Tuesday, October 4, 2011

Alberta politics in downward spiral

Although I could continue to blog from China if I bought a monthly subscription to a VPN service, use of Twitter, Blogger, Youtube, Facebook etc is not so essential for me that I can't just wait until I return to Alberta (probably after Christmas) or am visiting somewhere else. Given that I'm in South Korea this particular week, I will seize my chance to note how the Alberta political news that has emerged over the summer has been increasingly depressing.

To begin with the Wildrose, I've noted before that when the party leadership has rolled out what it says is the party platform, it has deviated from both conservative principles and what the party membership has historically supported, an example being the leadership's announcement that provincial achievement tests (PATs), something that the teachers' union has long opposed, should be killed off. As I noted at the time, the move put the party to the left of Red Tory Dave Hancock. As an aside, one has to feel a bit for the current Education Minister, because not only have Hancock's defences of testing now been rendered for naught by Premier-designate Alison Redford's promise to axe the tests (amongst other accommodations of the Alberta Teachers' Association agenda), but he took political fire for deficit easing cuts to his ministry while his new boss Redford scooped the easy political payoff that came with promising to promptly reverse those cuts. When I called attention to the fact that the Wildrose leadership's assertion that the PATs are "outdated" or "inadequate" clearly was not coming from either the grassroots or conservative pundits, I pointed the finger at floor-crossing MLAs Rob Anderson and Heather Forsyth, who showed their hand when they lobbied for union-friendly changes to party policy at the 2010 Wildrose AGM. Given that "caucus" had also elected to attack the party's free speech plank which called for the repeal of Bill 44's section 3 at that time, I am hardly surprised to learn that the recently rolled out party leadership position on human rights essentially caves on this issue as well.

Couple this with reports that party HQ is trying to suck up dollars from the constituency associations to support high spending (and salaries for staff who are hired and fired based on the leader's own counsel as opposed to constituency association recommendations) and I'm also not surprised to learn that several of the most gung-ho party organizers in Edmonton that I knew have finally thrown up their hands in frustration this summer.

Wildrose Finance critic Rob Anderson doesn't seem to be willing to go after health spending, education spending, or spending on unionized civil servants at a meaningful level of specificity. Hence Anderson has directed most of his fire at infrastructure spending, which happens to be the one form of government spending that actually creates economic growth. According to StatsCan, "Between 1962 and 2006, roughly one-half of the total growth in multifactor productivity in the private sector was the result of growth in public infrastructure." If this is how it is going to be, I'd sooner support a Liberal like Kevin Taft. Unfortunately, the Alberta Liberals have taken themselves quite completely out of the running as the thinking man's choice given that new Liberal leader Raj Sherman's idea of opposition seems to be leveling implausible allegations of conspiracy and coverup. Meanwhile Liberal MLA Hugh MacDonald, who earlier this year I identified as "easily the most effective MLA on the Heritage Fund committee," has left the party.

As for the governing party, the leadership vote has proven a grave disappointment. Instead of bringing some vitality to the Liberals or the Alberta Party, many people affiliated with the centre-left apparently decided to instead try to advance their agenda within the PC party, thereby making that particular tent even more suffocatingly huge. Former Liberal MLA Maurice Tougas has described the elevation of Alison Redford to the Premier's office as "a potential neutron bomb" that could destroy the Alberta Liberals.

Supposedly Alison Redford has influenced South Africa's legal system via her work with Nelson Mandela as a human rights lawyer. Although South Africa's 1996 constitution is "widely regarded as one of the most progressive in the world," the level of racial hatred and violence in South Africa is disturbingly high, notwithstanding the fact many liberals are relatively unconcerned because, unlike in the apartheid area, the violence has been privatized. While acknowledging that Redford has been generally effective on the crime file as Justice Minister, one of the classical differences between liberals and conservatives is that liberals are considerably more agitated about state coercion than private coercion and Redford's resume gives little confidence that she would be immune to the classic liberal syndrome of overestimating the extent to which government legislation can improve reality on the ground for private citizens. In 1997 Mandela, Redford's supposed mentor, bestowed one of South Africa’s highest honours on no less a humanitarian than Col. Qaddafi, saying “those who feel irritated by our friendship… can go jump in the pool.”

Redford promised that she will "ensure that caucus understands that their role in the future of government decision-making is critical," yet immediately upon becoming premier-designate she waved off any role, even superficial, for the elected opposition by declaring that the Legislature will not sit this autumn.

Most disturbing, however, is how exceedingly facile Redford's policy positions are. Given that any focus group or poll will tell you that health and education, especially health, are the public's top priorities, it is entirely unoriginal for a politician to say that these are her top priorities. Does she at least have some imaginative ideas for new revenue sources? Apparently not, since we're told she's been eyeing the Sustainability Fund to support her spending promises. This in contrast to leadership contender Doug Griffiths, who has took it upon himself to try to actually lead by challenging the public to think about fiscal sustainability challenges and in particular a retooling and modernization of the tax code. We know what Griffiths would have done with the briefing memos that reached his desk; he'd have been open to their arguments and, if convinced, would've tried to build popular support for moving in an unpopular but necessary direction. Yet the imaginative and intellectually curious Griffiths only managed to get first round support in the single digits. Redford is said to be a quick study, but it ultimately doesn't matter how smart a committed populist is since the policies will still be assessed on their popularity, not the strength of their supporting research or sophistication. How is Redford going to pay for her proposed $1500 Family Recreation Tax Credit, which is essentially another spending program despite its "tax credit" name and further narrows the tax base, a trend that is being widely lamented by contemporary tax economists, including those in Canada.

To those who dispute my line of argument here, I would call attention to Redford's lack of significant support from other elected representatives of her party. Representative democracy is marginally more likely to be fiscally disciplined that direct democracy, simply because representatives as a group are responsible for a coherent budget while general referendum voters can consider spending proposals in isolation. The art of serving as an elected representative is to a large degree the art of getting credit for spending and/or tax cuts while avoiding blame for spending cuts and/or tax increases. Pulling this off as a political party requires a disciplined team strategy, lest individual representatives break ranks to demand more spending or more tax cuts from their party while leaving responsibility for funding these demands on the party instead of themselves. It is this idea that left me distinctly unimpressed with the antics of Guy Boutilier, Raj Sherman, and now Alison Redford. As Sherman and Redford became popular with the public, they were in turn unpopular with their long-time party colleagues.

If it weren't for energy royalties that essentially knock 30% off the price of public services, there would be no way that Alberta could afford Premier Alison Redford.

Friday, May 27, 2011

Romney sells out again

I have been in China for a few weeks and expect to be there for a few months yet. I had worked out a tunnel that allowed access to Youtube, Facebook, Twitter, and Blogger but it has since been filled in (this may be an argument for blogging via Wordpress).

I have made a weekend trip to Vladivostok, Russia, however, and will use this opportunity to quickly state that I have lost what enthusiasm I may have had for the candidacy of former Massachusetts governor Mitt Romney for the Republican 2012 nomination.

Apparently Romney has declared without ambiguity that "I support the subsidy of ethanol." Yet another case of a supposedly conservative politician opposed government spending except when they are for it. Now there are a variety of things which rightly call for some government support, but subsidizing the production of something which encourages the conversion of natural wilderness to farmland (not directly in the North America, but indirectly through the global food chain) is not one of them.

Monday, April 18, 2011

MPT gives thumbs up to Garth Turner

As I noted in my last post, Stephen Gordon has got it right on corporate taxation. Unfortunately he has it wrong, however, when he calls for former MP and financial advice blogger Garth Turner to be corrected with "the math."

I won't say that Garth's latest morsel of financial advice is "right" in all its details, never mind that he's right about the "goal of life" (the grand title of Garth's latest post) being related to achieving some level of financial wealth. But I can say that Dr Gordon is the mistaken party when he says that "variances and covariances and CAPM and stuff" will expose the errors of the former Parliamentarian.

In the comments to Gordon's post, Andy Harless takes a stab at "the math" by offering an example of how adding an asset that is less than fully correlated reduces the variance of a portfolio. In the world of "modern portfolio theory" or MPT, variance and risk are one and the same; a dubious assumption in my view but one I'll just run with for the purposes of this post. So far so so good. But then Dr Harless says, "Now free up a and b so that you can use leverage, i.e., take away the constraint that a+b=1." Sorry, but one cannot take away the constraint that the coefficients add up to 1 without taking away the equation. A weighted average means the coefficients must sum to 1 by definition.

When Garth suggests that people who have a $400K portfolio consisting solely of a house take out a home equity line of credit secured against the house for $200K and use the money for investing in a variety of other assets like financial instruments, he is indeed recommending diversification. The former portfolio contained a sole asset, the house (we'll call this asset X), and its weight coefficient was 100%, ie a = 1. In the new portfolio, a is still 1 ($400K) while the coefficient (say, "b") of the new assets (which we'll call asset Y) is 0.5 ($200K) and the coefficient (say, "c") of the HELOC (asset Z) is -0.5. The coefficient for the loan is negative because one is short the security. Thus a + b + c = 1 + 0.5 - 0.5 = 1.

Since variance is the square of standard deviation ("σ"), the variance of the portfolio is given by

where the CORR functions are the correlations between the subscripted terms (e.g. the first CORR term is the correlation between asset X and asset Y). Now suppose the standard deviation for asset X is 5% and 10% for asset Y, while the expected returns are 4% and 8% respectively. This would mean the house is expected to appreciate at just half the average annual rate of the new assets excluding the loan, but with just half of the volatility as well. Let's also assume the correlation between X and Y is 0.5. The standard deviation of asset Z would be zero if it's deemed a risk-free asset, which is an important concept in MPT. A risk-free asset returns the risk-free rate, which we will assume to be 3% for this example. The loan here may be reasonably defined as risk-free because it is secured by the home: the lender is accordingly guaranteed to be paid. As noted earlier, MPT defines risk as being variance, so the standard deviation of Z is zero.

Plugging these numbers in means the deviation for the new portfolio is 8.66%:

So Stephen Gordon is correct that total risk has been increased. A standard deviation of 8.66% is higher than 5%, which was the house alone. But can it be said conclusively that Garth Turner has "not got it right"? No, because the expected rate of return is also higher, and not just higher, but would be higher after adjusting for the increased risk. MPT uses what's called the Sharpe ratio to measure excess return per unit of risk. It subtracts the risk-free rate from the portfolio's expected return and then divides that by the portfolio's standard deviation. The portfolio's expected return is simply the weighted average of the expected return on its components, ie:

Another way to calculate this would be to take the dollar value of the expected return on the house (4% of $400K or $16K), add the additional $16K one would expect on the $200K investment (that returns 8% per annum), subtract the $6K one would have to pay on the $200K HELOC, and divide the resulting $26K by one's $400K net equity interest in the new portfolio. The Sharpe ratio for the new portfolio is 6.5% - 3% divided by 8.66% or 0.404. For the old portfolio of the house alone the Sharpe ratio was 4% - 3% divided by 5% or 0.2. In sum, while Garth's recommendation does increase risk, it more than compensates in higher expected return.

Now someone may object that the particular numbers I chose produced this result. Before one quibbles too much about that, I could make some observations about some of them such as noting as Garth does that the interest paid on the HELOC is tax deductible because it is considered money borrowed to invest and the investment is not in a tax-shelter. But the full answer is that the proposal is well-founded as a matter of theory and what I've provided is just an example.

MPT is primarily concerned with building mean-variance efficient portfolios. This means finding a portfolio mix on the "efficient frontier." Graphically, the efficient frontier (for a portfolio not including a risk-free asset) can be represented by the left boundary of a hyperbola sometimes called the "Markowitz bullet." One can think of the individual points along the frontier as portfolios of different risky assets in different proportions. The addition of a risk-free asset to the portfolio creates a new efficient frontier called the Capital Asset Line - or Capital Market Line (CML), which is the best possible Capital Asset Line - tangent to the hyperbola at the point where the Sharpe ratio is highest. Shorting the risk-free asset, or using leverage, is represented by the line above this point, which I have indicated in red:

Call the red part of the line the "Garth zone," if you like. All points on the CML have the maximum Sharpe ratio. It shows that just adding cash to a portfolio (represented by the part of the CML that is not red) or deleveraging can improve expected return for a given level of variance just as leverage can.

There are, of course, problems with this model like the fact it assumes that the variance of the assets has a neatly defined probability distribution. But almost all financial models have this problem, which can be loosely described as the "fat tails" problem. Garth Turner is in any case right in a more general sense in my view, since he appreciates the fact that the people who become truly wealthy in their own right through investments almost always use leverage to get there. Garth sums up, "The holy grail isn’t living in a place your friends covet. Then they’re not friends. The object is to posses enough wealth with liquidity to give you options. Freedom, choices." I think this is sound observation; a big house just ties one down, such that what the former Liberal (and former Conservative) politician proposes provides not just diversification benefits but liquidity benefits.

Wednesday, April 13, 2011

off-balance sheet government

Were the current federal election campaign to come and go without my blogging about it, this blog would surely be given up for dead completely. Hence a few "observations."

My objection to the Harper Conservatives that they aren't really conservative remains, but it is interesting that more of the policy community is cottoning on to how narrow "tax cuts" are actually social programs dressed up at please the smaller government crowd. The centrist Brookings Institute recently hosted a panel discussion on the topic that follows up what Greg Mankiw and other economists having been saying. This afternoon President Obama called for cutting a trillion dollars worth of "tax expenditures", a cut the Republicans will of course describe as a tax hike.

The Tories' March budget continued to fragment the tax code, and the one big dollar proposal the Tories have made to date as a campaign promise, which is to allow more income splitting between couples (after the deficit has been eliminated), continues in that vein.

Income splitting is a broader tax break than most of the other extremely narrowly targeted tax breaks the government has offered, but it is still selective. What matters here is that this revenue loss comes at the opportunity cost of providing tax relief to everyone. What is the economic rationale for not providing relief to individuals as well? What social or equality objective rationale is served by a policy that does nothing for families headed by single mothers? The short answer of course is that it serves a political objective: getting credit for proposing a "tax credit" but then restricting its cost by narrowing its application.

Want to give a handout to an influential interest group but avoid "conservative" ire at your spending? Ask your staff to investigate the nature of that group's tax liability and then structure the handout so as to reduce that liability as opposed to an overt subsidy. Gives the group the same benefit while nominally keeping the "size of government" limited. One can call it moving government off-balance sheet, because although the the size of government is nominally limited, it has still interfered in the allocation of resources across the economy. What does it mean to be an economic "conservative", if not to prefer private markets over central planning?

Aside from this, there's the more obviously non-conservative policies espoused by the Harper regime, like attacking the Liberals for not standing as strongly behind trade barriers (e.g. noting that the “Liberal Party’s platform makes no mention of supply management.”) This is the same supply management, of course, that Harper denounced as "government-sponsored price-fixing cartels" when he was a private citizen instead of a politician.

The Harper government is simply too hostile to complex policy for those who appreciate the need for such complexity for someone like myself to not conclude that working for or supporting them would not be prohibitively frustrating.

In 2008, instead of sending a new Tory backbencher with a legal cloud over his head to Ottawa to represent Edmonton-Sherwood Park, a voter like myself could check off the Liberal candidate and send a PhD in Economics to Ottawa to represent the riding and support a Liberal platform that called for a targeted tax with a sound economic rationale. Although the "Green Shift" was somewhat corrupted as a policy plank, it still aimed to discourage production that created a negative (or possibly negative, which is the minimum that can be said about carbon emissions) externality.

2011 is somewhat different. The Tory attitude in general has hardly changed - consider the statement of Harper's former Chief of Staff that "Politically it helped us tremendously to be attacked by this coalition of university types." But the Conservatives are actually on the right side of the issue with respect to corporate tax cuts, and it appears that this idea was actually allowed to escape from the non-partisan Department of Finance as opposed to being hatched, like most Tory policies, in the brain of a Conservative "strategist"/poller.

I won't repeat all the arguments for a cut in the general corporate rate. Stephen Gordon (photo at right from Laval University), has been making valuable contributions on the Globe and Mail's website that have served as a corrective to some of the claims of labour economists as the topic has developed as a political issue. I say labour economists instead of "progressive" economists because for those who are not on a union payroll, I believe a full analysis would lead them to agree with Laura D'Andrea Tyson, who notes on the NY Times website that "a high corporate tax rate... is also increasingly ineffective as a tool to achieve more progressive outcomes..." Most astute observers understand what the preponderance of evidence and argument supports.

Toronto Star columnist James Travers (photo below) passed away on March 3 and, in keeping with the Star's political lean, was a fierce critic of the Harper regime. Travers nonetheless understood that several "conservative" principles like free trade are well justified. Travers' February 8 column neatly summed the politics of the corporate tax cut issue:
Caught on the slippery slope of a popular proposition, Harper and Finance Minister Jim Flaherty are appealing to voter’s cerebral side. Aided and abetted by conservative economists, they’re constructing the analytical case that corporate tax cuts will pay dividends in jobs as well as productivity and won’t cost the federal treasury the $6 billion annually that critics claim.
Watching Conservatives slip and slide trying to push a policy rock uphill is a delicious treat for political rivals, deputy ministers and egghead academics.
For five years now they have been struggling against the ruling party’s populist gravity. ...

In my view, Michael Ignatieff's run to the left wasn't just bad policy but bad politics. Jack Layton is not about to be snookered at his own game of appealing to the anti-"corporate agenda" crowd. The Tories created all sorts of space for an opposition campaign that indicated that it would stay the course economically (or got even more aggressive on deficit reduction) but attacked the government for its contempt for Parliament and its contempt for "university types" in general, which manifests itself in things like manipulating the census, something that disturbed many swing voters. Instead the Liberals have tried to appeal to NDP voters, which is only going to be as effective as Jack Layton allows it to be. Judging from last night's TV debates, I don't think Layton lost any people to Ignatieff, meaning Ignatieff will likely end up ruing the decision to focus on the Liberal/NDP swing vote instead of the Liberal/Conservative swing vote.

Monday, March 14, 2011

nuclear nervousness

13 months ago I traveled through what I would call the northern part of Japan's main island but which the Japanese call the east, including through Sendai, the coastal capital of Miyagi Prefecture. Westerners are rarely found around here, at least at this time of year. Sendai has known destruction before, as the "Sendai City War Reconstruction Memorial Hall" explains in its review of the American bombing of the city in July 1945. I then took a break from the February snow in Japan's north to fly down to tropical Okinawa, where I stayed at a capsule hotel for about $30 a night until I found a different place which was more like $20. I was woken up early in the morning by the sensation that a gigantic dog had taken my capsule in its teeth and was shaking it. Since the hotel's WiFi was still working and I had my smartphone with me, after some minutes I learned from the US Geological Survey website that the epicentre of this earthquake was just 80 km away.

What astounded me was that the Japanese literally won't get out of bed for anything less than a 7.0 earthquake. Tremors are a regular fact of life for the Japanese, and it accordingly did not surprise me to see Japanese supermarket workers being more concerned about bottles breaking than about building integrity on YouTube. It was only after the intensity of the tremors rose and lasted for an unusual long duration that locals would have become especially concerned.

I've been to Japan twice now and I've come to really love the country. It has endured a disaster but of the many individual catastrophes that occurred in the wake of the earthquake and tsunami, a particular disaster is receiving far more attention than a proportionate and rational perspective would provide.

I'm talking nuclear, of course. Noo-klee-ur! The very word that sends a chill down some spines.

Now I'll grant that the situation at the Fukushima I power plant has deteriorated substantially, as the amount of radiation released on March 15 was non-trivial and it has been acknowledged that containment integrity at Unit 2 has been partly damaged. I could make some observations here about the situation at Fukushima, such as calling attention to the fact the station apparently kept humming despite a massive earthquake (it was the tsunami that has caused its problems), the fact that newer plants are not as dependent upon external power sources to maintain their cooling systems, whether from the grid or portable backup, the fact most experts contend that - especially after several days have passed - a full meltdown remains highly unlikely, or the fact that the problems are essentially problems of the sort an oil refinery could face in a no power situation (explosions from flammable but otherwise non-toxic gases, short-lived fire at a unit with waste material that released some environmentally harmful toxins). At issue is not the facts on the ground in Fukushima, but the reasonableness of the popular reaction to them. As one authority (among many) has observed, people "don't have a particularly good grasp of the science of radiation and tend to over-exaggerate the risks."

Consider the history of nuclear accidents.

The number of people who ultimately became sick because of the Three Mile Island accident? Zero.

In 1987 in Goiânia, Brazil, a radiation scare resulting from an old nuclear medicine source being scavenged from an abandoned hospital caused more than 130 000 people to overwhelm hospital emergency rooms. Ultimately just 250 were found to be contaminated through the use of Geiger counters and just 20 showed signs of radiation sickness and needed treatment.

In 2005 a team of 100 scientists produced a 600 page report for a consortium of UN agencies on the legacy of Chernobyl. Although an accident on Chernobyl's scale is not conceivable in a developed democracy (where all reactors have containment vessels) the team found that even in Chernobyl's case,
By and large... we have not found profound negative health impacts to the rest of the population in surrounding areas, nor have we found widespread contamination that would continue to pose a substantial threat to human health, within a few exceptional, restricted areas.

More importantly, however, is the finding that "the largest public health problem created by the accident” is the psychological impact. This is partially attributed to a lack of accurate information. 20 years after the accident, the greatest problems are identified as negative self-assessments of health, belief in a shortened life expectancy, lack of initiative, and dependency on assistance from the state.

The hysteria over nuclear power, in other words, didn't just aggravate the health problem, it practically constituted the whole health problem in and of itself!


The Washington Post cites a radiation expert who notes that of more than 80 000 survivors of the Hiroshima and Nagasaki blasts, about 9000 subsequently died of some form of cancer. But only about 500 of those cases could be attributed to the radiation exposure the people experienced.
The average amount of radiation that victims in Hiroshima and Nagasaki were exposed to would increase the risk of dying from lung cancer by about 40 percent, [the expert] said. Smoking a pack of cigarettes a day increases the risk of dying of lung cancer by about 400 percent.

Meanwhile, this Slate column makes the same argument I do but with a better turn of phrase and some more facts. Charlie Martin at PJM has more in this general vein.

EPA guidelines for workers in emergency situations are radiation doses of 10 rem (100 mSv) when protecting "valuable property" and 25 rem (250 mSv) when protecting populations. What does a 25 rem dose mean? According to the EPA, it means one's lifetime risk of cancer would increase by 1% on average (from 20% to 21%). Compare this 1% increased risk for workers at the Fukushima site to the reality of worker fatalities on the Deepwater Horizon rig last year, and keep in mind that no Fukushima worker in Japan has yet reportedly received a dose even this high, never mind the general public. Although there was a reading of 400 mSv/hr at one location in the plant at one particular point in time, at the same point in time the level was more than 10 times lower just 50 meters away.

Monday, February 14, 2011

the power of personality

I have wound down my blogging, in the short term because I have been on the road and don't expect to be back in Alberta for at least a month yet, and in the longer term because, at least with respect to Alberta politics, I had largely said what I wanted to say on the subject and didn't want to muddy the message (that Albertans need to turn more of their current incomes into assets, real or financial, that will grow into the future).

The new year's news from Canada's most fortunate province creates some interesting prospects for further shake-ups on the political and policy fronts, however.

The premier not running for re-election is the biggest news, although there is a limit to what the pundits can add to this headline. Albertans already know that Ed Stelmach (photo at right) was a charisma-challenged but nice guy. Whether it was his fault or not, it was on Ed's watch that a rival party emerged that, for the first time since at least 1993, seriously threatens the Progressive Conservative dynasty. It is nonetheless worth reflecting on the fact that Mr Stelmach's resignation announcement came less than 3 years after his winning an electoral landslide. What changed to compromise Steady Eddie's political security when he'd already proven that he can kick the Wildrose Alliance to the curb? Danielle Smith?

Which brings me to the main thesis of this post, which is that personality - and personalities - matter more, and ideology less, in politics than many observers appreciate. While it is generally recognized to matter with respect to the individual party leaders, consider the fact that the next tier of people below the leader are also, well, people, with personalities, and so on down.

Daveberta's blogpost on the resignation of Alberta Liberal David Swann (left) has attracted no less than 60 comments, and a comment by Calgary Grit, the most read (or perhaps just most readable) blogger on federal politics who (formerly) hails from Alberta is a representative example of the sort of punditry that gets a lot of thumbs up from those who have not been heavily involved in internal party politics and/or the machinery of government. CG contends that the Alberta Liberal Party and the fledgling Alberta Party occupy the same "centrist" ideological ground, while "[Wildrose leader Danielle] Smith and [PC leadership candidate Ted] Morton [are] splitting the right wing vote..." To a lot of people it makes perfect sense to look through an ideological prism like this and assume one is getting a reasonably complete view. While I have never really been a true political party "insider", based on what experience I do have, and especially upon my experience working within the machinery of government in a central agency, I would characterize this perspective as one that perhaps ought to be satisfactorily explanatory, but not one that is.

Consider how the cogs of government policy actually turn. Suppose you were to come into a position of real political power in a parliamentary democracy. This would generally involve being elected and then being assigned a cabinet position responsible for a ministry. The first thing one would be expected to look at after being sworn in would be the briefing books prepared by the civil servants in one's Department. A great many problems will be identified in these materials and solutions suggested, problems and solutions that never made it into the political campaign debates because 1) the issues are too dull to interest the electorate or 2) the solutions are generally unpopular with the electorate. When I first loaded up my 1982 Mazda RX-7 with my limited personal effects to drive from Edmonton to Ottawa nine years ago and begin work for what was then Paul Martin's Department of Finance, I was curious as to how the competing ideologies would play out in the policy discussions that occurred. Of course, at the end of day the elected Minister makes the final policy call, but what of the details? I was ultimately struck by how un-ideological the Department actually was and I came to appreciate how frequently "ideological differences" are just political campaign artifacts as opposed to seriously competing policy alternatives.

Having said that, I have to concede that the dominant culture is only non-ideological if one sees organizations like the IMF, OECD, World Bank, European Commission, etc as non-ideological. Some strong leftists would contend that there is an "anti-people" or "corporate" agenda dominating these entities and if that's true then this agenda dominates the culture in provincial finance ministries as well. But I don't believe it is, in fact, a left or right matter nearly so much as a matter of how populist one is in one's sensitivities. It's not the job of, say, an OECD economist to recommend what the "people" want. What the people want in the short term may be in full contradiction with what they want in the long term. Now, there are several "think tanks" that are clearly "ideological" in almost everyone's eyes and an organization like a Department of Finance or a Privy Council Office is somewhat analogous to a think tank, but neutralize the funding of these think tanks (e.g. take self-styled "progressive economist" Jim Stanford off the union payroll, or diversify the Frontier Centre's funding from former Alberta Report readers) and a remarkable consensus would emerge on most issues. As it is, I think the consensus is already there, one simply has people like Stanford trying to obscure the "expert" consensus on, say, the efficiency of corporate taxes at the one end while at the other end the Frontier Centre obscures it on, say, the efficiency of carbon taxes.

As a newly minted minister, one's first lesson would thus concern how one's ideas about what one is going to do in office have to be heavily modified based on the advice of one's ministry re what is feasible and just what the most pressing problems are. An example here would be how neither Jim Flaherty nor the federal Tories in general felt that income trust taxation was a problem in need of a solution before taking office. It was after being bombarded with memos from the civil service saying there was a problem that Flaherty eventually overruled his political staff to make a move on the file (as an aside, when I learned that Wildrose constituency operations manager Dave Shillington was part of Flaherty's political office at the time, although I suspected we would end up disagreeing on something significant in Wildrose it wasn't until Dave indicated to me that he was inclined to take a laissez-faire attitude towards how nominations were conducted that I saw a red flag for a disputed nomination at some point down the road and, more ominously, a party culture that sees loud self-promoters advance at the expense of quieter voices).

The decisions of real consequence cannot, or at least should not, be taken unilaterally by a minister, however, even if the decision is well-informed by consultations with one's Department, external experts, and industry. One still has to convince one's cabinet colleagues. Suppose I was elected as the sole Wildrose MLA from within Edmonton city limits. I might have to be made finance minister simply because, given the political realities, an Edmontonian would have to get a post that at least appears to be among the most important. Now of course I would be encouraging my cabinet colleagues running line departments to support cuts to or at least caps on their budgets, and especially cuts to line items are only indirectly related (as in the case of wages and benefits for current provincial workers) or not related at all (as in the case of benefits for retired provincial workers) to the quality and quantity of services delivered to the general public. But how much power I would actually have in this situation, at the top level of internal party politics and of the government machinery, is only very approximately suggested by what an external pundit like Calgary Grit reckons the ideological positioning of my party to be. The personalities of those around the cabinet table matter far more, and it matters more the higher one gets.

When I blogged here last year saying I should no longer be described as a current Wildrose supporter, I noticed a couple people wanting to explain my defection in terms of ideology. As someone who joined the Wildrose Party even before it merged with the Alberta Alliance, I'm easily perceived as a fiscal conservative ideologue who cannot tolerate the ideological compromises that a mature brokerage party must inevitably make. But in fact I believe I would have more influence and work more effectively as part of an Alberta Party cabinet than a Wildrose one, despite the fact the Alberta Party is universally seen as significantly to the left of Wildrose. If I wasn't a member of a the cabinet but a backbencher or even just a local constituency figure, the situation would be same but at a lower intensity. Now it's true that in a parliamentary system, it is the first minister who drives cabinet dynamics. If the party leader wants to shoot down a spending proposal originating from a line department, for example, he or she will typically ask the finance minister for his or her thoughts at the cabinet table. In the case of Wildrose, although Danielle Smith would make a good premier, if I demanded that we go to war with the public service unions, or cut back on all the programs that amount to subsidies to farmers and accordingly distort the provincial economy, I doubt that she would be keen to back me in a dispute with, say, Rob Anderson who would warn darkly of the political consequences of picking a fight with the unions, or Link Byfield who would be sensitive to the political consequences of alienating rural Alberta. This isn't to say that I'm concerned the leader would tell me to sit down and shut up. I can't even imagine Danielle telling someone to sit down and shut up. It's rather that she wouldn't tell anyone to sit down and shut up and as a consequence the voice of the professional policy community would be left to fend for itself against the self-promoters, opportunists, demagogues, and assorted lobbyists. It's the power of personalities. If people think my problem is that I'm upset about having ended up on the losing side of an ideological showdown, I can only say, "if only!" There was about as much of an ideological showdown as the one in the federal Tory party that led it to going on a spending spree when in government (which is to say, effectively none).

Which brings me to Doug Griffiths. Not only does Doug (at left with wife Sue, photo from Facebook) make time to hear out the professional policy community, he understands how these sorts of people get drowned out and pushed aside in the jungle of politics. He's a fiscal conservative, which of course I find salutary, but more important to his appeal to pundits across the spectrum is that he does not try to push a particular agenda per se so much as call for a framework that ensures that sober, serious, evidence-based agendas win out. If Doug were first minister, I believe he would be less interested in getting his way, like so many politicians who have a pre-conceived and rigid idea about what's wrong with world and how they are going to fix it, than in ensuring that those who are following the advice they are getting from their Departments and non-partisan experts get a full hearing despite the political risks, and, more importantly for democracy, ensuring that that hearing occurs in front of Albertans as opposed to behind closed doors. I don't just endorse Doug Griffiths for leader of the Progressive Conservative Association of Alberta. Whether Alberta Party, PC Party, or Wildrose, if Griffiths were contending for the leadership I would be taking out a membership to support him. I admit that this seems to contradict my call for more ideology, or more precisely more ideas and consistency in those ideas, in what distinguishes and defines political parties, but that's because I think it generally needs to be made clear to campaign volunteers and donors that they are working for something larger, that they are a part of, than just a person who is not a part of their personal lives. I am not asking readers here to help advance someone's political career because he deserves it. I don't know Doug personally and I don't know what he deserves in terms of his personal fate. I support Doug Griffiths because what he stands for deserves support.

Liberal party? Whenever I think about joining the Alberta Liberals, which is never for more than an occasional nano-second, I ask myself how I would explain the move to friends and family. The politically active could potentially understand, but everyone else would think I've lost my compass completely. I could call attention to a selection of Kevin Taft speeches but Taft is no longer leader. Federally, besides the Liberals there is no other option to the Harper Conservatives that isn't fundamentally at odds with either the federation or the prosperity-creating business community. That's not the case in Alberta.

In any case, I'm not the only person who ran for election under the Wildrose Alliance banner in 2008 to now be mulling support (if not more) for the relatively legacy-free (dare I say, baggage-free) Alberta Party.