Archive for the News Category

CONFUCIAN CONTRADICTIONS

On August 14, 2019   /   Blog, News, Uncategorized  

 

The 21st century will belong to China.  Demographics tell us that, and so have most economic analysts.  China itself has been boldly stating its intention to be the leading nation in technology development, capital markets and global trade.  And before recent slumps in Chinese GDP growth, it sure looked like that was an easy call.  But 2019 has not been kind to the forecast of the rapid and inevitable rise of China to global leadership, and it all comes down to some longstanding and intractable contradictions.

Contradiction #1:  China wants to be the leading supplier of hardware to facilitate the transition of the global economy to the 5G data and voice transmission.  Critics in the West argue that large Chinese enterprises are entirely enmeshed with China’s totalitarian regime, and accordingly cannot be relied upon to not use installations of this critical technology in foreign nations in a manner that compromises the economic and political security of those nations.

Not so, says Huawei, China’s leading provider of hardware to enable the 5G transformation, in response to the efforts by multiple Western nations to ban its equipment from their 5G networks.  But then Meng Wanzhou, a senior executive of Huawei who had enjoyed Permanent Resident status in Canada until 2009, is arrested in Vancouver on a warrant and extradition request issued by the US government based on allegations of breaches of the US trade embargo of Iran.  The arrest is executed in compliance with a longstanding treaty in place with the US, and Ms Meng was quickly granted bail and released on the condition that she remain in Vancouver pending an extradition hearing.  This condition can be assumed to be more inconvenient than oppressive given that Ms. Meng is able to continue to reside in either of the two $5+ million dollar residences that she and her husband maintain in Vancouver.

Shortly after this event, the Chinese government chose to appeal the sentence given to a Canadian citizen previously convicted of a drug offence in China, which was quickly concluded and upgraded to a death penalty conviction.  In addition, two Canadian citizens, Michael Spavor and Michael Kovrig, were arrested and continue to be held with limited consular access on vague charges of espionage. It appears that skeptical Western governments had it wrong; it is Huawei that appears to have undue influence over the Chinese government, not the opposite.  Nothing to worry about there.

Contradiction #2:  China wants the access to capital that accrues to the host country of a global financial centre, and it obtained just that in 1997 when the UK ceded control of Hong Kong.  “One country, two systems” was the promise of the accord that enabled that transfer.  But the Executive Branch of the Territorial government quickly ceased to be controlled by the Hong Kong electorate, and the populace has long been on alert for the other shoe to drop.  It finally did with the introduction of legislation that would permit Hong Kong residents to be transferred to the mainland for the prosecution of offences, easily the most critical tool of economic and political control by the Chinese state.  The fragile mutual trust that allowed the Hong Kong financial markets to operate successfully since 1997 appears to be irreparably damaged, and China must now choose between either backing down to maintain the support of global capital markets or brutally demonstrating to the rest of Chinese society that demands for democratic niceties will not be tolerated.  I’m not feeling good about which way that one is going to go.

Contradiction #3:  Xi Jinping wants Chinese products exported across the globe.  Donald Trump wants US products exported across the globe.  Both men want to do so while protecting domestic employment and running trade surpluses, which is pretty much impossible to achieve for both of the world’s two largest economies.  Donald Trump is imposing tariffs to reduce access to its huge consumer market to force better access for US exports to China.  Xi Jinping is using currency devaluation to obviate the tariffs (most recently) and deny Chinese consumers the benefit of imported goods (both now and for the last many years).  Neither approach bears any resemblance to free trade but looks more like economic imperialism.  If the two biggest economies can’t support global free trade, we will all be worse off.

Global economic leadership is not as easy as the Americans used to make it look.

Back to Top

CASTER ADRIFT

On May 16, 2019   /   Blog, News, The Chairman's Corner, Uncategorized  

Say what you will about the gender binary world that people my age grew up in.  Yes, it was myopic, oppressive, small minded and hurtful to many, but it was simple.  That is the attraction of categories; they allow for sorting, which is what we yearn for when we are trying to “sort out” a complex world.

That being said, for a time, just sorting things out between the binary genders presented issues.  Take athletics, for example.  In almost all competitions recognized as sports, women were just not competitive with their male counterparts.  Accordingly, sports began as competitions in various activities conducted among men and teams of men only, with women rarely competing, even among themselves.  In time, women demanded, and the world accepted, a comparable though unequal range of competitions for and among women, although the process of expanding and supporting the nature and number of these competitions has been slow as society has unwound its presumptions about what is both becoming and safe for the fairer sex.  Fast forward to 2019, in which, notwithstanding this ingrained resistance to the participation of women in sports, there is virtually no category of athletic competition open to men in which women are not competing among themselves.

Into this world steps Caster Semenya, a 28-year-old middle distance runner from South Africa, who has recently emerged as a dominant force in the 800-metre distance in women’s track.  Caster’s dominance in her chosen event has been impressive, but not unprecedented.  There have been women athlete’s in various Olympic sports who have been more extraordinarily dominant over the years.  What made Caster more noteworthy was that she shared with a small number of those dominant women’s athletes: a subtle but unmistakably more masculine build and appearance.

In the past, this observation has been associated with speculation about the use of performance-enhancing drugs that altered the hormonal chemistry of the athlete to mimic, to some extent, that of males.  Suspicion of the use of such drugs by a generation of East German women’s athlete’s in various disciplines during the 70s and 80s has since been confirmed, and their strikingly androgynous appearance is accordingly reflexively associated with cheating.

Caster Semenya, however, is entirely different.  Her apparent androgyny is neither denied nor vilified.  It has been widely reported that she is in fact intersex, possessing the XY chromosome characteristic of male gender but, by virtue of unique complications in the expression of that genetic coding, she is without external male genitalia.  She has been raised as a female and self-identifies as such.  She is not a cheater; she is just Caster.

Caster Semenya creates a vexing problem for women’s sport.  Women sport was created as a protected category of competition because of the profound and intractable differences in biology between men and women.  Adjusted for differences in height and weight that can almost as easily occur among men, elite women athletes are profoundly challenged in terms of their athletic capacity relative to their male peers.  Without the protected category of women’s sport, no women, including Caster Semenya, would have any ability to meaningfully compete for local, national or world titles.  This is not a construct of the patriarchy; women’s sport was demanded by and created for women in defiance of the patriarchy.  It is the voices of Caster’s competitors that has raised the issue of Caster’s status, not the reactionary whining of misogynists, homophobes and transphobes.

So, like it or not, and regardless of the political incorrectness of the concept, the athletics world finds itself faced with the task of defining what a woman is in the context of athletic competition.  However respectful it would be to ask only how one identifies oneself in the oversimplified gender binary construct, in the context of elite athletics, where even women enjoy financial opportunity as a deserved consequence of achievement, that clearly can’t be the test.  The genetic division drawn between individuals possessing ‘XX’ and ‘XY’ chromosomes can generally be defended, but, in exceptional examples like Caster’s, the expression of this seemingly categoric genetic difference can be significantly muted.  The presence or absence of male genitalia is equally inapt; what ever advantage it is that men enjoy as athletes I know for sure that it is not that appendage that accounts for it (or if it is, I somehow haven’t yet figured out how to use it to help me run faster).

Alas, we are then tossed into the murky world of hormone levels to draw this critical line.  What track officials know is that while women, like men, differ widely within their gender-specific range of testosterone levels, it is among successful women’s middle-distance runners that higher testosterone seems to be most relevant.  As a result, the International Association of Athletics Federations has determined that in these events (and, for now, only in these events, despite similar findings with respect to certain field events), an individual seeking to compete in the women’s category must not have a testosterone level higher than a specified maximum.  That maximum, it is worth noting, is at a level that is far outside of the high end of the normal range for women but beneath the low end of the normal range for men.

Caster Semenya’s testosterone level exceeds that stipulated maximum.  She is the first athlete to be required to take performance- (and likely health-) detracting drugs to participate in her best event in her chosen sport as a member of the gender with which she identifies.  Is that fair to Caster?  Absolutely not. But is there an alternative solution that both protects Caster Semenya’s right to compete as she is and preserves women’s sport as a protected category of athletic competition?

Back to Top

DEMAND SIDE ECONOMICS

On April 16, 2019   /   Blog, News, The Chairman's Corner, Uncategorized  

Today is the first day of argument in the court proceedings brought by the Ontario government challenging Ottawa’s constitutional authority to impose a carbon tax in this province.  The constitutional question is an interesting one, and it is certainly one upon which reasonable minds can differ.  Unfortunately, the same can’t be said of the public policy arguments against the concept of the carbon tax itself.

The court challenge will focus on the important but decidedly wonkish question of whether a carbon “tax” is within the taxing powers granted to the federal government under our Constitution.  On the actual substantive policy question that the federal carbon tax purports to address, the Ford government has not taken the position that climate change is a hoax, or even that it is an issue that is too intractable to merit legislative action in Ontario.  Instead, they have asserted that it is an issue that is better addressed through “smart” regulation than the creation of a market solution.

And that is fair, although, as Preston Manning has already observed, it is counterintuitive to hear a conservative (or Conservative) government espouse a preference for a prescribed regulatory solution over a solution that puts the creative problem-solving capacity of the market to work.  The problem is that regulatory solutions cannot be anything but the cloaked version of market solutions.  To be effective in reducing carbon emissions, regulations must either make low carbon alternatives less expensive, or incumbent high carbon technologies more expensive.

The Province of Ontario has already tried the former. The Green Energy initiative introduced by the Liberal government of Dalton McGuinty was just that; strategic subsidies that would quickly scale up the supply of renewable energy that would result in a costless transition of the Ontario economy to Green Energy.  The result: the creation of a network of inefficient wind and solar capacity that has added a large long-term cost component onto t a power grid that was already serviced with low carbon nuclear and hydroelectric sources.  No one can seriously propose trying that again.  And if these regulations are created to do the latter, how can they be fairer or more efficient than a revenue-neutral carbon tax?

If we are then left to choose a market solution, there are only two market mechanisms to reduce the burning of carbon: tax it or reduce supply to drive the price higher.  As the Ford government has already realized, taxes that nudge us away from ingrained and popular lifestyle practices are never popular.  Ironically, on this point, Doug Ford can find common cause with the environmental lobby.  It seems apparent that those looking to influence the public policy agenda have already conceded this reality.  Far greater noise and heat has been expended in supply side solutions (opposing pipeline approval or extraction projects) than on demand suppression (decrying consumer behaviour and habits).  Neil Young has never visited Pearson Airport at March Break to join protestors in the shaming of sun-bound airline passengers.  Vilifying corporate suppliers has long been a more marketable PR strategy than guilting consumers.

The only problem is that Canada is not Saudi Arabia.  Our oil sector is the high cost producer.  Making it more expensive to get our high cost oil to market will have no effect on the market price of oil.  At best, all it can do is defer the carbon-intensive extraction activities of producers in Western Canada to a day on which the marginal cost of extracting conventional oil rises closer to that of Oil Sands production.  No Canadian let alone American, European, Asian or African will fill his or her tank less frequently or turn down his of her gas furnace one degree because Oil Sands oil did not make it to tidewater other than those families in Alberta that must do so to stretch their EI cheque.

The Liberal government in Ottawa may have little to recommend it of late, but on this point, they are indisputably right.  Their simultaneous embrace of carbon pricing and ownership and development of the Trans Mountain Pipeline is both principled and farsighted. If Canada is to take a global leadership role in addressing climate change, let it be in addressing demand for carbon by imposing revenue-neutral taxes on consumption.  Undertaking a Quixotic and counterproductive supply-side assault on resource development has and will only unfairly victimize and alienate Western Canada without making any meaningful contribution to reducing carbon generation here or anywhere else.

Back to Top