Trust me, it’s all about taking credit when credit is due.

The recent (and inevitable) “credit crisis” and the disaster looming on the eastern seaboard has brought one thought to mind. The amount of consolidation happening in the financial industry is almost shocking. It has brought two major thoughts to the forefront of my mind: Anit-trust, and the paradox of information – as well as perception and reality.

I would like to touch on both of these points.

First, some background. In the current state, the number of independent US Investment banks has, in recent history, been reduced to two. Speculation is that only one will survive – GoldmanSachs. It was not too long ago that BearSterns was on the brink of bankruptcy and was sold the JP Morgan Chase for a bargain. It was like stealing from a flea market – at the end of the day, you are really just a cheap asshole. A few months later, and on the same day, Lehman Bros. declared bankruptcy and MerrilLynch was sold to the Bank of America. The speculation in the current state, is that a major retail bank (namely Wachovia) is very interested in purchasing the likes of MorganStanley. Realistically this is a Cher-esque facelift of the United States financial sector. Seemingly overnight, Wall Street has had the squeeze put on it in terms of the span of control. Remaining there will be 4 major banks, and 1 investment bank.
They are:
CitiGroup (Bank)
Bank of America (Bank)
JP Morgan Chase (Bank)
GoldmanSachs (Investment Bank)

Of course, there are still a number of banks that are kicking it on Wall Street. But realistically, does anyone still drive Fiats? (no pun intended?).

To touch on the first point - the anti-trust situation. In any given market, there are regulatory bodies (both governmental, and bureaucratic) that will investigate all industry consolidation to ensure that it is not creating a situation of monopoly. There are anti-trust laws in the United States that ban both holding companies, and monopoly. Some examples of companies that have been subject to anti-trust legislation are (in both recent and not-so recent history) Microsoft, and Standard Oil. Both were broken up by the government. The irony of the break-up of Standard Oil is that the price of crude had dramatically dropped from its infancy to its rise to power due to economies of scale. The savings were, in fact, actually passed onto the consumer.
In the current situation, I have not heard a peep about the regulatory bodies looking at whether there are infringements on any anti-trust legislation. Given that the span of control in the US financial sector has greatly shrunk as a result of the “crisis”, I would expect at least some words of wisdom from the powers that be.
I conjecture, the reason for this silence, is that it is acceptance. It is not that the regulatory bodies (and should be the public) are not concerned with the consolidation and its effects on free markets, but their hands are tied. The argument that would come from the industry itself (or the players) is that without this consolidation, the market would crash. Those with liquidity needs to save those without. For some of these companies to attempt to liquefy (that’s right) their assets, it would create a situation where the supply of instruments would grossly outstrip the supply. To flood the market with these fire sales would cause an inherent and systemic problem of devaluation. If company A sells an asset at a discount on the market for the purpose of liquidity, and Company B happens to hold an identical instrument, it reduces its value. Given that these companies have more or less mimicked each other in terms of strategy and creating this false market value, when one goes, they all lose value.
The only option for the powers that be (mainly the Fed) is to allow for this consolidation and for assets to be frozen to avoid them being spewed out into the market. The good get to buy the bad for a bargain. Realistically, the Fed is stuck between two choices – assume the liabilities and assets of the organizations (like Fannie and Freddie), or allow for the private sector to sort out its own debacle. Personally, and politically, it is an issue where I am completely torn. I am against big government, but against modern corporate capitalism. Would I rather see the Fed assume these failing banks, or would I rather see banks buy these failing banks. I honestly don’t know. The one caveat is that the Fed is also a private bank. The key difference between the private nature of the Fed vs. for example, Citigroup, is that one has open books, and the other does not. The other key difference is that the cash flow of the Fed is the tax base (and the interest is collects) vs. the voluntary deposits of the citizenry. Ultimately, I would have to (and I mean reluctantly) side with the current industry consolidation. I am against monopoly (unless I’m the one reaping the benefits – what can I say, I’m a capitalist), but I am also against nationalization.

This is a nice segue for my second concern, that being the openness of the books. With the post-Enron legislation led by 2 US Senators, Sarbanes and Oxley (known as SOX), came new mandates for the openness of books and the separation of processes. To summarize SOX in very layman’s terms – the guy that sells the product can’t load the truck and enter then enter the JV. The processes need to separated by individuals to ensure that there is no overlap. With overlap comes the opportunity for sleuth activity.
This question was posed to me by my brother, and that was (paraphrase) “What was the point of SOX if these companies have been padding their books and bottom line in this fashion?” Now, some of you may be saying that SOX has nothing to do with it, which is somewhat true. These banks were not padding their bottom line with fake money, but they were building their bottom line with derivatives and instruments based on their derivates and instruments. This money never existed, although, to be nihilistic for a second, no money really exists. There are three regulatory bodies that theoretically should have been monitoring the banks behaviours. The Fed, the US Treasury, and the SEC. I am not saying that they were not looking at it, but am definitely saying that they did absolutely nothing about it.
The reality is that they likely were not being pre-emptive in actually monitoring what these firms were doing, and by the time they had clued into as to what was happening, there was really no point. The paradox of perception and reality is that they are one in the same. No matter what the source of the information is, or how valid it is, the information is public. The examples are endless. My favourite one is the paradox of the slut. Regardless of whether or not a girl is tramping around and giving it to every man she could hit with the throw of a rock, if the perception is that she does, she is a slut. I am convinced that there is at least one virgin slut in every high school. A friend once reminded me of a famous saying, and that is that a lie told enough times becomes the truth.
Think about the market situation. If the three regulatory bodies were to have stepped in (and there is no choice but to do it publicly), the perception of the street being cracked is the reality regardless of whether or not it is true. The panic would have set in, regardless of its validity. The reality right now is that there is a hairline fracture in its base, but it has been spreading for quite a long time. Those in the know were definitely not surprised, and those who weren’t, were where the concern lay. This is the paradox of the market – perception is reality. The end effects of a crash, verse a perceived crash, are ultimately the same. If I think the bank doesn’t have my money, it’s the same as me being told that the bank doesn’t have my money. The only benefit is that I don’t need actually run to the bank in the latter, unless the bank tells me that they might have my money – then I’m going to run even faster! I think I have made the point pretty clear.

The current global money markets is a house of cards built on a fault line. The cards are the derivates on derivates, and the fault line is the lack of reserves to validate the wealth. I am not a proponent of a 100% reserve ratio system, but I am also not a fan of paying profit with debt. There are two types of debt, good debt and bad debt. Example of good debt, is taking on a mortgage to purchase and affordable real estate for the purpose of owning property. Example of bad debt, is the war in Iraq.

I am not saying this system will tumble, but I am saying that we will continue to cycle through these collapses and gains. They are driven by irrationality and greed. Unless a phoenix rises from the ashes (the phoenix being a new system) we will continue to be susceptible to the inevitability of the beast. If you are like me, you can’t wait to see how this will all pan out. Take a number and get in line.

You can't beat the man if you are the man

In essence, profitability is a function of two dominant factors: strategy and execution. Without both happening in perfect synergy, profitability will never achieve its full potential. It could be argued that for any given organization, when considering their core operations, mission, and existing infrastructure, there exists an equilibrium level of profitability. It can be exceeded by beating the system, and it can fall short by losing while attempting to beat the system.

Within strategic operations, there exists vision and analysis. One must first set goals for their organization, align this with the overall intent, and then quantify its value before implementation. Once approved, it is simply (well, not always) a matter of execution. Execution is taking the goal, examining its structure, designing the processes, and implementing controls. Once this is accomplished, operations are ideally like clockwork. Continuous improvement necessitates better and more targeted controls to identify systems out of control. The definition of ‘out of control’ is that the execution is not falling with an upper and a lower bound – this bound is ultimately cost (costly). The most direct and functional tool with a great scope is Zero-Based Budgeting. Simply, if the company ceased to have expenses, the budget would be zero – but this is clearly not the case, so each expense is quantified, justified, and approved, marginally increasing the budget. When this process is complete, a budget is born. This is the internal control of an organization to manage all directives and functions.

Ultimately, for costs to be cut, incentives need to be put in place. If the almighty dollar is the measure of strategy, then it also must be the measure of improved execution. These incentives vary, but are generally the same – esoteric motivation. Whether these be in-kind or in-cash, variable or absolute, they are carrots. Economics rests on the notion of human reaction and behaviour to incentives – without this basic principle, economics is but a fallacy. Through measurable targets, variable compensation can be determined for the individual employee, and through profitability, the overall compensation for the group as a whole is found.

When these two tools are used in unison, theoretically you obtain a balanced attack at profitability. The incentives dangled over the individuals are to encourage new ideas and directives to cut out the fat (costs) within every process and method. If you consider that individual functions’ budgets will each be zero-based, then you have a playing field for charge backs. Each function can charge services, or even divert, costs to another function. It is both in the department’s interest and the individuals (so long as their variable compensation is tied solely to its ‘profitability’) to minimize their own costs, irrespective to overall costs. It is as simple as thinking of a bucket filled with water, when you insert a divider (assume it has zero volume), the volume of the segments is less than before (as there used to be one), but the overall volume has not changed. If you were to move the divider away from the middle, again, the overall volume does not change – only the relative proportions.

The results are divided. Although the implementation of individual incentives and company targets would theoretically create a machine for cost-savings, this is not necessarily the case. There is one sore assumption, and that is that the controls can be put in place to mold human behaviour (employee performance). The question becomes, can controls be put in place in alignment with a corporate policy such as ZBB to create equilibrium? I guess no.

The perception is that these tools together will drive improvement, although does it necessarily every get off the ground? I conjecture that they can create mixed results. It is quite possible for it to drive costs down, but one can’t rule out the fact that they are combatants to one another. The individuals will fight over their respective budgets, disregarding the net impact on the overall budget. Each owner would need to be as prude as the other in order for this cost-cutting equilibrium to be found. If this is not the case, the situation will arise where one owner acts in a way to reduce his costs, diverting added costs to another function, and it actually increasing overall costs. Under no circumstances can relatively higher costs over a fixed revenue increase operating profit.

To be successful in an organization structured like this, one must be prudent and greedy. One must be seeking not the best interests of the company, but himself. The strategy is based on the assumption that the individual’s interests can be aligned to that of the company through controls. Instinctively, man survives not through subsistence, but through accrual.

Organizations attempting this form of management system but be wary – for they must be more prudent and greedy than the individuals that work for them. But if the only ones who succeed in this organization are those that are the most prudent, is this not a paradox? It looms on disaster…

You can't beat the man if you are the man.

Jeremy Boorman

Copyright 2007

Highway to hell...

Across the northern part of the GTA (Greater Toronto Area) there is an Express Toll Route freeway called the 407 ETR. The highway was built to ease the congestion across one of North America's busiest highways, the 401 (MacDonald Cartier Expressway).
It was built in phases and is now complete - spanning from the Eastern most parts of the area (Oshawa) to the Western most parts of the city (Close to Hamilton). For many commuters it has been a godsend in terms of reducing not only the time required to even get on to the 401, but the time spent with your foot on the brake once you're lucky enough to merge on to it. The government of Ontario sold this toll road a number of years ago - possibly a big mistake, but at the same time, was a nice one-off revenue source for a government running a hefty deficit. The highway was actually provided free-of-charge for the first year of its existence, at which point a digital transponder was required to gain access (or at least gain access to 'reduced' rates).
In the beginnings, it was moderatle priced at around $0.04-0.05 per kilometre. Once it was sold to a European private equity firm the rate increase began.
Currently, at the end of the summer of 2006 the rates sit at approximately $0.15/km and $0.10/km for prime and 'off-peak' times, respectively.

This is the set up for an idea that I think would be an absolutely beautiful (and sly) way of reclaing the 407 from private hands - most imporantly, at minimum cost. And by minimum cost, I mean next to nothing.

Part of existing as an autonomous state is having a monopoly of policing within your territory. This simply meaning that only sanctioned police organizations are allowed to enforce the law in a criminal sense. Of course you can have private security firms - but they are simply a sub-step to the actual police being called in to arrest and charge you of a crime. In this, all roads are enforced by sanctioned police officers with the given authority to ticket and stop traffic violators and offenders. Finally, even a privately-owned toll road is subject policing by public forces - with absolutely no exceptions.

So here is my idea - the 407 needs police - and if doesn't 'need' police - we pass a law that says ALL roads within Ontario are required to be policed. Public roads, of course, are simply policed - but we then pass a law saying that all privately owned roads must be policed, at a small fee.
This is the set-up: You then set your rate of 'private policing of roads' to an astronomical price. The current owners of the 407 cannot avoid having to pay this ridiculous price - becuase it is the law that one's private road must be policed (by your publicly funded monopoly of a police force).

So now the owners are in a slight predicament - they need police, by law, but are buyers in a monopoly market. We, being the friendly public, are charging them an absolutely ludicrous price for policing - which they are required to have. So now the owners have a choice - raise the price of the toll, or sell off the highway due to its lack of profitability.
Now, the current price more or less sits at the cup of the willingness to pay - meaning that if they were attempt to raise the toll - they would most certainly lose customers, if not all of them.

The company is stuck between a rock and a hard place. Raise prices and lose money, continuing operating at status quo with greatly increased costs and lost money, or sell the asset. Option (a) is not profitable (therefore sell), option (b) is not very profitable (therefore sell), and option (c) is... wait, who is going to buy a losing asset?
I can only think of one customer interested in own this asset - you guessed it - the government.

Bringing a whole new meaning to a rock and hard place. Three simple manoeuvres and you wedge the current owners of the 407 between a monopoly and a monopsony.

To add insult to injury - who did they buy the asset from? The government itself!

Write to your local concillor or MPP - lets get our highway back - for less than for what we sold it.
And in the interim - lets fund our local police services not by way of increased taxation, or more useless enforcement of not stopping all the way at a red light when you are trying to make a right hand turn onto a street with absolutely no traffic on it, or user fees - but by billing a myopic corporation for their lack of foresight.

Bounded rationality and opportunism are wonderful.

the Unflappable GOP vs. Stem Cells

The GOP is the greatest (self-proclaimed) and the worst political party in the history of the world. It takes testicular fortitude to be a full-blown member of such an organization, and possibly the absense of morals, scruples, or general concern for your fellow man. What is the GOP? The Grand 'Ol Party - or, the Republican Party.
Although I disagree with just about everything the GOP does and has done for the better part of its existence, it is ignorance to deny their brilliance in terms of playing both sides of the political spectrum. Somehow they always find a way to please the religious Conservatives, the economic Conservatives, the fence-sitters, the Liberals, and the Libertarians. And if they don't - they give you the finger and laugh in your face. Regardless, they're good - damn good.

An example of this was a ruling in 2001 or 2002 regarding the much debated use of public funds for researching stem cells. This ruling, in my opinion, was the second greatest political manoeuvre of all time. Whoever came up with it is nothing short of a man of great cunning and unprecedented political rhetoric.
The ruling was quite simple - the 60 some odd stem cell lines that had already been discovered would be continued to be researched on using public funds, but any new exploration was banned. Pretty simple, but lets look at this a bit further in terms of the different players in the United States and who you need to please to get a the vote of 50.0000001% of the people.

Break it down...

Religious Conservatives - Motto: God Rules! Don't mess with God's plan.
Goal: Stem Cell Research is evil and 'playing God'. Ok.
Opinion on ruling: God wins! No public money on future research.

Neo-Conservatives - Motto: Privatize, Money, Kickbacks, Privatize ( oh ya, and MILITARY)
Goal: Privatize the sector, capital gains for all (some), then sell organs? sure
Opinion on ruling: Fuck ya! Privatization = property rights = patents = commodities

Fence-sitters - Motto: Meh.
Goal: Meh.
Opinion: Meh.

Liberals - Motto: Social programs save lives, and only cost billions of dollars!
Goal: Spend, tax, spend, tax, spend, tax, spend, spend, spend, lose election.
Opinion on ruling: You mean we can spend tax dollars on genetic research? Cool!

Libertarians - Motto: Freedom!
Goal: Its do what you want day!
Opinion on ruling: Well thats good, and bad, and not that there's anything wrong with either of those. Whatever floats your boat captain.


The Republicans managed to please every member on the broad (or not so broad), complicated political spectrum of the United States. The alternatives were to continue to fund such research with public funds (but you'd piss of the Right), or to end all funding to such research (but you'd piss off the Left). So what the Bush Administration did was carefully consider their options and find a beautiful middle ground. This single ruling has created implications well beyond what the average American could even conceive.
In public hands and with public funds there will be a limited amount of discovery and research. This research will be owned by the people, and will be able to be used in future endeavours of all sorts. Therapeutic cloning (not reproductive cloning) to help with all sort of genetic tests of pre-susceptibility, corrective surgery, possibly gene alteratoins - basically a whole whack of pre-birth opportunities for quality of life improvement (a good thing I guess).
In private hands will be all the research that falls outside of a continuation of the existing lines of stem cell research. There are FAR more lines than what were discovered in the preliminary research prior to the Bush Administration taking power. Why does this please the Right? The religious conservatives are happy becuase they last thing they want is for public money (tax dollars) to be used to fund any sort of research pertaining to the altering of human beings: its simply unnatural. But more importantly, this pleases the Neo-Conservatives. These are the industrialists, bankers, military executives, lawyers, and all pro-market men of economic clout and fortitude. These are the men and women that profit of war, research, and just about everything they can get their hands on. With private capital being the only available research funding avaiable for continued research on additional stem cell lines and their subsequent possibilities - the property rights of these findings will be held privately. This means one thing - profit. Whatever is found, and obviously no one knows that because it hasn't been found yet, will be owned by a corporation. And that leads to possible commodification of particular genes, lines, traits, who knows what else.

In conclusion: A good politician is hard to find, a great politician is impossible to deny.

"If you aren't turned onto politics, politics will turn on yout." - Ralph Nader. Go Green!

Turn over Mr. Smith, I know you want to...

The single greatest and worst things that have ever happened in the history of modern society, in my opinion, are one in the same. In 1776 (coincidence?) Adam Smith published his masterpiece: The Wealth of Nations. To attempt to go into great detail about the foundations laid and the obeservations made in this book would most likely put me over bandwidth, so I'll keep it as short and sweet as I can.
First of all, I would like to beging by clarifying the all-important misconceptions of Adam Smith - he is not the man who is most oft portrayed as being. He was a Capitalist by default of being a Libertarian' and he was not an Autocratic-capitalist, nor was he a fan of Government or 'men of commerce and trade'. He was also, in the modern day, the greatest opponent of Mercantalism and subsequently Colonialism. He was adamently against the use of slavery (albeit for Economic reasons and not those of social concern; which is hard to blame on a man who grew up in an entirely different society of norms and perceived righteousness).
What the man is best known for, other than his most eloquent writing and flowing thoughts and arguments, was his depiction of the gains from trade and the division of labour.

I will focus mostly on his ideas of the division of labour herein, as attempting to explain his opinions on free trade would a) mean I have to explain the predecessing Mercantalist thought, b) would get reponses from proponents of fair trade (whatever that is), and c) the gains from trade are obvious: I like coffee - Canada doesn't grow coffee - Canada imports coffee - Canada exports wheat. I'm happy, the coffee farmer is happy, the wheat farmer is happy, and currency remains unchanged (all in theory of course).

Although Adam Smith was not the first man to describe and explain the mechanism of the division of labour, he did do it the best. The principle of the division of labour was quite simple, and it was depicted using the illustration of the making of a pin (of all things, as many would say we are now 'pinned' under it in itself). He simply observed that the more simple the individual the tasks are in the manufacturing of any particular product, the more efficiently it can be created. Division of labour has since run rampant in our society, basically proving that Adam Smith was most definitely correct in his observation. Enough said on that.
What I would like to get at more is the unbelieveably eerie statements by Smith on the possible downfalls of the division of labour. To think that Smith was a myopic and rationally bounded individual who did not foresee the possible misuse of his findings is simply wrong. Adam Smith was well aware of the effects the division of labour would have on society and the work force. He blatantly stated that the repetitive and tedious work that the division of labour creates (think assembly line) would lead to the degradation of the mind of the labourer, and ultimately unhappiness. Although he did show a rare sign of optimism in acknowledging that should someone truly enjor their part of the process, they may as a result attain a greater level of happiness, he knew this would not be the majority.
My question is simple... when we consider that Smith openly understood and conceivably predicted the 'crippling of the masses' by corporations and capitalists, was it his comments on this that made these 'evil' individuals to proceed in doing so? Or was this inevitable?
Was the division of labour so universally implemented to promote efficiency and increased happiness or was it used to bring society to its knees?
Karl Marx would tell you that it was the capitalists that took a hold of the opportunity created by the division of labour and brought society to its knees (or stole the individuals' surplus value).

Smith was far from the man whom most believe he is. The man was a pessimist, most definitely - in fact, after Smith, Economics divided into two subcategories: optimists and pessimists. It was the pessimistic economic thought of his followers such as Ricardo, Malthus, and maybe Bentham (a stretch), that brought much of modern economic theory to life. It is not known as the dismal science for fun - really, it isn't. It's a dismal, dismal science. Much like alcohol is an evil, evil substance.
Adam Smith was a true libertarian - he based his economic theories based solely on pessimistic thought, unlike his more modern counterpart, Karl Marx. Marx was an optimist that saw an idealistic society of collectivism and collaboration. Although in my heart I wish Marx was right - he wasn't. Smith hit the nail on the head. Unfortunately in this world, regardless of how much we try to avoid it, there are a few certainties (other than death and taxes, which he hated both), free-riders, incentives to cheat, and general self-interest. I conjecture that Smith's philosophy was based more on a strategy for avoidance of being 'screwed' by his fellow man, as opposed to an optomistic strategy for the individuals of society to work together to create a common good. Smith accepted the moral sentiments of individuals. Smith saw the impossible reality of universal benevolence (picture two identical altruists trying to give eachother gifts - each would receive as much joy from giving as bad from receiving - a wash) He knew that self-interest, no matter how uncommon, would foil the plans of any socialist or communist system. The first to 'cheat' in a Communist system has the most to gain - and each individual there on in has a lesser incentive to cheat. The man who does nothing in a Communist country has the most to gain - as no matter how much he produces he will receive the same alotment. He also understood the dangers of the black market in a Communist system (read A tad on Communism).

I take after Smith in almost all of his thoughts. I have tried my hardest throughout life to keep a positive and optimistic attitude towards my fellow man - but they have failed me again and again. It is because of this that I resort to the dismal science for guidance. It's a pathetic existence to admit, but I think we are all better off accepting the thoughts of Smith and acknowledging that avoiding a bad is probably just as satisfying as seeking a good. Its cynical. Its pessimistic - but its reality.

A friend of mine once said, the road to hell is paved with good intentions. To me, this applies wonderfully. The intentions of Smith were good - he wanted men to live free and to work and consume as much as they desired without being interconnected in such a way (through the Church, government, or soclialism) that the opportunity to ride off of others ambition was not provided.
Unfortunately, in acknowleding the possible downfalls, he put the ideas in the head of autocratic and greedy capitalists to slightly twist his ideology into a form of control known as American Capitalism. I will say with one hundred percent certainty that Adam Smith is turning in his grave and is sitting in heaven, hell, purgatory, or the ground with his hands over his head in tears. But again, the road to hell is paved with good intentions. Would the world be a better place had the Wealth of Nations not been published? No one really knows. Should he have stopped after Theory of Moral Sentiments? Maybe.
The real question is, why did he burn his manuscripts and years of rough notes on his book on Politics? Did he see the mistake he may have made by publishing the Wealth of Nations and attempt to avoid any further damage? Or was it simply that he was such a perfectionist that it could not be published whilte perceivedly incomplete?

These are some of the questions that make Adam Smith not part of that infamous 'if you could be at a table with three people, who would they be?', but the reason why the answer to that question as far as I'm concerned is: one person, Adam Smith.

May 31 National Post Letter

Original:

I was astonished at the clear one-sided bias that was displayed in the letters shown regarding the recent move by CUPE President Sid Ryan. All contributors need their own lesson in Politics, Geography and Economics. To address the comment that Israel is the only 'real democracy' in the Middle East - you may be right, but lets dissect this comment. The Saudi Royalty wouldn't consider democracy because that would lead to sharing of oil profits; Iran and Iraq - we can thank the meddling of the United States for both of their failures in terms of democracy, and Kuwait, consider it Saudi Arabia Lite. The most important of all though is the Palestinian people - first of all, they are not given the basic Human Rights of a State due to Israeli bureaucratic influence, and when given the opportunity to have a free vote - Hamas is elected, and its condemned by the international community.
As for the comment regarding that Sid Ryan is either an imbecile or an anti-Semite - I don't even know where to begin. I will not disagree with him being a leftist imbecile - but I would most definitely disagree that this situation is as clear-cut as two possibilities. It is this type of narrow-mindedness and the constant resort to 'racism' that is at the crux of the Middle East issue. Mr. Ryan has made a misguided and controversial first step in supporting a people that have been oppressed for the better part of this century - not to take away from the previous oppression that people of Jewish descent were subjected to, but maybe I could suggest you speak to your elders and ask them how it felt - then try to turn that into unilateral support for a true peace, not a segregated stalemate of oppression and name calling. If someone destroyed my house I would not be fighting for my State, nor democracy, nor ideology - I would be fighting for my own right to exist as a person - that is what the Palestinians are doing. "Jealous of our freedom, I can't believe you bought that excuse"

Jeremy Boorman



What happens when an Editor gets their hands on your work:

Jeremy:

Here's what I was thinking of.

Cheers,
Paul

Re: CUPE's Misguided Attack On Israel, letters to the editor, May 30.
I was astonished at the biase displayed in these letters regarding the recent
move by CUPE president Sid Ryan. Your contributors are the ones who "need a
lesson in politics, geography and economics." The comment that Israel is the
only "real democracy" in the Middle East may be right, but let's not forget
about the Palestinians. While they are not given the basic rights of a
state due to Israeli bureaucratic influence, they did recently hold a free
vote, with Hamas elected.
Another writer commented that Sid Ryan is either an imbecile or an
anti-Semite. While I will not disagree that he's a leftist imbecile, I would

disagree that this situation is as clear-cut as two possibilities. It is

this type of narrow-mindedness [and constant hit of racism] (had to argue for this part) that is at the crux of the Middle East issue.

Mr. Ryan has made a misguided and controversial first step in supporting a

people that have been oppressed for the better part of this century. If
someone destroyed my house I would not be fighting for my state, nor

democracy, nor ideology - I would be fighting for my own right to exist as a

person. That is what the Palestinians are doing.
Jeremy Boorman, Aurora, Ont.

Paul Russell
Letters Editor
National Post

Supplement to Peak Oil...

Written circa August 19, 2005...

The true capitalist nature was made very clear to me the other day as I was watching "Mad Money". Jim Cramer's financial advice was for longer term invetors to look to the coal markets [companies] for long-term gains as a result of the rises in oil costs. It is fairly obvious that hte fule of the first industrial revolution will also, eventually, be the fuel of the continuance of the third. As the quantity of coal and its ease of extraction make it a cheaper alternative than such renewable sources such as wind and wave power. But once again, it is not a renewable resource and will follow the same long-term price pattern as petroleum. We, as a society, moved away from the use of coal many years ago as oil was not only slightly easier on the environment, but considerably cheaper [and versatile]. Now, as the price of petroleum steadily skyrockets, it has become abundantly clear that the move to oil was due to the latter rather than the former.
We start with coal, move to petrol, and end up going back to coal? This leads me to the belief that the use of fossil fuels was part of hte beginning of the end of not only the environment, but truly sustainable evolutionary innovation. The resources that we use will continue to be depleted and increase in environmental and economic cost. We are stuck in the resource trap that was created by the Industrialists [Illuminati?]. All of which relates back to human nature, summed up in one word: Now. We are fixated on material wealth and objects, and fial to se (or maybe just care about) our own doom we create with our greed.
As all prices in the economy are indexed to the price of the driving commodity, oil, all goods will continue to rise in price. Even those renewable goods which mathematically, should be more elatic in price, are made more expensive due to the use of oil-fuelled machinery and methods of transportation, for example.
To semi-conclude, its obvious that there are forms of unseen control in the economy that keep our main source of energy non-renewable. Although, man is ultimately the one to blame for this dismal trap, as we refulse to recognize this inevitability or attempt to change it.
If all goes as planned, I forsee the intersection of ever increasing demand for goods (greed) and the ever decreasing supply of non-renwable energy. Accompanied with the basic assumption that all goods are producted with oil being an input [whether it be direct, or indirect] the depiction is as follows...

[ Insert Graph... or imagine Supply (non renewable) convex to origin and downard sloping, Supply (renewable) convex to origin and upward sloping; and Demand convex and upward sloping. Y axis - Quantity, X-Axis - Time.
d[S(r)]/dT > d[S(nr)]/dT
d[D]/dT > d[S(r)]/dT
and a lot more than i can describe w/ words ]

To argue that the supply of renewable energy could meet the demand for goods would be a definite overstatment, thus that is shown in the diagram as S(r). We are currently at NOW (as always); where the worlds demand for goods is rising and the suply is decreasing, but at such rates that S(nr) is still at an affordable level for almost everyone. This will not remain as, a) the clock continues to click, b) demand continues to grow, and c) resources continue to grow more scarce. [Think China and India and their domestic supplies].
Even if we had invested all of our money into renewable resources from day one, it would not be enough as D includes a variable for convience which could not be met aas well with S(r) as it can with S(nr). The argument for the conspriacy to control mankind with S(nr) is sen when we look into the future. The market price in a situation where demand exceeds supply (a monopoly, oligopoly), will be determined by the willingness of demanders to pay a higher price. i.e. when demand is inelastic they will pay a surreal premium. (WEAK ARGUMENT)
The gap between the demand for energy and the supply of energy are the surreal profits that are made by those with the control of the energy. A gap would still exist between D and S(r), but these profits would be spread mor equally amongst competition as there are fewer barriers to energy in the S(r) than in S(nr). The only known [to the author] barriers to entry to S(r) are access to capital as well as applicable patents (Wave Power, e.g.). Whereas, there is one main barrier in S(nr), and that is the ownership of unextracted resources (oil sands, wells, etc.). As there is an effective monopoly (oligopoly)on S(r), the gap (alpha + beta) will be surreal profits left for the few rich who own stakes in the oil companies. (Alpha+Beta) > Beta, and...
Beta/n < (Beta+Alpha)/n, where n is the number of vested stakeholders.
Meaning the alternatives are...
a) S(nr) -> more profit for fewer people
b) S(r) -> less profit for more people
A rebuttal to one who argues that incorporation allows for the sharing of profit among many holders is that incorporation and stock ownership are available in both scenarios.
i.e.) it doesn't matter what the type of energy or resources used, the wealth will be shared in thsi way all the same.

I am focussing primarily on the elite few at the top, the Industrialists.

The sooner people realize this, the more we will all save and the more 'wealthly' we will all be. Not in absolute terms, but in relative purchasing power.
The price of all goods whicha re processed using energy will continue to rise due to the scarcity and demand; but thse rises would be severly deafened if the primary indirect input was a renewable energy source due to the elimination of rising energy costs and the near elimination of opportunity costs of energy [maybe? to the latter]. Not to say that renewable energy sources will be constantly infinite, but are not bound in the long-term; leading to a lower opportunity cost of energy.
Although the world is inevitably heading to a world of unprecedented excess demand for energy, the exploration of renewable energy sources is a net pareto efficient move. The eletite few will be worse off by alpha, but the world will be less burdneed by this amount alpha; and share more equally in the amount Beta.
I write this as an economist [a bad one...], not as a left-wing, flower-power, hero.

As well, as an economist [again, a bad one...], I believe in the rationality of human beings and the incessant greed of man; which means that as S(r) becomes more economically viable that even those who seek wealth and control with S(nr) will see the long-term sustainability and profitability of renewable energy sources.
Eventually people will stop buying oil because of the price, and the elite will already have deloped and patented forms of renewable energy. The only difference this time is that there will be a perpetually sustainable method of control that we could have actually avoided a long time ago.
This is the plight of mankind - myopia.
What is this obsession with controlling mankind?
How did they get so smart and wist yet stay so evil?

The power of clout...

Wal-Mart recently announced that they have a plan to place pressure on Congress, which if anyone has that kind of clout, it's Wal-Mart, to reform minimum wage (which has remained at $5.15USD for over a decade. Wal-Mart has put forth the argument that the current minimum wage is not helping the working poor and that reform is necessary to up the level across the economy. There are many interesting points to be made about this reform, with a special focus on the difference between appearance and reality.

The first point is, Wal-Mart pays the majority of its Associates that work in retail operations at a rate higher than both Federal and State minmum wage in almost all stores.
To elaborate:
If Wal-Mart were to keep its wages after the reform at an identical level (so long as it's still above the new minmum wage) as before, this move will cost Wal-Mart absolutely nothing. The only effects they would feel would be increased costs of products so long as they are manufactured, or in any way handled, by an American worker making minimum wage. Other than that one possibility, the additional costs added to Wal-Mart's expenses is zero. Following this line of rhetoric, there is an inflation index to which the Federal Reserve sets targets, meaning that the prices (which are arguably sticky in the short run for small firms, but are not so sticky for a corporation the size of Wal-Mart) will rise. But as almost all of Wal-Mart's goods being manufactured outside of the United States accompanied with the inherent strength of the domestic currency, they are in line for supernormal profits made simply with their clout.
If Wal-Mart decides to adjust, on a pro rata basis, their "minimum" wage accordingly with the rise in the new minimum wage, they will most definitely have greater expenses, meaning decreased profits.
I am going to go out on a limb and to say that Wal-Mart, the most successful company in the world, besides Microsoft (which is arguable, as Wal-Mart dominates many former nearly perfectly competitive markets), would ever take an action such as this for a non-profitable reason. Of course, there are many that will not think of such a proposition, or at least will think of it, and not be educated enough to see it. I predict a large portion of the population (particularly the left) will discredit this move as a publicity stunt, which, it is. But it is a lot more than a publicity stunt; it is a publicity stunt with major reprecussions. And still there will be another portion that will welcome this move, and buy the publicity stunt; because it is true that the increase in minimum wage will benefit all those who have minimum wage jobs, except of course those that lose their job because of the higher level of minimum wage.
What Wal-Mart really wants in doing this is to use its unprecedented clout to attempt to push smaller competitors out of the market. First of all, they can absorb the new minimum wage with zero change in costs. Secondly, they are by far the biggest of its industry and would be able to best abosrb the extra costs if their current standard was minimum wage. This move will hurt every single competitor, besides those who pay more tha minimum wage; of course, depending on their choice of action, whether it be leaving the wage unchanged, or adjusting it on a pro-rata basis.

The only thing I can say is that Wal-Mart, as a competitive company, is unprecedented. There is no button Wal-Mart won't push and no edge they will not seek. If Wal-Mart becomes successful in this bid to scale up minimum wage, they will have gained a competitive edge that has a trickle down of reprecussions for competitors as far as the eye can see. I do believe that it will come to a point where there are absolutely no more room for Wal-Marts, the question I pose is what will they do next?