Still rage against the heart

I keep a placid existence in this bright and fierce world, partly from my lack of imagination and partly out of emotional self-protection. I strive and fight for life, without fear and without joy. Once, a liv passerby cut right through me, through my armour and artifice to my very self. She is far and away on rivers of heartbeats now, but the colour she planted in my shadow still shows up the seams and lends tears to my dry soul.

I look behind and see no flowers grow from my tears. The dust ahead breathes promise of new colours where none should be, yet always I shut my eyes and sleep to forget the dawn.

Market magic

I promise this will be my last post on economics. It's not something I enjoy thinking about--the Invisible Hand is so HP Lovecraft--but with financial fire-and-brimstone all over the news, I start to feel as though it could be important. The trouble is, media "experts" have a vested interest in the status quo, so I can't get an accurate picture or explanation of the carnage. Some things just sound wrong to me...


I know what real investment and assets look like: 1000 people get together and spend $1 million on a cracker factory, and it makes them $100 000 a year of profits for 50 years. All things being equal, you could even say that investment is beneficial for society by efficiently supplying a cracker-hungry nation. Inflation, depreciation, debt, and fluctuations in the price of labour and raw materials muddy the situation, but that's the basic idea. Combine a million factories and other productive assets, and you get macroeconomics. (That classical picture ignores social and physical limits, but I'll let that slide for now.) But it's the financial crisis that's in all the papers, and that's rooted in the speculative side of the economy.

First, let me just say that derivatives trading is the stupidest thing I've ever heard. People have been "investing" by betting whether a numerical value will go up or down. That's the same as betting on a horse race, and it has just as much to do with the real economy. Let them gamble if they want to, but the rest of us shouldn't bail them out when they have a losing streak. Worse still, it exaggerates the upswings and downswings of the market, which is making the current collapse even worse. (Warren Buffet himself called derivatives "financial weapons of mass destruction" in 2002.) From what little I understand of the other opaque 21st-century "financial instruments," the same is true for them.

But let's get back to that old august gambling house, the stock market. It's supposedly been the motor of economic growth for centuries. It's true that IPO's lead to real investment, ie mobilize unproductive wealth and labour. (Often it's more effective when the state mobilizes resources itself, but I digress.) But the currency, stock, futures, real estate, etc. speculation that occupy 95% of trading have nothing to do with real investment. It's a series of side bets. If Microsoft shares go up or down, that doesn't change its working capital, only the wealth of those who happen to buy or sell that day. And unlike the cracker factory, that value is entirely imaginary: just like tulips or baseball cards, shares only have value if someone else believes they do and is willing to pay. Elsewhere we call that a pyramid scheme. (Some shares give dividends, inside information, or voting privileges, which gives them some real value, but they are still grossly overvalued.) So why do we have billions of dollars tied up in the stock market? Why have we bet the entire global economy on "irrational exuberance"? It's true that small investors are often ignorant, emotional, and short-sighted, but the large investors who control most of the stock market have professional, expert staff, and they should know better. Maybe the Marxists are right--the whole thing is a shell game designed to transfer wealth from the working class to the rich, and whenever there is financial collapse, that's the biggest transfer of all.

It's been proven many times that the more stocks you own, the more you tend to make from them. The irrational cycles of the market punish small investors and reward large ones because large investors have more information, expertise, and control and can predict or orchestrate downturns. The speculative economy also impoverishes the working class by making small investors feel more rich than they are. If you bought $100 of my stock yesterday and now own $500 worth (on paper), you'll feel like celebrating, and you'll go ahead and spend some of your non-speculative money. Studies show a 3-4 cent increase in spending for every dollar of stock increase. You can see how that can lead to disaster: when your stock goes back to $100, or to zero, you just bought things you can't afford. Many people end up going into debt rather than sell their stocks, on the assumption that the value of their stocks will always go up faster than their debt. When stock prices finally do fall, the hardship is multiplied immensely because people have more debt and smaller savings.

I have one last rant, so bear with me. Lately, I've often heard TV talking heads say that global markets lost a trillion dollars overnight. That is, the total face value of global stocks went way down. What a catastrophe, right? But here's the problem: the listed stock price is its marginal price not its value. Let's say my company issued 1000 shares at $1. So $1000 of real money is invested. Then the next day people learn my grandfather is John Lennon, so 100 stocks are sold to Beatles fans for $5. Now $1500 is "invested" in my stock, $1000 in the company itself and $500 in the pockets traders. But the media would say the value of my stock is 1000x$5=$5000! If some investors change their minds the next day and sell for $2.50, economists go ballistic because the stock "crashed" from $5000 to $2500, even though there is still only $1250 or so invested. That's why trillions of dollars can be created and destroyed in the blink of an eye; it's a mathematical fiction. The true value of a stock would be something like this: the total cash raised if all stocks were sold one by one. It would be above $1000 since the marginal price is high, but it wouldn't be much above it.

If I have the time and the patience, I'll read up more and see what I can figure out. So I may come back and post an update. In the meantime, my advice is to ignore anything economists say and get on with your life.

No eternal reward will forgive us now for wasting the dawn

Media pundits like to discuss "the economy" and "the environment"--especially during an election campaign--as if there is some difference between them. The economy is the subset of the environment which is most useful to man. Only the most brainless dilettante could discuss economic or environmental changes without some knowledge of their interaction. The term "environment" itself is misleading; it implies that human society is somehow separate from the air, water, earth, and life that surround us. On the contrary, every molecule in our bodies comes from our daily food, drink, and air. That's not new-age religion, that's science. Our bodies are also an ecosystem unto themselves, containing thousands of symbiotic microbes, as are our food and drinking water. Changing "the environment" means literally changing ourselves.


As an environmentalist, I'm a bit unusual. I have no particular affection for fuzzy animals, stately trees, and pristine rivers. I find them beautiful, of course, but like most people, I don't stir myself to protect them. My concern is the health and happiness of humanity, and we've reached a point where ecological damage is our biggest threat. To put it bluntly, we've been shitting where we eat for a long time, and it's starting to pile up. I have no doubt that the myriad toxins, pharmaceuticals, and pathogens we put into our water, air, and food are making us more stupid and sickly. Climate change, loss of biodiversity, and resource depletion are already reducing our standard of living, with potential catastrophe on the horizon. I want my grandchildren to eat cotton candy, dance to the Beatles, make snowmen, not scratch out a stunted living east of Eden.

In this post, I won't talk about the dangers of deforestation, persistent pollution, or other traditional environmental issues. Those already get decent media attention. Instead, I'll discuss the set of problems called "peak oil."

A non-technical explanation of peak oil can be found here. For a technical explanation, refer to eg. Beyond Oil by Kenneth Deffeyes. The short version is that, for geological reasons, the rate of oil production follows a bell curve. Technical, political, and economic factors make the curve noisy. The US has the world's most intensively explored oil reserves, so it shows the trend the most clearly:
No matter how much money the US spends, it can never raise its production above the 1970 peak, so it imports oil from countries whose production hasn't yet peaked (currently only Iraq, Kuwait, and Saudi Arabia). However, total global oil production will peak in the next 5-10 years, if it hasn't already. Experts such as Dick Cheney (!) estimate a 3% per year decline from then on.

Why is that a problem? For the past 100 years, our society has used more and more oil every year. That oil is used for agriculture, transportation, electricity, and manufacturing to supply our growing population and our growing sophistication. The earth is very bountiful, but we've been living beyond our means. So the first problem is that we need to accept a 3% per year drop in food, transport, power, and consumer goods. The second problem is that free-market pricing will mean a large increase in the price of those things, which means many will struggle to obtain food and fuel. The price has already gone up considerably the past few years even though no oil peak has been announced. A sudden crisis could lead to disruption of supplies or hoarding, which would exacerbate a price spike.

It's true that oil is not our only energy source. Natural gas, coal, nuclear power, and alternative energy also exist. But with our current infrastructure, none of those can be used for transportation, large-scale agriculture, or manufacturing. That is, if gasoline jumps to $10 a litre or pumps run dry entirely, individuals have no way to switch to alternative energy to get to work. It'll work itself out in the long term, but many people could suffer. With proper planning, we could break our fossil fuel addiction and find a way to travel, grow food, manufacture, etc. without oil. If we wait too long, we'll one day find ourselves in a permanent 1973-style energy crisis, and it'll be that much harder to restructure. (The Internet, of course, has plenty of imaginative worst-case scenarios.)

Despite the potential for a humanitarian catastrophe, peak oil doesn't concern me much. I only mention it because it may help to explain upcoming events. The fact is, if we burn all the world's oil in the next few decades, we will cause uncontrollable climate change, which will have far more serious consequences. So we need to reduce global fossil fuel use with or without peak oil.

And Stephen Harper just got re-elected. I need a drink.

Update: I heard an interesting metaphor the other day. The transition from industrial capitalism to a sustainable society is like the metamorphosis of a hungry, single-minded caterpillar to a beautiful, low-impact butterfly. Even though both stages are necessary and inevitable, the first butterfly cells that form within a caterpillar are always attacked by the caterpillar's immune system as foreign cells; it's only the weight of numbers that allows the butterfly cells to finally take over, not through any conscious organization but simply because they have the same purpose.

Dispatch from the trenches

Left to right: our campaign manager Vandy, candidate Jim, and party leader Elizabeth May.

My riding, North Vancouver, has been a tight race between the Liberals and Conservatives for years. The results this time: Con 42%, Lib 37%, Green 11%, NDP 9%. The Conservative was an investment banker from outside the riding who echoed Harper word-for-word; the Liberal was a popular 2-term veteran and former mayor; the Green was a personable businessman and former professor; and the NDPer was an unknown actor. So clearly the personality and competence of the candidates was not the deciding factor for voters.

Across the country, the wind in the Conservatives' sails came from Harper and only Harper. For the first month of the campaign, none of the metro Vancouver Conservative candidates would attend public debates or media interviews (!). But I realize in retrospect that the biggest difference between their campaign and ours was the quality of their campaign machinery. For the uninitiated, a traditional campaign involves the following major parts:

planning and organizing
creating and updating a website
creating and erecting highway signs
creating and distributing lawn signs, buttons, car decals, etc.
creating and distributing fliers
newspaper, radio, TV ads
bulk mailing, robodialling
media interviews and press releases
damage control
all-candidates debates
phone canvassing and supporter identification
door-to-door canvassing
pamphleteering
mainstreeting
coffee parties, open houses, meet-the-candidate, etc.
get-out-the-vote (calling supporters on voting day)
driving voters to the polls
scrutineering (observing the voting and vote counting process)
retrieving highway and lawn signs
compiling and analyzing the election results

Our riding had one of the best Green campaign teams, with a dozen very active volunteers, an extensive support network, and (eventually) $25 000 to spend. But we've never run a campaign before; our candidate ran in 2006 with a campaign team of two. The major parties have a paid, professional team. We made dozens of rookie mistakes, which cost us hundreds of votes. It seems ludicrous that our choice of government hinges on copious highway signs and glossy pamphlets, but that's the reality. In the next election, we'll be much better prepared in that respect.

I encourage anyone interested to get involved in a political campaign. It's more interesting than it seems at first glance, and it really gives you a stake in the outcome. The national leaders get all the media attention, but the local community is where the rubber meets the road. You can also donate to the local campaign rather than the central party, which not enough people do; it's 75% refundable through your taxes, so a $100 donation only costs you $25.

That's definitely enough politics for me this year...

Make that a four-colour map

I've worked about 150 hours for the Green Party over the past few weeks, and on election day I spent one last 12-hour day as a scrutineer. So naturally I'm disappointed that my candidate and my party did so poorly. Based on the voters I've talked to, the reason is quite clear: the Green Party has the "softest" voters, and many of them voted strategically to defeat the Conservatives. And they did help deprive Harper of a majority, so I take some consolation in that.

Another big reason for the low Green vote is our amateur "party machine"--events planning, PR, get-out-the-vote, etc. See the next post.

Stephen Harper bet his political career on a majority and lost; after a $300 million campaign, we are exactly where we were 6 weeks ago. Many people don't follow the issues, but a frivolous election is highly unpopular, and Harper is entirely to blame.

The Liberals and NDP didn't change their standing significantly. The seat numbers changed, but the Libs are still the Loyal Opposition, and the NDP are still far behind. When the Liberals get a more popular leader, I predict they will be back in majority territory at the expense of the NDP and Bloc Quebecois.

I thought the Bloc would do quite poorly because their provincial equivalent, the Parti Quebecois, slipped to third place in their last election. The Bloc's entire campaign strategy was to attract strategic voters, and I suspect that's where most of those seats came from.

In the final account, only the Green Party benefited from this 5-week waste of time. In the next campaign we will have significantly more legitimacy, name recognition, money*, and expertise. It would have been nice to have at least one Green in Ottawa, but there's no use crying over spilled milk.

There is one last thing I want to add. If all eligible voters are included, the party support drops to 22% Con, 16% Lib, 11% NDP, 6% Bloc, 4% Green, and 40% undeclared. That's a pretty meagre mandate. A big reason for the low turnout is that the election was the day after a long weekend: I don't know about you, but my brain told me Oct 14 was Monday (heading to work after a weekend out of town) when I knew the election was Tuesday. I think Harper chose that day deliberately because low turnout always favours the incumbent.


*Federal parties are publicly funded. Each vote cast gives $2 per year to that party, split between the local riding and headquarters. If it gets above 10% of the vote, a local campaign gets 60% of its spending refunded (which is a huge advantage: my candidate will start with $18 000 next time not $3 000). With 12 MPs elected, a party gets official party status and hence additional funding. So that's the next thing we're working towards.

Ralph

I've heard many people cite the "Ralph Nader effect" as a reason to vote strategically on October 14. Even Elizabeth May said, "I don't want to be the Ralph Nader of Canada." So I'll say this once more for the record: Ralph Nader DID NOT make Al Gore lose in 2000. It's all public knowledge for anyone who cares to look.

By the official count, Bush beat Gore by a few hundred votes in Florida. The theory since then is that Gore would have won if 500 Florida Nader voters had voted for Gore instead. (And Gore would have stopped Enron, 9/11, Katrina, you name it...) But there's far more to the story than that. Hundreds of thousands of Democratic voters were disenfranchised in swing states (including Florida) through Diebold machines, arcane voting rules, spurious criminal records, inadequate polling stations, etc. In fact, Florida itself was going for Gore, but the Supreme Court stepped in to stop the vote count when Bush was temporarily in the lead. When the recount was completed weeks later, it was found that Gore won Florida and hence the Presidency. Again in 2004 (when Nader wasn't even running!) Bush won amid widespread vote fraud. It's entirely possible McCain will win fraudulently next month as well.

Furthermore, Nader attracted very different voters than Gore. He raised issues like Pentagon profiteering, corporate control of the political process, addiction to fossil fuels, criminalization of the poor, etc., which neither Bush nor Gore would address. (Gore has become a progressive poster boy since he released An Inconvenient Truth, but in 2000 he showed no sign of a pulse, let alone progressive ideals.) However, the rules made it effectively impossible for Nader to win, so it was 100% a protest vote. If Nader hadn't run, those voters would likely have stayed home not voted for Gore.

The reason there is such a sustained anti-Nader campaign is because the US establishment--including the Democratic leadership--doesn't want the political/economic system itself to be called into question. If Nader is ridiculed and marginalized, it allows the press to avoid answering (or even asking) the questions that Nader and others like him want to address.


Can the real "Nader effect" happen here? There is occasionally small-scale vote fraud in Canada, but it isn't enough to sway more than a few thousand votes nationwide. A larger problem is that election-day workers are exhausted by the time they count the votes--they work a 14-hour day and are not allowed to leave their post for more than a few minutes. That's what scrutineers are for, but it's hard for the parties to get enough volunteers for the 40-50 polling stations per riding. All in all, ballot chicanery in Canada is trivial compared to the systemic electoral distortions I mentioned earlier.

Nov 3 update: Greg Palast, who wrote a book about vote theft in the 2004 Presidential election, just wrote an article describing the current state of American vote theft. Scary stuff.

20 million artists paint a 5-colour map

This is going to be a very interesting election. I won't make any predictions here; with the sharp rise in Green and NDP support and fall in Liberal, Conservative, and Bloc support, all bets are off. Then there is all the organized and unorganized strategic voting, which doesn't show up on the radar until voting day.

For what it's worth, the election prediction project currently predicts 118 Con, 77 Lib, 29 NDP, 47 Bloc, 2 Independent, and 35 too close to call (including my riding).

Oct 13 update: the final pre-election prediction is 125 Con, 94 Lib, 36 NDP, 51 Bloc, 2 Independent, zero Green. If that is indeed the case, the Liberals and NDP could form a coalition government and keep Harper out of 24 Sussex.

Splitting headache

Elizabeth May demonstrated in the Leaders' Debates that Greens are not ignorant, utopian, or flaky. She earned her place at the grownup table. Most Canadians aren't paying attention, so it will take time for that to change voting patterns, but the ball is rolling now. At this point I'd say we'll win one seat in this election and 5-10 in the next one.

Political inertia is bad enough, but a more serious obstacle to Green success is strategic voting. (At this point, that's the Liberal Party's main campaign strategy.) Roughly half of Green supporters will vote Lib, NDP, or Bloc to defeat the Conservative candidate in their riding. No-one knows which progressive candidate is actually in the lead, so everyone assumes it will be the same as 2006, when Greens had 5% national support not 10-12%. In fact, there is a lot of animosity against loyal Greens for splitting the vote* and helping the Conservatives win. (Actually, many fiscal conservatives vote Green, so we take votes from the Cons as well.)

In my opinion, it's pointless to blame individual voters for this--vote splitting is a systemic flaw. "Dark Green" voters will keep voting Green, so the only way to avoid vote splitting is electoral reform. The central problem is this: our electoral system was created when there were only two parties and only rich white men could vote. Now we have 5 major parties and a broad diversity of voters, so it's no wonder the election gives strange outcomes. (Seriously... why should the Conservatives win a majority of seats when 2/3 of the public is against them?) Harper called an election when his popularity went up by 5% because he knew that would translate into 25% more seats. Widespread strategic voting only exacerbates the flaws of the system because it rewards only well-established parties and leads to narrower margins of victory. Most democracies in the world have some kind of proportional representation in order to avoid this endless lesser-of-two-evils voting. For those who want a detailed description and analysis of Canada's political system, I'd recommend the latest edition of Canadian Politics: Critical approaches by Rand Dyck.

With all this talk of strategic voting, people forget the whole purpose of democratic elections: The People, in their incomplete but complementary wisdom, choose those who reflect their values to govern them. If voters feel forced to vote for their 2nd or 3rd choice, it distorts the resulting government. In a way this is also an attack on free speech since for many voters, election day is the only time they feel comfortable to take a clear political stand.



*Our federal elections consist of 308 separate first-past-the-post elections. That means that the candidate with the most votes in a given area wins the seat. So if Bart Simpson got 60% and Homer got 40%, Bart would win. "Vote splitting" occurs when two or more candidates are similar to each other. If Lisa also ran, the vote might be 30% Bart, 30% Lisa, and 40% Homer--Homer would win even though 60% of voters were against him. Nationwide, only 50%+1 of seats are needed to control government, so with enough vote-splitting a minority party can dominate the country. With 4 major anti-Conservative parties and 60% voter turnout, this means that Harper could control government even with only 25% support. (The American system is even more distorted: Bush won in 2000 with only 21% popular support. Vote fraud and a stacked Supreme Court are another matter.)

To continue the analogy, strategic voting says all anti-Homer voters should vote for Bart because he came along first. The first problem is that Bart doesn't address issues that Lisa voters care about. As well, in the long term Bart becomes corrupt and ineffectual because he knows the 60% of anti-Homer voters will always vote for him.