Pandering to the electorate

It seems the government of Ontario is gearing up for the next election, already. There is just a year and a half to go and the Liberals of Ontario seem to be coming out swinging as protectors of the little guy - a traditional NDP ploy.
In the fuzzy economics of government, Premier Dalton McGuinty has made some fuzzy statements lately to "help" us all cope with rising costs and rising expectations.
McGuinty will protect renters from greedy landlords, protect the environment from....well... from  us, and protect us from greedy pharmacists, and its still early days. The National Post has a great editorial on the doings of Dalton here, it's a must read.  

This week we will pick on teachers

The Globe and Mail has just completed a nine month investigation in which it has discovered that the largest school boards in Ontario waste money. HELLO! What a shock! They should have asked me, I would have sped up their investigation. Look what the Globe decides to pick on.
The Globe discovered that school boards would rather hire experienced retired teachers than inexperienced new graduate teachers to cover for the contract teachers who have an extended illness or are on mat leave. This is absolutely true, but lets back up a minute to see if its crazy.
Most of you reading this are not, or have never been, a school teacher. Imagine being absent from your job for a day or two, the likelihood is that no one was hired to replace you for that time. Upon your return you catch up on the work back-log or even do some of the work from home. Not teachers; if the teacher is absent he/she requires a substitute, and that sub must be given instructions by the absent teacher. For short periods of time even freshly minted teachers may be able to handle such an assignment, hell a door stop probably could. What about extended absences? Would you trust an inexperienced teacher to deliver the program and manage the classroom for several weeks or longer? Well, neither do most contract teachers or their Principals. Realistic new teachers realize this, and accept being  paid on a graduated grid (when they get a contract) over ten years, because they are most incompetent when they start and become less so over time.
The Globe journalists seem to be hung up on the pay (no wonder), the retired substitute gets the vaunted teacher's pension, AND is paid at regular pay rates for the long term substitute job; not bad (to a point). The journalists are jealous because their jobs have been lately on tenterhooks, so who can blame them.
The issue here is not just double-dipping retired teachers preventing fresh young blood from entering the profession, its much deeper and wider than that. The issue is that public sector unions and governments have been in cahoots for years and now the chickens have come home to roost. Governments are looking for ways to save money and reduce their spending and the past deals based on old assumptions are no longer appropriate. The apparent waste in hiring substitutes needs to be addressed - but the unions/federations will not go quietly.
It's not just teachers, what about retired hydro employees who go on consulting contracts for their former employer? What about unionized LCBO workers who contract deals to sell liquor? Union people must sell liquor?  That's a skill?!
The crunch is coming folks, the public sector unions will be dealing with cash strapped governments at all levels soon and changes will be required. I hope the Globe does more of this digging, the voters need to know.        

A challenge to Canadian journalists

Tomorrow is income-tax deadline day in the United States. In Canada we follow two weeks later on April 30.
As a journalist, John Stossel does not hesitate to skewer both people and practices that he feels stray from the ideas of fundamental liberty. Today he writes about the complexity of income tax in the United States, read it here.
Income tax in both Canada and the US has become part of our daily lives - like brushing your teeth and taking out the garbage.  Most things that we do on a daily, weekly or even annual basis are fairly simple. You shovel the snow, cut the grass, paint the garage - stuff like that. You might even hire someone to do these things for you, but that is strictly voluntary.
Income tax has become so complex that many people MUST resort to outside help, like John Stossel. Lets put aside for a moment the size of the tax, the questionable value for money that it delivers, and the coercive nature of this obligation. Why does it need to be this complicated? Where are the Canadian journalists that might inject this issue into the daily conversation?    

Raising the minimum wage (Part 2)

In Part 1, I pointed out that by arbitrarily ignoring productivity and increasing the cost of production (by raising wages) the government effectively creates money out of thin air. No new wealth is created by producers, but costs have increased. Ultimately more money must be printed (injected into the supply of money) to adjust to this new situation which devalues the existing supply of money and adds to what we call the inflation of our currency.
As for employers (the creators of wealth), their labour costs have been increased by government edict, and in order to stay competitive they must raise their prices or reduce there input costs by releasing staff.  This effectively prices the lowest skilled workers out of the "legal" workforce. In Ontario this month, employers must decide to either pay their bottom rung of employees $10.25 per hour, let them go, or shorten their hours worked. Alternatively employers may keep wages for their more skilled workers lower than they may otherwise be, creating a class of under paid skilled workers that cannot secure a decent living wage (more about that later).
I'm sure this Ontario government action, raising the minimum wage,  is motivated by the best intentions of helping the working poor; the irony is that it may be doing exactly the opposite.
The people of Ontario are fortunate to have one of the most robust and wealthy economies in the world and as a result we have one of the highest standards of living in the world. And yet by my strictly unscientific measure, poverty seems to be increasing.
In my experiences living in the Greater Toronto Region (GTA), one of the fastest growing regions in the country, poverty was something I was always aware of. While my own family struggled as I was growing up, I don't ever remember being hungry. In 1983 one of the first food banks was created to address the problem of hunger in the GTA. Now 27 years later, this and other food banks have sprung up and food donations during key holiday periods has become a ritual in our society. The food banks have persisted during good times and bad and they don't just cater just to the unemployed. Today in the midst of the Great Recession over 30% of food bank users are employed earning an average $10.90 per hour working an average 20 hour week. Food bank users have increased in those 27 years (by the way inflation went up 103% in that time!!) despite government programs to address the issue of poverty, and despite raising the minimum wage. In fact Ontario began a poverty reduction strategy called Breaking the Cycle in December 2008 with a set goal of reducing poverty in children by 25% in 5 years. All of this in my view is the wrong approach.
In my view raising the minimum wage increases inflation, increases unemployment and creates an underclass of workers that cannot earn a living wage. To get a better understanding of some of these issues let me direct you to some of these sites:
The Ludwig von Mises Institute; Economics in One Lesson; and the Freeman Online.