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Making Canada Relevant Again- The Economic Super-Thread

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I can usually find lots of reasons to disagree with the Globe's Jeffrey Simpson, but this column, reproduced under the Fair Dealing provisions (§29) of the Copyright Act from the Globe and Mail, is spot on:

http://www.theglobeandmail.com/news/opinions/opinion/the-parochialism-of-little-canada-is-killing-us/article1841323/
The parochialism of Little Canada is killing us

JEFFREY SIMPSON
From Friday's Globe and Mail


An excellent diplomat, winding up his years in this country, was saying last week that Canada has everything at its command. Huge geographic spaces. Enormous natural resources. A well-educated population. Good governance. Chests were undoubtedly swelling in his audience. He made us all feel very good about being Canadian.

He was talking about Big Canada, and its great prospects. He was kind enough not to speak of Little Canada, and its discontents.

Little Canada, alas, makes its appearance all the time in the parochialism that besets us and prevents Big Canada from fulfilling its potential.

Big Canada, like market-oriented countries everywhere, has an internal market. That’s important for all countries, but especially important for a small country such as Canada. Instead, we have provincial governments that epitomize Little Canada thinking, blocking the creation of a national securities regulator of the kind all other industrialized countries have.

Quebec’s opposition is predictable. The province has already achieved de facto sovereignty association within Canada, and cares little about Canada as a political entity. By voting Bloc Québécois six elections in a row (soon to be seven), French-speaking Quebeckers have withdrawn from the governance of Canada. All they apparently want from the federation is a passport and money. They are almost exclusively interested in Quebec, period.

In the next provincial election, they’re likely to return the Parti Québécois to office. The country will be plunged once again into internal debates that are boring manifestations of the Little Canada syndrome that has dragged down the country for so long.

But outside Quebec, on the securities file, Little Canada is apparent. Alberta wants to protect its small oil and gas firms, Manitoba its mutual fund industry, B.C. its own sectors. Rather than working to make the national regulator sensitive to these particular elements of the Canadian whole, these provinces are only interested in their particularisms – that is, Little Canada.

So here we have the federal government proposing a perimeter around North America to facilitate the flow of goods and services, and prevent further thickening of the Canada-U.S. border, while, inside Canada, manifestations of Little Canada – the securities regulator being only one – are everywhere apparent.

Take energy and the environment. We have energy surpluses galore, but rather than the federal government’s working with provinces to spread that energy around Canada, Ottawa absents itself and the provinces can think of nothing more than how to ship their surpluses south.

Quebec, thinking only of itself, has screwed Newfoundland for 50 years over hydro, resting its case for creaming the profits from Labrador power on contract law. Law is law, as courts have found; but justice is not necessarily law, as Shakespeare (“a pound of flesh”) taught everyone a long time ago.

There’s been no justice in the contemptuous way Quebec has stiffed Newfoundland, then and even today, since Quebec’s hydro regulator won’t let its neighbour’s power flow through Quebec to Ontario. That Newfoundland is asking Ottawa for money to support a cable to Nova Scotia is directly related to Quebec’s screwing of Newfoundland.

A federal government with gumption and money would have at least tried to expedite a three-province (win-win-win) solution, but Little Canada was allowed to prevail.

The same applies to climate change, where the Harper government hasn’t even tried to formulate a national policy. Instead, Little Canadas have gone in different directions, some bringing emissions down, others allowing emissions to rise.

Or take health care. Canada doesn’t have a national health-care plan. Instead, it has some federal dollars to help finance a series of provincial plans that may or may not pay attention to nominal national norms.

Big Canada can be Ottawa acting alone, or Ottawa acting in harmony with provinces, or the provinces working constructively together. There’s no “one size fits all” definition of Big Canada in such a sprawling, diverse country.

Little Canada is easy to define: parochialism working against other parochialisms, or parochialism sharpening itself by working against Ottawa, with provincial politicians appealing to the lowest common denominator of local prejudices.

In a hypercompetitive international world, the internal dynamics of Little Canada are a recipe for a slow, debilitating slide toward complacency, irrelevance and mediocrity. There are, alas, on the political and economic landscape of contemporary Canada, plenty of preachers of Little Canada but no one articulating and defending a vision of Big Canada.


He's right; the problem is not just Québec – although it is a significant drain on Canada in every possible respect and, as Simpson says, French speaking Québecers are, grosso modo, already socio-culturally independent even as they remain firmly attached to the Canadian financial teat.

But what's the answer? Force Québec's hand; make Québecers, finally, choose on an issue that, firmly and clearly, pits their French Québecois nature against continued access to Canada's money? Further assert federal constitutional rights in areas that are, properly, provincial? Further decentralize – making  Canada into a supranational union with (largely) sovereign members some, à la the European Union, weak and some strong and some in the middle? And, if any of those answers are practical possibilities, how?
 
>There’s no “one size fits all” definition of Big Canada in such a sprawling, diverse country.

Simpson pretty much refutes his worry right there.  Canada is geographically large, and consequently regionally diverse.  The cost of having too much "Big Canada" is not having enough resources (ie. money) left to deal with distinct and different needs around the country.  Devolution of authority and power to set and address priorities at lower levels is a good thing, unless one believes that the point of some people is to be the means to the ends of other people.

I understand his particular gripes, financial regulation and Newfoundland's plight.  If a federal solution is an enviable one, I expect provinces will gradually all or mostly sign on.  But when you pick one solution and you make a balls-up out of it, there's a tendency for the solution's champions to defend the hill while there are no functioning alternatives to assess.  And Newfoundland's main problem is that Quebec, like Ontario, is one province rather than half a dozen (or, conversely, that Atlantic Canada is four provinces rather than one).
 
“Give me a place to stand on, and I can move the earth” said Archimedes about his lever.  And Jeffrey Simpson.

Simpson perceives the place to stand, Ottawa, and has no doubt about the need to create a strong lever in the form of federal powers.  The problem though, is that he is not trying to move a unitary earth.  He is trying to move a mountain of gravel.  As Brad and Edward point out, there is no unity there, no internal cohesion.  Still less is there is a desire amongst the parts to be moved and no desire to be moved by an agent of one of the other parts.

It is not that "big things" can't be done.  It is that everybody wants to be the ......er and not the ......ee.
 
A limited Federal Republic, such as the United States, or a Federal State like Germany or the Swiss Confederation may be a much better model of how Canada should be constituted so the parts are in balance and can function effectively.

Getting there will be the interesting question....
 
A matter of culture. We had a culture willing to take on big projects from building the CPR to ensure Confederation to about 1975 with the building of the CN tower. A new culture exists, and we need to find the best parts of it and run with them in order to stay ahead:

http://blogs.forbes.com/mikemalone/2010/12/16/why-cant-we-do-big-things-anymore/

Michael S. Malone
SILICON DREAMS
Why Can’t We Do Big Things Anymore?
Dec. 16 2010 - 5:15 pm | 3,353 views | 0 recommendations | 18 comments

by Michael S. Malone and Tom Hayes

The recent quick fade of the Deficit Commission was the latest reminder that America no longer seems to have the stomach for big challenges.  There was a time – was it just a generation ago? – when Americans were legendary for doing vast, seemingly superhuman, projects:  the Interstate Highway System, the Apollo Missions, Hoover Dam, the Manhattan Project, the Normandy invasion, the Empire State Building, Social Security.

What happened?  Today we look at these achievements, much as Dark Age peasants looked on the mighty works of the Roman Era, feeling like some golden age has passed when giants walked the Earth.  Even when we can still see the aged survivors of that era sunning themselves outside the local convalescent home – or sitting down with us for family holiday dinner – it’s hard not believe that there was once something larger-than-life about them that they failed to pass on to us.  The ‘Greatest Generation’, and those before them back to the birth of this country, seemed to be able to do big things, and think big thoughts, in a way that is now beyond both our abilities and our desires.

We no longer build the world’s tallest buildings – other countries do.  We no longer reaching towards the moon – other countries are.  And when we do attempt something big – universal health care, alternative energy, improved educational standards, mass transportation – the initiative inevitably snarls up in bad planning, corruption, political pay-offs, lack of leadership, impracticality and just sheer incompetence.  The comparatively tiny Lincoln Administration managed to win the Civil War, open up the Great Plains through the Homestead Act, and kick off construction of the transcontinental railroad. . .all in four years.

Why are things so different now?  Why can’t we seem to do big things well anymore?  We think there are a number of reasons, some consoling, others worrisome:

Big isn’t big anymore:  Big has, in many cases, become Small:  nanotechnology, microelectronics, human genome project, distributed networks, ‘smart’ objects – and there is a lot more reward these days in developing a smaller, more power-efficient microprocessor than in pouring a million yards of cement for new dam.  So, perhaps much of our sense of failure in achievement is, in fact, merely a failure of perspective.

Collective individualism: Today’s technology, which allows us to connect and communicate directly with each other, makes us less inclined to centralizing themes and collective action. Our networked world gives equal voice to every person, while marginalizing intermediaries, including political parties . . .making it much harder to win policy consensus for really big problems.  Worse, in a paradox of our times, the more connected we get the more divided we become.  The most vocal, outraged group wins.

The Way of the Wiki:  The most important organizational innovation of the last quarter century, and our new defining social metaphor, is ‘the cloud’.  The Cloud is bigger than Big, but it is also amorphous and composed of millions of tiny, discrete elements.  It is good in bursts, but weak in follow-through.  In the wisdom of the cloud, there is an expert for everything.  Hammers are always in search of nail – and so, armed with these new decentralized, horizontal, ‘Army of Davids’ we tend to attack problems (and sometimes create them) that respond to a ‘wiki’ strategy.

Been there, done that:  Watching Malaysia, Hong Kong and Dubai compete to build the world’s tallest building can be both thrilling and depressing – i.e., cool constructions, but why isn’t the U.S. in this race?  One answer is:  we’ve already run that race, and won, several times, so why not move on to other challenges?  Edifice construction seems to be a phase in the development of successful modern nations; ditto national transportation and communications infrastructures.  We passed through that phase fifty years ago – and all that’s left now are occasional upgrades.  On the other hand, you can’t help noticing that this type of epic construction is also synonymous with national ambition and confidence, two things that seem sorely missing in modern American life.

Analog is messy:  You may not have noticed, but over the last half-century almost every successful U.S. industry has found away to climb aboard Moore’s Law of semiconductors and take advantage of its exponential growth curve.  This has inevitably rewarded pure digital plays, such as the Internet, while only conferring partial advantages on physical – analog – industries, such as medicine, automobiles and construction.  Big projects tend to be very physical activities . . .and our economy now directs smart players elsewhere to more immediate rewards.

Everybody’s a winner:  The recruiting ad for the Pony Express said:  “Orphans Preferred.”  The ugly fact is that the building of America cost a lot of lives by putting men (and sometimes women) in dangerous, high-risk situations.  We don’t seem to have the intestinal fortitude for that kind of sacrifice anymore – and even if we did, our robust system of torts laws would make it too expensive to pursue anyway.  You probably can’t conquer outer space with a society that doesn’t keep score in youth soccer games, hands out participation trophies, and sues for every cut and bruise.  After all, the virtual bullets in a Halo gunfight don’t hurt.

Big has gotten harder:  Fusion power is infinitely more complicated than internal combustion, and a laptop computer inhabits a different universe from an adding machine.  Almost everything big we attempt now is much, much more complex and expensive than anything our ancestors could have ever imagined.  On the other hand, they probably said exactly the same thing . . .and then went ahead and built it anyway.

Nowism: Big projects require both patience and a belief in history.  Our society appears to have neither.  Instant downloads, endless channels and movies on demand have trained us to want exactly what we want, when we want it.  All the forces that satisfy our consumer desires make us less able to invest in tough, unglamorous, inconvenient things – especially if they take time.

Put them all together and what can we learn about ourselves and our seemingly growing inability to do anything big and important?

First of all, we are doing big new things; they just aren’t like the big old things.  The customer base of Facebook is now bigger than the populations of all but two countries in the world.  We’ve mapped the entire human gene sequence.  With a few keystrokes in a Google search we can now find almost any piece of information on the planet.  We make microprocessors so small that their walls are bumpy with molecules and that can perform ten billion computations in a second.

That said, however, the world is still a material place – and it is with big physical projects that we seem to be slowly losing both our competence and our nerve.  Part of this is due to the loss of intellectual capital as skilled veterans of past Big Projects fade away; part of it is a new economy that offers better incentives elsewhere; and part of it is a growing national aversion to physical risk, discomfort and deferred gratification.  But most of all, it is the lack of the very confidence that once made America and its leaders willing (to quote one of those leaders) to damn the torpedoes and to charge into the future under full steam.

Sure the digital world is exciting, engaging and often quite rewarding.  But someday a whole new set of roads and canals and bridges will need to be built – maybe on Mars, maybe on a ruined Earth.  We just might want to start practicing for that day right now.

[Tom Hayes, co-author of this article, is a vice-president of Marvell Semiconductor, and co-author with Mr. Malone of the book No Size Fits All:  From Mass Marketing to Mass Hand-Selling (Portfolio)]
 
While I am working on a business start up, I am coming to appreciate the effects of "compliance" here in Ontario. Canada isn't too different from what is being described here, and the effects are the same:

http://pajamasmedia.com/blog/compliance-the-word-that-sunk-a-million-u-s-jobs/?singlepage=true

‘Compliance’: The Word That Sunk a Million U.S. Jobs
Costs not related to the quality of the end product — costs created entirely by overbearing government — have destroyed our manufacturing sector.
December 22, 2010 - by Jeff Pope

President Obama may be perhaps the most openly anti-business president ever, but government at all levels has been creating an adverse business environment for decades. In the last forty years those policies have caused great damage to the U.S. economy, with particularly negative effects on manufacturers employing the medium- and low-skill workers so important to our economy. The dreaded “outsourcing of jobs,” so demonized by politicians, may be driven as much by the need to escape a high-cost domestic environment created in significant part by government as it is by the search for increasing profits. We are simply losing players to more welcoming countries.

Generally speaking, when discussing the state of international competition the conversation focuses on issues of taxation, fair/unfair trading partners, labor costs, and corporate CEO greed. However, as competitive as Americans are it is surprising that so little attention is given to the ways in which we make ourselves uncompetitive by putting one-sided burdens on our own companies. Whether as a source of revenue or a means of promoting social policies, we have watched federal and state governments do just that.

How might this happen? In reality, when we think of competition in business we usually focus on product pricing, unless there is a unique product that commands its own price. (Think anything named Apple.) In reality, competition among businesses is not based as much on price as it is on cost to produce. The market sets the price among like or similar products, and only those companies that can produce that product at a cost low enough to make a sustainable profit will survive. Those whose costs are higher must either lower costs or exit the market. It really is that simple. The companies that produce an acceptable product or service at the lowest cost usually determine the market price, and competitors must be able to match that price and be viable or lose out.

This is tough enough in a market gone fully global, but it gets immeasurably worse when the U.S. burdens its companies with layers of additional costs the competition does not have. While we focus on the relative labor rates between countries and demagogue about “slave labor,” we would do well to consider the added costs accumulated by federal and state government actions; extraneous costs that add nothing to enhance the end product.

Politicians have treated business as a painless source of social and monetary benefits for nearly forty years. In the end, regardless of their origin or intent, all costs of doing business must be able to fit into the competition model. A business that can’t recover all its costs must find a way to reduce them — possibly by relocating to where they don’t have those costs.

We can break manufacturing costs into two broad categories. The first covers those costs directly related to producing the product and operating the business. In the most comprehensive sense this would include not only the labor, materials, and facilities needed to make the physical product, but also the managerial, sales, administrative, and distribution costs necessary to operate in a given market. The second category, the one we are focusing on here, are non-product related costs. Simply put, they are those that if removed in total, would have no discernible immediate impact on the product itself or market position of the producing company. Let’s call these two categories product and non-product related costs.

American manufacturers have become quite adept at reducing product-related costs by managing productivity at all levels of their organization. Many can hold their own in the global market when competition is based on product cost alone, because higher labor costs are offset by significantly higher productivity. Non-product costs — better recognized as government facilitated monetary and social costs — tilt the playing field heavily against domestic manufacturing by adding a layer of cost not related to the value of the product:

Companies used to have personnel clerks whose primary function was to make sure employees were paid accurately, vacation time was accounted for, and payroll tax deductions were made. They have been replaced by multitudes of advanced-degreed and six-figure paid HR professionals. We have diversity audits, sensitivity training, gender awareness programs, and all manner of support and grievance processes. As a result, every employee must be treated as a potential minefield of liability — an artificially generated risk managed at great expense to meet the mandates dictated by government at state and federal levels, and all with reams of accompanying reporting.
Health insurance that used to focus primarily on illness and injury now, by state and federal mandate, covers all manner of other costs such as smoking cessation, obesity counseling, gender counseling, drug abuse treatment, depression, mental health, etc. These costs are added on top of the already ballooning cost of basic care by politicians who run to a microphone to announce that they have provided help for your smoking habit — and without raising taxes!
Environmental regulations that are so extreme that spilling a can of paint thinner becomes an “end of life as we know it” event. Common sense good stewardship long ago lost out to very, very expensive measures frequently unrelated to a real threat. Try breaking a CFL in the middle of an environmentally compliant facility or getting all the permits needed to build a facility that will in any way use chemicals.
Corporate legal departments used to be primarily involved in contracts and tax preparation. Now add to that whole staffs to either manage litigation or stifle any activity that could lead to liability in the fertile imagination of a tort lawyer. If a stock drops, a label falls off, a risky abuse of the product can conceived of, or any of a thousand other real or imagined risks, a company lawyer is called in to advise. Tort lawyers increasingly attempt to construe personal liability of corporate management in order to pressure them to settle claims, all without constraint from the government or the courts. Protection is expensive, and non-productive.
These are but a few examples as government related costs have permeated every corner of business operations. If we were to attempt to summarize these factors into a single descriptive term, a driver that just makes the cost wheels spin in all non-productive areas, that term would be “compliance.”

What I call compliance costs add significantly to the cost of a product without adding any value at all to the product itself — it does not improve the product nor increase its value so that a higher price can be obtained. One can argue the social value (except in the case of tort exposure which is mostly predatory), but the simple fact is these costs put U.S. manufacturers at a disadvantage against global competitors that have significantly lower levels of compliance cost. It is a matter of degree.

Businesses must spend vast sums in an attempt to be compliant and to minimize the potential devastation that comes from even minor non-compliance. These non-productive costs were small nuisance items at the outset but have since grown to be major components of business costs. They have contributed to U.S. companies finding it harder and harder, in some cases impossible, to compete domestically against global producers of basic manufactured products. Whole industries are simply gone from American soil because of them. Worse, when contemplating investments that stretch years into the future, a business planner sees no signs of this trend abating anytime soon.

Are Americans as a whole better off for all this effort? Certainly we are to the extent real issues such as health, safety, and non-discrimination are concerned. We have gone well past the point of practicality however, and now the lack of opportunity for basic manufacturing workers to earn the living their fathers and mothers had has damaged us all.

The world has changed and there are now alternatives that didn’t exist before. There are developing countries with modern roads, ports, reliable electrical supplies, and legal systems to secure property and contract rights. There are also educated and motivated workers and governments that are welcoming instead of threatening. These governments promote growth and development of manufacturing as a means to raise the standard of living in their country, just as it did for prior generations here. They are not promoting abuse or exploitation of their own people; rather they are inclined to promote economic growth to better their condition. They offer prospective businesses the opportunity to operate in a responsible manner by their standards while avoiding the extremes imposed at times on American producers.

China, India, and Brazil join a host of smaller countries to vie for productive investment on a global scale. American businesses don’t move or expand offshore without reason. Unfortunately, there is ample reason to avoid the U.S. manufacturing environment — it’s called survival.

Mr. Pope runs a manufacturing company in the Midwest.
 
While I am working on a business start up, I am coming to appreciate the effects of "compliance" here in Ontario. Canada isn't too different from what is being described here, and the effects are the same:

http://pajamasmedia.com/blog/compliance-the-word-that-sunk-a-million-u-s-jobs/?singlepage=true

When I worked for a lumber company in British Columbia several years ago this was a big topic as the Forest Practices Code had just came into effect a couple of years before.  That one piece of legislation meant basically 4 additional full time staff positions were required to deliver the same amount of wood to the mill...

4 x $67,000 salary + employer costs = roughly $402,000 in labour costs that had to be covered off somehow...plus office spaces, vehicles etc..

Put another way that was about $0.33 per cubic meter of wood harvested.  In 2003 (1) BC had an annual allowable cut of 75 million meters = roughly 25 million dollars just in direct industry costs passed on consumers.

Since 2003 to 2008 Annual allowable cuts have dropped in BC on average 8% (2) plus many facilities have closed permanently due to low market prices.  Although legislation has changed during this time reducing the more clumbersome legislation requirements many facilities that are operating still struggle to break even meaning cash is not there to invest in the plants to increase labour productivity.  Big circle that only gets worse when exporting product to the US and a strong Canadian dollar exists.

Anyways..ramble off but a Canadian example of this occuring for you.


(1) http://www.for.gov.bc.ca/hts/pubs/jubilee_ubc.pdf
(2) http://www.bioenergyconference.org/docs/speakers/2008/Karidio_BioEn08.pdf

 
Good, indeed GREAT news in this item, reproduced under the Fair Dealing provisions (§29) of the Copyright Act from the Globe and Mail:

http://www.theglobeandmail.com/report-on-business/commentary/neil-reynolds/canada-one-of-the-freest-markets-at-last/article1882624/
Canada, one of the freest (markets) at last

NEIL REYNOLDS
Globe and Mail Update

The end of capitalism? Not quite. Not yet. Not here.

Indeed, the Heritage Foundation-Wall Street Journal’s Index of Economic Freedom 2011 says Canada has edged upward in capitalist sentiment and free-market rights in the past couple of years, thereby earning an elite ranking as a “free economy.” In the entire world, only six economies qualify (by scoring 80 points or more on a scale of 1-to-100) for this distinction: Hong Kong (89.7), Singapore (87.20), Australia (82.5), New Zealand 82.3), Switzerland (81.9) and Canada (80.8). Free at last.

Although no other countries except these are designated as truly “free,” Index 2011 notes that capitalism bounced back around the globe last year, reversing two years of decline amid the wrenching market meltdown of 2008-09. Index 2011 reports higher scores in Eastern Europe, Asia and, perhaps most remarkably, Africa. On the same 1-to-100 scale (with one measuring economic freedom in North Korea), three sub-Saharan countries now place higher than China (score: 52.0; rank 135th) and Russia (score: 50.5; rank 143rd) in this 183-country assessment. The sub-Saharan trend setters: the 10-island country of Cape Verde (score: 64.6, up 2.8 points in the past year; rank: 65th), Rwanda (score: 62.7, up 3.6 points; rank: 75th) and Djibouti (score: 54.5, up 3.4 points; rank: 125th). By way of comparison, France ranks 64th (score: 64.6), one slot ahead of Cape Verde; Italy trails in 87th place (score: 60.3).

Index 2011 distributes points on the basis of 10 components of economic freedom, including such things as government spending, competitiveness, openness, property rights and the rule of law. In Index 1995, the inaugural year, the global average score was 57.1. By Index 2007, the global average had risen to 60.2 – the highest score ever. By Index 2008, it had slipped to 59.4. By Index 2011, it had risen back to 59.7 – only 0.5 points from the pinnacle of pre-crash free-market enthusiasm.

Canada has done well in the Heritage Foundation-Wall Street Journal survey and Canada’s successive scores appear to reflect accurately our actual economic ascent. We hit bottom – 25th place – in 1999. Since then, we’ve ranked consistently as an upward-bound country. By 2006, we were 10th; by 2008, seventh. And now we’re sixth – with further corporate tax cuts (noted by Index 2011) directly ahead. As Canada has ascended, the United States has fallen (though not precipitously): from fourth place in 1995 to ninth in Index 2011. With a score of 77.8, the U.S. gets ranked as a “mostly free” economy.

Equally discouraging, though equally predictable in recent years, Britain fell from a 3rd-place ranking in 1995 to a 16th-place finish in Index 2011. In 2000, for example, Britain’s government spending accounted for 36.4 per cent of GDP. By 2007, it accounted for 41 per cent. By 2010, it accounted for 47.5 per cent – an economic mutation that Wall Street Journal editorial page editor Paul Gigot describes as a prolonged Keynesian “spending binge.” The Labour government’s reckless spending, Mr. Gigot says, took the country back to “a pre-Thatcher economy.” It left the country with an enormous drag on economic growth – and all for naught. “Index 2011,” he says, “shows no positive co-relation between stimulus spending and the pace of recovery.” Anywhere.

In both the U.S. and Britain, he says, misguided government intervention – “the largest expansion of government in two generations” – produced recessions of exceptional depth and duration, turning these two great countries, momentarily at least, into antagonists of economic freedom. Yet the countries that didn’t “binge,” and especially the freest of them, emerged from the recession in relatively good shape. “Economic prosperity is not a national birthright,” Mr. Gigot says. “Rich countries can fall quickly in stagnation. Long-suffering countries can ascend from poverty to powerhouse in a matter of years.”

From the perspective of the Index 2011 scoreboard, free economies are amply rewarded for recognizing the limits to government. In Europe, the top-five freest countries have GDP per capita of $47,570 (U.S.); the bottom five, $10,430. In Asia, the top-five freest economies have GDP per capita of $44,310; the bottom five, $3,042. In the Middle East, the top-five freest economies have GDP per capita of $34,848; the bottom five, $8,513. In sub-Saharan Africa, the top-five freest economies have GDP per capita of $9,338; the bottom five, $1,485. Economic freedom, it appears, is a good investment.


Prime Minister Harper may have steered Canada away from the Trudeau era; it remains to be seen if he and subsequent “helmsmen” can stay on the “right” course.
 
One interesting issue is credentialism vs education. I'm sure we have all met or worked with credentialed people (i.e. having degrees or other advanced designations) who were essentially dumb as a post, but in positions of authority due to their credentials. If we as a society were to shed our attachment to credentials, then lots of unused potential could be unleashed as bright people were promoted due to ability. As a thought experiment, what if part of the hiring process was to have candidates do a battery of SAT and aptitude tests to determine their real abilities?

http://www.firstthings.com/onthesquare/2011/01/uncredentialed-wonder

Uncredentialed Wonder
Jan 25, 2011
Elizabeth Scalia

He has authored over a dozen books, written a syndicated newspaper column and countless essays and articles covering a broad range of subjects—sports, politics, mobsters, union thugs, cultural touchstones, booze, and blades of grass—all of it written in a smart, literate voice of the casual sophisticate who takes his subject, but not himself, seriously. And in the summer of 2010, Pete Hamill finally received an honorary graduate’s diploma from Regis High School, a Jesuit-run prep school from which he dropped out 59 years earlier. “It was the last period when you could do that and still have a life,” Hamill told the New York Times. “Try getting a job on a newspaper now without the résumé.”

True. We live in an era where a well-educated journalist can declare the Constitution to be “over a hundred years old” and therefore difficult to understand, and remain credibly employed; it does seem that credentials matter more than ability. Demonstrating that one is able to conform to curricula currently trumps boldness; seat hours in the auditorium count more than audacity.

I wonder if that’s really good for America, though. To become educated is a marvelous thing; to have the opportunity to study is a privilege too many take for granted. But have we become a society that places too much weight on the attainment of a diploma, which sometimes indicates nothing more than an ability to keep to a schedule and follow a syllabus, and underappreciates the ability to wonder, to strike out on an individual path, and to learn on one’s own? When did non-conformists become so unromantic and undervalued?

In the wake of the press’ post-Tucson attack on Sarah Palin, James Taranto, the puckish and observant editor of the Wall Street Journal’s Opinionjournal.com and a member of that paper’s editorial board, suggested that Palin’s humble bachelor’s degree from the University of Idaho has contributed to the overt hatred the credential-obsessed media consistently betray, whenever the subject of Palin arises. In sympathy, Taranto informs the reader that he possesses no college degree at all; “For the record,” he notes, “our high school diploma is a GED.”

Well, for nearly 60 years, a GED was more than Pete Hamill possessed. Or, for that matter, the late Peter Jennings, who managed to forge a distinguished journalistic career without a diploma. NBC news anchor and managing editor Brian Williams attended—like Sarah Palin—several universities in pursuit of a degree. Unlike Palin, he never did acquire one, but he is currently crushing the ratings against the noted University of Virginia graduate Katie Couric at CBS.

One of my sons graduated a few years ago from a very good college at which he performed poorly. From his sophomore year forward, he hated college and seemed to work very hard at getting his parents to pull him out, but we were adamant about that degree. Since graduating, he has read non-stop—philosophy, economics, theology, mathematical theory; he reminds me of Winston Churchill, the famously poor student who asked his mother to send him books while he was stationed in India (in the cavalry because he was considered too stupid for infantry duty) and educated himself until he was the equal of any Oxford graduate, and then some.

It is a wonderful thing to sit in a classroom and grow in knowledge, if one is in fact doing that, but often it seems that degrees should be awarded in going through the motions; they come without a genuine expansion of thought, or an enlargement of wonder. And, to paraphrase Gregory of Nyssa, it’s the wondering that begets the knowing.

Jeff “Skunk” Baxter dropped out of Boston University to start playing guitar in various local bands and became a founding member of Steely Dan and an occasional Doobie Brother. While he still accepts studio gigs, Baxter also chairs the Civilian Advisory Board for Ballistic Missile Defense and consults with the Pentagon, the Department of Defense, the intelligence community, and various defense manufacturers. His expertise in the area of missile defense systems and tactics is considerable, and he is self-taught. An interest in recording technology got him to wondering about military hardware, and things took off from there.

Perhaps the over-reliance upon credentials is connected to the undervaluing of faith in society. In the past, people of faith had the examples of holy men and women who managed to exhibit enormous wisdom through grace, whether they were exceedingly well educated, like St. Augustine, or not educated at all, like St. Catherine of Siena. Saints are full of wonder; it is their ability to wonder, in fact, that allows them to be open to grace, the gate of all of their theological and philosophical brilliance.

And when faith was common to kings and paupers, self-evident brightness and acumen were appreciated and acknowledged. People understood that there was more than one way to learn, or that ideas could be burnished and gifts could be nourished by sheer curiosity sustained on a pilot-light of passion, even without the consent and certification of an appointed body.

As recently as sixty years ago society was willing to take some things on faith, and that habit-of-faith allowed room for instinct to have a voice; it permitted one to try people out—to give a guy a chance to prove himself. Lacking faith, lacking a mindset that can trust in possibilities, there is nothing to fall back on but credentials.

And if credentials are all we value, we miss out on the Churchill, or the Baxter, or the Hamill, to our great detriment. Education and certification, particularly in the hard sciences, is essential and good, and a broad education is life-enriching. But society needs a few people audacious enough to strike out, or to dare the system, if only to show us that it is still permissible to wonder.

Elizabeth Scalia is the Managing Editor of the Catholic Portal at Patheos and blogs as The Anchoress. Her previous articles for "On the Square" can be found here
 
Thucydides said:
One interesting issue is credentialism vs education. I'm sure we have all met or worked with credentialed people (i.e. having degrees or other advanced designations) who were essentially dumb as a post, but in positions of authority due to their credentials. If we as a society were to shed our attachment to credentials, then lots of unused potential could be unleashed as bright people were promoted due to ability. As a thought experiment, what if part of the hiring process was to have candidates do a battery of SAT and aptitude tests to determine their real abilities?

http://www.firstthings.com/onthesquare/2011/01/uncredentialed-wonder


A very dangerous proposition. Do you really want to drive, day after day, on a bridge that built by a gal who was not a PEng? Or fly in a plane piloted by a guy without a current licence? Sometimes credentials matter; we have learned that the hard way.
 
Credentials (certifications of competence) matter in technical endeavours, but not so much in politics and governance.
 
Brad Sallows said:
Credentials (certifications of competence) matter in technical endeavours, but not so much in politics and governance.


Agreed completely; in politics and governance we wish for men and women who are honest and smart and driven by duty, in e.g. engineering and medicine we need qualifications - certified ones, at that.
 
E.R. Campbell said:
A very dangerous proposition. Do you really want to drive, day after day, on a bridge that built by a gal who was not a PEng? Or fly in a plane piloted by a guy without a current licence? Sometimes credentials matter; we have learned that the hard way.

Tacoma Narrows bridge was designed by an engineer... look how well that turned out!  :D
 
Credentials are a quick means of verifying that someone has been "hard assessed" in various fields, so are (or should be) important for things where the hard assess is based on unchanging metrics (science, engineering, medicine and so on). When the "hard assess" is for something like "gender studies", then we are dealing with very squishy metrics, and assigning a level of confidence in the holder of the credential based on very little real evidence. A qualifying SAT battery would likely favour an engineering student and disqualify a gender studies graduate.....

Once again using Internet shorthand gets my foot stuck in my mouth. My excuse is I'm not credentialed!  ;D
 
Kat Stevens said:
Tacoma Narrows bridge was designed by an engineer... look how well that turned out!  :D

I hope it wasn't the same guy who designed the floating bridge in Seattle that didn't.  Talk about a career going down the toilet.  Maybe he moonlighted on the Second Narrows bridge an hour or two away.  Credentials indicate only a minimum of competence.  In a political situation they are often hired by people with no competence in the subject so reliance on credentials becomes paramount.
 
The latest McNaughton-Vanier Round Table is not related directly to economic but could contribute to "make Canada relevant again".

Lieutenant-General Andrew Leslie had interesting points that he brought up.

McNaughton-Vanier Round Table
On January 19th, 2011, the First McNaughton-Vanier Round Table on Government Decision Support was held in Ottawa. Lieutenant-General Andrew Leslie (Chief of Transformation, Canadian Forces), Peter Schmidt (political scientist from Stiftung Wissenschaft und Politik, Berlin) and Franklyn Griffiths (professor emeritus, Political Science, University of Toronto) discussed the ways in which academic support might improve government decision making.

www.cpac.ca/forms/index.asp?dsp=template&act=view3&pagetype=vod&hl=e&clipID=5008
 
This has to be fixed, and fast:

http://redensign.wordpress.com/2011/02/26/canadian-provincial-debt-vol-i/

Canadian Provincial Debt Vol I
Posted: February 26, 2011 by ezbeatz in Uncategorized
Tags: Debt, Provinces 0
Canadian Provincial Deficits for 2009/2010 & 2010/2011.

Alberta:
2009/2010: -$3.62B
2010/2011: -$4.75B
British Columbia:
2009/2010: -$2.87B
2010/2011: -$1.72B
Manitoba
2009/2010: -$555M
2010/2011: -$545M
New Brunswick
2009/2010: -$742M
2010/2011: -$749M
Newfoundland
2009/2010: -$295M
2010/2011: -$194M
Nova Scotia
2009/2010: -$488M
2010/2011: -$222M
Ontario
2009/2010: -$21.3B
2010/2011: -$19.7B
PEI
2009/2010: -$84M
2010/2011: -$55M
Quebec
2009/2010: -$4.3B
2010/2011: -$4.5B
Saskatchewan
2009/2010: +$425M
2010/2011: +$20M
Total:
2009/2010: -$33.8B
2010/2011: -$32.4B
 
The economy of Quebec is among the largest in the world ranked the 44th largest just behind Norway. Quebec is also ranked the 21st largest in the Organization for Economic Cooperation and Development. The economy of Quebec represents 19.9% of total GDP of Canada........Quebec gets $8 billion a year in transfer payments.........yet they are as far in debt as Alberta is!

I guess that goes to show where the welfare state gets you.
 
It looks like the stubble jumpers from Saskatchewan are carrying the rest of the Canadian provincial freeloaders. :)
 
A more meta look at things; is our civilization's foundation based on a bubble?

http://pajamasmedia.com/blog/is-our-civilization-a-bubble-part-i/

Is Our Civilization a Bubble? Part I

Posted By Stephen Balch On April 7, 2011 @ 12:00 am In Health Care,Money,US News,economy | 24 Comments

Americans have become bubble-conscious and bubble-shy. A tech bubble in the nineties, a housing bubble in the oughts, and fear of a massive fiscal bubble soon to come have temporally darkened the horizons of the world’s most optimistic people.

Not that bubbles are anything new. Black Friday popped the stock market. Eighteenth century bubbles burst on the Mississippi and in the South Seas. Tulips even made one bloom [1] in Holland. Whenever greed and mania combine, bubbles beckon.

Conventional bubble imagery captures the stance of an outsider who watches it swell, vent, and collapse. But to genuinely appreciate bubble dynamics the insider’s perspective is better. The bubble experience, from within, is more like that of being in a closed universe, wherein lines of sight curve back upon themselves, and recycled expectations reinforce one another until surrounding realities are eclipsed. Realties, of course, cannot forever be obscured, however hyped hopes or blinkered perspectives become. When their force proves irresistible, bubbles break, revealing the true dispensation, all the grimmer for its long denial.

Most bubbles occur within particular settings, however their consequences may ramify. Illusions vanish about stocks, real estate, the ability of governments to pay their debts, with concomitant spillovers as the soundness of related assets are called into question. An atmosphere of gloom then replaces euphoria, apprehension complacency, and the wheels of commerce timorously slow. But society’s mainsprings generally escape permanent damage. Its institutional infrastructure, its human resources, even much of its financial capital, survives intact. And as good feeling recuperates constructive activity assumes its normal pace.

But can a whole society bubble and burst, with the resulting fall more than just a ratchet or two, but into an entirely new and degraded state? Can runaway expectations fuel the blowout of an entire civilization? Could ours be at such a risk? There may be reason to think so.

Consider the inner logic of the bubble: skyrocketing expectations due to forgetfulness about life’s plainer facts. This usually starts in a process of habituation that spirals out of control — gradually at first and then with more and more rapidity.  The price of a given commodity rises steadily, initially as the result of a well-founded belief in its growing value, then because its track record suggests a sensible investment, and finally in frenzied efforts to turn a quick, and seemingly inevitable, profit. As the process accelerates, behavior becomes more and more reckless, not only through a spontaneous upsurge of animal spirits, but because a multiplying number of intermediaries — brokers, merchandisers, politicians — come to profit off the profit-taking and pour further fuel on its psychological fires. At root the bubble phenomenon resides in a fantasy that becomes increasingly “real” to the fantasists as they share it ever more exuberantly with one another, and as it is stoked by those having a rational interest in sustaining the collective delusion.

No bubble can inflate without the help of anomaly. Typically, the anomaly is heightened economic value or opportunity. Technological breakthrough, the sudden availability of something otherwise precious, an unexpected upswing in demand, spike possibilities for gain, and produce spurts in investment, exploration, or acquisition. The dynamic growth of the Western world’s, and America’s, economy has produced many such anomalous episodes, each, potentially at least, the seed of a bubble. But all this has been encompassed in a far greater anomaly, which creates the possibility of a mega-bubble of colossal scale, one that might burst the entire modern world.

For about the last two hundred years (three in a few locales), the fundamental structure of Western civilization has been anomalous in a crucial way. The anomaly consists in this: whereas in the overwhelming majority of societies the dominant route to wealth and status has been through political control, essentially the use of force or threat of force to extract value from others, in the West it has generally been through exchanges in which the parties have choices, and in which value must be returned for value received if the transaction is to consummate. We’re so conditioned to this, to the fact that our great fortunes belong to entrepreneurs, inventors, magnates, entertainers, and athletes, people who make (or do) things that others want, rather than to royalty, nobility, high priests, mandarins, court favorites and military leaders, people who take in taxes and booty things that others would prefer to keep, that we — very much including historians, journalists, and social commentators of almost every stripe — give little or no thought to it, considering it pretty much the natural order of things. But our exchange-oriented social order does not  represent the natural order of things, and what it anomalously results in is of enormous –though perhaps ultimately self-destructive — consequence.

Where the route to wealth is via exchange, members of society, especially the most talented and energetic, are motivated to produce more wealth in order to trade it for the wealth produced by others. Relationships tend to become mutually beneficial, overall wealth increases, and inventive ways are found to produce ever more of it. On the other hand, where the preferred route to wealth is command, outcomes are quite different, exchanges being less wealth for wealth than wealth for (as some waggish economists have put it) “illth” [2]– or at least potential illth in the form of “offers that can’t be refused.” Wealth, if it grows at all, grows slowly, with innovation becoming more concentrated on how to extract and how to evade, than on how to produce. Society takes on a hierarchical and less mobile cast; more centered on birth and alliances among elites, less on creative ability; more status consciousness and less socially egalitarian.

This last circumstance is particularly worth stressing because of the social atmosphere it fosters. While power is always distributed unequally, the average individual has much more clout in exchange-centered (let us simply say “free”) than in extraction-centered (“unfree”) societies. Extraction is based on narrowly distributed skill sets, those of the warrior, courtier, and bureaucrat, who generally seek to, and usually succeed in, monopolizing their functions. Productivity, by contrast, may assume many forms, and individuals — both as producers and consumers — typically deal with vastly larger numbers of transactional partners through the marketplace than in the polity. Even compared to representative government, with regular, competitive balloting, the marketplace offers the average person far more choice, not just among a few promise-making candidates at widely spaced electoral intervals, but among numerous products and providers on a daily basis. The upshot is that in free societies the typical individual has more leverage and can demand more consideration than in those organized around command. Competition in productivity — however sharp its elbows may sometimes feel — tends to elevate the standing and dignity of the ordinary man and woman, enriching them as much in psychological as in material possession. In highly developed exchange societies the demos — consumerdom — may not be royalty, but it is catered to with deference by those eager for its custom (and votes). Customers may not be always right, but they’re nearly always flattered.

So, by what means might this special set of circumstances, those of our free civilization taken as a whole, provoke a bubble?

First, by encouraging those habituated to it thoughtlessly to universalize the peculiar aspects of their condition, imagining that they exist as humanity-wide constants rather than as socially exceptional contingencies — a natural tendency for those encased within a closed perceptual sphere. Specifically, it has the potential of leading to fundamental misapprehensions, an innocence one might say, about human nature and human action, dangerously overestimating their benignity and leading to excessive or misplaced trust. To translate this into bubble-talk: the difference between the “social pressure” inside and outside the bubble becomes too great.

Second, as with anything of long-standing, it can produce forgetfulness about the struggles that first called it into being, about the perils that attended its birth, and about the lessons these should leave. As with the preservation of all things hard-won vigilance is necessary. But with extended enjoyment an easy smugness may instead take hold, fostering frivolousness about what should be held dear and veiling threats toward which less favored ancestors would have been continually alert. To translate this into bubble-talk: the distance between the bubble’s point of origin and its circumference becomes too great.

Third, it spoils. Desires too regularly satisfied are desires likely to grow, a process that may carry them beyond what even the most cosseted optimism ought to think possible. Politicians with short time horizons and the ability to pass along, and thus hide, costs, are tempted to play upon such false hopes, bidding them ever upward. To translate into bubble-talk: the bubble’s surface becomes too insubstantial.

In each of these three cases, that which starts as solid fabric — real cultural and economic achievement — becomes progressively stretched and progressively frayed until its tensile strength is exceeded.

Now recall the circumstance of anomaly. The bigger the anomaly, the bigger an ensuing bubble is likely to be. The anomaly constituted by modern civilization is truly enormous. If modern civilization turns out to be a bubble the distance from its surface to its point of origin, that is to say the distance of its collapse, will be enormous as well. Once support is removed it’s going to be a long, long way down. Stock market and real estate bubbles are survivable because the collapses generally erase only a few years of accumulated value. Not so a plunge from where we now stand to the normal human condition. As with an airline cashing in mid-flight, not much may be left afterward.

Article printed from Pajamas Media: http://pajamasmedia.com

URL to article: http://pajamasmedia.com/blog/is-our-civilization-a-bubble-part-i/

URLs in this post:

[1] Tulips even made one bloom: http://www.amazon.com/exec/obidos/ASIN/1453690298/pajamasmedia-20

[2] “illth” : http://en.wikipedia.org/wiki/Illth
 
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