Making Canada Relevant Again- The Economic Super-Thread

[Infanteer]

Let me guess, the next post will point to Gene Spurling as a moron.... :boring:

 

[a_majoor]

Canada has a similar political and economic culture to Europe, but we get a "slipstream effect" from bordering the United States which masks some of the self induced problems. Here is a look at Europe which suggests one potential way we could be going. Prime minister Harper is very constrained due to a minority government, so this session of Parliament isn't going to turn the Ship of State around, just change course by a few degrees.

Some of this is old news, http://forums.army.ca/forums/threads/37454.0.html,  and the article conclusively debunks any attempt to uphold the EU or particularly the Scandinavian models as ideals to emulate, on the other hand, the hard numbers for Ireland are quite startling; anyone contemplating where to go should consider the Emerald island.

http://www.instapundit.com/  (March 25, 2006)

BRUSSELS JOURNAL looks at Europe's economic problems: http://www.brusselsjournal.com/node/933

    The reality of Europe’s ailing economy contrasts sharply with its economic potential and with the massive resources employed to cure its ailing growth. The whole arsenal of Keynesian remedies has now been tried and has failed one by one. Massive deficit spending throughout the eighties and nineties has left Europe with a public debt unequalled in history. The size of Europe's monumental public debt is only surpassed by the hidden liabilities accumulated in Europe’s shortsighted pay-as-you-go public pension schemes. . . .

    Europe’s well-intentioned model is not working because it does not pay to work after the taxman has taken his share. Europe is not innovating because it does not pay to innovate after the huge costs of complying with all the prescriptions, limitations and restrictions in all Europe's overabundant licences and authorisations. Demoralization is the real cause of Europe’s stagnation. Europe’s workforce is tired of being incessantly hindered in its task of producing wealth. Demoralization is the reason why ever more engineers, scientists and entrepreneurs flee Europe’s tax misery. Paradoxically, the Old Europe of the West must now learn from the New Europe of the East, where after years of disastrous socialism, low and simple flat taxes are being introduced, luring investors from all over the world.

Read the whole thing, and also read this prophetic email from the early days of InstaPundit. http://instapundit.com/archives/000942.php

UPDATE: More on Europe's problems in this article. http://www.taemag.com/docLib/20050912_EndangeredEurope.pdf. I very much hope that the Europeans manage to turn things around, as trouble in Europe has a way of becoming trouble worldwide.

ANOTHER UPDATE: Here are more thoughts from Larry Kudlow. http://www.nationalreview.com/kudlow/kudlow200603251037.asp
"All of this is reminiscent of the British disease of the 1960s and ’70s. Back then, striking labor unions closed down the English economy again and again, and it took until the early 1980s for Margaret Thatcher to put an end to it."

 

[Zartan]

While what the Irish have done has been truly fantastic, I wonder how the government could manage to establish a national flat tax (isn't Ireland a Unitary state?) - I feel the provinces would be the biggest hurdles in trying to achieve an economic liberalization. The Feds could lower their tax rates, business and personal, but it's still up to the provinces as to whether they follow suit - I would expect (you know me in this thread).

 

[a_majoor]

While what the Irish have done has been truly fantastic, I wonder how the government could manage to establish a national flat tax (isn't Ireland a Unitary state?) - I feel the provinces would be the biggest hurdles in trying to achieve an economic liberalization. The Feds could lower their tax rates, business and personal, but it's still up to the provinces as to whether they follow suit - I would expect (you know me in this thread).

Provinces which follow suit would expand their economies, while provinces which did not follow suit would suffer from a loss of jobs, people and investment flowing to the low tax jurisdictions. Even today, you can compare Alberta and Saskatchewan, which have similar climates and geologies and resources, but very different political cultures and therefore very different economies.

 

[mainerjohnthomas]

I get a kick out of everyone who points to Alberta's tax situation and claims its a model Canada should follow.  Alberta can do just about anything it wants as long as oil prices and demand stay healthy; its got oil money overflowing provincial coffers.  Give every province equivalent oil revenue, and then we'll talk.  As far as the Irish situation, they do not share the worlds longest undefended border, and airwaves with the US, so they have a population that is more open to approach things in an Irish fashion.  Our population is too closely linked to that of the US for our people to accept a different fundamental understanding of economic rights and responsibilities.  We may approach solutions differently than the US, but we are approaching the problems of today's economy with a similar understanding and economic model.  Our population will not accept any model of taxation that appears to favour or exempt the rich or large corporations.  In democracy, objective reality is less important than popular perception.

 

[SeaKingTacco]

Hang on there Mainer,

Speaking as a former Albertan, contrary to popular opinion, the secret to Alberta's success is not only oil revenues.  In the Early 90's, Alberta had nearly the highest govt debt ratio in the country.  It's growth in provincial spending, if left uncontained and expanded to today, would have outstriped even the so-called "windfall" from oil revenues today- which were not predicted when Alberta started cutting expenditures.

The fact of the matter is that, the Klein Gov't did the hard lifting by cutting expenditures when it was politically unpopular, but necessary.

Now, the Alberta Govt has zero debt (something it mostly paid off BEFORE oil prices spiked upward) and room to make decisions that other governments would love to have.  Guess what- they can.  IF they are willing to make the politically unpopular, but necessary choices, that Alberta did.  Ontario, for example, should quit making excuses about how the Feds underfund them at every turn and simply balance their budget and pay off their debt.  Funny how much more room a Govt has to make decisions when it is not being squeezed by interest payments. 

Cheers,

 

[Kirkhill]

http://atlas.gc.ca/site/english/maps/archives/4thedition/economic/resourceindustries/179_180

mainer - further to SKT's comments - here is a map from the "The Atlas of Canada" (admittedly dated 1970) showing all of those parts of Canada where oil and gas are likely to be found. 

It predicts the presence of Oil & Gas in:  Alberta - Found; Saskatchewan - Found; Manitoba - found; NE BC - Found; Mackenzie Delta & Beaufort - Found; Off Newfoundland and NS - Found.  It also predicts reserves off the Queen Charlottes, in Hudson and James Bay and their lowlands as well as in the Gulf of St. Lawrence. 

Setting aside economic viability for a moment, that is a valid issue, it is hard to explain Alberta's wealth and Saskatchewan's relative poverty as being a result of anything else than government policy when there is little to choose between the costs of extraction in Alberta and Saskatchewan.  In BC, when the NE field was recently opened up BC revenues have climbed and the province is suddenly in the black again.

In addition to SKT's point that oil was not always at 60/barrel, it wasn't so long ago that it was 10-13/barrel - a money losing proposition for the oil sands, Alberta has acted both positively and negatively.  They have succeeded by "making hay when the sun shines".  When there is a demand for what they have in the ground they sell it, make money and put it back into the economy and infrastructure.  They have even managed to tuck away some money (never enough as my retirement planner keeps trying to tell me) for the day when those revenues dry up completely.  When the demand went down and the revenues weren't there, they cut back on spending.  The formula is available to all provincial managers.

Does anybody believe that all the mining potential in Ontario and Quebec has been played out?  Or is it more likely that the decreased mining activity is because of government policy?  The hard rock mining industry used to be a major economic engine for Ontario.  It still is for Sudbury.

The demand for what Canada has to sell, if it chooses to sell it, is not going away.  It is getting stronger.

 

[a_majoor]

I get a kick out of everyone who points to Alberta's tax situation and claims its a model Canada should follow.  Alberta can do just about anything it wants as long as oil prices and demand stay healthy; its got oil money overflowing provincial coffers.  Give every province equivalent oil revenue, and then we'll talk.  As far as the Irish situation, they do not share the worlds longest undefended border, and airwaves with the US, so they have a population that is more open to approach things in an Irish fashion.  Our population is too closely linked to that of the US for our people to accept a different fundamental understanding of economic rights and responsibilities.  We may approach solutions differently than the US, but we are approaching the problems of today's economy with a similar understanding and economic model.  Our population will not accept any model of taxation that appears to favour or exempt the rich or large corporations.  In democracy, objective reality is less important than popular perception.

Kirkhill already answered the relative distribution of resources question, so I will tackle the second part:

Canada may share a border with the United States, but our political, economic and social culture is quite different. We do indeed have a different fundamental understanding of economic rights and responsibilities, with the majority position being to demand "rights" of subsidization and "free" handouts, while evading responsibilities.

Our population, for whatever reason you might choose to believe, seems entirely disinterested in the fact (repeatedly brought home during the dying months of the Martin era, but quite evident throughout the 1990s) that our tax and regulatory structures DO favor or exempt the rich (some of them anyway, look up the Income Trust leak of 2005) and large corporations, particularly Crown Corporations and "friends" of the Liberal Party. You can probably report many examples in your province or municipality as well.

The overall thrust of the argument is not so  much "we're rich and you're not", but rather WHY some political jurisdictions become rich and others don't. To use a historical example, the Spanish Empire was literally sitting on top of a mountain of gold in the 1500's, at a time when gold was the currency of choice and mercantilist economics were commonly practiced, yet by the end of the century their status as a "Great Power" was clearly slipping and from which they never recovered. Their major opponents were England and the Netherlands, neither of which (at the time) had overseas Empires or access to anywhere near the resource base Spain did. At about the same time, the City-State of Venice, with a small fraction of the resources available to Spain, was able to face off the much larger and potentially wealthier Ottoman Empire.

Relative to their opponents or other peer states at the time, England, the Netherlands and Venice had fairly liberal "free market" economies, as well as political cultures which minimized State intervention in economics and personal affairs. (Remember, I am talking about relative to other states in the 1500's, not today).

The answer to why the Irish could succeed so spectacularly in the 1990s is not particular to Ireland, but universal and applicable to any society.

Canada is a continental nation, sitting astride one of the greatest concentrations of natural resources on the planet. Our population is well educated and we have the infrastructure of a modern, technological society, so by rights we should have the ability to be one of the leading nations in the world. In reality, we are perhaps the most sanctimonious nation in the world, who preach a lot while our actual ability to intervene in global affairs (diplomatically, economically or militarily) have shriveled to practically nothing. Economic liberalization would provide the financial horsepower to develop our diplomatic, economic and military abilities so we could walk on the world stage as an independent actor, and become relevant again.

 

[Zartan]

Provinces which follow suit would expand their economies, while provinces which did not follow suit would suffer from a loss of jobs, people and investment flowing to the low tax jurisdictions. Even today, you can compare Alberta and Saskatchewan, which have similar climates and geologies and resources, but very different political cultures and therefore very different economies.

While to summarize, "it would make sense," you and I both know how these governments operate. When there was a call to establish a National Securities regulator, everyone but Ontario balked. Certainly a more complicated situation, but I believe many provinces would rather stick to the status-quo than some tangible improvement. Just my opinion, though.

 

[mainerjohnthomas]

Economic liberalization would provide the financial horsepower to develop our diplomatic, economic and military abilities so we could walk on the world stage as an independent actor, and become relevant again.

    Our diplomatic, economic, and military abilities atrophied during times of plenty.  Economic liberalization could provide the financial horsepower to do great things.  It could also simply continue the current entropy at a vastly increased rate.  Canada has spent the last forty years climbing on its high (and rickety) moral horse and saying that we are NOT like the Americans, that we have lost all sense of what it means to be Canadian.  I disagree with some of the US foreign policies, but at least their govt has an agenda.  Our leaders, the true servants of our apathetic people, know that Canadians have no fixed goals for our nation to achieve, and thus only require enough military and diplomatic presence to make nice noises in the thirty second attention span of our "responsible" but lazy press, without alarming the apathetic body politic with the thought that we might be in danger of DOING something abroad.  Our public knows what its against, and it certainly includes trying hard.  Human rights are not worth fighting for, genocide should be denounced, but not actually stopped at the cost of discharging a firearm.  The world would just be fine if the US would stop doing things, and be more like Canada.
    The wealth of the Canadian economy has little bearing on the force Canada brings to bear in the world.  If our coffers ran over with gold, our public would still not support a strong military, especially one being used to enforce our political will and actually fix the problems it encounters.  The fault lies not in our pocketbook, but in our sense of identity.  If the Canadian people woke up long enough to decide that Canadian values require us to intervene in the trouble spots of the world, rather than simply disapprove from the sidelines, then we could build up a military and foreign service in a decade or two that would justify our claim to be a world power.  As our people appear to want nothing of substance, that is what their leaders give them.

 

[a_majoor]

Unfortunately you are correct insofar as our political culture is concerned.

On the other hand, when you consider Canada's combined Federal, Provincial and Municipal indebtedness, and our unfunded pension liabilities are equal to about 400% of our GDP, there is another VERY compelling reason to embrace economic liberalization outside of providing economic horsepower to enhance our political and military presence on the global stage.

 

[a_majoor]

More reasons to keep driving nails in the Liberal coffin. Make sure you look closely at Provincial and Municiple govenments very carefully as well:

http://thelondonfog.blogspot.com/ April 5 2006

Cynical surpluses

As William Robson noted in the Financial Post last week, the strategy of federal Liberal governments in the past decade of underreporting revenue to produce enormous year-end surpluses provided enormous political benefits for the government — not the least of which was a general complacent attitude in the electorate that the government was managing the economy well as though revenue from taxes and monopolistic services were a direct function of economic well-being. Two further political benefits were realized: first, fans of fiscal prudence were placated by the fact that much of the surpluses were earmarked for paying down debt without the government having to go to the trouble of antagonizing socialists by making significant debt repayment a line item in the budget; and, second, the government found itself with plenty of extra money to throw around to coddle protected special interests.

London city council has been learning the trade from their federal Liberal counterparts and reported a surplus of $9.8 million from the last fiscal year after reporting a $12 million surplus in the previous year. This being an election year, council elected not to commit itself to very many future expectations and used $5 million to retire debt. However, $300,000 remains uncommitted and rather than returning the money to its rightful owners, the city is entertaining requests for the money for the Children's Museum, the Palace Theatre, splashpads in the Pond Mills area, and the London TechAlliance — but not only for that portion of last year's surplus but for this year's projected surplus, according to the London Free Press. This raises the question: if city hall can already project surpluses, why is that additional revenue not being reported in the budget which was passed little more than two months ago? Answer: as with the federal Liberals, surpluses at city hall are a cynical political tool. If revenue is not budgeted, the city cannot even begin to pretend that it is a legitimate municipal asset.

 

[a_majoor]

The disease of Statism (most commonly expressed in a form of Socialism in this day and age) isn't confined to Canada:

http://www.nationalreview.com/kudlow/kudlow200604181516.asp

Waking Up to Hillary’s Big-Government Nightmare
In theory it will put Chicago to sleep; in reality it will sink the economy.

The ballroom was packed with a who’s who of business when Sen. Hillary Clinton addressed the Chicago Economic Club last week. No doubt about it, this was the address of a presidential hopeful. But unfortunately for Mrs. Clinton, the eyelids grew heavy as she droned on and on.

Sleep, it seems, was the better option to suffering through this odd and curious presentation. On the one hand Clinton acknowledged a growing economy, a stock market at historic highs, strong productivity and profits, and low unemployment, while on the other she called for big-government investment in infrastructure and heavy spending on health care and education. These two hands don’t go together.

The senator argued that “Tax cuts are not the cure-all for everything that ails the American economy,” and that instead we need the “right tax system [and] the right investment, including infrastructure. . . . decisions and policies that only all of us acting together through our government can make to set the stage for future prosperity.” The italics, unfortunately, are mine.

So what we have here is a strong plea for a government-directed economy. This is something that used to be called industrial planning and targeting, at least until the dismal economic performances of France, Germany, and Japan totally discredited those terms. But for Sen. Clinton, government planning is back. Citing a recent report by New York financier Felix Rohatyn and former senator Warren Rudman, Clinton is calling for a “national investment authority” to rebuild the nation. This in her view will solve all our problems related to airports, highways, bridges, hurricanes, and lord knows what else.

She speaks as though Congress didn’t already spend a fortune on the recent highway bill, replete with corrupt budget earmarks that totaled a cool $30 billion in 2005.

Ironically, while Clinton wants to revive big-government spending, a number of respected policy analysts are writing about making public highways private. Topping their list are the Chicago Skyway, the Indiana Turnpike, and toll roads in Texas and Oregon, toll truck lanes in Virginia and Atlanta. These private ventures would pay for themselves and would substitute market decisions for government planning. The Reason Foundation is chock full of similar ideas, including private-sector road and highway plans in California, where voters just rejected a $68 billion infrastructure package because of a political history of pilfered taxpayer funds.

In Chicago, Mrs. Clinton also engaged in a bit of class warfare, telling the assembled businesspeople, “America did not build the greatest economy in the world because we have rich people. Nearly any society has some of those.” Without exactly saying it, she clearly implied tax hikes on the rich and a large-scale redistribution program worthy of any centrally planned economy.

Hasn’t Mrs. Clinton noticed the worldwide spread of free-market capitalism that has become such an enormous wealth creator across the globe — including Eastern Europe, India, China, and the rest of Asia? The economic growth principles of higher after-tax returns for work and investment, deregulation to limit government’s reach, and the privatization of government-run companies have become almost commonplace following the Reagan-Thatcher revolution of twenty-five years ago. But Mrs. Clinton would have us turn the clock back in ways that even her husband didn’t support. She defines her goals in terms of “a middle class life, education, health care, transportation, and retirement.” But all this is nothing more than a massive dose of government spending and regulating — a sure prescription for humongous taxes and a declining economy.

No wonder the Chicago ballroom started to snooze. Clinton’s ideas electrified the audience about as much as a broken plug attached to an old land-line phone.

Why not employ the tax code to reward success rather than punish it? What about investor-owned savings accounts for health care, retirement, and education? Why not put pro-market consumer choice, rather than government, at the center of the 21st century economy? How about setting the fiscal stage so the non-rich can get rich?

Two weeks ago I was in the Oval Office with President Bush and a handful of financial journalists. The president spoke to us about his growth policies and priorities, such as making tax relief permanent, keeping the tax rate on dividends and capital gains low, maintaining lean budgets, and expanding free trade.

This vision is in deep contrast to the one being set forth by Hillary Clinton. The president places the risk-taker and the entrepreneur at the center of economic growth; the presidential candidate sees government as the driving force of the economy.

It may well be that the booming American economy is still the greatest story never told. But the reality is that low-tax free-market policies are triumphing here and around the world. It makes one wonder, What planet is Hillary Clinton living on?

— Larry Kudlow, NRO’s Economics Editor, is host of CNBC’s Kudlow & Company and author of the daily web blog, Kudlow’s Money Politic$.
 
http://www.nationalreview.com/kudlow/kudlow200604181516.asp

       

 

[clasper]

The president spoke to us about his growth policies and priorities, such as ... maintaining lean budgets...

This guy has got to be joking.  The author just ruined the entire article by demonstrating what ridiculous rose-coloured glasses he sees the world through.  I've heard many words used to describe Bush's budgets, but "lean" isn't one of them.

 

[Brad Sallows]

Hm.  I didn't think they were only Bush's budgets.  They're Congress's budgets too, aren't they?  I'm not sure what passes for Bush's budgets - maybe something he hands to Congress, and then they hand back, with fattening adjustments? - since there is still no line item veto provision for the US president and he seems unwilling to exercise the presidential veto otherwise.  I admit I'm a little hazy on how the federal budget is developed in the US, and the exact point at which the various parties have input.

 

[Centurian1985]

Arrrrgghh....head...aching....eyes...popping.....must...reach...for...beer...

ahh thats better....far too much intellectual thought going on here! must eject from thread!

 

[a_majoor]

Jared Diamond makes my points by inference; he gropes for examples based on "environmental issues" when they are clearly irrelevant, while ignoring the role of culture, organization and the belief structures of Western civilization:

http://www.victorhanson.com/articles/hanson042305.html

Decline And Fall
A review of Collapse: How Societies Choose to Fail or Succeed by Jared Diamond

by Victor Davis Hanson
National Review Magazine

Jared Diamond’s bestselling Guns, Germs, and Steel argued that geography trumped culture, and that the current privileged position of the West was therefore mostly attributable to the advantageous resources in, and location of, Western countries, rather than to Europe’s singular values. Despite the allure of such a politically correct exegesis — President Clinton endorsed the book wholeheartedly — there were numerous criticisms of this determinist idea of natural accidents resulting in the present-day dominance of the West. At some point a Cleisthenes, Plato, Augustine, Magna Carta, Sistine Chapel, Thomas Edison, or Albert Einstein — and the thinking and substructure that produced them — is worth more than long, indented coastlines and concentrations of iron ore. Diamond seemed to be terribly confused about the course of 2,500 years of Western history: Environment, far from being a precondition for Western success, was often almost irrelevant to it.

For example, how did the Ptolemies create an even more dynamic civilization than that of the earlier dynastic pharaohs, when they inherited from them a supposedly exhausted and increasingly salinized landscape? Or why did the palatial culture of Mycenae prove to be a dead-end society, and yet the radically different Greek city-state centuries later blossomed in the exact same environment? More immediately, are we to suppose that there are underappreciated micro-climates that separate Tijuana from San Diego, strangely different soils on the two immediate sides of the Korean DMZ, and something about those ever-changing lagoons of Venice that made it irrelevant in late Roman times, a world power in 1500, and once again a backwater by 1850? Did the environment of Britain improve from A.D. 400 to 1700 while Rome’s declined, thus explaining why the former outpost of the Western world became its new center and vice versa?

Never mind that these bothersome historical details point to a particularly innovative — and ever evolving — social, economic, and political Western paradigm that can not only destroy, but repair, and, yes, often improve on nature in a way not quite possible in other cultures. The hillside slums of Mexico City, Sao Paulo, or Calcutta may support Diamond’s gloomy assessments of what population density and environmental ignorance have wrought, but why does such a theory break down when we look at civilized and relatively affluent life in similarly congested Tokyo and London? Instead of the hard work of sorting out the subtleties of how sophisticated Westernized cultures both succeed and fail in inhospitable landscapes, the morality tale of Guns, Germs, and Steel was soothing salve to the increasingly berated Westerner, who apparently was amused by the idea that he had not stolen, but bumbled onto, his embarrassing bounty. And so the book, presented in a chatty and often witty style, went on to sell a million copies.

Perhaps Diamond sensed those inconsistencies and thus in his new book, Collapse, he attempts to demonstrate through case histories of small micro-climates from Easter Island and modern Montana to Iceland and Greenland how civilizations disintegrate: Mishandling of the fragile environment causes wars, famines, depopulation, and eventual breakdown — and we modern wastrels should learn from them all before it is too late. Of course, empires can seem to fall for other reasons, but usually historians fail to see that political and military causation “masquerades” deeper environmental degradation.

Diamond’s natural determinism and condemnation of the West’s pathological means of exploitation are nothing new, but represent a synthesis of the previous pessimisms from Marx and Toynbee to Paul Ehrlich and Kirkpatrick Sale. Most scholars, however, would accept the notion that societies like those of the Egyptians, Romans, Aztecs, or Ottomans — civilizations that, unlike those of Diamond’s tiny settlements at Pitcairn Island or Vineland, had millions of inhabitants — at some period in their growth, evolution, and maturity inevitably declined; whether abrupt or insidious, such breakdowns were largely due to government overcentralization and rigid bureaucracy, affluence and leisure among a bored elite, high taxation, and depopulation in the countryside — all of which made rulers insensitive to change and unable to react rapidly to the radically new stimuli of invasion, novel religions, internal dissent, and, yes, occasional natural challenge.

In contrast to this broad historical picture, most of Diamond’s examples are slanted: They involve fragile, mostly isolated or island landscapes that witnessed colonists, renegades, or adventurers who sought in their greed or ignorance to put too many people in the wrong place. Modern Montana cattlemen and miners, like Norsemen and Mayan big men of the past, are easy targets; Diamond breezily disparages them through comparisons to “modern American CEOs” and caricatured chauvinists who proclaim “the unconscious message, ‘We are Europeans, we are Christians.’” When the reader begins to suspect that these light, anecdotal impressions are either irrelevant to larger historical questions or themselves internally inconsistent, Diamond coughs out a necessary qualifier: “I am not claiming,” “On the other hand,” and “Nor am I . . .”

The main problem, however, with this book is that Diamond’s well-meaning, environmentally correct storytelling cannot impart any coherent lesson of why in fact societies fail. Environmental degradation, climate change, hostilities, political and cultural failures, and trade are cited as the roots of collapse, but are used so interchangeably that we never learn to what degree mismanagement of nature or of people brings on doom. As a result, when Diamond ventures into systematic analysis of historical questions that he knows nothing about, he has a predictable propensity to say things that are not simply wrong but hilarious.

Yes, Americans once clear-cut the northeast, but now it has more forests than ever — because, among other things, technology moved us beyond wood-burning fuels. Iceland lost its topsoil and trees and thus many of its early settlements — but modern technology, liberal government, and Western jurisprudence ensure that its current Scandinavian descendants inhabit a successful society despite its cold, denuded, and unfertile island. And if Diamond believes that is so because Icelanders finally got smart and now follow his environmentally correct nostrums, he should ask why that is so — or what would happen in a decade should they magically be transferred to Haiti or Yemen and, in turn, Haitians and Yemenis were to take over Iceland.

Perhaps the wealthy, pampered 9/11 terrorists did count on the teeming slums of the Middle East for their base of support, and no doubt Rwanda’s genocide likewise had elements of too many people expecting too much from too few resources, but such environmental explanations are in the end fatuous when seen in larger and far more important political and economic terms. A Singapore or South Korea — or Manhattan — shows that modern technology, free markets, and the rule of law create a fluid and ever responsive social structure that can trump tribalism, religious fundamentalism, and the miseries of material poverty, limited resources, and an unforgiving nature.

Diamond also fails to see that his “masquerading” works both ways. If we historians are fooled into thinking environmentally degraded societies lose wars owing to military ineptness rather than resource depletion, then he is utterly incapable of seeing that material want is often a mere pretext for national delusion and aggression. Germany is more populous today on smaller territory than in 1939, when it advanced the bogus notion of Lebensraum; overcrowded contemporary Japan, Inc. does fine within its smaller borders without warring for a Greater Co-Prosperity Sphere. Few think that the Falklands were vital to Argentina’s food supply.

In an age of sophisticated fertilizers that can implant huge amounts of nitrogen into the soil through a variety of mechanical, chemical, and “organic” mechanisms, it is simply not true — as I can attest from 30 years of farming trees and vines — that in Montana “apple orchards, which were initially very profitable, collapsed, due to in part to apple trees’ exhausting the soil’s nitrogen.” Diamond laments that out-of-state homeowners are “careful to stay in Montana for less than 180 days per year in order to avoid Montana income tax and thereby [not] to contribute to the cost of local government and schools,” but ignores the logical corollary that many of his maligned affluent Californian interlopers (and other commuters like them from other states) already pay almost 10 percent of their salaries back home for services that they, as absentee residents, do not fully use.

Diamond idealizes the Netherlands as one of the world’s most environmentally sound countries, where the need to manage the tides has made it an especially communitarian culture of the “polter” — as if resource management will address unassimilated Islamic ghettos, or as if such environmental sensitivity extended to the more mundane task of cultural integration. (In any case, that country is in near paralysis from, and now furious at, the murder of Theo Van Gogh and Islamic fundamentalist threats to its democracy.) Similarly, Diamond’s idea that the Australian continent not only cannot support its present small population, but is doomed unless it reverts to a more natural human community of 8 million is ludicrous. The recent history of Australia has actually seen a steady rise in the standard of living, directly connected with growing population and a newfound allegiance to free trade, open markets, and foreign investment — all of which have capitalized on the rich Australian environment in novel and often sustainable fashion.

Finally, the moral lectures about contemporary Western dissipation are sadly compromised by occasional hypocrisy. While I think Diamond is absolutely right that “wealthy people” often “insulate themselves from the rest of society” and “use their own money to buy services for themselves privately,” I also know that his own environment of Westwood and UCLA is not quite Bakersfield or Memphis, but one of the most affluent and secluded in the world. Diamond’s ample reference in the text to dozens of overseas trips, and numerous sabbaticals and research grants the world over, testifies not merely to his privilege, but also to the success of the modern Western world in altering the environment. Safe and rapid global travel, modern medicine, and the security brought through jurisprudence — all developed over the same 2,500 years of Western exploitation that Diamond takes jabs at — are a world away from the brutish, more natural world of New Guinea that in the past he has often romanticized, but ultimately chooses to visit periodically rather than raise his children in on a permanent basis. Indeed, the exploitation of fuels, ores, and soils that Diamond seems to think is so often reckless and presages our own collapse is very often not reckless, and thus inseparable from his own current enlightened and rich existence.

Parts of Collapse are a therapeutic and salutary reminder to recycle more, trade in our gas-guzzling SUVs, and cut back on the parathion, but sound history this book unfortunately is not.

 

[a_majoor]

The debate is continuing in "Small Dead Animals". As you can see when you follow the link, the crux of the problems isn't revenues, which are increasing in step with the increasing American GDP, but rather the increasing spending by an out of control congress. The "Porkbusters" movement is a reaction to this, and the reaction of some of the congressmen and senators to the Porkbusters would be hilarious, if it wasn't such a serious manner.

Just remember, the American deficit is coming down far faster than forcast, so if they could fix the OTHER half of the equation.....it would work for us too.

http://www.smalldeadanimals.com/archives/004132.html

 

[a_majoor]

One thing ofter missing in economic arguments is the issue of "Stocks" as well as "Flows". Stocks in economic terms are essentially static forms of wealth, such as savings and real property, while Flows reffer to the movement of wealth through economic transactions and activities. We are most familiar with Flows, since we see it every time we make a purchase (the money just "Flows" out of your wallet), but Stocks actually outnumber Flows by a huge amount. Hernando de Soto makes this argument in "The Mystery of Capital" and "The Other Path", pointing out that the key difficulty in third world nations is the inability of most people to convert their "Stocks" into "Flows".

This is not to say we are in the clear (after all, combined debt and unfunded liabilities in Canada are equal to about 400% of the GDP), but adds another layer to the analysis of our economic performance. Another difficulty in the analysis is the fact that a great deal of the "Stock" in Canada is "owned" by the government (i.e. Crown lands), and so the value of these stocks are arbitrarily determined by the Crown, rather than by the market, and they are not easily accessable by the market or converted into flows.

Here is the example using US figures:

http://article.nationalreview.com/?q=NTFiMDlkOTlhYTVlOGMwMzFlOTNhMjZmZDVhZDUwNGQ=

The Financial Prowess of the U.S. Family
You can’t talk liabilities without mentioning assets.

By Jerry Bowyer
 
Imagine for a moment that you are a financial planner and you are advising a family that makes about $130,000 per year. Their total assets, including a house, stocks, and bonds, add up to about $660,000. They owe roughly $130,000. Over the past three years their assets have been growing in faster increments than their liabilities.

So, should you be worried about these people? Neither would I.

Now, if you were to add 8 zeroes to these numbers, you’d be dealing with an actual family in the real world — the Unites Sates of America. However, the pessimistic and moralistic factions of the right wing are doing a lot of hand wringing about U.S. debt these days, both public and private. So are the if-Bush-is-president-everything-must-be-awful left wingers.

As a recovering financial accountant, this BuzzCharts’ author always feels a little queasy about any report that mentions liabilities but not assets. It’s hard-wired into me to weigh debits against credits.

Thus, when we treat the U.S. as one family, we can create a balance sheet that’s quite admirable: Assets: $66 trillion. Liabilities: $13 trillion. Owner’s Equity (or Net Worth): $53 trillion.

Watching left-wing bloggers and right-wing nail-biters contort this data into bad news is priceless.

— Jerry Bowyer is the author of The Bush Boom and an economic advisor to Independence Portfolio Partners. He can be reached through www.BowyerMedia.com.

 

[Cloud Cover]

I thought debt to GDP was the better measurement when GDP also includes some intangibles such as the value of Intellectual Property? This would place the US even further ahead.