The best job-creation strategy: Getting rid of corruption

“We stand by the Constitution as inherently conservative,” says the U.S. Tea Party web site. “We serve as a beacon to the masses that have lost their way, a light illuminating the path to the original intentions of our Founding Fathers.”

Now there’s something you don’t hear every day about the Canadian constitution, which hasn’t been a topic of much interest, even to political buffs, since prime minister Brian Mulroney drove the whole country nuts by talking about it nonstop 20 years ago.

Yet the constitution is a hot topic in the United States, where many on the political right see a more literal reading of the document — with a special emphasis on looking for areas where the federal government has overstepped its authority — as the way to restore optimism in a country exhausted by terrorism, war, recession and political dysfunction.

They are, in a way, both right and wrong.

Let’s start with the wrong. Constitutional fundamentalism won’t do much to restore American prosperity or hope. Neither will abolishing the Federal Reserve, reinstating the Gold Standard or eliminating anti-poverty safeguards.

Now here’s what right about it.

The U.S. constitution was designed in a world where monarchs and warlords ran roughshod over everyone else. Laws were written, enforced and tossed aside whimsically. Corruption and violence were rampant. Human rights were non-existent.

Suddenly, a new concept: a written constitution that would apply some discipline and consistency to law creation and enforcement, rein in the corruption a bit, offer some protection from anarchy and guarantee some basic rights.

In the world of the 1780s, this was a truly innovative idea.

The guarantee of somewhat fair treatment — at least compared to the abysmally low standards of the 18th century — made the United States an extremely attractive place to do business, and gave that country a tremendous economic advantage that lasted well into the 20th century.

But somewhere along the way, the U.S. stopped leading on that front.

By world standards, still abysmal after all these years, the United States still has excellent constitutional safeguards that broadly ensure basic human rights and the rule of law.

Yet, it falls short of being the cleanest place to do business in the world, or even the Americas. According to Transparency International’s 2011 Corruption Perceptions Index, Canada, Barbados, Bahamas and Chile all have less corruption.

Corruption matters. It’s not just a matter of bribes and kickbacks to get government contracts, the protection of favoured businesses from competition, or the patronage appointments. (That the Canadian Senate is still filled with partisan appointees in this day and age is deplorable.)

It’s about government actively seeking good advice, and being frank with the public about what it wants to do, why it wants to do it, and letting people know what to expect well ahead of time.

It’s what divides relatively successful northern Europe, where unemployment is still only five percent in the Netherlands and eight percent in Denmark, from southern-tier countries like Greece and Spain, where the official unemployment rates are 22 percent and 24 percent, respectively.

Spain is only the 31st least-corrupt country in the world according to Transparency International, while Greece ranks a miserable 80th — tied with Colombia, El Salvador, Morocco, Peru and Thailand.

In corrupt countries like Greece, where six-in-ten citizens supposedly bribed  public officials in 2011-12, good advice doesn’t get heard or acted upon by those at the top if it conflicts with the interests of those few who benefit handsomely from the corruption.

And it shows in the local job market. The graph below shows the relationship between a country’s reputation for not tolerating corruption and the health of its job market.

Corruption perceptions and employment/population ratio, based on entire population aged 15-64. (Click to view full-sized image)

About 60 percent of the difference between job markets can be accounted for by  a country’s level of freedom from corruption, with the cleanest countries having the most jobs to go around.

How can corruption hurt the economy, and by extension, job markets?

• In 2009, the Oxford Review of Economic Policy found that corruption “leads to pure waste and to misallocation of resources” and is “a likely source of unsustainable development”.

• “When a culture of corruption in a state raises uncertainty or the cost of doing business, capital flows to more amenable institutional environments,” noted a 2009 working paper written by researchers at  Virginia’s George Mason University. “[E]ntrepreneurs may respond to corruption by choosing ‘fly-by-night’ technologies with too little fixed capital so they can credibly threaten to disappear should bribe demands become too high.”

• “Corruption makes local bureaucracy less transparent and hence acts as a tax on foreign investors,” two researchers from Oxford University and Columbia University wrote in 2009.  [C]orruption decreases the effective protection of investor’s intangible assets and lowers the probability that disputes between foreign and domestic partners will be adjudicated fairly . . .”

In every country, the honesty and openness of government can no longer be treated as an issue not relevant to job creation and economic growth — it is at the heart of both issues.

All places, including Canada, Manitoba and Winnipeg, can always take steps to make government ever more open and honest, and benefit from the resulting job creation. Here’s how:

• Wherever possible, laws against basic forms of corruption — such as bribes, kickbacks and influence-peddling — should be toughened up and more rigorously enforced.

• The media and the public should continue criticizing political patronage, such as the appointment of partisans to the Senate and the boards of Crown corporations as thinly disguised rewards for services rendered.

• Attempts to toy around with the integrity of the electoral system through “robocalls” and fiddling with constituency boundaries should also be severely dealt with.

• More governments should follow in the path of Australia’s southeastern Victoria state, which publishes the contracts it awards online for anyone to read.

• Freedom of Information laws should be brought up to high Scandinavian standards — and it should not cost $1.9 million to get information. Federal and provincial Transparency Commissioners should be established to nag governments on issues like this.

• Political life should be organized less on hierarchical lines, given a 2005 study’s finding that “the level of political corruption is higher in hierarchical societies” (and almost certainly in hierarchical organizations as well). Thus, governmental pleas for greater public deference — “just trust us” — should be greeted with scepticism. So too should claims by public figures that they speak on behalf of an entire group of people, which is another common plea for deference to those at the top of a hierarchy.

• Protectionist policies should be eliminated as much as possible, given that a 2009 study found “strong evidence suggesting that corruption is significantly higher in countries with activist trade and industrial policies” on the grounds that these give government officials greater discretionary power.

• Major legislation and regulatory changes should be subject to public hearings, with presentations for and against the legislation being posted online for public viewing.  This lends itself to good decision making and allows important information to be brought forward by those without the funds to run a public awareness campaign.

Cabinet ministers have long had lavish tastes

Waiter! Bring me an orange juice!

Many Canadians try to pinch pennies when they travel abroad, looking for bargains on airfare and accommodations. Not federal International Cooperation minister Bev Oda, who found herself in trouble this week for having a grand old time at taxpayers’ expense during a trip to London, England last year.

It was bad enough that the Minister decided that the five-star Grange St. Paul’s Hotel wasn’t up to her standards and canceled her $287 Cdn./night reservation — quite reasonable for a London five-star hotel — in favour of a $665/night reservation at The Savoy, a favourite with visiting heads of state, and stuck the taxpayer with the Grange’s $287 cancellation penalty.

But did she really need a $16 glass of orange juice?

As outrageous as these prices might be, Oda wasn’t the first minister to get busted living the high life before her ministerial years come to an end and the perks and privileges disappear.

Those with long memories might recall Suzanne Blais-Grenier’s love of travel. Now largely a forgotten figure, the then-Environment Minister was blasted in 1985-86 for spending $65,000 ($127,000 in 2012 dollars) on two trips to Europe that seemed to involve more fun than government business.

She was soon demoted by then prime minister Brian Mulroney, and later kicked out of the Progressive Conservative party.

It’s not just Canada that has had problems with ministers who didn’t always appreciate value-for-money.

Ireland’s former Arts, Sports and Tourism minister John O’Donoghue caused howls of outrage in 2009 when it was discovered that he spent over $600 Cdn. on a three-minute limousine ride between two terminals at London’s Heathrow Airport.

An airport shuttle bus could have taken him between terminals at no charge.

The same year, Irish environment minister John Gormley made a point of taking the ferry across to the U.K to reduce his carbon footprint — where he was promptly met by a chauffeured car that had been driven five hours from London to whisk him away. In total, the car and chauffeur cost taxpayers about $3,500 Cdn.

It was the embassy’s fault, he said.

On the continent, France has had numerous problems with ministers’ free-spending ways. Herve Gaymard, the finance minister, handed in his resignation in 2005 after it was discovered that his luxurious 6,500 sq. ft. (!) home near the Champs-Elysee — shared by his wife and eight children — was costing French taxpayers the equivalent of $23,000 Cdn. every month.

To make matters worse, he was simultaneously renting out his other apartment for $3,700 Cdn. per month.

“I have always lived humbly. I don’t have money,” he told a reporter in his own defence.

Five years later, junior minister Christian Blanc resigned after getting caught passing his $18,000 Cdn. bill for Cuban cigars off to the taxpayer.

Though French president Nicolas Sarkozy vowed a crackdown on such lavish spending, he himself was roundly criticized one year later after his son Pierre Sarkozy — better known in rap circles as DJ Mosey – called home from Ukraine complaining of an upset stomach.

The president promptly dispatched a government jet to Ukraine to airlift his son to a French hospital, covering 30 percent of the bill himself and leaving taxpayers on the hook for the balance.

As comical or outrageous as these abuses are, one can only imagine how much worse things would be without Freedom of Information laws.

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On the subject of travel, if you ever wanted to visit Europe at a reasonable price, this is the year to do it.  While gateway cities like London, Paris and Amsterdam will always be expensive, high-quality accommodations in Europe’s secondary cities are so ridiculously cheap right now due to the recession that it can cost about as much to travel to Europe as it would to travel to a major U.S. city if you can catch a seat sale. Consider the following, based on a July 7-14 stay:

Berlin — Park Plaza Prenzlauer Berg (4*): $55 Cdn./night

Copenhagen — First Hotel Copenhagen (4*): $105 Cdn./night

Lisbon — Hotel Lutecia (4*): $63 Cdn./night

Vienna — Rainers Hotel Vienna (4*): $65 Cdn./night

Get the deals while they last.

Winnipeg Transit needs to be faster than walking if it wants to be competitive

How to get from Grant and Stafford to St. Vital Mall in a hurry on a Sunday afternoon (From Navigo; © Winnipeg Transit)

A mile is a long way in Winnipeg.

A mile separates the troubled Spence-Langside neighbourhood north of the Assiniboine from the swanky palatial homes that line Kingsway and Ruskin Row on the Assiniboine’s south bank. A mile separates entire social networks on opposite sides of high school catchment boundaries, which can make a difference in a city where high school cliques — and rivalries — survive well into middle age.

Despite the recent arrival of the new rapid transit corridor in Winnipeg, a mile is even still a long way to go by bus.

Take the following table as an example. It shows 12 random locations in Winnipeg within roughly a three-mile straight-line distance from Portage and Main. It also shows how long it would take to get to a location about one mile away as the crow flies at a random daytime departure time on either a Saturday or a Sunday.

Note that in six of the 12 cases, it would be quicker to walk than to take the bus. In four more cases, taking the bus saves less than five minutes compared to walking. (A 25-minute walk is in fact good exercise, but a bit difficult with groceries on a cold, windy day.)

FROM	TO	READY-TO-LEAVE TIME	WALK TIME	TRANSIT TIME	BUS CONVENIENCE SCORE*
Kavanaugh at Dufresne	St. Boniface Hospital	2:01 p.m. Sunday	28 mins.	18 mins.	10
Daly at Beresford	Corydon at Hugo (dining, retail)	8:12 a.m. Saturday	35 mins.	27 mins.	8
Grant at Heath	Corydon at Wentworth (light retail)	3:21 p.m. Saturday	26 mins.	22 mins.	4
Admiral at Fife	McPhillips at Jefferson (supermarket)	1:58 p.m. Sunday	24 mins.	23 mins.	1
St. Matthews at Minto	Polo Park	3:57 p.m. Sunday	22 mins.	21 mins.	1
Young at Balmoral	Osborne Station	10:15 a.m. Sunday	21 mins.	20 mins.	1
Denson at Riddle	St.  James at Sargent (big-box retail)	10:09 a.m. Saturday	25 mins.	27 mins.	-2
Stapleton at Talbot	EK Pool	2:57 p.m. Sunday	29 mins.	32 mins.	-3
Brazier at Leighton	Gateway at McLeod (supermarket)	12:10 p.m. Saturday	27 mins.	34 mins.	-7
Cabana at Des Meurons	The Forks Market	10:27 a.m. Saturday	25 mins.	35 mins.	-10
Levis at Poplar	Munroe at London (retail)	4:48 p.m. Saturday	28 mins.	43 mins.	-15
Brunet at Drake	Autumnwood at Cottonwood (school, church, light retail)	1:31 p.m. Sunday	25 mins.	46 mins.	-21
* – Based on walk time minus transit time

Another factor which might discourage Winnipeggers from using the city’s transit system is that the system is not always intuitive to navigate.

Take the trip from Talbot and Stapleton to the Elmwood-Kildonans Pool on Concordia Ave. as an example. Winnipeg Transit’s Navigo trip planner shows five possible scenarios between 3:04 p.m. and 3:28 p.m. for the one-mile trip.

The five scenarios involve five different bus routes — the 43, 44, 45, 85 and 90 — leaving from three different bus stops. The most direct route is on the 90 – Concordia bus, which runs at inconvenient 75-minute intervals on Sundays. The most convoluted routing, on routes 45 and 85, require the passenger to literally travel north, south, east and west en route to the destination.

Now try figuring out the easiest way between the two points without Internet access. Much easier — and faster — to just keep walking north to Concordia Avenue.

When it comes to shopping and recreation, many Winnipeggers want to be able to get to locations within their own general part of town. Yet Winnipeg Transit seems to lack sensitivity to neighbourhood needs, with meandering bus routes that connect Corydon Avenue to faraway Garden City Mall more than 20 times per day, but not to the much closer Grant Park Mall; and South Tuxedo to South Osborne every 27 minutes on a weekday afternoon.

To be competitive with the car and even merely walking from one place to another, Winnipeg Transit needs more than just rapid transit. It needs a route system that is easy to navigate — straight lines along major thoroughfares, hub-to-hub nonstop routes, and even circle routes connecting various landmarks in a given area are good, meandering lines are bad — and it needs frequent service so that a missed connection doesn’t mean a wait of half an hour or more.

Modern governments need to explain what they’re doing, and why

A group of unusually young-looking anti-pension-reform protesters in France, Oct. 2010. (Click for source)

“You lied to us,” 63-year-old Solange Denis scolded Prime Minister Brian Mulroney outside the Parliament Buildings in Ottawa one day in June, 1985.

“You made promises that you wouldn’t touch anything. I was made to vote for you, and then it’s goodbye Charlie Brown,” she continued.

A TV network’s recording of the feisty near-senior putting the prime minister in his place made for electrifying television, and turned Denis into a temporary celebrity.

In fact, Denis herself had likely never voted Conservative at all, given that she had been an active Liberal Party volunteer in the Eighties.

“I have always supported the Liberals,” she publicly announced a decade after she confronted Mulroney.

But the point had been made.

The issue then: Finance Minister Michael Wilson’s plan to scrap a guarantee that the federal government’s Old Age Security (OAS) payments would keep up with inflation. Days after the Mulroney-Denis confrontation made the news, the government hastily retreated.

Conventional wisdom has it that governments tinker with pensions at their peril. Thus, when Prime Minister Stephen Harper announced this week that still-unspecified changes are coming to federal pension programs — thought to include a rise in the minimum eligibility age from 65 to 67 years — it brought back memories of the Mulroney government’s u-turn more than a quarter-century earlier.

Harper need not fear a confrontation with Solange Denis, who died in 2004 at age 81. In these more security-conscious times, it’s unlikely that the prime minister even shakes hands as freely with tourists, as Mulroney was doing when Denis began scolding him in 1985.

Some even doubt that “grey power” is as effective against Canadian governments as it is often thought to be. “Far less vocal and well organized than its U.S. counterpart, the Canadian ‘grey lobby’ has never played a truly central role in pension politics since [the mid-'80s],” academics Daniel Béland and John Myles wrote in a 2003 paper on pension reform.

Yet backlashes sometimes do work, as illustrated by the U.S. Congress’s embarrassing Jan. 20 retreat on the Stop Online Piracy Act (SOPA), 48 hours after the world’s most-used web services fought back in one of the swiftest and most successful public awareness campaigns in living memory.

It was even more remarkable that the bill’s congressional backers seemed unable to explain what they were doing, and why they were doing it.

That fueled suspicion that SOPA was not based on wide-ranging research and consultation — as all sound public policy should be — but was rather a law bought and paid for by campaign contributors.

So, how can a government avoid being SOPA’d on pension changes or any other controversial change?

The most important thing to do is to frankly explain what the government is doing, and why.

Like Canada, Italy is struggling to figure out what to do about a growing age imbalance — a bounty of older Italians and a dearth of younger Italians. In 2000, there were roughly four working-age Italians for every Italian aged 65 years or over. That ratio is expected to drop to three-to-one by 2020 and two-to-one by 2040.

That will make traditional pension benefits difficult for governments to pay for. This inspired Tito Boeri and Guido Tabellini at Milan’s Bocconi University to take a closer look at what works best when a government is trying to make pension changes.

“We find that individuals who have read newspaper articles or watched TV debates on pension reform are not better informed than the other citizens,” they wrote in a paper most recently updated in 2010.

“One interpretation . . . is that individuals read newspaper articles or watch TV programs on the issue just to confirm their [prior beliefs], more than to collect new information.”

Yet, in a 2007 experiment with 267 adults, they found that when people were directly given information about the state of the Italian pension system from a neutral source, they became more likely to support pension reform than were those who had only heard about these changes through the media.

Informing the public “cannot just be delegated to the media,” they wrote in their concluding remarks, adding that the public would be more likely to support changes if  citizens are sent credible information “explaining to citizens how much they are paying into the system, what they will be entitled to, and whether the system is currently in deficit or in surplus.”

While many people in most countries have no idea how much they have paid in to the pension system or how much of a difference a slightly earlier or later retirement makes, Boeri and Tabellini highlight one government that has dealt frankly with its population when it comes to pensions: Sweden.

In Sweden, everyone paying in to the pension system receives an “orange envelope” every year — a statement that includes basic information on the pension system, plus “a statement of past contributions and projections of the annual entitlements under three retirement ages and for two assumptions on economic growth.”

The “orange envelope” plan hasn’t worked perfectly — a 2006 World Bank report noted that even though public confidence in the new system was high, many Swedes still didn’t fully understand how the pension system worked.

Yet Sweden’s relatively smooth experience in changing over to a pension system that offers fewer pay-out guarantees, but is at least financially sustainable, stands out in contrast to the experiences of France, Britain and Belgium.

In those countries, public mistrust of their elected representatives led to serious backlashes — including rock-throwing and car-burning youths (!) in France’s case.

Trust that reform is based on a careful study of the facts and an eagerness to be frank with the public — not on ideology or an industry buy-off of legislators — is what separates Sweden’s relatively successful pension reform from other European countries’ failure in that area, and from the U.S.’s SOPA failure.

Here in Canada, the government will need all the public trust it can earn. It should not assume it will come easily in these cynical times.

U.S. Republicans could learn from former N.D. governor

Eisenhower, Ford and Reagan must be rolling in their graves at what their old party has become.

One major candidate for the 2012 Republican presidential nomination, Michele Bachmann, has said that the U.S. should seek compensation from Iraq to cover the cost of the 2003 invasion and subsequent occupation. Previously, she had also suggested that some newly hired teenagers should be paying their employers instead of the other way around.

Another candidate with significant support from the party’s libertarian wing, Ron Paul, caused more than a few chuckles and rolled eyes when he announced that ”[the U.S.] should be like 1900; we should be like 1940, 1950, 1960…” Paul is also an advocate of returning the U.S. dollar to the gold standard.

A third candidate who has become popular more recently, former restaurant CEO Herman Cain, markets his economic plan as if it were pizza, calling it the “9-9-9 Plan”. Candidate Bachmann has already tried to link this to the supposedly satanic “6-6-6″. Few, however, have noticed that “999″ is the local equivalent of North America’s “911″ emergency number in Hong Kong, the U.K., Ireland, Singapore and several other countries; nor that nein, nein, nein is German for “no, no, no”. Candidate Cain’s web site also helpfully suggests that “a dollar must always be a dollar just as an hour is always 60 minutes”. Americans are no doubt waiting with baited breath for Cain’s “2 for 1 Special”.

Amid it all, the more presentable Mitt Romney, a seemingly competent former governor and corporate executive, tries to bolster his appeal to the Republicans’ influential Christian Conservative wing, which views his Mormonism as being only slightly less distasteful than if he were to be an atheist; while Jon Huntsman, another competent former governor and diplomat, and Mormon, struggles to make an impact at all. Rick Perry, an incumbent Texas governor who at least looks presidential even if his qualifications are the subject of much debate, struggles to keep his once-promising campaign from going off the rails.

It’s strange that North Dakota senator John Hoeven, who governed Manitoba’s southern neighbour state for 10 years from 2000 to 2010, hasn’t been suggested yet as a compromise candidate, given the casting-about that the Republican Party has been doing in its search for a viable presidential candidate.

Less than a year after leaving Bismarck for Washington, D.C. and handing over the top job to now-governor Jack Dalrymple, North Dakota still looks like the land that the brutal U.S. recession somehow forgot.

In September 2011, North Dakota had the lowest unemployment rate in the U.S., at just 3.5 percent, far below the U.S. national unemployment rate of 9.1 percent.

North Dakota’s real GDP grew by 7.1 percent in 2009-2010, powered by the relatively strong mining and wholesale trade sectors.

In 2000, North Dakota ranked 21st in terms of the percentage of residents aged 25 years and over who had completed high school. In 2009, North Dakota ranked 11th — a change in standing only rivaled by Hawaii and the District of Columbia, and a sharp contrast to Texas (which dropped from 45th to 51st under Rick Perry’s watch), Utah (which dropped from 2nd to 8th between 2006 and 2009, when Jon Huntsman was governor) and Massachusetts (which drifted up and down in the upper-teens during the 2000s, which included Mitt Romney’s 2003-07 governorship.)

In 2009, North Dakota was one of the 10 safest U.S. states to live in in terms of violent crime rates — bested by Utah, but still boasting fewer than half as many violent crimes per 100,000 people than in either Texas or Massachusetts.

Perhaps even more importantly, Hoeven is a proven vote-winner, having increased his respectable 55 percent of the vote in 2000 to 71 percent in 2004, and further still to 74 percent in 2008.

He is, however, a Catholic (not necessarily an asset with the important Christian Conservative base noted above) and is considered to be fairly moderate in his views and reluctant to get dragged into hot-button social issues (definitely not an asset with the above!)

The two latter items alone are probably enough to prevent him from advancing any further in his political career than his current position in the Senate.

It’s a shame, because the U.S. deserves better than a zany congresswoman, a guy offering the hope of a better yesterday, and a Texas governor who led his state to the country’s worst high school attainment rate during his time in office, among others.

Did Carlton St. shooting prompt Air Canada to remove crews from downtown Winnipeg?

An interesting post from “Longhauler”, seemingly an Air Canada crew member, on the Airliners.net Civil Aviation discussion forum. The shooting he is likely referring to is the Sept. 19th shooting on Carlton Street, about 350 metres from the Radisson Hotel.

Air Canada recently announced that its crews would no longer be staying at the hotel for security reasons.

No this decision came from the Corporate Security department of the airline. This large department is always doing “risk assessment” everywhere Air Canada flies. Not just for aircrew safety when away from base, but also for passengers and aircraft.

 For example, a few years back, there was concern about Tel Aviv. As a result, aircraft and crew were laying over in Cyprus, then shuttling back and forth to pick up and drop off passengers. These types of risk assessments are continually done everywhere worldwide Air Canada flies.

 In the case of Winnipeg, if I understand correctly, the final straw was a murder in the parking lot of the hotel during daylight hours. Combined with continued concern from police reports, the risk was considered too high.

Thus, the decision to pull crews from downtown Winnipeg likely wasn’t driven by the availability of a better deal at the Sandman Hotel or to make some kind of point on the eve of a provincial election — just by the desire to protect the airline from lawsuits and operational problems.

Love or hate Air Canada’s crews and onboard service, you have to at least applaud their safety-first mindset, without which the airline wouldn’t have gone 28 years without a fatal accident. (The most recent fatal accident: the June 2, 1983 DC-9 fire in Cincinnati.)

* – See also Jean Leloup’s thoughtful post on Winnipeg’s pros and cons from a Calgarian’s point of view.

Can governments spend their way to a higher birth rate?

The warning was stark. “Like many other countries, Canada does not have a sustainable fiscal structure,” Parliamentary Budget Officer Kevin Page wrote in an e-mail this week. “Policy makers will need to address the aging demographic issue. We feel it should be part of the discussion leading up to the 2012 budget.”

Canada’s population is aging. In 1996, there was 1.2 Winnipeggers under the age of 20 for each Winnipegger over the age of 55.

By 2006, the situation had begun to reverse, with the city having 1.03 over-55s for each Winnipegger under the age of 20.

And yet Winnipeg, the median (or “typical”) resident of which was 38 years old in 2006, is one of Canada’s younger cities, especially in comparison to some blue-collar Ontario and Quebec cities, where the “typical” resident is (or will soon be) 45 years old.

An aging population has a real impact on a city. Aging communities tend to have lower typical incomes, greater dependency on government income supports, more sluggish real estate markets and low-wage-low-skill job markets. It’s a toxic soup that leaves a feeling of doom hanging over the community.

Many places, like Manitoba, have put an effort into attracting immigrants to prevent communities from aging too rapidly as the “Baby Boomers” retire from the workforce.

By many accounts, this has worked fairly well in Manitoba, where many people are the children, grandchildren or great-grandchildren of immigrants, and thus sympathetic to newcomers.

There will always be those, however, who will bemoan the fact that Canadians are not having enough babies. If only Canadians got busy and produced more of their own children, they say, we wouldn’t need so many immigrants.

Never mind the fact that immigrants have beneficial economic effects and, as this blog pointed out some time ago, often bring with them a culture that values education — a cultural infusion we very much need in Manitoba.

Indeed, there are governments that have tried to use subsidies and tax credits to boost birth rates. How have those efforts worked out?

• A 2003 study of changes made to France’s Parental Education Allowance in 1994 found that government financial incentives played a role in encouraging people to have a first child. However, these incentives were largely ineffective at convincing people to have anything more than a second child.
• In May 2004, Australian finance minister Peter Costello urged his compatriots to get cuddling and produce “one for mum, one for dad, and one for your country”, offering the parents of newborns a $3,000 bonus for their efforts. A paper produced by researchers at the Royal Melbourne Institute of Technology University in 2010 found that the bonus had a ”positive effect on fertility rates”, leading to about an additional 119,000 births. But it also concluded, however, that the program cost about $39,000 per newborn to run, and has not increased fertility rates to levels needed to replace the aging. Furthermore, an effort to control costs by means-testing recipients is expected to reduce the program’s impact.
• A 2009 Princeton University study of the impact of the incentives introduced by Quebec in the ’80s to boost birth rates found mixed results. On the positive side, it found a 1.72 percent increase in fertility as a result of these incentives. On the down side, it found that these incentives took women out of the work force — and subsequently reduced their average earnings — and cost nearly $400,000 in 1986 dollars ($738,000 in 2011 dollars) per newborn.

Many studies have also cautioned that birth rates can also change over time due to other factors, such as immigration patterns and economic security.

In the final analysis, it appears as though it is possible for a government to spend its way to a higher birth rate — but at a very high price per child, and not to a level sufficient to reduce the need for immigrants.

So, the next time you see a new Canadian, thank them for joining us here in Canada. They’re helping the economy at a much more reasonable price than the alternatives would cost.

Counting on China to save the economy is a risky bet indeed

In the year 2030, a professor stands before a classroom full of young Chinese students in Beijing, delivering a lecture on why great nations fail.

“They all make the same mistakes,” he explains, “turning their back on the principles that made them great.”*

With his students hanging on to his every word, he discusses how the United States was brought down by its efforts to tax and spend its way out of recession, making “massive changes” to health care, nationalizing private industries, and running up debts.

“Of course, we owned most of the debt,” he says, followed by an ominous-sounding chuckle. “So now they work for us.”

The students laugh.

So goes a U.S. TV commercial produced and aired in 2010 for “Citizens Against Government Waste”, just ahead of America’s mid-term congressional elections.

By standard appearances, China is becoming a power to be reckoned with.

While other countries languished in recession, China’s economy is estimated to have grown by about 10 percent in 2010. Its public debt was a mere 19 percent of GDP. If needed, it could draw from a pool of 318 million men and 300 million women fit for military service. And the wealthiest five percent of its population are greater in number than the entire population of France.

Thus, some people wonder if it might be up to China to save the world. Consider the following commentary written for Britain’s The Guardian by Dean Baker:

Can China save the world economy? That is a question that people should be asking as the other potential candidates withdraw from the race. At the moment, the economies of the United States, Europe and Japan are all suffering from weak growth or worse. The debt crisis of eurozone countries threatens another financial crisis that could lead to another plunge in output, not just in Europe but throughout the world.

[...]

With the key actors in the wealthy countries either unwilling or unable to take the necessary steps to support the world economy, it is reasonable to ask whether China can fill the gap. Certainly, China has the ability to act as a backstop for the world economy, if it chooses to play this role.

[...]

If China were to take this path, it would provide enormous benefits to the world economy. The wealthy countries would have to acknowledge China’s role as the leading economic force in the world. They would also have to acknowledge the errors of their boneheaded economic leadership that put them in a situation where they could not rescue their own economies.

Are Europe and North America doomed to kowtowing before the newly rich and powerful Chinese?

Probably no more so than we were supposedly doomed to kowtow to “Japan Inc.” in the ’80s, when a confident, disciplined and seemingly wealthy Japan looked likely to end up dictating its terms to the soft, lazy North Americans and Europeans.

If Japan had its faults — most notably a corruption problem in its government — China’s faults are even worse. Take the World Bank’s latest Worldwide Governance Indicators for instance:

• In 2009, China scored 5 out of 100 for Voice and Accountability, meaning that Chinese citizens had about as much say in how their country is run as did citizens of Belarus, Cuba, Iran, Libya or Saudi Arabia.

• China scored 30 out of 100 for Political Stability, putting the country roughly on par with Cameroon, Guyana, Nicaragua and Serbia.
• China’s strong point was Government Effectiveness, where it scored 58 out of 100. But even here, there was a danger: countries where the government is effective but still refuses to give citizens a say in running the country are at an elevated risk of revolution. Bahrain, Egypt, Jordan, Syria and Tunisia suffered from particularly large gaps between government effectiveness and accountability on the eve of the “Arab Spring”, and such problems persist in not just China, but also Cuba, Kuwait, Malaysia, Saudi Arabia, the United Arab Emirates and Vietnam, just to name a few countries.

• China scored 44 out of 100 for Regulatory Quality, meaning that oversight of critical areas of the economy is likely no better than in the Dominican Republic, Egypt, Honduras, India or Senegal.

• China scored 45 out of 100 for Rule of Law, suggesting that the idea of everyone playing by the same rules remains a hallucinogenic fantasy. In this case, China plays in roughly the same league as Belize, Serbia and the West Bank-Gaza.

• China scored 36 out of 100 for Control of Corruption, down significantly from the turn of the century, when China was in the high-40s. By this standard, China is roughly as corrupt as Argentina, Guyana and Zambia.

Countries with poor-to-mediocre governance indicators are a risk to their neighbours, their trading partners and their investors. Government ceases to exist for the equal benefit of all, laws are enforced or ignored whimsically, and discontent is repressed and denied an outlet until one mistake by the government causes a sudden, violent backlash.

The risk is that, behind the happy face of an increasingly prosperous and self-confident China, is a country seething with discontent — and that one wrong move by the country’s leaders could produce the same sudden outburst of public anger that the world recently witnessed in Egypt, Libya and Tunisia.

The worst-case scenario would be to have such a flash-over happen back-to-back in China, the world’s third-largest economy, and in Saudi Arabia, the world’s largest oil exporter.

That could make the Greek debt crisis look like a walk in the park.

* – As an aside, I would say that the main threat to the U.S. is the perception that its government is too unaccountable (being roughly on par with Spain and Uruguay in this regard) and is in need of tougher anti-corruption safeguards (where America’s system of government is perceived to be no more honest than Japan’s, and less honest than Chile’s).

What makes a city worth moving to?

Moving, in search of a better life

Election campaigns nowadays are too often dominated by wedge issues and efforts to make mountains out of molehills, but there are some encouraging signs that more substantial quality-of-life issues are wiggling their way into the nascent Manitoba provincial election campaign.

Take for example an article by Derek Holtom which appeared in the Winnipeg Free Press recently, asking why more people move away from Manitoba to other provinces than move here.

Between 2007 and 2010, 12,655 people left Manitoba for other provinces. During the same time frame, Saskatchewan added 14,393 from other provinces. And according to a report done by TD Economics, the trend appears set to continue. Manitoba is projected to lose another 6,750 to other provinces in 2011 and 2012, while Saskatchewan is projected to add another 7,434. Alberta and British Columbia are also projected to add more people from other parts of Canada, making Manitoba a big loser in terms of interprovincial migration in Western Canada.

Of course, Manitoba has done exceedingly well in terms of immigration. It does so well, in fact, that the province continues to grow despite interprovincial migration losses. Last year Manitoba welcomed 15,805 immigrants, more than making up for those who left between 2007 and 2010.

But the question remains, why are people leaving? Some argue taxes are an issue. Manitoba tries to position itself as a more affordable place to live with a lower cost of living. But Saskatchewan’s lower taxes and higher wages cannot be ignored. For example, Saskatchewan just raised their personal income tax exemption by $1,000 to $14,535. Manitoba just increased their exemption by $250 — to $8,384. That’s a stark difference when it comes to paying your taxes in May.

So why do people leave?

Manitoba is hardly alone in pondering this question. Statistics Canada data shows that eight out of 13 provinces and territories saw more people move out to other parts of Canada than move in in 2008-09. The only net gainers were Newfoundland and Labrador, Saskatchewan, Alberta, British Columbia and the Yukon Territory.

And Manitoba, where 92 domestic migrants moved in for every 100 who moved out, was hardly the worst province in this regard.  Only 72 people moved into Quebec for every 100 who moved out to other parts of Canada, suggesting that the beauty of la belle province doesn’t make up for a perceived lack of opportunity.

The Northwest Territories also suffered a major shortfall, attracting only 74 domestic newcomers for every 100 who moved out.

Even Ontario, the traditional economic powerhouse of the Canadian economy and still a popular destination for immigrants, seemed to lose a lot of lustre in the eyes of Canadians, attracting only 80 people from other parts of Canada for every 100 who moved out.

To answer the question of what drives people to move from place to place around Canada, I took a second look at some data I had on hand with more than 90 pieces of data on each of 25 Canadian cities. Most of this data came from the 2006 census.

Specifically, I looked at how each piece of data correlated with the proportion of city residents who had moved in from out of province within the past five years. The further the score was from zero on a scale of -1 to +1, the stronger the relationship between the two factors.

An interesting picture began to emerge, as shown below. Canadians, it seems, are drawn to the coasts, or at least away from the heartland where the winters are the harshest.

Not surprisingly, Canadians also tend to move to places that have better job prospects, hence a strong relationship between a city’s employment rate and the concentration of recent out-of-province newcomers living there. Similarly, places with high levels of dependency on government income support tend to have little attraction to other Canadians.

(* – All factors above are statistically significant. Click to enlarge.)

But the types of jobs that a city offers also has the power to attract or repel people. Cities with larger business services and construction sectors tend to draw more people, as do those with jobs in the sciences, management, business, finance and administration. Manufacturing-dominated towns, however, were seen as distinctly unattractive places to live.

Cities with larger numbers of secondary and post-secondary graduates also tend to be more attractive. Yes, it’s true that those who are already well-educated tend to be more mobile than those who are not, but a city also needs a well-educated local population before it can start drawing similarly well-educated migrants from elsewhere.

Finally, there are signs that lifestyle plays a role. Cities where it’s possible and practical to walk or ride a bike to work have an advantage over more car-dependent cities; and cities with lower reported stress levels tend to be more attractive than higher-stress cities.

Median pre-tax and after-tax family incomes showed some signs of influence, but there was little to suggest that the difference between the two plays much of a role in choosing a place to live.

Housing costs were also neither a distinct advantage nor liability.

So the next time you hear Manitoba’s interprovincial migration rate being discussed in the media, remember this: it’s about climate, it’s about finding work, and it’s about lifestyle. And that Manitoba is neither alone in worrying about people moving away, nor is it the hardest-hit province in this regard.

Several Manitoba communities set to lose service after Digital TV switchover

Forget the Government of Canada ads about “clearing the snow” from Canadians’ over-the-air TV reception after this week’s digital TV switchover in Canada’s big cities. Some Manitoba communities will have nothing but snow thanks to some little-publicized changes the TV stations are making.

Manitoba’s TV stations aren’t just changing to digital. Many of them are reducing power and some are moving from tall rural towers to city rooftops, reducing their signal’s range.

• CBC and Radio-Canada used to broadcast from a 324-metre (1,063-foot) tower near Starbuck, Man at 100,000 and 59,000 watts respectively. They’ll be moving by October to the roof of the Richardson Building, and reducing power on their new UHF frequencies to 42,000 watts and 7,600 watts respectively.
• CTV will be staying put on their Ste. Agathe tower, south of Winnipeg, but reducing power from 325,000 watts to 24,000 watts on Channel 7.
• Global has moved to the top of the former CanWest building in downtown Winnipeg, and is now on UHF Channel 40 with a power of 25,000 watts. They formerly operated from the CBC’s Starbuck tower at 325,000 watts.
• Citytv will be continuing to broadcast from its Elie tower, west of Winnipeg, but will reduce power from 325,000 watts to 8,300 watts on Channel 13.
• Joy TV will continue to broadcast on Channel 35 from their tower just off St. Mary’s south of the Perimeter, but will be reducing power from 22,000 watts to 6,000 watts.

These power reductions are based in part on some controversial calculations made by the U.S. Federal Communications Commission, which oversaw the 2009 digital transition south of the border.

Even though digital TV should require less power than traditional analog TV to produce a watchable picture, many critics argue that the Commission grossly underestimated the power needed for a station’s signal to overcome the challenges of the urban environment, where signal-absorbing trees and buildings and interference from machines and appliances take their toll on a signal.

When the U.S. switched to digital in 2009, some stations frantically sought power increases or to move from the Channel 2-13 VHF to the Channel 14-52 UHF band as it became clear that their digital signals weren’t strong enough to penetrate the urban jungle.

Since there have been a lot of hits on this blog over the past few weeks from people with questions about digital TV in Manitoba, here is a pre-emptive response to the questions some of you will have as to why you can no longer receive your favourite stations — and some suggestions on what you can do about it.

And if you want to get a better idea of what you should be able to receive where you live, check out Your Guide to Digital TV in Winnipeg and Southern Manitoba.

If you live or have a cottage in Gimli/Winnipeg Beach…

• Radio-Canada Manitoba will remain weak in Winnipeg Beach, even with a rooftop antenna, and will become virtually impossible to receive in Gimli. You’ll probably get better results pointing your antenna east toward their Channel 11 analog transmitter near Fort Alexander.
• CBC might still have a so-so signal in Winnipeg Beach if you have a rooftop antenna. This signal will become very difficult to receive in Gimli. (Hint: If you point your antenna ESE, you might pick up a weak analog signal from CBC’s Channel 4 Lac du Bonnet analog transmitter. If you point it north, you might pick up another CBC signal on Channel 10 from Fisher Branch.)
• CTV reception will be very poor, even with a rooftop antenna. (Hint: Viewers north of Inwood might be able to get a weak CTV analog signal on Channel 8 from the station’s Fisher Branch transmitter.)
• Global, Citytv and Joy TV will be very weak in Winnipeg Beach, even with a rooftop antenna, and will be virtually impossible to receive in Gimli.

If you live in Morden/Winkler…

• CBC and SRC will become virtually impossible to receive, even with a rooftop antenna. Currently, Morden is on the outer edge of the station’s rabbit-ears range, and Winkler is in the station’s rooftop-antenna zone.
• CTV and Citytv’s signals will lose strength, and might be difficult to receive with an indoor antenna in the middle of town. Both stations currently offer moderately strong “Grade-A” analog signals or better.
• Global should be virtually impossible to receive, now that it has reportedly shut down its old analog transmitter.
• Joy TV will be difficult to receive.

If you live in Portage la Prairie…

• Radio-Canada Manitoba will become extremely difficult to receive, even with a rooftop antenna. Currently, Portage la Prairie is on the outer edge of the station’s rabbit-ears range.
• CBC Manitoba will only be putting a very weak “deep fringe” signal into Portage. Currently, Portage is on the outer edge of the CBC’s rabbit-ears reception range.
• CTV reception will only be satisfactory with a rooftop antenna.
• Now that its analog signal is reportedly off the air, Global will be very difficult (if not impossible) to receive in Portage. Portage is just outside the western fringe of Global’s digital TV coverage area.
• Joy TV will be extremely difficult to receive, as Portage will be on the extreme outer edge of its digital reach.

If you live in Selkirk…

• CTV and Citytv’s signals will lose some strength, and might be difficult to receive with an indoor antenna in the middle of town. Both stations’ current analog transmitters cover Selkirk with a moderate “Grade-A” signal.
• Joy TV might also lose some strength, with its analog “city-grade” signal being replaced with a digital signal that might not be strong enough to overcome the ground clutter in the middle of town.

If you live in Steinbach…

• Radio-Canada Manitoba, CBC and Global will all drop from good to marginal indoor reception in Steinbach. Signal quality will depend on how many buildings, trees and other obstructions there are between you and the transmitter.
• Citytv will be even worse, as Steinbach sits right at the point where any realistic hope of receiving Citytv with an indoor antenna ends.

If you live in Winnipeg…

• Citytv might be difficult to receive in the eastern half of the city if you’re using an indoor antenna. Signal quality will depend on how much ground clutter — such as buildings and trees — there is between you and the Citytv transmitter.

Incidentally, the stations aren’t necessarily to blame for coverage reductions. The Canadian Radio-Television and Telecommunications Commission, the federal agency which regulates the airwaves in Canada, invited public comments on both Global’s and the CBC’s plans to reduce rural coverage — and no one objected.