Canadian Cincinnatus

Why Fitzgerald went public with the Blago scandal when he did

The timing of Patrick Fitzgerald’s press conference and arrest of ‘Hot Rod’ Blagojevich has been questioned. i.e. why would he go public now when it is not clear if Blagojevich has committed a crime yet with regard to Obama’s Senate seat? Wouldn’t it have been better for him to have waited for a transaction to have occurred? Then ‘Hot Rod’ would have been caught red-handed, or so this line of thinking goes.

The answer, I believe, is job security.

When Bill Clinton first came to the White House in 1992, one of his first acts was to fire all 93 US Attorneys. It has been speculated (by Dick Morris, who used to work for him) that his real reason for doing so was to replace Charles Banks, the Attorney who was investigating Whitewater at the time. The other 92 bodies were merely collateral damage that Clinton was willing to tolerate in order to cover up his real intentions.

Now that Fitzgerald has gone public with the Blago affair, it would be very difficult for Obama to fire Fitzgerald, even if he pulled a Clinton and fired everybody. Blago is front-page news and axing Fitzgerald at this point would look very suspicious.

Of course, we have no idea what exactly Barack Obama’s relationship with Blagojevich really is. Perhaps the MSM is actually right in its constant intonations of Obama’s innocence, in which case the Blago scandal doesn’t matter one way or another to him. While I think conservatives who automatically assume the worst about Obama in the absence of concrete evidence aren’t doing our cause a service, I personally find it very hard to believe that he could be completely innocent growing up with the Chicago political machine like he did.

I believe the right approach is to be agnostic and curious. And to lambaste the MSM for their gullibility and utter lack of curiosity about any possible connection between the two men, especially when they were so eager to disseminate every wild rumor about Sarah Palin, no matter how irrelevant and absurd it was.

A great video explaining the financial crisis

Via Reason TV. It is a great summary of how government meddling in the US housing market precipitated the current credit crunch. A must see for those who still think that today’s recession is a failure of laissez faire capitalism. 

The Toronto Star Kick-starts Miller's Re-election Campaign

When Jane Pitfield gave her concession speech after losing to Toronto Mayor David Miller in the 2006 election, my wife commented that it was the first time she'd actually seen Ms. Pitfield.

The Toronto Star had found room for almost daily photos of David Miller on its website throughout the campaign, and even managed to find a child wearing a David Miller Halloween mask (a very flattering portrayal) for its Oct. 31st website edition.  Funny, they had hardly any room for Jane Pitfield photos.

On December 13th, 2008 the Toronto Star proved that they intend to carry on with their version of balanced reporting.  On the home page of their website they had an article listed under the heading "news" about all the action Miller is going to take to save Toronto's economy.  Apparently condo sales have slumped drastically and developers are walking away from the city.  Miller also stated his intention to run again in 2010 to "continue pushing for transit improvements and other projects."

What the article fails to mention can be found in the backwater of the "YourHome.ca" section listed as "opinion."  This article actually had more verifiable data than the so-called "news" article on the home page.  For instance, a study by the C.D. Howe Institute showed that condo and home sales have suffered a crushing blow as a result of David Miller's Land Transfer Tax.

So it's "news" that David Miller says he's going to try and save struggling condo developers, but it's distant "opinion" that a study from a respected institute has proved his LTT had "punishing effects" on condo and home sales in an already troubled economy.  This is the Toronto Star's version of fair and balanced reporting. 

I'm going to try a little experiment when the next election campaign kicks off in 2010: I'll count how many times David Miller's photograph appears on the Toronto Star's website, and how many times they display a conservative challenger's image.

I'm guessing I'll see far more of Miller, but that's just my opinion.  It won't be news until the day before the election, when I can present verifiable facts, which won't be published in the Toronto Star.

Mike Downtown

Lack of Productivity at the Big-Three Car Companies

Rand Simberg has a great article on one of the most under-reported problems at GM, Ford and Chrysler – lack of productivity. As Simberg correctly notes, almost all the criticism directed at the UAW is over wages (i.e. that workers at American car companies are paid an average of $70+ per hour (including benefits), while American workers at Japanese car companies get compensated in the $40 an hour range), while the real problem is their lack of productivity. If they were more productive than their Toyota counterpart (or even as productive, or, possibly, just more productive than they are now), then the big three might not be in a death spiral now. But as they say, a picture is worth a thousand statistics, so check out a couple of anecdotes from the shop floor by a former GM line manager:

“One afternoon I was helping oversee the plant while upper management was off site. The workers brought an RV into the loading yard with a female “entertainer” who danced for them and then “entertained” them in the RV. With no other management around, I went to labor relations for assistance. As a twenty-five-year-old woman, I was not about to try to break up a crowd of fifty rowdy men. The labor relations rep pulled out the work rules and asked me which of the rules the men were breaking. I read through the rules and none applied directly, of course. Who wrote work rules to cover prostitutes at lunch? The only “legal” cause I had was an unauthorized vehicle and person and that blame did not fall on the union workers who were being “entertained” but on the security guards at the gate. Not one person suffered any consequence.”

and:

“Another employee in the plant urinated on the feet of his supervisor as a protest to discipline. He was, of course, fired …that is until the union negotiated and got his job back.”

Imagine that - prostitutes at work and pissing on bosses! And we wonder what’s wrong with GM.

These stories are so incredible that, quite frankly, I wouldn’t believe them if I hadn’t myself worked four summers at unionized factories when I was going to school. While I (unfortunately) didn’t run into any hookers on the job, I did see widespread employee theft, liquid lunches on weekend shifts (one summer student - nicknamed the Photon Torpedo - drank 12 beers in one hour), craps games on night shift and I even heard rumours of power plant operators zonked out on acid. Of course, more run-of-the-mill stuff like work-to-rule, sick leave abuse and not-in-my-job-description-so-I-can’t-do-it was merely routine.

All this reminds me of an incident in high school. A classmate went to work at the GM’s Scarborough Van Plant for a week on a student exchange. When he got back the electronics teacher asked him what he did there. He replied:

“Nothing.”

“Nothing?”

“I was paired up with a mechanic and we spent our days hiding from the foreman.”

“Well, even so, you must have done something during the week?”

“Nope. We didn’t do anything at all. Not a thing.”

Needless to say, the Scarborough van plant closed up in the 90’s... I believe for being unproductive.

Meanwhile, what is it like at Toyota?

“In San Antonio, the Toyota Tundra plant lay idle for three months this fall, though Toyota hasn't laid off anyone. Instead, according to Richard Perez, president and CEO of the Greater San Antonio Chamber of Commerce, Toyota offered the city ‘a whole bunch of folks who need to get busy’ (San Antonio put them to work on beautification projects).”

In Ontario, when GM or Ford have to temporarily shut a plant down, the workers sit at home collecting pogey (i.e. they get paid by the federal government) and then get their benefits topped up to 90% by the company. The Champaign corks must be popping whenever the layoff notices appear.

The reason, Toyota can keep do things like farm out their employees to the city is because they have only one category of worker on the factory floor, ‘production,’ so they can get them to do whatever needs doing at that moment. At the big three, every job is hemmed in by a job description. I can take this pencil from A to B but I can’t take it from B to C. If I did that I would be depriving somebody of their job, and that would be wrong.

As one economist once put it, when a trend can’t continue, it won’t. And if anything is unsustainable it is high wages and low productivity in the face of competition. Caterpillar  deunionized in the early 90’s and is currently doing fine (considering the economy). It’s time for the big three to do the same.

A few more good articles on this subject are here and here.

America doesn’t make things any more: one cause of her current problems

As this Christian Science Monitor  article points out, the loss of manufacturing in the US is a big reason for the current economic woes. Why? Because Americans consume more than they make, causing them to go deep into debt to second tier countries like China (who do make things). As the chart I showed in a previous post shows, until a couple of months ago, US household was over 120% of the national income. This is unsustainable and clearly a manifestation of people living beyond their means. The good sign is that, as a result of the recent financial meltdown, this number has dropped almost five points in three months.

How does the government get America making things again? The answer is that policies and tax codes have to be put into place that encourage capital investment. What are they? Cutting capital gains taxes (which Obama contemplates increasing), cutting corporate taxes (which are among the highest in G7 countries) and eliminating taxes altogether on reinvested profits. The tax free savings accounts which the Conservatives in Canada just implemented is also a good idea. Industrial regulations have also be thoroughly reviewed and all unnecessary, counterproductive or onerous regulations removed. For instance, one of the reasons for last summer’s high gas prices is a lack of refinery capacity. The last oil refinery was built in the 1970’s. None have been made since, thanks to environmentalists and NIMBY’s. Another instance, most of California’s power plants are in Nevada – because building power plants is too politically daunting a task in lotusland. This job-killing political climate has to change.

What not to do? Stop throwing money around. All the billions and trillions that are being showered on businesses will have to be repaid at some point. That means raising taxes, or printing money (i.e. inflation). Both are sure-fire growth killers. Right now Bush and Obama are trading long-term growth for short-term political fun.

And, while this sounds counterintuitive, if you want to encourage manufacturing in the States, don’t bail out the automakers. Bankruptcy is an essential part of capitalism’s renewal process. One reason the big three are in this mess is a whole bunch of legacy agreements – over wages, benefits, bloated dealership networks – that they can’t get out of. Bankruptcy will allow them to become profitable again. And don’t forget, the Japanese and German automakers who have set up (productive) plants in the US are now also a part of the American auto industry. Subsidies just soak up precious capital that could be better spent by these efficient American car companies. I recently read somewhere that various US governments have over the years given enough money to the big three that the US government could have bought up Honda, Nissan, Toyota and Volkswagen.

Just think, these fearsome competitors could have become American-owned companies!

Will Obama become America’s Bob Rae?

The reason it is hard to predict Obama’s future behave as President is that, by and large, what heads of state mostly do is react to events. As British PM Harold Macmillan once replied when asked what was the biggest challenge of being a Prime Minister was, “Events, my dear boy, events.” (This quote is from p. 227 of Steve Sailer’s excellent new book on Obama, America's Half-Blood Prince.)

George Bush’s Presidency was defined by 9/11 and Bill Clinton’s was a reaction to the Revolution of 1994, and then to Monica Lewinski. The problem for Obama-watchers is that his life so far has been almost completely devoid of any executive experience. All he has ever run is his Senate staff.

We only know two things about him for sure. One is that he has been surrounded and influenced by many radical leftists. And two, that in practice he has been very cautious. Which of these will facets prevail? Who knows.

I have already speculated on these pages that his Presidency might follow the trajectory of Bill Clinton, that is, go hard left initially, causing the Congress to return back to the GOP in the midterm and then govern pragmatically from the middle from then on.

Recently, a second possible trajectory occurred to me that Obama might follow – Bob Rae’s, when he was the Premier of Ontario. Like Obama, Bob Rae inherited a bad economy. What Bob Rae then did was to try and spend his way out of it. When this created a debt crisis for the province, he belatedly discovered fiscal conservatism, which alienated his core supporters, the public service unions. He ended up being hated by everybody, his opponents - for being a socialist, and his own party – for being a right-wing sellout. I can see this happen to Obama.

First of all, the US economy is in bad shape. Second, George Bush already opened the federal taps with the $700 billion bailout. Even if Obama were to reverse course completely, stopping the handing out of money would be very hard to do. Third, he has shown every indication that he will likely continue with this policy, only more so. Fourth, the US already has a huge running deficit and an increasingly serious debt problem.

If he starts spending like crazy on infrastructure and then implement a national health care system on top of it, I can see a point when the US will start to run out of credit. And if there is another foreign policy crisis, he won’t be able to cut anything in the Defense Department.

If this happens, it will be bad news for the American government, and great news for the GOP.

Coalition economics

It seems that the Bloc-Liberal-NDP coalition’s economic plan was to spend $30 billion ‘stimulating’ the economy while cancelling scheduled corporate tax cuts. Let me see, part A is to jack up the federal deficit, which will have very little effect on the economy since the crisis was bought about when a spending bubble built up by consumer excess in the States burst, but it will increase federal indebtedness up here substantially. Part B is to make Canada a less hospitable place for business.

If this coalition of the miserable were allowed to, they would take an economic downturn in the Sates and morph it into a Canadian recession, one we would be labouring under long after the Americans have recovered.

What economic fools these socialists are!

Stephen Harper’s two mistakes

There is no doubt that from a strictly Machiavellian standpoint; Stephen Harper was outmanoeuvred in Parliament by the Liberals – probably the first time that this has happened. While they chose a good issue, the Conservatives made, I think, two crucial mistakes.

The first is to not give a coward the easy way out, so that his desperation does not turn him into a lion. While the Liberals had been reliable pushovers when it came to the mere welfare of the country, the threat to cut off their government subsidies is an existential matter they couldn’t ignore, given their inability to raise funds from, you know, like supporters. This made them desperate. What was needed was an ignominious, but easy, way for them to shrink back from the abyss. Unfortunately, none was provided.

The second is that the Conservatives didn’t tie the original confidence motion to a broader economic package, say, a broad tax cut package. If they had done so, gone on the road to sell it beforehand and then thrown the measure to end subsidies to political parties in at the very end, the Liberals would have had a harder time justifying their opposition.

I have long argued in these pages that it has been a mistake for the Conservatives to soft-peddle Canada’s current economic problems, even if the problems in Canada have been exaggerated. With the steady-as-she-goes approach, the Conservatives are trying to show voters that they have a reliable hand on the rudder. Unfortunately, for too many Canadians, it merely looks like they are trying to sweep problems under the carpet in order to look better.

Instead of viewing the recession as a threat to stability (i.e. their government), they should view it as an opportunity – an opportunity to implement changes to Canada’s tax code and regulatory structure to make the country more efficient. Regardless of how bad (or good) things are, these reforms would make things better than they are now. Additionally, they would be a good flag to rally the troops around, and a persuasive argument for a majority government. In times of trouble, people are inspired by action, not soothing words.

On the other hand, it is easy to pile on Stephen Harper right now when he is down. Those who think they can do better should remember that these are his first two mistakes since 2006. Up until now, his ability to play the opposition like a fiddle would have made Machiavelli proud. I wonder how many of us critics could have done the same?

Mark Steyn savages his critics

After his sabbatical, Mark Steyn is back with this masterful assault  on some inconsequential critics. This is one of the best things that I have ever read on the internet in a while. I had tears in my eyes from laughing so much.

Don’t let the political subsidy issue fade away

While Stephen Harper’s Conservatives lost a tactical battle in Parliament last week, this shouldn’t be a reason drop the issue of subsidies to political parties – or rather, it shouldn’t be a reason not to resurrect it, since they have dropped it from the upcoming economic statement. The opposition parties in general and the Liberals in particular, are now on record as supporting (vigorously) these unpopular privileges. Instead of forgetting about it, the Conservative should immediately put out TV ads attacking the Liberals for being selfish hypocrites dining out on the taxpayer-funded caviar while auto workers are being laid off. Stephen Harper and Jim Flaherty should do as many media interviews as they can, hammering this message home.

And when an election does happen, eliminating subsidies to political parties should be a prominent part of the policy platform. This is a winning issue – if it is used!