Sunday, 27 February 2011

Canada's Real Estate Professionals: Overworked and overpaid







When pop culture creates heroes like this, is it any wonder too many people have been attracted to the profession?


I'm not sure there are many real estate agents suffering from workplace injuries, taking stress leaves, or putting in sixty hours weeks. Nonetheless, the sector has become accustomed to an excess of activity that trickles down into employment for all different types of people who didn't have it before. These people are not "overworked" in the traditional sense, when employees are leaned on heavily by their employers who either don't trust anybody else or are too cheap to hire/train others. They overworked because their sector provides a disproportionate amount of economic activity after being artificially juiced and inflated for the past several years by low interest rates, lenient borrowing requirements, and a spike of speculation from "flipping", "income properties", etc. The logic of "saving up" for your first house has disappeared; now the idea is to "get in the game" as soon as possible so you can stop "throwing your money away".

Before getting into today's post, however, I would like to welcome some guest stars. It gets old reading my thoughts and opinions all the time so I'll open up the floor for a minute to some fellow citizens of mine. We will hear some testimonials from people who work in the real estate sector. Real estate is a constant topic of conversation in Canada, but lately some negativity has started to creep into the discussion. All this sudden pessimism is fine, and all, but what is life like for people in Canada who have chosen real estate as a career?

"I was wondering how long I was going to sit in my parents basement on my bachelor of (insert useless major here) degree before sucking it up and getting a serving or call centre job like all my douche bag friends. Then I made the best decision on my life, based on some billboards I saw. I became a "Condo Specialist". Turns out pretending to be an expert about something there is really nothing to (apartments with mortgages and maintenance fees) is the best possible way to market yourself. After you make your first couple sales, some nice clothes, the latest smartphone and a leased BMW do the rest. There's really nothing to it. I moved over 40 units last year and my website gets a thousand hits a day now."
-Darren, 27

"Real estate is like any other business. You got your high end and you got your low end. I decided from the beginning I didn't want to deal with riffraff. No, I don't think they're bad people and yes, you can make a living off them, but the commissions are so low on what they buy, you have to be working on new deals all the time. I was lucky early on to be taken on in a small brokerage in the most established, old money part of the city. Today I own it. You will not find any homes here under a million anymore. And with us its not about buying a home, its about a total real estate experience. Nobody in my office, including receptionists and admin staff, makes less than 65K. Not because we throw money around, but because we can't risk making a bad impression, and they need to be able to afford proper attire. From the words on our cards like "private" and "exclusive", to the green leather furniture in our office, to the dinners prospective buyers get taken out to, our office spares no expense to provide a total luxury home buying experience. And it works. The firm moved over $150 million of real estate last year, almost all of it in a 5 kilometre radius" -Hank, 57

"I wasn't sure how I was going to start a business when I came here from India five years ago. I looked at franchises, convenience stores, manufacturing, but the start-up costs and red tape were so high and there was no guarantee of success or return on investment. Then I got my real estate licence. It's really not that hard. If you're personable and willing to be patient, you'll be successful. After just three years I'm in the top 1% and my face covers the entire side of a bus.

-Rizvi, 35


Life. Is. Good. And that, my friends, brings me to today's related topic, the government's recent moves to regulate the real estate sector which I have been wanting address for some time. Without wanting to inadvertedly praise the Conservative Party of Canada or contribute in the slightest to its latest series of strong polling numbers, this is one department I have to give them credit in. The finance minister has recently imposed new regulations on this sector which make it harder for unqualified borrowers to sign up for lifetime debt serfdom to acquire overinflated properties. As we've seen, the banks have only been too happy to oblige them up until now.


Of course, much of this has been tightening back up the rules that the Conservatives themselves loosened, but it is still a positive development. By raising minimum down payments for secondary properties to 20%, lowering maximum amortisation terms from 40 to 35 then 30 years, and making it mandatory to prove housing debt could be carried beyond a period of being locked in at the current historically low rates, they have thrown cold water on what was an unprecedented wave in Canadian history of runaway real-estate speculation.


The moves are however incongruous with the rest of the regime's programs and policies. This is a party that howled for almost a decade when it was in opposition under the Reform/Alliance label about government waste and excessive spending. It became the government in 2006 and proceeded to waste and spend record amounts. The government has managed to reduce the tax base by tens of billions of dollars and increase spending by tens of billions of dollars. Much of this wasted money is the result of corporate tax cuts. From a long-term planning perspective, this course in fiscal policy is the worst possible one we could follow from a long-term planning perspective, but it stems from the Conservatives deep desire to be the party most accommodating of businesses and their interests. With these policies, and their eschewing of any messages that encourage people to be responsible or think long term, the government doesn't just talk the talk, it walks the walk. It is a reasonable expectation that everyone in Canada should one day have a 10 bedroom, $850,000 house mortgaged to the hilt on former farmland, three Hummers, and at least an hour commute to work. It is, after all, an individual's prerogative to live this way should the banks see it fit to encourage him in it, and this is the utopia the Conservative party sees our country someday achieving the realisation of under their stewardship. They've never hesitated to behave this way themselves with our tax dollars . Since they are so quick to point out the importance of leadership, and what they feel are their superior leadership skills, I feel safe to assume this is the message they want to infer by leading by example. So why all the sudden prudence and restraint on its housing market regulation, hitting our guest star real estate agents where it hurts?


It is because the government, as I've noted before, is primarily concerned with strategy and appearance. So it doesn't really matter to them if Canada turns out to have been a significant contributor to resource exploitation, environmental degradation, and skyrocketing emissions when the impacts of these become painful and apparent a decade or two or three from now. It doesn't matter if the country becomes an international joke by 2020. And it obviously doesn't matter, based on the fiscal policy they've been pursuing, if the nation that could have been the richest on earth defaults. All that matters is the next election and the polls. That this government, so loathe to intervene on what it considers the wrong side or face criticism for decisions, acted the way it did with these regulations indicates there was a problem. They don't care if their opponents blather on about 2020 or 2050; they appeal to the segment of the population who is in denial about the various fires we've been playing with. With this particular issue, however, it is clear that if they let things keep going the way they were, they were going to end up with an egg on their face in the very near term. A big, fat, housing bubble shaped egg.


Lest week the government was issued a stern warning by the CREA , a group of real estate "professionals" who wagged their fingers at the government. There should be no more fettering of their ability as professionals to do the important work they do by a once-friendly government buying all this doom and gloom hype. They are, after all, the "experts", and the government should listen to them. And so should you, obviously, if they are grabbing a major headline in a national newspaper in saying so.

This is of no consequence now, but we need to be wary of groups in sectors that are vulnerable to the wrath of logical, free-market fluctuations taking too many individuals under their employ, lest they become "too big to fail" (see Auto Sector, 2008). There are more mortgage brokers, alternative lenders, mobile mortgage specialists, top 1% real estate agents, home stagers, re-financers, private lenders, and all the administrative/clerical personnel who help them than ever before. Places with names like Mortgage Intelligence, Red Hot Mortgages, Mortgage Monster, Mortgages R' Us, Sky High Mortgages, Rocky View Mortgages, and One Stop Mortgage Shop have proliferated on street corners everywhere. Call in shows like Hot Property on CP24 and newer real estate brokerages with names like Peak Realty are demonstrative in their names of the mood and environment in the country whose real estate prices greatly increased during the recession.

Which brings us back to our testimonials of people who profited handsomely during this property "boom". A simple look at the rate at which housing prices have risen in major Canadian markets like Montreal and Vancouver and, to a lesser extent in Kitchener-Waterloo tri-cities and many GTA suburbs when there is clearly no underlying median incomes or labour market to support and justify such rapid increases shows that a bubble has been expanding in Canada for sometime. The real estate sector has experienced corresponding growth and now repeat "recovery" with the same religious zeal and die-hard repetition as the kool-aid drinkers in government. This story, however, is one of hundreds of examples I've read of the peril they are exposing themselves to. When even the Conservative government can see this and put the breaks on, the real estate pros might want to take now and be thankful for the artificially high amount of work that they had, instead of criticising the government and thinking their Trumpesque fantasy could have lasted forever.

Friday, 25 February 2011

Libya Gas Price Hysteria (Oh can you feel it)






Hysteria – (n): an uncontrollable outburst of emotion or fear, often characterized by irrationality, laughter, weeping, etc.

I was unfortunate in my eighties childhood to mistake Def Leppard for a metal band. The oblique shape of their misspelled logo, the eerie graphics on their album covers, the five manly guys playing rock n' roll instruments with British accents. Even the one handed drummer was an extra hardcore component that made them seem like a rough and tough band serious guys listened to.

They sure couldn't keep that up, and the naivete of my six year old brain didn't last long either. Other than the strip club anthem “pour some sugar on me”, what did these guys bring to the rock music table?

It turns out, in my opinion anyway, not a whole lot. This week, while I was catching up the latest news from Libya at my desk, I heard the utterly wretched Def Leppard track “Hysteria” come on my ipod's shuffle, which put me in the frame of mind to subject you to this bit of subjective music history, and how it relates to the North American media's interpretation of the events in Libya. To the bands credit it is also damn catchy in all of its horribleness, and this post is part of the process of deleting it from ipod and forgetting about it, I hope, for another twenty years.

The song, which if you open a new browser tab and listen to it may make these remarks come alive for you, begins with a dreadful twangy, synth-enhanced clean guitar arpeggio that takes itself way too seriously. I have the most vivid vision of a curly or frizzy eighties explosion of female hair à la Ferris Bueller's sister or early Elaine Benes, thrashing around the most earnest of pouty actress faces, while she tries to make things right with Mr side parted hair football star, who's also running alone on a track in a fading juxtaposition. That's before Joe Elliot's high baritone, Aussie inflected, grunty whine of a voice serenades into the most embarrassing set of lyrics you've ever heard (don't believe me? follow along here), which make you wonder who you feel more sorry for; his former self who came up with them, or yourself because you're actually sitting there listening to them.

This gears you up for a rousing chorus with the rest of the band coming around to pipe in with their high terrible backing vocals. They sound like a group of the principal's favourite schoolboys in the choir who are grown up but are still in their outgrown childhood uniforms, which restrict the circulation to their masculine organs and inadvertently re-create their voices of yesteryear.

With those thoughts circling around in my head, along with that damn arpeggio riff that seemed to be simultaneously begging me to take life more seriously and reminding me why I'll never be able to take it fully seriously, I hit the gym. And there I saw it on the TV screens above the cardio. Gas prices had jumped at least 8 cents overnight. This means the majority of 6 o'clock news programming is devoted to gas station testimonials with car owners. And they are an extraordinary spectacle to witness – the human spirit in crisis. Guy with baseball cap frowning and shaking his head from inside his Toyota Rav4 driver's side window. I took his look of consternation as fear that his 2 car household days may be numbered. Giggly but concerned looking skinny Chinese lady filling up her compact sedan, laughing. Taking the pain with a sense of humour: yeah it sucks I have to pay more, but what can I do? Cut back to the anchor. People in the region are getting gas today, he says as he stares into the camera with a firm look, and it's a few bucks more than it was yesterday. Your hysteria is well placed and totally warranted, conveys his expression with approval in all of its seriousness, which is why it occupies front row centre on our program.

To help us understand the horrible injustice to humanity these folks' plight represents, we cut to Libya, where gunfire, chaos, uncertainty and mayhem seem to be the order of the day. This isn't the first time external forces have had adverse effects on the price of gasoline, so what are our upright and concerned fellow citizens going to do about it? They're going to get into their cars and drive by themselves again tomorrow, just like they always have.

I can't help but feel a bit hopeless when I contemplate the volatility and usefulness of the remaining petrol left in the world and look at all the people whizzing around in their personal vehicles here in Waterloo region. Can't they effect the smallest gesture which indicates they are cognisant of the future? Do they stop and ask themselves, “Is the middle east a bottomless black hole which is going to power this fantasy world forever?”

Yes, they stop and say, yes it is. Of course it is. And if anything bad happens, there's Saudi Arabia and there's the oil sands and we're good. No worries!

This morning when I got on the bus, the front page of the newspaper provided an exact match to the news. Except I was no longer reacting only to visual cues, I was reacting to what a local businessman said. “I thought this recovery was just starting to happen, that things were just starting to get better, and now this.”

I guess this is the irrationality bit in the hysteria. Its nice to know that the entire strategy of this supposed “recovery” hinges on cheap, abundant petroleum, and that interested parties know so. If that's not enough to make you reject the blather from the governments and media about recession, and the “nascent recovery”, maybe you should wonder why the stock market is really high, real estate values are really high, and public and consumer debts are at all time highs. But that “recovery” is just around the corner. I can just feel the early hints of its wind breathing down my neck, ready to gust through here and save us all.

Gadhafi will be deposed, sooner or later, and whoever replaces will continue to sell the oil until its all gone, because they need the money just as bad. But I was more frustrated in the media's stoking of hysterical reactions than with him. His reactions, of course, have been hysterical too, but they usually fit in the psychiatric definition more than the one we've been working with.


Hysteria (n): A complex neurosis in which psychological conflict is turned into physical symptoms, such as amnesia, blindness, and paralysis, that have no underlying physical cause

mixed with

Hysteria (n): a psychoneurosis marked by emotional excitability and disturbances of the psychic, sensory, vasomotor, and visceral functions without an organic basis


Al-Qaeda spiking young people's coffee is at the root of all this is his latest reasoning for the cause of the unrest. Right. I think these definitions apply. Remember this is the same guy who told the last U.N. General Assembly that the JFK assassination file needed to be opened. Or you could just Google images his name, Gaddafi. The outfits alone will convince you that he's been hysterical, in more ways than one, for quite some time.

He's a lost cause, and his people are the latest grouping of arabs to decide that about their leader. But the Def Leppard song seemed an appropriate soundtrack to the local reaction to how what was taking place in his country affected this area here in Canada.

Monday, 21 February 2011

Canada Needs More Ron Paul

In the Indigo bookstore at the Eaton Centre Mall in downtown Toronto, Canada, there is a spiral staircase to the 2nd floor surrounded by a red wall emblazoned with the names of notable Canadians in literature and other fields, around a bold, centred declaration: “The World Needs More Canada.”

As an admirer of a number of figures on this wall (Farley Mowat, Margaret Atwood, and Leonard Cohen come to mind off the top of my head,) and a supporter of Canadian literature, I would not dispute that Canada has significant works to offer in certain artistic fields. I also think it is to somewhat commendable, even though I find the statement embarrassing and brash, that Indigo CEO Heather Reisman parks her opinion and patriotism in such a prominent place within the halls of this crown jewel in her empire of locations.

In the last forty or fifty years, Canada's accomplishments and willingness to adhere to certain principles perhaps allowed one to get away with making such a rah-rah, we're the best type of declaration. When one has read, however, two well-researched, detailed, intricately constructed pieces explaining the damage and profound changes the conservative government of Stephen Harper has imposed on Canada during the past five years, one in the walrus by Erna Paris and one in this weekend's Globe by Gerald Caplan, as I have, I believe their only reaction to such a statement could be an immediate and uncomfortable recoil. If you have time, I strongly suggest you read these two stirring and brave articles, with the caveat that they may anger you as much they angered me. To me, these articles make it clear that if Canadians continue to engage in the sort of hubris Ms. Reisman has with her interior design choice , whether knowingly or not, they are exhibiting either their ignorance, wilful suspension of disbelief, intellectual laziness, or some combination thereof.

Why, though, do I have this axe to grind with the government, this persistent beef? Do I really believe that other parties are more principled and would not have acted in the way the conservatives have? Yes. Am I willing to go as far as plugging another Canadian politician's name in the title of this post as an alternative? Not yet, and judging by the way things are going, not anytime soon. So whose name is that in the title?

If you've made it to here, then you obviously could read the name. You may know who it is, or you may not. I will say as an introduction that there is no politician anywhere who is irreproachable and deserves 100% unquestioned support, because we are all individuals with varying opinions. Ron Paul is no exception. The member of the U.S. House of Representatives (Congressman) from the 14th U.S. Congressional District in Texas does have a number of strong positions which put him at odds with me and most people I know, such as being pro-abortion, anti-gun control, and quite possibly racist. He is unanimously recognized as holding the most conservative voting record of any U.S. Congressman since the 1930s. He is also 75 years old; that alone makes it almost certain we will see things differently.

If one is careful, however, and does not let those outstanding issues of personal and moral judgement derail him when he is attempting to objectively examine the parcours of Mr. Paul over the last ten, twenty, or thirty years, then he may arrive at the same conclusion I have. Mr. Paul is the only politician in North America who has been talking any sense, and by that I mean saying anything real, true, or of any substance whatsoever, in recent memory. Take away everything objectionable about the man, strip away all the Texas redneck stuff and southern baptist religious beliefs, forget his guilt by association with the tea party nutjobs like Beck and Palin (who, by the way, are mercifully declining in power and influence if you take a look at this), and look at the basic essence of these three core things that he has to say:

1)Federal bureaucracies in a country our size are by definition wasteful, expensive, and massive. This makes them not only inefficient and unaccountable, but almost always failures at carrying out their mandates.
2)A Central Bank (in his country's case, The Federal Reserve) creates an endless downward maelstrom of deficit and debt, by financing the nation's debt which must be repaid with compound interest and simultaneously creating inflation which reduces the value of the citizenry's money. This syphoned wealth is shovelled to a private banking cartel and captains of industry, and is the principal reason the elite's wealth is further consolidated with each passing year, while average citizens find themselves poorer
3)Military adventures, bases, and activities abroad are illegitimate and unconstitutional; they weigh heavily on the budget and financial reserves of the nation, they have no purpose or benefit that serves the nation and its citizens, and must be wound down immediately.

I have been in awe for some time. The sharpness and pertinence of these critiques, which cut through the bullshit and inconsequential hair-splitting the news media goes through on a daily basis with its take on the issues facing the nation, is a breath of fresh air. Of course, Mr. Paul is not taken seriously by either the right or left, because he considers the “untouchable” items which eat up 95% of America's now 1.5 trillion structural deficit, well, touchable. They are touchable in his view because they are putting the nation on the fast, make that imminent, track to bankruptcy. The professional American right, quick to keep any sensible voices at arm's length, does not associate with Mr. Paul too closely. Over at the New York Times, Paul Krugman (a PhD holding Nobel Laureate, you imagine?), self proclaimed liberal and intellectual leader of the “let's print our way out of this” movement, thinks the mere mentioning of Mr. Paul's name is a sufficient argument to quiet the growing number of people who've become, for reasons which I think are obvious by now, concerned. He's frustrated that the manipulations and machinations of the treasury and the fed are becoming more and more apparent to be the useless and impotent gestures they are, and the evidence is his resorting to lashing out at Paul with bleat-errific non-sequitors like “Imagine if you were in poor Ben Bernanke's shoes trying to save the U.S. Economy.” like he does here.

I mention Krugman's lack of argument because he seems to be suffering from the same intellectual laziness I mentioned earlier. Otherwise, I have unfortunately. strayed quite far away from where I want to be. Sorry about that. At issue for me is the absence of any independent, critical, and principled voice in the Canadian body politic. There is no person in any of the four parties who has the courage or the intelligence to admit that the three Paul principles I outlined above apply here in Canada and explain how and why they do. This does not mean our politicians don't have any good ideas or changes to put forward of their own, but they avoid these fundamental issues which affect our country as well and are, after all, making our it crawl toward insolvency at perhaps a slightly lesser rate.

On the first point, I wish to use some Canadian federal bureaucracies as examples of redundancy and failure. Corrections Canada (which falls under Public Safety and Security Minister Vic Toews jurisdiction) is set to become, if the Conservatives get their way, the single biggest direct non-military recipient of Canadian government largesse (pork) through upwards of $13 billion in prison building programs. Will it achieve its mandate of rehabilitating the wayward members of a 34 million member Canadian society for this exorbitant cost?

Health Canada and its minister, Leona Agulkaaq, are supposed to ensure as stipulated in the Canada Health Act, that every Canadian has access to required medical care and adequate services. Considering the amount of doctor shortages, eight hour ER waits, and months-long waiting lists for urgent surgical procedures, this ministry is failing.

The CRA is supposed to make sure Canadians are paying the requisite amount of tax and enforcing rules that prevent money laundering, tax sheltering, and income being gained from scams. Based on two recent stories, one uncovering the existence of over 1,800 offshore accounts held by the extremely wealth, and another exposing a lenient system for fraudsters, it is not enforcing anything of the sort.

As these bureaucracies here in our own backyard show us, billions of dollars and hundreds of departments do not necessarily equal excellent public service or success. The problem with most critiques of government (tea party, et al) is that they are too generalized against the system and the notion of the government serving its people. Government services are not a bad thing in and of themselves, but why should it be taboo to point out that phalanxes of highly paid employees and office building leases do not equate services for people or even good decisions?

On the second point, critiquing monetary policy, Canada has a fractional reserve banking system similar to America's presided over by Fed darling Goldman Sachs alumnus Mark Carney. The main difference between the two countries is the amount of players. Canada's 5 bank cartel is a private club, with only ten to fifteen other entities being allowed to operate. America's 9 bank cartel is also a private club, but thousands of other little entities that rise and fall out of thin air are permitted to operate alongside it. Canada's system just makes a cozier and less complicated arrangement for money shovelling and bailouts.

Stephen Harper loves saying no Canadian banks needed a bailout. Why, then, did the department of finance through CMHC feel the need to backstop (guarantee, in other words make itself liable for even if it did not pony up the amount at that moment) almost $200 billion dollars of dicey assets and positions held by the banks. Why did CMHC feel the need around the same time to step outside of its mandate and take on over $80 billion dollars of mortgage guarantees.

These are not policies or decisions made on behalf of the Canadian public, they are underhanded and illegitimate moves carried out in secrecy and then released quietly with zero option of recourse or appeal to the tax-paying Canadian citizens backing them. The best part of the revelations revealed in the two references (if they are a revelation to you) is in the Ralph Surette article: that in 2006, for the first time in our country's 140 year history, the Conservatives also managed to enact a law that allows the government to borrow without first acquiring the approval of Parliament. Sort of sounds like a door opener to that shadowy “Reserve” who borrows trillions with the approval of no one that Mr. Paul is so worked up about.

Finally on the Afghanistan (war and empire) front, we have exactly zero return on our investment for a decade spent in a barren and impoverished country. $32 billion dollars and counting, plus untold billions more on future military hardware if the Conservatives get their way. For what? To intervene where? To accomplish what goals? These questions are never asked, and the legitimacy of these policies is never questioned. It may be due to the opposition leader's previous tenure at Harvard as a member of the American Foreign Policy Committee. Yet too many people have swallowed the notion that we have “priorities” there that are “relevant”. We could stay there for a hundred more years and the Afghan people's destiny would not change one iota. Because we are not the Afghan people, the Afghan people are the Afghan people. I don't need to belabour this point; look at what is happening in Islamic countries all across North Africa and the middle east right now. Does this look like the work of North American debt or the decisions of North American commanders?

The government has a million lame excuses ready for each of these issues and thousands of apologists in the mainstream media and blogosphere to defend it on just about any front. The help we need in making these facts known to a greater number of people is clear. We can keep educating each other and ourselves about the folly of a government whose head now utters not a single sentence that doesn't include the words “economy” and “priority,” but what Canada really needs is more Ron Paul. Not the Ron Paul, who is only going to get busier with the fires he's been single-handedly trying to extinguish since the early eighties, but a Ron Paul. Someone with levels of frankness and integrity commensurate with his public sector salary. At this point, the Congressman from the 14th is the only one on the continent I'm aware of.

Friday, 11 February 2011

Dear Egypt

Dear Egypt,

For ten or eleven days here in Ontario, Canada, slowed down by snow and freezing temperatures and now a horrible cold, I have been kicking a blog posting between my personal and work emails about your recent exploits. It was about war and oppression and "hearts and minds" and you not buying what your dictator was selling. I have realized today upon learning of your victory over this man, Hosni Mubarak, that I was not getting my point across and I needed to start over. So without further ado, congratulations With the whole world watching, hundreds of thousands of you refused to vacate Tahrir square for 18 days. Today, Hosni Mubarak finally did what he couldn't have done a second sooner as the biggest strongman turned lame duck ever: He quit.

The stuff I wrote was okay and probably editable, but the main problem with it was my lack of knowledge on Egypt. I've never been to Egypt. I went to high school with a couple Egyptians. I know some anecdotal stuff, such as that General Nasser was the first Arab leader with any backbone, in the early 1970s, after a few decades of Western-supported sellout lackeys in your region. I know that you've been ruled by this former military commander, U.S. supported strongman Mubarak since 1980, and that the Suez Crisis in the 1960s around the Six Day War was historically significant. This information, while useful, does not give me sufficient license, I feel, to comment and analyse what your country is going through and the zeitgeist in your air right now. I will restrain myself instead to giving you my heartiest congratulations, explaining why I think what you did was important, and describing how our ideas about the middle east in North America about your country and region get created in our minds.

Apart from the vivid images we get from a few daring American adventure-man reporters like CNN's Anderson Cooper and the New York Times's Nicholas Kristof and Thomas Friedman who jump on planes and land in the middle of crowds like yours whenever stuff like this happens, to shout at us through overstated prose or shaky camera lenses "Holy Shit! I'm witnessing history. Democracy is being born over here. I can't describe what is in the air. Everyone's on twitter," our view over here about you tends to be distorted and monopolized by "experts". These are people who sometimes write in the mainstream media, but more often in journals like Foreign Affairs or The National Interest. Many of them work at Ivy League schools, and there is also their audio output from podcasts, such as the Center for Strategic and International studies' (CSIS) weekly briefing. That organization is a think-tank, of which there are hundreds if not thousands in Washington D.C. and elsewhere. They make up a good part of the entity referred to as the "Foreign Policy" community (FPC).

These people may be heavily credentialed, but not in the field they seem to be most learned in when they talk about your country and your region, which is child psychology. To hear it from them, the whole region of the middle east and North Africa is as easy to categorize as some simple children in a school yard. They are as manipulative, dismissive, and corrupting as you would expect the behavioural coordinators as Middle East Public School to be. Iraq and Iran are the two ringleader alpha males, getting all the attention and being thrown in detention all the time. Saudi Arabia is the spoiled and infantile rich kid who is given free reign because his parents cut the fattest donor cheques. Hezbollah and Hamas are your ghetto kids, the lowest of the low, the most dangerous who aren't even registered half the time (influential political entities that don't govern or have nations). Turkey is the preppy straight A well dressed student who steals exams and sells drugs and never gets caught. Algeria, Morocco, and Tunisia are the weird kids with a French nanny nobody pays attention to. Israel is the overachieving teacher's pet who gets no respect and doesn't belong (and still manages to kick people in the balls). Jordan is a pretty girl, not too bright. Dubai is the rich kid who's such a well behaved kiss-ass he's annoying. And Syria is your average sized low-middle class kid who muddles along fine but somehow got put in the "at-risk" file. Libya is that strange kid about whom everybody is sure they will one day say "I always knew there was something off about him..." and Afghanistan is that huge dope who sits way in the back who is in his 20s even though you're supposed to graduate at 13.

And then there is Egypt. Who knows about Egypt? What is said about Egypt? Not a lot. In truth, no schoolyard image comes up for me. All that mattered until a month ago was that it was "free" and "friendly" in our terms. It didn't provoke Israel. It was simple to visit. It had wonders of the world to see and all inclusive resorts to stay in. That was good enough to earn a dictator thirty years of U.S. military aid and unconditional U.S. support. Yes, there were ten or so bullshit elections won with 99.9% of votes for Mubarak, and dissent was not tolerated in any form, but these inconvenient facts could not deter Western "pragmatism" (A favourite term of our friends in the FPC). Egypt was stable in a volatile region and sacrificing ideals was a low price to pay. For American diplomacy that is. The poor Egyptian population, however, paid a very high price. It's starting to look like the money from all those pyramid visits went straight into Mubarak and his buddies' pockets.

These facts were known during the period in which they occurred. So your country did often get lumped in with the other countries in the school yard and painted with the "backward", "stagnant", "corrupt", and "potentially explosive" brushes used by the brooks brothers suit wearing circles of geo-political shrinks in Europe and North America whom you never asked to be psychoanalyzed by. I'm not sure how many of you were aware of this or why you should or would care, but you were basically written off as insignificant. America paid your dictator and then its commentators laughed at you for putting up with him.

Then something happened. In two years, Social Media has become widespread, fine, but something of a bit more consequence has also happened. Grain prices have shot up. Your pitiful wages have not. So there was no realization. There was no two-thirds-of-the-way-through a hollywood movie epiphany where you decided to beat the bad guys and get the girl, although these are the terms some of your American observers think in. You did what any reasonable humans would do and will be doing a whole lot more of. You said, "Holy shit, I cannot afford flour and rice on the fifty dollars a month I earn kissing ass in this five star resort. So F--- this!"

It is incredible. You looked like champions, the whole world is admiring you, and you have made history by seizing your moment and not giving in. I smiled today when I found out the bastard went down. Just don't let the Anderson Coopers of this world steal all your thunder by acting like it is some huge achievement for them, because they think Americans invented freedom and democracy, and you are deciding to be like Americans because you used twitter. These guys didn't have their eye on you and didn't give a shit before the action started happening, and they want to show themselves in the mix because that's how they make their buck. Egypt, I want to know more of your stories, I want to know what your life is like, and I want to see you succeed. I don't want to learn these things through the American media filter.

You are an inspiration. For years, they thought Mubarak was untouchable, and you forced him out with almost no violence. In North America, where we have an opinion on just about every country on earth (as well as vested economic interests in the backs and resources of those countries' citizens), our governments continue to lie to us, abuse and monopolize power, disregard and bypass procedures that are there to protect the integrity of our democratic system, and hand money and influence over to the unaccountable companies and lobby groups that buy it from them on a daily basis. People think our countries don't compare because of the illusions of stability and prosperity that are maintained over here. They are wrong. On one of the countless articles about you this week, I read something to this effect in the comments:

"The problems of North African Arab countries (high unemployment, corrupt pocket-lining dictators, intellectual and economic stagnation) have been well-known and present for decades - the tiny amount of time it took for things to come to a boil is instructive."

Again, great job on deposing your dictator! Welcome to your insane future!

Wednesday, 2 February 2011

Creative Finance - A Tax on Speaking Engagements




At $100,000 a gig, the question is not going to be "How can we tax them?" but "How can we not?"


There is a campaign actively underway to convince the Canadian public that corporations need additional tax breaks.  The government of Canada is so sure about this that they are prepared to make it an election issue.  Corporations, it is argued, are the driving factor in the economy's circle of life, providing goods and services, exporting products and resources, and employing people.  This is why life needs to be made as easy as possible for them.
 
It is on this last point that the government is hoping to emotionally appeal to you by portraying these shamelessly and unabashedly self interested actors, 100% in it for themselves and unaccountable to the public, as worthy benevolent recipients of public resources.  We should do everything possible for the entities that allow certain people among us to make a living. 
 
They can allow you to make a living for as little, in Ontario, as 10.25 an hour.  Most of the people over this poverty line wage who earn livings working for them are reimbursed to the tune of 30,000 (23,000) a year, 40,000 (27,000) or 50,000 (31,000) per year.  The approximate after tax incomes at these salaries are listed beside them in parentheses.  From 70,000 per year onward, the government takes a little more than half.
 
If you are self-employed, you know that you pay taxes AFTER your car, phone, living expenses, eating out, etc are written off.  These people I'm talking about are regular employees, therefore taxed at the regular income tax rate THEN paying all those expenses after the tax is taken off.
 
So for our rank and file Canadian society proles, we are looking at a 24-36% tax rate for the massive amount of "lower-middle class" earners in this country and a 50%+ tax on a smaller, but not insignificant, amount of "mid-upper middle class" earners.
 
And yet somehow, these people's interests are conflated with corporations', whose rates have been progressively lowered over a relatively short period of time from 21% to 15% to the now 12% they are asking for and will eventually receive from the conservatives.  These are taxes on PROFITS - after wages, rent, depreciation, and all other operating costs.
 
So even though we have now established we are preparing to allow less than half the tax for gravy that we put on bread and butter, let's suppose they were right and they really did need this relief to remain "competitive" and "certain of their ability to operate here" so that all these heavily taxed people can continue to toil 40+ hours per week for them.  What do you think would happen in a year, or six months, or two months?
 
They'd be asking for it to be lowered again.
 
See, the Conference Board of Canada, the Canadian Council of Chief Executives, Chambers of Commerce, Bay Street and the other diverse organizations and institutions that make up what I will refer to as the "business lobby" don't really care where the money comes from.  They just know that they need more, all the time, to meet their needs.  Which are profit, growth, dividends, beating the forecast, and capital.  I think you can see where this is going.  You can bet they are eventually going to say the rates are too high as sure as you can bet you're eventually going to take a trip to the urinal after downing a pitcher of beer.  They will be asking for the rates to be lowered until they are at zero.
 
And when they are at zero, they will start asking for subsidies.  Not that that will represent anything new, because they receive those already, but why not ask for more and bigger ones?  What do they have to lose by asking? It doesn't cost them anything and the government always says yes.  When a business finds a guaranteed, low-cost way to increase its revenue, you can bet they will be doing that as long as they can get away with it.
 
There was a time when businesses expanded based on demand.  Now it seems like you can't read about a plant opening or a company setting up in Canada without the lucky provincial government publicly kicking in millions of dollars (Again, the feds have trouble getting away with this, so their subsidies are much murkier in little noticed-little scrutinized bailouts, transfer payments, and corporate tax rates).  There are no plans to pay this back or justifications why public money should be directed to these uses; it is merely portrayed as an "investment" in the province or country"s "future" because it "creates jobs" and "strengthens the economy".
 
The bottom line is that these corporations are all driven by, well, their bottom lines.  Meaning their profit.  All profit means is taking in more money than you put out.  I don't think any of them are too concerned about where the money is coming from.
 
What is funny is that it is a revolving door consortium of government and business elites who push these endless demands to accommodate businesses, while the vast majority of workers who power these businesses earn in a week what these guys consider a modest lunch tab.  In the middle of the 2nd working day of 2011, Canadian CEOs had already earned a year's salary of the average worker.  But there is no point on dwelling on this obvious fact: we know that eat the rich, glaring inequality rants get nowhere because people have accepted the two falsehoods that these people are better than them and they have earned it.  The real question is how anti-tax governments and anti-tax businesses propose to cover the state's massive operating costs and expanding budget deficits, if they are so sure that the taxes on business are such an unnecessary source of revenue.
 
What we should focus on is thus productive discussion on how to raise state revenues without sacrificing our businesses competitiveness.  Well, we know deficits are at record levels and entitlements are only going to rise.  We've seen in this post that workers are pretty well maxed out. And now the single easiest source of revenue, companies who make their money OFF OF US, are untouchable. What to do?  Wait, I have an idea. Lets look at our well-meaning elite. They are examples of how to succeed in this society. So how do these enlightened folks make livings after leaving business leadership or public life? Maybe we can draw inspiration from there.
 
Because I will tell you that regardless of their unpopularity, irrelevance or total failure, come hell or high water, they fill up their calendar with speaking engagements.  Typically at $100,000 a gig.  Just ask Jack Welch, Lee Iacocca, Rudolph Giuliani, Jean Chrétien, Bill Clinton, Sarah Palin, George Bush, Tony Blair, Dominique Strauss-Kahn.  $20 million per film celebrities, multimillionaire bestseller authors, and recording artists whose tours gross in the tens and hundreds of millions have also joined this fold.
 
The annual DAVOS conference that takes place in the eponymous Swiss resort is really their one collective freebie; the world elite's group speaking engagement that they don't get paid for.  And I don't want to spend a lot of time criticizing this conference, which is about as hard for me as it is for a three-time Cy Young award winner to hit the side of a barn.  What is common to this conference and the various paid speaking engagements this cabal spends its time traipsing between are the dramatic passion with which they describe the problems of this world and infuse their $200-a-word, ghostwritten discourses (that is probably too generous of a term).  Child poverty. Slumping economies. Anaemic Growth. Climate change. Very general and exotic sounding problems at the same time, which could change depending on the persons' superficial political leanings, with the constant being the person taking themselves seriously while describing how they are now "giving back" by "raising awareness".
 
These are the same people, when they were passing from Goldman Sachs to their government's cabinet, then back on the board of the IMF, before going over to a plum post at an embassy before finally setting up their foundation, had no problem doing what they were supposed to do when they were on either side of the same coin.  Which was asking the government for money when they worked in business, and saying "yes" to business when they were in government.  It's pretty funny to hear them talking about the need for governments to "tackle poverty" and "do more".  it seems that in fact that they may have been the root cause impeding governments to do such things at one time, when they were in business (or was it government)?

I don't want to spend all day pillorying these folks (because after all, they're (pompous and self-aggrandizing) humans too) or be a negative nancy who sends you fleeing to a popular celebrity gossip site, so I will get on with the solution: A global speaking engagement tax, levied at 95% on all appearances 5 figures and over. What better way for our public figures perturbed and concerned about the state of the world to “give back”? Now, for 45 minutes they will only make $500-$5000 dollars. I think they will set a real example by consenting to receive such a working class sum. Best of all, the other 95% will flow directly into the coffers of whichever overextended and perpetually indebted “rich” country they find themselves in...those same empty coffers they are in the middle of hectoring them to open up! It's not the only reason for Western insolvency, but cuts of the colossal sums many of these people are worth are not paid to the relatively high-taxing (in their minds) governments of Western nations of which they are nationals. They are rather stored in an international network of “paradises”, countries who exist for the sole reason of sheltering rich people's money from the 90% on earth who have none: Switzerland, Cayman Islands, Turks and Caicos, Aruba...So let's end this irony, surely one of the greatest on earth, and grab the icing on the cake that flows into these accounts: appearances and speaking engagements.