Blue Like You

Canadians would love nothing more than to hear a party leader put forward an iron-clad way for our country to avoid the economic carnage that is happening south of our border.

Sadly, there is no such perfect plan. It does not exist because we are in uncharted territory.

So all the voter can do is weigh the options and put a lot of trust into whichever platform they end up selecting.

But a having a ‘plan’ doesn’t necessarily ensure that it will work. We only have to look at the situation in Europe to see that there are no simple solutions.

All we can really hope for is that whoever ends up leading the country doesn’t make things worse. That is why I am concerned about the thought of Stephane Dion becoming Prime Minister.

People are worried about their stock portfolios - especially the wave of Baby Boomers nearing retirement. Then when Stephane Dion starts musing about taking away income splitting for pensioners, and a Liberal MP has to quickly recant, seniors have cause for concern.  Who is telling the truth?

If Dion had to find more tax money for his social programs, would he ever consider revoking the pension splitting in the future?

And what about that carbon tax ? Dion points to Europe as an example of how well being green merges with economic policy, but as Lorrie Goldstein points out today, Europe really shouldn’t be used as the poster child. It just isn’t working.

But election hopefuls are trying to pretend that they have all the answers, when in reality nobody truly knows how Canada will fare over the next several months, and what policies are necessary to cushion the blow. Some experts even suggest that running a deficit might be a reasonable plan in an emergency situation, but that we are not in any immediate danger right now.

So it all boils down to trust and competence.

Who are you willing to put your money on? The economist or the professor?

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Related: Wudrick Blog - The No-Plan Part ll

Canadian Business - It’s the economy.

The Record - Market turmoil has stress levels on the rise.

Globe - Where did all my money go? (Margaret Wente.)  Great comment by ‘General Wolfe’ following Wente’s column:

General Wolfe from Wolfe Island, Canada writes: Don’t worry, you’ve just suffered unrealized losses of your unrealized gains. Somehow if you think of it that way it doesn’t seem so bad.

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Update -  Harper: Tories will act on banks if needed. (Globe)

Jonathan Chevreau - Live Q & A (Financial Post)

CBC - Financial crisis hows wealth a ‘house built on sand’: Pope.

This could get ugly - Bailout bill defeated; Dow Jones falls 777 points. (H/T National Newswatch)

Jonathan Chevreau suggests going out for a brisk walk to help shake off the anxiety. That might be the very best thing you could do right now.

It will be interesting to see how Canadian politicians spin this one.

Let me guess… Iggy will say this is all Harper’s fault.

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Update: Can anyone please tell me why TD’s Don Drummond continues to support a carbon tax?  At least one Ontario Liberal has his head on straight.

More from the Wudrick Blog.

Civitatensis - Paul Martin to the Rescue.

I think that part of Stephane Dion’s problem is that he still sees the world from an an academic point of view - If it works in theory, then it should work in real life, no matter what unexpected variable might be thrown into the mix.

This simplistic and rather naive perspective is likely what contributes to his aura of sincerity, but his downfall is that he steadfastly refuses to address the negatives or answer technical questions beyond a theoretical context.

Instead, most questions and criticisms of his carbon tax plan are brushed aside with either a rose-coloured description of how Canadians are intelligent and have ‘big hearts’ - as if that will somehow explain the holes in his platform. (Or else he tells reporters that he’s not talking numbers because they wouldn’t trust him anyway! ) He refuses to even consider the possibility that Canadians will not warm up to it:

…Asked whether his future as Liberal Leader would be imperilled by failing to sell such a complex plan, Mr. Dion denied the plan is complicated.

“I think Mr. Harper is underestimating the intelligence of Canadians, the big hearts of Canadians,” he said. He added that other Conservative Party leaders in the world, including Britain’s David Cameron, have suggested green taxes as a way to fight climate change.

Well, considering that even Dion himself admits that Saskatchewan and Alberta would have to endure the lion’s share of the pain, that would make those residents the most philanthropic citizens in the world if they were to comply. Basically he wants those two provinces to finance his vision for a greener, richer, fairer Canada. His green shaft policy would certainly appear to embody those three peel-ers . I can see why he is so excited to sell the plan.

But would it actually achieve those goals? Terence Corcoran explains how Dion’s policy is not based on solid economic principles, and that similar models in Europe have failed to produce the desired results for carbon emission reductions (Economics only thing shifting):

…He is steadfast in his target — carbon emissions at 20% below 1990 levels by 2020 –even though, as I told him, that would mean removing the equivalent of the entire Canadian transportation (including personal auto use) and the entire electric utility sectors in not much more than a decade.

To get there, Mr. Dion seems to have a clear overview and strategy — how he will negotiate harmonization of his $40-a-tonne carbon plan with British Columbia Premier Gordon Campbell’s $30-a-tonne plan to create a $70 joint project; how he will approach a U. S. president to work out a continental cap-and-trade emissions network that Canadian firms could join; how the Green Shift will "be very good for Saskatchewan and Alberta" because the heavy tax loads on their energy producers will prompt them "to invest in Canada more."

Some of this is novel theory, more speculative and fanciful than hard economics. Taxes have never before been seen as a spur to more investment…

Moreover:

…Foreign experience with carbon taxes as economic policy is far from the unequivocal success Mr. Dion talks about. He seemed unaware of the record of job losses and uneven economic performance recorded in Europe in the wake of various environmental taxes and energy price moves. Within specific countries, including Sweden, which the Green Shift plan cites as a model, the role of green taxes is a mixed bag. Alleged boosts to new investment do not take place. And, most telling, the impact on carbon emissions has been limited.

The best and most sobering look at Europe’s green tax experiments is a paper by the Centre for European Policy Studies titled The Political Economy of Environmental Taxation in European Countries. After more than a decade of rampant green taxation and regulation, a sort of lab test for every policy fantasy known to economists and politicians, Europe essentially ended up proving the policies really didn’t work.

(Too much to quote here, but please read the whole article.)

So anyway, there goes 2 of Dion’s three peelers. As for the ‘fairer’ one, well that may be accomplished by a massive wealth transfer to the poor, but is that actually ‘fair’ to the western provinces? Something tells me the answer would be a resounding ‘non’.

Yes, of course we’d all seeing rising prices in everything we use daily, but in the west it would hurt the most. Of course, as one of SDA’s readers (Andrew) noted:

...If Dion becomes Prime Minister, watch Canada meet its Kyoto targets and achieve M. Dion’s reduction targets when Alberta and Saskatchewan leave and take their 40% of "Greenhouse emissions" with them. All of a sudden, the problem is solved.

But how would that leave us ‘richer’, Stephane?

So to sum up Dion’s theory, he feels confident that intelligent, generous Canadians will support his plan.

Well, I guess you’ll have to put me under the dumb and selfish category, because I just don’t get it.

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Update: Post editorial - Liberals are still kicking the West.

And this is a MUST-READ : Lorne Gunter - Dion carbon tax would shaft the west again.

Three BT bloggers assess the reaction of various premiers to Dions’ green shaft:

Steve Janke - No votes? Screw you!

Reid - Green Shaft…

Raphael - How the ‘Green Shift’ is flying around the Premiers.

Yesterday as Stéphane Dion was announcing his Carbon Shift plan, I was trying to survive a white-knuckled ride on Canada’s tallest and fastest roller-coaster, The Behemoth at Canada’s Wonderland. Well, needless to say, I am still here (next time, hands-up!). Yeah, that was awesome. I highly recommend it.

This morning I’m reflecting on Dion’s Carbon Shift/tax/election platform/budget and considering the implications for a major theme park like Wonderland. The energy required to run that park must be frightening. I would assume the proposed tax would affect everything associated with energy - from running the rides, to the restaurants, maintenance of the grounds and rides, and to the costs of all the goods needed to be transported there. That is just off the top of my head. I’m sure there would be more.

Then consider the cost to the tourists wanting to come to the park. How would they get there? Only a very few would be able to walk or bike there. Yes, Dion says no tax on gas (for the moment). However, gas doesn’t magically appear at the pumps. Oil has to be refined. And it requires energy to come out of those pumps. So gas will in fact cost more.

So Wonderland will probably have to pass the increased the cost on to the consumer in order to remain solvent. Consumers will be paying more to get there. Likely some season pass holders will decide that the cost of the increased pass, increased parking (which is already $10 a pop), and the cost of getting there will be prohibitive.

This is just one example of how taxing consumption (which is what a Carbon Tax does) will have a negative impact on the tourist industry. These people then get laid off and collect unemployment.

How is this helpful to a country’s tourist industry that is already reeling with high gas prices, and a high Canadian dollar that is forcing U.S. visitors to stay home?

And don’t tell me that the ‘Revenue Neutral’ aspect will balance my concerns.

‘Revenue Neutral’ means neutral to the government ; not me.

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Required Reading: The Great Carbon Swindle - Lorrie Goldstein.

The Liberals’ Tax Shift - National Post editorial.

Then and now; GST, Carbon Tax. (Globe )

Sifting through the shift reviews - Calgary Grit.

Liberals give business the shift - Globe.

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Saturday Update - Record editorial!!! Dion’s green plan needs reality check:

…There are so many other questions: Will the residents of a province like British Columbia, which has its own carbon tax, be taxed twice? Why will the carbon tax apply to heating oil, propane, natural gas, coal and diesel fuel but not gasoline at the pump? If the point is to change human behaviour, why not go after the drivers of the big vehicles? Or is Dion afraid of courting voter backlash? Meanwhile, given the complexity of imposing a carbon tax, is it advisable, or folly, to try, as Dion is, to use the carbon tax to not only decrease pollution but eradicate poverty?

And why are there no clear targets? Sure, the Liberals say they would cut greenhouse gas emissions to 20 per cent below 1990 levels by 2020. But how will Dion’s plan get us anywhere near that goal in the coming years? When it comes to such specifics, his plan is strangely silent, devoid of charts, projections, statistics…

Don Martin has an article in the Post that actually makes sense - GM closures were inevitable.

No CPC-bashing. It’s merely a very accurate assessment of today’s reality, which is that big gas-guzzling trucks are no longer practical. So Buzz Hargrove’s screaming at the federal government is rather pointless. Why throw good money after bad? Martin sums it up very well:

…Naturally, Jim Prentice made all sorts of sympathetic noises after question period on Tuesday, but his government cannot and should not react by opening the vault to targeted auto sector relief.

Exhibit A against that move is Ontario Premier Dalton McGuinty, who has poured about $400-million of taxpayer’s money into using public money to vaccinate assembly line jobs from an erratic marketplace. All its bought him are 10,000 job losses in an industry that seemed to take the money and invest it elsewhere.

And it’s not over, yet. McGuinty seems deluded enough to believe his government’s investment in the return of the Camaro will pay off with lasting jobs. But muscle cars are second only to heavy trucks in the assembly line for market-driven extinction.

The fed’s better idea was Tuesday’s announcement of funding for 54 research projects into advanced efficiency or environmental technologies for the auto industry.

As for Hargrove’s profanity-laced demand for the government to "prevent a company from selling trucks into this market when it no longer makes them," Prentice has an obvious shrug given the doomed plant exports 90% of its production south: "Insults and profanity are not going to cause U.S. consumers to increase their purchase of trucks."

It would be easy for the Conservative Government to play the cherry-picking game the way the Liberals love to do, but instead they are acting responsibly with taxpayers’ money.

And Buzz Hargrove is throwing a tantrum because he isn’t getting his way. No wonder he supports the Liberal Party of Entitlement .

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Wednesday Update: Yeah, this will really help… Workers form road block to GM’s head office to protest plant closure.

Record - Auto cuts hammer local workers.

Thursday Update: McGuinty under fire over GM loan - Record.

"Tax shifting " - Just a sneaky euphemism for "The person looking back at you in the mirror will pay more" .

Lorrie Goldstein gives us the straight goods, via Sandy at Crux-of-the-matter .

I have to give credit to the Kitchener Record for not getting sucked into the Karen Redman vortex of blaming the Federal Government for everything that goes wrong in Canada.

Yesterday in Question Period, Kitchener Liberal MP Karen Redman demanded (updated link):

Mr. Speaker, the crisis in the auto parts industry is getting worse and still the government does nothing. Kitchener Frame announced that it is throwing 1,200 people out of work and this is a huge blow to the Waterloo region

Will the government finally admit that there is a strong role for the federal government? How many good Canadian jobs have to disappear before the government does something about this emergency?

By contrast, the Record points to a variety of factors causing the carnage, including the stubborn stand of the CAW brass which refuses to consider wage cuts (Let’s work to save Kitchener Frame):

…Unfortunately, CAW president Buzz Hargrove has fingered the federal government as Kitchener Frame’s saviour, as if it wields a magic wand that can set everything right. Hargrove should look to his own organization and the company for salvation. The threats facing Kitchener Frame, as well as other auto parts manufacturers, are mainly beyond the federal government’s power to control.

High labour costs, particularly compared to those in similar plants in Mexico, declining demand for the sports utility vehicle frames the company makes, increased transportation costs as well as the high Canadian dollar — these are the series of body blows that have sent Kitchener Frame reeling. Despite having coffers stuffed with billions of taxpayer dollars, the federal government just isn’t rich enough to turn back the global economic and market tides washing over — and away — Canadian industry…

Of course, unions shouldn’t be blamed exclusively either. It is however, a huge factor contributing to the perfect storm that’s tearing the heart out of automobile manufacturing in Ontario.

Karen Redman’s simplistic attitude of demanding that more taxpayer money be thrown at an industry which needs to undergo some serious introspection is disingenuous, irresponsible and only serves to pander to the interests of the buddy of her ex-boss.

Even if Corporate Welfare could be used to save some companies the Record points out, “if it does intervene selectively, who gets saved and who is allowed to perish?”

Instead of trying to score points in QP with useless accusations and pointless questions, perhaps Karen Redman could start addressing the concerns of her constituents with suggestions of realistic methods of helping workers adjust to economics changes that are part of the ebb and flow of life - and to which we must all adapt.

From the school of harsh reality - Carbon Tax Bill in the Mail (Gazette) H/T National Newswatch:

“They said consumers would not pay for this - and now here we are, paying for it.”

When the Liberal government introduced the carbon tax, it said it was targeting oil companies with deep pockets.

“We are asking them to be good corporate citizens,” Natural Resources Minister Claude Béchard said at the time.

He added that the plan is based on the principle that the polluter should pay.

How naive.

In the end, there really is only one taxpayer - whether you pay the bill directly or as a consumer - or even as a laid-off worker.

Deirdre McMurdy articulates what many of us have been observing for some time now - that the more Stephen Harper moves into the rational centre of the political spectrum, the more Dion crowds the left (Party faithful set to pick economy as next hot-button election issue):

…All this blurring of traditional lines would certainly have caused real brand confusion issues for voters at the polls if the Liberals hadn’t been quite as obliging as they’ve been lately.

As the Conservatives have nudged to the centre, the Liberals have gone all retro and moved further to the left, back into the territory marked out in the Trudeau era. Party leader Stéphane Dion is already calling for a return of targeted spending programs to help individuals and businesses make it through a rough patch…

But this doesn’t just apply to the economy. The Afghanistan mission has also become a tug-of-war between the government and the opposition parties, with Stephane Dion vacillating like a reincarnated Mr. Dithers, and a Liberal caucus that is not united on this issue.

In spite of the Manley report however, Dion now seems to be throwing his weight to the left, which may be regrettable decision in terms of the future of Afghanistan’ women and children.

I suppose it could end up depending on whether or not Dion allows his caucus a free vote.

Things not looking too good today - Toronto Stock Market falls more than 600 points.

What do you think? Bail or hang in for the ride?