Canada-US trade, oil prices, and the minimum wage

Two things that seem to have been dropped from the conversation about how Canada's economy will fare as it tries to disentangle itself from the US.

First of all, I don't think it will disentangle itself. Geography is powerful, and our supply lines and habitation patterns are oriented toward trade with the US. Changing those things just to enable the same level of output as what we already had before does not seem like the "investment" we're told is forthcoming from the next federal budget (see: green transformation for another thing that did not make sense for the same reason, absent artificial taxes on the "non-green").

So, PM Mark Carney is doing the right thing in the way he is handling the US trade negotiations - preserve what we can, and reach out to other countries to backfill some of the trade losses where possible as a mitigation strategy (but not a trade replacement strategy).

But, what's not being talked about what should be, at least in the places I am looking?

1. Oil prices. They have dropped significantly in the past year, yet rather than talking about how we can put cheap energy to use to increase our value-add (which is what the US, EU, and Russia see when they see cheap energy) we seem to be focused on investing in how we can ship it offshore. Energy prices are a moving target, so you need to have a long-term vision, but it's been an ongoing issue in Canada that we are far more oriented toward shipping commodities offshore than we are with turning those commodities into things that are more valuable - adding value and economic capacity - and using plentiful energy as an accelerator in the endeavour.
   
   
2. Minimum wage. The EU and the US have low-wage districts that provide them with flexibility. In the EU it is Eastern Europe; in the US it is the southern states. Canada has no such districts anymore - all provincial minimum wages are in a narrow band of agreement - which essentially means it's illegal to hire people in Canada if the business you're running is labour-intensive and can't support the minimum wage as a result. The EU and US have the option to grow the economy by having lower-value work done domestically in those places where it's allowed by the minimum wage. There used to be regular discussion about minimum wage when it was poised to increase but that seems to have gone away, despite being important.

I'm interested to know how much #2 plays a part in the difficulty that so many Canadian students and citizens are having finding entry level jobs, tied to the concern that temporary workers and international students seem to have taken so many of those jobs. Perhaps the minimum wage is so high that unconventional deals (illegal wages, kickbacks, pay-to-work, etc) are in play in those positions because the business requires lower wages to persist. Just speculation, of course, but it's based on real hearsay.

COVID-19: federal election, and low-interest / high-inflation

COVID-19 messaging and the federal election

The upcoming federal election timing seems to be based on the idea that lockdowns will be over, borders will be reopened, and citizens will be vaccinated.

We're then just waiting to give the government that made this possible a majority mandate so that they can lead us into the genuinely and truly unknown. Really: I don't know, and nor does anyone else.

So, that is the strategy, but they'd better get going on a parallel strategy to bring people onside with the idea that rising case counts are OK in a world where people who wanted to be vaccinated have had the opportunity.

First: the Federal government doesn't control lockdowns to a large extent. That's up to the provinces and PHUs.

In Ontario, we have no date for full reopening, and further reopening is conditional on vaccination targets that may never be met. There is no visible plan beyond the current stage of partial reopening.

The message pushed by the media continues to be that case counts are the primary concern.

Since the vaccine doesn't prevent infection, it's reasonable to expect that case counts will start rising again in September and October like they did last year. However, you'd expect the cases to be mostly non-serious for the vaccinated. It seems clear that this virus is not going away, unless it naturally weakens and goes away on its own.

We haven't yet brought people onside with the idea that high case counts are OK as long as other metrics are under control. To be fair, other countries are struggling to do this as well, but I expect the UK to arrive at a proposal. They have gone full steam ahead on the reopening as of mid-July, removing most if not all restrictions, and are seeing major case count increases but low death rates. They have been about 2 months ahead of us on reopening.

For our messaging, I'd propose focusing entirely on the actual hospitalization and death risk to under-12s and the vaccinated. Everyone who wants both vaccine doses will have had the opportunity very soon, so presumably the unvaccinated are happy to take the risk, and we'll have the healthcare resources to handle them.

This will need to become like the flu, where plenty of people get an uncomfortable case periodically; some people get hospitalized; some people die; but largely it does not affect most people beyond an uncomfortable few days of symptoms.

So, unless they the Federal government gets going on working that messaging through the system, the narrative come Election Day may be "well, they opened the borders to US travellers in August; and then they opened the borders to foreign travellers in September; and look at our case counts! We can't reopen and he wants an election?!". Other countries have had elections during the pandemic, but this one is not mandatory and as a feature of our minority government would need to be instigated.

Low-interest / high-inflation

At some point, I have a feeling that it's going to become obvious (rather than be revealed) that this low-interest / high-inflation world we are growing into is not transitory, but is a new normal to be managed by a stronger state.

I can't say I'm 100% confident about this, but how can anyone be at this point? I just don't think it's a sure thing that "high inflation means we will raise interest rates to bring inflation back on target". That was just what we did yesterday.

Part of the "great reset" narrative is about moving from asset ownership to asset rental, and low interest / high inflation puts assets out of reach for many while providing an opportunity via wage inflation to rent more of what you would otherwise have owned.

Another reason high inflation is wanted is to inflate away the piles of debt that have accumulated during COVID-19. Not only does it inflate away the debt, but it also increases taxes through the back door, because higher receipts and/or higher wages both lead to higher GDP and higher taxes, even if the tax rates stay the same.

It also transfers wealth from savers to debtors. Savers get lower returns on their capital and debtors get higher prices on assets purchased with cheap debt.

The notion that monetary policy is a science where you have rules that you apply consistently to get a result is not true. Monetary policy is bent toward what society needs from the monetary system at any given time. We need something new because the old tools aren't working anymore.

We haven't done inflation targeting forever, so it's perfectly reasonable that we'd change course if it's not doing what we'd want anymore. It will screw up people who are rigidly attached to the old system, however, and anyone that made assumptions based on it (i.e. retirees). I assume Millennials will be fine to let retirees (Boomers) sweat a little bit.

I think many people could have seen this coming. It has been decades in the making. We're just now getting confirmation of what many suspected was the case - that is, that governments and people are far too indebted for significant interest rate hikes to be a reasonable response to excess inflation.

The part that's missing from the picture is the part where governments have to control the flow of capital in other ways. Less "invisible hand" and more "nasty government hand". For example, the stress test on mortgages, which makes you qualify at a higher rate than the market demands in order to borrow to buy a house. Essentially, this is a government-influenced qualification that is higher than the market rate and applies only to houses. This type of thinking would be perfectly in line with the general economic shift away from "one size fits all" systems and toward crafting solutions for specific purposes and use cases.

I didn't say anything about yield curve control, which is presumably a necessary part of this if it is in fact a thing. I don't want to think about that yet.

Apple News and where it fits in my life

As part of Apple's iOS 12.2 release, Apple News was finally made available on Apple phones and tablets in Canada. Before now, it had been available in other countries but not in Canada. This availability coincided with the North American availability of their Apple News+ service.

Apple News is a curated and aggregated news app. In the abstract, it's similar to Google News but it only lives on Apple devices in the form of an app and is not available on the web.

So, what is Apple News+? As far as I can tell, it's Apple News plus these things:

• Full magazine content
• Articles designated as premium articles within Apple News
• Offline reading

Here's what I like about it:

• Clear identification of news source (every single article has a logo indicating the source before you click through to it)
• Mixing of magazine with news content. Magazines do a better job in some areas than newspapers.

Here's what I don't like:

• Locked in to Apple devices. I have a Windows PC and notebook with no intention of changing, and I can't access Apple News at all from there.
• Does not provide full access to news sources. For example, while you get premium Wall Street Journal articles in your feed you can't go back and read the whole WSJ.
• Loss of artistic layout and flow of newspapers - there's no concept of what a newspaper has deemed "front page material", or relatively more important than other content. Apple takes over this role with a uniform utilitarian approach through the app.
• Magazines have table of contents but they show the title only and are not helpful in understanding what an article is about.
• Not very searchable, and the UI for finding sources is a bit confusing (though it makes some sense once you get used to it).

Good luck finding something you read and want to revisit, or if you want to search historical perspectives on a story. That's not what this is about - it's about the here-and-now, and it's why it's more of a supplement than a replacement.

It essentially turns newspapers into time-boxed content providers. But this is similar to how many people watch TV, where channels provide content and the TV service provider presents everything on a level playing field as channels organized in a common schedule.

Imagine if you had to watch TV by going to the schedule for each network and browsing the channels offered only by that network. That's the current state of news. It's not terrible that some companies want to try a new way of doing things.

From what I can tell, though articles display is usually quite clear of clutter, news sources are still free to interject in an article with suggestions of other articles of theirs that you may find interesting, and there does seem to be some formatting control at the source level. Artistic independence is diminished but not fully lost.

I'm trying it out in trial mode at the moment. The big question is: is it worth continuing at $12/mo? A number of times, I've told myself "no", but then I've thought about how much I like using the app. You can use the Apple News app without paying, but you can't read everything in that mode and you lose the magazine integration. It's not a straightforward answer.

I think this needs to be looked at in the context of how news is going to be consumed rather than how news was consumed in the past. I have a newspaper subscription. I have a couple of news magazine subscriptions. To try and stay balanced, the newspaper I subscribe to works against my natural political bias. However, I don't like to get all of my news from one source.

I'd like to have more newspaper subscriptions, but that does get very expensive. If I wanted to add another digital newspaper subscription, for example, it'd be $20/mo. Through newspaper partnerships, I could add additional content to my existing subscription starting at $5/mo.

This adds up and it's hard to justify unless you make your living from discussing news. I have limited time in the day to spend reading news. If I had more subscriptions, I'd read less content from each one but spread my reading across multiple papers meaning the value I obtain from each is lower.

I find news increasingly difficult to read digitally because of intrusive advertising that is getting increasingly aggressive - even on the online edition of the newspaper I pay to subscribe to.

My newspaper contains a lot of syndicated content. It is also now regularly making certain online content unavailable unless I pay more. It regularly "forgets" who I am and requires me to sign in, moreso than many other sites do.

I increasingly read my content digitally because of how portable it is, especially when I am interested in many sources.

I don't like the idea of having a separate source or app for every single news source I want to read - especially not for sources that I consider secondary preferences.

So how does Apple News help with this?

• It provides access to a diverse set of high-quality sources and clearly identifies those sources so that I can assess how much I trust it.
• It lets me monitor topics rather than sources (but lets me read more from specific sources if I want to) and gives different perspectives on that topic that I can dive deeper into if I want to.
• It blends magazine content - magazines do better in some areas than newspapers.
• It presents the content beautifully whether you are reading on a phone or tablet
• It removes many or most distractions from advertising and clickbait (which also helps with battery life and data consumption).

It essentially gives me what I want in a modern, digital "newspaper" and provides a solution to all of the problems above. If I continue past the trial, I'll be sending money into the world of journalism that likely wouldn't have gone there before.

It's a great start. I hope it only gets better.

Algonquin - Western Uplands Backpacking Trail - October 2017

As mentioned in my 2016 post on the Algonquin Western Uplands backpacking trail, I had planned to complete the trail again in 2017 without suffering the same knee and foot injuries. I succeeded in this, and attribute this to:

• Pacing myself for the long haul. I over-reached on the previous trip, in some cases from frustration. Going in knowing what to expect over the long run makes a difference.
• Better, larger boots. Specifically, Scarpa Zanskar GTX in a EU size 46. This is roughly equivalent to a US size 13 and is therefore about 1 full size larger than I'd normally wear. Very good boots, and kept the water out on what was a much wetter and muddier trail than it was in 2016.
• Heel lock lacing pattern to keep my heel from slipping in the larger boots. Combined with some grease rubbed on my heel each day for anti-friction (I normally use Burt's Bees Hand Salve but for this trip used a Burt's Bees lip balm stick due to the much smaller weight/size), I avoided heel blisters for the first time on a backpacking trip.

There's not much else to add about this trip, as it was largely a repeat of the 2016 route with largely the same gear with some things left behind 35lbs of equipment, which was down to 25lb by the end (due to food and fuel consumption).

Some notes on relative difficulty:

• Day 1: Entry to Maggie Lake E: Average difficulty.
• Day 2: Maggie Lake E to Pincher Lake N: Second most challenging day. Shorter distance but more terrain variation.
• Day 3: Pincher Lake N to Brown's Lake: Longest distance but counteracted by less variable terrain. This was the only day it rained significantly and when the first picture below was taken.
• Day 4: Brown's Lake to Susan Lake: This was the hardest day and where my feet suffered the most.. The trail is narrow and slanted in many places as well as being rocky or laden with tree roots, increasing the friction between your shoes and feet.
• Day 5: Susan Lake to Exit: I had an overwhelming memory of the 5th day being easier from the previous trip, but I must have been remembering the relief offered by the final few kilometres. The early part of this stretch is as challenging as the rest of the trail.

There aren't any grand lookouts on this trail, but I've attached some pictures from along the way.

Demise of Sears Canada

In what already feels like old news in the news cycle of today, Sears Canada will eventually be no more.

Here's what I take away from the coverage so far:

• Nobody is surprised
• Online shopping is partly to blame, but so is a lack of investment on the part of Sears.
• Sears is a source of memories of bygone days. It's mostly older people that lament the passing of Sears, and they sound as if they are talking about Werther's Originals.

From my own perspective, it's been awhile since I shopped there with intent. There isn't a Sears close by, and when I did have a chance to visit one I used it for comparison shopping with The Bay (since they were frequently at opposite ends of whichever mall contained one or the other). In those cases, I usually ended up buying from The Bay because I liked their offerings more.

There was a Sears mattress and appliance store in town from which you could pick up catalogue or online orders, but it just seem to have disappeared one day.

Some general thoughts:

• Outlet malls and high-end malls that have tightly-focused, branded offerings seem to be doing well.
• Online shopping isn't the only part of online that's to blame. Direct marketing by brands is also a factor - many people no longer go to a store looking to be sold something in a particular category. They go looking for the exact thing they've already been sold online and just need a place to buy it.
• The vast number of products sold under even a single brand produces cross-brand permutations of products that are now too large for a single department store to hope to satisfy and carry.
• This makes outlet malls and high-end malls the new department stores. It also makes a lot of sense why The Bay is both present at outlet malls and has subdivided many of their stores into brand-focused departments within category-focused departments. It also makes Sears' selling off of their high-priced real estate (in high-end malls) look especially counter-productive.
• Small towns are said to be affected. But the writing must have been on the wall in small towns more than anywhere else because they are just as reachable by online shopping as are major centres. If the Sears catalogue combined with local pickup drops was of particular benefit to small towns then I don't understand why online shopping where the products are delivered to your door isn't many degrees better.

I respect the challenge that they faced. Running a large, legacy business is hard during times of change, but they did not make the same effort as The Bay to stay current. The Bay is also not doing that well financially, but they at least seem to have identified what their modern market looks like.

Like many other people, I lament the passing of Sears as it's a part of my past, but it won't affect my present very much at all.

Digital disruption and its effect on Canada and profitable business

There has been a lot of coverage of the trouble that retail in the Western world is in, and Amazon is largely on the pointy end of the wagging finger. Generally, though, it's an intervention of highly digital, Internet- and data-driven companies against more traditional companies that have a higher dependency on widely distributed physical assets.

Canadian revenue diversion to US

From a Canadian perspective, I think we should be worried about these things in relation to the replacement of things that keep funds within the Canadian economy with things that send funds down to US-based companies instead:

• Newspapers: it's understood that newspapers are suffering, and this is largely due to a collapse in readership and therefore print advertising. Readership is generally older and naturally in decline, and this is not the demographic that many marketers want to target.

• Advertising: what's not so apparent is that much of this Canadian-made print advertising is largely being replaced by US-based digital companies such as Google and Facebook, which despite all appearances are really advertising companies. Google makes money from intercepting searches for things that you are looking for an steering you toward companies that pay to feature prominently in the search results, and again from anonymized data that can be used to sell things to your market/demographic. Facebook can target advertising to you directly based on the massive amount of detail it knows about you from the interactions you have on its platform, and every "like" advertises a product between friends, which is a far more trusted relationship than is the relationship you have with an anonymous corporation.

• Streaming: the collapse of Canadian-operated retailers like HMV and video rental outlets is largely being replaced by US-based streaming services like Netflix, iTunes, Amazon/Google services, or other foreign companies like Spotify. Worse, few of these services seem to collect Canadian sales tax.

It all seems like a significant diversion of revenue and value-added employment outside of the country, and Canada was already over-weighted on non-value-added commodities.

Unprofitable companies killing off profitable companies

It used to be that disruptive companies would enter an existing market, change the way that things were done, and become massively profitable as a result. And this has been the case with companies like Google, Facebook, and Apple. Apple's case is especially interesting, as they are the only smartphone manufacturer making windfalls despite having less than 20% of the market share.

However, what about companies like Amazon and Uber? As far as I can tell, these companies have largely been operating at a loss and threatening or killing off traditional retail and taxi companies and the jobs they sustained in the process.

In international trade, this is frowned upon and is known as "dumping". From Investopedia:

Dumping, in reference to international trade, is the export by a country or company of a product at a price that is lower in the foreign market than the price charged in the domestic market. As dumping usually involves substantial export volumes of the product, it often has the effect of endangering the financial viability of manufacturers or producers of the product in the importing nation.

But I'm not clear why this is desirable domestically. Sure, it's private money and I assume these investors can do what they want with it. But where is the wisdom in not intervening in cases where sustainable businesses are being killed off in favour of businesses that despite considerable disruption and employment shrinkage haven't proven that they can be profitable? With the way that tech funding works, the goal will be to blow out the incumbents and take as much of the market as possible so that a strong position is demonstrated and the early investors can cash out their winnings in an IPO.

The shoe that hasn't dropped yet is the one that drops when the incumbents are largely gone or incapacitated and an effective monopoly is in place for the new digital companies. That's the missing piece in the story of how these new companies become profitable and we don't know what that will look like.

What happens next is anyone's guess, but perhaps it'll be come to known as Gig Economy 2.0 - living in a rented car that you also use to operate your ride-sharing business, with the car's rightful owner working an entirely separate job to pay off the 84-month loan he took out to buy the car. The "gig economy" meets "financial engineering".

Glad for a lack of "meaningful" Canada Pension Plan reform

Although, like most people, I don't understand why we need another federal election in Canada, I am glad that the Minister of Finance didn't give in to certain demands from the NDP -- their only realistic source of saving grace in this cycle -- such as an overly-unrealistic increase in Canada Pension Plan benefits.

I'm not opposed to restructuring the Canada Pension Plan, but I am opposed to increasing payouts from the plan in a way that pays out to a person that isn't commensurate with the amount that that person paid in.

In other words, if they want to say that you have to contribute an extra X dollars to the plan every year and that, as a result, you'll receive Y more dollars in benefit when you are retired, then I am OK with that. But I'm not OK with saying that you've paid in X dollars all your life and were told you'd be getting Y dollars when you retire, but now that you're close to retirement and haven't put enough money aside, we're going to give you more than Y dollars without requiring you to make any significant additional contribution to the CPP, seeing as you don't have many working years left. The missing part of this story, of course, is that people like me would be footing the bill for it.

As I understand it, if you're an immigrant to this country who arrives in mid-life, you are allowed to participate in the pension plan to the extent that you've contributed. You wouldn't, for example, receive the same pension upon retirement as someone who had been contributing for their entire working life.

Why should it be any different for a non-immigrant?

Ann Coulter, in her own way, holds a mirror up to Canada

Ann Coulter has apparently finished her short Canadian tour. I'm not surprised that people complained, but I'm surprised at some of the other things about our country that it brought to the surface.

The speech at the University of Western Ontario, for example -- a speech that looks to have been a very open and unguarded session, where any question was permissible. It apparently costs $10,000 to have her speak. The cost itself has been raised as an issue. But, is that expensive? Al Gore charges $250,000, you can't ask him any questions not screened in advance, and he is ostensibly doing it in order to help save the planet.

The most interesting part to me is that, if you watch the often-quoted "take a camel" segment from the Western speech, it is much longer in its unedited version and did not simply lead from "what mode of transportation should I use?" to "take a camel!". Although the student was obviously trying to provoke a response (and did not even seem to be asking her own question -- she seemed to be reading it from a cell phone, which I assume was because the one who wanted to ask the question didn't look "racial enough"), Coulter tried to reply with some background to the past comment she was being asked about. The students -- university students, remember -- would have none of it. They didn't want to hear an answer. They wanted to be audience members of "The View" and turn every single sentence into a referendum on the truth, voted on by the volume and voracity of the heckling. These are Canadian university students? Really? I had a different image in my head of what a student was meant to be.

This is the edited version that first came out:


Here is the full clip:


But where did the "flying carpet" comment originally come from? It has obviously been selected from her repertoire because it sounds so offensive. It resurrects a stereotype (that is, if you believe that some Arabs did once fly around on magic carpets and that it was erroneously applied to the entire population) that almost everyone seems to have heard of. But it originally came as a flippant response to a tendentious question asked of her some years ago in response to a broader point she made: in response to some Muslims imams threatening to boycott a particular airliner, she suggested that airline security in general would be much easier to accomplish if Muslims as a whole decided to boycott air travel. She didn't say Muslims should not fly. She said that it might be a great marketing bullet to say that your airline had been the victim of more complaints by Muslim flyers than had some other airline -- implying that they had been doing far more in the interest of airline safety than other airliners. In that earlier interview, she was asked about what form of travel Muslims should take instead of an airplane and she responded that they should take "flying carpets". The question was obviously designed to provoke a reactionary response, and was not even related to her point -- she did not say that Muslims should not be allowed to fly, but was instead arguing in favour of security profiling based on an identifiable group.

So, who is the stupid one here? Ann Coulter? Or the interviewer who pushed for a response from her to a question that was a deliberate misinterpretation of what she'd said in her earlier interview? Or the university students who took that deliberate misinterpretation and pushed for a further response (to which she got her "take a camel!") that just amplified the error of the original interviewer even more?

Remember that, when doing research, university students are meant to go to primary sources and investigate the truth of things from that point of reference. Deliberate misinterpretation of a source is not very academic, but having spent a number of years at a Canadian university it does not surprise me that Canadian university students would behave like this.

Ann Coulter's style is one of rhetoric. Rhetoric is an art form designed to make people think when their eyes would otherwise glaze during a detailed discussion that would in all likelihood end up going nowhere. It is not meant to be objective, but to be a counterpoint to other rhetoric. In the middle is where you do your own work by thinking about what has been said. I suspect most Democrats would have no problem with registered Democrat James Howard Kunstler's rhetoric, which can often be just as offensive with his talk of human "land whales" and the "NASCAR moron culture" of the southern US states. He often speaks on college campuses. I doubt he would be threatened or banned, except by anti-Semites (he is Jewish) and extremist Muslims. These groups seem to have problems with all sorts.

Ann Coulter is obviously divisive (if you look at any of her books on Amazon, most of them have a three-star rating, nearly evenly split between 5-star and 1-star ratings, with not much in the middle as you see for most products with a 3-star-or-better review). But she is nowhere near as simplistic or anti-intellectual as many of the Canadian media outlets would have you believe. Anyone who has read some of her more serious writing or listened to her talk when given room to do so could see that she's not dumb, an idiot, or a redneck. She is, though, perhaps a bit too quick to dismiss loose ends. You won't get someone who sees all sides of an issue, but you will get someone who has ideas about how to act. Few would actually act on what she says -- she's not in a role where anyone would -- but I found that listening to some of what she said cut through about 10 years of calcification of some of the pathways of my brain facilitated by Canadian media. Her style, generally, is to take an argument that has been made by someone else and apply it to another circumstance to demonstrate how questionable its logic is. That is not a useless contribution. It is thought-provoking and forces you to defend -- and maybe you won't be able to. That's when you might get angry, I suppose.

I think it reflects badly on these outlets that shut her down because it is essentially them and those who think like them who have turned her into the person they want her to be -- they ignore the gist of what she says and pore through her words for something quote-worthy that they think scores their point. This is not a healthy thing for serious news outlets to be doing.

I wonder if any of her loudest critics have ever read her books. I really doubt it. She is not extreme. She is one-sided and sometimes flippant, and sometimes what she says doesn't hit the mark and fails miserably, but she is often intelligent. Nobody can get it right all the time.

The best appearance she made while in Canada was on the Michael Coren Show. If you are really interested in hearing her speak and being given time to do it, you can see it here.