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The Conservative government is in trouble for understating the cost of the F-35 program by 10 billion by only giving out the incremental cost instead of to total cost. Despite years of controversy, it seems they never bothered to point out there was a reasonable explanation for the two different numbers.

Because they where so obsessed over controlling the message they never admitted the total cost. Since to most people can’t conceive of $25 billion anyway few minds would be changed by knowing it.

Instead many people have been convinced that they tried to deceive them and has suffered a significant drop in the polls.

In a speech to shareholders, Scotiabank head Rick Waugh said, “It’s up to the banks themselves – not government or regulators – to manage our risks and advise our customers appropriately.”

It’s hard to call this statement anything but delusional. It was graphically shown in the United States banks frequently don’t do a go job managing risks these days. Lehman Bros. went bankrupt and most of the other banks had to get bailed out when the property bubble burst down there.

I don’t think anyone would claim that Scotiabank and the other big five banks aren’t too big to fail and wouldn’t be bailed out if they where about to go under. Their implied government backing has been one of the secrets to their success. Therefore, the claim that government shouldn’t be managing the bank’s risks, especially when Canada is still in a property bubble of its own, is ridiculous.

There are some things that make Canada’s situation less troublesome then it was in the United States. First it is much harder to abandon your mortgage in Canada then it is in the US. The other problem was that the bad mortgages where just the tip of the ice burg. There real money was lost on the derivatives where many insurance policies where taken out on each mortgage that paid off it the mortgage was foreclosed on. Many of these insurance policies where taken out by people who anticipated the crash, often by the vary investment banks who where selling to mortgages to investors.

When the crash happened and the foreclosures started not only did the home owners and mortgage holders lose money. The groups providing the insurance, like AIG, lost many times more money because there where multiple insurance policies on each mortgage. In fact the insurance provides lost so much money they wouldn’t have been able to pay it off so even the people who had the insurance lost money.

Back to Soctiabank, maybe if the CEO promises to surrender every dollar of his family’s assets and all future income above a minimal amount if his bank should ever need a bail out, it would almost be enough to convince me to allow the bank to manage their own risks, except the humans have an uncanny ability to underestimate risks so frequently, even that wouldn’t be enough.

Conservatives believe the first thing that pops into their mind.

Jail is bad so they think that if we increase jail time, people will stop committing crimes. They don’t consider that the current sentences is already enough to deter crime and if the criminals where worried about going to jail at the time they where commit the crime they wouldn’t do that. They problem is they are not thinking about it. Instead they are thinking about their addiction or their desperation or even that going to jail is inevitable for them anyway.

They also think that taxes on businesses are bad because they work by making money, so if they make more money they will work harder. In reality the thing the businesses need most is customers. If there is a demand businesses usually don’t hesitate the fill it.

Libertarians try to think rationally about things. They use reason to conclude that if everyone where free to do what they want and where as rational as they think they are the economy would work out fairly. They probably think they are being scientific, but they are not.

Science isn’t about logic or even rationality. It is about performing experiments and examining evidence to test theories. Logic is great for coming up with theories, but if one had infinite resources you could test every possible theory and you could discover how the universe works without the need of any logic or reason. That’s how evolution works. Without any intelligence it has been able to develop incredible capabilities just with uncounted trillions of random experiments in survival over a billion years.

Libertarians don’t look at the evidence to see if their ideas would work in the real world. If it did you wouldn’t have bankers that risked their banks (Lehman Brothers did go bankrupt) and the world wide economy over clearly foolish moragage investments.

Progressivism is supported by evidence. The counties that have the best conditions for people (the 99%, anyway) are the most progressive, like the Nordic counties while the US is the least progressive and has the worst conditions for people among developed countries.

Admittedly few progressive choose that position after examining the evidence, but choose it based on their values. Maybe some libertarians know the evidence shows poorer outcomes but still believe in it because they so strongly believe in economic freedom.

Many people believe the government wastes vast amounts of money. This perception is created by the media and the opposition making a big deal out of every little bit of perceived or real wasteful spending, which make people assume that waste is pervasive. Governments spend billions of dollars but when people hear about waste of ten thousand dollars or even ten million dollars they don’t put that number in perspective. A lot of them probably don’t even notice the difference between ten thousand or ten million.

Government isn’t perfect but I suspect it is no more wasteful then large businesses. The difference is there is no Freedom of Information Act for businesses and no group of opposition board members always trying dig up scandals. Even if people hear about a business being wasteful they assume it is someone else’s problem, but in the end we all pay for corporate waste just as surely as government waste, especially since most large companies are part of oligopolies and it would require a major screwup to bring them down.

For example, look at the recent controversy over the CEO pay of ORNGE, a mid-sized Ontario government agency that handles air ambulance service for the province. They cleverly hid their CEOs pay in a for-profit subsidiary. When it was reveled to be $1.4 million a year, more then the head of Ontario Power Generatio, people where appalled. How many people assume that such excessive pay is widespread in the government when this is really an exceptional case? We know the salaries of the heads of other agencies, so we the head of ORNGE was the highest paid of them all. He was the exception.

However, in the private sector his pay would not be exceptional, but the norm. Who is really more wasteful? The government where his salary is exceptional and makes people angry when they hear it or the private sector where his salary would be normal?

The false perception that waste is widespread it drove dubious Toronto mayor Rob Ford to victory, but he has yet to find any beyond the crumbs he campaigned on.

It’s a fundamental problem with the media. They spend so much of their time reporting on exceptional things, people assume those things (murder, sex scandals, war, animals doing somethings funny) is the norm, rather then exception.

This post based on a comment I made on the Toronto Star website.

On and off since at least 2004 the Toronto Police have been using the public space in front of the 52 Division Police Station as a private parking lot.

At first they just started parking there. They only stopped after two articles in the Toronto Star. Then a while later they started parking there again. This time they claimed they had to because their underground parking garage needed renovations. They have only stopped using it in the last could of weeks. The temporary barriers are still there, although some have been moved.

It is at least as illegal to use this space as parking as it would be to park on the lawn in front of your house in Toronto.

If Occupy Toronto set up there, because they haven’t been enforced bylaws to keep this place open to the public for years, if they where to try to evict occupiers the argument could be made that they are only evicting them because of their political message. The government certainly wouldn’t be allowed to evict someone just because of a political message.

There is also a mural on the sidewalk in front of the station painted several years ago. It is also illegal but hasn’t been removed, assuming it doesn’t have a permit under the city’s mural permit system.

Of course, I doubt this tactic would be successful, but getting evicted from there would expose the hypocrisy of the authorities.

The media complain that the Occupy movement has made no demands. The way I see it the aim of the movement isn’t to make specific changes themselves, but to get people to realize what is really going on. Many people are simply unaware of the seriousness of the problem. People need to see charts like this which clearly show how much more the 1% get and how much it has been growing over the last 30 years:

To understand the level of ignorance take a look at this article about recent focus group of Rob Ford voters. Many of them saw Ford and Jack Layton as cut from the same cloth, honest and fighting for the little guy. I’m sure both of them saw themselves that way, but too many people don’t know the difference between one who provides realistic solution and one who doesn’t know what he is talking about.

It is not for the protestors to tell the people what to do. Although flawed, we have democratic institutions set up to decide what to do about our economic problems. What the protestors can do is wake people up and get people talking about solutions.

It has already had success. In the US obsession over the Federal debt has died down and there is more talk about jobs. In Canada NDP leadership candidate Brain Topp’s announcement suggesting increased tax on people with high incomes wasn’t criticized as harshly as it would have been before the movement started and it makes it much more difficult for the Conservatives to use that against him.

There has been talk of the Liberals and NDP merging. The justification for this is that the split in the progressive vote allows the Conservatives to form a majority with 40% of the vote.

This is a legitimate concern but the splitting of the vote is only a problem because of our First Past the Post electoral system. If we had proportional representation splitting the vote wouldn’t have been a problem and the NDP and Liberals could have formed a coalition and governed.

Merging the parties has many drawbacks compared to PR. First it has little support in the Liberal Party and virtually no support in the NDP. Any NDP members who thought that winning was worth compromising their principles to that dagree would have already left and joined the Liberals. Another drawback is that it would reduce voter choice. They would no longer be able to choose which of the Liberals or NDP better reflects their values.

An alternative is electoral cooperation for one election in order the implement proportional representation. A deal would be struck between the two parties with the following conditions:

1. The parties agree that if no party gets a majority they will attempt to form a coalition government where cabinet seats and other decision making powers will be divided in proportion to the number of MPs elected and the Prime Minister shall be the leader of the party with the most seats.

2. Both parties agree to support proportional representation and put it to a national referendum within one year of taking office where the system with the most votes will be declared the winner

3. The parties identify ridings that a united candidate could win using data based on results during the last election and regional polls of second choices.

4. The parties would then conduct local polls in the ridings identified and if the results show a united candidate would win comfortably, but having both candidates would not result in a win, only the party that polled the highest would run a candidate.

5. In other seats and in the national campaign the parties would continue to compete against each other.

6. If not enough seats to form a majority are identified the agreement would be canceled

7. Either party could withdrawal from the agreement up to 4 weeks before an election is called.

I suggested something like this before. Back then the data suggested that there weren’t enough seats that could be taken for the Liberals and the NDP to form a majority without the Bloc. The dynamic has changed quite a bit since then, so that may no longer be true.

This strategy isn’t without risk. There could be a stronger then expected backlash against the coalition or Canadians might not be convinced of the benefits of PR, I think the risk is worth it, if the polling numbers show it is possible.

Where as open source software shares the spirit of socialism because it is about openly and freely sharing software with all and stands on contrast to the secrecy and profit maximization of closed source software.

Where as software is unique because once built, unlimited copies can be made at no cost. If houses where like this, a single house could be built and a copy given freely to every family in the world.

Where as people wouldn’t want to buy a car where only the original manufacturer could open the hood and make repairs, modifications or even make sure the vehicle is safe. People expect to be able to do this themselves or have a choice of garages to do this for them. Yet, closed source software can only maintained by the company that created it, meaning there is no way the verify security and the company has a monopoly on maintenance.

Whereas open source software requires that the source code be available to people who have a copy of the software allowing anyone with the skills to add features, fix problems or make sure the software is secure.

Be it resolved that the Socialist Party of Ontario would require software written by or paid for by the Provence of Ontario be made available to all under an open source license. It should be a license like the GPL that requires all modification made by others to the software be open source as well.

Be it resolved that when choosing off the shelf software for use by the province open source options always be considered and closed source software will only be chosen if no open source option satisfies the requirements and it can be shown that buying closed source software would be substantially cheaper over the long term then modifying open source software to meet the requirements.

Be it resolved that the Socialist Party use open source software in its own operations and release any software developed internally be released with an open source license.

Discussion:

An example of the problems with closed source software can be seen in the Presto transit fare payment system. It has been developed for Metrolinx by Accenture, a big software consulting company known for high priced contracts. Presto has cost hundreds of millions of dollars and will cost hundreds of millions more to implement on the TTC and other transit agencies. The cost was so high the TTC was investigating alternative systems before the Province made a deal with Rob Ford. The system is also difficult to use and isn’t flexible enough to handle the current fare structure. No doubt it meets the specifications of the contract, but because Accenture controls the source code they are the only ones who can make the modifications needed to fix some of the problems with Presto, therefore they can charge excessive fees to make changes. If the system was open source changes could be made by anyone so the cost to make the changes would be much lower.

Read about more about Presto here: http://stevemunro.ca/?p=5391

A group of people is angered and hurt by another group. Suddenly an event causes the anger to explode. They are united in euphoria and lash out violently at everything and everyone, only rarely hitting the actual source of their pain. Feeling invisible and invincible they forget laws, morals and their own rationality.

This appears to be the state of the British justice system’s response to the riots. They have succumb to the same mob psychology that triggered the riots in the first place.

Handing out jail terms of months and years for crimes that would have been sent to diversionary programs under other circumstances. The number of lives that will be ruined may pale in comparison to the lives destroyed by the rioters. Rather then taking into account the psychological effects of being part of the mob and giving them leniency they are giving them harsher penalties for what is the ultimate crime these days, being human.

It is to be expected. Both the riots and the justice system are both made up of humans and are subject to the same human failings. We should show the judges, lawyers and politicians the same compassion we show the rioters.

Hopefully many of these sentiences passed in the heat of the moment will be reduced on appeal.

Being human has caused no end of trouble. It causes people to fail to follow the theories of economists resulting in unexpected economic downturns and inequity. Clearly people need to be fixed so we get the economic system working again.

It is a question that is never asked in society. In fact it is hard to even ask because the simple answer is that owners have power over the company because that is the definition of “owner”.

If we where talking about a chair, it is perfectly reasonable to say the owner should have power over it. They can sit in it, preserve it, abuse it or destroy it without restriction. Legally companies are treated the same way as chairs, however a company isn’t made up of inanimate pieces of wood. The employees are what companies are made of these days.

Ostensibly the reason owners are given control is they are risking their money and should the company fail, they will lose the money they have invested.

It is a view of risk that is centered completely around money. In reality, risk is not as simple as capitalism suggests.

Myth of Capitalism #1: Employees can easily move from job to job

Capitalism is premised on the idea that people have a free choice in what they buy and sell. Most people have quite a bit of flexibility in what and where they buy (although even that may be illusionary) but they have very little flexibility in what they sell. The vast majority only have their labour which they sell to a single customer over a period of years. People usually have to find a job near where they live and their skills are usually specialized for certain industries. These limitation reduce the size of the market for their labour to only a few companies. People who live in towns often only have one company they could work for. This means looking for a new job is a very risky proposition even during periods of economic growth.

This makes it very difficult for an employee to leave due to poor working conditions or pay, while it us usually much easier for an employer to replace an employee. This is why we need unions to even out the bargaining power between the employers and employees.

It also means that employees have a large stake in the success of the company, because if it should fail or downsize they risk having to search for another job and all the uncertainty that entails.

Myth of Capitalism #2: owners make the decisions because they are taking the most risk

For publicly traded companies most owners only have a fraction of their assets in the company, so if one fail it is only a minor inconvenience. Even for small and medium sized private companies that are owned by one or a few people, in most cases, the owners have set aside enough of their profits to comfortably ride out the failure of their company.

Lets take a hypothetical example. A successful medium sized company whose founder and president has $5 million of his $8 million of her assets tied up in the company. She makes an ill conceived decision that causes the company to fail. She still has $3 million in other assets so she chooses to retire early and live comfortably for the rest of her life in the Caribbean.

At this same company there was an employee who advised the president against making the bad decision, but respected her authority to make the decision as the owner. When the company failed he lost his job through no fault of his own. He lost no assets but he lost income until he found a replacement job but could continue to lose income if the replacement job pays less.

The employee gets EI, but still loses $25,000 in income after being unemployed for a year and takes then a job that pays him $10,000 less for the next 10 years for a total of $125,000.

By the measures of capitalism the owner who lost $5 million was hit much harder then an employee who only lost $125,000, but everyone knows that in reality it employee suffered much more then the owner. If by almost any measure the employee is taking a greater risk then the owner, why is it that the owner gets to make all the decisions?

In businesses today the owners only do a faction of the work and have a fraction of the knowledge. In large public companies the most owners have no knowledge at all. They are granted complete control because they came up with an idea long ago or bought the right of control from someone else.

I don’t begrudge the owners getting paid with profits. In the end there isn’t much difference between getting paid a regular salary or an irregular profit. Excessive profits and executive compensation isn’t the problem. It is a symptom of the excessive power owners have. If we solve the problems of excessive power, then the problems of income inequity will solve itself.

Owners may think that they are the ones who built their companies, but in reality that they are one part of a collaboration between the employees, customers and suppliers. In the end they are mostly just facilitators.