Sunday, June 24, 2012

Thomas Mulcair vs Evidence -- a Very One-sided & Nasty Fight

Mulcair decries the damaged Canadian reputation that wasn't

Thomas Mulcair wants you to think Canada has a bad reputation. And he wants you to think Prime Minister Stephen Harper is to blame.

This is actually nothing new. It's a familiar tactic adopted by the opposition throughout the entirety of the Harper government era. And never once have any of its proponents been able to produce even a shred of evidence to support the claim. Not one.

"The Canada that [the Conservatives] are projecting onto the world stage is no longer recognizable to our many partners around the world who have always admired and worked with Canada, and it’s no longer recognizable to us," Mulcair declared. He attributes these comments to a European Union diplomat whom he recently met with.

This, of course, is a conversation that took place in private. No European Union diplomat has come out and gone on the record saying that Prime Minister Harper has hurt Canada's reputation. And apparently we're supposed to take Mulcair at his word. Because he's a politician, and no politician would ever lie or embellish anything.

Right? Right.

But, just as with Mulcair's "Dutch Disease" thesis, Mulcair is sorely at odds with the evidence on this one. Just what should Canadians believe? Mulcair's claims that Canada's reputation is suffering? Or scientific polling that demonstrates Canada's reputation is quite strong, and getting stronger?

The last time that such a poll was conducted, 57% of respondents around the world gave Canada a favourable rating. Even more tellingly for Mulcair's claims about Canada's reputation, only 12% gave Canada an unfavourable rating.

Once again, the evidence is stacking up against Mulcair. Which is far from shocking. But even if a few disgruntled EU diplomats were griping to Mulcair in private, it likely had far more to do with getting him on-side with the sovereign debt bailouts that the EU wants copious amounts of Canadian dollars for. Which is a colossally bad idea, as the risk attached to European sovereign debt skyrockets.

"We had these weird statements from Conservatives saying that [the crisis] was because of the sumptuous lifestyle in Europe. They turned it into a local, parochial, partisan, political fight, whereas this is literally something where we're all attached," Mulcair complained.

First off, there's nothing "weird" about those comments. Many of the European countries that are on the verge of collapse accumulated that debt somehow. And whether Mulcair wants to admit to it or not, everyone already knows how.

But it's true that Canada is attached. But some of us are more attached than others. Mulcair, for example, has to be keenly aware that the collapse of Europe is a stinging historical rebuke for his party's ideology. Europe has long been the NDP's model for Canada, and as goes that model, so will go the NDP. They aren't very good at going back to the drawing board when their ideas fail -- ergo the need to obfuscate the failures of their ideas.

Bailouts are something that every government should avoid. But sovereign debt bailouts are the absolute worst bailouts, and have always brought nothing but economic disaster. It happened in the 1930s with Germany, happened in the 1980s with various Latin American countries, and it's happening again now. There have been more than 250 defaults on sovereign debt since 1800. Many of them -- in particular Germany's -- were made far, far worse by the bailouts they had received in order to avoid such a default.

So certainly, yes. Canada is attached to the European economic crisis. Due to the nature of the global economy, pretty much everyone is. But Mulcair needs to ask himself a very serious question: if Europe is sucked down a whirlpool of debt, should Canada follow just to spare the NDP a little wounded pride?

Unfortunately, it's easy to forecast Mulcair's answer. He's proven exceedingly poor at coping with the bruises to his pride since he became Leader of the Opposition. Whether it was dealing with all the informed observers who demonstrated that his "Dutch Disease" theories were complete and utter bunkum, whether it's his claims about Canada's international reputation -- again, flying in the face of the available evidence -- or whether its the future of his party's model for Canada, he's shown he's just not very good at dealing with these things.

Thomas Mulcair and evidence don't get along very well. It's been a nasty and one-sided fight, with the evidence doing all the hitting. It's enough to make the prospect of Prime Minister Thomas Mulcair a deeply disturbing one.

Sunday, June 17, 2012

The Phantom Menace: The OECD "Dutch Disease" Report That Never Actually Was

If you were to believe Canada's left, there's a malaise ravaging Canada's economy. And conveniently for them, they can blame it all on Alberta, where practically no one votes for them.

They call it Dutch Disease. And they're grasping at any straw they can find in order to make Canadians think that Canada has it. Including a report by the Organization for Economic Cooperation and Development which, they say, identifies symptoms of Dutch Disease in Canada.

But the report isn't the blanket confirmation of NDP leader Thomas Mulcair's wacky economic thesis that they think it is. In fact, there's far more in the report that disputes Mulcair, and reveals his economic ideas to be shortsighted and dangerous than there is anything that actually backs him up.

Mulcair claimed that Canada suffers from so-called Dutch Disease on account of what he considered an over-valued Canadian dollar, which he attributed to resource revenues, singling out the oilsands in particular. The Dutch Disease argument holds that resource exports, which help drive up the value of the dollar, "hollow out" a country's manufacturing sector. A country's exports become more expensive by comparison to their international competitors, driving down sales, and labour demand from the booming resource industries leave the manufacturing sector unable to compete for labour.

And so the symptoms of the so-called "Dutch Disease" are pretty clear: struggling manufacturing,  suffering sales, and lost jobs.

But to identify the symptom is hardly to diagnose the disease. And as a diagnostic tool, the OECD report actually tells a very different story. The report actually found what the IIRP did -- that the problem with manufacturing in Canada is below-nominal innovation. "While Canada has made great strides in macroeconomic and structural policy settings, and its academic research is world class, the pay-off in terms of business innovation and productivity growth has not been large. Business R&D is particularly low, despite significant policy support, suggesting substantial scope for improvement."

So the government of Canada has been doing its part. Particular sectors of the economy -- particularly the high-labour, low-wage subsectors of Canadian manufacturing that have been struggling -- have not been doing their part. Which, you may recall, was precisely what the IIRP concluded.

The report also found that opening sheltered sectors of the economy -- such as network communications -- up to greater competition would be beneficial. (Prime Minister Stephen Harper's government has been doing just this, and it's been driving the opposition batty.)

On the whole, the OECD report concluded that the problem with the Canadian economy is not the competitive pressures imposed by a higher exchange rate, but rather failures by specific sectors of the Canadian economy to respond to them. Which confronts Thomas Mulcair, the NDP, and his standard bearers with some very stark realities, and some equally stark challenges.

For example, Mulcair cites Canada's strong dollar as a problem, implying that something needs to be done about it. Yet the OECD gave Canada a sold thumbs-up on its monetary policy, although noting that the Bank of Canada should stand prepared to respond to inflationary pressures. So policy measures to erode the Canadian dollar don't seem to be in order.

So even if the OECD agreed with Mulcair that some symptoms of Dutch Disease are present, that's just one thing. And the presence of symptoms alone are not enough to diagnose the Dutch Disease. They also need to be able to identify the cause.

This is where some control comparisons come in handy. If the oilsands, and the energy industry in general, were really spurring Dutch Disease in Canada, then the struggles of Canada's manufacturing sector should be unique. But unfortunately for Mulcair and his fans, those struggles are not unique. Not even within OECD countries.

In fact, comparing declines across OECD countries is rather telling. While Statistics Canada identified a general downturn in Canadian manufacturing since 2004 -- something that Mulcair's followers point to as symptoms of Dutch Disease -- that downturn wasn't limited to Canada. The downturn in Canada's manufacturing industry was approximately 14%. But during the same period of time, Great Britain experienced a manufacturing downturn of 29%. Japan experienced a downturn of 24%. It was 20% in Belgium and Sweden. And an identical 14% in France.

This is all particularly telling, because it begs an important question: can the UK, Japan, Belgium, Sweden and France -- or most of the OECD. for that matter -- blame the decline of their manufacturing sectors on the oilsands? Do they even have an oilsands resource export equivalent that they can blame the decline on? Or is that general decline symptomatic of something else?

This is almost certainly why the OECD declined to cite Dutch Disease in their economic survey of Canada, and why a reporter for the Canadian Press had to do it for them: because the malaise of manufacturing is not uniquely Canadian, not attributable to Dutch Disease, and instead attributable to standard global economic forces.

Simply put, Canadian firms that placed their bet on high-labour, low-wage manufacturing in Canada made a poor bet. They're losing their sales to firms located in companies that have a competitive advantage in unskilled labour. In essence, they're paying the price for their own bad business decisions.

Thomas Mulcair and his followers point to this as evidence that Canada's economy is becoming "unbalanced," and that something needs to be done about it -- even though they're all lacking in ideas as to what exactly they want to do about it. They all seem to lack ideas about just what an "unbalanced economy" even means, and how to achieve a "balanced economy," and for good reason:

That isn't even remotely what the problem is. The OECD knows that, even if Mulcair and his followers so desperately want to pretend otherwise.

Tuesday, June 5, 2012

For No Particularly Compelling Reason, the Far-Left Wants Fraser Institute Blood

DeSmogBlog wants the Fraser Institute audited because they hate its politics -- and its success

Ever since the federal government -- in particular the Canadian Revenue Agency -- started to investigate the funding activities of far-left organiations like Tides Canada and the organizations they fund, Canada's far-left has been losing its collective mind.

The jig, as it turns out, is up. They thought they had found the perfect way to cheat the system, and use the tax benefits accorded to charitable organizations to fund their political activities. Now, becuase people have finally started paying attention to the gross abuses of the Income Tax Act,

The money laundering practices of Tides Canada, as well as the openly partisan activities of the David Suzuki Foundation, have drawn attention and fire because they are abuses of the law.

But when plumbing through the complaints writers like Jeff Gailus and David Climenhaga (who Gailus cites in his hitpiece), it becomes clear that it really comes down to one thing and one thing alone: that they don't like the Fraser Institute's political views, and that is the sole basis of their complaint. As mentioned here before, they also deeply resent it for its success.

In the great tradition of left wing nut jobs everywhere, Gailus turns to other left-wing work in order to justify his definition of the Fraser Institute as an "inerently political oragnization." In particular, he quotes Simon Fraser University professor Simon Gutstein accordingly: "The Fraser Institute is a small cog in a global wheel of reaction designed to roll back the democratic gains of the 20th century."

Aside from being pure nonsense, this definition is also politically-loaded. Which should come as no surprise whatsoever -- Gailus' entire article is deliberately designed to be politically loaded, Which would be OK, if he weren't targetting the Fraser Institute for an entirely baseless and vexatious audit.

For one thing, when writing his column, Gailus clearly never bothered to research what activities are permitted under the Income Tax Act, and which are not. The resulting revelations are very illuminating, and very clearly do not support his argument.

For example, Gailus points to comments by former Alberta Premier Ralph Klein that his government followed the policy recommendations of the Fraser Institute. And yet, according to the Canadian Revenue Agency, this doesn't impact on the Fraser Institute's charitable status: "When a political party or candidate for public office supports a policy that is also supported by a charity, the charity is not prevented from promoting this policy." That doesn't change once a particular party or candidate -- in this case, Klein -- is in office, provided they haven't endorsed or supported that particular candidate.

Charitable organziations are allowed to take positions on issues of public interest, so long as:
  1. it does not explicitly connect its views to any political party or candidate for public office;
  2. the issue is connected to its purposes;
  3. its views are based on a well-reasoned position;
  4. public awareness campaigns do not become the charity's primary activity.
The full extent of Gailus' take on this particular matter is that he disagrees with the conclusions that the Fraser Institute reaches on various subjects -- including right-to-work legislation, election spending laws, supply-management and the administration of Canadian environmental law -- and ergo he denies that they could be "well-reasoned."

It's just another piece in his demagogic Jenga game. Gailus argues that the Fraser Institute should be audited for the sole reason of -- get this -- he doesn't like the Fraser Institute. That's pretty much it.

It's a shocking analysis that basically amounts to "rules be damned, they should be auited because I disagree with them." And if this -- someone disagreeing with a particular think tank --became the basis for denying charitable status to think tanks, it wouldn't stop at the Fraser Institute, no matter how much Gailus may fantasize that it would.

By the standard he would like to apply to the Fraser Institute, Gailus' test of chairtability would also inevitably sink the Canadian Centre for Policy Alternatives, the Pembina Institute, the Parkland Institute, and especially the Broadbent Institute. None of Canada's left-wing think tanks would stand a chance. The Climenhaga/Gailus test would shut each and every one of them down. It would, but fortunately this is not the test the CRA will use in relation to Tides Canada, in relation to the David Suzuki foundation, or in relation, and would not use in relation to the Fraser Institute or Ethical Oil (the latter of which the CRA would be largely disinterested in because it's not a registered charity) if it did decide to audit them.

Gailus' work amounts to nothing more than the kind of fact-free analysis that has driven a certain panic among the far-left about the Fraser Institute. Before this, it was the yellow journalism of Gerald Caplan and the Vancouver Observer, pointing out that the Fraser Institute received $500,000 in funding from the Koch foundation, but never actually bothered to contact the Fraser Institute to find out what the money was used for.

For the record, the Koch foundation grant was in support of the Fraser Institute's annual economic freedom index. Extremely innocuous stuff, except to those on the left who despise economic freedom because it impedes their ideological goals.

With the left becoming more and more frantic as more and more of the liberties they've taken with the rules come to light, no one should expect the witch hunt against the Fraser Institute to fade quietly -- or any time soon. The best anyone can do is to continue to counter those trying to lead the charge against the Fraser Intitute, and continue challenging them to explain just what they think is wrong.

More often than not, they can't name a single thing. When some, like Jeff Gailus, attempt to do so, they inevitably come up empty. Which is forever a further reminder of what this is about:

The Fraser Institute hasn't broken any rules. They just hate it for its opinions, and resent it for its success.

Saturday, June 2, 2012

The Junk Economics Behind the "Dutch Disease" Theory

Far-left response to Dutch Disease theorem short on facts, long on... pretty much nothing

With the far-left doubling down on NDP leader Thomas Mulcair's "Dutch Disease" thesis -- arguing that an artificially high Canadian dollar, allegedly inflated by Canadian energy exports, has hollowed out the manufacturing sector -- it should be far from surprising that the so-called "Progressive Economics Forum" is following the same lead.

Responding to a Glibe and Mail editorial which agrees with Mulcair that the oilsands industry should do more to protect the environment -- they should always be striving to do better -- which attributes their struggle to competition from Chinese manufacturers as much as to a comparatively high Canadian dollar,.Andrew Jackson overlooks a very basic detail.

The PEF's response, written by Jackson, is only four paragraphs long, so it can't help but be short on the facts. While it does offer one fact for consideration, that the Chinese Yuan, like the Canadian dollar, is managed against the US dollar, he actually declines to mention just what the Chinese Yuan-to-US dollar exchange rate actually is.

In fact, as of the time of this writing it happens to be approximately 6.4 Chinese Yuan to one Canadian dollar. This means that it takes approximately 6.4 Chinese Yuan to purchase one American dollar, making US manufactured products very unattractive to Chinese buyers.

Economic analysts cited by the Pembina Institute claim that the "natural value" of the Canadian dollar ranges from 80 cents to 90 cents. If the Canadian and US dollars are at parity, this would put the Chinese Yuan-to-Canadian dollar exchange rate ranging from 5.12 Canadian dollars-to-Chinese Yuan to 5.76. This means that it would take anywhere from 5.12 to 5.76 Chinese Yuan to purchase a single Canadian dollar on the international currency market.

As of May 12, the exchange rate was 6.1 Chinese Yuan to Canadian dollars.

This confronts people like Andrew Jackson with a very stark question: just how far should Canada's dollar be de-valued, and by what means, in order to allow Canadian manufactured goods to gain a competitive foothold against Chinese products, let alone in Asian markets? And what kind of other economic disaster would befall Canada if the dollar were artificially devalued to that extent?

Imagine what would happen to the royalties collected from resource exports, among other things. One thing becomes perfectly clear: whatever the future of Canada's economy, it had best noted by planned by the braintrusts of the Progressive Economic Forum. They're pretty clueless.

Oh Good Lord, Thomas Mulcair, You Have GOT to be Kidding

Mulcair pretending his caucus isn't anti-Israel

NDP leader Thomas Mulcair is a man with a problem. Many problems, actually. But far too many of them are entirely self-created, and they're piling up.

His most recent problem? His caucus is virulently anti-Israel. But he wants to pretend that it isn't.

"I firmly reject any such affirmation with regards to our caucus," Mulcair recently insisted.

But once again -- as so many times before -- Mulcair is banking on the idea that Canadians just haven't been paying any attention.

The most obvious problem with Mulcair's denial of the anti-Israel bias bubbling in the very soul of his party's caucus is that of his deputy leader, Vancouver East MP Libby Davies. Davies has become infamous for a series of bizarre statements about Israel, including referring to it as the longest military occupation in history.

(The people of Kurdistan, for just one example, may beg to differ with that.)

It shouldn't be believed that Mulcair hasn't tried. He hasn't tried very hard, but he has tried. He has enough problems within his own caucus and the greater far-left community over support from "the Israel lobby" in his leadership campaign.

The anti-Israel lobby wasn't a problem for the NDP when they were in opposition and had no chance of governing. In fact, it was a reliable source of cheap and easy political support. But now that the NDP are contending for government, they no longer enjoy the convenience of appealing for cheap and easy political support by appealing to the far-left fringe.

Mulcair isn't fooling anybody. His caucus is virulently anti-Israel. If he wants his party to be considered fit to govern, he's going to need to do something about it.