Tutte Politiche (aka All Things Political)

A place for a PhD candidate to rant, rave and discuss revelant political issues: Canadian, American and Comparative.

Wednesday, November 26, 2008

Tories consider ending public funding to political parties?

This story suggests that Flaherty is considering ending the public subsidies parties receive each year from the taxpayers. I wonder how the opposition parties are going to deal with this. Perhaps a game of political chicken?

Such a move would have considerable impacts on Canadian politics for the next few years.

1. It means the end of the BQ. The Bloc is highly dependent on public funding to run its operation. One could even argue that without those funds, they may not have been able to survive the last election. You see, fundraising is very much contingent on a party's popularity. For the last two years, the Bloc's popularity has down - that is until Harper started talking arts cuts. With such poor polling numbers, the party needed the funding from taxpayers. Cut the subsidies. Cut the Bloc. Win for the NDP and Tories in Quebec.

2. The ditch the Liberals are currently in with fundraising will become a canyon. The only thing keeping the Liberals solvent right now is the public funding. Take that away and we won't be seeing an election for another four years. Why? The party won't be able to afford it.

3. The NDP won't spend the max again. During the last election, for the first time in its history, the NDP spent the maximum allowable amount for its national campaign. It was a risk surely, but one based on the premise that the party would receive subsidies from taxpayers for the next two or three years. Taking away taxpayers' money and keeping union contributions illegal is a potent cocktail for the New Democrats.

What does this mean?

Potentially, the Conservatives will be the only party able to afford to go all out during the next election. Add to that the possibility that once they win their majority, they will eliminate spending limits during the election period.

Unlimited Conservative spending may be coming.

A Progressive Economists' View of the Global Economic Crisis

A very smart friend of mine has some interesting things to say about the causes and solutions to the economic crisis. The article originally appeared here. Progressives should take note...

Causes and solutions to the global financial crisis

Suggestions about where to find the light at the end of the tunnel.

Dateline: Tuesday, November 25, 2008

by Henri M Sader

The current global financial meltdown provides an opportunity to challenge and begin to change the status quo of the past three decades. The magnitude of this crisis has exposed a global economic system that has preyed on the weak while shifting wealth thus widening the gap between rich and poor. This is a time for bold leadership and resolve — anything less could precipitate a global economic meltdown and resulting human suffering on a scale unprecedented in recent memory. As some of the Chinese say, crisis can be defined as "opportunity riding the dangerous wind."

For years, many good economists of the Keynesian and Galbraithian school have warned that the path chosen by the financial and policy establishment was unsustainable and would cause massive damage to society and the public good. These voices have been marginalised by the same ideology that allowed for deregulation and the explosive growth of derivatives within the financial sector worldwide.

The trigger of the crisis was the collapse of the sub-prime mortgage market in the United States. The collapse happened because of over-speculation on worthless mortgages massively transformed by the financial system into wholesale products and ranked by some of the best rating agencies as 24K investments. These products were then disseminated across the world, leveraged and fed by an underestimated frenzy of technically-orchestrated greed, infecting international markets. When mortgagees defaulted, the collapse of the scheme detonated the global financial crisis.

There are, however, financial and structural roots within the current crisis that reach back to policies over twenty years old. The general deregulation of the economy pursued by the G8, starting in the 1980s and accelerated in the 1990s, set the stage for disaster.

Furthermore, a decade of low interest rates, while helpful to consumers and workers, reinforced the lax conditions under which cheap credit was provided to support the expansion of securitization and derivatives markets.

The deep, structural factors behind the financial crisis are mortgage loans granted on commissions — with shady credit-worthiness rules — and then an off-balance sheet securitization and the expansion of the derivatives market.

The role of financial deregulation

In Canada, the New Democratic Party (NDP) has long been concerned with financial deregulation and other policies that created the structural problems within the financial system. The NDP warned in 1998 that "Canadians should be particularly concerned about the explosive growth in derivative products and off-balance sheet liabilities." New Democrats warned that accelerating deregulation would only serve to put the financial system at risk by allowing banks and other financial institutions to engage in and leverage financial activities that carry a credit risk that is not based on real economic activity.

As predicted, the gap between growth in the real economy and the financial sector has increased dramatically since the 1980s and 1990s. Canadian Economist Jim Stanford was one of the first to warn about this problem in his book Paper Boom, published in 1999. Pillars that once separated insurance, investment and commerce, built to prevent the spread of risk from one category of financial institution to another in another 1929-style crash, were collapsed during the great wave of deregulation of the 1990s. The deregulation wave also encouraged speculation over well measured and productive investment, as Stanford pointed out.

It was only a matter of time before human nature followed its course. Greed, amplified by the system, overpowered unregulated markets. Root causes of the problem lie in the unsustainable nature of credit to the growing masses of working poor and an increasingly impoverished middle class.

Easy credit sustains wage stagnation

Real wage stagnation since the 1980s has made it impossible for US consumers to keep up with the cost of living and sustain aggregate demand. Household debt there has ballooned, exceeding 100 percent of disposable income.

The crisis was spurred by a distorted capitalist system. It extracts the highest profit from the poorest, while giving them access to credit to continue to buy the goods that growth in their real income alone cannot support.

The more "egalitarian" distribution of credit is not sustainable, unless supported by a truly egalitarian distribution of real income. Advancing credit to low-income households to help them acquire property is commendable, but unless their incomes rise as well, a day of reckoning is inevitable. Speculation sustained by loose credit bought some time for the economy, but ultimately the financial system can no longer defy with impunity the laws of economic gravity.

G20 governments are now feverishly consulting to find solutions to the crisis. Their recent summit was followed by a flurry of calls to rein in the global financial system, making many Bush-era ideologues into near closest Keynesians. It will take time to see if these world leaders are able to move past rhetoric to deliver urgently needed reform.

Accountability is key to an effective bailout

The fundamental issue is not that the financial markets must be kept functioning to allow their masters to uphold their obligations to the citizenry. A complete collapse of the financial markets would destroy the jobs, property and savings of tens of millions of working families. The real question behind any bailout, through the IMF or central banks, is ultimately accountability. The massive injection of stabilizing funding cannot be a sort of unconditional release of money through the banks or government supplementary borrowing which amount to a massive transfer of wealth from the poor to the rich. It is very revealing that the US government did comparatively very little to rescue households who were trapped and needed higher incomes to maintain their hold on their property.

The conditions for the reimbursement of the money and accountability mechanisms for institutions receiving public funds are therefore as important as the actual money itself. Greedy institutions being bailed out by the public's money should not become a further burden to the citizenry and working families. Regulators and legislatures must seize the opportunity and obligation presented by the crisis for greater accountability and restorative economic justice.

Additionally, it is absolutely necessary to re-regulate the financial sector. The very idea of credit has been dangerously perverted by an explosion in derivative products that no longer serve the legitimate purpose of reducing productive business risk. The sale of Ponzi scheme derivatives allowed a few people to become very rich while contributing nothing but a potential disaster to society. These schemes must be eradicated and criminal charges laid.

Tight-fisted regulation by authorities has proved its worth during this crisis. In Lebanon for instance, despite a severe political situation and a heavy amount of public debt, the banking system has rested completely insulated from the worldwide meltdown thanks to the foresight of the governor of the Lebanese Central Bank. He prohibited Lebanese banks from engaging in the derivatives business. Compare this to Iceland, a vanguard of the orthodox approach, where the banking system has fallen apart precisely because of deregulation and the systematic exposure to derivatives.

In this context, the NDP's 1998 recommendation is just as relevant today as it was ten years ago: simply prohibit or highly regulate the financing of derivative products through bank credits. Once accomplished, it will be necessary to explore the idea of creating a mandatory reserve requirement for certain types of lending which do not target the creation of wealth in order to help prevent or mitigate the risks of speculation.

Institute the Tobin tax, with the IMF as back office

Also, the time is right to explore once again the concept of a Tobin Tax, which would target international financial speculation. A modest fee levied on international transactions is not only a method to discourage currency speculation and fund development. It would also create an insurance fund for sheltering more financially vulnerable countries from currency meltdowns. Perhaps the principle of a Tobin tax could also be in line with the necessity of implementing a capital gains taxation policy that would target each transaction rather than aggregate income, while protecting the investments of retirees and working families.

A Tobin Tax should dovetail an increased and redefined role for the IMF: from a draconian and loathed institution to a trusted coordinator, partner and consultant to the international community in crisis management and finance. Perhaps it is also the time to revisit a question dear to John Maynard Keynes: could a redefinition of the job description of the IMF be constructed in conjunction with the creation of an international bank with a mandate to provide compensatory credit to countries experiencing destabilizing trade gaps?

Finally, the issue of income inequality must be dealt with by promoting a new international strategy for sustainable investment. A key component is an income policy targeted at reducing income inequality, setting fair wage standards for all, to increase domestic demand in the larger economies of the world. There must be a concerted international effort to end the Predator State — the legacy of the Bush administration — and promote economic policies that prioritize the sustainable growth of domestic demands, the counterpart of sustainable investment policies.

This is even more a fundamental issue now that there seems to be an appetite in Obama's Washington for incorporating labour and environmental safeguards in the NAFTA, for example. The political dimension of this crisis has been generally ignored by most of the parties involved, a legacy of the government's hands-off approach up to this point. Since the market has dramatically proved its inability to govern itself, there is no other justification required for an immediate, aggressive and fair government intervention in the economy, to bring the kind of sweeping and substantive change that can only be achieved through political and legislative means.

In reality, China seems to be leading the way towards this type of Keynesian resurrection with the announcement of a $586 billion public investment package on infrastructure including housing, healthcare and disaster relief. The package comes in response to a faltering demand for Chinese exports from the West, a direct consequence of the meltdown taking its toll on global demand. The Chinese government has highlighted the fact that a solid domestic economy will be their contribution to the stability of the international economy. This is good news for the western manufacturing industry.

To broaden the participation of the international community towards a global agenda of growth renewal, the millennium goals for the cancellation of debt of the poorest countries — shamefully behind schedule — must be accelerated and broadened. This is a prerequisite for the successful implementation of a new strategy for financing sustainable development, which would be based on the Make Poverty History movement's platform. This includes the expansion of Fair Trade with an egalitarian solution to accessing international credit.

Canada's government is winging it

In the end, much will still depend on the new Obama administration's will and ability to break with the ideological establishment of the American financial system and push through urgent and appropriate reform. In Canada, it is clear that the Harper minority government is fitfully attempting to adapt its policy on the fly, grasping at a political solution to an economic crisis. The middle road proposals enunciated by Harper at the G20 summit, may have afforded the Conservatives an opportunistic venue to save their ideological face.

The ease and eagerness of governments to come up with a trillion dollars very quickly when their stability is threatened, in contrast to their reluctance to pour aid and sustainable credit into impoverished and devastated nations, is shockingly inhumane, and irresponsible. While blame and solutions are being passed around like cheap currency — in the worst sense of the word, given the crisis that is before us — government must show leadership by acknowledging not only the initial causes of the current crisis, but the longstanding failures of the neo-liberal economic model that lead to the suffering we currently experience.

Henri M Sader was born in Lebanon. He holds a PhD in Economics and is a member of The Progressive Economics Forum.

Monday, February 18, 2008

Alberta election- Students getting involved

I just got this link sent to me.

Thought I'd share it with everyone.

Thursday, December 27, 2007

Harper on TSN - Illegal Campaign Contribution?

Now I am studying election financing so I'm looking for any legal opinions out there.

Have you noticed Harper's little "Go Canada" ad provided by TSN? Have past Prime Ministers done this?

Just curious, does this break the Election Finances Act? Was TSN giving the Conservative Party and Stephen Harper free advertising, thus an in-kind contribution from a corporation? This is now illegal in Canada thanks to Chretien and Harper's reform bills.

Weigh in if you have any thoughts.

Sunday, October 28, 2007

Cabinet Building: If I were McGuinty

Seeing as though McGuinty will announce his new cabinet this week, I thought I'd take a stab at building it myself. This isn't a prediction, but more of how I'd form it based on what I know about the Liberal caucus.

I think McGuinty has a wealth of talent in his caucus and some current cabinet ministers probably deserve to be left out of the new Executive. Furthermore, there are plenty of experienced women MPPs to increase the number within cabinet.

Premier - Dalton McGuinty
Finance - Kathleen Wynne (She defeated John Tory and she's done a good job in Education. Will send a message to appoint a woman to this position. Plus she's from Toronto)
Education - Jim Watson (The current Health Promotion minister is a natural coalition builder and deserves a promotion within Cabinet)
Health - Chris Bentley (Implemented McGuinty's aggressive post-secondary policies as Advanced Ed Minister, deserves a promotion)
Environment - George Smitherman (He's done a good job in health care and needs something new, but still important. The Environment will be a major portfolio over the next four years, and McGuinty needs a fighter in there.
Transportation - Donna Cansfield (She should stay in this position)
Labour - David Caplan
Economic Development and Trade - Jim Bradley
Training, Colleges and Universities - Laura Albanese (from Anchor of Italian News on OMNI)
Municipal Affairs and Housing - Dwight Duncan (Windsor MPP and solid cabinet performer)
Attorney General - Michael Bryant (Has been a consistently solid Attorney General. He deserves another term in the role)
Community Safety and Solicitor General - Wayne Arthurs (2nd term MPP and former mayor of Pickering, sorry Monte Kwinter, but we need some fresh blood in cabinet.)
Culture - Laurel Broten (The story about her garage entitles her to demotion within cabinet)
Tourism - Sandra Pupatello (She'd do a good job selling Ontario to the rest of the world)
Intergovernmental Affairs - Madeleine Meilleur
Democratic Renewal - Jim Bradley
Women's Issues - Sandra Pupatello
House Leader - Jim Bradley (An experienced legislator)
Health Promotion - Dr. Helena Jaczek (former Public Health Officer for York Region)
Public Infrastructure - John Gerresten (Former Municipal Affairs and Housing)
Children and Youth Services - Sophia Aggelontis (New MPP from Hamilton)
Revenue - Dave Levac
Agriculture, Food and Rural Affairs - John Wilkinson (2nd term MPP from rural area)
Energy - David Ramsay (Long time member of the leg, and almost lost his seat)
Natural Resources- Steve Peters
Community and Social Services - Aileen Carroll (New Barrie MPP and former federal CIDA Minister)
Government Services - Gerry Phillips
Citizenship and Immigration - Madeleine Meilleur
Aboriginal Affairs - Deb Matthews (second term London MPP)
Northern Development and Mines - Rick Bartolucci (He's done a good job and apparently enjoys this portfolio.)

So there you have it. I didn't create any new positions, but there could always be some created by McGuinty.

Total Cabinet size: 26
Men - 16
Women - 10
GTA - 10
Ottawa - 3
North - 2
Rural - 5
New faces - 7

Tuesday, February 20, 2007

CTV Poll Analysis is Warped

I just finished watching the CTV nightly news and was dismayed at how they covered the latest Strategic Counsel poll.

First, the Greens at 12%? That seems a bit high considering all the other polls, including SES, has them at a more modest number. This should really be the focus of the reporting. But alas, pollsters work in their own world, ignoring any other polls commissioned in between their own.

As for the "nosedive" comment, I think Gregg's analysis needs some context. The previous poll was conducted in December during the weekend of the Liberal leadership convention. Taking into account the margin of error (and Strategic Counsel has had its share of error if we remember their 2006 election polling), the Liberals and Conservatives are basically tied. In all reality, I think this poll is bogus. Though what is far worse is the manner in which the CTV reported the poll.

Can anyone say drive-by smear? In my opinion this was probably one of the worst attempts at political reporting in a long time. Maybe it was a make-up by the CTV for releasing the December poll in the first place.

Does it get attention? Yes.
It is headline worthy? Of course.
Was it good journalism? Hell no.

I don't think the Liberals should worry about this poll... and here's why.

I did a quick analysis of the 2006 Election Study released recently. The results of the survey showed that on Election Day in 2006, the Liberals lost a substantial block of voters who went to the Conservatives and the NDP. Also of note, the Green Party picked up more voters from the Liberals than they kept from the 2004 election.

Here is a chart I put together that outlines the entire 2,700 respondent panel. Along the columns are respondents behaviour during 2006. Along the rows are respondents reported behaviour in 2004.



2006







Lib CP NDP Other Bloc Green DNV
2004 Lib 22.0% 8.5% 4.7% 0.1% 0.8% 1.3% 2.3%

CP 0.8% 22.5% 1.1% 0.1% 0.1% 0.2% 1.1%

NDP 1.0% 1.1% 9.1% 0.0% 0.3% 0.4% 0.5%

Other 0.1% 1.4% 0.6% 0.0% 0.0% 0.0% 0.4%

Bloc 0.3% 0.4% 0.6% 0.0% 7.5% 0.8% 0.1%

Green 0.1% 0.2% 0.1% 0.0% 0.1% 1.2% 0.0%

DNV 1.5% 2.4% 1.0% 0.1% 0.8% 0.3% 5.7%

NE 0.0% 0.0% 0.1% 0.0% 0.0% 0.0% 0.0%

As you can see, the 2006 election attracted a lot of voters who did not vote in 2004. The Liberals and Conservatives were the main beneficiaries of these new voters. Also of note here, 2.3% of the electorate who voted Liberal in 2004 choose to stay home in 2006.

The NDP was able to pick up 4.7% of the electorate from the Liberals, and one can assume that many will come back to the Liberal fold during the next election to prevent the Conservatives from winning again. Why? Because the Conservatives have basically dismantled social programs, threw away Kyoto and put more Canadian troops into Afghanistan. A Liberal government is far better than a Conservative one in the eyes of rational progressive voters.

The CTV poll is bad: bad polling and bad reporting. Watch it here.

I am not worried - Canadians still don't know who Dion is yet. Once they are given the choice, the Liberals will be well positioned to retake government, albeit with a minority government.

Sunday, February 18, 2007

John McCain - Campaign Finance Reform and Hypocracy

John McCain is running for president. No one doubts it and no one doubts his strength and the establishment's support for him in the Republican Party. However, the difference in his campaign strategy and tactics between 2000 and now are light years apart.

Note this Washington Post article. In 2000, McCain was the champion of reform - pushing for tough new campaign finance legislation to limit the influence of big donors on campaigns. It was a good bill, but it had plenty of holes (mainly allowing donors to bundle contributions).

Back in the early 1990s, McCain and four other Senators were caught helping a political contributor (who happened to own a failing savings and loan company) with federal regulators. So to improve his image, McCain starts his crusade to remove soft money and reform the campaign finance system: clearly a rational decision on his part.

Flip back to 2007 - McCain is running for president. He needs big money to do it and cannot count on the support of small contributors because he's no longer the reformer, but the establishment candidate of the GOP. What does he do? He taps some of the GOP's biggest fundraisers - former George W. supporters to raise him huge sums of money.

The problem? - When McCain needed a face lift, he became the reformer. But now he needs big money. John McCain is a shame. At one point, particularly after the 2000 election when he pushed the campaign finance law through the Senate, I had some respect for the man as someone who would speak out against his party. Now it's clear - McCain is a hypocrite, and in my opinion, scarier than George W. Bush.

Sunday, February 11, 2007

In 2007, let's get rid of Harper and Howard...

Yesterday, in responses to Obama's announcement, Aussie PM John Howard was quoted as saying:

Australia's Prime Minister John Howard blasted Senator Obama's policy on the Iraq war and said al-Qaeda would "be praying as many times as possible for a victory for not only Obama but also for the Democrats".

Australia will throw Howard out as Canada sends Mr. Harper packing.

Update:
Obama responds to the Aussie War Monger

"If Prime Minister Howard truly believes what he says, perhaps his country should find its way to contribute more than just 1,400 troops so some American troops can come home," [Obama spokesman Robert Gibbs] said. "It's easy to talk tough when it's not your country or your troops making the sacrifices."