Canada's Action Plan - Fixing broken windows

You have probably seen that picture on the left, either at the roadside or in the media. It advertises the Canadian government's plan to create jobs in the wake of the Great Recession.
Have you ever wondered how governments create jobs?
Governments obtain income from various kinds of taxes, fees, duties etc. Basically they redistribute a large portion of the wealth of the nation. Adding to the bureaucracy and hiring more government workers certainly creates jobs, but does not add to the wealth of the nation in fact it increases the size of the redistributed portion. Government can also hire private industry to add or improve government supervised infrastructure - effectively "creating jobs". Again this is just money that must be taken out of the private sector - all of us - through greater taxes eventually, or as often happens the government prints more money.
Suppose your after tax income was $6000 per month. That might be enough to take your family on a nice vacation for a week, but your normal expenses that month like mortgage, food, phone, cable etc., would not be paid unless you used savings or borrowed against future income. Generally governments borrow against future income frequently going into debt (deficit spending) which is added to the total debt of the government. The government of Canada and many other countries have done exactly that over the last couple of years. Does it work?
Not according to the Fraser Institute in a report issued today on what caused the economic turnaround we have experienced lately. The report can be downloaded for free, and it basically attributes the turnaround to private investment and exports.
Creation of jobs rarely works the way government claims. In a very entertaining video John Stossel, explains this type of thinking is what economist's call the "Broken Window Fallacy".  

http://www.youtube.com/watch?v=UPmo2e-bAMQ

Involuntary Charity by yet another tax: G8 Style

Canadians have every right to feel over-governed.  I pay taxes to my local Municipality, the Regional, Provincial and the Federal governments. Each successively higher level of government seems to have less beneficial impact on my life and I have less influence on their spending as my "vote" becomes more diluted.  

What if I told you that a Super-Federal government, a world government also wants your taxes to finance its projects? That is the proposal of some members of the G8 countries (see photo from last G8 meeting). The tax is called the Financial transactions tax (FTT), and it is tiny (anywhere from 0.005% to 0.05% depending on sources) but its revenue generation is huge. That's because the tax would be levied on financial transactions including stocks, bonds, foreign exchange and derivatives (futures, options etc.) trades world-wide. Its estimated that the tax would generate somewhere between $447US billion and $1022US billion (thats a trillion!) annually, not chicken feed. Apparently Canada does not support this tax. Julio Montaner and Stephen Lewis, in a recent Globe and Mail column think that Canada needs to get with the program. 

"Once a leader in health and equity, Canada is now the only G8 country that is determinedly, inexplicably and shamefully opposed to an innovative financing tool – the financial transactions tax (FTT) – that would produce billions of dollars to meet critical global health needs."

These guys go on to say that:

"It's one thing to oppose heavy taxes in a time of economic hardship. But the FTT, which has been endorsed by Britain, France, Germany and the International Monetary Fund (with friendly interest shown by U.S. President Barack Obama), would levy a fee so small (as little as 0.005 per cent) on the millions of daily bank financial transactions that one would need a magnifying glass to even notice it."

How could economies lose as much as a trillion dollars annually and not notice it?  Would you not notice that leech on your leg perpetually sucking your blood? I think eventually you would. That is the essence of this idea, charitable donations are "too voluntary" according to Montaner and Lewis. Funding for global health needs must be institutionalized and the best way to do that is to have this esoteric FTT that common folk won't even notice. Sneaky eh?  Imagine how diluted your "vote" is as a member of the G8 countries?

For those of us that live in Southern Ontario be aware that the next G8 meeting is in Huntsville Ontario, cottage country this June. You can be certain they are going to discuss the FTT. Time to exert whatever influence you have, write your MP and MPP and let them know that voluntary charity is the way to go. Do it.    

Libertarians at Manning Centre

  The Manning Centre Barometer was held last week in Ottawa and a Libertarian group was there hunting for libertarians. This photo is from a Maclean's-on-line article that shows how the Nolan Chart was being used to discern a participant's political leanings. 

Unfortunately the article associated with the photo failed to mention the libertarian presence instead it spoke about the rise of social conservatism in Canada. Libertarians are not social conservatives, on the contrary the libertarian attitude is extremely liberal in that regard. 

The article's author Paul Wells, seems to be saying that there are dangers in a Harper Conservative government because it still carries along the baggage of social conservatism the so-called "hidden agenda". I agree, and of course as the Canadian electorate ages (especially the Boomers) both fiscal and social conservative attitudes rise. This attitudinal shift was illustrated in the article by pollster Allan Gregg.

This creates opportunities for Libertarians in Canada. Libertarians demand fiscal restraint on government while simultaneously advocating the traditional "Canadian" attitude of social liberalism. To paraphrase Pierre Trudeau, the government does not belong in the bedrooms of the nation, or any other room for that matter.     

Environmentalism: Descent into irrelevance

I was scanning the "Mail Bag" in the most recent issue of MACLEAN'S (March 29th, 2010) and read a letter about plastic grocery bags. It seems that in Atlantic Canada, Loblaw's has dropped a five-cent fee for grocery bags because customers were switching to Sobeys rather than pay the fee. The letter writer went on to say "apparently, cheaper is more important than greener." Of course in some places (Toronto) the municipal government (one of the dumbest, most incompetent in the country) has made it a law that retailers will charge five-cents per bag in an attempt to curb their use.

Fortunately I don't live in Toronto, where the municipal council believes it knows how people should live their lives. My municipal council has other stupid laws - but not that one....yet. But I digress.
In today's Globe and Mail one of the regular columnists (Lawrence Martin) had an interesting comment about Elizabeth May and the Greens. The gist of the column is that May (leader) and her Party are slowly losing ground. Of course she has no elected MP's in the parliament (so not much to lose there) and the Greens seem to be a one issue team. That issue - with many names: environmentalism, climate change, green shifting. All of that seems to be fading away from the media spotlight and the public consciousness as Martin suggests, especially since the Copenhagen non-event. Whatever the reason, it is a good thing. Environmental responsibility need not be forced down each of our throats by zealots like the Gore's and Suzuki's and by governments that seek to pander to them.
Maybe now problems with the environment will be put into perspective, along with all the other important issues of the day. Who knows maybe people will start to see that the biggest issues can be dealt with right at home, right in your own country, your own province or state, your own town.