Saturday Afternoon Links

Assorted content for your weekend reading.

- Lana Payne discusses how we can bring about change in the new year by demanding that our political leaders recognize and use the power of collective action:

Social justice requires a collective response and political action. It is at the root of wonderful nation-building programs like universal health care, the Canadian Pension Plan and Old Age Security, which act as great equalizers in our society.

Charity will always have its place in society. It reflects an important part of our humanity. It is the same part of us that supports greater collective goals — goals that are more broad-based.
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Common interests. Shared purpose. These are still possible in a nation such as Canada. We may have been given every reason to give up on such things, and yet somehow this time of year, I find renewed hope that it is not just possible, but likely.

I believe Canadians want such a country. They just need politicians who believe, too.

- Canadian for Tax Fairness weighs in on the need to reduce inequality through a more fair tax system. And Andrew Jackson calls for a raise for Canadian workers:

(W)ages of permanent workers have risen a bit faster than those of temporary workers, and wages of women have risen a bit faster than those of men. But these differences do not hide the fact that real wages are pretty much flat across the board.

According to the most recent International Labour Organization (ILO) Global Wage Report, average real wages in the advanced economies have stagnated or fallen since the Great Recession, and indeed have fallen significantly in some countries. United States average real wages in 2013 were just above the pre-recession level, and real wages have collapsed in the most hard-hit European economies such as Greece and Spain.

The ILO notes that, across the advanced economies, wages have lagged productivity (the value produced per hour of labour) since 2000, with the result that labour's share of national income, including in Canada, has declined while the share of corporate profits has risen.
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(A)n increase in real wages would give a significant needed boost to a slow-growing global economy. They also note that the problem of stagnant wages is compounded by the fact that wage increases are typically distributed very unequally. This contributes to rising debt for the middle-class and rising surplus savings for the most affluent.
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A shift to a wage-led growth strategy would, according to the ILO, include significant increases to minimum wages and more government support for unions and the process of collective bargaining.

These items are not exactly high on the policy agenda of most governments, not least that of the Harper government, but continued stagnation in 2014 may yet force some needed re-thinking.

- Zeeshan Aleem comments on the correlation between increasing inequality and lower marriage rates for the less well-off in the U.S.

- Bill Moyers' site takes a look at the stories from 2014 which deserved more attention than they received. And Kathryn May reports that one of those issues is much more familiar in Canada, as a substantial majority of respondents to a poll are concerned about vote suppression in light of Robocon and other attempts to manipulate election outcomes.

- Finally, Stephen Maher notes that we have ample reason to be skeptical about the Cons' self-serving security spin. And PressProgress highlights ten moments from 2014 which encapsulate the Cons' attitude toward the country they govern.

Musical interlude

Lemonchill - Dragonfly

Friday Morning Links

Assorted content to end your week.

- Daniel Tencer nicely surveys how a guaranteed annual income could work in Canada, as well as the obstacles to putting one in place:

Imagine the government started handing out $10,000 annually to every adult in the country, or implemented a negative income tax rate so that low earners and people out of work would receive tax money instead of paying it.
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(A) growing number of economic thinkers -- and not only on the left -- are saying it could be the exact opposite: that it could be the policy idea of the century. While not exactly a silver bullet to solve all ills, it could eliminate poverty to a great extent, and set the stage for a healthier and more productive society.
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(I)n the short run, we could be facing a major problem. If new industries and activities don’t take the place of disappearing jobs fast enough, we could see a similar sort of displacement and impoverishment as seen in the early years of the industrial revolution, when many skilled craftsmen were put out of work by machinery.

In a 2013 article, Nobel prize-winning economist and liberal pundit Paul Krugman argued for a minimum income as a way of cushioning the blow from the automation revolution -- a way of ensuring the middle class isn’t decimated in this transition to a new economy.

In an economy like this, “the only way we could have anything resembling a middle-class society ... would be by having a strong social safety net, one that guarantees not just health care but a minimum income, too,” Krugman concluded.

- Chris Rhomberg comments on the U.S.' barriers to social programs - noting that an end to easily-accessible social programs hasn't done anything to end or reduce poverty. Erika Eichelberger discusses how a lack of access to affordable financial services imposes an extra burden on people living in poverty. And Jessica Silver-Greenberg and Michael Corkery report on the spread of title loans as yet another financial-sector scheme to extract massive amounts of money from the people who can least afford to lose it.

- Mitchell Cohen is hopeful that now may be just the time to make a push for more affordable housing - if we elect a federal government interested in taking on the cause.

- And finally, Owen Jones interviews Thomas Piketty about the need for wealth taxes and other means of reining in inequality.

New column day

Here, on the need to turn the holiday spirit of charity into lasting improvements in the lives of the people who need help the most.

For further reading...
- Joe Gunn and Iglika Ivanova also discuss the limitations of charity compared to structural change.
- Jordon Cooper discusses Saskatchewan's bad habit of accepting food banks as a substitute for food and income security. And again, there's reason for doubt (PDF, see Harpauer's dissembling about child poverty rates at p. 6085) that the current government plans to take poverty seriously.
- Finally, the provincial government's announcement of the Advisory Group on Poverty Reduction is here. And as noted in the column, it will be worth keeping an eye on both the group itself (as we'll have to wonder whether a large contingent of current provincial higher-ups will be willing to criticize the government), and whether the Sask Party intends to turn ideas into action.

Merry Xmas to all!

And to all, a reminder that you'd best get your holiday dinner inspected for yourself, because the Harper government isn't so much on the job.

Wednesday Morning Links

Miscellaneous material for your mid-week reading.

- Mark Bittman discusses the connection between economic and social ills in the U.S., and offers a message which applies equally to Canada:

I have spent a great deal of time talking about the food movement and its potential, because to truly change the food system you really have to change just about everything: good nutrition stems from access to good food; access to good food isn’t going to happen without economic justice; that isn’t going to happen without taxing the superrich; and so on. The same is true of other issues: You can’t fix climate change or the environment without stopping the unlimited exploitation of natural and human resources (see Naomi Klein’s “This Changes Everything”). Same with social well-being.

Everything affects everything. It’s all tied together, and the starting place hardly matters: A just and righteous system will have a positive impact on everything we care about, just as an unjust, exploitative system makes everything worse.

Increasingly, it seems, there’s an appetite and even unity to take on the billionaire class. Let’s recognize that if we are seeing positive change now, it’s in part because elected officials respond to pressure, and let’s remember that that pressure must be maintained no matter who is in office.

- Louis-Philippe Rochon writes about the harm inequality is doing to Canada's economy, and proposes an eminently reasonable set of policies to reduce it:

1.  Governments must make job creation their mission.  In fact, nothing short of a full employment policy will do.  Since when is unemployment an acceptable social and economic end?

2. We must raise the minimum wage and make sure that it is sufficient for Canadians to live on.  The Canadian Centre for Policy Alternatives estimates that for two working parents with two children, the living wage in Toronto should be $16.60 an hour and $14.07 in Winnipeg, a far cry of where it stands now. Many studies show raising the minimum wage does not hurt employment nor does it cause slower growth.  In fact, the contrary is true.
3. We should adopt a guaranteed annual income for all working Canadians. There are many variations of this policy, and more work needs to be done to determine the best program for Canada, but the central idea is a sound one.
4. We must implement an inheritance tax, in order to avoid the transfer of tax-free wealth from one generation to another. Canada remains to this day one of the only industrialized countries without an inheritance tax.
5. We must cap corporate annual bonuses. It has become common for corporate CEOs to make six and sometimes seven-figure bonuses. Bonuses are certainly valid in many instances, but the practice has become extreme.
6. We must raise the number of tax brackets and marginal tax rates on higher income. We now have evidence that high or higher taxes on income do not hinder growth. So what’s stopping governments from raising the marginal tax rate on higher income to 60 per cent or even 70 per cent? Canada’s tax system has become considerably less progressive in recent years. 7. We must encourage increased unionization. This will allow workers to be better protected and in general have higher wages and better benefits.
8. We must reconsider taxes on capital gains. We must consider all capital gains as taxable income.

- Zi-Ann Lum reminds us of Dauphin's experience actually eliminating poverty through a guaranteed annual income. And Michael Bryant suggests that eliminating anti-panhandling laws would be a valuable step in ending the criminalization of poverty.

- David Pugliese reports that as another prime example of their Mostly Competent Government, the Cons are committing Canada to paying more than twice as much as other countries for the same C-17 transport planes.

- Jordan Press writes about Suzanne Legault's investigation into the Cons' refusal to release public data in usable formats. And Jason Kirby duly mocks the Cons' excuses so far.

- Finally, Thomas Walkom discusses the catch-22 facing anybody who's wrongfully and unilaterally proclaimed to be terrorists by the Cons - as it's impossible to raise money to even challenge the designation without putting donors at risk of receiving the same label themselves.

Tuesday Night Cat Blogging

Downed cats.

Tuesday Morning Links

This and that for your Tuesday reading.

- Lynn Parramore interviews Joseph Stiglitz about the spread of inequality, along with the need for a strengthened labour movement to reverse the trend:

LP: In your paper, you indicate that the power of the 1 percent to exploit the rest seems to be increasing. Why is this happening? Are there limits to this exploitation?

JS: In a more careful, academic way of putting it I would say that one of the explanations of what is going on is increased exploitation. You see the ratio of wages to productivity going way down, and that certainly is consistent with increased exploitation. And you see that the ratio of CEO pay to worker pay has gone up. So what I would say is that some of the explanations have to do with weakened worker bargaining power, weaker unions, asymmetric state liberalization where capital moves but labor can’t move, corporate governance laws that provide relatively little check on abuses of corporate power by CEOs, and an increase of monopoly power because of network externalities. So there are certainly a number of factors that would lead one to suggest that overall there is an increase in market power. There are some things where there’s more competition — because of the Internet, for example, there’s more competition on the price side, but overall, when you look at the ratio of wages to productivity, there’s a marked increase in market power.

Probably there are limits — sometimes the degree of exploitation is expressed as the ratio of wages to marginal productivity of labor, and when that ratio gets down to zero – that’s a limit! What I would say is that things could get much worse if we don’t do something. That’s a relevant issue. What’s important is whether or not we’re on a path that’s looking worse and worse.

- Matthew Yglesias notes that inequality makes "market-based" solutions unfair as the people with the least means to make choices for themselves bear the burden of directives from above:

Microeconomics tends to tell us, again and again, that life is best when sellers can set prices to rise and fall with the ups and downs of supply and demand. The idea is that markets should "clear." Everything that's produced should be sold, but you shouldn't have shortages that force people to wait around forever and ever.

This is an appealing idea, but as Steve Randy Waldman has written, it tends to brush distributional issues under the rug.

When people say that a price-based scheme for rationing water is most efficient, they mean that prices will deliver the most efficient distribution of dollars and water. The idea is that how much people are willing to spend on something is a good proxy for how much they care about it, or how important it is to their well-being. Different people like different things, but you can buy all kinds of different stuff with dollars, and seeing what people choose to spend their money on tells you a lot about their preferences.

But dollars aren't a perfect proxy for well-being, because money means different things depending on how rich or poor you are.
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To the extent that inequality undermines arguments for efficient price-based schemes, the correct conclusion is to reject inequality, not reject pricing. It's probably no coincidence that the three countries to really embrace congestion pricing are either egalitarian (Norway and Sweden) or dictatorial (Singapore). Efficiency-enhancing economic schemes often simply assume a background where there's not too much inequality, in part because, in many cases, they were hatched during the decades when the income distribution was much more even. But to actually implement these schemes in the real world, we need to also deliver the equality.

There's an old saw in the economics profession that there's a tradeoff between egalitarian outcomes and efficient ones, but empirical research consistently fails to find evidence that inequality boosts growth or redistribution slows it. One reason is that needs conditions of macro-equality to make micro-efficient schemes tolerable.

- And as an example on point, Hilary Osborne writes about poverty in the UK, and finds evidence of large number of people being forced to limit their food and heating in order to pay rent. 

- Kyle Chayka discusses how we're headed toward the destruction of almost all jobs in the (recent) historic sense of the word. And Jim Tankersley points out that the massive gap in pay and security between the financial sector and nearly all other options is pushing far too many of the world's best and brightest into destructive jobs.

- Gareth Kirkby follows up on the Cons' attacks on charities. And Bruce Campbell assures us that the Canadian Centre for Policy Alternatives (for one) won't be silenced by Conservative bullying.

- Finally, Mike De Souza reports that the CRA is being put behind a veil of secrecy, as the Cons are trashing both existing work texts and the capacity to collect future ones. And Jim Bronskill exposes Tony Clement's asinine excuse for refusing to release public data in usable forms.

Monday Morning Links

Miscellaneous material to start your week.

- Ryan Meili examines why Craig Alexander of the TD Bank is calling for a move toward greater income equality in Canada:

The OECD reports that income inequality is at the highest level in 30 years, and that economic growth has been slowed by as much as 10 per cent in some countries as a result. A 2014 IMF study showed that redistributive policies through tax and transfers not only do no harm to the economy, but can improve performance in the long-term. In fact, it appears that public investments in child care and other services are far more effective in creating jobs and increasing economic growth than corporate or income tax cuts.

Returning to the TD report, it recommends a variety of key public investments to reduce inequality, including affordable housing, health and social services, early childhood development and decreasing barriers to all levels of higher education, from skills training to professional colleges. These are encouraging comments, as they also address key social determinants of health, meaning they are not only good for the economy, but more importantly, good for Canadians.
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(I)t’s extremely encouraging to see this shift in thinking coming from so many directions. When economists working for one of the Big Five banks — Canada’s largest lender, in fact — come out with a strong position on income inequality, it’s indicative of how much this has moved from being a fringe concern to economic orthodoxy.

Last year at this time we heard Conservative Minister James Moore channel his inner Scrooge, implying that the poverty of his neighbour’s child was none of his concern, and neither was the poverty of Canadians any business of the federal government. How delightful to hear a message far more in keeping with the spirit of the season, however unlikely the source. 

- Meanwhile, Alex Himelfarb talks to Possible Canadas about the damaging effects of inequality and austerity. And LOLGOP points out that slightly more progressive taxes under the Obama administration have been put in place at the same time the U.S. has experienced its best job growth of this century.

- Justin Ling interviews Tony Clement about access to information under the Cons, only to find that Clement's own responses consist solely of talking points and redactions. And Torstar reports on the Cons' use of a paid PR service at public expense to manufacture government-approved "news".

- Radical Centrist discusses the need for Canada to talk realistically about the meaning of minority election outcomes - and notes that the U.K. offers a readily-available basis for comparison. And Frank Graves finds that there's plenty of popular support for a coalition government to replace the Harper Cons, even as the Libs once again try to order Canadians not to accept change other than on their own unilaterally-dictated terms.

- Rob Drinkwater reports on CNRL's contamination of drinking water near Cold Lake.

- Finally, Naomi Klein writes about the scant attention paid to murdered and missing aboriginal women by Canadian authorities (with the full support of a callous government), while highlighting the movement to end the silence.

Saturday Morning Links

Assorted content for your weekend reading.

- Thomas Walkom discusses why politicians have thus far failed to take any meaningful action on climate change. But it's also worth noting that the question of whether voters are pushing for change may not be the only determining factor in government decision-making.

Most obviously, debt and deficits (which are no less distant from the immediate interests of voters than climate change) are seen as demanding constant and immediate action even at the expense of anybody's apparent short-term political interests - with unpopular and destructive policy choices regularly defended based on the accepted belief that no responsible government can ignore a greater issue. And while the fiscal scolding may be based all too much on a general aversion to government rather than any sane ranking of priorities, a similar and more positive principle might develop in the area of climate change: leaving aside the exact means chosen, there's surely some value in arguing that the end of not damaging our planet should be part of any reasonable set of governing principles.

- Of course, "a secure living for all" would also fit neatly into that category. On that front, Guy Standing makes the case for a basic income, while Neil Irwin points out that (contrary to the spin of the right) strong social programs strongly encourage workforce participation:

(M)ore people may work when countries offer public services that directly make working easier, such as subsidized care for children and the old; generous sick leave policies; and cheap and accessible transportation. If the goal is to get more people working, what’s important about a social welfare plan may be more about what the money is spent on than how much is spent.

That is the argument that Henrik Jacobsen Kleven, a professor at the London School of Economics, offers to explain the exceptional rates of participation in the work force among citizens of Sweden, Norway and his native Denmark.

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There is a solid correlation, by Mr. Kleven’s calculations, between what countries spend on employment subsidies — like child care, preschool and care for older adults — and what percentage of their working-age population is in the labor force.

Consider Marianne Hillestad of Steinberg, Norway. She teaches kindergarten; her husband, Ruben Sanchez, installs heating and ventilation systems. Day care for their three children, ages 4, 7, and 9, works out to about $1,100 a month; Ms. Hillestad estimates that if she had to pay a market rate, it would be nearly twice that, eating up most of her paycheck.

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Collectively, these policies and subsidies create flexibility such that a person on the fence between taking a job versus staying at home to care for children or parents may be more likely to take a job.

- Following up on Thursday's column, Don Cayo chimes in on Canadians' broad public support to fight inequality. And Dennis Howlett makes the case for strong enforcement against tax cheats to ensure wealthier citizens pay their fair share.

- Finally, Brent Patterson notes that the Cons managed to prevent a toothless NAFTA panel from even examining the effect of fish farms on B.C. salmon stocks by voting against any review. And ThinkProgress highlights Enbridge's recent Regina spill as yet more reason to be dubious of pipeline promises.

Musical interlude

Emma Hewitt - Rewind (Mikkas Remix)

On representative units

Does anybody remember which particularly prominent political pundit went far out his way to trumpet the idea that the basic unit of political legitimacy is the caucus - to the point of repeatedly advocating a legislated requirement that a caucus vote override the decisions made by the whole of a party's membership?

I ask only because he seems to have been replaced with a far more reasonable impostor.

By the majority-of-caucus standard set under Michael Chong's Reform Act (or the stronger forms suggested by Andrew Coyne among others), the decision of a majority of Wildrose Party MLAs to join up with Jim Prentice's PCs following a caucus vote should be seen as having been fully validated.

So why then is Coyne among the people rightly lambasting Danielle Smith and company for their move? Well, that has to do with the flaws in the original theory behind the Reform Act.

Elected representatives are (and should be) only the tip of the iceberg when it comes to determining the direction of any political party. And we're right to consider it illegitimate when those representatives make choices which run contrary to the underlying basis for their elected positions - even if a majority of their caucus-mates happen to agree.

What's more, an undue focus on a narrow set of representatives rather than the broader populations they represent can make it far too easy for politicians to bargain away their votes or seats, rationalizing the action on the theory that the trust reposed in a representative through the ballot box represents a mandate to use an elected position for personal gain. And that can happen just as easily on a group basis as an individual one.

Of course, the question of how to then check top-down power remains open. (Though it's worth noting that exactly one party has respected the ethical principle that a mandate to serve one party can't simply be passed to another in both law and practice.)

And it's doubtful that any legislated structure can do the job in the absence of a strong and active membership which can ensure that self-serving actions are met with an appropriate response in the next election cycle.

But at the very least, nobody should hold any illusion that handing special power to party caucuses will resolve the problem.

[Edit: fixed wording.]

Thursday Morning Links

This and that for your Thursday reading.

- Jordon Cooper rightly argues that we should move away from forcing people to rely on homeless shelters and other stopgap measures when we can afford to provide permanent homes:

We fill a bus for the hungry while ignoring that the reason for it is that social service programs depend in part on our generosity to feed people. We bring care packages to shelters and forget that cities elsewhere in Canada have drastically reduced the number of people in shelters and the time they spend there, and that it's cheaper than keeping people in shelters. One can make Christmas at shelters an extremely pleasant experience. I have seen shelters provide fabulous food, nice gifts, good movies and quality entertainment over the holidays. Staff, volunteers and even residents go all out to make things pleasant and inviting.

Yet, at the same time, you are left with people who remain homeless. If you ask them if they would rather be in a dorm or a their own apartment, the answer would be the same for each: They want a place to call home.
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As important as it is to be charitable toward the poor, it is more important to find long term solutions to social problems and implement them. As great as it is to help someone in a shelter at Christmas, it would be even better if they didn't have to be there.

- Zoe Williams laments the UK's move toward different classes of new citizenship based on wealth. And Susana Mas reports that the Cons are being even less subtle about making cash up front the default standard for immigrants to Canada.

- Jim Tankersley writes that far too many of the U.S.' best and brightest young minds are being diverted into a financial system which does nothing but extract wealth for itself. And Michael Lewis has a few suggestions to reverse that pattern.

- Scott Clark and Peter DeVries comment on the absurdity of being governed by a party which is fundamentally opposed to the idea of government. And Michael Harris highlights the gap between what the Cons plan to campaign on next year, and what Canadians actually want out of a federal government.

- And finally, Linda McQuaig reminds us of Canada's appalling role in encouraging and facilitating torture in the wake of the U.S.' long-awaited report. 

New column day

Here, on this week's confirmation from the Broadbent Institute that Canadians severely underestimate wealth inequality - as well as the strong popular support to reduce the wealth gap.

For further reading...
- The Norton/Ariely study of the views of Americans on wealth inequality is found here, and discussed further here, here and here.
- And Danielle Kurtzleben writes that actual wealth inequality in the U.S. has only been getting worse since 2010.

Wednesday Morning Links

Miscellaneous material for your mid-week reading.

- Mariana Mazzucato comments on the role of the innovative state - and the unfortunate reality that we currently lack anything of the sort due to corporatist thinking:

(T)hanks in part to the conventional wisdom about its dynamism and the state’s sluggishness, the private sector has been able to successfully lobby governments to weaken regulations and cut capital gains taxes. From 1976 to 1981 alone, after heavy lobbying from the National Venture Capital Association, the capital gains tax rate in the United States fell from 40 percent to 20 percent. And in the name of bringing Silicon Valley’s dynamism to the United Kingdom, in 2002, the government of British Prime Minister Tony Blair reduced the time that private equity funds have to be invested to be eligible for tax reductions from ten years to two years. These policies increase inequality, not investment, and by rewarding short-term investments at the expense of long-term ones, they hurt innovation.


Getting governments to think big about innovation is not just about throwing more taxpayer money at more activities. It requires fundamentally reconsidering the traditional role of the state in the economy. Specifically, that means empowering governments to envision a direction for technological change and invest in that direction. It means abandoning the shortsighted way public spending is usually evaluated. It means ending the practice of insulating the private sector from the public sector. And it means figuring out ways for governments and taxpayers to reap some of the rewards of public investment, instead of just the risks. Only once policymakers move past the myths about the state’s role in innovation will they stop being, as John Maynard Keynes put it in another era, “the slaves of some defunct economist.”


- And Ross Gittins describes how an obsession with balanced budgets and tax tinkering is preventing Australia from even discussing meaningful social and economic goals.

- Of course, that will sound all too familiar based on the Harper Cons' treatment of Canada. And Carol Goar surveys some of the crazy policy choices which have led us to be grossly overreliant on unstable resource prices, while Trish Garner notes that poverty remained endemic even a supposedly strong economy prior to the resource bust.

- Murray Mandryk recognizes that the Wall government's determination to favour private consultants rather than building a strong public sector workforce is thoroughly counterproductive. And Paul Hanley laments the waste of $1.4 billion of public money on a carbon-capture scheme which is both dirtier and more expensive than renewable alternatives.

- And finally, the CLC rightly blasts the Senate for refusing to apply either second thought or any apparent sobriety in rubber-stamping an anti-labour bill which all parties agree contained serious errors.

On managerial lapses

Shorter Tony Clement:

I believe there's an art to managing public money. And that's why I see no problem whatsoever with budgets which are works of fiction.

Tuesday Night Cat Blogging

Cats with mats.

Tuesday Morning Links

This and that for your Tuesday reading.

- Carter Price offers another look at how inequality damages economic development. And the Broadbent Institute examines the wealth gap in Canada - which is already recognized as a serious problem, but also far larger than most people realize:



- Paul Buchheit discusses how the U.S. is turning poor people into commodities or criminals. Chuk Plante reviews some facts about child poverty in Saskatchewan - with a particular focus on the need to measure and reduce the alarmingly high rates of child poverty among First Nations children. Suzanne Moore points out how poverty in childhood affects a person for a lifetime. And Betsy Isaacson reminds us that a basic income would work wonders in eliminating poverty.

- Tim Naumetz exposes both the Cons' failure to spend budgeted public money on renewable energy, and their overspending on oil and gas. And PressProgress catches Christy Clark literally talking up the concept of lumps of coal at Christmas - offering about the most stark example yet that our petro-politicians have nothing to offer other than trying to talk up what's long been seen as an outcome to be avoided.

- Meanwhile, Giuseppe Valiante reports on what happens when a more independent body carries out a cost-benefit analysis of risky resource development, as Quebec's environmental review board has given a thumbs-down to shale gas development.

- Finally, Christopher Waddell observes that the Cons are destroying access to information in Canada.

Monday Morning Links

Miscellaneous material to start your week.

- Barrie McKenna comments on how far too many governments have bought into the P3 myth with our public money:

Governments in Canada have become seduced by the wonders of private-public partnerships – so-called P3s – and blind to their potentially costly flaws. In a typical P3 project, the government pays a private sector group to build, finance and operate everything from transit lines to hospitals, sometimes over decades.

These projects almost always cost significantly more than if governments just put up the money themselves and hired contractors to build the same infrastructure, under conventional contracts. Ontario Auditor-General Bonnie Lysyk found that the province may have overpaid to the tune of $8-billion for 74 major infrastructure projects, dating back nine years.

A key factor is financing. Private-sector companies can’t borrow as cheaply as governments can, adding significantly to the cost, especially on contracts that may run for decades.

Other transaction costs, including lawyers and consultants, are also typically higher with P3s. But the biggest variable is the substantial price tag put on the risk shifted from governments to the private sector. Ontario is convinced the risks of cost overruns, delays, design flaws and the like are substantially lower with public-private partnerships, and it’s willing to pay a premium for that peace of mind.

Unfortunately, the government has struggled to accurately price that risk, relying on the murky and potentially inflated calculations of outside consultants. As Ontario Economic Development Minister Brad Duguid sheepishly admitted: “It is a bit of an art, identifying risk, as much as a science.”

Ontario’s Auditor-General is blunter, suggesting the government’s so-called “value assessments” are little more than junk science.
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The allure may have a lot more to do with politics, than sound financial management. These projects give governments the ability to push spending down the road, with ribbon cuttings today and most of the bills due later.

They also allow governments to duck the inconvenient responsibility when things go terribly wrong. No politician, or bureaucrat, wants to have to explain why a high-profile project is late or over budget.

Taxpayers may have a very different perspective on the responsibilities of public officials, and a few good suggestions on what to do with an extra $8-billion.

- And James Bagnall notes that it's also a regular practice for the Cons and other governments to write the rules of supposedly neutral competitions to favour their preferred bidders.

- Jim Tankersley reports on the devaluation of the American worker over the past few decades. And David Climenhaga finds that Jim Prentice's idea of getting input about the needs of workers is to gather seven executives in a closed-door "blue ribbon" panel.

- Allan Maki interviews Ted Clugston about Medicine Hat's success in eradicating homelessness - though the most important lesson to be drawn from the story may be that we shouldn't let naysayers (which Clugston once was) stand in the way of vital public policies. And Cory Weinberg discusses San Francisco's push to make sure that underused public land directed toward meeting housing needs, while David Ball reports on a creative effort to make home ownership more affordable in Calgary.

- Finally, Gerald Caplan explains what he'd tell Stephen Harper if given the chance. But in light of the tiny odds of Harper having interest in a word of it, I suspect we're better off making the same statements to the general public.

On unjust cause

Shorter Peter Kent, Stephen Harper Talking Point Dispenser Level Infinity:

The Dear Leader fired me for making some effort to do a job with the work "environment" in the title, rather than merely going through the motions. And through much re-education, I've come to see that he was right to do it.