Ireland rejects Lisbon Treaty

Colm Tóibín, in a column titled "A godsend to every crank in Ireland - on the left or on the right", says

I support the European project as a way of protecting me from Irish politicians. I voted for Lisbon, not because I wanted to follow the Irish political establishment but because I despise it and need protection from it.

Well said.

"It's such a toxic cocktail of anti-globalisers, neocons, the clergy and Trotskyists. Frankly, we're in a big mess," observed Andrew Duff.

Micheál Martin, the Irish minister for foreign affairs, told of a voter who was leaning no, based on a leaflet from the anti-treaty campaign group Libertas. Martin suggested she read the information from the neutral referendum commission. But she had no idea what he was talking about. "We up here in the elites have the idea that everyone is listening. But it didn't register."

As Fintan O'Toole notes, "But to remove most of the things people objected to in the treaty, they would have to have been there in the first place."

Indeed, all too much does not "register". I've heard various complaints about the low turnout in the last Alberta election, but frankly, I see that as a total red herring. You could have 90% turn-out but what does that mean if people are not "listening" and engaged in the issues?

There's no shortage of people who believe that empowering supra-national organizations like the WTO disempower individuals. Yet the WTO has never started a war, never enslaved a people, never done anything that national governments have done except stand up for the right of individuals and freely associated individuals to conduct commerce without interference from national governments.

more on a sovereign wealth fund (AKA a REAL Heritage Fund)

Suppose you live in a town of 1000 people and a million dollars suddenly lands in the town square, to be shared equally by all the people. Each person is $1000 richer, right? Yes. But are you really richer? Suppose you go into the local gadget maker's store and say you want to buy two gadgets today instead of the usual one. After all, you have the money for more. Meanwhile, she comes into your store and says she'd like two widgets instead on the usual one. But how is everyone in town supposed to double production overnight? They can't, of course, which means that the fact all your customers have another $1000 means you raise prices for your limited supply, while they, in turn, raise prices on you. No one in town will end up genuinely better off, and tourists willl stop coming because they can't afford it anymore.

This is why economists talk about moving out the long run supply curve as the ultimate policy objective, as opposed to manipulating the demand curve. In a closed system, you aren't any better off unless you can increase output.

There is another solution, and that's to open the closed system. If that million dollars is in the form of an asset outsiders want, A) you can trade with foreigners for stuff OR B) use it to buy foreign assets. I've been primarily advocating solution B, in part because many things are non-tradable. You can't import a haircut, so if everyone in town decides they are going to spend their money on services like haircuts, the price of a haircut will simply rise (and the haircutter won't be any better off either if the services he wants, like being waited on at a fancy restaurant, can only be supplied locally as well). More dollars chasing an unchanged supply is the very definition of inflation.

The other argument for solution B is that if Jay-Z can, "in anticipation of precipitation, stack chips for a rainy day" on Rihanna's Umbrella track, so can we. If Alberta simply consumes its natural resource windfall, we could end up in the situation whereby Alberta's future generations survive by selling their labour while the citizens of Norway, the UAE, Singapore, live off their capital (investment bank Morgan Stanley estimates that sovereign funds currently hold an estimated $2.3-trillion and their holdings will expand to $12-trillion within a decade). This would be a less than brilliant strategy for the province when the ratio of active to retired workers is expected to decline.

Now how can this be sold politically to Albertans? A problem is that governments are not generally held to account for what they COULD do but didn't. Albertans need to feel that they are entitled to that ownership future, where that ownership is of a growing (financial) asset as opposed to a depleting (non-renewable) one. My thinking has been that a periodic dividend to Albertans could be promised starting at some future date, such that unless the government starting saving instead of spending, independent actuaries would stand up and say, the promises cannot be fulfilled. If the government is seen as trying to fund current expenditures by raiding social security, Albertans might not tolerate it. The abstraction will be more concrete. The problem with this approach is that the idea that there will be a cash shortage remains pretty abstract given current conditions. The government could always find someone to say that if oil prices continue to rise indefinitely, the government can continue its profligate ways. Indeed, the raiding of Albertans' futures is essentially what is happening right now, yet it seems to be tolerated just fine...

The room for optimism here follows from the fact Albertans don't tolerate deficits. Conceptually, building an asset is the exact same thing as reducing a deficit. If we can get that across, it can sell politically.

"Alberta defends spending oil cash OECD wants saved"

Having been through England, Bulgaria, Macedonia, Albania, Montenegro, Serbia, Hungary, and Slovakia over the past 3 weeks, I am now in Stockholm, Sweden, and expect to be here for a few months.

What should we make of the fact the OECD is taking the Alberta government to task over its spend instead of save mentality? The fact the OECD is criticizing a government is not notable in the slightest, but the fact the government here is sub-national is unusual.

The Globe and Mail has an excellent article on this. Note the bit about "the report was reviewed by senior government officials who had the chance to comment before its release". One of my jobs while working for Finance Canada was to respond to OECD requests for pre-release reviews. National governments might be able to ensure greater accuracy than a Paris-based organization could achieve on its own. you see. It wasn't often that there would be much to really say, however, beyond occasional revisions to raw data. Fact is, Finance Canada and the OECD are both staffed by and large by professional economists, so in terms of policy prescriptions, any objection would more likely come from one of the Minister's political people on the 20th floor that a civil servant on a lower floor.

... there's a growing recognition that Alberta's excess of cash is overheating the economy and causing it harm, Mr. Drummond said.

I'm not sure what Mr. Drummond's sources are, but as a candidate in this year's provincial election, I'd say "recognition " was pretty close to zero. If there was REALLY "recognition", the provincial Tories would not be so foolish as to be responsible for the Reuters wire headline you see at the top of this blog post.

That said, my former U of A economics prof says "In Alberta there is more and more pressure for people to think of this more seriously," and he (Andre Plourde) is far more connected than I am so there must be something to it. However, at this point I have to disagree with Dr Plourde's advice, "Don't be surprised if that kind of messaging comes out from the Alberta government in the next while." I would continue to be surprised, especially if the "messaging" was accompanied by real action. The academics and experts can publish report after report, but if I learned anything from the provincial election earlier this year, it's that it is very difficult to get political traction for such studies in a populist environment.

The past few months have, in fact, disabused me of some of my notions about politics. From my Ottawa office tower, I thought Alberta would be more amenable to fiscally conservative policies. It's younger, Western (which generally means more libertarian), and more dynamic in its approach to problem solving. But having lived overseas, it's rather painfully apparent that the populist tradition in Alberta, something I'd trace back to Social Credit, means Alberta will continue to be behind global trends, whether it be the building of sovereign wealth funds, movement towards consumption based taxation (which would include a carbon tax), electoral reform, etc.

The "dynamism" of Alberta problem solving applies to the private sector, not the public. I believe a key challenge for the public policy is the province is the populist skepticism of elites. According to C. H. Douglas, a pioneer of the social credit movement in Britain, "Systems were made for men, and not men for systems". Having travelled and/or lived in at least 34 European countries over the past 4 years and having a completed a "Master of European Affairs" degree in Sweden, I'm astounded at the power of Brussels' bureaucrats given the cacophony of languages, cultures, and varying levels of development in the European Union. I believe this to be in part because Europeans understand that the secret to government is protecting it from the daily mob. The Germans are so insistent on ensuring the someone with a PhD be addressed as "Doctor" that one of my Swedish professors said he was called "Doctor Doctor" because he had completed PhDs in two fields. More significant than any such isolated anecdote, however, is the fact that Europe's establishment learnt its lesson after the Dutch and French public shot down the proposed European Constitution in referenda, such that this time around 26 of 27 member states will not be putting ratification of the Lisbon Treaty to a vote. The exception is Ireland (and the Irish vote today, as a matter of fact!).

The point here is that the Globe and Mail article observation,

The idea that Alberta and Ottawa should take excess revenues from the energy boom and invest outside the country, Norway-style, has been bandied about for years. It's a concept that has gained credibility with intellectuals, but one largely dismissed by decision makers who would rather use the money here and now.

is quite telling. The "intellectuals" in Europe have influence, such that if they decide a common currency is efficient, start preparing for a common currency. In Canada, economic logic suggests Alberta should have either have its own currency or there should be a common North American currency, but you may be assured that the loonie will remain legal tender in Alberta throughout my lifetime and yours. As for Asia and the Gulf States, the masses are ignored not because they are vulgar because they simply don't have much use for democracy in the first place. So it is that Dubai's reigning Sultan is essentially the country's CEO.

Does this analysis, which further references my "cosmopolitan" experience, make me a snob? Of course. But note that I started from the opposite perspective: I was born and raised a proud Alberta conservative, who had little use for latte liberals. But I now see that while the good earth has more to teach us about human experience than ivory tower abstraction, there needs to be a firewall between the economic/fiscal and socio-psycho-spiritual realms such that conservative skepticism of the power of reason re the latter does not extend to the former. But more on that later...

euro TV scene

The big event on European televisions last Wednesday was Manchester United's taking of the Champions League league trophy from Chelsea on penalties. England's dominance seems to extend beyond just where soccer clubs are based, however.

The Scandinavians and the Dutch have been universally fluent in English for decades. There is enough material available in German, however, that the rationale for learning English in Germany is more limited. As for the French, well...

But the times, they are a changin. Swiss miss Stefanie Heinzmann shot up pop charts in the German speaking countries with the English "My Man is a Mean Man", an odd occurance given that we have a native German speaker whose primary market is German speaking. There's also the fact that Germany's Eurovision entry was in English.

Most noteworthy, however, is the fact that France's Eurovision song is 90% in English, something that was caused to small amount of hand wringing in Paris.

But if any conclusions could be drawn about last (Saturday) night's Eurovision final, it's the fact that the language is one thing and the style another. The French entry remains distinctly avante garde (by Eurovision standards) while Norway's "Hold On, Be Strong" is typical Scandinavian pop and Ukraine' "Shady Lady" is perfectly at home in the eastern European club scene.

In end the, Russian entry won, apparently due to lingering Soviet nostalgia. The fragmenting of Yugoslavia into a bazillion independent countries greatly assisted, since each country is weighted equally in the voting.

I'm no longer surprised that Westlife and Boyzone emerged out of Ireland, given that country's votes for Poland's ballad "For Life". The astounding number of Poles living in the UK and Ireland may have played a role, however...

Is there a typical American song? For white America, I'd say the analogue is easily Carrie Underwood's "Inside Your Heaven".

in Stockholm

Apologies to those looking for more regular posting here, but I've just arrived in Sweden from England, and will be heading to Bulgaria on Saturday. I'll be returning to Stockholm June 10, and expect to be here for the summer. So look for more next month!

back in Alberta

Apparently Premier Ed objects to "the $2.2 million that the unions spent against me personally" in the last provincial election.

Solution? Restrict advertising by entities that are not registered political parties.

In other news, Ed's banned the CBC from lockups and technical briefings for a full year.

With respect to the campaign finance issue, one might presume that restrictions on third party advertising would help parties like the Wildrose Alliance since third parties who support fiscal conservatism would be less able to advance their agenda independent of the Wildrose Alliance party. I seriously doubt that the restriction would help anyone but the incumbent government, however. Why? Because everyone knows that the opposition has next to no chance of ever forcing Ed into a minority situation, never mind forming a government themselves. The return in terms of legislation that a potential donor can expect from a contribution to an opposition party is negligible. Indeed, while making due allowance for the fact that popularity and financial support are directly correlated, this is the biggest reason why the opposition in this province is perennially cash strapped. Most Tory MLAs are in more danger of being unseated in a P"C" party nomination battle than by the nominee of another party, and a third party advertising campaign could create dissidents within the P"C" party. The message from Ed on this one should be clear: interest groups should be expending their resources on trying to influence the government behind closed doors.

If the government were really interested in electoral reform, it would look at some form of proportional representation or at least fixed election dates. Just looking at campaign finance reform, a start would be to stop restricting full candidate deposit refunds to just the winner and those with more than half of the winners' votes. In my riding of six candidates just the incumbent MLA, who lost, and the incoming MLA who won got their full $500 back. The other four, including myself, donated half of that $500 to Alberta taxpayers. Getting the other $250 wouldn't do anything for me personally. I am forbidden by Alberta law from just spending that $250 on personal expenses. Generally, it has to be forwarded on to my party. Note that I'm not asking for public support for my party, although many other jurisdictions have recognized a role for public financing when candidates and/or parties have unequal resources. I'm just suggesting that my party get back from the public purse the money which it or its candidates originally raised privately. To those who argue that the hurdle to getting a long shot on a ballot should not be lowered, I'd suggest raising the number of required nomination signatures from 25 to 50 or even 100.

globalization = Holocaust

In the overkill of the week, Hillary Clinton applied Martin Niemöller's poem about the Holocaust to jobs lost to trade:

They came for the steel companies and nobody said anything. They came for the auto companies and nobody said anything. They came for the office companies, people who did white-collar service jobs, and no one said anything. And they came for the professional jobs that could be outsourced, and nobody said anything.