Saturday, August 17, 2019

Hong Kong: China's regret?

I’ve been of the view for some time now that if multiparty democracy comes to China, it’ll be because it was first decided that allowing it in Hong Kong would be the least costly option following which Beijing couldn’t keep it quarantined to the HK Special Administrative Region (HKSAR).  This isn’t based on some grand China collapse theory but on my personal experience of both Hong Kongers on the one side and “mainlanders” on the other.  I’ve been to China more times than I can count, adding up by this time to a couple years’ worth of time in the country, and the impression I get of the prospects for political freedom there remind me of a phrase by SNL producer-writer James Downey: “It’s like being a rock climber looking up at a thousand-foot-high face of solid obsidian, polished and oiled.”  It’s very hard to see where democracy could find its purchase.

Another analogy that comes to mind is that of a nuclear containment building.  Within it are multiple barriers to prevent contamination of what Chinese state media calls the “political ecology” and the system is finely engineered to allow controlled releases within the barriers to preclude pressures from building up to uncontrollable levels.  It really does feel that it would take a tsunami to break the system down.  I recall a Harbin local who would voice a few criticisms from time to time but then, when the topic of the party’s founding anniversary celebrations came up, nonchalantly referred to “our party”.  The idea that the nation is the party and the party is the nation was been very successfully propagated.  That the military and armed police forces are not structurally loyal to or accountable to China but solely to the Party seems of little popular concern.

The mentality in the SAR, at least with young people who were born in HK, is far more familiar to westerners.  In fact, I’d say the typical HK youth takes a dimmer view of the society on the north side of the Shenzhen border (commonly called the "mainland", especially by those who don't want to call it a Hong Kong - China border) than the typical western expat living on the mainland side.  When I was at Wikimania 2013 I stayed in Hong Kong Baptist University residences and when I was talking to the students about where to get the bus to the border (I was living in Chengdu at the time) it was like I had asked about going outside the wall that kept out the living dead.

Polls say that the extent to which HKers identify as Chinese has been declining since the 1997 handover, paralleling a trend seen in Taiwan, with 90% of 18 to 29 year olds recently telling a pollster they were not proud to be Chinese nationals.  This, more than anything in my view, blunts the effectiveness of the central government’s public opinion tools in Hong Kong, which are already weakened by the fact that social media in particular isn’t blocked in the SAR like it is in the mainland.  This while GDP per capita, an increase in which Beijing trots out as the solution to almost every instance of popular dissatisfaction whether at home or abroad, has been rising with Hong Kong exceeding US GDP per capita on a purchasing power parity (PPP) basis (never mind Canada) and even exceeding Norway according to the World Bank’s 2018 calculations.  It’s in fact more plausible that what we’ve been seeing in HK is because of the presence of prosperity than the lack of it.  While Hong Kong has the world’s most expensive real estate on a square meter basis that’s been the case for a long time and comes with the territory when a location is desirable.

I would not be surprised were we to learn that the powers that be in Zhongnanhai secretly regret gaining control of HK from the British on the “one country, two systems” (1C2S) basis that they did, a basis that I believe was set out by the Sino-British Joint-Declaration of 1984.  It arguably just postpones the problem of how Beijing is to take control of HK civil society.  The bet presumably was that the mainland would be more similar in 2047 than 1997, and economically it’s certainly the case that the mainland will have made enormous progress in catching up economically (indeed it already has).  But what if the ease of integration on that count isn't the count that matters?  When it comes to political freedom the mainland has been moving further away from HK (and Taiwan) since Xi took over in 2012.  When thinking about the end game for HK, I find myself returning to the fact that if HK were still British at this time, Beijing wouldn’t have the problem it currently does. 

The Party’s calculation may be that it's best to concede and let HKers elect their own leadership, which right now is deemed unacceptable because it could mean an unfriendly stance towards Beijing at the very top of local Hong Kong government, and then contain the democratic reform to the SAR by indefinitely maintaining, and even strengthening where necessary, the separation with the mainland that currently exists.  But the Party could alternatively conclude that such a concession would be at odds with everything they purport to stand for and that the writing is on the wall that there is no way of asserting central authority over HK that isn’t what they’d recognize as colossally messy, such they might as well definitively assert that authority now when they can push the line that dealing with the political “terrorists” and the “riots” is beyond the capacity of the HK government.  The calculation would be that it's going to just be more difficult when those 20-somethings are 28 years older.  I don't see a middle way between these two routes that “pacifies” HK on a sustainable basis.  One would think that intervention would be a violation of the Basic Law and/or 1C2S such that there would be a huge cost to the Party’s credibility when Beijing has been continually pushing the line that the root problem in HK is a failure on the part of protestors to respect the Basic Law and 1C2S but the Party could surely dress it up as answering a request for assistance coming from autonomous HK authorities.  Asking said authorities to call for what would surely be the end of HK as we know it would of course be a big ask, but the Party seems to do quite well at getting what they want out of people who are in the positions they are in because the Party put them there.   

No doubt Beijing will want to put off having to go one way or the other as long as possible.  A military, or more precisely People's Armed Police, intervention could provoke a powerful reaction in the U.S. in particular, which could block US corporate investment in China, place heavy pressure on Chinese firms listed on US stock exchanges, and even cut China off from the SWIFT international payments channel.  Indeed, it's more likely that we'd instead see, at least at first, a shut down of HK’s internet and social media by subsuming it behind the Great Firewall.  The outrage this would provoke within HK would be immense, it directly hitting perhaps the most valuable freedom and hitting everyone, not just the few who would be impacted by kicking in some doors in a police state round up, but would have the virtue of being a non-violent government action.  If HK subsequently explodes in rebellion, which it might very well, it’d be then, and only then in my expectation, that the APCs roll.  Seizing control of the internet and complete control of the media would be part of a longer term move to transform education, curriculum reform in HK being something that Beijing has tried its hand at before in HK and found difficult without popular support.

The most likely short term scenario nonetheless remains the protests dying off as the Umbrella Movement of 2014 did.  The problem for Beijing is that they will most certainly be coming back unless they take one of the two routes I've described, the only question being when.

Saturday, April 6, 2019

Alberta Election 2019

Why haven't I blogged since 2014?  Short answer is that I got married and have a little girl who turns 3 this summer. For those of you who have several kids under age 5, if you have have time for anything besides work and family matters I'm impressed!  It's one thing to find 5 minutes to tweet and another to find an hour to blog.

So we have a provincial election a week from this coming Tuesday (on April 16).  When I was heavily involved in the Wildrose Party a decade ago I ended up running in Edmonton Beverly-Clareview for the 2008 election as the Wildrose Alliance candidate.  At the time I was only nominally living in the constituency and was planning to buy a home in Edmonton's southwest.  In the end, though, I couldn't justify paying a lot more for the same property but in the southwest instead of the northeast, and ended up buying a new townhouse right in the middle of Beverly-Clareview (although on the east side of Victoria Trail).  

This riding would be considered a safe NDP seat, especially if the NDP has inherited the Liberal vote, but nonetheless has enough curving residential roads that a centrist suburbanite could conceivably be elected in the right circumstances.

Which brings me to the question of who to vote for.  If the NDP's apparent view of the election is the correct one, then it's a referendum on whether to persecute LGBTQ2S+ people or not.  If homosexual acts were being criminalized I'd be inclined to think they are quite right to be taking the lead in giving more people their liberty.  

But of course that's not what's going on.  We've instead got what Licia Corbella calls out here.  If every Albertan read Corbella's piece, it would drive BIG turnout against the NDP at the polls.  It's one thing to threaten religious schools with a loss of funding, and quite another to go after them saying expressing a belief in the "unchangeable and infallible truth of the Word of God" is violation of provincial law.  

We have to give religious communities some space.  That doesn't mean tolerating Branch Davidians in the province where the group leader takes 12 year olds as wives.  It means stopping somewhere short, and I suggest well short, of basically declaring their belief system illegal.  Trudeau-appointed Senator Paula Simons (who isn't doing a very convincing job of rebutting the Notley-Trudeau nexus allegation when she's acting as de facto NDP spokesperson in Ottawa) at least has acknowledged a conflict of rights:

The only problem with this (besides the strawman that deciding not to criminalize an action is akin to "wanting" that action) is that there's no Charter right to never be let go by a private sector employer.  There's a good reason for this, of course, and that's the general principle that government stays out of interactions between citizens unless there is a sound reason to meddle.  So it is that a religious organization's right to take an action for religious reasons without government interference isn't on the same level as the right of citizen to call on the government to get involved and exercise its coercion.  There's a balance that has to be struck here between freedom of religion and other considerations and it ought to lean against bringing in the power of the state.

With public opinion having moved as far as it has it terms of normalizing LGBTQ2S+ self-identification or behaviour (however one looks at the question of whether it's a dispute over behaviour as opposed to identity, I disagree with those who contend it's just behaviour), the NDP inevitably has to keep reaching further and further if it's to maintain outrage levels and, by extension, political turn-out.  Eventually it gets to the point where the majority of citizens ask if the Education Minister is making the most productive of use of his time.

I'll nonetheless say this for the NDP: Notley is genuinely trying to get a pipeline and it's really not fair to contend otherwise.  But if Albertans trust the Conservatives more on that, well, what goes around comes around.  The NDP has gone too hard for too long on the idea that Conservatives are not to be trusted on social issues to complain about how unfair it is to be perceived as anti- the energy business.

This isn't to say that I stand four-square behind the social policies of Kenney's UCP.  It's rather to say that if one party is going to one extreme and another party to the other, the NDP is the more motivated to push the envelope and not admit that there's another side to the issue.

Which brings me to the question of whether I'm voting UCP.  I must be right?  I mean, I'm a former Wildroser and the Wildrose has been softened by its merger with the more centrist Progressive Conservatives such that if I have any objections to the UCP, it's that they are not right wing enough, no?

Here's the thing about that mis-perception of that Wildrose-PC merger: it's in fact Wildrose that was "softer" when it came to what matters, not with respect to the Prentice and earlier PCs so much as with respect to the Harper/Kenney crowd who represent current Conservatism in Alberta as surely as Trump = Republicanism south of the border.  It was the political hardball practices and general Machiavellianism of the federal Conservative types moving into the Alberta conservative space that drove me out of provincial politics.  Some might say I'm exaggerating the menace they represented and the issue was more my simply not liking populism and the international trend in right-of-centre politics to move downscale.  But this is kind of like calling the Trump movement populist and leaving it at that.  It is, but it's also nasty and most nasty for me is the epidemic of lying that's come with it.  So, yeah, I do apply a value judgment to it that, for me, transcends ideology.  I got into politics for what you might call ideological fiscal policy reasons, namely trying to call attention to the issues that Brooks DeCillia calls attention to here (early 2008, when I quixotically stood for office, would have been prime time to control spending) but after some time on the inside realized that policy doesn't matter as much as the typical outside voter thinks it does.

So of course I am not surprised in the least that the Kenney crowd cheated their way to control of the merged party.  I would have been surprised if they didn't.  When I was with Wildrose I'd heard about what was going on at federal Conservative nomination meetings and was thankful they are not happening at the provincial level.  I then saw the writing on the wall saying it was just a matter of time.

So where does that leave me on the 16th?  There are circumstances under which I might conceivably vote Liberal at the federal level.  Some might consider that disloyalty to conservatism but my experience as a political activist taught me that a common ideology isn't enough to support affiliating with the unintelligent and unscrupulous.  It won't happen with Trudeau and it would depend a lot on the other options but it's theoretically possible.  Provincially, though, no, not since Kevin Taft was succeeded by David Swann anyway.  There's a reason why the Liberal vote has largely gone to the NDP since then.

I understand the argument that marking one's X for the Alberta Party is throwing away your vote or splitting the vote.  But when I ran myself in 2008 I had no hope at all of even getting a tenth of the vote never mind winning, so that argument doesn't go far with me.  The AB Party has come up with a good marketing line and that's that the NDP and UCP are the vote splitters taking support from the centre.  You can see this phenomenon clearly developing in the U.S. The fact is that if you vote for Kenney or vote for Trump, they're just going to double down on whatever they did to get as far as they have.  Why wouldn't they?  It doesn't mean never voting for the Conservative or the Republicans again, it means trying to stop a particular group from taking total control of the party or movement.  The point isn't just to put a particular party in power but to make a political statement.

Here in my particular riding, the Alberta Party candidate, Jeff Walters, isn't just a name on the ballot.  He's running a serious campaign.  He also doesn't seem to have been sniffing around for an NDP nomination in the city where that would be the thing to do if you just want to get elected.  He seems to have soured on a Kenney party he might have otherwise run for over the social issues hubbub which happens to be the one point on which I think the UCP may be unfairly perceived, but I'll nonetheless endorse him, not least because I've spent most of this post arguing that personal character matters and however much the riding's incumbent may be a nice guy with reasonable policy preferences (for an NDP man), we could use an upgrade and I think Jeff Walters will deliver it.  I haven't met Mr Walters so will grant that I'm just guessing to an extent but I do think that for the first time ever this is the provincial election for me look past a party with "conservative" (or "Wildrose") in the name and to the party with Alberta in the name.

Sunday, December 21, 2014

Five Questions for Danielle Smith

Let's take a stroll down memory lane:

October 27, 2009: Wildrose office manager Heather McMullen advises a member, "As for floor crosses, we have a policy in place that any MLA wishing to cross the floor will have to first sit as an independent, then gain the support of the Executive of the party and Constituency Association, and prove that their decision is also supported by the residents of that riding."

January 5, 2010: Wildrose leader Danielle Smith tells Liza Yuzda of iNews 880 that " policy had been to require a by-election for 'floor crossers' but when it came to reality..." party policy didn't stop her from welcoming floor crossers Rob Anderson and Heather Forsyth without conditions.  Smith goes on to invite listeners to think of the financial needs of the crossers, saying that if they had to run in a by-election, there might be some period of time that they wouldn't be drawing their taxpayer funded salaries: "without an income for six months."  We later learn that in fact there were conditions, but not conditions demanded OF the crossers, rather, "Danielle Smith had agreed to give each of their constituency associations $20 000 prior to crossing."

December 18, 2014: Danielle is "moved to tears" recounting a November 15 policy vote where, in a close vote, the membership declined to revisit and enshrine as policy a motion about rights that the membership had approved the previous year.  "It really was a turning point.  It was one thing that made it impossible for me to continue as leader," she says.

Some questions for Danielle:

1) If you could ignore party policy in January 2010 in order to have Rob Anderson come over without conditions (and in fact even let Anderson set financial conditions in a secret deal), you could ignore last month's policy vote, no?  Never mind going even further and defending last month's vote saying "I think that the nature of the debate was that [the membership was] concerned there might be something excluded in that long list.  I think that's a reasonable position to take."  If your conscience was as troubled as you now say it is, you could have resigned, or replied to the vote by asking at the AGM for a democratic mandate for what you now demand, namely, a merger with the PCs, no?

2) In 2010 over at the Western Standard Matt Johnston complained about Heather Forsyth's social conservatism.  "Sadly, as an early defector to the Wildrose Alliance, Forsyth will likely be given prominence in the party that could put her in a position to shape policy," Johnston noted.  Why are you now complaining about the membership when it was your idea, not the membership's, to welcome Forsyth as a floor crosser?  More to the point, please explain that "Wildrose Statement on Ontario Court Prostitution Ruling."  I invite you to look again at the reaction on the Western Standard to that "Statement."  Colby Cosh, writing in Maclean's, complained about it.  I, no libertarian, complained about it as a gratuitous poke in the eye of libertarians.  Yet you, party leader, let that statement go out, without any evidence the membership wanted Wildrose to adopt such a position, and now complain that it's the so-cons in the rank and file membership that are bringing you to tears?  You've got Forsyth and Anderson's back, do you?  You reacted to Towle's and Donovan's crossing to the PCs by saying "Today I was proud to be in the legislature with Rob Anderson and Heather Forsyth at my side [two of the biggest so-cons in the Leg].  Rob and Heather crossed the floor from government to opposition because of principle [while Towle and Donovan did] the opposite [by joining the PCs]."

3) Rob "crossed the floor from government to opposition because of principle" and he crossed back because of principle, right?  Then explain his comment, "If only three or four decided to [cross the floor this month], I don't think it would have happened."  Why is it that the right thing would not have been done if only "three or four" of you decided to do it?  Why does it take a crowd?  Anderson, who brought the mass crossing idea to caucus (why wasn't it YOUR idea, Danielle, if you're the leader?  Anderson gave you, the leader, "an ultimatum to join the mass defection"???), successfully lobbies 8 people to join him in floor crossing.  To win those seats back, Wildrose campaign workers and donors will have to lobby well over 8 thousand voters, maybe 80 thousand.  Do you really think that's fair?  How about FIRST changing teams, openly, and THEN working to shrink the Wildrose caucus?

4) Last Thursday you said the plot had to go down in secret because, had there been an open effort to lobby ordinary Albertans to endorse the floor crossing, the official opposition and the government would have been in limbo for 4 months.  Yet you've admitted that "discussions have been going on for months" anyway!  If they could go on "for months" in secret, they could have gone on in the open, no?

5) This past week you complained that "the most radical elements show up and choose the policy direction."  You've attended more AGMs than I have, so I think you know that the truth is that, year after year, "the most radical" social conservatives have shown up to propose socially conservative planks and they routinely get outvoted.  As for the Allan Hunspergers in the party, yes, the most radical elements HAVE been known to get someone like Hunsperger nominated, but if you don't like that, then why wasn't more effort put into overseeing the development of consistency associations, since large associations are more likely to ensure due diligence is done with respect to nominations?  I was heavily involved in setting up Edmonton Whitemud's constituency association and I called on the party leadership at the time to get a separate association up and running south of the Anthony Henday as early as possible in order to keep motivated and moderate constituency workers involved yet I couldn't get any interest.  The result was a rump association relative to the north side of the Henday and Hunsperger's nomination.

In April 2012 when I ruefully recounted how Wildrose had arrived on the doorstep of government, I said "I trust Danielle."  I was mistaken about that, and the main reason I was mistaken is because I didn't fully appreciate just how weak your leadership was.  You abdicated party leadership over to the ring leader of this destruction of the Wildrose caucus, and then tried to come up with excuses like blaming social conservatives in the membership that you've never met while never confronting the caucus members you regularly see face-to-face.

It didn't have to be this way.  As Maurice Tougas observes, "Winning isn't the only thing that matters in politics.  There are a few corny old things like public service and honouring the people who voted for you that still matter.  Liberals and New Democrats run for office knowing their odds of winning their seats are long, and the odds of winning government are longer still; say, the distance from the Earth to Jupiter.  But they run anyway, because they feel they have something to offer, or something to say." 

Wednesday, January 9, 2013

Trillion dollar coin an insult to the Fed, not common sense

Before I get to the proposed solution to the anticipated U.S. debt ceiling crisis of just printing the money to keep the spending flowing (by striking a $1 trillion coin) thus obviating a need for Congressional authorization for additional borrowing, I'll make a comment on the nomination of Chuck Hagel for Secretary of Defence.

The contributors to paleocon flagship The American Conservative are positively giddy, saying "No matter how the battle over his confirmation goes, it will  be educational and point the country in a better direction."  Libertarians who have distinguished themselves from and taken issue with neoconservatism in the past like the CATO Institute are also pleased, with Justin Logan of the view that "Hagel successfully running the DC gauntlet could be a perestroika moment in the American foreign and defense policy debate, and possibly even loosen the neoconservative stranglehold on the GOP."  Fact is, the conservative pundit class is far more neo-con heavy than popular support would suggest (implying the reality of an influential lobby), and neo-con nostrums are received wisdom across the "right wing" spectrum of talking heads, from David Frum to Charles Krauthammer.  The one palecon pundit with name recognition, 74 year old Pat Buchanan, is widely perceived as a crank.  If the Hagel nomination stays in the headlines it may create an opportunity for a new generation of paleocon voices to attract a following.  Last month the self-described neo-con John Agresto penned a very interesting piece on the need for neo-cons to re-evaluate.

Now what about #MinttheCoin?  Apparently the first appearance of this idea is a comment by a lawyer named "beowulf" (later identified as one Carlos Mucha) on Brad DeLong's blog in July 2010.  Beowulf expanded on the notion in his own blogpost in January 2011.  The concept then got traction on mainstream media hosts in July 2011 as the then debt ceiling debate caught fire.  The idea rests on a legal loophole created by Congress in 1996 that authorized the Secretary of the Treasury to mint "platinum coins in accordance with such specifications, designs, varieties, quantities, denominations, and inscriptions as the Secretary, in the Secretary’s discretion, may prescribe from time to time."  Note that although there is a legal limit to how much paper currency can be in circulation, no such limit is specified here.  The U.S. Mint would book the difference between the coin’s face value and its cost of production as seigniorage (marketing and distribution is normally deducted as well but those costs should be negligible here).  As the Mint explains, seigniorage is part of "off-budget receipts" and "is deposited periodically to the [United States Treasury] General Fund where it reduces the government’s need to borrow."

A lot of the media hosted bloggers haven taken issue with the legality of the scheme.  But ask yourself if it is legal for the U.S. Mint to issue a $100 coin and use the seigniorage (which will be a little less than $100) to "reduce the government's need to borrow" by that amount.  Obviously it is.  Now why is it not legal to issue ten billion of those coins?  And if that's legal what's the substantive difference between that and a single trillion dollar coin?  Now Canada has a "general anti-avoidance" rule whereby the government can challenge your exploitation of a tax loophole if the Crown can prove that your schemes are "so inconsistent with the general scheme of the [Income Tax] Act that they cannot have been within the contemplation of Parliament."  But that sort of rule has to be specifically enacted, it's not part of the common law.

What about the economics?  Suppose Timothy Geithner stops off at the Mint to collect the trillion dollar coin in person and on his way over to the Federal Reserve to deposit it happens to stop at a cinema and see a show.  While sitting in his plush seat the coin rolls out of his pocket and ends up on the carpet.  After leaving the cinema he notices the coin is missing and rushes back to the cinema.  But it just so happens that you came upon the coin first and you are already on your way to your local bank to deposit it (knowing that you would have a hard time getting change at the local mall).  Now instead of the U.S. Treasury getting to write cheques on that trillion without having to borrow the money, you get to do so!  Now suppose the minting of the coin and Geither's actions happened to have been done in secret (perhaps to be announced later) and the management of your bank took no particular note of your deposit.  Without the public info that might create expectations of inflation (and no additional lending by your bank on the basis of your deposit) would there be any inflation?  Not so long as you haven't spent any of it.  But if you did spend it it would eventually drive up inflation because each or your purchases would add to the quantity of dollars while the supply of goods and services remained the same.  Note that this inflation would not happen if you borrowed the money because the borrowed money would have already been introduced into circulation.

Now Paul Krugman (visage at right from TPM) had me puzzled when he seemed to pooh-pooh the coin on January 2, saying "to prevent a sharp rise in inflation the Fed will want to pull back much of the monetary base."  Krugman, of all people, succumbing to inflation fears?  Krugman seemed to quickly refind the courage of his convictions, however, saying on January 8 "mint the darn coin."

If Krugman is correct that there isn't an economic policy objection, and there isn't a legal issue, then what's the problem?  Consider the case where you've just found that trillion dollar coin.  What could then stand between you and anything money could buy?  The bank, of course.  If the bank accepts your deposit, you're gold (or platinum?).  As a for-profit institution, your bank should be eager to take your deposit, since it could vastly expand its (loan) business, but the Federal Reserve is not a profit centre.  The Fed is not going to want to be a party to a major transaction that serves the government's fiscal purposes instead of its own monetary purposes.  Now the Fed might not object to accepting the coin if the transaction were guaranteed to be a one-off.  It already has close to $3 trillion on its balance sheet and plans to add another trillion in 2013 anyway (in part through purchases of more than double the average daily supply of mortgage-backed securities aka MBS) so what's another trillion.  The Fed could additionally "sterilize" the coin in terms of inflation by selling off a trillion of its other assets early.  The contemporary Fed furthermore has an inflation fighting tool at hand in that it can pay interest on reserves so that banks are content with that income and don't lend on said reserves (see again the hypothetical above where your local bank just happens to ignore your trillion dollar deposit instead of expanding its lending business).

Now to be sure, there are real risks to yet another expansion of the Fed's balance sheet, not least of which is the substantial risk that markets will not react well to the unwinding the Fed's oversized balance sheet (what is going to happen to housing if, or more precisely when, the Fed stops buying and instead dumps its trillion in MBS on the market?).  When you ask the people who say that there are no economic concerns at all, "why not mint $16 trillion in coins and pay off the whole debt?" they wave the question away as crazy talk but the question illustrates how the risk of inflation and financial instability is on a continuum.  Of greatest concern to the Fed, however, would be the precedent set with regard to who controls its balance sheet (and monetary policy in general).  At the end of the day, the trillion dollar coin "solution" to the debt ceiling means printing money instead of borrowing it.  In terms of the mechanics there isn't a lot of difference between quantitative easing to stimulate the economy and printing money to finance the government's deficit spending but politically the difference is huge.  The Fed wouldn't just be surrendering its independence, it'd appear to be doing so to Democrats in Washington over the objections of Republicans.  Imposing on the central bank like this is the sort of thing one expects of Hugo Chavez, not the U.S. Treasury.

Now a reasonable question to ask here is why the Fed's current handling of coinage doesn't amount to a threat to its independence.  After all, I've called attention to continuums (or, depending on your view, used the "slippery slope" argument) with respect to both the legality of a trillion dollar coin scheme and its economic consequences.  Coin currently counts for $2.1 billion or 0.07% of that $2.9 trillion in Fed assets but what is fundamentally different if that number changes to become closer to the $0.93 trillion currently in MBS?  The distinction here is that the current volume of coin reflects the public's demand for it, not the government's.  As the Economist points out, if financial institutions were actually requesting trillion dollar coins to use in private transactions then, yes, the Fed could go along with the scheme while plausibly arguing that it was not just dancing to the government's tune.  Note, however, that even if one were to mint a million million dollar coins (something that's more plausible in terms of economic utility than a single trillion dollar coin), in 2002 the total coin in circulation was only $32 billion, or 3.2% of a trillion, and the total of both U.S. currency and coin was less than two-thirds of a trillion.  Even a tenth of a trillion in additional coinage can't be justified except by admitting that it would have to be handled by the Fed and in order to facilitate Washington's deficit financing.

The trillion dollar coin scheme is thus unworkable, but it's unworkable because the Federal Reserve Board of Governors will refuse to cooperate.  It's not Obama's reputation but Bernanke's that will take this option off the table.  If somehow the Fed did go along, investors would become extremely nervous.  At a minimum, the Fed chair would feel compelled to spin the stunt as his own idea, applied to a unique circumstance.  On its face, yes, a fear that the U.S. will inflate away its debt is less grave than the shock of an outright default by not raising the debt ceiling (one can argue that various personal transfers like social security cheques could just be trimmed instead of any "defaults" but the brake on spending would be so great it would dwarf any "fiscal cliff" concerns to date).  But a default would surely never be allowed to happen again, whereas if the Fed steps in to help the Treasury Secretary manufacture a trillion or two out of thin air (or an ounce of platinum) what's to stop that from happening again?  The very fact that the consequences wouldn't be so immediately horrific would raise greater fears for the long term.

UPDATE January 10:

WIRED has a fuller background on "beowulf" and the origins of the idea.  Apparently the blogosphere discussion dates back to May 2010 on Warren Mosler's blog.

It's struck me that the best counter to the contention that the Fed would see this coin idea as a challenge to its independence is the fact that the Fed is already on track to have a balance sheet of four trillion by Christmas.  One could therefore reasonably argue that the only real issue is the optics of the Fed's desires as opposed to the Fed's desires (unless the Fed is particularly insistent that a large fraction of the money printing continue to support housing as opposed to general government expenditure).  By that angle, all the Whitehouse has to do is work behind the scenes to get some Fed people to raise the coin idea and make some public statement indicating that they're open to it.  That could both resolve much of the independence concern and make the move an easier sell politically.  Now the Fed might object anyway even if it didn't see an independence issue, but in that case their objection would be more like an objection to NGDP targeting that we've often heard from central bankers; that is, that a concern is not just the theory but retaining the confidence and understanding of the general public.

Friday, December 14, 2012

Lie of the Year? "$1.5 trillion spending cuts already passed"

For my undergraduate degree I majored in philosophy, and one of the ideas I picked up then that has stuck with me is that the "coherence" theory of truth has a lot to recommend it.  It answers many of the various objections that epistemological skeptics make and that subjectivists make to objectivists while retaining the primacy of logic and rejecting the metaphysical premises behind moral relativism.  To oversimplify, you might not agree with someone else's world view, but you still have to keep your own world view coherent, and once it is established that both you and another person both believe in certain basic principles, if you disagree on some derivative matter one of the two of you is more wrong than the other.

The moral status of abortion may be an example of an issue whereby the level at which disagreement begins is too fundamental for either side to prove the either side to be definitively wrong.  There just aren't many commonly held premises, even when drilling down to the metaphysical level.  One ends up appealing to a "correspondent" theory of truth, i.e. arguing that the other side's beliefs do not correspond to reality.  If one person's view of reality happens to be entirely materialist (that nothing, not even consciousness, exists apart from matter and energy) while the other is metaphysical dualist, the disagreement will be pretty fundamental.

But most debates between "subjectivists" and "objectivists" are over matters of degree within a coherence construct.  If the coherence test is applied to such an extent that the "edge" of its applicability circumscribes all of human consciousness, and that metaphysical premise itself forms a common cornerstone, then notions of "subjectivity" drop out as irrelevant, à la Wittgenstein's beetle in a box.  There might be another universe out there, but we are living in this one.

I write this as a preamble to making three comments about the U.S. economic and political debates.  Allow me to take as the first example what PolitiFact called the "Lie of the Year": the Romney campaign's Jeeps and China ad.
 How effective a criticism of PolitiFact's decision is it to note that every word of the ad is actually true?  Presumably not very, since that's held to not be the issue.  At the time, Politifact said, "In this fact check, we examine whether the sale of Chrysler came at the cost of American jobs" instead of examining what the ad actually claimed.  According to PolitiFact, the ad "presents the manufacture of Jeeps in China as a threat, rather than an opportunity to sell cars made in China to Chinese consumers."  Now that IS true, it is presented as a threat on the basis of the well established economic principle of opportunity cost (corporate resources spent on expanding plant in China are resources not spent on expanding plant in the U.S.) but the question is why outsourcing suddenly became an "opportunity" when Politifact treaded lightly on the Obama campaign's many charges that Romney was running to become Outsourcer in Chief.  Where is the coherency?  Now it's true that Romney could be challenged on his own "coherency" in choosing this line of attack by noting his track record at Bain.  But that's actually a charge of hypocrisy, not a truth claim.  As Ryan Chittum at the Columbia Journalism Review put it:
[The ad is] saying that Chrysler’s Italian owners “are going to build Jeeps in China.” But happens to be true, even if it was happening before 2009 under its German and private-equity ownership. Cars made overseas by an American company (even one with Italian owners) are cars that won’t be made in the U.S., and it’s fair to say those jobs are outsourced.
On the other hand, it’s high hypocrisy for Romney the free-trader private-equity guy to attack anyone for outsourcing production...

Glenn Kessler of the Washington Post dodged the fact that what the ad said was true by declaring that "The series of statements in the ad individually may be technically correct, but the overall message of the ad is clearly misleading."  Kessler assigned his most damning designation of Four Pinnochios on this basis, yet he assigned zero to Obama's claim in his second debate with Romney about his communications regarding Benghazi which were only technically correct and technically was not even technically correct.  The Columbia Journalism Review was founded by Victor Navasky, who has used his publication The Nation to, amongst other things, argue that Alger Hiss wasn't a spy for Stalin despite the overwhelming evidence to the contrary.  The CJR's Chittum nonetheless points out a mitigating factor re the Jeeps and China ad, namely that it started with a Bloomberg story with problematic wording and then was amplified inaccurately by a Washington Examiner blogger (before actually being dialed back in the Romney ad transcript from what the Examiner said).  No such mitigating factor exists with respect to Obama's misleading claim in the second debate.  Instead of getting "caught up in the liberal echo chamber," Obama's decision to create the impression that he called Benghazi a terrorist attack from Day 1 was a decision to create something, not picking up to forward on a liberal attack line already in circulation. Politfact, of course, also took a pass when it came to rating Obama's remarks, instead seeing the back and forth with Romney at the second debate as an opportunity to mark down Romney, calling his criticism of Obama on the point "half true."  The bottom line here is that it's a mug's game to try and expose "fact checking" bias by pleading the "facts."  One has to make an appeal to coherency, not correspondence.

There are other examples one could go into.  Romney's infamous "47%... pay no income tax" remark was taken to task by fact checkers in part because "nearly two-thirds of households that paid no income tax did pay payroll taxes."  Yet when it comes to trimming the growth of Social Security benefits, were these benefits paid for by tax revenue?  In that case, the payroll taxes are spun as being insurance policy payments or otherwise "earned" benefits; in other words, when the question is whether the 47% are carrying their share of the load, their payroll taxes are deemed to be building up the public pot, but when the question is limiting S.S. payouts, these same contributions are deemed to be building up a private entitlement.

Now the example I meant to talk about today (but which I've taken a while getting to) goes back to my last post about the extent to which U.S. unemployment is cyclical or structural.  In the context of the "fiscal cliff" debate the New York Times today claims that "Obama already agreed to more than $1.5 trillion in cuts last year."  This $1.5 trillion number comes courtesy of the Center on Budget and Policy Priorities, however it should be noted that these "cuts" nonetheless still not only allow "discretionary" programs to continue to grow with inflation, they allow for a further $65 billion in spending above and beyond that over the next decade.  How do you spin spending that exceeds inflation (and more) as "cuts"?  By reaching back to inflated 2010 appropriation levels and using that as the baseline.  The 2010 appropriation bills were actually adopted in 2009 when the demand on the social safety net was near its height and when Democrats enjoyed a filibuster-proof majority in the Senate in addition to their majority in the House, except for some special bills in 2010 for disaster assistance, border security, and the Patent and Trademark Office which the CBPP of course also included in order to further inflate its baseline.  The CBPP says that the 2010 appropriation "simply reflects the level that Congress deemed appropriate" at the time.  Well of course.  You could say the same thing about 2007, or 2013 (we're already more than than two months into the 2013 fiscal year), but of course then the claim of $1.5 trillion in "cuts" would collapse.

Now what would be an appropriate baseline?  The answer to that is what is most coherent with the view you have taken elsewhere.  Dean Baker, for example, has repeatedly insisted that the "graph that gives a better picture of the problem of the budget deficit in relation to the economy" is one that calls attention to projected deficits in January 2008 (I've copied his graph here).  The blogger Kevin Drum insists on using a graph that he cuts off at 2008 in order to argue that "Washington Doesn't Have a Spending Problem." Drum says he cuts off his chart because "numbers in the chart have spiked over the past four years because the recession has temporarily depressed GDP and temporarily increased spending, but that spike will disappear naturally as the economy recovers".  Yet Drum elsewhere tallies up "Discretionary spending cuts already passed in 2011: $1.5 trillion"  No "natural disappearance" here, it's "cuts already passed" by Congress!  Not passing another disaster relief bill like in 2010 becomes passing a cut.  Coherency here would mean tallying up the change in spending since 2008, although that would of course completely undermine the point about all the "cuts" that have occurred.

My last two blogposts about the U.S. prior to this one were about whether the current U.S. economic situation is the "new normal" and whether Obama's remarks at the second presidential debate were misleading or not.  People can disagree with the former and say that 2007 should be the touchstone, but if so, don't elsewhere start calling a level of federal government spending that was decided in 2009 the appropriate reference point.  People can disagree about my negative take on Obama's claim in October about what he said on September 12 by saying his words were narrowly true, but don't elsewhere say that Romney was a liar because while his ad was narrowly true it's what viewers were lead to believe that matters.  

Tuesday, December 4, 2012

the new normal: U.S. economy already nearing potential

The main argument that's been trotted against the "deficit scolds" is that Washington should wait until the U.S. economy has recovered.  When will it have recovered?  When it is approaching "full employment."

In economics, "full employment" is a rough synonym for "potential GDP" and it refers to the underlying productive capacity of the economy.  Potential GDP is the blue line in the graph below.  Although the U.S. emerged from the officially determined recession some time ago (indicated by grey shading), according to Keynesians a  large "recessionary gap" or shortfall in the aggregate demand for goods and services in the economy remains, as indicated by the gap between potential GDP and actual GDP (which is given in red):

Although there's no doubt about the red line, just where the blue line should be plotted is less than an exact science.  In this case, the blue line is plotted by the Congressional Budget Office or CBO, and what is of particular note here is that the CBO has been repeatedly shifting the line towards the right (i.e. towards the red line), as Brad DeLong has graphed, to the effect of steadily reducing the demand deficiency.  DeLong notes that the CBO has drawn down its potential GDP track by 8.5% since 2007, well in excess of the 2008-2009 contraction, which Dean Baker has pegged at 4%.  Here's a graph that has the potential GDP line coming very close to actual GDP:

This particular graph, which the President of the St Louis Federal Reserve, James Bullard, has been using, has come under a lot of attack by Keynesian economists because it challenges the hypothesis that there is currently a significant output gap.  The red dashed line here is generated by using a "Hodrick–Prescott filter," which is named after economists Robert J. Hodrick and Edward C. Prescott, who developed it to separate the "cyclical" element from the "trend" element.  Now an HP filter has various limitations, such as working with less information near its end point, but Mark Thoma takes issue with what it says in the middle: "the HP filter reveals a period of substantial above trend growth through the middle of 2008. This should be a red flag for Bullard. If he wants to argue that steady inflation now implies that growth is close to potential, he needs to explain why inflation wasn't skyrocketing in 2005. Or 2006. Or 2007."  One could start here by pointing to the fact that Paul Krugman has defended the use of data that uses a Hodrick–Prescott filter by arguing that a gap with potential GDP need not be defined exclusively by inflation.  Does Thoma believe that because the general consumer price index in Japan rose less than 4% between 1985 and 1989, the Japanese economy was not operating above potential despite real GDP soaring more than 20% during those four years?  Isn't there an obvious analogy between Japan's equity and commercial real estate bubble bursting in 1990 and the U.S. residential real estate bubble bursting in 2008?  Growth cannot always be below trend, meaning that unless Thoma is going to define a decade as the short term, he needs to acknowledge occasions where it has been above trend.

Notwithstanding his 2009 use of the IMF's HP filtered data, in July Krugman weighed in on the debate over Bullard's graph to note that back in 1998 he took issue with those who used a HP filter to conclude that Japan's economy was close to potential that year.  What Krugman doesn't tell you is that he took issue wrongly, claiming back then that "in retrospect it will seem clear that Japan's 1998 output gap was 8 percent or more... so that demand-side policies to close that gap are of very real importance."  In fact the OECD, which marked down Japan's potential growth to 1.6% in 1994 and forecast then that the estimated output gap for Japan in 1997 was, in Krugman's view, "remarkably small:  -  1.2  percent," has been vindicated.  According to the IMF's model (that would be the very same model Krugman used in 2009 to support his claim about the output gap in the U.S.) Japan's output gap for 1998 was less than two percent.  While Krugman argued that Japan was facing a prolonged slump in GDP growth below potential, the IMF correctly interpreted Japan’s lost decade as a slowdown in potential.  I might add here that the IMF also says that the U.S. had an "inflationary gap" (that is, a negative output gap) over 1% in 2005, 2006, and 2007.  Despite having wrongly prescribed aggressive "demand-side policies" for Japan in 1998, Krugman is currently pounding the drum for them to be applied in the U.S. in 2013.  

Ironically, Krugman exhibited a moment of worry in February 2008, noting that a HP filtered graph of productivity was flashing warning signs.  Productivity is a key component of potential GDP, meaning that he saw back then an explanatory factor for the U.S. economy's low growth that wasn't coming from the demand side.  Here is a graph of the year-over-year change in potential GDP as measured by the CBO:
Note the slump from 2000 to 2011.  The CBO optimistically believes the trend will reverse this decade, but if it doesn't, the CBO will continue to shrink its projected output gap by ratcheting down its potential GDP projections.

There are a variety of other metrics that one can point to that are inconsistent with the thesis that there is a large output gap, including the fact that inflation is running at 2%, pretty much right on the average since the late 1990s, the employment cost index (wages and benefits) is rising, and  U.S. capacity utilization has recovered to pre-crisis levels. 

But a Canadian now working for the St Louis Fed, David Andolfatto, makes a particularly compelling argument for deeming current U.S. unemployment structural as opposed to cyclical:
The Canadian unemployment rate is is blue, the U.S. rate in red.  Throughout the 80s and 90s, Canada's unemployment rate was consistently higher.  Although the Canadian unemployment rate rose around the 2001/2002 recession and again in 2008/2009, the rise was smaller than in the U.S., and Canada reformed its unemployment insurance program in the 90s, restricting benefits.  If it took Canada three decades to move in front of the U.S., why should we believe the U.S. will quickly reduce its unemployment to Canadian levels?  It's more likely that most of the "business cycle" adjustment has already occurred, such that remaining adjustment is subject to long term processes.

This brings us to yet another string of arguments, namely those advanced by Casey Mulligan.  Mulligan goes beyond the fact that the share of 25 to 54-year-old non-college educated men in the work force has trended down for decades to note how U.S. policy has encouraged non-participation in the labour force in recent years by easing eligibility rules for unemployment insurance, increasing the generosity of food stamps, etc:
The American Recovery and Reinvestment Act, popularly known as the stimulus, gave unemployment insurance recipients a weekly bonus, and offered to pay for the majority of their health insurance expenses. FDIC and Treasury reduced some “unaffordable” mortgage payments, which means that successful people need not apply. The list goes on and on.

The essential consequence for all of these is the same: a reduction in the reward to activities and efforts that raise incomes.

Dean Baker and Paul Krugman have occasionally taken issue with Mulligan, although Krugman frequently suggests that he considers Mulligan too much his inferior to engage.  At one point Krugman says "Mulligan and others keep emphasizing examples of individual groups that have managed to gain jobs by cutting wages or offering other attractions to would-be employers."  Why is this inconsistent with Keynes?  Because Keynes' was of the view that if you increased the skill level of all the unemployed in the economy in one swoop or reduced the wage cost to the employer of hiring them, this wouldn't reduce unemployment when there be an output gap because the problem is not with the supply of labour but on the demand side.  Krugman's reply is that a sub-group that reduces its unemployment says nothing about whether the whole group ("all unemployed in the economy") could realize the same success.  Everybody can't be an above-average potential hire, observes the Krugman.  I don't find this at all convincing, however.  Krugman ought to be be chastising Dean Baker instead of citing him if he were consistent.  Why?  Because Dean Baker's #1 policy prescription after the economy has returned to potential is a lower U.S. dollar.  I should think it would be obvious that not every country can depreciate its currency at the same time.  At issue here is the international competitiveness of the United States; if a particular group in the U.S. can take actions that improve its employability the Keynesians need to explain why it wouldn't work for the entire country to take a similar action.  

To be sure, I think Mulligan goes too far when he seems to suggest on occasion that the cause of the recession is to be found on the supply side.  But that's not the question at issue here on the doorstep of 2013.

UPDATE December 6:
Job vacancies continue to rise:

Monday, November 26, 2012

Wildrose 2013

For the past few years, I've given a run down of what I found noteworthy at the provincial party's AGM.  That won't be happening this year, because I didn't go.  I can, however, comment based on what I've seen reported.  Since this post is directed at current Wildrosers, I will be calling attention to some local constituency details that won't be of interest to a wider readership, and I'll be stepping back into my old shoes as a party activist to speak to social conservatives from an "us" perspective, issues I wouldn't say I've since "evolved" on but I would say would require more discussion of what things look like from the libertarian perspective were I addressing a broader audience.

First of all, I'll note that there seems to be a continuation of the mentality I took exception to at previous AGMs, namely, that the party's MLAs in particular seem to be of view that the party's popularity challenges are best overcome by making policy concessions as opposed to advocating for the party's policies more effectively.

The best example of this is not "conscience rights" since there is little room to advocate more effectively and convincingly on life issues.  Most people are already informed enough in that area to make a decision, rightly or wrongly, and it's a decision that is typically based upon an ingrained world view.  However, even here it could be pointed out to the media that anti-abortion and anti-gay marriage planks have been shot down continually by the party membership ever since "Wildrose" was first attached to a provincial political party name more than five years ago.  All that's left today is a plank that is consistent with a pluralistic society wherein a significant minority does not support either abortion on demand or state-approved gay marriage..  In theory, access to abortion or a marriage certificate could be constrained by finding that one's first point of contact is declining to offer the service.  But if my local medi-centre declines to perform brain surgery on me and I end up having to head down to the university hospital, have I been really been denied access to this surgery?  In a free society, coercion is a last resort and if someone is modestly inconvenienced by someone's freedom to decline a service, that may seen as a reflection of the fact that it's one thing for a society to come to a conclusion about a contentious issue and another to coerce conscientious objectors into helping implement that conclusion.  Surely the manpower of the dissidents is not necessary if community consensus is in fact so decisive.  The real problem for those requesting the service is not the inconvenience of moving on to the next provider but the audacity of the refusant to not recognize their entitlement.  If we can tolerate cops declining to ticket someone even though the letter of the law calls for a ticket, I should think we could allow some room for other representatives of the state to exercise their personal judgement.

But if the "conscience rights" clause must go nonetheless, the party would still have a raison d'être without it, even just on social conservative grounds (properly construed).  I've long been of the view that narrowing one's advocacy down to a pro-life agenda often ends up undermining the larger conservative social agenda, because, to take an example, it may end up increasing out-of-wedlock births instead of decreasing them.  I understand that the ends don't necessarily justify the means, but if one person is trying to get a guy to take more responsibility for his partner and his children and another is trying to convince him of the need to obey Levitical prescriptions concerning the eating of pork, do we decide which person we should ask to stop talking over the other so a single, less confusing message can get through based solely on who makes more references to Scripture?  I'm not trying to trivialize abortion by talking about clean and unclean food, I'm rather noting that not everything in the Bible is treated, or can be treated, as a litmus test.  What matters is whether the candidate's approach to public policy will advance or retard God's will for the family and society.  It's not impossible that an atheist could be used by the Lord.  Once a particular theological point assumes dealbreaker status, where you do you stop?  We saw the logical conclusion of how the issue plays out politically south of the border when GOP Senate candidates Richard Mourdock of Indiana and Todd Akin of Missouri were pressed on how far they would go in their opposition to abortion.  With respect to gay marriage my primary objection has been to the characterization of the matter as a "rights" issue when such characterization ought to be reserved for a call for the state to step out, not for a call for the state to step in.  And a "step in" is indeed the issue here because the issue is not striking sodomy laws off the books but recognition of gay marriage as a social norm.  It's the difference between the freedom to deviate and whether it's deemed deviant in the first place.  There's a fundamental difference between approving gay marriage via the legislature or by referendum, in other words, and approving it via courts citing "rights."  Once democratic support for gay marriage has been established, that may make no difference in terms of its rightness theologically or metaphysically, but it does make a difference in terms of the return one is going to get on one's political advocacy going forward.  I am not so much saying that social conservatives need to move on from the issue so much as I am saying that social conservatives need to look at advocacy holistically and the breakdown of the nuclear family in particular is an issue that not only provides more fertile ground for moving public opinion but has consequences that do not presume a particular metaphysical view to be identified as negative.  Even atheists can lament the number of single parent households.

So if abortion and gay marriage are not the best examples of where the party should dig in and just fight harder, how about the human rights commission plank?  I'll repeat here what I said after the 2010 AGM:
The question for me, however, was why there was any need to finesse this policy plank when even the Sheldon Chumir Foundation for Ethics in Leadership, which draws its name from a former Liberal MLA [photo at right from Foundation website], thinks a simple repeal of section 3 acceptable.
Here we have the best illustration of why the call by party poohbahs to move closer to the "centre line" represents a lack of creative thinking.  On abortion, OK, the lines have been set for a long time; - if someone had an idea about how to bust open that issue to new movement in public opinion, someone would have surely thought of it by now.  But this human rights commission issue is highly susceptible to framing.  The left has been dragging the centre line their way for a while now and the current situation calls for yanking on the other end of the rope, not capitulation.  The spectrum here consists of the left, the libertarians, and the conservatives.  On this matter it's already been dragged well into libertarian territory such that current policy can be, and should be, entirely defended on free speech grounds.  I call attention here, again, to the fact that Janet Keeping, president of the Sheldon Chumir Foundation, took exception to how this issue has been framed:
Here's one that especially rankles. The Alberta legislature recently confirmed the provincial commission's jurisdiction over offensive speech, but [chief commissioner of the Canadian Human Rights Commission, Jennifer] Lynch notes "not without a chorus of 'boos' from the far right." The Chumir Foundation, other organizations and individuals presented carefully constructed arguments against Alberta's hate-speech provision. It is disrespectful to dismiss our reasoned objections as "boos"...

Our most prolific provincial pundit, David Climenhaga, is of the view that it wasn't a "couple of candidates mak[ing] controversial comments" that brought Wildrose up short in April's election but "Wildrose policy".  Aside from the fact that Mr Climenhaga's thesis isn't supported by the polls ( it wasn't previously undisclosed policy that grabbed headlines late in the campaign but "comments") it requires far less reaching to contend that what voters took issue with was not the fact that Edmonton South West candidate Allan Hunsperger wasn't legally prosecuted by the human rights commission for referring to the "lake of fire", it's that he was a party candidate.  I assure you, dear reader, that "lake of fire" does not appear in the party's policy platform.  It's one thing for the party to defend Hunsperger's right to free speech as a private citizen and another to make him a potential legislator in a Wildrose government.

Tom Flanagan [photo at right from] says Wildrose should have been spent more money on oppo research, digging into the background of both Wildrose candidates and PC candidates.  Is it not a little odd that a prescription to spend more money is coming from someone seen as a conservative ideologue?  Is it not oddly ironic that someone with such a (well deserved, in my view) reputation for cynical, hardball politics, ended up the lamb before the lion of the PC's political attack machine?  Flanagan repeats the call for softening the party's policy book, when in fact it was the party's campaign tactics that were the problem, and if anything the tactics weren't hardball enough, substituting shrillness and sheer volume for sophistication in its criticisms of the governing party.  The idea of paying out energy revenue directly to Albertans didn't come from the policy book, or the grassroots, anyway.  This was entirely a creation of the head office brain trust.  One of the biggest arguments for conservative taxation and spending policies is that incentives matter and should be rewarded.  Paying out unconditional cheques for simply existing does pretty much zero in terms of creating additional incentives to work or otherwise add value to the economy.  Consigning entitlement schemes like this to the dust bin, in other words, would move policy to the right, not left.  The problem with the policy book is not that it is too right wing but that it isn't smart and innovative enough.

From: Brian Dell
To:  Wildrose VP Policy
Date: Tue, Nov 17, 2009
subject: Re: Making Policy
"We cannot simply call on... people that do not have a connection to us..."
Now where's that "can do" attitude, [...]?  If say, getting someone from the U of C's School of Public Policy to speak to the membership about trends in tax reform or an Edmonton-based academic economist to provide input to a policy task force is truly mission impossible, why not suggest to the policy committee that they consider and come to a consensus about whether to give me, or anyone with a public policy background, authorization to try and make it happen?  After all, I would only be failing where others have failed before, no?  Just be sure to have that Mission Impossible theme music in the background! ;)  If it is a requirement that the invited person be sufficiently "connected", just get specific about that in the mission details.  I don't think a "connection" of comparable strength to whatever the connection was that brought someone to speak to the membership twice this year about privatizing healthcare would be impossible to find or create.

I think you've struck upon precisely what I see as the issue, namely, that the people that have a "connection" to "us" are Calgarians, media people, oil patch lobbyists, or all of the above.  We can either move beyond that, or we can take that attitude that we can't build new "connections"....

For all of my frustrations about policy, I might have been able to deal with it, had it not also been for other factors including what seemed to me to be a shortage of professionalism when it came to local organization.  I lobbied for the early creation of a southwest Edmonton constituency association that I and others could work with in anticipation of Edmonton Whitemud's split and I couldn't find any takers at the stage when the association could have avoided ending up a runt. This brings us back to Hunsperger, the party's ultimate nominee for the new riding of Edmonton South West.  According to the Journal, "[Danielle] Smith repeated her stance that it was largely up to local constituencies to weed out problematic nominees."  But of course.  This means, however, having a developed local constituency association early in the game.

From: Brian Dell
To: [select local riding people from the southern part of Edmonton Whitemud]
Date: Tue, Nov 24, 2009
Subject: anticipated division of the Edmonton Whitemud provincial constituency
I'm Brian Dell with the Wildrose Alliance.  I may have left a message for you or sent you an email in recent weeks.

The Alberta Electoral Boundaries Commission is scheduled to release their preliminary report with respect to redrawing the province's ridings in late February.  Public hearings will be held in April, and a final report presented to the Legislature in July for the Assembly to consider and enact as law.

During preliminary hearings last September it was apparent that of the 4 ridings to be added to the province (for a new total of 87), at least 1 would be going to Edmonton and the #1 priority for placing this new riding would be Edmonton's southwest; - the Whitemud riding is currently the most overpopulated riding in Edmonton and one of the 2 or 3 most overpopulated in the province.

It follows that the chances of you gentlemen... remaining in the same constituency as those up in Brookside or Rhatigan Ridge is close to nil.

The two main proposals under consideration would either divide the constituency more or less east-west (as proposed by Edmonton's PC Party VP) or north-south.  See attached maps....
...the south of the riding will likely be in need of another individual or two who could be called on to form a nucleus for the new constituency in the south and east of Edmonton Whitemud.

... If you are interested in helping guide the development and success of the Wildrose Alliance in southwest Edmonton generally we encourage you to stand for a position as soon as possible on the executive to be established...

By meeting each other... we could become briefly acquainted and could have something of a game plan for avoiding the scenario whereby only 1 or 2 people from the south volunteer to serve on the [Edmonton Whitemud CA] executive or the south's representatives consist of self-promoters and/or oddballs who popped up out of the weeds.

From: Brian Dell
To: Eleanor Maroes
cc: [Edmonton Whitemud CA Assoc]
Date: Wed, Dec 2, 2009
Subject: a modest proposal re Edmonton Whitemud
Could we perhaps constitute the board with northern people and then just have it understood that the south is in development?  The idea here is that the north continues without so much as a hiccup post-split because it is the heir of the pre-split riding while the south formally launches upon the split, with people expected to be on the southern board having been meeting separately on an unofficial basis prior to the official division.  The south could conduct its own fundraising, general meetings, etc and have its own bank account.  For Elections Alberta purposes it would not be an official constituency bank account, of course, but that should not matter to the bank.
...The reality is that the south of the riding is going to be more of a challenge developmentally and I think southerners will be confident that there will be no conflicts of interest with respect to that development by having southerners handling it from day 1. 

From: Brian Dell
To: Link Byfield
Date: Sat, Dec 5, 2009
Subject: Fwd: Wildrose Alliance - Edmonton Leaders SAT DEC 1 may end up hearing on the grapevine that my view of the success of Edmonton Whitemud's founding deteriorated within a day or two of my talking to you on the phone and [X] and I are a little at odds over what happened.

Fact is, me and another organizer took to facilitating board nominations like we were a recruiting committee for a corporation, meaning skill sets and where vacancies existed in the board mattered and personal relationships didn't matter, [X]'s friend went and surprised us by nominating directly or indirectly about half a dozen people she was friends with and sit on James Rajotte's federal board.  There was a glaring omission in the minutes released after I talked to you that suggested that not only did this group not cooperate with the idea of ensuring representation from the south of the riding, the one southerner who nominated (another southerner) had his nomination fail to appear in the minutes.  I in turn ended up nominating this nominator because he was a month-long organizer who even went down to Calgary on the 29th but only when forced to because no one else would, and he later said that he wasn't surprised because for weeks now it was apparent that [X]'s friends were not interested in his input (or mine, in my view).  So he's actually quit the board before it even got started, costing us our most motivated volunteer in the riding.
This compromises the viabiltiy of the new southern Whitemud riding post-split and, re the "triage" argument, the polls here went 58.8% PC in 2008, which in my amateur strategizing indicates an area that should not be written off as unwinnable [especially with no PC incumbent].

From: Brian Dell
To: Eleanor Maroes
cc: Jane Morgan
date: Mon, Dec 7, 2009
subject: Re: comments
"Creating division at this point is not helpful to getting a strong CA executive."

WE ALREADY HAVE A DIVISION!  Sorry for the caps but in my opinion I was as accommodating as possible until the minutes came out and somebody resigned as a consequence. ...The message that his input would be routinely ignored could not have been clearer.  By proposing a division I am proposing a mechanism to keep this asset ("[Y]") engaged.  Now maybe he is a liability we are better off without.  But if that's the case I would like to see an argument since we are very short volunteers from the southern part of Edmonton Whitemud as it is.  And I have already received a complaint to the effect of why raise money in the south if the money is going to end up in a bank account controlled by northerners.  I am reacting to the division here and am trying to figure out a way to make the best of it. ...

The point of the above is to note that just "calling on local constituency associations to ask tough questions of anyone running to be a nominee in 2016" isn't going to cut it.  The local CAs have to be both able and willing to ask those "tough questions" and if they are not, vetoing the CA nominee treats the symptom, not the disease.  Is it going to go like this?
Local CA player #1: Danielle says our nominee is unacceptable!  Apparently they were suspicious that a person who has spent most of his adult life lobbying for home schooling might have said something eyebrow raising about the insidious corruptions of secular society at some point and apparently HQ indeed ended up finding something problematic.
Local CA player #2: No complaints here!  Nothing undemocratic about that!  Both we and the nominee himself are going to just nod and sit back down.
Local CA player #3: So else do we nominate?
Local CA player #2: How about approaching that business owner, you know, the one that's prominent in the community? That lady who also sits on the hospital board?
Local CA player #1: Of course, that's why we passed her over the first time!  Because that was just a practice run!
A problem CA is going to nominate a problem candidate.  Head office has to get involved in local CA politics by ensuring that every CA has a minimum number of volunteers and money.  The strategy of focusing resources on "winnable" ridings can be unraveled by having a fringe candidate emerge out of neglected riding.  You can't hide that person's record and trying to hide the policy book instead just creates suspicions about your agenda.  Stop apologizing for the policy book and get your hands dirty by intervening in local constituency politics.  Of course a group of friends is going to nominate each other to the board and then nominate one of their own to be the candidate!  Rubber stamping that sort of thing is respecting the local cabal, not the local grassroots.  If there's a controversy in the local CA the party needs to step in and adjudicate, and adjudicate with an eye to whether the procedure that was followed was appropriate, not whether it was followed or not.  It's easy to argue that you've followed the local rules when you're the one who made them up.

I might add that even if the Edmonton South West CA was a gong show, all head office had to do was ask me to throw my hat in the ring and I would have rigorously contested the nomination (if the nomination period was open more than just a few days) and I would have pointed to Hunsperger's blog, even if it was just to a tiny crowd at the nomination meeting.   I'm a graduate of Briercrest Bible College and accordingly wouldn't accept any Wildroser's contention that I was attacking Hunsperger because he's a believer.  "Lake of fire" may be biblical, but Hunsperger's view that public education is inherently evil is not part of the evangelical mainstream, never mind the secular mainstream.  Ethics Commissioner Neil Wilkinson once wrote to the Legislature Offices Committee requesting authorization for his office to post MLA financial disclosure statements on internet and the PC members on the committee said no.  That didn't stop me from physically going down to the Leg Annex to take a look at Dave Hancock's file, and I didn't bill Flanagan for doing oppo research.  All of this stuff is just a matter of making use of your motivated volunteers.

To anyone concerned about my quoting from email exchanges, you needn't worry about me not respecting expectations of privacy.  What I've repeated here is what I've wrote, except for a few phrases the attribution of which I've left ambiguous.  I'll repeat the most important bit that I said in those emails again: "me and another organizer [sic] took to facilitating board nominations like we were a recruiting committee for a corporation, meaning skill sets and where vacancies existed in the board mattered and personal relationships didn't matter."  I didn't feel that head office was going to back up those of us who had this view by intervening in CAs to ensure that that principle was followed, and so it was that I was essentially on my way out the door at that point.  If the party's floor crossing MLAs are too scared of special interests like the teachers' unions, perhaps their influence could be diluted by electing some longer serving party members.  But that requires professionalization of the how the constituency associations are staffed, as these CAs in turn "staff" the candidate slate, and it didn't appear that that was going to happen.  Would I do what I did again if I had the chance?  I'm not entirely sure about that because I alienated a lot of people by complaining to anyone that would listen that there was too much nepotism going on at the constituency level.  A person may consider himself a righteous crusader or whistle blower when reality he's just a pain in the buttinski!