Tariffs

People have been generally supportive of the news that the aluminum and steel tariffs have been lifted and generally enthused about the pending ratification of the revamped NAFTA accord. I get that.

But commentators on CBC News went over the top today on the subject of tariffs. One person said, “if you support tariffs then you haven’t passed grade two.” Another said, “I can’t think of anything good to say about them, actually.”

I can think of one, right off the top: tariffs are a tax. They raise money for the public treasury. They thus make it possible to have public services and improve social welfare.

I’m sure the commentators weren’t thinking of that when they spoke about tariffs. They were most likely comparing tariffs only with other forms of taxation, such as income tax,  sales tax, user fees and subscriptions.

The general tenor of the opposition to tariffs is that they increase prices to consumers. But is this true? Not exactly.

First, consumers rarely pay directly for tariffs. Few consumers import or export goods. Tariffs raise prices only if they are passed on to the consumer by producers. Now it’s true that this usually happens. But not always.

The price consumers pay isn’t directly related to the cost of production. It is based on their willingness and ability to pay. And in a marketplace, typically prices are set to the highest rate that consumers are willing to pay. So you can’t simply raise prices – consumers will stop buying.

And that’s the real reason the commentators say there’s nothing good about tariffs. They may mean higher prices, but they mostly mean lower demand.

In fact, the whole idea of a tariff is to lower demand to the point where the consumer makes an alternative selection. Instead of buying imported pineapples they buy local pears. Instead of buying imported iPhones they buy domestic Blackberries. Overall, they purchase less, what what they do purchase has a higher price.

Tariffs, however, also have the unfortunate effect of plunging the economy into recession. Increased prices leads to inflation and higher interests rates, which makes it more difficult to buy goods and make investments. As well, the overall reduction in demand (both domestically, and from exports) results in increased layoffs and higher unemployment, which in turn depresses wages.

Tariffs point to the fact that our economy depends on maximum consumption and minimum price. And they point to hold these have over us: deviate from these, and you get recession.

However, these are also the causes of the greatest social ills. Maximum consumption is harmful. As Kalle Lasn says, productivity is killing the planet. And low prices also means low wages. And this has over the last 40 years led to increasing inequality between the rich and the poor. And – note well – a one-time increase in price wouldn’t matter if people were paid more, and received better social services.

No, the commentators oppose tariffs not because they hurt consumers, but because they hurt producers. They increase costs to producers, and reduce demand for their product, which means they need to become more efficient in order to compete.

(Ironically, the opponents of tariffs use the inverse argument, saying that lowering tariffs force local industry to increase productivity, because of lower costs from exports. This would be true – except that these lower costs are usually produced by lower wages, poor labour laws, less taxation, and environmental degradation.)

In fact, tariffs can act as a governor on the world trade engine. World trade without restraint leads to exploitation and ruin. Tariffs can act as a push-back against this: a way to ensure countries respect the environment, treat labour fairly, and provide adequate social services. In conjunction with other measures, tariffs can lead to a gradual equalization of economies, allowing countries to selectively develop and nurture local industries.

We’ve seen what happens when the global trade engine runs without restraint – it simply extracts value from everything and dumps it into the pockets of the rich. We need mechanisms to extract value from this global trade engine to support the welfare of everyone else, and to keep the engine from ruining economies and environments.

Tariffs aren’t the only tool. They should not be applied bluntly and without thought. Too much application of tariffs can be ruinous. And they make poor weapons of war. So there’s a lot to say against them.

But there are – contrary to the one-sided commentary I heard today – things that could be said in their favour as well.

trade

 

Integrity in Sport

For years I have been hearing the mantra from agencies like the International Olympic Committee and the rest that the need for integrity in sport is paramount, and that this is the reason performance-enhancing drugs were banned.

I’ve always felt that the IOC said this with a nudge and a wink, because they’ve tolerated any number of other advantages for specific athletes, including improvements in equipment design (such as bobsleighs), better clothing (especially for swimmers), and the rest.

But it didn’t bother me that much, because using performance-enhancing drugs did feel like cheating, and worse, the use of these drugs could be harmful to the athlete. And I am not supportive of the idea that athletes should deliberately harm themselves in the pursuit of gold.

However, the news that sprinter and Olympic gold medallist Caster Semenya will be required to take drugs to reduce her testosterone levels makes me question all that.

Where is the integrity of drug-free sport if athletes are now required to take certain drugs that impact on their performance? What’s the difference between one athlete taking testosterone to increase her levels as opposed to another athlete taking testosterone to reduce hers?

I agree with Chris Mosier’s comments: “We know that Michael Phelps was suited to be a swimmer but he may not have been a great sprinter, so he found the sport that he was made for just as [Caster] Semenya has found the sport she was made for.”

Whether a person is ‘male’ or ‘female’ is not defined by testosterone levels, and there are no non-arbitrary definitions of testosterone levels that would make a person one of the other. Being a woman isn’t about being ‘weak’ in certain specific ways. If a non-drug-taking woman can best her field for whatever reason, then good for her.

If, on the other hand, you feel that athletes are just slabs of meat to be displayed for entertainment purposes and commercial gain, then the requirement that she must take drugs won’t bother you at all.

2014 06 28 - Moncton Track and Field-1049

The Carbon Tax

Politicians from the right are in full form these days expressing their opposition to what they call the carbon tax.

What they are attacking is more accurately what the government has been calling ‘putting a price on pollution’. And viewed from that perspective, it’s hard to deny the reasoning.

We would quite rightly object, say, if an apartment building just dumped its raw sewage on the road or onto our lawns. We would demand, and expect, that the owners of the building would pay to manage the sewage in some way.

They can call it a ‘sewage tax’ all they want, but the fact remains, sewage disposal isn’t free, and it has to be done. You can’t simply pass your sewage on to your neighbours.

It’s the same with the carbon tax, except the sewage in this case consists of climate-change gasses, including most especially carbon dioxide but also hydrocarbons such as methane.

The first objection to a carbon tax is essentially climate-change scepticism. I don’t think anyone really doubts the impact of climate change – the science has been conclusive for a decade now – but enough people are paid to sow doubt into the winds, and so expressions of scepticism persist.

The second objection is that the cost of a carbon tax is too great to bear. There are jobs at stake, or people depend on low-priced transportation, or alternatives are too expensive. All this may be true. But why is that my problem?

If you were dumping your sewage onto my lawn, I wouldn’t really care how much it would cost you to stop. My response would be something like, “Why should I have to pay to clean up your sewage?”

It’s the same for climate-change gasses. Sure, you may be making money, hiring people, and all the rest, but the cost for all this is being paid for by other people (including me). Your actions pollute the land, change the climate, and are already costing other people billions of dollars. Shouldn’t you be paying these costs?

A third objection is that people prefer incentives rather than costs. That’s just a straw man, though. People have tried incentives. That’s what the Ontario Liberal government’s plan was based on. When I purchased a plug-in hybrid electric vehicle, I received an incentive to offset the extra cost I was paying to use less gas. This program was killed by the new conservative government.

Even today, the story about the government paying Loblaws (a local grocery store chain) to install energy-efficient fridges was slammed by the conservatives. “Fast says he is curious how many ordinary Canadians could just walk into the prime minister’s office and ask him to buy them a new fridge.

The answer to the question is: all of them. That’s what the federal government’s plan does. It collects money from carbon pollution and redistributes it to people in the form of a rebate. Where the province has a plan – as Ontario used to have – then the money could be directed toward energy-efficiency, like fridges. But without a plan, it’s just distributed to everybody, no strings attached.

When it’s just a cost, they say there should be incentives. When there are incentives, they say there should be no payments. There’s no right way to make the polluters pay, and that, of course, is the point.

In the end, the opposition to a carbon tax boils down to a campaign by polluters to be able to keep on polluting for free, to keep on passing their costs on to the rest of us, and  to keep on recklessly endangering the community as a whole.

Indeed, the carbon tax should be viewed for exactly what it is – a compromise. Knowing the damage climate-change gasses are causing, the rational and common-sense response should be to make them illegal. Pull the plug on them. Force the polluters to stop fouling our community and our planet.

The carbon tax is a market-based approach to solve the problem. Instead of making pollution illegal, it makes it expensive. This creates an incentive for polluters to change their ways, and allows society adjust gradually to the change. Given the stakes, it’s a pretty generous compromise. Maybe too generous.

If you don’t want people pouring sewage on your lawn, if you don’t want people dumping carbon into the air, the answer is the same. You either force them to stop, or make them pay for the cleanup. What you don’t do is let them keep dumping their problem onto you.

pollution

Free Speech

There’s this view of free speech that seems to suggest that we have an obligation to sit down and quietly listen to racists, warmongers and extremists.

That seems to be the undertone of criticisms of the student demonstrators protesting a speech at Beloit College in the U.S.

“In a raucous performance-inspired protest, students at Beloit College on Wednesday shut down a planned speech by Erik Prince, an associate of President Trump and the controversial founder of the security company Blackwater.”

It also seems to be the intent of the free speech policy being required of Ontario colleges and universities this year. Said our premier: “I’ve heard from many students who believe our campuses need to be a place for respectful and open dialogue, without fear of attacks or discrimination.”

Let’s be clear, nobody here is promoting physical attacks. But is someone is going to show up where I work or study and promote some of the hatred some speakers promote, then I’m not going to sit quietly and applaud. Neither should the students.

Yes, there should be room for debate at colleges and universities. That’s the reason for their existence. Yes, we should be able to discuss uncomfortable topics at colleges and universities. That’s the only way some of my own ideas (radical left-wing ideas like socialized health care and guaranteed income) can ever see the light of day.

But let’s also be clear that this is not what the promoters of talks by people like Blackwater founder Erik Prince or race-based theorist Charles Murray are trying to do. They’re not there to debate their ideas. They’re there to intimidate the people who oppose them. They’re there, quite literally, to take the bully pulpit.

As a recent open letter says in part, “This is not an issue of freedom of speech. We think it is necessary to allow a diverse range of perspectives to be voiced at Middlebury …. However, in this case we find the principle does not apply, due to not only the nature, but also the quality, of Dr. Murray’s scholarship. He paints arguments for the biological and intellectual superiority of white men with a thin veneer of quantitative rhetoric and academic authority.”

What ‘freedom of speech’ is being used for in the case of people like Prince or Murray is to block criticism of of these people. They can speak, but if you raise your voice in criticism, you are the one blocking free speech. Because the first principle of free speech under this sort of regime is that ‘you do not speak back to power’. Especially if they are questioning your right to exist.

No, that’s not how free speech works. If someone is going to say something offensive, then they should be shouted down. That’s how freedom of speech works. If someone says something hateful or threatening, then they should be removed from the stage. That’s how freedom of speech works.

Because freedom of speech works not by protecting the oppressors. It works by protecting the people who would stand up against them.

Opposing factions gather over the cancelation of conservative commentator Ann Coulter's speech at the  University of California
Image: The Atlantic

What Justin Trudeau Should Do

1. Own It

Yes, the testimony by Jody Wilson-Raybould on political pressure applied to her on the SNC-Lavalin matter is devastating.

While maintaining that he has his own truth, Trudeau should accept Wilson-Raybould’s testimony as a valid perception of the events and admit that maybe he didn’t see how his actions could be viewed this way.

The sort of pressure exerted by SNC-Lavalin is, after all, politics as usual. And it’s pretty easy to fall into line and try to help the corporation through a rough patch, even if it’s a rough patch completely of it’s own making.

But there is a point of view where this could be seen as wrong, especially when it crosses into the conduct of the Attorney-General’s office. It was wrong in Wilson-Raybould’s eyes, and in my eyes, and in the eyes of a lot of Canadians.

Trudeau should acknowledge that, own his actions, and admit that there is this other point of view, and that it is valid.

2. Turn It Around

What has bothered me most about the entire SNC-Lavalin matter is that it is a manufactured crisis, created by the Conservative Party and their political allies, the Globe and Mail.

How did the Conservatives know all this pressure had taken place behind the scenes? Because that’s what they would have done. And as I suggested in a previous post, the matter would have quietly gone away.

That may still happen with the Liberal party. As one commentator said on today’s CBC political panel, they would wait “a decent interval of time”, and then give SNC-Lavalin everything it wants. But as another commentator notes, that would be an admission of guilt.

Trudeau should turn the crisis around, and make it clear that this demonstrates one of the strengths of the Liberal Party.

He should say that this is what distinguishes the Liberal Party from the conservatives. The Liberals have strong and independent voices in Cabinet, bolstered by diversity of representation, and that what happens in this sort of environment is that politics as usual is disrupted.

Trudeau should say that he appreciates the presence of strong caucus members and ministers, that they serve a valuable purpose in correcting mistakes, and that the fact that he ultimately left the decision up to Wilson-Raybould is proof of this.

And he should be very clear that this never would have been a scandal in a Conservative government because none of this would have happened, and corporate influence over the judicial process would have happened quietly, in back rooms, with nobody in a very quiescent cabinet to say no.

3. Make It Right

Jody Wilson-Raybould has established her position as a moral authority. Whether or not you believe her (and, frankly, there’s no reason not to believe her) and whether or not you agree with her position (though, as I have said, many Canadians do) you have to agree that she would not put political convenience ahead of what’s right.

That’s somebody you want on your side when the other side seeks to paint you as unethical. Especially when the other side is probably even more unethical themselves. Yes, you can have a very strong disagreement with her. But – you want to make clear – that’s why she’s in cabinet, and even more importantly, that’s why she’s a Liberal. And not a Conservative.

The shuffle to Veteran’s Affairs was a bad look, and granting SNC-Lavalin its wishes would be an even worse look. Continuing down this path will, ultimately, undermine the credibility of the Liberals.

So you make it right. You agree that the positions of Justice Minister and Attorney General should be separated. You do that, and then you appoint Jody Wilson-Raybould as the new Attorney General.

This firmly entrenches the idea that you agree there should be no political interference in judicial matters. You’ve put the one person in place who guarantees this. You also right the wrong that was created when you moved her out of Justice, without leaving her in the political position she may not have been comfortable with.

You can do this without saying that you were wrong, because you have already agreed that, ultimately, it comes down to a matter of different perspectives, and you want to find something that values that. This values that, and allows that you still had a valid perspective.

As for SNC-Lavalin, maybe they get their wishes, maybe they don’t. Who cares? They are charged with breaking the law. There’s no way for you or me to buy our way out of a criminal record; there should be no way for them either.

indigenous-rights-20180214

 

SNC-Lavalin

Let’s be clear – if the Conservatives had faced the SNC-Lavalin issue, there would have been no scandal.

This is because they would have very quietly given SNC-Lavalin everything it wanted, and let them off the hook for corruption charges.

The only reason this is an issue at all is that there appears to have been a Liberal cabinet minister who was not corrupt. Of course, it also appears that she paid a price for that.

But what we should be talking about is why we would want to let SNC-Lavalin off the hook at all. On the news this morning there was commentary to the effect that ‘everyone wants to make sure SNC-Lavalin is not harmed by these charges’.

But the jobs won’t disappear just because SNC-Lavalin does. Government contracts – like Ottawa’s LRT system – will continue to exist. Other (hopefully more ethical) companies will appear to fill the gap.

Companies shouldn’t get a free pass on their misdeeds (I don’t care whether the U.S. and the U.K. already have laws to this effect – they’re hardly role models).

We should do business properly and ethically in Canada. That means penalizing companies that perpetuate shady business practices. Because companies that get away with bribing officials in Libya won’t think twice about doing the same in Canada.

Of course, like I say, all this goes away quietly under a Conservative government. It just becomes business as usual.

snc-lavalin-rslts-20190222

Groundhogs

I don’t want to sound like a crank, but, why on earth are we depending on groundhogs this day every year to tell us whether we will have more winter?

You all know the ritual. When the groundhog emerges on February 2, if it sees its shadow, it retreats back to its burrow, and we have six more weeks of winter.

My objection is not based on the inherent unreliability of weather forecasts made by rodents, though I will point out that he’s usually wrong. “He was only right about 40% of the time, according to the National Oceanic and Atmospheric Administration.”

No, my objection is based on the date. February 2nd. We have groundhogs in Canada in Shubenacadie, Nova Scotia, and in Wiarton, Ontario. They also make predictions, but who cares? It’s February 2nd!

We have never seen winter end on February 2nd in Canada. There’s always six more weeks of winter. So why are we consulting a groundhog about whether or not it will end?

If we adjusted the date by a month (like we do for Thanksgiving) I would be more understanding. But we don’t, and every year, we go through this ridiculous charade of asking a groundhog whether winter will end when we know full well it won’t.

It’s -11 here in Casselman as I type, and it’s snowing. According to real meteorologists, it’s going to remain cold for the next six weeks, at least. Just like it always does.

winter-season