Sunday, August 28, 2011

(No.167) Jack Layton & Christie Blatchford

Jack Layton, the head of Canada's federal New Democratic Party and the new leader of Her Majesty's loyal opposition, died on Aug. 21. The news media seemed to rise up as one and decide to treat the death of this politician with deep solemnity and handle the surrounding events as, to quote from one letter to the editor I read, "the Dianaification" of the late Mr. Layton.

A significant exception to the major media's worshipful posture came in the National Post (Aug 23). Longtime and fearless columnist Christie Blatchford dared to suggest "how fitting that his death should have been turned into such a thoroughly public spectacle." She noted that Prime Minister Harper, who had offered Layton's family a state funeral for him (which was accepted), "was one of the very few voices of reason to be found on the air waves" after the death had been announced.

Layton's last "letter to Canadians" released by his party and family shortly after his death was described by Blatchford as "full of sophistry" and "vainglorious". It is "remarkable," she wrote," because it shows what a canny, relentless, thoroughly ambitious fellow Mr. Layton was."

"The public over-the-top nature of such events," she concluded referring to the state funeral and surrounding events, "make it difficult to separate the mourning wheat from the mourning chaff."

Having read these and other comments in her column I was not surprised by the reaction. The National Post reported (Aug 27) that it had received "hundreds of angry notes ... A few dozen went beyond discussing the ideas raised in the column and attacked Ms Blatchford as a person. Some letter writers seemed to have trouble accepting that a woman could write such an analytical column at a time when many were consumed by emotions. Their comments cannot be reproduced..." Many writers used "colourful expletives" while others used "nothing but swear words".

Apparently some of Mr. Layton's political admirers and social democratic supporters did not feel it necessary to include within their political liberalism Ms Blatchford's right to public expression. Indeed, in her own column (Aug 27), she indicates she had failed "to understand that in Canada, a democratic country with constitutional guarantees of free speech and expression there are unwritten but well-defined lines around what is acceptable and what is not."

What brought her to this conclusion? She relates that in the days following the publication of her column she has been "deluged [with] ghastly email" containing attacks on her as a woman, on her "physical shortcomings", "obscenities" plus "countless vague threats".

Having just watched the CBC's three hours of coverage of Layton's state funeral procession and service I am wondering about the extent to which as many people would now disagree with Blatchford's political analysis.

In the service in front of 2500 (all but 600 by invitation) at Roy Thomson Hall in Toronto NDP lion Stephen Lewis, one of the most accomplished political orators Canada has ever produced, delivered a eulogy for Jack Layton that was a very effective political speech, one that drew standing ovations. He proudly emphasized the fact, pace Blatchford's incensed respondents, that Layton's last letter to Canadians (to which Blatchford had pointed as a political act) was actually "a manifesto for social democracy".

Even the CBC's most solemn talking heads finally got around (post-service) to acknowledging that the funeral service, with the planning of which Layton had been directly involved, was "political theatre". It was also, not by accident, a memorably comprehenisve presentation of political correctness.

Fine; political theatre is a part of the political system in which all parties indulge. But in this instance there are those who should now at least consider apologizing for obscenity-laden criticisms of Christie Blatchford whose views were fair comment even if they were politically incorrect and expressed too soon after Jack Layton's passing for some.

by Alastair Rickard

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Sunday, August 21, 2011

(No.166) More about Economical Mutual Insurance Co.

In early July I wrote a column about the proposed demutualization of Economical Mutual Insurance Company of Waterloo,Ontario (founded 1873), a property and casualty insurance company with fewer than 1000 participating policyholder-owners but several hundred thousand non-par policyholders (see "Economical Mutual Insurance: sham mutuality", posted July 10, 2011 to www.RickardsRead.com).

I pointed out at some length how Economical Mutual has been operated "as a burlesque of a genuine mutual insurance company" and that the federal Minister of Finance had launched a much needed public consultation. I won't repeat here my lengthy column on the subject.

I have reason to believe that Minister of Finance Jim Flaherty and the Department of Finance have received considerable input on the subject of how the demutualization of Economical Mutual should be prescribed by Ottawa and what the rules ought to be for any future demutualization of federally regulated P & C mutual insurance companies.

RickardsRead.com has received a variety of interesting comments on the subject including copies of some submissions to Ottawa. I will present in this column just a few excerpts from several some communications received here.

A former Canadian regulator wrote to say that "your piece on Economical Mutual brought to mind ... [a] visit to [State Farm Insurance's] corporate HQ in Bloomington IL, a chain of humungous fortifications surrounded by cornfields in the tornado alley half way between Chicago and St.Louis. State Farm is enormous by any measure -- 37 on the 2011 Fortune 500 list by revenues, over $63 billion, between Microsoft and Boeing.

"Why do I mention this?" he asked. "Since it was founded in 1922 State Farm has had exactly five chairmen and CEOs (none of this split governance nonsense). These were the founder and his lawyer and their descendants, from father to son. Sounds like a family business, no? But guess what -- State Farm is a mutual company, owned by its policy owners according to their bumph, just like Economical Mutual."

An American journalist and insurance industry critic emailed that he thought the RickardsRead column was an "excellent, albeit shocking article about Economical Mutual. One thing you did not mention is the possibility that a significant number of the relatively few par policyholders are corporate insiders." I think he is correct about this in the case of Economical Mutual.

Another American with longtime executive experience in the insurance business shared his view that "there is little or no justification for a current set of policyowners (owners of the company) appropriating for themselves surplus that was developed over decades and even centuries. As is the case in dividend calculations they should receive in stock their fair share of the value they constitute. ...

He concluded that "whatever the approach, the conflict of interest in giving the entire company to the current generation is so great that contemplating such an action is, to use your good word, risible. Nevertheless, so pliable are some regulators, and so grabby are some managements, that in all too many cases the conflicts are overlooked and the current generation laughs all the way to the bank."

From a Canadian insurance agent came this comment: "You have done it again! You put the mysterious language of Canadian insurance into the vernacular. An excellent article that I trust will be taken seriously by decision makers in Ottawa. On the basis of this article alone Finance Minister Flaherty should invite you to the best restaurant in Ottawa! I'm sure he would find the price of the meal well worth his time and taxpayers' $'s. Thank you for your excellent commentary."

I will return to the subject of Economical Mutual Insurance and its demutualization in a future column.


by Alastair Rickard

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email: Alastair.Rickard@sympatico.ca

blog: www.RickardsRead.com

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Tuesday, August 16, 2011

(No.165) Americans (& others) reply to RR on "US debt crisis"

My column on the current situation in the U.S. ("Through the looking glass: the U.S. debt crisis", column No.163 posted on Aug.5, 2011 to www.RickardsRead.com) prompted some interesting responses from both Americans and Canadians. I have selected a few to share in this column.

By far the longest reply came from an American who laid out at considerable length his comments on some of the arguments I had made in my column (as well as on several I did not make). To excerpt several: he was adamant that the "US political system is not broken, nor is it a charade, nor is it better or worse than that of Canada. ... It is fair to say that the US and the Canadian political systems are cousins, but it is not fair to say that one is better or worse than the other. In simple terms there are actually more checks and balances in the US system than in the Canadian system."

He went on to argue that the US political system " is not dysfunctional ....To infer that this is any different than in Canada, or for that matter any other democracy, is to ignore the inherent principles of what a democratic process is. ... The demagoguery around the TEA Party is just a convenient way for the liberal faction (which includes most of the media) to point blame onto someone else."

He concluded that "I think it can be strongly argued that it is Obama who is looking at this "Through The Looking Glass" of the 2012 elections not the Republicans or the TEA Partiers -- remember that these TEA party candidates were elected in 2010 so they do not need to concern themselves with electioneering until 2014." [Note from the editor: in fact these so-called 'TEA Party' (Republican) House of Representative members elected in 2010 must stand for re-election in 2012 not 2014, i.e., after a 2 year term, as do all 435 members of the US House.]

Most of the responses to my column on this subject from American readers did not register disagreement. One American living in the south emailed to say that I was "on target as usual. The self-delusion in our population is breathtaking and frightening."

A correspondent from the U.S. northeast reacted to the column by declaring that "I expect nothing less than brilliance from you. With this message you have exceeded even my highest expectations."

He continued: "One thing I believe all the plastic pundits have missed thus far is that the so-called Debt Reduction Bill passed and signed last week in fact contains significant tax increases.To the extent that income, services, or reimbursements for food, medical care, housing and education are cut for our neediest citizens, if they can they will have to somehow make up for those losses -- in effect diverting whatever meager income and assets they may have to make up for their losses. A tax increase by any other name is a tax increase."

I also heard from Canadians on the subject of the US debt crisis. A Canadian travelling in Ireland emailed me "thanks for your great piece on this recent disgraceful conduct by the elected crazies in Washington. Thanks also for the non-partisan source to support what I was recently informing some Yanks about at a pub in Dublin. Talk about self-serving when it comes to tax increases."

Another Canadian, also travelling, emailed that I "spent the last week insulated from the world of news ... your blog on the self-made crisis and the dysfunctional U.S. political scene was excellent."

That's a sample of reader reaction to my "Through the looking glass" column.

by Alastair Rickard

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email: Alastair.Rickard@sympatico.ca

blog: www.RickardsRead.com

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Wednesday, August 10, 2011

(No.164) Stratford Festival & Woody Allen

I have never been a particular follower of the work of American movie director and writer Woody Allen although I have wondered about the fashion of recent years which seems to require self-regarding movie critics to delight in trashing Allen and his movies.

Now in his mid-70s Woody Allen seems to have caught his second wind as a film maker. He left New York, his longtime home and setting for his movies, and made his last four movies outside the U.S.

The Allen movie that recently signaled extra public and critical attention was the 2008 comedy-drama Vicky Cristina Barcelona. Shot in Spain (Barcelona and Oviedo) its focus is two Americans -- Vicky (played by Rebecca Hall) and Cristina (Scarlett Johannson) who spend a summer in Barcelona. Each gets mixed up with a Spanish artist played by Javier Bardem. His role is very different from his chilling depiction of the hitman in the Coen brothers' Oscar-winning No Country for Old Men, a role that also won him a best-supporting Oscar. His relationships with both Vicky and Cristina in the Allen movie are complicated by the reappearance of his mentally unstable ex-wife (Penelope Cruz, Bardem's actual spouse).

This Allen movie was better received than his more recent movies both at the box office and critically and was widely nominated for various awards. It won most of them including Best Supporting Actress for Penelope Cruz. It also seemed to set the stage and provide encouragement for the making of Allen's very successful 2011 movie Midnight In Paris, a romantic comedy made with twice the budget of Vicky Cristina Barcelona. It is still playing in some independent cinemas. There are a number of thematic similarities to Vicky Cristina Barcelona but it is, for Pat and me, an even better film. It has already become Allen's most successful movie measured by in-theatre box office -- and I can see why.

While Pat and I very much enjoyed revisiting Paris locations used in the film (the Barcelona locations were less prominent in the previous movie, for us a disappointment), the basic appeal of the film is its story and performances. As is customary with his movies Allen wrote as well as directed both.

In Midnight In Paris a successful Hollywood screen writer, tired of writing his commercial film scripts (Owen Wilson, perfect for the part) visits Paris with his irritating and shallow fiance (Rachel McAdams) and her politically right wing parents. He's trying to write a serious novel but they are dismissive of the effort. He has long been fascinated by the famous artistic figures who lived and worked in Paris of the 1920s.

He discovers quite by accident that each night at midnight he is able to enter this world starting from a certain street in Paris. The famous people he encounters and his relationship with a girlfriend of Pablo Picasso (Marion Cotillard) are the emotional heart of the film. His encounters with the past are handled in a very convincing way by Allen. His depictions of the (now) famous from the past are both clever and accurate without being overdone.

Midnight In Paris, Woody Allen's 41st film, is well done and more to the point very enjoyable -- and not just for those who like Paris or are interested in the city as it was in the legendary post-war 1920s. Much of the central city remains largely unchanged in appearance today, hence an important part of the movie's charm.

Film critics, with their overwhelmingly favourable reviews of the movie, seem (as so often happens with criticism that seeks to be fashionable) to have deliberately jogged the critical pendulum arc about Allen and his work.

Pat and I think Midnight In Paris is well worth seeing in the theatre or through rental or purchase.

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Several works by Moliere, the 17th century French actor and playwright, have come down the centuries as important art and are still performed both in French and in translation. The Misanthrope, a comedy of manners presented by the Stratford Shakespeare Festival in Stratford, Ontario this season may be the Moliere work best known to modern audiences.

The Stratford version of The Misanthrope is the 1980s translation into English verse by the American Richard Wilbur, a two time Pulitzer Prize winner. The play was still in preview when we saw it earlier this week; its formal opening is Aug.12.

The play's central character is Alceste, a French aristocrat who is "the misanthrope". He courts Celimene but is wedded firmly to what he regards as his honesty, integrity and principles and to his cynicism about the motives of people generally.

Alceste believes he must always tell his peers the truth as he sees it whether it is polite or not and regardless of the impact it has or the reaction it elicits. The play revolves around his unwavering adherence to this approach whether in love or in relationships with male friends. The play concludes with Alceste forsaking Celimene.

The elaborate costumes in this Stratford production, designed by Robin Fraser Paye, add considerably to the stage impact perhaps because they are 18th century in period rather than the play's 17th century origin.

The cast handle the dialogue very well, delivering the verse naturally and with sharpness and, as Hamlet directed, trippingly on the tongue. The performances are excellent and of a high standard.

Brian Bedford, the longtime Stratford Festival leading player, directed and performed as Lady Bracknell in the 2009 season's very pleasing version of one of our favourite comedies: Oscar Wilde's The Importance of Being Earnest. He then took it to Broadway in New York for a limited run (see "Wilde, Coward & two festivals", column No. 35 posted to RickardsRead.com on June 28,2009).

Bedford was to have performed the role of Oronte in The Misanthrope but illness forced him to the sidelines. He's been replaced by Peter Hutt who Pat and I enjoyed as Buckingham in Stratford's production of Richard III several years ago. Once again Hutt is excellent.

Ben Carlson played John Worthing in Bedford's "Earnest" production. In The Misanthrope he plays the lead role of Alceste and he is impressive. His misanthropy is convincing, reeking of bloody-mindedness and tunnel vision. Sara Topham as Celimene works hard to keep up with his performance. Juan Chioran as Alceste's friend Philinte deserves a special mention: he delivers his lines with a smoothness, clarity and energy that is a model to be emulated.

David Grindley's direction is effective and he makes excellent use of both superior pacing and the Festival Theatre's thrust stage.

Both Pat and I enjoyed this production of The Misanthrope even more than we had expected. It provides a rewarding time in the theatre.

*****

The Misanthrope is one of 12 productions in this season's Stratford Festival. The play runs through Oct.29, 2011 at the Festival Theatre, one of the 4 venues used for Stratford's productions.

Information can be obtained and tickets ordered online, by email or by telephone:

online: www.stratfordshakespearefestival.com

email: orders@stratfordshakespearefestival.com

telephone: 1-800-567-1600 and 1-519-273-1600

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by Alastair Rickard

email: Alastair.Rickard@sympatico.ca

blog: www.RickardsRead.com

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Thursday, August 4, 2011

(No.163) Through the looking-glass: the US debt crisis

For some weeks I have tuned in periodically to the cable news networks trying to hype their viewer ratings with breathless coverage of the "race" by the American government to avoid a U.S. default on its accumulated debt of $14.3 trillion if Congress refused to raise the country's debt ceiling by Aug.2. If Charles Lutwidge Dodgson (aka Lewis Carroll) was alive today and preparing to write Alice's Adventures in Wonderland, he could hardly do better than to make the setting the United States, specifically Washington D.C.

This American soap opera, this Washington political charade, this partisan farce is a reminder yet again of how hollow are the occasional arguments by a few Canadian journalists among others that the American political system is superior to the Canadian. The 'debt ceiling/budget reduction' political fight would constitute black humour if its potential implications -- including for Canada --had not been so serious.

Since last November's congressional elections the Republican Party has controlled the House of Representatives. The Tea Party element within the House is comprised of 80+ newly elected representatives in the House and they constitute the extreme right in a right wing party that no longer has room for political moderates within its ranks. The Tea Party faction has received, justifiably on several levels, the credit or blame for hamstringing the Washington process of political compromise in order to tie mandatory budget reductions to the raising of the U.S. debt ceiling without tax increases.

On the eve of the default deadline a deal of sorts was reached among Republicans, Democrats and the White House. It postpones the next fight over raising the American debt ceiling to early 2013 as President Obama had insisted, i.e., until after the next presidential election.

The first phase of the deal does virtually nothing to address the underlying U.S. fiscal problems. It involves spending reductions of only $917 billion but no tax/revenue increases, not even the closing of a single individual or corporate tax expenditure/loophole. This first round of 'savings' will actually arise only from holding (over years) the increase in discretionary spending below the rate of inflation.

The reduction is spread over 10 years and part two of the 'deal' involves yet another committee (6 Republicans and 6 Democrats to report by Nov.23 this year) to look at how the deficit can be reduced by a further $1.5 trillion and by how much but supposedly with 'triggers' for spending cuts in the likely event of no agreement. In fact the deal just signed into law on Aug. 2 by the president will, if not enlarged, add a further $12 trillion to the U.S. deficit over the next decade.

The dysfunctional American political system has borrowed its way to $14.3 trillion of debt: $6.1 trillion of it under George Bush who had inherited $trillions in surplus from President Clinton, $2.4 trillion added to date under President Obama. It has also shown itself unable to address the public realistically about the horrendous fiscal challenge the country faces, one that can only be dealt with if major tax increases are married to spending reductions.

Absent a suspension of disbelief can any sensible person in a time of fiscal crisis, whether analyst or voter, oppose removal of highly favourable tax treatment bestowed by George Bush and his congressional Republican majorities upon the wealthy, on oil companies, on hedge fund managers and numerous other elements of American society?

The logical answer may seem as plain as a pikestaff until one looks at the reality: most of the persons elected to Congress are wealthy. According to the Center for Responsive Politics, a non-partisan organization in Washington, the average wealth (2009) of all U.S. senators was more than $13.5 million while for House of Representatives members, the corresponding figure exceeded $4 million.

However the Republicans, particularly the Tea Party reps, have steadfastly opposed any tax increases while repeating as if it was holy writ that there can be no tax increases on "the job creators". This latter phrase is their euphemism for the wealthy who, the evidence shows, have not been creating the jobs their tax windfalls are supposedly designed to encourage and underwrite, much less with nearly the enthusiasm with which they contribute financial support to the Republican Party. Even the oft-repeated comment by billionaire Warren Buffet that the wealthy do not pay enough taxes has had no apparent impact on the public views of these Republicans.

A fundamental problem underlying this political dance of the deaf involves the extent of American popular understanding -- or rather its absence -- of U.S. economic and historical reality and the refusal of most politicians, including the current American president and his predecessor, to address it publicly in a manner at once realistic, frank and forceful.

The historical and cultural factors accounting for the average American's view of taxes are a significant reason helping to generate uninformed and illogical views on the problem. American mainstream media, especially the cable news networks, have done little to confront Americans with reality, with the facts. It was the late American senator from New York Daniel Patrick Moynihan who said that while we are all entitled to our opinions, we are not entitled to our own facts, an aphorism with particular relevance to Tea Party members.

Consider for example:

-- In 2011 43 cents of every dollar spent by the federal government will be borrowed, 4 times the rate in 1980. Indeed, between 2007 and 2011 alone the rate has increased by 38 cents per dollar.

-- While most Americans seem to believe they are highly taxed, the opposite is true. They pay the lowest taxes in the developed world, and actually lower than they paid in 1965: 24% of GDP (2009) while the average among OECD countries is 34.8% of GDP (2008).

-- While most Americans are opposed to any reductions in their entitlement (social benefit) programs like Social Security, Medicare and Medicaid a majority refuse to contemplate levels of taxation sufficient to pay for them either at their current or steadily increasing (and under-funded) costs. To take just one example: increased revenue from elimination of the deduction of home mortgage interest which accounted for $500 billion in deductions last year.

-- A majority of Americans and their elected representatives apparently still subscribe to the propaganda put out by the military-industrial complex about which President Eisenhower warned the country on his leaving office. U.S. defense receives an annual budget of approximately one quarter of the federal government's $3.7 trillion annual budget, higher than the military spending of the next largest 20 countries combined. This bloated and unnecessary level of post-Cold War military spending is an obvious and major source of potential budget reductions by the government but still garners major political support.

-- How much will this just concluded 'debt ceiling' deal reduce U.S. defense spending? Like the overall deal itself, projected reductions in defense spending are a triumph of political slight of hand producing, spread over 10 years, a total reduction in the defense budget of $330 billion. Privately Pentagon sources, who had been anticipating a spending decrease, already predict this reduction will amount only to decreases in the rate of projected increases in defense spending.

-- Many Americans appear to swallow whole the propaganda from Republicans and various allied special interests that health care reform could not possibly have been based on a 'socialistic single payor' system like Canada's (even though the American public seem largely unaware that Medicare is a form of single payor system). President Obama's reformed and extended health care system had to settle for continuing to involve the insurance companies as core participants in the system. This ensures that in future, as now, unnecessarily high administrative and other costs and therefore the proportion of U.S. GDP devoted to health care will continue to be half again or more higher than Canada's, i.e., health care reform without the necessary concomitant savings.

This latest political deal to raise the U.S. debt ceiling illustrates the considerable success to date of the Tea Party as a movement and ultimately an elected faction in the House. Its success lies above all in its demands for solving the U.S. government debt challenge with no tax increases despite the Tea Party residing in an intellectual cloud-cuckoo-land.

The Tea Partiers as well as most elected Republicans seem sincerely to believe what cannot be: the elimination of a vast and growing U.S. federal government debt only through budget reductions and without substantial increases in tax revenue. The ridiculously elongated campaign run up to American presidential elections has already been in full swing for some time in this election cycle. Therefore it seems certain that Americans (and the world) must wait until after the Nov.2012 presidential and congressional elections to find out if there is to be any realization of the increasingly forlorn hope that measures to avoid a fiscal disaster will soon be put in place by the U.S.

Had Lewis Carroll been an economist and Through the Looking-Glass a textbook, could it have had a title better suited to this latest episode?


by Alastair Rickard

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email: Alastair.Rickard@sympatico.ca

blog: www.RickardsRead.com

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