One idea for economic growth: fight spam

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...

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

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

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.

The Economy: keeping on track may mean being run over

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.

The Economy: Stephen Harper has cast away any intellectual anchor

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.