Ontario Budget 2012 - Austerity?

Cuts? Not so deep really, they should have been different cuts, but the Liberals just don't get it yet.

The Ontario Budget released March 27, 2012, mostly affected the one million or so public sector workers in Ontario's government. Thats a lot of voters and their families to antagonize, and believe me they are voters.

All the public sector unions are gearing up for the election battle to come. It may not be for a year or so, but it will happen sooner than later. 

For the public sector employees, the Liberal budget has frozen salaries, grid moves, pensions and these things are definitely going to happen, for sure, because they said so.....or else.

The Ontario PC's have already decided they will not support the budget. I'm not certain why, the budget calls for less spending than the PC's wanted in the recent election. So it sort of looks like a start toward fiscal sanity, maybe.

That puts the ball in the court of the NDP, who seem to be non-commital, they will let the people decide. Right. You may have your say by contacting the NDP, and giving them an earful. It's a good publicity ploy anyway. Some time next week they will say: "you know, nobody really wants another election." They will hold their noses and vote with the Liberals to pass this thing, OR maybe just "sick out" a few MPP's (just three sickies are required I think). But they need to somehow court the public sector unions for the inevitable election fight. I'll let them worry on that.

Meanwhile the Liberals will keep their pet projects, all day kindergarten, subsidized but GREEN power generation, build more and larger LCBO stores to better monopolize the market for booze, and they are getting deeper into the gaming industry. 

These are effectively additional taxes. Why? Because many people drink liquor, beer or wine, and the markup is high because the government has a monopoly. Think of it like a tax on bad habits. 

Similarly, more casinos in more populated parts of the province will fleece the gamblers, increasing the odds of taxing the stupid. I will include myself in that group, because I do buy the odd lottery ticket, really stupid.

This neat little graphic at the Globe & Mail, shows how the deficit will deplete (they hope), and how the cuts help the decrease and the added revenues help too.

The video and text below it, represents my 5 minute response to this budget.  

Ontario is in financial trouble, that's according to the proposed budget tabled yesterday by Finance Minister Dwight Duncan.

Less than six months ago, during the provincial elections, none of the major parties made the debt or deficit an important issue.

No one but us, the Ontario Libertarian Party; the record is there for everyone to see.

Ontario didn't get into trouble in just six months. This trouble has been building for decades and was greatly aggravated in recent years.

The Liberals have doubled the Provincial debt and deficit since coming to power in 2003, doubled in less than nine years.

Finance Minister Duncan blames the global recession, and the stimulus spending, that the government chose to do, for creating the current problem.

But the spending problem began in their first budget, well before the recession. The Liberals raised taxes, pulling more money out of the pockets of families, and increased government spending.

Their spending problem was aggravated by an economic slowdown and a reduction in government income.

So, what if your family runs up a large credit card bill during hard times? Would you continue spending lavishly, or consider cutting back on some frills? Would you decide to take on more services, or consider doing with less, and paying off your debt?

I’m not the only one criticizing the Liberals; their own people have been their greatest critics.

  

The provincial Auditor General in his last report pointed to excessive spending and poor management in adding heavily subsidized wind turbines and solar panels to everyone’s electricity bill, and also increasing government debt.

Don Drummond, in his recent report on reforming the public service, echoed the Auditor’s criticism, and came up with 362 recommendations to balance the budget or the deficit would balloon to $30 billion in five years.

To add to the criticism, Moody's, a financial rating agency warned Ontario that it's credit rating would be in jeopardy if its lavish spending habits don't change.

And what does balancing the budget actually mean? To compare it to your family credit card bill again, it means just making the minimum payments without paying back what is owed. And worse, the government has said it won’t balance the budget for another five years, so debts will continue to increase.

So, what have the McGuinty Liberals done in this budget? They have decided use the coercive powers of government to freeze the salaries of all public sector employees. The public sector will take the brunt of the cuts, in salaries and pensions, but many of the items recommended by the Drummond Report were ignored.

Many of the frills are still in place and the government has chosen to increase its income by doing things like building more and larger LCBO stores, and more casinos, both of which act like taxes on consumers.

The budget does not address the debt. Servicing the massive debt is Ontario's third largest annual expense, and that assumes that interest rates will remain low.

  

The Liberals have also cancelled a proposed cut in corporate taxes.

Libertarians would not cancel the cut in corporate taxes.

We believe that jurisdictions that have the low corporate tax rates attract more business and industry. These will create real jobs that would ultimately improve Ontario’s economy.

Libertarians would choose to eliminate or amalgamate entire ministries and many agencies that provide little or no value to the province, and where the free market could do a far better job.

We all want Ontario to be the best place to live, I’m sure that is true of the government. I believe that their intentions are good, however, sometimes-good intentions have very bad results.

This is what has happened here. The government has a spending problem that it does not want to admit; I have no confidence in this budget solving that problem. I believe its time to change the government.

Phasing out of entitlements

It's hard for people who think that government is the solution to all that ails us, to imagine what things would be like if the government just protected your natural rights.

In the video above, Yaron Brook explains why people will need to come to grips with the coming crisis in entitlement payments. This issue is already affecting some European countries, notably Greece. But its will affect Americans and Canadians in due course, Brook explains why Americans will be affected.

In Canada the difference is just in degree, it will affect Canadians, and in many ways is now, because our medical care system is already being rationed. Brook offers some general solutions that will solve the problems in an orderly way.

Regulating the price of gasoline in a free market

Everyone has a theory to explain the fluctuating and rising price of gasoline. But considering ALL the factors that influence the price, it's virtually impossible to actually come to a simple answer. But the simplest answers are often the ones that most people discount.

What if there were a free market in Oil and Gas?
What if the price of oil and gas were entirely dependent on supply and demand?
What if all taxes were removed from the price of oil and gas?
What if road construction and repair was entirely financed by the users through tolls?
What if oil companies were actually allowed to find new oil reserves on government lands that are excluded from the search?
How might things change?
Check out this very interesting column by Lawrence Solomon in the National Post.

The Reason Rally 2012

There may have been some "non-human" animals at this march, but I'm sure they were treated well.

Sunshine, lolipops and Ornge

No, that's not a spelling error in the title; this posting is about Ornge, the Ontario government's pet air ambulance service, and government spending in general.

An air ambulance service, like any other service, is a business. There is a business model for the company, there are employees, equipment, management, in fact all the things that businesses are required to do to offer good service, and still try to make a profit. In the real world of business there are also competitors that might offer the very same service. In that same real world, customers, people that need or want to use that service have choices. Customers often choose the company that offers the best service at the most affordable price. In this way, the business practices, salaries, and profits of companies are best regulated by the free market.

Yes, its true, that unfortunate moment you personally may need an air ambulance, will likely not be the best time to shop around for one. But a regional trauma centre or hospital, if allowed, and on behalf of its patients, might be able to contract an air ambulance service from a list of available competitors. Presumably the hospital would choose the most reliable and affordable transport methods to serve its needs, including air ambulance, to best serve potential patients/customers.

But not on Ontario!

In Ontario one person and a staff, are charged with the task of selecting THE air ambulance service for everyone, in fact overseeing the entire health care system.

Currently that person is Deb Matthews, the Minister of Health and Long term Care. Here is the overview for this Ministry from the government website: The ministry is responsible for administering the health care system and providing services to the Ontario public through such programs as health insurance, drug benefits, assistive devices, care for the mentally ill, long-term care, home care, community and public health, and health promotion and disease prevention. It also regulates hospitals and nursing homes, operates psychiatric hospitals and medical laboratories, and co-ordinates emergency health services. And of course Ornge. This is a daunting task to be sure. Imagine, this Minister, and her staff are responsible for seeing to the medical needs, wishes, and desires of everyone, everyone in the province; there is no other choice, if its medical, its them. That is a weighty responsibility, I would have trouble sleeping.

Let me stay focussed on Ornge. Ornge has been in the news lately, not surprisingly when there is only one such service available, with no competition to regulate their business practices, there may be a tendency toward corruption. Ornge is a classic case, if you don't know the story read this, and this.

In a few days the budget for the Province of Ontario will be made public. Just six weeks ago, the Commission on the Reform of Ontario's Public Services (Drummond Report) was made public. The Drummond Report recommended 362 ways, that Ontario's spendthrift McGuinty Liberal government, might curtail spending, and balance its budget by 2018.

I say spendthrift because the release of Ontario's "$100,000 per year club" shows that members of this vaunted Sunshine List has increased by 10% in one year, this, while the drones of the public sector have had their salaries frozen. The Liberals have no control on spending. Why should they? It's not their money to begin with, they don't care.

Back to Ornge for a moment, just to show how corrupt it had become, the former CEO Chris Mazza was fired in February 2012, when it was discovered he made $1.4 million in 2011 and he wasn't even on the Sunshine List last year.

What is the moral of this story? First, no single person or group best knows how to care for your medical (or any) needs, and second, when they try, they invariably screw up.

Housing crisis....Coming to Canada soon?

Maybe. But this video proves that one man's castle is another man's dump. Some dump! I wish I lived in one of those dumps.

HomeSchooling? Real competition for government run schools

The graphic below is from an American homeschooling organization. It seems to be a direct response to the perceived inadequacies of American State and local government school systems. I'm not aware of any Canadian analogues, but if you know of one please post in the comments below.

Created by: College At Home

The real and painful effects of Climate Change on Ontario Part 2

In my last posting I discussed the erroneous prediction made by a consensus of weather forecasters from across North America for the winter of 2011 - 12.

Suppose you were a retailer in Ontario this past winter and you actually took seriously the prediction that the winter was going to be brutal, cold, and snowy. You acted on that prediction and pre-ordered extra snow blowers, shovels, snow-boots and other wintry paraphernalia. The erroneous predictions were based on computer models used by forecasters. Now your decision has left your business with a surfeit of winter stock and a cash flow problem. Too much cash is tied up in too much stock, and not enough cash is on hand to restock for the new season.

That very situation may have played out for retailers recently. Should they liquidate the excess stock at fire-sale prices and accept losses, or hold it until next winter while borrowing money for the new season? What to do?

This problem of course is mostly confined to the retailers, wholesalers and their employees. It is a risk of doing business. The general public may be advantaged by the potential fire-sale prices, but presumably they will not be affected by the problem because those businesses operate mostly in a free and voluntary market.

Unfortunately that is not the case with regard to the production of electricity in Ontario. The government of Ontario operates Ontario Power Generation (OPG) as a near monopoly for the production of electricity in Ontario.

When the McGuinty Liberals became the government in 2003, they completely accepted the United Nations IPCC forecasts for future catastrophic global warming (AGW) due to "excessive" carbon dioxide gas (CO2) emissions from fossil fuels. These forecasts were determined by a consensus of researchers using long range computer models and data that was collected.

Despite our normally cold winters and comparatively meagre population, Premier McGuinty's government ordered the shut down of most of the coal burning power generation stations in the Ontario. The purpose was to replace these low cost electricity producers with alternative high cost wind, and solar generators that do not produce CO2 (that was key). The McGuinty Liberals even offered inducements (FIT and MicroFIT) to landowners to construct these generators on their properties across the province. It worked, OPG now produces less and less electricity though the price of production continues to increase because of the high cost producers. Check out this recent column which details what is happening.

So, much like my hypothetical retail story above, and based on long range climate predictions that may or may not be correct,  the McGuinty Liberals have made a decision that affects all Ontario consumers now, and into the foreseeable future. It wouldn't be so bad if we had the choice today of opting out, but that's not the way things work in Ontario. Unless you are self-sufficient in electricity production, you are paying more and more because of McGuinty's actions and that trend will continue.

Interestingly the IPCC's predictions of five years ago can now be compared to reality. That is what the graph below shows.

The graph is taken from here. The graph's author contends that while the climate is currently warming slightly, there are other cycles unrelated to CO2 that cause variability. The blue area denotes the range of the variable cycles, the red and blue line denotes actual data, and the green area shows the IPCC 2007 projections for temperature. The yellow line shows the author's projections based on his theory (which is more in agreement with the real data).
It's a bit more complicated than that, but that is the gist of the graph. There is now a divergence between the real data and the IPCC projection that may increase with time. If it does, it just confirms my case that the McGuinty Liberals have acted prematurely and rashly. Ontario will suffer real economic pain from global warming, whether AGW is real or not. And because there is no free market in electricity production, we have all been coerced into this situation.

You might be asking how can I be certain that the McGuinty Liberals are assuming that CO2 is the cause of climate change? Watch this short video:    

Is there any doubt now? The Environmental Commissioner of Ontario, the Provinces' INDEPENDENT watchdog for environmental issues, has no doubt! Did he sound independent? Can you imagine a more bullshit job than this in government?

If you want more information about how your Ontario government is wasting tax revenues and borrowed money go here.    

The real and painful effects of Climate Change on Ontario Part 1

The snowdrops and crocuses are blooming in my yard, weeks earlier than I've ever seen them. It has been a strange winter. Normally, the park abutting my yard is covered in snow from December through to March, even longer some years. This year it has been winter green, punctuated by brief periods of whiteness that melt in just days. There were no extended cold spells, I mean really cold spells, where it hurts just to be outside for too long. The local pond near my house, never did freeze up for skating.

Predictions for the winter of 2011-12 were way off (see picture above). Most weather offices predicted this winter was to be colder and snowier than usual, they predicted a winter of yesteryear. It didn't happen. So much for long range predictions.

This may be the mildest winter in my memory, I know we're not done yet, but how bad can it get at this point?

Apparently winter was absent from much of the country according to the latest issue of MacLean's (The year that winter died, March 26/12). They viewed it as a concern. What if there are no more backyard hockey rinks? Where will we nurture our future Gretzky's and Crosby's? Oh woe is Canada, what will happen to our national identity, hockey? Despite that, no one around here is complaining, quite the contrary.

Why was everyone so wrong? Weather people are blaming (thanking?) something called the Arctic Oscillation for this anomalous winter behaviour. Indeed winter was brutal in some places, ask the Europeans. Much of Europe and Asia was gripped in the kind of weather we expect here.  

Of course one winter, does not a trend make, so I'm not selling my snow shovels or snow tires yet. But I am convinced that winters around here are getting milder, and have been for some time. How do I know? It's not that I keep meticulous records and can recall past winters, its that I can see evidence in the plants and animals of southern Ontario. I have seen changes, subtle changes in the indigenous wildlife, for example: Turkey Vultures were once rare visitors this far north. No longer, they now range into Central Ontario (that video link is a clue as to how rare they were) each summer, they regularly soar over my town near Toronto, and have done for years now. Opossums, once rarely seen in the Toronto area, are now becoming a nuisance and can be found north into Central Ontario. Robins are found year-round in Central Ontario, and this year tree pollen was detected in Pittsburg in February, earliest ever. Yes, these are subtle changes, and the truth is change has always occurred. This area was once covered by a continental ice sheet, and my house is just south of a large moraine leftover by the glacier's retreat.

There is nothing painful about these changes, they are easy to adapt to. Even the temperature changes are on average minor. Next year is libel to be as cold, snowy and as bad, as the winter of 2008 - 09.

What I found remarkable this winter were the lack of claims by the anthropogenic global warming (AGW) crowd that our strange weather is a direct result of what they call "carbon pollution." They have been strangely quite. It may be because they have been embarrased, like here. Or because the theory of AGW caused by greenhouse gas emissions is falling into disrepute, as more and more scientists support the theory less and less like here. Its clear that the dire predictions of the IPCC are not in line with reality (see graphic below).

This graphic comes from an article published in Forbes magazine, where Warren Meyer compares the AGW theory with observations, and finds the theory to be alarmist and unrealistic. Meyer does not dispute the warming or even the possible insignificant impact of CO2, he just argues that the predictive models are hyped far in excess of the actual observed data. That alone should be enough to sink any theoretical model, but this theory, like a zombie seems to cling to life.

Here is where the problem occurs. Belief in that theory and the actions taken as a direct result of it, has caused and will continue to cause the people of Ontario unnecessary grief and expense. The real and painful effects of an erroneous theory are right now taking their toll on the economic freedom of all Ontarian's.



       

"Liberty is not Intuitive" - John Stossel

Things are changing.......

Preaching to the choir is not challenging

Do you ever ask yourself what would you be doing if it weren't for the internet? Something useful maybe eh?

If you use Facebook, then you know its another way that the whole internet thing steals time. But you will also know, and I'm not exaggerating, that Facebook and the other social networking tools, are changing the world in ways we can't yet imagine.

What would be the state of the libertarian movement were it not for these tools? Would there be such a movement? I doubt it, at least not to the same extent. With Facebook I can interact with libertarians around the world, sharing thoughts, ideas, stories, pictures, you name it, and do it in real or delayed time, it's absolutely remarkable. That's the good news about these tools, and the bad. Bad, yes bad? Most of my "Facebook friends" are libertarians or liberty-minded, we form little groups and cliques where we share common likes and dislikes among ourselves, just like in the real world. By and large we have common views on many issues, and any discussions while lively, are frequently philosophical in nature and minor in the bigger picture. We are preaching to each other much of the time, and that's fine. We humans crave re-enforcement of our ideas and we do that a lot on the social networks.

I use the internet mostly to peddle ideas. But to be most effective its best to get into a group which is not homogeneous and not necessarily in line with my thinking even though that can be uncomfortable.

Below I have taken a comment from a Facebook thread that dealt with the cartoon you see above. Most libertarians with some knowledge of Austrian economics, like me, look at that cartoon and will agree that shifting the burden of taxes from individuals to corporations doesn't really lift the burden of taxation, it just shifts it. It may not be exactly as indicated in the cartoon, but corporations  don't pay tax to their own detriment, they just add the tax to their cost of doing business, and we all end up paying more. Government spending requires tax revenue, everyone agrees with that. So the discussion on my non-homogeneous Facebook group revolved around this issue, and one person, let's call him James, who wrote the following:          

"Alright. Where does the money come from? The consumer wants their social benefits. The consumer wants their pension plan. The consumer wants green jobs which only can come with government subsidization. The consumer wants unlimited free healthcare with a low wait time. The consumer wants state day care programs.

Well guess what, all those programs cost a lot of money. It's either cut those programs or raise business taxes. I've been in small business literally all my life, and I am pro small business. At the same time, the same politicians who advocate on a stronger economy don't have the balls to cut social programs relentlessly so that business' can actually work efficiently. Large corporations will not be hurt by tax increases, there's always ways around it - I work in that industry. Will it be passed on to the consumer? Not really. Prices will stay marginally the same as business' find new ways to stay competitive. This means firing a few people and keeping the innovative ones to find ways of keeping the bottom line strong. So, like minimum wage, more taxation will probably mean a few people could potentially be cut.

I'm not for raising corporate taxes as corporations provide jobs. What I am all for is raising taxes on the bracket of tax payers who make 1m or more, at least in the US (where the rate is at its lowest in 50 years). Basically the government raising taxes on business' is a spineless move. Politicians don't want to lose votes of a majority of society who will complain when they make social programs more efficient through cost benefit analysis, so they raise taxes instead.

At the same time, the massive government programs we have provide a great deal of work to the private sector, so cutting those programs will have a backlash to.

As I said, more complicated than this. This comic is actually more incorrect than correct. Why? Because the alternative is to cut social programs which will see a lot of government workers without a pay cheque which will lower their purchasing power affecting all small business. No matter what the government does to cut the debt, it will affect the consumer most likely negatively. Why? The last 40 years we mortgaged the future, and now our interest and principal are due."

Its difficult to respond to comments like that from a free market viewpoint with short pithy retorts. This person has practical knowledge of business economics, the implications of tax cuts, and the popularity of entitlement programs. So where to start?

In the first paragraph James outlines "consumer wants." The fact is consumers want many things, fortunately not all of them are provided by government, unfortunately many are. So my first issue is why is government involved in, pensions, green jobs, healthcare and daycare? Can government do a better job providing these services than the free market? If that were true than why doesn't government provide ALL of our needs? One of the reasons that doesn't happen is that consumers also prefer choices. Government rarely offers choice and almost always creates monopoly situations. In fact government does nothing better than the free market in my experience. But James is correct, money for these services must come from somewhere or the services must be cut. Politicians are reluctant (James says: "spineless") to make the cuts so they either raise taxes or worse, borrow the money. In either case, the economic freedom of citizens is affected. 

But where I disagree most with James is his contention that: "the massive government programs we have, provide a great deal of work to the private sector." Is that true? It is, if only one side of the story is examined. Look at the government monopoly in healthcare. Government together with various professional organizations agree on a compensation packages. The government takes on the responsibility of payment. The private professional organizations regard the government treasury as a bottomless pit. The government arrangement eliminates free market competition between the various healthcare providers, and as a result costs always go up in healthcare. 

The bottomless pit characterization holds true in many areas. Whenever government puts out tenders for construction or any sort of purchase, they may accept the lowest bid, but the bidders know who they are dealing with. Not to mention that virtually every government worker is ensconced in a labour union, and their demands depend on the bottomless pit idea too. It's no wonder that government workers have some of the most generous compensation packages around. No one asks why should the unions be the sole providers for government services?

So yes its true, lots of work for the private sector, but are we getting the best value for the money spent? This avoids the moral question, is it reasonable to make everyone pay for services that they may not even use? Governments create uncompetitive, overpriced, over regulated services that everyone pays for whether they use the service or not. The entire process depends on coercion administered by government and mostly unchallenged by citizens. At some point, the citizens will wise up. I hope it happens soon. There will be short term pain, yes, but all successful surgeries require healing.  

The Cato Institute?

The Cato Institute needs to be an independent, APOLITICAL, libertarian, think tank. I hope it stays that way.
The Koch brothers have launched an extraordinary campaign to take control of America’s most respected libertarian think tank. Will they destroy it?

Signs of Hope & Change 3

This month marks the beginning of my fourth year blogging online. I have over 500 blog posts, coming up to 41,000 page-views, and I'm still learning how to use this wonderful tool.

Why bother? Only because I believe, perhaps naively, that I can make a difference, I can help change things for the better. That's why I've jumped into politics after spending most of my life being apolitical.

Politicians and their antics seem to dominate the news media in North America. While I haven't done a survey, I'm sure that's true. Even though I've become political, I don't really want to be in the news, I just think our lives have been manipulated by political agendas for far too long, and that has damaged individuals and society as a whole. There needs to be a counteracting force.

The world is run by busybodies that inhabit various political offices, legislative assemblies, parliaments and congresses. To justify their own existence, these political entities are forever busy dreaming up new legislation that almost always adds to the cost and size of government, while at the same time removing money, freedoms and responsibilities from individuals.

Most interesting to me is that with all the political shenanigans that have gone on and are going on, very few if any of them have an impact on improving our lives, our living conditions, or anything else of value. On the contrary, think about it, when was the last time a political decision had a significant positive impact on your life?

But our lives have improved despite governments, how? Peter Diamandis explains in the TED video below that things are getting better. If you have heard of the X-Prize, then you may know Dr. Diamandis. The X-Prize, does what governments around the world notoriously appose, it incentivizes human competition, governments of course, do the opposite. The X-Prize leverages the human mind and the free market and gives us all reason to be optimistic and hope for better things.  
        

Political Irrationality

Are you politically irrational? In the TED video below, Michael Huemer points out two of the more glaring politically irrational policies that exist in the present day United States. These policies exist in most Western societies to some degree, Canada is no exception. Libertarians will agree that BOTH of the examples that Huemer uses are indeed irrational. Conservatives will agree with one of them, Socialists will likely agree with the other one.

I know generalizations are dangerous, but Huemer does suggest that a different group of people may agree with one or the other. For those of you that don't understand libertarianism, maybe those examples will help?

Huemer goes on to suggest that the reason policies are often irrational, is because most people are politically ignorant. In my experience that is a fundamental truth of politics. I think Huemer gives a good explanation and then he surveys his audience to validate his explanation.

Huemer then goes on to explain why people are irrational. Being rational is costly, his first point. People will be rational if they believe the rewards exceed the cost, but most people understand that they have just one vote to affect change. So why bother thinking rationally? At this point, Huemer suggests that its easy to persuade most people, that most people are irrational about politics, absolutely true.

So why do we need people to be rational about politics? Well, you should watch the video, he seems to spend the least time on that, but it's the most important point in the story. 

Stossel at Students for Liberty

In this video clip, John Stossel explains that he has discovered that liberal progressives are closed minded and impossible to talk to, with respect to liberty compared to social conservatives. I happen to agree, having experienced the same thing.
Nick Gillespie offers hope.