Monday Morning Links

Miscellaneous material to start your week.

- Alex Morrison reports on the call from climate experts for immediate action to avoid careening past imminent climate tipping points. BNE reports on the unprecedented reversal of of the Deep Western Boundary Current as yet another example of the damage already done. And Aliyah Marko-Omene reports on the drought emergency facing southwestern Saskatchewan - even as the Moe government continues in its nihilistic determination to exacerbate the climate breakdown. 

- Jim Stanford points out that the digital services tax which Mark Carney sacrificed just to sit down with a manifestly untrustworthy counterparty has been was itself far from sufficient to account for the rents being extracted by U.S. tech giants.  

- Meanwhile, Stuart Trew and Marc Lee highlight how the business lobby's knee-jerk demand to eliminate regulations and development strategies in the guise of "trade barriers" will do little to boost anybody's economy, but create immense risks for democratic decision-making. 

- Finally, Tim White discusses the EU's experience - paralleled across North America as well - showing that the financialization of housing ensures that people's human rights aren't met. And Aishwarya Dudha reports on the rise of mortgage delinquencies across Canada - with Saskatchewan once again ranking worst among the provinces. 

On guardrails

There seems to be a general (and rightful) consensus that Elon Musk's demand to eliminate all regulations as a baseline position is high on the list of his unauthorized plans, based solely on libertarian fervour and wilful ignorance, which stand to create catastrophic risks for the American public. 

But if we recognize that compulsive deregulation is one of the most obvious and dangerous symptoms of antisocial corporatist disease, shouldn't we also recognize that it's worth defending our governments' ability to enact protections in the public interest - rather than using Trump's administration as an excuse to subject ourselves to the same type of presumption that all regulations should be invalid in Canada? 

Update: See more from Chris Roberts and Stuart Trew, as well as Dougald Lamont. 

[Edit: fixed wording.]

On defectors

For the most part, discussions as to how to respond to Donald Trump's various threats ranking from tariffs to annexation have focused on the contrast between a population (PDF) and set of political leaders mostly united to oppose them, and Danielle Smith's place as the main figure publicly looking to sell out Canadian solidarity for the sole benefit of the oil sector.

Unfortunately, I don't think we can safely presume the list of parties willing to undermine Canada's position is limited to the UCP. And the other ones worth worrying about are (mostly) more conspicuous by their silence than any public statements so far.

By way of background, let's note that there's a long history of debates as to questions of sovereignty vis-a-vis the U.S. And the traditional camps have generally involved public support for Canada's self-determination, lined up against business interests seeking a combination of market access, deregulation and general erosion of democratic decision-making.

The former set of voices have been the most prominent in responding to Trump so far, helping to give the impression of near-unanimity. But the latter have become accustomed to getting their way over a period of decades. And main business group which led the charge for corporate free trade in the past has been conspicuously silent in objecting meaningfully to Trump's posturing, with its public messaging going out of its way to defer to Trump and his apologists, while also flogging the tired hobby horse of mythical interprovincial trade barriers.

At most, the business lobby has shown some willingness to participate in voluntary consultation processes which may play a role in developing direct responses to Trump. 

But both inside and outside those groups, there's a significant risk that corporate voices will be pushing a radically different set of priorities than the ones assumed to be agreed to be those of any Team Canada. And the usual conflict between corporate priorities and popular ones may be even more stark than usual based on the U.S.' slide into corporate-dominated politics and gangsterism in government. 

Trump's obvious plans to make cronyism the main factor in his administration's decision-making will tempt those focused on short-term profits to sell out the rest of us to get on his good side. And laissez-faire ideologues may be perfectly happy to tie us as tightly as possible to a system where unlimited corporate money in politics has led to a SCOTUS-driven prohibition against effective regulation.

As a result, we can't take for granted that the corporate sector is on board with the Canadian public's desire to maintain our independence. And we'll need to both keep an eye out for, and be prepared to apply immediate pressure against, any businesses who are looking to play both sides - or worse yet, pledge their loyalty to team Trump. 

On redundancies

Scott Sinclair offers a useful summary of the latest sop to the anti-regulation lobby in the form of the new Canadian Free Trade Agreement (PDF). And as usual, there's a fundamental problem with any deal which deems public policy to be presumptively invalid to the extent it affects actual or potential corporate profits.

But I'd think it's particularly worth watching what will happen among the provinces who have already agreed to worse deals.

Unlike the New West Partnership Trade Agreement (formerly known as the TILMA), the CFTA does back up the usual spin about harmonizing rather than gutting regulations with processes which might actually encourage provinces to reconcile conflicting rules. And as noted by Sinclair, it avoids the trap of turning trade challenges into corporate windfalls.

With the CFTA in place, it would thus seem that all of the even arguably valid purposes behind the NWPTA have now been addressed at a national level - without some of the most glaring flaws.

So with that in mind, we should ask: is there any purpose to keeping the NWPTA around other than to give corporations multiple ways to attack policymaking at the provincial level? And if not, then isn't it about time to terminate the NWPTA?

New column day

Here, on the impending premiers' summit - and the need for any new deal on internal trade to recognize that provinces have to maintain the ability to foster their own economic development.

For further reading...
- Bill Curry and Robert Fife reported here on the pre-summit PR campaign to force the provinces to sign on, while Gordon Isfeld followed up.
- Meanwhile, Angella MacEwen offered a far more reasonable take on domestic trade:

Proponents are trying to argue that a negative list is ‘modern’ – but it’s just privatization and deregulation through the back door. As I told Blacklock’s Reporter, implementing a negative list to solve Canada’s internal trade barriers makes about as much sense as using a chain saw to trim your fingernails.

- Finally, Linda McQuaig highlights the entirely valid reasons for questioning the spread of "trade" agreements which entrench corporate power. And John Milloy's take on the need to listen to the public and take its interests into account is worth a look for those who haven't seen it yet.

[Edit: updated link.]

New column day

Here, on the Senate's recent attempts to claim any relevance to Canadian politics, and what they should tell us about the failures of our actual elected representatives.

For further reading...
- OpenParliament's status report on Bill C-14 (featuring the votes from the House of Commons) is here. Catherine Tunney reported on the Senate's debate on amendments to Bill C-14, while John Paul Tasker follows up on its final vote.
- The report of the Standing Senate Committee on Banking, Trade and Commerce seeking to undermine provincial governance is here (PDF). And for background as to the absurdity of demanding wholesale limitations on government based on a small number of "barriers" which could best be addressed individually, see here, here and here among other examples.
- And finally, for more on the Trudeau Libs' refusal to develop a federal policy on climate change, see my past discussion here and here. 

New column day

Here, on how Brad Wall is kicking Ontario while it's down by demanding that it let stimulus funding leak out of a province which actually needs it - and how Saskatchewan and other provinces stand to suffer too if Wall helps the Cons impose similar restrictions across the country.

For further reading...
- The Leader-Post reported on the Sask Party's own rejection of the TILMA here, while Matthew Burrows noted Saskatchewan's overall consensus not to pursue it here.
- I posted here on the absence of any substantive differences between the TILMA which Wall rejected based on public pressure, and the NWPTA which he signed in secret without consultation. And Erin Weir addressed the problems with those agreements here.
- Lucas Kawa points out Sylvain Leduc and Daniel Wilson's work on the value of infrastructure spending here, noting that while it's generally a good investment under almost any circumstances, it can be several times as valuable if paired with stimulus effects in a depressed economy.
- Finally, Stuart Trew and Kayle Hatt discuss the dangers of the Cons' attacks on provincial government policy-making authority.

On reality barriers

Shorter Brian Crowley:

It turns out that finding "facts" and "evidence" about mythical trade barriers is tougher than I'd realized. In light of this adversity, can't we just agree to accept my unsupported assertions as fact, and impose the most extreme anti-government policy my corporate benefactors can imagine in response?

New column day

Here, on how we should take Germany's rightful concern over investor-state dispute settlement provisions as an opportunity to reevaluate what we expect to accomplish through trade and investment agreements such as CETA.

For further reading...
- Peter Clark, Michael Geist and Scott Sinclair discuss Germany's objections to new trade agreements with Canada and the U.S. in particular, while reminding us why we should be wary of handing undue power to the corporate sector as well. And Nathalie Bernasconi-Osterwalder and Rhea Tamara Hoffmann discuss (PDF) Germany's past experience with ISDS in detail.
- Meanwhile, Patricia Ranald notes that similar issues are developing as Australia debates an agreement with South Korea.
- Finally, Thomas Walkom and Jim Stanford weigh in with their own concerns about CETA, while the Council of Canadians applauds Germany's stance.

Thursday Afternoon Links

This and that for your Thursday reading.

- Marc Lee looks in detail at the risks involved in relying on tar sands development as an economic model:

The UK outfit Carbon Tracker was the first to point out this means we are seeing a “carbon bubble” in our financial markets – that  fossil fuel companies, whose business model is the extraction of carbon, are over-valued on the stock markets of the world. This analysis was subsequently picked up by Bill McKibben in his now-famous article, “Global Warming’s Terrifying Math,” which launched the fossil fuel divestment movement, plus some local content by yours truly in a CCPA report called Canada’s Carbon Liabilities.

The latest from Carbon Tracker looks at planned capital investments in oil production around the world (future reports will look at coal and natural gas). These have different costs of extraction, leading to a “carbon supply cost curve” for oil production. Carbon Tracker argues that in a world of constrained carbon, it only makes economic sense that it will be the high cost suppliers that get cut out of the action.

This logic is bad news for Alberta’s tar sands, which are among the highest cost reserves. Using an oil and gas industry database, Carbon Tracker looks at a potential $1.1 trillion of capital expenditure on oil projects between 2014 and 2025 that require a price of at least US$95 per barrel market price ($80 break-even) – i.e. those projects most likely to not go ahead in a carbon-constrained world. They find that a very large share of these projects (nearly 40%) are tar sands projects in Alberta (see Figure 7 in particular).
...
For the most part, however, the underlying assumption of Canadian financial markets, including most Canadian pension funds, is that governments of the world will not get their act together, so there is no reason to pull out from fossil fuel investments. Some skepticism that governments will be able to reach a new deal is warranted, but the probability of them doing so is not zero either. But even in the absence of a global treaty, unilateral actions by Canada’s trading partners could impose de facto carbon constraints. Examples include the Keystone XL pipeline and European Fuel Quality directives.

There is a strong possibility that, sooner or later, Canada will be living in a carbon-constrained world, a development that would have significant (and, to date, widely ignored) economic implications. In this context, “responsible resource development” implies strategic management of fossil fuel reserves in order to maximize shared prosperity, within the context of a carbon budget. The good news is that Canadians have been bombarded with several decades of budget talk about “living within our means”  – now we just have to apply that to carbon.

- But Sheila Pratt highlights some more examples of the oil industry trying to buy the public's silence when it comes to questioning unfettered oil exploitation. And the Council of Canadians notes that for now, Canada is instead trying to bully the EU and other international allies into delaying any steps to reduce fossil fuel consumption.

- Meanwhile, Justin Ling writes that yet another trade agreement side-effect - this time arising out of the TPP - looks to be far more intrusive surveillance by the U.S. and other foreign states.

- Joseph Stead reports that the corporate sector is laughing at the UK's honour-system plan to improve corporate accountability. And Julian Beltrame finds that the Cons' tall tales about mythical trade barriers have far more value as entertainment than as policy analysis.

- Finally, Steven Greenhouse writes that the U.S. is finally seeing some legislative efforts to give part-time workers some security and control over their time - including a few ideas along the lines of what I'd proposed for Saskatchewan here.

Also, James Moore is firmly devoted to swatting flies which threaten the very fabric of space-time

No, the Cons still can't be bothered to try to actually identify mythical "trade barriers" as they push to give the corporate powers that be a practical veto over provincial governments. But they're certainly trying to make the myth sound more terrifying - and they won't meet anything more than mindless repetition from John Ivison.

On common ignorance

Sure, it may look bad that the catastrophically-suffering Larry Smith has no answers as to what a trade agreement with Japan could possibly hope to accomplish when he's been selected as the Cons' spokesflack on the issue:

He was asked, at a news conference where he announced a study on a possible trade deal with Japan, a basic question on what barriers to commerce currently existed. He was there last Wednesday on behalf of International Trade Minister Peter Van Loan.

"I am not informed about all the details," Smith replied. "You'll have to give me another two or three months before I respond to that question."

But let's be fair to Smith: if he can't name any trade barriers worth addressing with far-reaching anti-government agreements, that only puts him in the same general category as everybody else pushing the same position.

On no-brainers

Let's grant Barrie McKenna this much: his "frustratingly long" list of four identified trade barriers is indeed probably the longest I've seen from anybody in the anti-government chorus that's long demanded that Canada's provinces sign over their ability to govern, and makes for a welcome change from the argument by absence of evidence that's become far too familiar. And he even takes the time to note that he's demanding massive political restructuring based on "back-of-the-envelope" calculations, presumably because any more thorough analysis would result in rather less generous totals.

But before we give him too much credit, let's note that a grand total of half of his identified barriers are from provinces who three years ago agreed to exactly the kind of government suicide pact the free-traders have been demanding. So isn't the obvious takeaway once again that the provinces' time would be better used dealing with identified irritants, rather than signing agreements which stifle future action without doing anything about the supposed problem?

Update: Erin points out a few more of the serious problems with McKenna's piece. But of course it's bound to remain uncontradicted in the corporate media.

Ignorance as policy

Lest anybody accuse the Harper Cons of being the only government in Canada which makes far too many decisions based on a complete lack of information, Joe looks to have uncovered another glaring (if unsurprising) example:

The subsequent request to Executive Council resulted in a phone call from Garett Murray, the manager of corporate planning at central management services with the Ministry of Municipal Affairs, on June 28, 2010, to discuss the matter. The central management services branch provides support to intergovernmental affairs through a shared services agreement.

Murray advised that there is no one document containing a comprehensive list of barriers to trade and investment between the three westernmost provinces, but proposed that the provincial government would create a new record that had the information. It was further agreed that such a record would also contain the source for each barrier listed.

Unfortunately, the Wall government reneged on the offer without explaining why.

In a letter dated July 22, 2010, Bonita Cairns, the executive director of corporate services with Executive Council, provided a one-page record prepared by intergovernmental affairs staff listing five “general examples” of barriers to trade and investment that currently exist between the three westernmost provinces.

“A comprehensive list of barriers does not currently exist,” the document states.

In other words: months after the Wall government signed onto the WEPA to permanently tie the hands of Saskatchewan's public sector based on its faith-based belief in the need to eradicate mythical trade barriers, it hadn't yet lifted a finger to determine what barriers actually existed. And that looks to me like a far more damning statement about the Sask Party's decision-making process than its later refusal to do its homework after the fact.

On shining examples

Sure, there's plenty to criticize in Todd Hirsch's column, which for reasons unknown seems to have been given prime real estate in the Globe and Mail.

But let's be fair to Hirsch: while his column may be an embarrassment from the standpoint of having anything useful or accurate to say, it does look to be perfectly emblematic of the TILMA/WEPA corporate movement. After all, it takes somebody whose depth of understanding is in the range of "BC = pot! (hehindeedy!) Saskatchewan = ViCo! (hyukhyukhyuk!)" to overlook the complete lack of reality to the supposed "trade barriers" he's so eager to fight - not to mention the fact that the examples of procurement and labour mobility have long since been dealt with.

Well said

Joe Kuchta takes full advantage of a chance to rebut a poorly-informed Star-Phoenix editorial on the WEPA, boiling down both what the agreement actually does and how dishonestly it's been peddled:

Those who claim the new agreement is not TILMA are not being entirely honest. The format is exactly the same and the content nearly identical. The new agreement retains the worst elements of TILMA, such as the right of private parties to challenge government entities. The New West pact provides for financial penalties of up to $5 million if a government is found to be non-compliant with its obligations.

Agreements like TILMA and the New West Partnership are meant to pressure governments to reduce standards and regulations to the lowest common denominator or abandon them altogether. They are by intent, design and structure no more than instruments for deregulation.

Shine on, you crazy Dymond

Enough column inches are given to blatant pro-corporate shilling that it's tough for any particular piece to stand out as more obviously deserving of criticism than any other. But W.A. Dymond manages the feat with a remarkable combination of non sequiturs and outright contradictions - so let's give it the full treatment it deserves.

Of course, Dymond starts off with the usual garden-variety corporate cheerleading:

Any tax change produces a lightning-rod effect. The decision by the Ontario government to harmonize the provincial sales tax with the GST has generated strong lightning strikes, both positive and negative. In my view, the positives outweigh the negatives by a wide margin for several reasons.

First, the harmonized tax is part of a major tax package which tax specialist Jack Mintz calls “the sharpest reduction in the tax burden on capital investment in any one province” he has ever seen. It should have, Mintz argues, a profound effect on business investment in Ontario through the virtual elimination of tax on capital goods and business intermediate goods. It will result in a dramatic improvement in the international competitiveness of the province. Mintz predicts that within ten years, the lower tax burden will increase capital investment by $47-billion, annual incomes by between 4% and 8%, and jobs by almost 600,000.

Second, the tax shifts the burden of taxation from income to consumption. It removes a major distortion in the current system by taxing only the value added at each stage of production rather than at each point of sale. This will be a major benefit to service providers such as electricians, plumbers and computer specialists who now have to pay the provincial sales tax on the tools and supplies they need to do the job. The harmonized tax will allow them to claim tax credits on these goods and pay tax only on the value added. Further the harmonization eliminates the need for business to comply with two separate and different sales taxes, which will be a major cost savings especially for small business.

Blah blah blah, what's good for your corporate overlords is good for everybody. Nothing much to comment on here that hasn't already been thoroughly debunked before. But then it gets a bit more creative.

Third, the harmonization will make a major contribution to removing barriers to the internal Canadian market. While Canada and Ontario have long benefited from the global reduction of trade barriers, internal barriers such as conflicting provincial regulatory regimes on transportation, health, safety etc. have long weakened Canada’s international competitiveness by making our small market even smaller. Ontario is as guilty as any province in creating such obstacles. However, by adopting the harmonized tax the province will join British Columbia, Quebec, Nova Scotia, New Brunswick and Newfoundland/Labrador in removing a major obstacle from an integrated domestic market.

Now, this is a remarkable bit of spin from Dymond. Whatever one's view of the HST, it has nothing at all to do with "trade barriers" in any meaningful sense of the term, particularly as compared to "regulatory regimes on transportation, health, safety etc.". While these factors might carry at least the theoretical potential to affect how business is done in different jurisdictions (albeit with zero current examples of how any of them actually do justify the government-flattening agreements normally proposed in response), it defies belief to suggest that having to pay sales tax in some provinces somehow creates some disproportionate difficulty in conducting business across provincial borders.

As a result, it seems most likely that Dymond is simply taking any opportunity available to him to get the pro-TILMA line in print even where it makes absolutely no sense in context. And one can't help but to salute his brazenness on that front.

Of course, there is another alternative: it could be that in order to pretend that trade barriers exist, corporate Canada has reached the point of having to argue that the very existence of separate provincial policies - even in areas other than what's normally identified as business regulation - runs contrary to their idea of an "integrated domestic market". But normally that seems to be treated as the unspoken endgame rather than an explicit goal, precisely because neither the provinces nor their citizens figure to take too kindly to being informed that any attempt to government themselves is inconvenient for business.

Onward:

Fourth, as Kevin Lynch, former secretary of the federal cabinet points out, Canada has a major productivity problem. Among the advanced industrialized countries, Canada ranks only 17th in productivity performance. In 2007, business productivity was 75% of that in the U.S. compared to 90% in the 1990s. A poor productivity performance is a drag on growth. Getting the tax framework right by encouraging investment in new technology and machinery is part of the answer.

Check "productivity" off your Buzzword Bingo card, and we'll return to this later.

It is no surprise that the harmonized tax is controversial. It will apply to services and a broader range of goods than the provincial sales tax. However, transition payments by Ontario with significant federal financial support will for a time offset the additional cost faced by consumers. Ontario will also introduce a permanent sales credit for lower income families.

So as long as we throw a few pennies at the poor, nobody should have any reason to worry about our handing billions to big business based on nothing more than their view that they'd like more money. Natch.

It is no surprise that the harmonized tax is controversial. It will apply to services and a broader range of goods than the provincial sales tax. However, transition payments by Ontario with significant federal financial support will for a time offset the additional cost faced by consumers. Ontario will also introduce a permanent sales credit for lower income families.

Keep in mind, this comes a mere two paragraphs after Dymond lamented the fact that Canada's productivity has done nothing but lag since the time when his ilk claimed that NAFTA and the Martin round of corporate tax cuts would FIX OUR ECONOMY FOREVER!!!

For anybody looking at the consequences of policy choices, that would seem to point to the glaringly obvious: that decades of free-trade agreements and corporate tax slashing haven't done squat to improve Canadian productivity. But for the likes of Dymond, the fact that the previous round of business-centred policies didn't perform as advertised merely suggests that we need to double down. And if that fails, then maybe a negative corporate income tax will be enough to finally do the job.

The recession delivered a heavy blow to the Ontario economy. Massive job losses in manufacturing, a ballooning budget deficit, and becoming a have-not province have thrown into sharp relief how outdated the province’s business model has become. The easy days when Ontario rode the top or close to the top of the charts as the most prosperous province in Canada are gone. In the sea of gloom that has enveloped what was once the richest province of Canada, reasonable people should support the harmonized tax as part of a larger package of tax reform which, taken together, will create the conditions for the resumption of strong and sustained growth in Ontario.

Translation: I didn't expect to enjoy "The Shock Doctrine", but found that it contained some excellent ideas which I've been able to put to use.

In sum, it's nice to get at least a slight break from the same old already-debunked rhetoric in favour of something which at least rearranges the arguments with no regard for consistency or logic. And I'm almost looking forward to seeing where Dymond goes from here with his apparent tactic of putting boilerplate corporation-first blather in a blender and serving what comes out to the media.

Direct from the mouth of the Canadian Council of Chief Executives, we bring you John Ivison

John Ivison is begging to be Fisked. Who's up for it?

On evidence-free assertions

Far too much of corporate Canada has been pushing for anti-government agreements by shrieking non-stop about "internal trade barriers". But when economists who don't share the same anti-government animus have made the reasonable request for some indication of what trade barriers the corporate crowd actually wants to see dealt with, the usual answer has been either to point to one of a tiny number of examples which could be (and in some cases have been) far more easily dealt with individually, or to make up numbers rather than even answering the question.

Now, one might assume that the corporate powers that be simply don't want to give ammunition to what they perceive as their opponents. But when one of the country's leading political journalists presents a request for a list of the barriers being dealt with - in the context of a post which includes absolutely no suspicion toward the free-trade position, and indeed buys into the rhetoric that labour mobility and free trade are exactly the same thing - one would think that anybody with a legitimate list would be happy to put it forward to have their position broadcast to the public.

So let's see what kind of actual response just such a request from David Akin has received so far...

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