Sorting Through an Economic Mess

I think the history books will remember the 2000s as the being similar to the 1970s. That era was well known in North America for its malaise with the OPEC embargo, the unpopular war in Vietnam, economic recession, Watergate, etc. Right now we're in a bit of a mess that's eerily familiar. The United States is fresh off its sub-prime lending crisis which had been threatening recession for a while. Combined with the high Canadian dollar this caused, we knew out export industries would have some problems. However, federal and provincial governments all assumed Canada could weather the storm if a recession in the US came to be. April truly is the cruelest month given that what's happened in the past 30 days has shattered this assumption. Fuel costs soared throughout April. In Toronto alone, gas prices for regular unleaded shot up 15%. Diesel has seen even greater increases. Canadians on average are paying $1.26 on average for fuel compared to $1.15 a month ago. This means shipping costs are rising dramatically. The move towards ethanol, fuelled by environmentalism and agri-politics has led to massive shortages of staple grains. This has triggered a global food crisis which is even hitting North Americans hard. Unfortunately, it seems that recession now is inevitable and Canada will not be able to weather this storm.

There's really a lot I want to talk about here. We'll start with GM's job cuts due to the ailing auto industry. 900 jobs are being axed in Oshawa, mostly due to high gas prices reducing demands for trucks. Giving the auto industry government handouts is a bad idea in my opinion since it only encourages poor business decisions. GM and the CAW should have seen this coming a mile away but did nothing to combat it. Canada is the most expensive country in the world to produce vehicles. However, if the auto industry does go under, reports from TD indicate that Ontario, once the economic engine of Canada, might become a "have not" province in two years time, comparable to the likes of Newfoundland. This would mean that Ontario would begin receiving billions of dollars in equalization payments. This has been a touchy issue in the past since the big provinces always felt they were getting the short end of the stick on equalization. The National Post also pointed out that this system was never meant to have vast sums of money going to Canada's most populous provinces. This could spell disaster when it comes time to draft federal budgets. Even if the smaller provinces loose their have-not status, it is unlikely they will be able to afford such payments to the likes of Ontario and Quebec, causing political turmoil.

Jim Flaherty was correct in lambasting Ontario recently for not cutting business taxes to encourage investment in the provice. I have long said Dalton McGuinty was an ineffective premier. When he was first elected in 2003, Ontario's economy was going strong and the future seemed bright enough. Even in 2007 when he was reelected, there didn't seem like there would be a sudden economic downturn on the horizon. With three and a half years left in his term, McGuinty is going to have to make some tough decisions. So far, all he has announced is that there will be no cuts to government services, translating to mean no budget cuts. Keynsian economics, on which modern liberalism is based, does say government spending should increase to stimulate the economy. However, there doesn't seem to be any plans to do that. Bail out packages as I have said do not work as they encourage poor decisions. McGuinty has given no clear indication of plans to help the economy other than that. The fact is that Ontario is no longer competitive and it's not the fault of NAFTA or Asian trade but rather stupid mistakes made by our own leaders. You can't simply shut your boarders anymore and hope for the best since no country is self sufficient. You also can't close your eyes and plug your ears in times of crisis and hope the problem simply goes away. Inaction usually breeds the opposite of the desired result.

That's not to say that the federal government has no responsibility in the matter. Like McGuinty, the federal Conservatives seem to have no plans to do anything to curb rampant inflation due to high fuel costs. Kim Campbell rightly noted in an interview with the National Post that Harper has become far too controlling. He's trying to do everything himself rather than relying on the tallents of his MPs. This has led to an unclear agenda as the Conservatives are begining to loose steam. As for the Liberals, Stephane Dion seems to think a carbon tax on gasoline would lower fuel prices, as he noted on an interview with CTV. That logic has holes big enough to drive the Queen Mary 2 through. I can't see how charging more for something would make it cheaper given fuel is an economically inelastic product. That means that as price goes up, demand doesn't change much. This is because fuel is an essential commodity. The NDP I have not heard much from. Jack Layton has been unusually quiet lately at a time where they should be making a fuss. I think the NDP on the federal level has become too much of a bleeding heart party and has forgotten its labour roots. The primary issue is that the Green party has been stealing votes from them, so they now focus on green issues. Unfortunately, green doesn't put food on the table or money in the bank for the average Joe. This mess must be a wet dream for these radical environmentalists though, who have long envisioned a "cooler but poorer" world as being the solution to anthropogenic global warming.
The Liberals are smart though by not pulling the plug on the Conservatives. If an election were to be called in the near future, it would truly end up as a battle royal between the three national parties. None of them have enough support for a majority and at this point, it could go either way. I'm leaning towards another Conservative victory at this point, but it would be by an even tighter margin than in 2006. The time for bickering in the House of Commons is over now. Both the Liberals and Conservatives need to start working together constructively if Canada wants to try and escape the worst of the inevitable recession on the horizon. I'm not an economist so I really can't provide specific suggestions. Right now, the best things to do would be to ban the use of ethanol for fuel as well as cut gas taxes in half at the vary least. This would help ease the pain at the pumps for consumers and businesses.

Clearly something needs to be done. If fuel goes up, that eats into profits of businesses that rely on it. That means wages go down and prices go up. I know for a fact that many people are going to be in serious trouble. Just look at all the people who live off their credit cards and only pay the minimum balance per month. Though I'm usually in favour of government staying out of business, it just can't this time around. Inaction will only breed the worst recession in decades.

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Global Warming Hysteria: Ethanol's Human Cost

Global warming is killing people, but not in the way people like Al Gore and David Suzuki want you to believe. A couple years ago, British documentary the Great Global Warming Swindle noted that environmentalism was an anti-human movement, citing pressure being placed on Africa to adopt green yet inefficient and prohibitively expensive forms of energy generation. Most of the debunkers saw that the mass hysteria of global warming was going to cause some sort of human crisis. However, many of us were surprised by how quickly it happened. 

Not too long ago, biofuel was supposed to be the great saviour since it was said to be cleaner than gasoline and also had the side benefit of cutting our dependency on foreign oil. Originally, biofuel was mostly biodiesel, which is made from old cooking grease. More recent efforts have pushed ethanol as an alternative. Ethanol is an alcohol made from distilling grain such as corn, wheat, rice, etc. It's essentially what is in booze. Rather than being used to make your favorite whisky or sake, corn and rice instead are being made into a pure ethanol solution for car fuel. This is what gives us fuels such as E10 (10% ethanol, 90% gasoline) and E85 (85% ethanol) which you can use to fuel your car. E10 fuel is required by law in Ontario. Of course, there's one obvious problem with this. 

In Peru and Colombia, there is a major problem with cocaine. Everybody knows that. Lets take Peru for an example since coca (the plant which cocaine is made from) can be legally grown. There, unprocessed coca leaves are chewed for an energy boost. It has the same effect as drinking Red Bull and is not nearly as potent or addictive as processed cocaine. So why am I talking about coke? Well, coca is a very hardy plant and grows just about anywhere with minimal human involvement. Poor farmers grow it illegally where it is sold to drug cartels, processed into cocaine, and shipped to North America and Europe for consumption. While farmers don't get even a fraction of the final street price, they do make more money than they would by growing food crops. Therefore, illegal coca plantations are a convenient cash crop for poor farmers. The same also bodes true for heroine poppy growing in Afghanistan. 

Growing ethanol grain is similar. It nets the farmer more money. The difference is that due to global warming hysteria, environmentalists have pushed governments to encourage farmers to grow ethanol grain. As if they even needed encouragement since fuel sells for more than than flour. Unfortunately, this saviour of the environment that will magically cut us from oil dependence has caused one of the greatest food crises in sixty years. 

In Asia, there is a major rice shortage. People are rioting in the streets trying to grab any scrap of grain they can get their hands on. For many people, it's forms the bulk of their diet. Similar situations have been seen in Latin America and Africa. Even us here in North America are feeling the pinch as prices at the grocery store rise. CTV described it as a perfect storm. A bad growing season in poor parts of the world has driven prices way up. Also noted was the increasing number of farmers converting their operations to grow grain for ethanol instead of food. Rice and corn are two such grains, which are major staples in the third world. Rather than going into a hungry mouth, that grain is going strait into your gas tank. It's no wonder the third world is so disgusted with the West. It is our fault for putting human lives at risk to solve a non-existent crisis. 

So what do we do to solve this. I think its time to stop beating around the bush. There is absolutely no proof that using ethanol for fuel lowers carbon dioxide emissions. As a fuel, it is also less efficient than gasoline. Laws requiring E10 fuel need to be revoked or at least put on the shelf until this food crisis is over. It would be a crime against humanity not to do so. Mr McGuinty, I'm speaking to you. 

Next, we need to address the problem of how we produce food and fuel. Free trade is needed to keep third world food moving into the West. This will encourage industrialized agriculture and overproduction in those countries. Countries in Africa have been wanting free trade for agriculture with Europe for years. Subsidies to Western farmers have become a road block since our food is actually cheaper and floods third world markets, shutting out their own farmers. International investment and genetically modified foods (drought and disease resistant) could be used to help farmers in less fertile regions to achieve this goal. We have the technology yet we don't share it, especially the boogie man of genetically modified foods. We fear them yet they could make the difference between famine and a bumper crop in many regions. We should encourage Western farmers to produce ethanol since they've long complained about how low their profit margins are. Making ethanol would generate them more money. It's not so much that we stop producing ethanol for fuel but we need to realign how the world does agriculture in order to keep food supplies in balance. Nations need to work together to accomplish this. We can't simply shut our borders on these issues. The United Nations needs to stop worrying about global warming and do something to solve this real crisis. Come to think of it, there is absolutely no reason why we should be using ethanol to begin with. Oil and natural gas are still abundant and hydrogen vehicles are on the horizon. Feeding humans should be top priority and feeding cars should always be secondary. 

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Corporations, Abusing Customers, and the Environment

Today is Earth Day so I thought it fitting to take pot shots at the environmentalists. I thought though that I'd conserve my own energy to "spend less on dinner". In other words, I'm feeling too lazy to write an article when Terrance Corcoran of the National Post does a good job summing up the same argument. Basically, his article deals with how big corporations are jumping on the environmental bandwagon and are now turning to nagging consumers. If you thought these stores treated you like dirt before, the best is yet to come.

Nag Days at the Bay

Environmentalism is PC these days and I suppose they feel the need to do this or else the eco-nuts won't shop there. As if their dollar somehow is worth more than mine. I somehow find it ironic though that these are the same places that run the heat hot as hell in the winter and the AC colder than a witch's teat in the summer. That for hypocrisy for you. I can now add the Bay to my list of insolent retailers that I refuse to shop at. Home Depot and Loblaws were already on there. Lululemon doesn't sound like a store I'd shop at to begin with.

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McGuinty, Miller Out of Touch?

Now is not a good time to go to China, especially if you're a politician. Try telling that to Dalton McGuinty though. I certainly guarantee that if this was Mike Harris doing this, there would be a lot more outrage. Yesterday, McGuinty met with Chinese business people while pro-Tibet protesters marched outside. He snuck out the back door in order to avoid them, something the National Post labeled as shameful. Also in the news is Toronto mayor David Miller's business trip to China. Milton mayor Gord Krantz will be acompanying him, as well as several other GTA mayors. All on the tax payer dollar I might add.

I find it somewhat ironic that left wing politicians in Canada would be so eagar to keep China happy when the right wing is less tolerant. Well, not so much ironic as hypocritical. The left for years has been pressing the rights of minorities in our own country yet when it comes to Tibet, they suddenly become silent. All of a sudden, it seems some cheap lead painted garbage and a bunch of jocks running around in circles is more important than the poor guy getting his head blown off for speaking out against the communist government. Then again, maybe McGuinty and Miller are trying to get some pointers from the Chinese communist party on how to subjegate their own people. I think both McGuinty and Miller are classic examples of weak leadership. They refuse to stand up to the wolf in sheep's clothing and tackle the real issues. Both say they will bring up human rights but the word of the mayor of some backwater city in meek Canada isn't going to have a lot of clout with the communist leaders. If anything, their economic summits should be postponed until at least the olympics are over, if not cancelled entirely. That would show strong leadership, that these two men actually have a backbone. Neither does though and there's ample proof of that with the way they deal with issues in their own jurisdictions.

Speaking of jurisdictions, I have to question whether individual provinces and cities should be making bilateral international deals on their own. Shouldn't international relations, both economic and political be made through the federal government? It seems to me that the feds are the only ones willing to push China on their human rights abuses. Also puzzling is why Kickback Krantz is going considering that the Town of Milton does absolutely no trade with China. The town has almost no manufacturing or natural resource industries. I can't help but think our tax dollars are being used for a summit that amounts to little more than a free vacation for politicians. It also gives Gordie a good opportunity to get out of Dodge after the huge mess he's made in the last five years.

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Stephen King on Game Censorship

Boston's mayor Menino may not be dead but his brain sure is. He's the latest to speak out on the supposed harms of video game violence. This comes on the heels of a Massachusetts law that would ban the sale of violent video games to people under 18. Stores who violate this law would see heavy fines. The king of horror Stephen King though has come out blasting the law. He is concerned about the politicians acting like "surrogate parents". King is quite right. Lazy parents are turning to the government to raise their kids for them, and this sets a dangerous precedent.

You can read the article about King here.

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Carbon Tax Would Hurt Low Income Earners

Perhaps I should go into more detail about why the proposed carbon tax has struck a nerve with me outside of my conservative mindset. Being a university student, I'm a low income earner. I drive a fuel efficient car. Yesterday, I noticed I had less than a 1/4 tank of fuel left. The gas station was selling it for $1.12. Too expensive I said. Unfortunately, the price shows no sign of dropping. Gasoline in itself is currently overpriced by a fair amount. The price spikes are fuelled mostly by speculation of investors, so they're artificially inflated. I remember hearing Liberal MP and gas crusader Dan McTage say it should be around $0.80 - $0.90 per litre given the current market. I realize that $1.12 is not really that expensive given the Canada average today is $1.18. So yes, there are people worse off then us in the GTA. I can still remember freaking out when the gas hit $1.30 after Hurricane Katrina, though fortunately, the company I worked for at the time was paying my gas bill since I was using my own car for business.

So what does this have to do with the proposed carbon tax that many economists are advocating? The answer is simple, everything! As you know, I do not support the anthropogenic global warming argument and in effect, I think taxing carbon emissions would end up doing nothing what so ever in that respect. The problem is that it's not big polluters they want to tax but rather add it to the fuel excise tax on gasoline, which would amount to a minimum of an additional $0.10 per litre. If added to today's price, that would bump up costs to $1.22! For American readers, this would roughly equate to $4.40 per gallon. British Colombia was the first province to enact a carbon tax and it already has some people in the north fuming over rising fuel costs.

What the environmentalists forget is that unless you live in an urban area, public transit is not an option. Even then, it's iffy. Rising fuel costs there have bumped ticket prices up 22% in the last five years for a one-way cash fare. I expect the TTC to raise their fare to $3 by 2009 given their current history. Also, our public transit systems in Canada are probably some of the worst in the first world. Slow, rarely on time, using outdated equipment, and run by unions who threaten to strike every five minutes. For most of us, the car is the better way, and in fact the only way. Yet there has been a march against drivers recently with higher license fees, registration fees, proposed road tolls to lower congestion, higher insurance costs, higher fuel costs. The list goes on. It's quickly getting to the point where many low income earners can't afford to drive. That means they can't get to their jobs, and are therefore out of work. There are also people who drive for a living, such as truckers, who have seen big chunks of their income taken by fuel costs. The cost therefore is added onto the final product, which is why we're seeing food prices spike.

Of course, we all know how the Canadian tax system works. Sure it's a proposed $0.10 now but how long before it's $0.15 or $0.20, which is what some climate hysterics are already demanding. Economists claim that the money will be used to lower personal income taxes so in effect, you're not really paying more. Do these people have no idea how the Canadian government works?! The original gas tax was supposed to go directly to roads and transit but it does not. Everything goes into one giant pot. It's unlikely that Liberal or even Conservative governments will give all the money back to the tax payer. We'd be lucky to get half of it back, if any at all. Besides, if that's the system you want to use, why even institute the tax in the first place. It just makes no logical sense. Then again, little concerning environmentalism and Canadian taxation does.

Carbon taxes do not punish the people driving the Escalades and Hummers because since they can afford those expensive gas guzzlers, they can afford to absorb the extra fuel costs. It's low income earners who will suffer from a carbon tax as fuel prices for their vehicles. I haven't even discussed how this would affect people who use oil and natural gas to heat their homes, because surely they'll be the next target. When does it stop? The proposed carbon taxes would do far too much harm and no good at all. They would effect the lowest income families the most, those that the liberals claim to advocate. The carbon tax is something we should not even be considering.

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Art Spiegelman on Political Correctness

Art Speigelman is well known for his graphic novel Maus, about a Polish Jewish family during the Holocaust. He is in Toronto for a lecture on censorship. An interview with the National Post explains his views on political correctness what it's not just conservatives that need to be concerned about it.

Politically Correct 'Fever' Grips Canada

His lecture is tonight at 7:30pm at Isabel Bader Theater at UofT St. George campus.

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Less for More: Garbage Collection

I've decided to start a new series of articles entitled "Less for More". One of the things I've noticed lately is how our tax bills are on the rise, yet government services that effect the average Joe seem to be on the decline. Coming on the heels of learning that the Ontario civil service "Sunshine" list (those earning more than $100,000) has grown by a huge number, I think that makes this fact more relevant.

This week is garbage collection. Recently, Halton has introduced the green bins, something many other cities have been using. I have to question if these bins really improve the garbage collection service. Here in particular, 2007 was not a good year for picking up trash. In Milton, trash collection has frequently been late. There are many days I've come home to still find my garbage sitting at the curb, only to hear the truck cruise by at dinner time, despite the demand to have your trash out by 7am. Recycle pickup was also infrequent, limited to every two weeks instead of every one, and big item pickups were every two months. Halton made some changes for 2008. Recycle and green bin are once a week now, but garbage is only every two weeks. That leaves smelly bags to fester in the garage. There are also now strict weight limits for the bags of garbage, since we can't have the big garbage men straining themselves to pick up bags my 83 year old Grandma has no problems with. Big pickup has also been limited to just three items. The supposed goal is to reduce the amount of waste heading to the landfills but I don't buy that. As for the green bins, they must have cost the region a bundle to buy them and print out the advertising campaign where it would have likely been cheaper to not introduce them. They were not widely popular in Milton. Further more, the bins require you to use special "biodegradable" bags, which further adds to the home owners expense. Halton has a very high tax rate given its lack of service.

Things get worse if you travel some 30km east of Milton to the centre of the universe, aka Toronto. Toronto has drastically cut back on garbage collection and has introduced a pay-per-bin policy which could add several hundred dollars to your annual bill no matter what you throw out. This obviously punishes larger families and businesses. In the mean time, Toronto has just levied some of the biggest tax increases in its history while the city continues to spend money like it were water on unnecessary expenditures. Of course, what could you expect from the central group of technocrats that huddle around Miller, the NDP showing its hidden totalitarian stripes. Toronto has long avoided dealing with its trash problem, trying to send their garbage (both human and otherwise) to nearby communities or to the US. The mayor and his cronies are afraid to open up a new landfill due to the "harmful environmental effects" it will have. Meanwhile, it's ok to send it to Michigan or other Ontario municipalities at huge expense to the Toronto tax payer where they can suffer the harmful effects. Ironically, I believe that having to pay-per-bin will most likely encourage people to illegally dump their junk, which Toronto already has a big problem with. So in the end, they're not saving their environment.

Taxes go up, service goes down. That's the Canadian way. I think it's time we put municipal leaders at the curb for not addressing one of our societies most basic services.

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