Canadian Cincinnatus

Cost cutting in America today: who’s to blame for the cuts?

All across America, years of overspending at the federal, state and local levels of government have come to an abrupt end and the chickens have come home to roost. When the money dries up, actions that were once unthinkable become not only thinkable but also unavoidable. Newark cannot buy toilet paper any more. Crime-ridden Oakland, California is laying off police. When the debt crisis hit New Zealand in the late 1980’s, the government had to put advertising signs on the side of police cars in order to pay for their gas. My question is, who is to blame?

Which is a very different question from who will be blamed. It is a dismal fact based on historical evidence that the politician closest to the cuts will be blamed the most. For instance, when Canada had her debt crisis in the mid-nineties, it was the provinces that were blamed for draconian health care cuts – hospital closures and line-ups for cancer treatment, even though the provinces right across the country cut health care services more or less simultaneously and the only common denominator was the equally draconian cuts in health care transfer payments from the federal government to the provinces. But because it was the provincial health minister who actually got his hands dirty by laying off the nurses, the people blamed Mike Harris more than Paul Martin. But let’s take this analysis one step deeper; was it really Paul Martin’s fault that he was the finance minister when the music stopped? 

I say, no. The debt bomb in Ottawa had been ticking for several decades before Paul Martin wrote his first budget. It first started with Lester B Pearson’s progressivism amplified by his successor, the Fabian socialist, Pierre Trudeau. That the deficit was not that high throughout most of their reign was due to the artificially low interest rates at the time that bred inflation in the late 70’s. When the Chairman of the Federal Reserve Board Paul Volker raised interest rates in the late 70’s to combat this inflation, and the Bank of Canada was forced to follow suit, the money printing option was gone. The result was a decade and a half of sky-high federal deficits that Pierre Trudeau didn’t care to address and Brian Mulroney was too afraid to address. The political cipher, Kim Campbell, was too clueless and short-lived to share much of the blame. My answer, then, is that blame for the health care cuts of the 1990’s rests on Pierre Trudeau, Brian Mulroney and Lester Pearson - in that order. My principle is to assign blame to those who voluntarily ran up the tab, not to those who got stuck with it when the waiter finally showed up.

Getting back to the American scene, whose to blame for the cost cutting in Trenton, NJ today, current governor Chris Christie, or his immediate predecessor, Jon Corzine? By the above reasoning, Democrat Jon Corzine, the Goldman Sachs alumni who tried to earn his blue-collar street cred by siding with the New Jersey public service unions on every contract negotiation that occurred during his tenure. Corzine recklessly ran up the tab, and not only with the unions - who he was beholden to and who demanded an ever increasing payment for their continued support. Corzine also resorted to other tricks of big-government politicans: pork barrel politics and buying off special interest groups with favours. Thanks to him, New Jersey is broke today. It is not Christie’s fault that the party is over and the hangover has begun. Governor Christie is just the clean-up crew.

I remember reading an alarmist article in the National Review in the late 1990’s, telling readers that just because the federal government was running balanced budgets (which it was back then), that there was a growing debt bomb at state levels with governor after governor spending to excess. Well, the debt bomb just went off. It just took a dozen years. And lets not just blame Democrats. There are plenty of Republican governors and state legislators who contributed to this problem: you know the type, the moderate RINO squishes, who think the path to electoral success is to be Democrat-lite, the kind of Republicans David Frum holds up to be harbingers of a Republican comeback.

“Blogging Tories in their own words” website: another manifestation of conservative victory

Last week I had the honour of being quoted in the “Blogging Tories in their own words” website. Not having heard of this site before, from what I can tell, its purpose seems to be to embarrass Blogging Tories with politically incorrect quotes gleaned from the blogs of BT contributors. Along the sidebar are prominent Conservative cabinet officials who are associated in some way with it. Though no point of view is explicitly stated, it seems fairly clear that its purpose is to embarrass supporters of Blogging Tories in order to marginalize the site.

Why do I consider its existence a manifestation of conservative victory?

Simple. Because winner aren’t obsessed with what losers say to each other. If you think of yourself as a winner, would you care what the losers say?

Furthermore, people who think they have the winning argument are not interested in limiting the debate.

Notice the way left wing organizations monitor right wing ‘chatter’ and then decree what speech is permissible and what is not. In the US, Soros-funded groups monitor and issue transcripts of the Rush Limbaugh radio show! For a while at least, any criticism of Barrack Obama was deemed racist. In Toronto, mayoral candidate George Smitherman tried to score points against Rob Ford by posting a web site of Ford’s most un-PC statements. And most recently, former conservative David Frum is trying to curry favour with the left by defining what is acceptable political speech as what isn’t. Who cares what is acceptable speech. If you think you have the best argument, go ahead and make it.

The left doesn’t have the best arguments any more and they know it. Socialism has been disproven so many times in theory and practice that even they know in their heart of hearts that it is a lost cause. Which is why they obsess so much with the terms of the debate. They figure if they can restrict political speech enough – in the right direction – they may be able to win the debate by default.

A losers strategy.

Do conservatives obsess with the chatter on left-wing blogs? I assume their must be a left-wing counterpart to Blogging Tories, but if it exists, I’ve never heard of it. I would rather read about conservative principles and strategy in order to hone my own opinions. I don’t care what lefty blogger x says to lefty blogger y. It’s irrelevant to me - and the country.

Now it is true that conservatives complain a lot about mainstream media. But this is qualitatively different. The principal audience of the mainstream media is not left-wing policy wonks. Rather, it is where the average politically unengaged person gets his news. And this is, or would be, fine except that they tend to hide their left-wing bias (if they have one) under a veneer of objectivity. For instance, there are many people who read the Toronto Star and believe that it is unbiased. This is a problem - and not just for conservatives.

In the 60’s, I think it would have been important to read up on what the NDP’s radical WAFFLE group say to each other. Groups like this were driving public policy. But now, I couldn’t care less which conservative the left is calling a racist this week.

Bank of Canada governor Mark Carney and Prime Minister Stephen Harper sound like they have been reading Canadian Cincinnatus

In this recent post, I warned Prime Minister Harper that Canada might be facing a credit bubble, thanks to our anomalously low interest rates and house prices that haven’t really dropped, and that he had better position himself - and the country - for the possibility of the bubble bursting.

According to this Financial Post article, governor Mark Carney was sounding very Cincinnatus-y in his address to the Economic Club of Canada:

 “Cheap money is not a long-term growth strategy. Low rates today do not necessarily mean low rates tomorrow. Risk reversals when they happen can be fierce: the greater the complacency, the more brutal the reckoning.”

Meanwhile, Mr. Carney said the central bank has “responsibility” to investigate the benefits of raising interest rates to ward off asset and debt bubbles that may emerge in an environment of historically low borrowing costs.

 The remarks come days after the Bank of Canada released its latest review of the financial system, in which it deemed the risk posed by record-high household debt levels to financial stability had increased.

  “Historically low policy rates, even if appropriate to achieve the inflation target, create their own risks. Aside from monetary policy, Canadian authorities will need to remain as vigilant as they have been in the past to the possibility of financial imbalances developing in an environment of still-low interest rates and relative price stability.”

Meanwhile, the Prime Minister was singing from the same hymn book:

 “We continue to warn Canadian households that interest rates are unlikely to go down in the future. Obviously, we encourage Canadians to manage their affairs soundly.”

Amen. Real leaders bring the bad news first.

 

 

What If Only Liberals Want to Be Multicultural?

The prefered assumption of liberals and the left is that all new Canadians want to embrace multiculturalism and only aging, racist white men are standing in the way of utopian harmony.  I've always been suspicious of this assumption, mostly because I've met racists all over the world, from Pakistan to Romania, from Japan to St. Petersberg, so I find it hard to believe that everyone who immigrates to Canada is ready to embrace everyone else's culture with tolerance and respect.

But this article in the Toronto Sun about Muslims protesting on Remebrance Day raised even my eyebrows.  I have no argument with them protesting the war in Afghanistan, although I'd like to remind them of who helped them during the decade the Soviets occupied the country, and while burning a poppy is culturally insensitive and shows they have no knowledge of Canadian history or where that symbol came from, that kind of drama is the stock and trade of protests, an art perfected by the left.

What struck me dumb was their chant: "Islam will dominate!" and "Our dead are in paradise.  Your dead are in hell."

Now I traveled briefy with the mujahideen in Afghanistan in 1988, just as the Soviets were getting ready to make their escape from that disasterous war, so it doesn't surprise me that they believe we're going to hell or that Islam (and by extension the protesters) will "dominate" in the end.  What amazed me was that they were utterly shameles and open about it.

White males who chant similar intolerant rubbish publicly usually belong to neo-Nazi skinhead clubs, and the thought-police of human rights tribunals would be all over them in seconds for such an outburst.  Stiffer hate crime legislation would be dusted off and enacted, and existing hate crime laws would be prosecuted with extreme prejudice.

With Muslims, of course, the human rights groups fear to tread.  These Islamists are serious, and if you try and charge one of them with a hate crime then you'd better have the RCMP open your mail with a bomb squad robot, let alone brace yourself for a barrage of bad press from the MSM.

The Irish, the Chinese, the Italians, all the Europeans after WWII, the Vietnamese, the Hindu Indians--all these ethic groups and many others came to Canada and for the most part lived and let lived.  They may have felt superior to established Canadians, and some may have even thought they had superior religions or morals, but they were relatively quiet about it.  In the long run, they became Canadians.

But there is a branch of radical Islam that wants to conquer and convert Canada. They shout "Islam wil dominiate!"  Dominate.  Rule.

Jack Layton thinks he can win these people over to the NDP cause by sending them Ramadan greetings, but he'd better be ready to toss away the NDP stand on equal rights for women, homosexuals and anyone whose religion isn't Islam.  There has already been a rise in anti-semetic attacks on everything from synagoges to grave yards, and no one is pointing the finger at skin heads anymore.  Sadly, no one is brave enough to point a finger at all.

If multiculturalism dies in Canada, it won't be white males who killed it.  Indeed, it was Pierre Trudeau and his cronies who pushed the idea in the first place.  It just didn't occur to them that some people would come here and not agree with them that we should all live shoulder to shoulder and respect one another's culture.

It was a nice idea.  So is banning war.  Try that and see how long you last as a country when things go bad.  These ideas fail because there are always some radical groups out there like fundamentalist Muslims who will see it as weakness and exploit it to the max.

Get ready Canada.  The wolves are in the sheep pen.

Mike Downtown

Harper must position himself for the time when the Canadian credit bubble bursts

Prime Minister Harper has taken credit for Canada’s (relatively) good economic performance in this economic crisis so far. Liberals counter this by saying that the health of our economy is largely due to the nature of our banking system, which was set up long before he arrived on the scene. This point is largely valid.

Because of our healthy banking system, our real estate market is OK even though real estate markets across the globe have blown up. Unfortunately, all is not well underneath the surface. The reason why the GTA’s real estate boom is still going strong is because it is fed by the Bank of Canada’s abnormally low interest rates. These rates are too low and I think the Bank of Canada understands this but they have their hands tied because Canadian interest rates are coupled to US interest rates: If Canada’s interest rates rise too high, our dollar will soar in comparison to the US dollar and Ontario’s manufacturing sector will we wiped out in the US market.

Unfortunately, US interest rates must increase rapidly in the next several years because the US Federal Reserve Board is printing money to cover Obama’s deficit spending (cf QE II). This will necessarily create inflation in both countries. To combat it, US interest rates to rise as high as 10 to 12%. Canada will have to follow suit, only not as extremely. This will burst Canada’s real estate bubble.

Stephen Harper must prepare for this eventuality if he is to survive politically. The only way he can do so is by levelling with Canadians about the nature of the upcoming threat.

How does he do this? Step one: stop being a cheerleader. This only makes him sound like a slick salesman at a time when we need a leader. Though he will catch a lot of flack by doing so, Canadians will in the end respect a leader who brings them the bad news first.

A small tentative step in this direction was done earlier this year when Finance Minister Flaherty worried out loud that Canadians are hooked on cheap credit. 

But if Harper does not follow up on this move, the Liberals will blame him when Canada’s credit bubble bursts. And the voters will agree. They will conclude that if it is alright to wrongly take credit for the health of our banking system then it is also alright to be wrongly blamed for the ensuing credit crunch.

Who is the Strong Mayor Now?

"Unintended consequences" has become a buzz phrase lately, mostly used by left wing latte sippers.  It's an indication of a shift in power from left to right over the last few months, and Toronto's election of true conservative Rob Ford is the most dramatic example.

Four years ago David Miller won his second term with unprecidented powers, bestowed upon him by Ontario's libreral premier, Dalton McGuinty, who felt Toronto's mayor needed to be a "strong mayor," with powers like the mayor of New York, the power to push through a socialist (oops, I mean "progessive") agenda without needing the support of right wing councillors.

I warned friends, especially socialist friends, about the danger here: what if a right wing mayor were elected?  Would they be happy then?  I was no fan of Miller, and I was trying to get them to understand how I felt about the City of Toronto Act and Miller's new powers, which allowed him to have an executive council of his socialist buddies, limit debate on the budget and shut right wing councillors out of city government, giving key positions only to his loyalists.

My socialist friends scoffed.  David Miller was going to be mayor for years, at least until he annoited a successor.  No right winger could ever win Toronto.

In their defense, I envisioned Doug Holiday, Case Oates or maybe Denzil Minnan-wong coming to power.  Even I didn't see that the left's arch-nemisis, favorite council punching bag, and the man endlessly ridiculed by the Toronto Star could ever come to power.

But now Rob Ford is the strong mayor with power that McGuinty and the socialists unwittingly endowed him with.  He has already shut out the downtown socialist from his executive, and while the left wing councilors point out that Rob Ford is only one vote on council, they are quietly cringing that they gave him the power to corall many votes without the need to compromise.  The unintended consequences of the City of Toronto Act make it clear that it is a mistake to increase the power of government to support a particular ideology.  Governments must be contained and constrained.

I'm delighted about the election and Rob Ford's strong mayor powers, of course.  Rob will be able to fundamentally change the way the city works, and I'm looking forward to that.  But I'd still like to see the end of the City of Toronto Act, because I prefer it when the mayor has to build a consensus, something Miller always talked about but never bothered to achieve.

Unlike my socialist friends four years ago, I can see that a pendulum swings.  Rob Ford has more staying power than David Miller, of that I'm sure, but stuff happens.  One day, unexpectedly, a socialist mayor will be voted in, probably disguising himself as a centrist.  I don't want him to be a strong mayor.  I want him to have to include the right wing councillors.

But for now: Go, Rob, Go!

Mike Downtown