Seamanship Quotation

“In political activity, then, men sail a boundless and bottomless sea; there is neither harbour for shelter nor floor for anchorage, neither starting-place nor appointed destination.”
— from Michael Oakeshott's
Political Education” (1951)

Monday, August 31, 2015

The re-invention of lying in Canada

We weren’t like this before. Ottawa-power chroniclers are emphatic: before Stephen Harper took over, even the roughest, most resourceful pistols in the PMO never lied.

We were effective, of course. We were UN-certified, cosmopolitan Machiavellians, respected troubleshooters and guardians of our model "Westminster" democracy. We were guileless and the country prospered. Indeed, by the time Harper got his hands on all that power we’d amassed in our capital, the art of lying had disappeared.

A little while before us, Canada’s politics weren’t so nice. The dangers of lying in politics weren’t ameliorated at our founding constitutional conferences. But it was alive in the shadows, as it was everywhere else, ever since that prehistoric bully recruited a magician to enthrall his tribe. Happily, in Ottawa, some 50 years ago, the icky business of lying became unnecessary. It fell into disuse and eventually we lost the knack.

Baseball fans like Lester Pearson and Ontario’s William Davis and their Red and Blue Machines impressed us with a striking made-in-Canada fact: in this gentle northern dominion, good government (with swelling treasuries) is good politics. The bad guys invariably were inept, distasteful, lost elections and were shunned.

Chronicler Stephen Lewis, a careful socialist who ended up working for Brian Mulroney at the UN, today moves crowds to their feet insisting that our national politics can be “civilized” again, when Harper’s out.

The PMO of good works can be restored.

Stephen Harper started out innocently enough as a young advisor to an innocent politician who took our appetite for honesty too far. Preston Manning didn’t catch the incumbent Liberal Prime Minister lying.

Rather, he disturbed Ottawa with simplistic ideas: "representative" means electing Senators; "representative" means every backbench knuckle-dragging fundamentalist should be free to speak freely in stone-cold sober conversations with press gallery journalists. “Balance” was, obviously, supposed to include balanced budgets.

Then, as now, he evoked the word “honesty” with the ease of an Alberta dissident.

Manning didn’t accept the Code of Conduct that senior political aids had been following for over a generation. Scott Reid outlined recently in the Ottawa Citizen the ploys that are permissible in an adult PMO: short of lying, you may manipulate, prevaricate, avoid unpleasant truths, deflect, distract and dance a jig.”  

Manning failed to beat the Liberals and, in failing, he corrupted Harper.

As a three-time election winner and Prime Minister, Harper will leave you fumbling in the dark if you don’t know the truth; and he doesn’t connect the dots for his enemies.

With a hard heart and a mind as quick as Pierre Trudeau’s (that most outspoken champion of our lie-free politics), it’s conceivable that Stephen Harper is not lying personally about Senator Mike Duffy. Conceivably, he didn’t worry that his brilliant Chief of Staff could be outsmarted by a self-indulgent broadcast journalist who never had to put the news in writing. Nevertheless, it is unlikely Harper ever fired a staffer for prevaricating.

However, influential Andrew Coyne, a columnist and CBC guest conservative with a heart a million miles from Alberta’s evangelical politics, simply damns all this as lying.

Stripping our PMO of those communication tools Scott Reid and the rest of us were permitted to use before Harper reinvented lying, of course, would make it impossible to run Ottawa on behalf of any interest other than status quo in Ottawa.

But, at least, once Harper’s gone, the lying will stop. People have short memories and the PMO will get back to being the light as well as the heart of our bruised union. 

Thursday, August 6, 2015

After Trump’s done: who’ll be America’s dealmaker?

The only phenomenon this week as overblown and insincere as Donald Trump is the flagellation over Donald Trump: specifically, his weed-like persistence as the front-runner for the 2016 Republican Presidential nomination. Frank Bruni and David Brooks of the New York Times intellectualize about how the terrible power of the communications industry has turned the awe of a race for the presidency into therapeutic entertainment, multi-channel dope for shallow voters angry that America isn’t working properly for them and their tawdry interests anymore.

Trump, of course, is too crude and too hedonistic to lead America’s vast, thin-skinned power structure. Nevertheless, he is sufficiently shameless, and carries a resume and bank credit sufficient to cast a harsh light on the true presidential front-runners.

The allure of power politics has cheapened the Manhattan entertainer brand of Jon Stewart. In return, Manhattan wheeler-dealer Donald Trump—not entertainer Donald Trump—is setting Washington on its heels.

Trump has a popular, not a populist, proposition: I don’t let things fester; I deal with them.

He appeals to the millions who’ve come to believe that Washington is run by a mellow, idle class of actors and scriptwriters who worry more about reviews than results. And the smooth, carefully considered, and thoroughly researched speeches and asides of the Clintons and the Bushes only stretch out the hurt of Donald Trump.

As a reluctant betting blogger, I suspect the moderates in the Republican Party already have the candidates and so credible a prospect of retaking the White House that they’ll survive Trump by holding their delicate noses.

Trump, however, must force the Democrats to think fast.

Congresswoman Nancy Pelosi was the dealmaker who delivered Obama’s only historically significant domestic fix. The Democrat slate to replace Obama today is led by a calculator without domestic accomplishment, a smoothie who obviously won’t be beaten by her present challenger, an old pol who thinks he’s more sincere.

Don’t be disheartened, though, dear Democrats: thinking could be worthwhile. Read the New York Review of Books profile of Governor Andrew Cuomo by Jim Dwyer. Here’s an executive son of a bitch who makes only necessary enemies and knows more about how to be effective in politics, in this decade, than Hillary Clinton and any other candidate in either party now promising to end "gridlock" and make Washington a more businesslike American capital.

Friday, July 31, 2015

National Keynesianism and democracy’s optimal playground (part 2)

There are two broad arguments used to defend the floating loonie: (1) its price is set in the capital markets and, therefore, is above politics and amateur discussion; (2) dropping it for the best alternative (US dollar) would immediately disrupt and permanently limit the Canadian government’s ability to maintain stable growth and pursue independent commercial policies. Both defenses have effectively gone unchallenged over 45 years of business cycles and swings in Canadian confidence and disdain for the elephant down there.

The first defense is probably the best. Our float, ladies and gentlemen, only performs at its best when those fidgety politicians and their wonks are perfectly still. Having agreed on all sides that complaining is bad form, it costs little politically to support it. The loonie’s devaluation (that nasty new 23% tax) does hurt us, of course. That hurt, however, is not something top performers at the Bank of Canada need feel for us, let alone address.

Last week, in the Report on Business section of the Globe and Mail, David Parkinson wrote a story entitled “Why the Bank Doesn’t Care About the Recent Inflation Numbers.” If he’d been writing about similar machinations in the Vatican, it would have been on the front page. Here’s Parkinson’s clean explanation on why it’s simply not discussable to worry that Canada’s core inflation rate, for the last 11 months, has been above the bank’s own 2%  ceiling:

“In its closely watched quarterly Monetary Policy Report this week, the bank reiterated something it has been saying for a while now: That the core rate is overstating the true underlying inflation in the Canadian economy. It is being juiced by some temporary rises in a few isolated components of CPI, and, more importantly, by what it calls the ‘pass-through effects’ of the Canadian dollar’s depreciation over the past year or so.”

The bank and its accountable governor can "pass through" the pricing of the Canadian dollar to the capital markets, but Canadians cannot "pass through" the affects. They must absorb them.

Devaluation, nudged by bank-rate cuts and deprecating statements about the economy by the governor, is prized in private by Keynesians as the only civilized way to “adjust” costs (wages, salaries, and benefits) in industries that can’t seem to keep up when the dollar was strong. It tightens everyone’s belts—supposedly to give failing industry’s space to reorganize to meet competitive pressures. This gentle, opaque process leaves our politicians unscathed—and, unfortunately, the economy’s 20% productivity gap unscathed as well.

The second defense idles in the distance, like Napoleon’s fearsome reserves. Literally, Canada’s freedom to act as a G-7 power requires that we accept the inconveniences and uncertainties of a standalone, floating Canadian currency.

In 1927, American jurist Oliver Wendell Holmes well served tax collectors everywhere when he explained that we pay taxes for living in a civilized society. In 1971, President Richard Nixon floated the US dollar in order to give Washington more freedom to manage the US economy within a severely changing global context. Ottawa still thinks that Nixon’s medicine for America was meant for Canada too.

Ottawa’s economic policy professionals insist that Ottawa needs a bank of its own that’s free to execute a responsive monetary policy for a uniquely Canadian economy. This flattering assertion rests on equally flattering assumptions. Canada’s economic circumstances are unlike America’s; its material aspirations, demographics pressures, trade prospects, business culture, and commitment to low inflation and full employment targets deserve the obeisance of a dedicated, separate dollar.

The historical adjustment mechanism of internal migration by people and capital from low wage and declining regions to more dynamic industries and regions, apparently, won’t happen continent-wide unless we totally erase our border.

Are Germans learning French? Has their common currency—the euro—turned French workers into Prussians? Do New Yorkers send their kids en masse to live in Houston to bolster national unity? Do Californians vote en masse like voters in New Orleans, Louisiana or Fargo, North Dakota? Does either of our two currency areas have in place a fiscal mechanism to deal automatically with economic shocks and Greek-style state bankruptcies that might befall some regions and not others? 


When Alberta is booming, is not Texas too? When Ontario is losing jobs to Mexico, does Michigan not as well? When jobs are scarce in Nova Scotia, are they not scarce in Maine? When real estate prices are white-hot in Toronto and Vancouver, are they not rising dangerously in booming US cities as well? Can you think of a year of depression in the US that didn’t depress most regions of Canada as well? 

A Keynesian from Mars would see that our two currency areas are highly diversified and viable—and divided from each other unnecessarily.

That’s an assertion that Martians and individual Canadians can make without making matters worse for the battered dollar they’re still stuck with. Wouldn’t it be lovely if we could have an informal discussion on the subject while the politicians are wholly preoccupied with market-tested election clichés?

Tuesday, July 28, 2015

National Keynesianism and democracy’s optimal playground (part 1)

Canadians of every income class are paying a new (and rising) 23% import and travel tax for the privilege of having a dollar that’s free to bob like a cork—a cork that magically accommodates Ottawa’s management manual for Canada’s internally loose and externally entangled economy. Do they in return, however, receive superior government for keeping a standalone, supposedly market-priced Canadian dollar?

Paul Krugman and other Keynesian scholars living offshore in New York and London admire our cork and believe that eurozone members—especially Greece—are suffering terribly because they no longer have corks of their own floating, in a sea of trouble.

The Canadian Nobel Prize economist Robert Mundell developed an alternative concept of transnational Optimal Currency Areas that helped convince the 17 eurozone governments to replace their individual currencies by creating the euro, in 1999. They hoped their OCA inspiration would do a better job of expanding prosperity and peaceful trade than continuing to let Europe’s tangle of national borders justify its tangle of currencies.

Canada’s state intelligentsia, to this day, barely gives the case for a transnational Canada-US currency the time of day. Overwhelmingly, those in the know insist that the status quo is optimum, that Canada’s economy is too different from that giant economy to the south to forgo having a cork of its own. And besides, why would our cork interest global thinkers in Washington?

As is so often the case, economic jargon and wonky gossip disguise raw self-interest and legitimate politics.

Friends of the Canadian dollar place the pursuit of national full employment and income equality over the pursuit of wider regional efficiencies and productivity. Proponents of a wider currency area, on the other hand, stretch “optimum” for the sake of distant liberal free trade benefits. Twentieth-century vested interests—in Canada’s auto industry, for instance—use “optimum” to justify not buying anything that’s not a perfect fit, immediately.

Certainly, the gap between the mixed economies of Germany and Greece is painfully greater than the six national borders between them. However, that gap between Canada and the US depends today less on one border and more on exactly where you live and work within either federation. Keynesians in both capitals are chasing the same economic growth imperative, almost in tandem, quarter-after-quarter, and, instantly, over the phone in emergencies.

North American business site-locators and investors carefully study regional census data, business cycles, and shifting consumer preferences. They worry little, however, about the respective professionalism of regulators and public servants or the chances of a comeback by Marx in Saskatchewan or even radical left or right separatists in Quebec or anywhere else. Cross-border Canadian and American white-collar and blue-collar workers ask about the quality of local schools, not whether they’ll be shunned in the workplace and in neighborhood stores.

Still, being human, government monetary economists are not likely to decide en mass that their lucrative, highly technical skills are unnecessary and serve an unnecessary currency. They will continue to believe and avow that there exists no sophisticated alternative to the Canadian status quo.

Okay, they needn’t be muzzled—but they shouldn’t own the podium.  

Whatever the ideological hype of their government, the Greek public overwhelmingly favors keeping the euro and seems ready to keep sacrificing to avoid going back to the glorious days of a sovereign drachma.

The euro represents in Greece not merely peace of mind for tourists and foreign investors, but now also genuine restraint on mischievous Greek governments that, in the past, artificially inflated their economy in order to finance extravagant and crony government. And while the eurozone doesn’t have a formal “sharing” fiscal union to complement its currency union, Greeks surely note that Greece has received—and is receiving—hundreds of billions of euros in help, in large part, because it’s in the euro currency union.

Greek middle classes and entrepreneurs are asserting the benefits of a common currency, believing it serves their interests, if not the interests of individual state managers. Canadians aren’t hurting as much and are more deferential.

Yet Canada is an exceptionally safe place to think out loud. We’ve done ourselves little harm when we’ve tried it before.

The Bank of Canada isn’t holding a gun to our heads. It merely represents a set of pro-loonie defenses that puff up the benefits of the loonie and shrug away the price we pay in forgone purchasing, in lower productivity, and in our ability to move money, products, labor, and ideas back and forth across our defenseless border.


Thursday, July 16, 2015

Blessed are the closers

Whether we agree with everything Angela Merkel and Barack Obama resolved in unfriendly but decisive negotiations with Greece and Iran this week, we should celebrate that closers still make it to the top in these perilous times.

Nothing in the rulebook of contemporary politics favors closing. Endlessly spinning good intentions, turning disputes over to judges or public commissions, or simply waiting on the sidelines to attack is always safer than bringing the game to a stop.

Yet some of the people we elect do step out of the routines of the status quo. They don’t just show up for the group photo and sit as long as it takes to complete the agenda. The closers own the outcome. And that, gloriously, sets them apart.

Intelligent closers don’t look for wins compulsively or squander capital simply to help sex up a communiqué. They are disciplined by the fact that when they truly win big, they risk their futures and limit their appeal as well as make their mark.

The forgiving machinery of simply carrying on is rudely sidelined, and its busy helpers are diminished. Professional survivors feel smaller. Those great decisions that pay off over time can leave the most cerebral conferences with the feel of Waterloo the next morning.

Barack Obama will never be a left-liberal icon, let alone a cocktail socialist, after securing universal health care without a single public insurer. And Pierre Trudeau’s liberal constitutional legacy includes tacky accommodations: for instance, an unelected Senate and the Charter’s notwithstanding override.

Closers learn later, after the deed is done, whether they were liberators or bullies, whether they secured “peace in our time” or were appeasers, whether they will be honored at, or not invited to, their party’s next convention.

In our neighborhood, today, we’ll soon find out whether Stephen Harper will betray dairy farmers or win equal access to the burgeoning Pacific free trade area. Later this year, we may find out whether the leader of Canada’s Liberal Party can support, conceivably join, a left government not led by a Liberal.

But let’s acknowledge that the drama of closing also includes the bracing chance that closers can pay with their careers and, if not recently, with their lives. Canada’s unsung closer today must surely be Shawn Atleo, former National Chief of First Nations, who paid with his career for negotiating and, then, actually signing a new Aboriginal education framework with a Prime Minister every grassroots lobby loves to hate.