The Globe and Mail: We’ll keep working past 65, and we’ll like it
January 31, 2012 – In today’s Globe and Mail, I discuss why raising the qualifying age for Old Age Security and the Guaranteed Income Supplement is the right thing to do. The full column is below:
We’ll keep working past 65, and we’ll like it
By Brian Lee Crowley, The Globe and Mail, January 31, 2012
Prime Minister Stephen Harper has renewed a perennial debate about when Canadians should expect to retire. Mr. Harper reportedly has in mind changes to the Old Age Security and the Guaranteed Income Supplement that would raise eligibility for these benefits from 65 to 67.
Much of the reaction has focused on how such changes would affect public finances and the Canadian economy, essentially asking whether the benefits of reducing the cost of old-age income programs, plus the increased labour supply, justifies making older Canadians “worse off.”
But that approaches such changes exactly backward.
Such reforms, far from taking something away from seniors, are a tiny step in reversing decades of bad policy that has marginalized older Canadians, damaged their health and harmed their morale. Raising the age of eligibility is emphatically not a matter of imposing costs on seniors in order to benefit the rest of the population. It is an exceptionally pro-seniors policy to reduce the incentives to stop working at 65.
There was a time when 65 and retirement were closely linked for a compelling reason. A life of labour had left the average worker depleted. A few short years of decline was all they could expect before death. A Canadian male born in 1966, when the Canada Pension Plan was introduced, would only expect to live to age 68 or so. Today, it’s 79.
Age 65 and the moment when one can no longer reasonably be expected to work have long since parted company. We live longer and are in better health. Much of the work in our increasingly service-based economy is not physically taxing. Many conditions associated with aging can be controlled by medication or corrected by surgery, with new breakthroughs daily. It is only a modest exaggeration when some say that 60 is the new 40.
Age 65 is no longer the exhausted tail end of life. And the research is eloquent about how central work is to the lives of those able to engage in it, including those over 65. For many, idyllic pictures of early and prolonged retirement without work are, in fact, not that attractive. Why? Because working is and has always been bound up with human fulfilment, with being productive, useful to others and responsible for oneself.
That’s why most people, not just a majority, but around 90 per cent of them, express great attachment to their work, independently of income, education, social class and whether they work for private companies, not-for-profits or the public sector. In both Canada and the United States, the vast majority of people tell pollsters they would continue working even if they no longer needed to, including if they won the lottery.
More than four-fifths of Canadians say they would like to continue to work even if they had enough money to retire. And nearly half of Canadians of working age already expect to work beyond the age of 65, and not just for economic reasons, according to a survey done for one financial institution: “Nearly all of those who expect to work beyond age 65 cite one or more lifestyle reasons, including remaining mentally active, enjoyment of their jobs and the interaction with their co-workers.” In other words, future retirees are coming more and more to realize that work (although not necessarily any particular job, a distinction many people seem to have difficulty grasping), is closely related to happiness.
Put this together with the evidence that older people live longer, healthier and happier when they continue to work and you have a compelling case that our dogged insistence on 65 as the age to encourage retirement has been a cruel policy that has created increasing unhappiness and ill-health for older Canadians. Encouraging retirement at 65 has pushed these costs onto seniors for the benefit of our younger population looking for work. Benefit eligibility at 67 is, therefore, far too timid a reform. A pro-seniors policy would be far more ambitious, looking at 70 or even 72. Even then Canadians would enjoy a longer period of work-free retirement than in 1966.
Canada must, of course, continue to look after those incapable of working, whatever their age. Changes must be phased to allow for adjustment in retirement planning. Retirement must stop being a radical overnight transformation and become a long slow transition, from full time to part time, balancing work and leisure and matching effort to capacity. And we should use some of the savings from reform to improve retirement conditions for those who do reach the age and state of health where work is no longer possible.
Sure, such changes will help public finances and ease the looming labour shortages that darken our economic future. But those are just side benefits. The chief beneficiaries will be older Canadians themselves.
Brian Lee Crowley is managing director of the Macdonald-Laurier Institute, an independent non-partisan public policy think tank in Ottawa.
Ottawa Citizen: Why we don’t just refine the bitumen in Canada
In my latest column for the Ottawa Citizen, I discuss why we don’t process the oilsands here at home. Read my full column below:
Why we don’t just refine the bitumen in Canada
By Brian Lee Crowley, Ottawa Citizen, January 28, 2012
All across the political spectrum the cry is heard: process the oilsands here at home.
Bank executives, trade unionists, editorialists and others want us to do all the work here.
Who could be against adding value to our resources before we export them? Where it makes sense and makes the greatest contribution to Canada’s prosperity we should all be in favour. But the simple calculus of more processing equalling more jobs and prosperity in Canada is not at all obvious when you dig into it.
Canada is a tiny market with a world-scale source of petroleum in a corner of North America that is far removed from the bulk of oil product consumers and is facing critical shortages of workers. All of these factors matter in thinking about how the get the best value out of our petroleum resources.
A bit of background: we don’t get oil out of the oilsands. We extract a tarry substance called bitumen.
That bitumen has to be “upgraded” (i.e. the undesirable bits stripped out) to make “synthetic” crude. A second step (refining) is then required to transform the oil into gasoline, diesel, jet fuel and so forth.
Unlike “conventional” crude, then, refining oilsands output is an expensive two-step process.
Moreover not all refineries can handle the upgrading. Oils vary a lot in their intrinsic qualities (such as sulphur content, for example), and refineries are designed for the kind of oil they will refine.
One whose feedstock will be light sweet crude from Saudi Arabia will be quite different from one built to process tarry crudes from Venezuela or the oilsands and cannot switch from one to the other without expensive refits.
In North America as a result of things like increased fuel efficiency, alternative fuels, changing consumer behaviour, etc., the demand for fuel has actually levelled off, even as the economy has grown. As a result, North America now has excess upgrading and refining capacity, particularly on the U.S. Gulf coast, a capacity designed to process bitumen-like products from Venezuela and Mexico, from whom the U.S. is buying less and less. So the capacity to process Canada’s bitumen is already available at no new capital cost, other than the pipeline to take it there.
Now look at Alberta. Far from complacently exporting bitumen, the industry has been furiously building upgrading capacity. Its ability to produce bitumen, however, is pulling ahead of its ability to upgrade it. Alberta’s economy is already red-hot and short something like 150,000 workers today. To meet Alberta’s ambitious target of upgrading two thirds of the bitumen it produces by 2020 will require the construction of four new upgraders at $10-billion apiece and require 60,000 person years of labour. That’s in addition to the work to expand bitumen production.
To require all bitumen to be upgraded in Alberta would mean lowering Canada’s standard of living, as we ratcheted back oilsands production to match our upgrading capacity at a time when the world is hungry for our output and willing to pay well for it. And that’s just for the upgrading phase, which only gives you refinable crude.
A new refinery (as opposed to an upgrader) hasn’t been built in Canada in decades. In fact the number of refineries has been steadily declining throughout Canada and the U.S., as uncompetitive facilities get phased out. Four major North American refineries have closed in the last year. The environmental and regulatory roadblocks to building a brand new refinery on a new site are such that the industry believes no such new refining capacity will ever be built in Canada.
Existing refineries also have to compete with new refineries being built elsewhere. In Jamnagar, India, 150,000 workers are today labouring on a $6-billion refinery that will be world’s largest. They have a supply of workers and a regulatory environment we cannot duplicate. North America is the target market for 40 per cent of this refinery’s production.
Because of our higher construction and other costs, it would likely cost $7 billion to $8 billion to build a new refinery in Canada if you could get approval to do so. But why would the industry invest billions to build uncompetitive new capacity that isn’t needed and likely wouldn’t be profitable? We could upgrade and refine some of our production facilities in the east (at the Irving refinery in Saint John, for example), but they are already well supplied by world oil markets, whereas getting large quantities of Alberta crude to them would be costly for little benefit.
Forcing investments of billions of dollars in unproductive capacity and delaying oilsands development won’t improve Canada’s standard of living, but the reverse. Our current policy of expanding oilsands production while continuing to build upgrading capacity and using lowcost spare upgrading and refining capacity wherever it is available gets the best value out of the resource for Canadians.
Brian Lee Crowley is the managing director of the Macdonald-Laurier Institute, an independent non-partisan public policy think tank in Ottawa: macdonaldlaurier.ca.
The Hill Times – Canada’s monumental economic challenge: Our increasingly schizophrenic attitude to natural resource development
January 23, 2012 – In today’s Hill Times column, I discuss how to restore the Canadian consensus in favour of natural resource development. The full column is below:
Canada’s monumental economic challenge: Our increasingly schizophrenic attitude to natural resource development
The provinces may control natural resources, but Ottawa controls enough of the jurisdictional, legal, tax, environmental and regulatory levers that it can set the tone and get provincial buy-in for a cooperative national framework equal to the opportunity Canada faces.
By Brian Lee Crowley, The Hill Times, January 23, 2012
One of the best Canadian politicians of his generation, Macdonald left behind him an enduring and powerful legacy. No, no, not Sir John A. The other one: Donald S. Macdonald. A Trudeau-era Cabinet minister, Macdonald is best remembered for his job post-politics. At Trudeau’s behest he headed the eponymous Macdonald Royal Commission, which reported in 1985. Dry-as-dust history? Hardly. A quarter of a century later we forget how Macdonald’s report led us out of a historical cul-de-sac and revolutionized our economy. It is a feat we need to repeat today, so Macdonald’s triumph deserves our attention.
By the early 1980s, the inadequacy of the old protectionist National Policy was plain. Inefficient domestic industry sheltered behind tariff and other barriers. To that inward-looking policy bequeathed us by Sir John A. Macdonald the 1970s had added restrictions on foreign investment, aimed chiefly at U.S. multinationals.
Yet, Canada was hugely dependent on America being willing to absorb our exports. The old strategy had become a Rube Goldberg confection unworthy of a great nation.
But it was deeply rooted in our politics and our neuroses, and particularly our fear of American domination. No government wanted to seize the nettle and say what experts had long since concluded: that a formal free trade agreement with the United States was the only sensible way to promote Canada’s national interest.
Enter Don Macdonald. His royal commission launched a truly comprehensive national conversation about what Canada needed to do to prosper. His fellow commissioners came from different parties, regions and language groups.
Academic papers were commissioned, experts consulted, and hearings held in every corner of the country.
After this impressive national pulse-taking, Macdonald duly reported, among many other things, that Canada’s national interest lay in free trade with the United States. By the next election, in 1988, the deal was done and Canada has never looked back. Macdonald’s massive work of careful, thoughtful and non-political national psychotherapy allowed us to let go of old emotions and prejudices.
Today’s Macdonald will be called upon to unravel a different but equally monumental economic challenge: our increasingly schizophrenic attitude to natural resource development.
Make no mistake: Canada is on the brink of massive development fuelled by our increasingly sought-after natural resources. It isn’t just the oil sands. Potash, natural gas, conventional and non-conventional oil, minerals and rare earths, and more in almost every province and territory all presage investments of tens of billions of dollars, year after year, for many years to come.
Far from being limited to Western Canada and the North, these opportunities can indisputably be harnessed to put Canadians to work in every part of the country. Steel, vehicles, and equipment as well as engineering and other high value services from Central Canada will be required, port facilities and processing terminals will be built on both coasts, unemployed workers will be put to work in high wage occupations, trade schools and universities in our communities will buzz with energy training people for these opportunities. Canadian workers’ pensions will be invested profitably in the companies doing the work, and our financial institutions will scour the globe for the capital needed. And despite globalization, most of the resource extraction work cannot be sent to other countries, because the resources are here.
Our challenge, however, is that the old consensus that properly regulated natural resource development is good for Canada is breaking down.
We see that in the debate over the Northern Gateway pipeline and Quebec’s shale gas today, just as America’s decision on the Keystone pipeline shows that next door the consensus in favour of resource development has collapsed. Aboriginal land and other claims add a further dimension of complexity and uncertainty to project prospects. All this adds up to investors being increasingly skittish about risking their money on projects that may become interminably mired in vexatious and acrimonious approvals processes that are increasingly hijacked by special interests for whom emotion defeats evidence every time.
The consensus can be rescued, but only if Canadians can be convinced that development will go ahead under the most demanding conditions, including responsible environmental standards and fair dealing for Aboriginals. We could then free up technical tribunals like the National Energy Board to return to their original mandate, which is not to be some kind of giant opinion poll dominated by emotive opponents, but to be a place where projects are examined quickly but thoroughly on their objective merits, ensuring they live up to Canada’s high standards.
The provinces may control natural resources, but Ottawa controls enough of the jurisdictional, legal, tax, environmental and regulatory levers that it can set the tone and get provincial buy-in for a co-operative national framework equal to the opportunity Canada faces. But where is this generation’s Don Macdonald? And where is the prime minister who will put him to work?
Brian Lee Crowley is the managing director of the Macdonald-Laurier Institute, an independent non-partisan public policy think tank in Ottawa: www.macdonaldlaurier.ca.
The Hill Times
Ottawa Citizen: The real pipeline debate
By Brian Lee Crowley, Ottawa Citizen, January 14, 2012
The start of hearings about the proposed Northern Gateway pipeline to take Alberta oil to the west coast has been notable mostly for the venomous invective hurled about by the interested parties. Yet beneath the exaggerated charge and counter charge the hawk-eyed can discern the very earliest stages of a national debate that will preoccupy us for the next decade or two.
Like it or not, Canada’s economic strength has always been closely tied to natural resources. We are abundantly blessed with them, we have great expertise in extracting and processing them, we have one of the world’s great markets for financing them, and we have spent liberally on pipelines and railways and ports to take them to market.
In return natural resources have generally been kind to us. Growing global demand has driven up the price we get for them while the cost of many imports, such as manufactured goods, has remained stable or fallen. This improvement in what the economists call the terms of trade is a major cause of Canada leading the G7 in terms of income growth in recent years.
The phenomenal economic development of countries like China and India, with their insatiable appetite for our resources, has broadened markets for what we produce. That doesn’t eliminate the risk of falls in resource prices, but it makes extended declines less likely for the foreseeable future.
Yet at exactly the moment when resource investment and development, particularly in the west and the north, seem poised to take Canada to unheard of levels of prosperity, we are discovering the weakness of the institutions we have created to manage such growth in the public interest.
Take the tribunal holding hearings on the Northern Gateway. It is premised on the idea that Canadians favour the development of their resources, but want that development to proceed in accordance with high standards of safety, environmental protection and social responsibility. Technical experts, paid for by the state, subject things like pipeline proposals to searching analysis and criticism, ensuring that they meet our standards before proceeding. In their analysis they are aided by a mandatory public hearing process that is intended to assemble and then critically evaluate, by written and oral cross-examination, factual evidence put forward by proponents and opponents.
Increasingly, however, a vocal minority sees these regulatory proceedings, not as opportunities to ensure fact-based decision-taking as we develop our resources, but as a place to argue that such development ought not to be allowed at all.
But that is a political and a moral argument that such agencies are not equipped to deal with. There is a world of difference between the assumption that projects that meet Canada’s technical, environmental and social standards are in the public interest and should proceed, and the assumption that development is somehow in principle undesirable and ought not to be allowed.
In the first case disagreements about whether projects meet our standards can usually be resolved by science and reason. In the second case we have disagreements over values and beliefs, such as whether a pristine environment ought to trump economic growth and job creation.
It is not that such disagreements cannot be grappled with in a democratic society. Rather it is that regulatory tribunals are not the place to do so. Conflicts over beliefs and values are properly resolved—indeed can only be resolved—in the political arena. We have to separate the question of whether we want natural resource development from the one about whether specific projects are up to standard.
The stakes are enormous. Under the current dispensation, thousands of people, some of them apparently inhabiting different continents, can sign up to participate in the Northern Gateway hearings causing enormous delay while manifestly not contributing to the tribunal’s goal of ensuring a reasoned consideration of the project’s merits.
Such delays themselves are hugely costly to project proponents but are essentially costless to opponents. Capital that could be used putting Canadians to work and developing our resources can be driven out by regulatory uncertainty and long approval delays just as surely as by outright rejection of a project.
With oil sands production in Alberta set to exceed pipeline capacity within a few short years, blocking new pipeline construction would have the effect of stranding new production and the forgoing of billions of dollars of investment and thousands of new jobs across Canada. Allowing such hijacking of the regulatory process allows a vociferous minority to achieve indirectly what they could not win through legitimate democratic debate: the power to block natural resource development.
The “right to be heard” is an important one, but it has to be made compatible with the right of Canadians to see their resources developed thoughtfully and responsibly. Achieving that balance has just rocketed to the top of the national agenda.
Brian Lee Crowley is the Managing Director of the Macdonald-Laurier Institute, an independent non-partisan public policy think tank in Ottawa: www.macdonaldlaurier.ca.
© Copyright (c) The Ottawa Citizen
Financial Post: NAFTA is really about running a single integrated economy
December 14, 2011 – In today’s Financial Post, I discuss how North America is a deeply integrated, cross-border economy whose most important feature is not free trade in finished goods. It is our ability to make things together and then sell them to each other and the rest of the world. An excerpt below:
On Dec. 7, Stephen Harper and Barack Obama announced their “Beyond the Border” initiative to respond to exactly these practical realities at the border. The intentions are good, but the language is vague and tentative and a U.S. election year is not a propitious moment to advance the idea of more economic openness. But at least the Americans are now committed to an agreement in principle that points in the right direction. It is now our responsibility to make sure we move from pretty words to a workable border regime. Our continental competitiveness and prosperity depend on it.
The op-ed is based on my November 15th Commentary published by the Macdonald-Laurier Institute. The full op-ed is copied below.
NAFTA really about running a single integrated economy
By Brian Lee Crowley, Financial Post, December 14, 2011
What is NAFTA really about?
That might seem a silly question. NAFTA is about trade, right? It is the North American Free Trade Agreement after all.
But what if it is not really mainly about trade at all? Thinking chiefly in terms of trade might actually obscure the real point.
Unfortunately when many people think about trade, they think of it in old-fashioned terms. Each country has its own self-contained economy. And in each economy, that country’s workers make goods and services. Those finished products are then sold to other countries, which make different goods and services in their own little self-contained economy. Japan makes cars. France makes wine. They trade wine for cars.
That is emphatically not what happens for the most part in North America. What we have is not three countries and three economies trading finished products with each other. We have a single economy shared by two countries, Canada and the United States (and increasingly a third, Mexico). We have a single economy awkwardly cross-cut by inefficient and obstructive national borders.
The implication of this one-economy-but-three-countries view is that NAFTA is not (despite its name) chiefly about trading finished goods between separate national economies. It is about managing a highly integrated continental economy in which Canadians and Americans work together to make things. NAFTA should really be called the North American Integrated Production Agreement (NAIPA).
Canadians and Americans do not trade with each other as the French and the Japanese do. We make things together and then sell them to each other and the rest of the world. That is why, for example, about two-fifths of the vast “trade” between our two countries takes place within individual companies. They move goods from one plant to another at different stages of production, and those plants are spread about in both Canada and the United States.
Let me make this eminently practical. I have in my hand a drawing of a rear wheel assembly used in North American auto production. In this drawing every part contained in the assembly has been flagged to show the country in which it was produced. Roughly half the parts were made in Canada, the other half in the United States.
Take one look at that drawing (which is quite typical — it could have been made of any other assembly that goes into cars made in North America) and you realize there is no American or Canadian auto industry. There is a North American auto industry. And dig into each one of those individual parts, and you will find chemicals, metals, castings, coatings and other products from plants in jurisdictions throughout the continent. It is not just the auto industry but the entire continental production process that is increasingly integrated.
The business community got this long ago. NAFTA did not create economic integration in North America. The business community did that over many decades, in response to strategic and economic imperatives. NAFTA was a crude and belated effort to create a legal and institutional framework for an economic relationship that had outgrown national institutions.
If you want to see what North America looks like from the point of view of business, have a look at a map of the continent depicting, say, oil production, pipelines, the rail network or truck traffic. In each case I defy you to spot the border in the business decisions that have shaped these maps. The economic energy of North America surges in all directions, and is increasingly unconstrained by considerations of political jurisdiction—unless, of course, jurisdictions forcefully intrude, as in the case of, say, the Keystone XL pipeline or “Buy America.”
There’s the rub. Politicians respond only to national voters, and so live in a closed political system. Alas, that closed polity is superimposed on an open economy. Government policies that result cannot truly encompass the interests of North Americans, but only of Americans and Canadians separately. Hence we get border thickening in the post-9/11 world and post-recession protectionism in the United States. Canadians’ vulnerability is that we live in another country, but not another economy.
National policy mismatches inevitably show up at the border. An inefficient border is an annoyance in a trading bloc. But in a production bloc, it is disastrous.
To understand why, think again about the rear-wheel assembly. It required that parts be brought across the border in different directions and at different stages of production. The car industry says a North American car crosses the border five or six times in the course of its production — likely an underestimate. A thick border causes our integrated production process to stumble every time the border must be crossed. We lose time and efficiency.
By contrast, a foreign car exported to North America enters our territory only once. Since the car is already made, our border controls don’t disrupt production. Our own production crosses the border innumerable times. Every inefficient or obstructive contact there is in effect a tax that our international competitors do not pay.
North Americans are in this together, building a relationship that is virtually without precedent for its breadth and depth. In thinking about what comes “after NAFTA” we must be capable of the effort of imagination to create institutions that can overcome the political divisions that scar our economic efforts while preserving our national sovereignty.
On Dec. 7, Stephen Harper and Barack Obama announced their “Beyond the Border” initiative to respond to exactly these practical realities at the border. The intentions are good, but the language is vague and tentative and a U.S. election year is not a propitious moment to advance the idea of more economic openness. But at least the Americans are now committed to an agreement in principle that points in the right direction. It is now our responsibility to make sure we move from pretty words to a workable border regime. Our continental competitiveness and prosperity depend on it.
Financial Post
Brian Lee Crowley is the managing director of the Macdonald-Laurier Institute, an Ottawa-based think-tank.
Media Update: The Ottawa Citizen, Wall Street Journal and The Hill Times!
In today’s Ottawa Citizen, I discuss the upside of downloading - cutting transfers to provinces in order to balance federal budgets. Click here for full column.
In my November 28th column for The Hill Times, I discussed the inability of the American political class to tackle their fiscal challenges. Click here to read the full column.
On November 23rd, the Wall Street Journal quoted me in an article about mounting provincial debt. Click here for more info.
The Ottawa Citizen: Pipeline decision will weaken Obama
My latest column for the Ottawa Citizen was published this past weekend. In this column, I discussed Washington’s plan to delay their decision on the Keystone XL pipeline. My column (copied below) also appeared in the November 20th edition of RealClearPolitics, an online news source covering U.S. politics.
Pipeline decision will weaken Obama
By Brian Lee Crowley, Ottawa Citizen, November 19, 2011
H.L. Mencken, I think it was, who uttered the immortal phrase “Nobody ever went broke underestimating the taste of the American public.”
No one is a greater admirer of the dynamic and generous society that is America, and when I consider all the nations we could have had living next door I often think we won the neighbourhood lotto.
But for some reason Mencken’s phrase kept echoing in my head when I heard the news about Washington’s plan to delay their decision on the Keystone XL pipeline.
Folly is too kind a word for this decision. It is the crassest pandering to a tiny minority of Americans whose demands run demonstrably contrary to U.S. interests. And even that electoral calculation is misconceived, for it will weaken, not strengthen, Barack Obama.
The background: the Alberta oilsands must have outlets to markets, chiefly in the U.S. The most efficient way is a new pipeline running through the American heartland to the Gulf of Mexico.
There on the Gulf Coast is a concentration of refineries with the capacity to refine oilsands bitumen, something few refineries are able to do.
Everyone wins. New oilsands extraction and upgrading capacity can continue, fuelling one of the greatest industrial projects Canada has ever seen. Scores of billions of dollars will be invested in this massive resource if market access can be ensured.
There is no prospect of reducing Americans’ consumption of oil in the short to medium term without a painful and unnecessary decline in their standard of living. Most of the alleged alternatives to oil are simply no real substitute for its unique properties, especially as a transport fuel.
Alternative sources of oil exist, but they tend to come from far less desirable places than Canada – think Saudi Arabia and Venezuela. Those places have lower environmental, human rights, labour and rule of law standards than we do. Less oil from Canada doesn’t mean less consumption, just nasty sources of oil.
Moreover building the pipeline would unleash a torrent of American economic activity, chiefly in the depressed construction industry. Trade unions, one of the constituencies most assiduously courted by President Obama, were vociferous in their support.
And yet all this was not enough to secure what is normally a pro forma approval from Washington. The United States is covered in pipelines, which historically are a lowcost means of transporting oil, gas and many hazardous chemicals in an extremely safe manner. Bringing a needed commodity to American consumers in an environmentally sound manner while reducing the country’s dependence on oil from despicable regimes and creating thousands of jobs at a time of high unemployment. That sounds like a lot of ticks in the right boxes.
But the decision to punt the Keystone decision until after the 2012 election was not based on the merits of the proposal, nor on a reasoned assessment of America’s interests. Instead the administration kowtowed to a coalition of NIMBYists and green activists whose arguments were embarrassingly thin.
Take the concern of some Nebraskans that the pipeline would cross the Ogallala aquifer, one of the chief sources of water in a number of the heartland states. Clearly the health of the aquifer is a matter of vital interest for many Americans, and they are perfectly entitled to question the project proponents closely about the danger of leaks.
But the answers should have been more than satisfactory for a state whose entire supply of oil and gas arrives essentially by pipeline. Anyone looking at a map showing the number of pipelines already transecting the territory covering the aquifer would have to conclude that something terrible had happened to make people feel that pipelines had suddenly become untrustworthy.
But other than a couple of entirely minor spills in recent years that represent an infinitesimal fraction of the oil transported safely by pipeline in the U.S., no such incident has occurred. And in any case the pipeline’s proponent has promised unheard of levels of safeguards and construction standards to allay fears of risks that are vanishingly small.
To no avail. The pipeline has suffered the worst fate possible: it became a symbol. To those convinced of an apocalyptic vision of a society hurtling toward environmental Armageddon, XL came to represent the sum of all their fears. Combine that with an environmental movement moving strategically to throttle the oilsands by closing off its access to markets, and you had a political force that made up in passionate intensity what it lacked in either logic or votes. President Barack Obama thinks he has thrown them a bone. Instead what he has done is to give comfort to a Luddite movement that thinks you can make modernity go away by holding your breath until your face turns blue.
The problem is that they may get their wish.
Brian Lee Crowley is the managing director of the Macdonald-Laurier Institute, an independent non-partisan public policy think tank in Ottawa: macdonaldlaurier.ca.
The Ottawa Citizen: Things I didn’t know about unions
My latest column for the Ottawa Citizen is copied below. It also appeared in National Post Chris Selley’s Weekend Roundup.
Things I didn’t know about unions
By Brian Lee Crowley, Ottawa Citizen, November 5, 2011
I just love newspapers.
You learn such interesting things in them—things you might never have known otherwise.
Take the front page article in Thursday’s Citizen about how the Professional Institute of the Public Service of Canada (PIPSC), representing professionals in the federal public service, is considering joining the Canadian Labour Congress (CLC). The CLC is the big union central that brings together under one umbrella most of the trade unions in Canada today.
According to representatives of PIPSC , the drive to abandon the union’s traditionally stand-offish policy toward the CLC was motivated by the dire challenge created by a Conservative government in Ottawa. Trade unionism must gather its forces to combat the government’s plans to attack unions and public services. We also learned in the article that, “deficits caused by the financial crisis [are] being blamed on the public sector.”
See what I mean about newspapers? I didn’t know all that stuff.
Gosh, in fact I’d been labouring under a terrible misapprehension. I was all confused by the fact that the government’s “temporary” stimulus spending to combat the recession was turning out not to be temporary at all. Instead that stimulus has largely been folded into the spending base and has permanently set government spending at a higher level.
Not only that, but I was blinded by the fact that if we could just wring the “temporary” stimulus spending out of the budget, and return to the pre-recession rate of spending growth, we’d be back in budget balance today. And I was wrongly impressed by the fact that that pre-recession rate of spending growth was faster than the rate of growth of the economy and of the population put together, meaning that government was already getting much bigger every year, even before the recession turbo-charged it.
Far from being a conspiracy to do down the unionized working class, I had been under the mistaken impression that the government’s plans to cut $4 billion in annual spending over four years was actually too timid a target and was highly unlikely tput us back in budget balance, especially since population aging is about to make public finances deteriorate even further. And that the financial crisis was really irrelevant now that we have recovered all the jobs and all the economic activity we had lost during the recession.
Finally, I was clearly wrongly impressed by what happened the last time we squeezed the public sector in order to fix public finances. After Jean Chretien and Paul Martin balanced the budget we enjoyed a decade of high growth, falling taxes, rising investment and explosive jobs growth—all while cutting all-government spending from over half of GDP to under 40 percent. And PIPSC’s stated objective in joining the CLC—a strictly non-partisan desire to protect public services—enabled me to put to bed another of my misconceptions: that a union with that in mind would have joined up when the Liberals were cutting 90,000 federal jobs in the 1990s, not after years of Tory-led public sector expansion.
Of course that’s not all I learned in this article. Apparently PIPSC’s leaders say now is a good time to join because the CLC has changed—the majority of its members are now public servants and have university degrees and other neat stuff. The CLC “has a growing number of professional and ‘knowledge’ workers…and is no longer dominated by large industrial unions.”
Golly, I just had it backward until I read that. I thought the issue wasn’t the growth of white collar trade unionists, but that private sectors workers were abandoning the trade union movement in droves. Its class warfare mentality is singularly ill-suited to a free-trading world where workers and management must work together to best foreign competitors.
Thus over the last 50 years the trade union movement has become the preserve of public sector workers, whose unique circumstances are a trade unionist’s dream.
If the unionized workers go on strike at GM or Ford or Chrysler, you can still buy a car from (non-union) Honda or Hyundai or Toyota. If Air Canada goes on strike, you can still fly WestJet or Porter.
But if the people who issue EI and CPP cheques and passports, who control the border and inspect our food go on strike, the service they provide disappears, inconveniencing angry voters and frightening politicians. This effective monopoly confers a bargaining power private sector workers can only dream of, while their employer is immune from the threat of bankruptcy.
These workers thus frequently enjoy better pay and benefits than their private sector counterparts, who foot the bill. In my naïvete I thought preserving these unearned privileges was the best explanation for public sector workers’ love affair with trade unionism.
I understand so much better now. And that’s why I just love newspapers.
The Hill Times: We could have a renaissance in rural Canada, but need to fight the bureaucracy
In my latest column for The Hill Times, I discuss the opportunity Canada has to feed the world, but due to heavy bureaucracy, we are lagging behind.
The heavy bureaucracy charged with regulating new products and methods in the field of food production and processing is creating obstacles to innovation and new product development that are out of all proportion to the health and safety benefit created for Canadians and their worldwide customers.
By Brian Lee Crowley, The Hill Times, October 31, 2011
OTTAWA – When in the 1965 Bob Dylan wailed, “I ain’t gonna work on Maggie’s farm no more,” he was echoing the mental picture almost all of us have about conditions on the farm. The Dirty Thirties largely spawned the identification of farming with grinding poverty, primitive technologies and capricious commodity prices, but the image has proven durable.
In Ottawa, as well as in the popular imagination farmers and the food industry are old economy, and the family farm a sponge sucking up major tax dollars to keep a politically powerful rural constituency sweet.
But as a wise man once remarked, it ain’t what you don’t know that’s the problem, it’s what you know that just ain’t so. And the real position of Canada’s food industry couldn’t be more different than the outdated vision that still infects too many politicians, civil servants and opinion leaders.
Far from being in decline, the agriculture and food sector is a potential economic powerhouse for Canada. The amount of food that will be consumed in the next 50 years will exceed all the food eaten in the rest of human history. World demand is on the upswing, driven by rising population and rising global incomes.
Yet the world’s doubtful ability to respond to that growing demand is ringing alarm bells everywhere. After a half century during which the Green Revolution produced a huge spurt in food production, the rate of growth is tailing off just when we need it to keep most. If we do not find ways as a planet to rise to this challenge, major food shortages and humanitarian disasters are just a few short years away.
As a result food prices are rising across the world, and those able to feed the world’s teeming billions will not only do a service to humanity, but will make a good living doing so.
How does Canada fit in? We have everything we need to fill a major share of the gap in the world’s supply of food. We have vast tracts of agricultural land and our soil is in much better shape than many other major food-producing nations. Our climate is clement and climate change is likely to make it even more so. Our supply of fresh water, a major constraint on other farming powers, is the envy of the world. And we have clever, educated and experienced people in every part of the sector: farmers, technologists, researchers, managers, manufacturers and more.
And yet despite the scale and scope of the opportunity, Canada is not merely failing to take advantage of these propitious circumstances, our ability to supply world markets is declining and our productivity on the farm is falling far behind that of our peers, such as the U.S. and Australia
Look no further than outmoded government policy based on dated views of the food industry for the chief explanation of this signal failure of imagination and energy.
Take the policy of cushioning the decline of the family farm, which costs Ottawa hundreds of millions of dollars a year in supports of various kinds. Our major competitors use much of their agricultural spending strategically to drive their farm communities to higher levels of productivity, innovation and environmental stewardship. We allow too much of this spending to be captured by the majority of farms too small and too poorly run to be competitive. Yet the subsidies keep these potentially highly productive lands in the hands of part time farmers, whose net farm income is actually less than the level of income support they receive.
And because these farms are so unprofitable, it is hard to justify new capital investment; on balance our farm investment has therefore been declining, not growing. Yet new investment is often the missing elixir that would allow our farmers to raise their productivity and respond to global demand.
Similarly the heavy bureaucracy charged with regulating new products and methods in the field of food production and processing is creating obstacles to innovation and new product development that are out of all proportion to the health and safety benefit created for Canadians and their worldwide customers.
And don’t get me started on Canada’s diminished ability to use trade talks to open foreign markets for our products because of our stubborn insistence on defending dairy and egg marketing boards the rest of the world rightly abandoned long ago.
The government that gets all this will preside over a renaissance in rural Canada, an expansion of well-paying food processing jobs, a much-needed rise in productivity and a transformation of the industry from a drain on the public purse to a wealth generator. All they have to do is to stare down a few special interests, including in the bureaucracy.
Damn. I knew there was a catch.
Brian Lee Crowley is the managing director of the Macdonald-Laurier Institute, an independent and non-partisan public policy think tank in Ottawa: www.macdonaldlaurier.ca.
news@hilltimes.com
The Hill Times
The Ottawa Citizen: Even with majority, Quebec a key challenge for Harper
My latest column for the Ottawa Citizen is copied below:
Even with majority, Quebec a key challenge for Harper
By Brian Lee Crowley, The Ottawa Citizen, October 22, 2011
In Stephen Harper’s long and painful education in the arcane art of managing political power, few things are proving so difficult for him to master as the thorny problem of Quebec. Two recent decisions show that he is still feeling his way, pulled in different directions by powerful forces. Yet finding his bearings and managing his relationship with Quebec successfully will be one of the tests that will determine if he becomes a great prime minister or merely a competent one.
There is not much political precedent to guide Mr Harper. The number of prime ministers who managed to achieve parliamentary majorities with only token representation from Quebec is about as long as the list of charismatic contenders for the Republican presidential nomination.
He owes his majority to the west and Ontario, regions that have chafed at Quebec’s political dominance over the last century. After 1968 it seemed a vain hope ever to see a prime minister from another province lasting longer than a month or two in office. And the national unity question seemed to mean that every dispute involving Quebec’s interests was immediately elevated to a matter of national survival. Quebec referendums (or the “neverendum”) felt to many like a cocked gun at the country’s head with the trigger finger belonging to sovereigntists who despised Canada.
So when the Conservatives finally won their parliamentary majority expectations were high that many policies that had seemed to confer unearned advantages on Quebec would be swept aside.
But Harper is no revanchist. He aspires to win more seats in Quebec in the future. Yet he must also deal with the pent up frustrations of much of the rest of the country. And he is finding it hard to strike the balance.
The two recent decisions that reveal this deep ambivalence dealt with the naval shipbuilding contract and the distribution of seats in the Commons.
On the shipbuilding contract the Conservatives spared no effort to come up with a process that would be seen to be fair and transparent, ostentatiously awarding the contracts on merit and not political criteria. In this Harper was surely reacting to the fury ignited in the west by the Mulroney government’s decision to award a fighter plane maintenance contract to a Quebec firm in preference to a Winnipeg company that had actually submitted a bid judged superior by government officials. The firestorm that erupted led directly to the birth of the Reform Party and ultimately sealed the fate of the Progressive Conservatives.
This time the contracts have gone to two companies, one on each coast, leaving Quebec’s Davie shipyard the wallflower at the shipbuilder’s ball. Quebeckers, used to these things being rewarded for reasons of political power and patronage, are outraged and will challenge the decision, but it was the right one and should stand. The only way in the long run to reduce regional tensions is to make such decisions on the basis of merit, so that all Canadians feel they have a fair crack at government business if they provide good quality at a competitive price. Chalk one up for Harper.
His apparent climb down on his proposed expansion of the House of Commons, however, is the exact opposite of the shipbuilding decision.
Successive governments diluted the principle that all Canadians should be equally represented in the Commons. Fast growing regions were never granted the number of seats justified by their burgeoning population; the distribution of political power in the country thus always lagged the distribution of people and growth.
As a down payment on fixing this, the Conservatives promised that 30 new seats would be added to the Commons and that these seats would be divided up among BC, Alberta and Ontario, the long under-represented provinces. Even 30 seats would not have wiped out the distortion, but would have gone a good part of the way to correcting it.
In the face of Quebec handwringing about loss of influence, however, Harper has reportedly blinked. The number of new seats is to be reduced and Quebec is to be granted additional seats too, even though its Commons representation is almost exactly what its population would warrant.
This smacks of the bad old days and ways. Instead of applying an unassailably fair principle (equal representation of all Canadians in the Commons), the government has caved into threats and intimidation. This is a pity, not only because of the damage it does to parliament’s ability to represent all Canadians, but also because it wrongly assumes that Quebeckers will not accept the basic fairness of rep by pop.
There are lots of political issues where Harper can give ground to Quebec because there’s no fundamental principle at stake. But where the fairness and integrity of our institutions is concerned, there should be no room for horse trading.
Brian Lee Crowley is the Managing Director of the Macdonald-Laurier Institute, an independent non-partisan public policy think tank in Ottawa: www.macdonaldlaurier.ca.
