elite group of economists and pundits with the good sense to have publicly advocated higher Pigovian taxes, such as gasoline taxes or carbon taxes.”

Pigou Club was founded by Dr. Gregory Mankiw by stating his legendary manifesto in the Wall Street Journal. As time passed more and more economists were added to the list of people supporting the Pigou Club. They include people from all sides of the political spectrum:

Nicholas Gregory Mankiw, founder, former chairman of President George W. Bush's Council of Economic Advisors

Nobel prize laureates

Gary S. Becker (+ J. Bates Clark Medal)
Joseph E. Stiglitz (+ JBCM)

John Bates Clark Medal

Lawrence Summers
Paul Krugman

Other fine Pigou Club Members:

Al Gore (former vice president)

Alan Greenspan (former Fed chief)

Amity Schlaes (Wall Street Journal)

Andrew Samwick (Prof. of Economics, Dartmouth College)

Andrew Sullivan (journalist)

Anthony Lake (National Security Advisor to Bill Clinton)

Brink Lindsey (Vice President for Research, CATO institute)

Christopher Farrell (economics editor, BusinessWeek)

Clive Crook (senior editor, The Atlantic Monthly & National Journal)

David Frum (speechwriter for George W. Bush)

George Schultz (US Secretary of Labor, Treasury and State)

Gregg Easterbrook (senior editor, The New Republic)

Hal Varian (Prof. University of California, Berkeley)

Joe Klein (jorunalist)

John Tierney (journalist, The New York Times)

Jonathan Rauch (journalist)

Kenneth Rogoff (Prof. of Economics, Harvard University)

Megan McArdle (journalist, The Economist)

Mike Moffatt (Economics guide at About.com)

Nouriel Roubini (Prof. of Economics, Stern School of Business, NYU)

Richard Posner (former Prof. University of Chicago Law School)

Robert H. Frank (Prof. of Economics, Cornell University)

Robert N. Stavins (Prof. of Business and Government, Harvard University)

Ted Gayer (Prof. of Public Policy, Georgetown University)

Thomas Friedman ( op-ed columnist for The New York Times, 3x Pulitzer Prize winner)

Tim Harford (journalist, The Financial Times)

Tyler Cowen (Prof. of Economics, George Mason University)

William Baldwin (editor, Forbes)

William Nordhaus (Prof. of Economics, Yale University)

The Green Shift: Why it's the right time for this policy

2008-06-19T07:12:00.003-04:00

Respected Globe and Mail columnist, Jeffery Simpson, wrote a column earlier this week entitled, "Carbon tax: the right policy, the wrong time" which claimed that, while a revenue-neutral carbon tax is a good policy in the long run, now is a bad time to implement it because the rapid rise in oil prices has, "create[d] genuine hardship for a lot of people". Simpson's article, I think, elucidates what Warren Kinsella said in a blog post which ended with: "I'm not saying no to a carbon tax. I'm saying no to a carbon tax now."

I don't doubt that many Canadians are experiencing some hardship now with the recent rise in oil prices. But that is a reason for providing some tax relief now with tax cuts and refundable tax credits. Look at Dion's Green Shift from another point of view: it's a plan to help Canadians with the higher price of oil by cutting income taxes.

How is this tax relief going to funded? Fortunately, not by borrowing from the future. We're already passing on much of the burden of dealing with environmental degradation to future generations. It will not be funded by cutting social programs. It will not be funded by increased taxes on gasoline because the existing federal excise tax on gasoline is already equivalent to a roughly $40/tonne CO2 tax. But it will be funded in a way that will gently put the brakes on our production of greenhouse gases.

People have been focusing too much on gasoline, and not enough about the fact that much of the Green Shift's tax relief will be funded by users of coal. Higher oil prices might make people think about using less gas, but they have also caused people to burn more coal, a dirtier energy source than oil. This is just one reason why higher oil prices are not a good substitute for a carbon tax.

Warren Kinsella, say yes to tax relief funded by a tax on fossil fuel CO2 emissions now!

Lifting the ban on offshore oil drilling in the US: another reason why the high price of oil isn't a great way to reduce greenhouse gas emissions

2008-06-18T11:41:00.005-04:00

In the news today is a report that George Bush, supported by Republican presidential candidate John McCain, is urging the US congress to the repeal the ban on new off-shore drilling for oil. John McCain previously opposed offshore drilling, but now he and others have been changing their minds and supporting some off-shore drilling.

I'm not going to debate the merits of off-shore drilling here, but it's fair to say that the ban was in place to curtail an environmentally risky way to search for oil.

What I will say is that this is a further illustration of why a high price of oil is no substitute for a carbon tax. High prices for oil mean more money paid to suppliers of oil, and more incentive to produce oil in environmentally or socially risky ways. In the US that means more incentives to drill in the environmentally sensitive Arctic National Wildlife Refuge, or off-shore. Here in Canada we are well aware of the environmental and social stresses caused by the boom in the oil-sands industry.

A carbon tax is different from a high oil price because with a tax, although the buyer pays more money, the seller receives less money. A tax would not increase the incentive to produce more and more oil and to thereby take more social and environmental risks.

Finally, a carbon tax produces revenues for our government, and not for unfriendly foreign governments. None of that tax money would go to the Taliban or to Al-Qaeda. I can't say the same for all the money that North Americans spend on crude oil.

Picking a fight between cap and trade and carbon taxes is not going to help Canada move forward

2008-06-14T16:18:00.006-04:00

Here is my letter to the editor that was published in the Kingston Whig-Standard on June 12, 2008. It is in response to a letter that can be found here

Reponse to Letter to the Editor of the Whig-Standard, "NDP has best policy to cut greenhouse gases", June 7, 2008.

In criticizing the Liberal or Green Party's green/carbon tax shifts, Jamie Masse and the NDP are picking a fight that is not going to help move Canada and the Canadian economy forward to meet the challenges of the 21st century. A carbon tax shift (rebates and lower income taxes financed by increased taxes on pollution and greenhouse gas emissions) can co-exist with a cap and trade system (which is used for managing greenhouse gas emissions from large emitters). For example, British Columbia has a carbon tax that starts on July 1, and has also joined the Western Regional Climate Action Initiative, a group that aims to establish an international carbon trading mechanism. Quebec, which just announced its intention to work with Ontario to set up a
cap-and-trade market, brought in a carbon tax on motor fuel.

Mr. Masse and the NDP seem to imply that businesses that pay a carbon tax could pass on the cost to the consumer, whereas that could not happen if they had pay for the credits that are auctioned off in a cap and trade scheme. That's clearly false. Either way a business will have a cost and some of that cost may be passed on to their customers. The "shift" part of
the green tax shift recognizes this and cuts or rebates income tax for both businesses and individuals, particularly low income individuals.

Vilifying "big, corporate polluters" and trying to put the cost of cutting greenhouse gases entirely on them, does not help to support a culture of energy conservation and efficiency. Any solution to the problem of our dependence on fossil fuels must involve efforts by every business and every individual to use energy in a sustainable manner. The participants in cap and trade schemes are so-called "Large Final Emitters" that account for only 50% of Canada's emissions. What about the other 50% of emissions that come from small emitters? As for making the 'big bad corporate polluters' pay, I would simply note that the biggest single greenhouse gas emitter in Canada
is the Nanticoke generating station, owned by us, the good people of Ontario.

Why should a carbon tax shift be considered in addition to a cap and trade scheme, or before a cap and trade scheme? One reason is that cap and trade schemes take time to set up. The 1990 U.S. Clean Air Act authorized emissions trading to control sulphur dioxide, but trading did not commence until five years later, in 1995. In 2002 the European parliament voted to endorse a cap and trade scheme for greenhouse gases but not until 2005 was the E.U. carbon market launched. A carbon tax shift, on the other hand, can be implemented much more quickly using the existing revenue infrastructure. The clock is ticking on climate change and that is why we should start moving now, beginning with a carbon tax shift. We can also start the preparatory work needed for a cap and trade scheme that would begin operating some time in the future.

Finally, the way Mr. Masse and the NDP look at things is that we need an environmental policy that respects "the needs of a fragile economy". The truth is probably closer to our needing to restructure our economy, with the environment foremost in mind, in preparation for the challenges of the 21st century. We must "energy-proof" our economy so that can withstand volatile fossil fuel prices. We must change how we live today, in order to preserve our natural environment and create a sustainable economy for future generations. A good step would be to remove the perverse incentives that we have now (pollution for free), to put a price on pollution, waste, and greenhouse gas emissions, to rebate taxes to low income Canadians, and to reduce taxes on income, investment, and innovation. A cap and trade scheme for greenhouse gas emissions also has its place, and I'm sure the NDP would be very welcome to work together with the Liberal and Green parties in this endeavour.

Green/Carbon tax shifts or Cap and Trade systems are not Tyrannical!

2008-06-11T15:59:00.006-04:00

Neil Reynolds wrote in today's Globe and Mail Report on Business (superheading "environment") about the costs of greenhouse gas mitigation ("Obama's Climate Change Solution: Tyranny"). Basically he was presenting and spinning some work put out by the George C. Marshall Institute which he claims is a "science policy think tank". Reynolds is where most of the "climate change deniers" have retreated to right now: saying that it's going to be too expensive to do much about greenhouse gas emissions. Only he's putting a new little twist, saying that it's going to be too costly in terms of freedom and democracy for governments to do anything but let technology and the market try to solve the problem.

Whoa!!

1) The well-known climate-change denier and tobacco and oil industry lobbyist, Frederick Seitz, helped found the George C. Marshall Institute. The Marshall Institute's work was, apparently, even too much for Exxon, who cut their funding last month, and explained that "In 2008 we will discontinue contributions to several public policy research groups whose position on climate change could divert attention from the important discussion on how the world will secure the energy required for economic growth in an environmentally responsible manner."

2) Reynold's doesn't seem to understand that technology plus a market economy that had a crucial price - the price of pollution (zero) - wrong, got us to our present dire situation. Two ways to try to solve the problem are the carbon tax, which puts a proper price on pollution and lets the market take over, and a cap and trade system, which is also a market solution to a pollution problem. These are the farthest you could get from tyrannical solutions to the greenhouse gas problem.

Tyranny, in my view, is leaving the price of pollution at zero. The subjects of our tyranny are those that will live, could have lived, or could have lived more productively in the future.

Carbon tariffs on Canadian exports?

2008-06-02T23:51:00.007-04:00

The US Senate began deliberating bill S. 3036 today, a bill that would set up a cap and trade system to reduce greenhouse gas emissions. It is not expected to become law, but there are some important policy ideas that could become established and implemented later by the new US government that takes power in 2009. One of them is that the US could impose tariffs on imports from other countries that do not put a price on carbon. I quote the New York Times today:

The measure directs the president to negotiate agreements with those countries to ensure they are imposing binding limits on carbon emissions on their own industries. If they fail to do so, the United States will impose unspecified tariffs on carbon-intensive products like steel, paper, concrete and glass from those countries. The provision was included at the behest of labor unions and American companies in those industries who would not support the bill without such a cost equalizer.

and a little further on,

Mrs. Clinton and Mr. Obama, courting labor support, favor tough carbon-based tariffs.

It would appear that WTO/GATT rules permit a country to impose 'border tax adjustments' when it imposes a domestic environmental tax and imports from countries that do not. Because the proposed cap and trade system does not give out emissions credits for free but instead requires emitter to pay for them, it could be considered a domestic environmental tax, and the United States would be entitled to impose a carbon tariff on imports.

These WTO/GATT rules have not been put to the test yet, but European countries are interested in giving it a try and the theoretical foundation seems solid.

If we already had systems in place to put a price on carbon, whether it be a cap and trade system or a carbon tax shift, it would be a lot easier to parry the threat of a carbon tariff imposed by other countries on our exports.

A high oil/gasoline price isn't the same as a carbon tax

2008-06-01T23:13:00.003-04:00

Here's why:

1. A high price for oil encourages more production, notably Canada's oil sands projects, which have been a major contributor to Canada's greenhouse gas emissions growth in the last few years. A tax might increase the price for gas for the buyer, but the seller doesn't get paid more and therefore a carbon tax does not encourage more production.

2. The high price of oil has been driving increased usage of coal as an energy source, notably in places like China. Coal emits more greenhouse gases per unit of energy than oil (as well as other noxious things). A carbon tax would increase the cost of energy from coal, more than it would increase the cost of energy from oil. Therefore it would reduce the incentive to switch to burning coal - something that a higher oil price does not accomplish so easily.

3. If higher oil/gasoline prices had been the result of a carbon tax, money would have been going to our government instead of to places like Russia and the middle east

A carbon tax shift is not an experiment

2008-06-01T19:06:00.003-04:00

I'm returning now to Terence Corcoran's op-ed (May 31, 2008) entitled "The carbon experiment". Here again is his concluding paragraph which I quote in its entirety:

So carbon tax programs are an experiment — although one that has already been tried. It imposes central planning on an economy based on carbon emissions rather than economic growth and welfare. It didn’t work for the economy, it won’t work for carbon.

Which is the experiment: a carbon tax, or the absence of a carbon tax and the resulting negative externality (polluting for free, a low price for fossil fuels) that, over the years, has gotten us into trouble with climate change and the geopolitical threats associated with dependence on oil?

I'd say we have been doing a grand planetary experiment to see if it's okay to subsidize fossil fuel use by allowing people to pollute for free.

I think we have the answer. Let's stop.

Putting a price on carbon is not central planning

2008-06-01T10:17:00.003-04:00

Terence Corcoran, editor of the Financial post has written an op-ed (May 31, 2008) entitled "The carbon experiment" with this concluding paragraph which I quote in its entirety:

So carbon tax programs are an experiment — although one that has already been tried. It imposes central planning on an economy based on carbon emissions rather than economic growth and welfare. It didn’t work for the economy, it won’t work for carbon.

I'd like to address that 'central planning' claim in the this post, and deal with the 'experiment' claim in a later post.

I find it ironic that the specter of central planning should be invoked to deter us from adopting a carbon tax. Centrally planned economies (remember communism?) tended to have official prices that did not reflect reality. The resulting inefficiency, waste, and suppression of freedom were deficiencies of that system of government. Most of the world has learned now that prices in a market are a useful tool for gathering and conveying information, and that free markets work better when prices reflect reality.

Now what does all of this have to do with carbon taxes? The point is that adding a tax to the cost of fossil fuels better reflects their real cost - a cost that includes the pollution from burning them. A higher price for coal tells everybody that it's worth spending a little more to develop renewable energy. A higher price for jet fuel tells a business to cut some of its least important airplane trips. The market prices do the work instead of a central authority deciding for people.

Now, I'm pretty sure that Terence Corcoran is not a left-winger, and so I'd suggest that he figure out how to counter Greg Mankiw, an economist who worked in George W. Bush's administration, who is in favour of a carbon tax, and who wrote this Wall Street Journal article that appeared on Oct. 20, 2006 entitled, "Raise the Gas Tax".

NDP's cap and trade plan: details?

2008-05-28T20:30:00.003-04:00

I tried to find out details about the NDP's cap and trade plan from www.ndp.ca today, but all that site did was refer to Bill C-377. I read though Bill C-377 and all it seems to require is setting emissions targets, including long, medium and short term (5 year) targets (good in my opinion), and gives the government the authority to regulate emissions. But that's all. What about the details? Am I missing a document that somebody can point me to?

www.ndp.ca says that the "projected" price for credits when they are auctioned off will be more than $35/tonne. I'd be interested in how they get that figure. How certain can you be of it? If you are planning to spend the auction proceeds on new government 'green' programs, what's your budget?

Will the different provinces be upset and want to interfere (a very big political headache) because the auction process will be sending hundreds of millions of dollars from Alberta (where almost all electricity is generated from coal and other fossil fuels plus they have the oil sands projects) to, say, Quebec (where almost all electricity is generated from Hydro)?

How a phased-in carbon tax shift could temporarily reduce gasoline taxes

2008-05-26T23:31:00.004-04:00

I've seen a number of blog posts and op-eds saying something like, "How could a carbon tax not increase gas prices?" Well, here is a way to phase in a carbon tax and actually reduce gas taxes temporarily.

Suppose you replaced the federal excise tax on gasoline with a carbon tax and phased it in according to the following schedule:
Year 1 $10/tonne CO2
Year 2 $20/tonne CO2
Year 3 $30/tonne CO2
Year 4 $40/tonne CO2
Year 5 $50/tonne CO2

Then the carbon tax on gasoline would be roughly
Year 1 2.5 cents/litre
Year 2 5.0 cents/litre
Year 3 7.5 cents/litre
Year 4 10 cents/litre
Year 5 12.5 cents/litre

But the federal excise tax is 10 cents per litre! So there you go: replace the excise tax with this phased-in carbon tax and you get three years of some gas tax relief for voters, repeat, voters.

From what I've read it seems that at the $10/tonne CO2 level, what the federal government would lose from motor fuel taxes would be roughly balanced by revenue from taxes on other fossil fuels. That seems like a good place to start.

You may ask, why introduce the carbon tax if you're just going to decrease gas prices and incent gasoline consumption? Well the point is that there is a lot of other fossil fuel consumption that is not taxed: coal in particular. Globally, high oil prices may be reducing demand for oil somewhat, but it's not reducing greenhouse gas emissions so much because people are being driven to burn more and more coal (not in Canada, in other countries). Coal shouldn't be getting that free ride.

An unlikely place to get an idea about elasticity of demand for motor fuel in Canada

2008-05-25T02:46:00.009-04:00

The Canadian Taxpayers Federation website contains an online poll
that, at the moment, contains the following results:

Two thirds of respondents are either driving less or purchasing a more fuel efficient vehicle. It's no surprise that Canadians are responding to price signals which is the motivation behind introducing a tax shift in the first place.

Now if only the CTF could be convinced that using less motor fuel is a good thing, or that the tax rebate part of a carbon tax shift plan would also be a good thing...but alas who knows what they think since the same webpage shows that they are getting their information about climate change from Friends of Science, the oil industry funded organization that may be in trouble with Elections Canada over un-registered election spending during the last Federal election.