US November Election Predictions

Now that there are mere weeks to go before American voters get to pass a midterm judgment on the Obama Presidency, I will make some predictions.

First some observations.

I am still amazed that the nation that calls itself the Leader of the Free World still has so many shortcomings in the practice of Democracy.  In the last midterms of 2006, 34 members of Congress ran unopposed by a major party candidate.  People like to say that it is a two party system......well in that case i would expect at least two candidates in each district.  34 members ran unopposed, far more ran with only token opposition.

Gerrymandering (both racial and simply partisan) have created a wealth of safe districts where the incumbent only ever faces a threat in the party primary.  George Will called this the ultimate perversion of Democracy....a system where politicians choose their voters rather than the voters choosing their politician.

A Republican tide has been predicted by most commentators.  Most predictions call for gains that exceed those of the 1994 election that ended 44 years of Democratic majority rule in the House.  In 1994 not a single incumbent Republican Congressman, Senator or Governor was defeated.

However some key differences are worth noting.  While many pundits are saying that Obama and Clinton both overreached in the first two years of their mandate, Clinton was elected with 43% of the popular vote.  Obama won 52%.  This is a key difference since the Perot voters did not have a candidate in the race in 94.  Obama voters do.

In 1994, the Republican landslide was a shock to everyone.  Virtually nobody saw it coming.  In 1994 the Speaker of the House lost his own district.  The Chairman of the Ways and Means Committee also got voted out along with several incumbents who did not even commission polls because they thought that they were so safe.  This time, Democrats are putting resources into races where defeat was previously unthinkable....such as Representative Barney Franks of Massachusetts.

This year everyone sees the wave coming and so the Democrats have time to batten down the hatches.

I am surprised and perplexed at the Democrats for their lack of message.  The signature achievement of the first two years of Obama's term is Health Care Reform.  A complex measure like this has many good and bad points.  Everybody knows that the Democrats passed it with only token Republican support.  Why are they running away from it rather than emphasizing the good points?  By ceding the fight, they have allowed the Republicans to paint Health Care reform as 'unpopular'.....and by doing so it becomes a huge negative.  A plethora of news stories point out that Dems are not even mentioning health care in their campaigns.   People...you passed it now take the credit for the good points!!!  If they were going to act like they needed to hang their heads in shame upon passing it then they shouldn't have voted for it.

The President's party loses seats in the midterms generally speaking.  George W Bush bucked this trend in 2002 in the wake of 9-11 but it generally holds true.

My prediction:

1) The Republicans will gain control of the House by a slim margin.....they will not win the 100 seats that some are predicting.
2) The Republicans will gain 9 Senate seats to create an evenly balanced Senate.  VP Joe Biden breaks ties so this means that Dems effectively maintain control.

Most of the Democrats who are voted out will be Conservative Democrats and as such the agenda for Congress will not change much.  The more interesting thing to watch for is whether this new crop of Republicans will actually produce someone who is a viable Presidential candidate.  Nobody had heard of Barack Obama until he won election to the Senate in 2004.

The Republicans had best hope so because none of Sara Palin, Mitt Romney, Mike Huckabee or Newt Gingrich are electable.

Of course i could be very very wrong.  Considering that there was not a single African American Congressman who represented a majority white district......I didn't think that America was capable of electing a black man to be President.

Nobel Peace Prize Part II

The Chinese government has reacted to the Nobel Peace prize award by placing Liu Xiaobo's wife under house arrest.  Her 'crime' was informing her husband that he had won the Nobel Peace Prize.

While the newspapers have reported these facts, the international outrage has been muted.  Once this news cycle ends, this story is likely to be forgotten.

Some of us are old enough to remember the cultural, economic and diplomatic boycotts imposed against a nation that repressed 80% of their citizens due to the colour of their skin.  The boycotts worked and South Africa emerged as a democratic nation that has the highest living standard in sub-saharan Africa.

Why is a nation that represses nearly 100% of its citizens less deserving of outrage and condemnation?  Is it that important to keep getting cheap stuff at Walmart?

Twenty five years ago Artists United Against Apartheid released the following video.

http://www.youtube.com/watch?v=OjWENNe29qc

Today, Hollywood's silence is matched by the diplomatic corps to say nothing of the corporate world and the IOC.

Nobel Peace Prize Regains its Noble Purpose

Today the Nobel Committee awarded the Peace Prize to a jailed Chinese dissident who had the audacity to call for multi-party democracy in China.  As a younger man, he was a leader of the Tiananmen Square uprising.  He shepharded many students out of Tiananmen Square just prior to the tanks rolling in.

Liu Xiaobo is in jail and is unaware of the honour that he has received.  In fact most of China is unaware as State censors scrambled broadcasts of the ceremony as it was carried live by CNN and the BBC.

With this award, the Nobel Peace Prize regains much of the lustre that it had lost in recent years as unworthy recipients such as Barack Obama and Al Gore were honoured.

Mr Liu is a worthy addition to the pantheon that includes people such as Bishop Desmond Tutu and Mother Theresa who worked tirelessly to lift people out of oppression and poverty.  The Nobel Committee displayed great wisdom in honouring FW De Clerk alongside Nelson Mandela for jointly leading South Africa beyond Apartheid.  Many others were inspiring leaders for peace and justice who richly deserved their place.

The wisdom of this choice can be seen in the reaction of the Chinese government.  First they tried to preempt the award by threatening the government of Norway by calling it a hostile action.  After it was announced, they decried the awarding of such an honour upon a 'criminal.'  Humanity would be well served if only more such 'criminals' existed in our midst.

The world has moved on since Tiananmen Square and that is a stain upon humanity.  The Chinese nation suffers from less material poverty but threatens more of their neighbours militarily and more of the world economically.  Even the United States treads carefully lest they offend such a valuable trading partner. 

The images of tanks rolling over students were horrifying to the world.  How soon they forget. 

The most indelible image for me is of a lone student standing before the tanks. His courage and defiance should be remembered today.

Captain Robert Semrau - Update

Captain Semrau was found guilty of Disgraceful Conduct and today his sentence was handed down.  He was reduced in rank to 2nd Lieutenant and dismissed from the Armed Forces.

This was the right and just result.  From the evidence presented at trial he did not have murder on the mind.  The prosecution's own evidence indicated that it was a mercy killing.

It was still wrong but it was not murder. 

Now Robert Semrau can go about rebuilding his life as a civilian.  His case should serve as a lesson to serving members of the military.  Doing the right thing is difficult.  As an officer he needed to follow orders which did not include killing a wounded combatant....even as an act of mercy.

It is especially important that the difficult issues that this case presented did not cause the system to take a pass on rendering judgment.

Good luck to Robert Semrau as he gets on with life.  His actions may yet serve to make the Canadian military a better place.

A Change of Pace

Today I decided to take a break from my usual ranting about the latest annoyance and talk about something that isn't talked about enough....friendships.

The past couple of years have seen enormous changes in my life.  I went from living in Britain with an expectant wife to living in Canada and then going through a difficult divorce.

Most of my friends have heard the gory details and I won't go into them in detail here.  Besides, that would miss the point really.

While I went through this most difficult phase of my life, I experienced many emotions.  I experienced fear, anger, despair, righteous indignation and a bunch of other not so nice feelings.  However through it all I was also experiencing feelings of gratitude.  This was due to the love and support that I received from my many friends.

During the time leading up to the court battle, I was feeling especially vulnerable.  Being falsely accused of plotting your wife's murder can have that effect.  Those of you who haven't stood before a judge to answer such allegations will just have to take my word for it.  It sucks!!! LOL

Even after it became clear that those allegations were not going to carry any weight, I was still faced with the prospect of picking up my son 6 times a week.  What else would I be accused of when there were no witnesses around?

Into this unpleasant situation, 35 different friends of mine stepped forward to accompany me during transitions to ensure that I was not alone.  This went on for over a year and I had somebody accompany me for all but 2 transitions.  Looking back, this was truly remarkable.  Some of these friends drove from long distances to help me for a 5 minute transition.  I find it amazing that not a single friend started finding themselves 'busy' on repeated occasions until I no longer asked.  It would have been completely understandable if they had because it was onerous.  Yet they didn't.

In addition, there were numerous occasions where my friends spent time with Krishna and myself.  I found myself turning invitations down because there simply aren't enough hours in enough days.  I am truly blessed!

It is too soon to say whether this story ultimately has a great ending or not.  I have joint custody of my son and we spend a lot of time together.  In fact, I get more time with him than many dads who live near their children.  Krishna is an amazingly happy and well adjusted little boy.....and extraordinarily handsome too!

I have the means to fly over to see him regularly.  Not every guy in my situation could do that.  I am blessed!

When I visit in Britain, one of my good friends and her husband welcome us into their home every time.  Even when I visit for weekends in Britain, Krishna has a consistent bed to sleep in and a place to leave his toys and clothes.  I am blessed!

When he visits Canada, again the invitations are more numerous than we can accept.

Divorce is not something that I recommend.  It is extremely destructive and some people never get their balance back after going through it.  It would be foolish for me to pretend that I haven't been damaged by the experience, but it would be truly ignorant to fail to see the good side that it brought out in so many of my friends.  Their loyalty and support were more than I could ever hope to repay.  But I suppose that is the whole point of such true friends....they don't expect anything for what they give.  Still I owe them a debt and I will be working to repay that debt.

I am not an easy person to get along with.  I am opinionated, mouthy and often ill mannered.  I am headstrong and, often, don't listen well.  I don't deserve the great friends that I have and so I treasure them.

Before Krishna moved away, a friend from church gave Krishna a gift and wrote inside that he should take good care of his mommy.  This was truly heartwarming.

I hope that Krishna grows up to take good care of his mommy.  He is a great kid and I don't deserve such a great son.  I am blessed.

Nobody is naive enough to believe that I don't have some residual negative feelings.  But I am human.  Time is working its magic in healing those wounds.

All I can say at this point is that I couldn't have made it through this nasty process without my friends.  Bill Gates and Warren Buffet have a lot of money....but I can't imagine them being richer than me..thanks to the wealth of friends that I have.

For that I am truly blessed!

Toronto's Next Mayor

I find politics fascinating.  I remember watching the 1976 Presidential debates between Gerald Ford and Jimmy Carter.  Since I was merely 6 years old my memories are scant.  From the 1980 election onwards, my interest level grew and my memories remain vivid.

Canadian politics has produced fewer larger than life figures than our neighbours to the south.  In part that may simply be a result of the fact that we don't tend to mythologize our leaders as Americans do.  We don't have a Mount Rushmore.  A Canadian Prime Minister rarely uses Teddy Roosevelt's "Bully Pulpit" to the extent American Presidents do.  Ronald Reagan often went on the airwaves to ask the citizens to call their Congressman if he wasn't getting his priorities through. A Prime Minister has no need to engage in such banal pursuits.  The Right Honourable one can simply order his caucus to vote as he pleases.....no need to involve the citizens.

It is a little known fact that the person in Canada who has the largest direct voter mandate is in fact the Mayor of Toronto.  The Prime Minister is merely a Member of Parliament representing one riding while the Mayor of Toronto is directly voted in by citizens of 22 Federal ridings.  It is also not very well known that from a Constitutional standpoint, there is no such thing as a municipal level of Government.  The City of Toronto is incorporated under the laws of the Province of Ontario.

Leaving small technicalities like the Constitution aside, it is a fact that more people vote directly for the Mayor of Toronto than any other office in the land.  It is the current Mayor's race that has me more baffled and amused than any other recent election.

Councillor Rob Ford is the clear front runner.  He is 11 points ahead of former Deputy Premier of Ontario George Smitherman....according to a poll released today.  The mind boggles.

Now it must be said that the amalgamated mega city of Toronto has not been around very long.  Toronto has had but two mayors.  The first was Mel Lastman who made Toronto a laughing stock by calling in the army after a bad snowstorm and telling a reporter that he didn't want to go to Africa because he hates snakes and might end up in a boiling pot of water with natives dancing around.  (If Lastman had spent any time in some of Toronto's parks, he might have seen snakes nearer to home).


After two terms of Mel Lastman's buffoonery (the fine citizens of Toronto re-elected him with 80% of the vote for a second term), the people turned to an American born, British raised Harvard graduate named David Miller.  Mayor Miller was a very smart man whose standing as mayor was torpedoed after engaging the unions in a long garbage strike only to give in at the end.  People understandably asked what the point of forcing the strike was when he just ended up backtracking anyway.



So now along comes Rob Ford with a record as a right winger in a left wing city.  He had a DUI conviction which he was apparently not very forthcoming about.  He allegedly had to stop coaching high school football after roughing up a player.  He has stated that Toronto should not welcome any more immigrants.  He has said that AIDS is preventable as long you don't do drugs and aren't gay.

Despite all of his bluster and revelations about his past, he continues to lead the field.  I can't explain it.

Perhaps the people are tired of charming politicians who hide behind a facade.  Perhaps they like the fact that a buffoonish Rob Ford is more of an average citizen than some other candidates.  Perhaps they feel that he is so bad that he can't possibly be hiding something worse (nowhere to go but up?).

I don't really know how Rob Ford can be the frontrunner in this race.  I am no longer a Toronto resident and as such I can't vote.  If I could, I really don't know who amongst this sad lot I would vote for.  Perhaps therein lies the answer?  Perhaps a paucity of good candidates means that the people are choosing between various degrees of bad.  How sad that the race for the largest direct voter mandate in Canada might be won by default.

Lottery Fever

The Toronto Star reports that the government of Ontario is considering legalized online gambling.

http://www.thestar.com/news/ontario/article/844961--ontario-set-to-bet-on-legalized-online-gambling?bn=1

Ontario would be joining a trend towards expansion of government run gambling.  The government approach to many vices seems to follow a trend of initial prohibition followed by monopolization.  It is true of gambling and in certain places (Ontario) it is true of the distribution of alcohol.   One wonders if they will follow that approach to marijuana and prostitution if they should ever be made fully legal?

The arguments in favour of increased gambling rely mainly upon the fact that it is very lucrative for governments around the world.  Additionally, the age of the internet means that a jurisdiction that practices prohibition still sees their citizens gambling online through internet sites that are domiciled in more permissive jursidictions.

I did a google search on the demographics of lottery players.  I found a plethora of studies that found that lottery players tended to be less educated and have less disposable income.  It naturally follows (and several studies confirmed) that those who were of an ethnic group who were economically disadvantaged were also more likely to buy lottery tickets and to spend more.

This makes sense since lotteries offer hope.  It is natural that those who are poor and/or lacking in hope would grasp at a straw offering that hope.  I do see the good that comes from that.  It may be too much to lecture the poor that they should just save the $5 that they spend on lotteries weekly and put it into a savings account.  That kind of sensible advice is better received by those who don't need it as much.

Still I cannot help but feel that a lottery is an insidious form of taxation.  The profits flow to the government from the people.  No tangible product is given in exchange for the cost of the lottery ticket.....it is strictly the possibility of a win that is being sold.  A losing ticket (which just very slightly outnumber the winning tickets) leaves the holder of that ticket without hope and without $5.  Government run gambling operations appeal mostly to those who are poor, desperate or stupid.  I recognize that there are some who spend a few dollars just to have some fun, however that is not where the bulk of the revenue comes from.

It is an insidious tax because it is regressive in its application.  It disproportionately affects those who can afford it the least.  It is particularly insidious because it is a form of taxation that generates less anger.  There were protests in the streets when the GST was introduced and more when the HST came in.  Both of these were measures that were more efficient and progressive in their application than a lottery.  Obviously income taxes are also unpopular and more progressive in application.  Yet lotteries are often greeted with cheers and long lineups.

I know that other jurisdictions are becoming more permissive.  However, this is a moral issue.  If gambling is such a vice that it ought to be banned, then the government shouldn't be running it as a monopoly. It is harmful and dumb.  Simply because other places exploit the poor and hopeless doesn't mean that we should act like lemmings and do the same thing.  By that rationale we should legalize a host of more obviously offensive activities such that dollars aren't flowing to some far away places where anything goes.

Say no to more gambling.

Stimulus and Recession in Simple Terms

I studied Economics in University, though my marks would indicate that I didn't attend many classes or read much of the material.  Nonetheless I find myself reading economic reports on a daily basis as a part of my job.  I often wait with bated breath for various reports that are released at 830 am.

This brief issued by the non-partisan Congressional Budget Office makes for some sober reading.

http://www.cbo.gov/ftpdocs/116xx/doc11659/07-27_Debt_FiscalCrisis_Brief.pdf

To make a long story short, soaring deficits may cause debt to reach crisis levels.

At this point I think that its helpful to simplify things so that the dimmer lights who occupy all parts of the political spectrum can understand.

If we borrow $100 to 'stimulate' the economy through tax cuts, infrastructure spending, etc, etc.......there comes a time when we need to pay it back.  If it's in one year then we will need to pay back about $102.  If its in 5 years we will need to pay back $110.  (I have assumed away compounding to keep it simple, and assumed an interest rate of 2%).  Paying that back means increasing taxes by $110 or cutting infrastructure spending by $110 or reducing social services by $110.....or some combination thereof.

The math is very simple.....to "stimulate" the economy with a $100 deficit means reversing the stimulus by more than $100 since we will need to pay interest.

This example makes some very poor assumptions that are helpful to the arguments for deficit stimulus spending.

1. I have made the bad assumption that $100 of stimulus will actually result in $100 of 'value' and that none will be lost due to inefficient allocation.  This is a very poor assumption.
2. I have made the ridiculous assumption that there is no compounding of interest.  The reversal of stimulus would be much greater if interest is compounded.
3. I have made the assumption (nay fantasy) that the deficit will be repaid in 5 years.....an appalling bad assumption.  Just how bad would the pro-deficit argument look if we assume that it takes 30 years to pay it back?  Even 30 years is a very rosy assumption.
4. I have made the assumption that there is no "crowding out" effect where government spending incents the private sector to spend less.
5. I have made the assumption that the expansion of the government into a greater share of GDP does not result in inefficiencies.  

Despite all of these very rosy assumptions that are helpful to the pro-deficit view, we are left with the simple math that says that $100 of stimulus will result in a reversal of $110 of negative stimulus over the next 5 years.

I have ignored one giant elephant in the room and that is the multiplier effect.  It is the idea that when the economy is stimulated by $100, it actually results in increased economic activity of a number greater than $100....say $160.  If this is uniformly true then the argument for stimulus is stronger.......except that I have never understood why the multiplier effect doesn't also work in reverse when the stimulus is withdrawn.

I once heard a saying that the only role of Economic Projections is to make Astrology look respectable.  (I would provide the citation if I could remember where I saw it.)  If we can't accurately predict the path of GDP, then I don't understand how we could possibly predict a secondary derivative like a multiplier effect.

If the multiplier effect is valid, I also don't understand why we don't favour ever higher deficits as the path to endless prosperity.

To borrow a phrase from George H.W. Bush....a lot of this is Voodoo Economics.  The truth is that our current deficits are just a way to pay for the standard of living to which we have become accustomed by raiding our children's education fund.  

Our leaders have failed to speak some basic truths to the people.  Hard times are necessary.  Recessions are bad and so is death......but both are necessities in the grand scheme of things.  No society has ever achieved 100% employment and no society ever will and it's not necessarily a good thing to strive for.

After 9-11, George W. Bush implored people to go shopping and enjoy life because otherwise Al Quada wins.  I can't recall another time in history when a nation went to war and simultaneously went out for dinner and a movie.  That attitude still permeates society.  

Hard times build character.  I treasure the memories of a childhood without material excess.  I recall eating a piece of (what I now know was terrible) cheese on a plane as we immigrated from Korea.  I realize now that our diet in Korea must have been very very low in fat.  I declared that cheese the best thing I had ever tasted!!

I couldn't possibly bring myself to impose a false poverty on my son so that he can learn about what life is like for so many.  However I do feel sad that he will probably never have such experiences.  Although if we keep spending money we don't have, then he and many other children of today will have those experiences in reverse...and that would be tragic and represent a failure on our part.

GM Again

Today GM announced that it was going to spend $3.5 billion to purchase a sub-prime car lender.  CEO Ed Whitacre said that the lack of a financing arm (since GMAC was sold off in 2007) put GM at a competitive disadvantage with buyers who had trouble getting credit.

I've read over the stories a few times and am completely stunned.  A few points to consider:

1. GM seems to have trouble producing cars good enough to sell at a profit.  Since they've shown that they are a car company that is not very good at producing cars, what makes them think that they are going to be so good at evaluating the creditworthiness of those who have been deemed to be not worthy of credit....and hence are subprime borrowers?
2. What will happen if the economy turns south again and these sub prime car borrowers stop making payments?  Will GM suffer losses that will require another bailout?
3. If GM has $3.5 billion kicking around in the bank, perhaps they should pay back some of the $40 billion that is still outstanding to the taxpayers?
4. Was there another buyer for this sub prime lender?  If so why is a taxpayer owned entity trumping a private sector bid?  If not, then isn't this just another bailout one step removed?

We will soon see another absurdity.  The government will divest itself of GM via, what may be, the largest public offering of stock in history.  To do this GM will engage several banks (some of which have been bailed out by the taxpayers).  GM will pay an underwriting fee to the Investment banks.  So the car company that got bailed out by the taxpayers will be paying an enormous fee to the banks that got bailed out by the taxpayers.

The depressing thing about this whole thing is that it just seems to keep getting more absurd.  The seeds for the credit crunch were sown during the Clinton Administration.  George W Bush became a tax and spend Conservative who created a moral hazard with an orgy of bailouts.  Barack Obama has followed in their footsteps.  At each step the policy decisions seem to get worse and worse.

Captain Robert Semrau

By all accounts Captain Semrau is a good soldier, a family man and friend to many.  He has been convicted of Disgraceful Conduct and faces 5 years in jail.  He is the first Canadian soldier ever convicted due to the act of shooting an unarmed combatant.

Many have called his act of killing a wounded Taliban fighter an act of mercy and in keeping with the soldier's code to end the suffering of a combatant.  The facts as presented by the prosecution state that after a Taliban ambush, a wounded insurgent was found with severe wounds that were too severe to treat in situ.  There are accounts that state that the situation was too hostile for a medevac.  One of his legs was blown off, the other nearly severed and his entrails were hanging out.  The consensus view is that this insurgent would surely have died anyways and that it was only a question of how long he suffered before succumbing to his wounds.  Apparently, Captain Semrau eliminated the question by shooting the man twice.

I recall an episode of Law and Order where the point was made that if a man jumps off a tall building and is plummeting to a certain death, the act of shooting him in mid air is still an act of murder as it hastened his death.  This is consistent with a discussion in a Criminal law class I attended however it is really Ivory Tower mental masturbation.

Obviously I was not in court to hear the evidence but it seems to me that he did the humane thing by ending the suffering of this wounded human being.  The fact that he was an enemy combatant and a member of the Taliban does not negate his status as a human being deserving of compassion.

Capt Semrau's motivations then are to be commended. However the jury was right to convict him of Disgraceful Conduct.

The Geneva Conventions state that a wounded enemy combatant ought to receive the same standard of care as a wounded friendly combatant.  I don't know if Captain Semrau would have committed the same act of mercy if the wounded man were a member of his Regiment (which is also my old Regiment).  However that is irrelevant really.  The Geneva Conventions are always inconvenient and at times impractical.  In coming to the conclusion that I did, I ignored the Geneva Conventions.

The problem I have with his act of mercy is that allowing it as an exception would set a precedent that could too easily be abused.  When thousands of soldiers die on the battlefield, a coroner does not conduct autopsies on each corpse to determine the cause of death and the likelihood of survival after the fact.  In many cases (including this one) the body is simply unavailable.

It is a myth that soldiers are trained and disciplined to such an extent that their emotions do not factor into their reactions.  If soldiers were merely such automatons, the words "troop morale" would scarcely be uttered.  The truth is that soldiers in battle experience intense feelings of fear, rage and hatred.  How would you feel if your buddy was killed in an ambush?  How would you react if you had a chance to exact some revenge?  Allowing an individual soldier to pass sentence and allow "mercy" to be a defence that could result in exoneration is a loophole that many body bags would pass through.

As an officer he needs to maintain good order and discipline.  His actions were prejudicial to good order and discipline.  However, I still feel nothing but sympathy for Captain Semrau.  He served in Afghanistan in the British Army and then with the Canadian army.  He was a volunteer who was serving his country.  Most of us never encounter a situation that presents such moral dilemmas and so we can sit back in our comfortable chairs and pass judgment on this man who risked life and limb to serve in a faraway land.  The truth is that I feel sick to my stomach for saying that what he did was wrong.  What he did was right in so many ways.

I think that Captain Semrau is a better person than most .  What he did might have been humane and deserving of some praise but he must now accept that he must accept punishment.  Perverse as it may seem, it might be the case that he was right to do what he did and it is right that he was judged guilty of a crime.