Quotulatiousness

November 30, 2023

Canadian government declares victory over Google, then lays down its arms and marches into captivity

Filed under: Business, Cancon, Media, Politics, Technology — Tags: , , , — Nicholas @ 05:00

The Trudeau government has won a glorious, historic victory over the evil capitalistic powers of Google in the war of Bill C-18. Let all patriotic Canadians raise their hands to cheer our victorious politicians before they have to admit out loud that they fucked up real good:

Heritage Minister Pascale St. Onge has surrendered to Google and Canadian media have avoided what would have been a catastrophic exclusion from the web giant’s search engine.

In the short term, this is very good news. The bureaucrats at Heritage must have performed many administrative contortions to find the words needed in the Online News Act‘s final regulations to satisfy Google, a beast which isn’t easily soothed. In doing so, they have managed to avoid what Google was threatening — to de-index news links from its search engine and other platforms in Canada. Given that Meta had already dropped the carriage of news on Facebook and Instagram in response to the same legislation, Google’s departure would have constituted a kill shot to the industry.

Instead, the news business will get $100 million in Google cash. For this, all its members will now fight like so many pigeons swarming an errant crust of bread.

The agreement will also allow the government, while surrounded by an industry whose reputation and economics have been devastated by this policy debacle, to attempt to declare victory. Signs of that are already evident.

That’s the good news.

The bad news is that while 100 million bucks is nothing to sneeze at, in the grand scheme of things it is a drop in the bucket for an industry in need of at least a billion dollars if it is to recover any sense of stability. Indeed, when News Media Canada first began begging the government to go after Google and Meta for cash, some involved were selling the idea that sort of loot was possible.

This did not turn out to be so.

Instead of the $100,000 per journo cashapalooza that was once hoped for, the final tally will be more like $6,666.00 per ink-stained wretch.

That figure is based on two assumptions. The first is that the government has agreed to satisfy Google’s desire to pay a single sum to a single defined industry “collective” that would then divide the loot on a per-FTE (full-time employee) basis to everyone granted membership in the industry’s bargaining group. Google had made it clear it had no interest in conducting multiple negotiations and exposing itself to endless and costly arbitrations. So, as we have a deal and Google held all the cards, it’s fair to assume it got what it wanted — a single collective with a single agreement and a single cheque.

November 27, 2023

The slackening pace of technological innovation

Filed under: Business, Economics, Media, Technology, USA — Tags: , , , , — Nicholas @ 04:00

Freddie deBoer thinks we’re living off the diminishing fumes of a much more innovative and dynamic era:

I gave a talk to a class at Northeastern University earlier this month, concerning technology, journalism, and the cultural professions. The students were bright and inquisitive, though they also reflected the current dynamic in higher ed overall – three quarters of the students who showed up were women, and the men who were there almost all sat moodily in the back and didn’t engage at all while their female peers took notes and asked questions. I know there’s a lot of criticism of the “crisis for boys” narrative, but it’s often hard not to believe in it.

At one point, I was giving my little spiel about how we’re actually living in a period of serious technological stagnation – that despite our vague assumption that we’re entitled to constant remarkable scientific progress, humanity has been living with real and valuable but decidedly small-scale technological growth for the past 50 or 60 or 70 years, after a hundred or so years of incredible growth from 1860ish to 1960ish, give or take a decade or two on either side. You’ve heard this from me before, and as before I will recommend Robert J. Gordon’s The Rise & Fall of American Growth for an exhaustive academic (and primarily economic) argument to this effect. Gordon persuasively demonstrates that from the mid-19th to mid-20th century, humanity leveraged several unique advancements that had remarkably outsized consequences for how we live and changed our basic existence in a way that never happened before and hasn’t since. Principal among these advances were the process of refining fossil fuels and using them to power all manner of devices and vehicles, the ability to harness electricity and use it to safely provide energy to homes (which practically speaking required the first development), and a revolution in medicine that came from the confluence of long-overdue acceptance of germ theory and basic hygienic principles, the discovery and refinement of antibiotics, and the modernization of vaccines.

Of course definitional issues are paramount here, and we can always debate what constitutes major or revolutionary change. Certainly the improvements in medical care in the past half-century feel very important to me as someone living now, and one saved life has immensely emotional and practical importance for many people. What’s more, advances in communication sciences and computer technology genuinely have been revolutionary; going from the Apple II to the iPhone in 30 years is remarkable. The complication that Gordon and other internet-skeptical researchers like Ha-Joon Chang have introduced is to question just how meaningful those digital technologies have been for a) economic growth and b) the daily experience of human life. It can be hard for people who stare at their phones all day to consider the possibility that digital technology just isn’t that important. But ask yourself: if you were forced to live either without your iPhone or without indoor plumbing, could you really choose the latter? I think a few weeks of pooping in the backyard and having no running water to wash your hands or take a shower would probably change your tune. And as impressive as some new development in medicine has been, there’s no question that in simple terms of reducing preventable deaths, the advances seen from 1900 to 1950 dwarf those seen since. To a remarkable extent, continued improvements in worldwide mortality in the past 75 years have been a matter of spreading existing treatments and practices to the developing world, rather than the result of new science.

ANYWAY. You’re probably bored of this line from me by now. But I was talking about this to these college kids, none of whom were alive in a world without widespread internet usage. We were talking about how companies market the future, particularly to people of their age group. I was making fun of the new iPhone and Apple’s marketing fixation on the fact that it’s TITANIUM. A few of the students pushed back; their old iPhones kept developing cracks in their casings, which TITANIUM would presumably fix. And, you know, if it works, that’s progress. (Only time and wear and tear will tell; the number of top-of-the-line phones I’ve gone through with fragile power ports leaves me rather cynical about such things.) Still, I tried to get the students to put that in context with the sense of promise and excitement of the recent past. I’m of a generation that was able to access the primitive internet in childhood but otherwise experienced the transition from the pre-internet world to now. I suspect this is all rather underwhelming for us. When you got your first smartphone, and you thought about what the future would hold, were your first thoughts about more durable casing? I doubt it. I know mine weren’t.

Why is Apple going so hard on TITANIUM? Well, where else does smartphone development have to go? In the early days there was this boundless optimism about what these things might someday do. The cameras, obviously, were a big point of emphasis, and they have developed to a remarkable degree, with even midrange phones now featuring very high-resolution sensors, often with multiple lenses. The addition of the ability to take video that was anything like high-quality, which became widespread a couple years into the smartphone era, was a big advantage. (There’s also all manner of “smart” filtering and adjustments now, which are of more subjective value.) The question is, who in 2023 ever says to themselves “smartphone cameras just aren’t good enough”? I’m sure the cameras will continue to get refined, forever. And maybe that marginal value will mean something, anything at all, in five or ten or twenty years. Maybe it won’t. But no one even pretends that it’s going to be a really big deal. Screens are going to get even more high-resolution, I guess, but again – is there a single person in the world who buys the latest flagship Samsung or iPhone and says, “Christ, I need a higher resolution screen”? They’ll get a little brighter. They’ll get a little more vivid. But so what? So what. Phones have gotten smaller and they’ve gotten bigger. Some gimmicks like built-in projectors were attempted and failed. Some advances like wireless charging have become mainstays. And the value of some things, like foldable screens, remains to be seen. But even the biggest partisans for that technology won’t try to convince you that it’s life-altering.

November 26, 2023

Ontario’s beer market may see radical changes soon

Filed under: Business, Cancon, Government, Wine — Tags: , , , , , — Nicholas @ 03:00

For beer drinkers outside Ontario, the province’s weird beer retailing rules may seem to be from a different time, but that’s only because they are. Until fairly recently, the only place to buy beer was from one of two quasi-monopoly entities: the provincially owned and operated LCBO or the foreign brewery owned Beer Store. LCBO outlets were limited to single containers and six-packs, while Beer Stores sold larger multipacks and also handled bottle deposits and returns. In the last few weeks, the Ontario government has indicated that long overdue changes are coming:

“The Beer Store” by Like_the_Grand_Canyon is licensed under CC BY-NC 2.0

The only thing we really know at this point (and it’s been reported by the Toronto Star and now CBC, and earlier by this website, all from sources) is the horribly unfair deal The Beer Store has had since 1927 in Ontario is about to come to an end. It’s expected that The Beer Store will be given notice by the end of December under the Master Framework Agreement (MFA) that the deal will be all but dead. They will have two years to wrap things up while a more modern system of booze retailing is fine-tuned and prepared for implementation. There’s a new era dawning in Ontario, one that would seemingly benefit grocery and convenience stores, local brewers, Ontario wineries, and obviously consumers who will get wider selection, more convenience and competitive pricing.

“The MFA has never been about choice, convenience or prices for customers, it has always been about serving the interests of the big brewing conglomerates, and that’s what needs to be addressed,” Michelle Wasylyshen, spokesperson for the Retail Council of Canada, whose board of directors includes members from Loblaw, Sobeys, Metro, Walmart, and Costco, told Mike Crawley of the CBC.

The end of The Beer Store MFA in whatever iteration it will look like will have a cascading impact on local VQA wine. Ontario wineries hope that it’s a positive impact and are cautiously optimistic that wide open beer and wine sales at grocery and convenience stores means more sales and less levies for their products.

As the CBC pointed out in its story, the looming reforms “pit a range of interests against each other, as big supermarket companies, convenience store chains, the giant beer and wine producers, craft brewers and small wineries all vie for the best deal possible when Ontario’s almost $10-billion-a-year retail landscape shifts. And — this is a biggie — the LCBO lobbying efforts to keep its antiquated system of monopoly retailing intact, which seems to be a big ask with what we now know from sources. Something must give.

Some key bullet points from the CBC report:

  • Will the government shrink the LCBO’s profit margins, including its take from products that other retailers sell?
  • Will retailers such as grocery and convenience stores be required to devote a certain amount of shelf space to Ontario-made beer and wine, or will they have total control over the inventory they stock?
  • Will small Ontario wineries get any help in competing against big Ontario wineries whose products can contain as much as 75% imported wine?

The government has been listening to all stakeholders in the booze industry in Ontario for over a year now. Three key associations — Ontario Craft Wineries, Tourism Partnership Niagara, and Wine Growers Ontario — joined together to commission a report titled Uncork Ontario. That report, which concludes that the Ontario wine sector is well positioned to drive sustainable economic growth for the region, the province, and the country and has the potential to drive at least $8 billion in additional real GDP over the next 25 years, launched a campaign to lobby the government for radical changes to reach those lofty goals, or at least put the wheels in motion.

One of the big issues for Ontario wineries is a punishing 6.1% “sin” tax charged on every wine made in Ontario but not foreign wines. It’s a tax that’s been hurting Ontario wineries for years even though a grant was issued to wineries to help pay that tax back. To this date, the tax has not been cancelled and wineries keep remitting the tax owed monthly and can only hope the grant keeps getting extended. Ontario wines are among the highest taxed in the world with up to 73% of every bottle sold going to taxes and severe levies at the LCBO.

November 24, 2023

More than 1,500 new jobs thanks to federal and provincial subsidies … except the jobs are for South Koreans

Filed under: Asia, Business, Cancon, Government — Tags: , , , , , — Nicholas @ 03:00

Tristin Hopper applauds the great job creation scheme that the federal and Ontario governments have put in place … if you ignore the inconvenient fact that most of the newly created jobs aren’t even going to Canadians:

When the Ontario and federal governments greenlit one of the biggest corporate subsidy payouts in Canadian history last summer, their main pitch was the deal would create jobs.

“The governments of Canada and Ontario are partnering to attract once-in-a-generation projects that will anchor our auto manufacturing sector and keep good jobs in Canada,” reads the opening line of a July 6 joint statement announcing a record-breaking $28 billion in government “performance incentives” to secure two foreign-owned EV battery factories in Southern Ontario.

The subsidy-per-job ratio was never great. Even according to the most optimistic estimates of government spokespeople, the two factories — one operated by Volkswagen, the other by Stellantis — would create about 5,500 jobs. Per job, that’s roughly $5 million in lifetime subsidies and tax credits.

But now, it appears that many of those jobs may not even go to Canadians.

Last week, during a visit by South Korean Ambassador Woongsoon Lim to Windsor, Ont., a social media post by the Windsor Police casually mentioned that “1,600 South Koreans” would soon be arriving in the community to staff the Stellantis plant, which is set to open next year.

    With the new LGEngergy Solutions battery plant being built, we expect approximately 1,600 South Koreans traveling to work and live in our community in 2024.

    — Windsor Police (@WindsorPolice) November 16, 2023

The CEO of NextStar — the Stellantis joint venture operating the factory — hasn’t confirmed the 1,600 figure, but said in a statement that the “equipment installation phase of the project requires additional temporary specialized global supplier staff”. He added that the company was “committed” to hiring Canadians to fill the 2,500 full-time jobs at the completed plant

The revelation has sparked a wave of confusion and finger-pointing among the very officials who, mere months ago, were championing the plant as an unalloyed triumph for Canadian manufacturing jobs.

When the subsidy arrangement was first announced in July, Ontario Economic Development Minister Vic Fedeli called it a “historic deal” and “a great agreement” that “protects the thousands of jobs quite frankly that were at stake”.

November 22, 2023

Marginal Thinking and the Sunk Cost Fallacy

Filed under: Business, Education — Tags: — Nicholas @ 02:00

Marginal Revolution University
Published 1 Aug 2023

Thinking on the margin is one of the most fundamental concepts in economics – and a valuable everyday tool for making optimal decisions.

For such an important idea, the meaning of marginal thinking is surprisingly simple: when faced with a decision, you should compare the marginal benefit of a possible action to its marginal cost. If the marginal benefit is greater than the marginal cost, do it!

Marginal thinking is best illustrated by some examples of everyday decisions. The volume you choose when you watch TV, the pricing strategy of a clothing shop, or even the decision to walk out of a boring film are all informed by marginal thinking.

The “Sunk Cost Fallacy” is a common failure to apply marginal thinking. Focusing on past decisions – the price we paid for an item, the time we’ve already invested in a relationship – can lead us astray. We can’t change the past, so only the potential marginal benefit and marginal cost of the next possible action are relevant to decision-making.
(more…)

November 21, 2023

“Self-checkouts are not quite Skynet T-800 death dealers. Sarah Connor can rest easy – for now”

Filed under: Britain, Business, Technology — Tags: , , — Nicholas @ 05:00

I realize the problem is me, in that I hate self-checkout kiosks with a fiery passion and have been known to abandon any plans to purchase from a store if there is no human assigned to the checkout desk. I decline (with thanks) all offers to use the self-checkout — several of which are often unused — while lined up three or four deep at the one human’s work station. It must be my Luddite side showing. But, as Christopher Gage shows here, I’m not completely alone:

Self-checkout using NCR Fastlane machines at a Sainsbury’s store in the UK.
Photo by Magnus Manske via Wikimedia Commons.

“He’s got a problem with potatoes,” said the condemned, guarding the self-checkout machines. Potatoes plague them. Carrier bags flummox them. ‘Surprising item on the scale,’ it squeaked as if I were weighing up a kilo of black-tar heroin.

The retirement refusenik tapped a code on the screen for the third occasion before returning to his post. ‘Unexpected item in the bagging area.’ Embarrassed, I marshalled my friend — the Hobbity, amenable man with the silver slugs for eyebrows — for the fourth time. He recanted a well-worn sop dispensed to young dotards like me: “Don’t take it personally,” he said. “He just doesn’t like you.”

Self-checkouts are not quite Skynet T-800 death dealers. Sarah Connor can rest easy — for now.

After a little while, the machine let me go. The ordeal, fractious and infinitely slower than employing the helpful man to man a till, was over. Then, the devil-device sucker-punched square in the testes.

“Lovely to see you bye for now,” read the screen. Sinister, like a Jehovah’s Witness grinning. No comma after the introductory clause?! The insolent swine. I fought the primal urge to drown the machine in Coca-Cola and watch it crackle. The clean-up would be Harold’s job. He had enough on his plate.

Mercifully, one supermarket has sacked these silly machines.

Booths, a posh retailer up north, has retired self-checkouts in all but two of their stores. The good burghers of Booths reckon humans talking to other humans is a groundbreaking idea that will catch on in future.

“We have based this not only on what we feel is the right thing to do but also from having received feedback from our customers,” they said.

“Delighting customers with our warm northern welcome is part of our DNA.”

Wearily, Booths did what British northerners must do lest they spontaneously combust — they peacocked their northernness. Apparently, to be born on a particular patch of this floating rock bestows northerners an umbilical, friendly mien.

Northerners cannot help themselves. POV: You encounter a northerner in a pub: “A malignant tumour, you say? You wanna get yourself a northern tumour. Northern tumours are far less aggressive than those bloody southern tumours. It’s a fact! Northern tumours still have a sense of community, you see. Not like southern tumours …”

I must forgive them. Booth’s “northern welcome” is a good thing. Entities imbued with DNA are a good thing. Even one fewer self-service checkout is a good thing.

From where Booth’s tread, others may follow. The numbers don’t tell fibs.

Self-checkouts mutate even the most cherubic of citizens into a degenerate thief. Stores with self-service checkouts suffer double the shrinkage (4%) — industry-speak for pilfering and thieving.

Researchers say the temptation can prove too much, provoking our inner tea leaf into a spot of half-inching. Self-checkouts goad miscreants into slapping a “Reduced to £1” sticker on a litre of Jameson.

Booths have bucked a trend. A fatuous, anti-human trend.

Update: Fixed broken URL.

QotD: Collabortage

Filed under: Business, Quotations, Technology — Tags: , , , — Nicholas @ 01:00

Yes, that’s a new word in the blog title: collabortage. It’s a tech-industry phenomenon that needed a name and never had one before. Collabortage is what happens when a promising product or technology is compromised, slowed down, and ultimately ruined by a strategic alliance between corporations that was formed (at least ostensibly) to develop it and bring it to market.

Collabortage always looks accidental, like a result of exhaustion or management failure. Contributing factors tend to include: poor communication between project teams on opposite sides of an intercorporate barrier, never-resolved conflicts between partners about project objectives, understaffing by both partners because each expects the other to do the heavy lifting, and (very often) loss of internal resource-contention battles to efforts fully owned by one player.

Occasionally the suspicion develops that collabortage was deliberate, the underhanded tactic of one partner (usually the larger one) intended to derail a partner whose innovations might otherwise have disrupted a business plan.

Eric S. Raymond, “Collabortage”, Armed and Dangerous, 2011-02-16.

November 15, 2023

The big brains of Hollywood display “a special kind of stupid”

Filed under: Business, Media — Tags: , — Nicholas @ 03:00

Ted Gioia met with a group of executives from movie distribution firms outside the North American market back in 2016. It was a good time, financially, but the overall tone of the meeting was anxious because the trend seemed unsustainable:

These were smart people, but they didn’t make the movies. They just ran theater chains. But they didn’t need to be specialists in creativity or storytelling to know that hit films were now built on tired formulas, the same plot lines played out over and over again.

Special effects added some sizzle to the steak, but it was still the same stale meal night after night. Sooner or later, even superheroes die.

Other genres have come and gone — westerns and musicals and other box office draws of the past. Comic book franchises would eventually meet the same fate.

Source: Bo McReady

Back then, Disney was bragging to shareholders that another 20 Marvel films were already in the pipeline. And that was just a start. CEO Bob Iger explained that Disney owned the rights to 7,000 different Marvel characters — implying that brand franchises could propagate forever, like copulating Australian bunnies.

That was the party line in Burbank. But most of the people I spoke to that day privately expressed doubts about this formula-driven strategy. They hoped to enjoy a few more years of boom times, but worried about what would happen next.

    “It takes a special kind of stupid to kill off Indiana Jones or Toy Story or a Marvel superhero, but that’s exactly what’s playing out right now in the Magic Kingdom.”

As it turned out, they were right to worry. But a virus, not a superhero, let them down. The first COVID case happened almost exactly three years after my December 2016 talk.

But it now looks like the pandemic merely delayed the creative collapse.

Hollywood has saturated the market with look-alike movies. Their pipeline of films is now exploding like the Nord Stream, but with this difference—studios are still sitting on a huge pile of future bombs.

And what does a studio do with a bomb on its hands?

They have four options—and they are four kinds of ugly

  1. You delay the film, hoping for a better market environment in the future.
  2. You send it back for rewriting and more filming
  3. You cancel it entirely, and write off the investment
  4. You release it — sinking another $50 million, more or less, into marketing — and then watch it collapse at the box office.

Disney is getting a sour taste of strategy number four this week.

November 10, 2023

Canadian media’s self-immolation an object lesson for British media

Filed under: Britain, Business, Cancon, Government, Media, Politics, Technology — Tags: , , , , , — Nicholas @ 04:00

Marc Edge discusses how Canada’s legacy media joined together in a virtual suicide-pact to force Google and Facebook to give them millions in unearned revenue:

The best-laid plans of Canada’s biggest media owners went badly awry this summer, when Meta began blocking news across the country on its social media networks Facebook and Instagram in response to the Online News Act passed in June. Newspaper publishers lobbied the federal government relentlessly to force Google and Meta to compensate them for supposedly “stealing” their news stories by carrying links to them. But instead of bringing them hundreds of millions of dollars a year from the digital giants, as a similar law has in Australia, their campaign backfired badly in what has been described as “a massive policy blunder“, and “the most spectacular legislative failure in Canada’s living political memory“.

Not only will publishers not be getting any money from Meta, they likely won’t get any from Google either, as they have threatened to similarly block news in Canada when the law comes into effect in December. Ironically, publishers will instead lose millions instead, as the agreements they already have with at least Meta will be cancelled, and probably those with Google as well. The knock-on effect makes it a triple-whammy when you also consider the traffic that news media will lose to their websites from the platforms. Worst affected will be online-only publications which have depended on that traffic to build an audience. Most did not want the Online News Act and many spoke out against it, but they were drowned out by the newspaper lobby led by industry association News Media Canada. It is dominated by the country’s two largest chains, which are now owned by a private equity firm and US hedge funds.

The Online News Act is the second in a series of bills designed to regulate the Internet, which, when taken together, include many of the same elements as the UK’s omnibus Digital Markets, Competition and Consumers Bill now before Parliament. An Online Streaming Act passed in April will tax and regulate digital video services in Canada, which are mostly owned by U.S. companies such as Netflix, Disney, and Amazon. A so-called Online Harms Act designed to combat hate speech and online bullying was introduced in 2021 but died on the order paper with an election call. It was criticised by civil libertarians for potentially prohibiting otherwise lawful speech and was thus being revised, but so far it has not been re-introduced. Legislation aimed at increasing online privacy and consumer rights is also planned.

One of these things, on closer scrutiny, is not quite like the other ones, and a realisation is growing in Canada that the government may have been co-opted in its enthusiasm to regulate the Internet to participate in what has been called a “shakedown” of the digital giants. Canada’s news media have literally been on the dole for the past five years since they lobbied the government for a five-year $595-million bailout that expires next spring. This has prompted publishers to adopt Rupert Murdoch’s successful strategy in Australia of persuading the government to force the digital giants to share their advertising revenues with newspapers.

Canadian publishers lobbied for the Online News Act in part by running blank front pages for a day and also spiked several opinion articles by academics that had been accepted for publication by editors. Canada has long had one of the free world’s highest levels of media ownership concentration, along with Australia. It went to another level in 2000 with the “convergence” of newspaper and television ownership, against which Canada had no regulatory safeguards, unlike most other countries. The multimedia business model collapsed with the 2008-09 recession, when advertising revenues dropped sharply, and Canada’s news media have been lurching from bad to worse ever since. The country’s largest newspaper chain, Postmedia Network, was acquired out of bankruptcy in 2010 by a consortium of US hedge funds which had bought much of its previous owner’s high-interest debt on the bond market for pennies on the dollar. They have since taken more than $500 million out of the company in debt payments. The country’s second-largest chain, Torstar, was bought from its owning families at the outset of the pandemic in 2020 by private equity firm NordStar Capital, which has been similarly stripping the company with closures, redundancies, and asset sales.

Only a government could waste this much money on the ArriveCAN boondoggle

Filed under: Bureaucracy, Business, Cancon, Government, Technology — Tags: , , , — Nicholas @ 03:00

Chris Selley is in two minds about the ArriveCAN scandal, in that thus far no minister has been implicated but we all may naively assume that the civil service was better than this sort of sleaze:

It’s tempting to want to forget that ArriveCAN, the federal government’s pandemic travel app that collected dead-simple information from arriving travellers and forwarded it to relevant officials for scrutiny, and that somehow cost $54.5 million — a figure no one has come within 100 miles of justifying, and don’t let anyone tell you differently. No one wants to remember the circumstances that supposedly made ArriveCAN necessary.

One could also certainly argue there are aspects of Canada’s pandemic response more desperately needing scrutiny. So, so many aspects.

But whenever the House of Commons operations committee sits down to investigate ArriveCAN, there are fireworks. And you start to think, maybe this godforsaken app is more key to understanding Canada’s pandemic nightmare than you first thought.

The latest blasts came on Tuesday, when Cameron MacDonald, director-general of the Canada Border Services Agency (CBSA) when the pandemic hit, alleged Minh Doan, then MacDonald’s superior and since promoted to chief technological officer of the entire federal government — pause for thought — had lied to the committee on Oct. 24 with respect to who picked GCStrategies to oversee the ArriveCAN project.

Doan told the committee he hadn’t been “personally involved” in the decision. MacDonald, who says he had recommended Deloitte build the app, says that’s garbage. “It was a lie that was told to this committee. Everyone knows it,” he said. “Everyone knew it was his decision to make. It wasn’t mine.” MacDonald said Doan had threatened in a telephone conversation to finger him as the culprit, and that he had felt “incredibly threatened”.

Crikey.

For those who’ve blissfully forgotten, GCStrategies consists of two people who subcontract IT work to teams of experts and takes a cut off the top — in this case a cut of roughly $11 million, for an app that should have cost a fraction of that, if it was to exist at all. Needless to say, that wasn’t the only fat contract GCStrategies — which, again, is two men and an address book — had received from the government over the years. Each GCStrategist made more money off ArriveCAN than I’ll likely make in my life. It makes me want to strap on a bass drum and sing “The Internationale” in public.

October 30, 2023

The rapidly fading market for “song investing”

Filed under: Business, Media, USA — Tags: , , — Nicholas @ 04:00

Ted Gioia called it over two years ago, and now it’s coming true:

The collapse finally came.

When I analyzed the song buyout mania, led by the Hipgnosis fund, back in June 2021, I predicted that this ultra-hot investment trend would “come to an unhappy end”. And now the collapse has arrived.

We’ve reached the endgame. The song fund’s share price has dropped 50% since I made that assessment — and now shareholders have voted to dissolve or reorganize the investment trust.

But where do we go from here? What are old songs really worth? And who will end up owning all these old rock and pop tunes?

Below I offer 12 predictions.

Much of what I have to say is harsh. That’s unfortunate — if I were a real judge, I’d err on the side of leniency. It’s never fun issuing such hardass verdicts. But if I claim to be the Honest Broker, I really have to stick with truths, even when (as in this case) they’re painful truths.

(1) Many musicians still want to sell their songs, but it will be hard to find generous buyers.
Bob Dylan got out at the top, but the times are now a-changin’. Musicians won’t get the big payouts available back in 2021. A telltale sign will be more deals with “undisclosed terms” — because nobody will want to brag about these lowball transactions.

(2) Professional financiers have finally learned their lesson.
The two big finance outfits promoting song investing, Hipgnosis and Round Hill, have faltered and will now sell the songs they bought. Sophisticated investors no longer believe the hype. So don’t expect to see the launch of new song investment funds any time soon. The remaining buyers will be bottom fishers and the terminally naive (described in more detail below).

[…]

(5) Look out for these vultures in all sectors of the music business.
When private equity firms knock on your door, it’s a sign that you’re already half dead. These folks actually enjoy picking on carcasses — which is easier work than hunting for live prey. I tend to avoid name-calling, but there’s a reason why some folks refer to them as vulture capitalists. That’s their specialty and their economic model is built on bottom-feeding. This is why private equity firms bought up lots of failing local newspaper, struggling local radio stations, etc. Guess what’s next on their list? Expect to see these tough hombres play a bigger role in all aspects of the music business over the next decade.

[…]

(7) This whole situation is a case study in misallocated investment capital.
There’s a general lesson here too. I realized, early on in my consulting work, that the single biggest mistake large corporations make is investing too much to keep their old business units alive — when they would be wiser putting that cash to work in new opportunities. The major record labels in the current moment are poster children for exactly this mistaken sense of priorities. They will support the “old songs” business model at all costs — it’s a core part of their self image — but return on investment will be dismal.

October 21, 2023

“… we’re not a business publication. One of them can point out that corporate governance is a joke in Canada”

Filed under: Books, Business, Cancon, Media — Tags: , — Nicholas @ 04:00

In the latest SHuSH newsletter, Ken Whyte reviews a recent BNN Bloomberg interview with Heather Reisman former-and-now-current-again CEO of Canada’s only big box book retailer, Indigo:

“Indigo Books and Music” by Open Grid Scheduler / Grid Engine is licensed under CC0 1.0

Heather Reisman gave an interview to Amanda Lang of BNN Bloomberg last week, her first effort to explain a summer of screwball management at Canada’s only bricks-and-mortar book chain.

[…]

How did Heather explain the zany sequence of events that started with her reporting Indigo’s fourth massive annual loss in five years in May; saw her booted in June from her role as executive chairman of Indigo, the company she founded, by her husband and controlling shareholder, Gerry Schwartz, along with every member of the board of directors who wasn’t personally beholden to Gerry; saw her spin her exit as a personal life-stages choice (“deciding when it is time to move on is one of the toughest decisions a founder must make”); saw her hand-picked successor and CEO, long-time British clothing retailer Peter Ruis, grab a seven-figure payout and make his own exit in September; saw the company announce that it would “act swiftly to find the right leader to move the company forward following Peter’s resignation”; saw Heather reinstated at the head of the chain two weeks later?

She didn’t. How could anyone explain that?

Heather bullshitted her way through the interview. It was all Ruis’s fault, she told Amanda. Indigo “took a journey off brand” under Ruis. She’d put him in charge of a book chain and “suddenly I was hearing that we were getting famous for selling $550 barbecues,” she said. “Somehow vibrators turned up in our stores and I remember saying ‘no, that’s not who we are.'” Ruis had “lost sight of … what our commitment is to customers.” He was “taking the business in the wrong direction” and it was showing up in the financials.

Heather claimed she’d been powerless to stop Ruis: “I was gone formally for over a year and informally for two and a half years in the sense that I was pulling back and not able to influence things.”

I scarcely know where to start. We could talk about the breathtaking ease with which Heather presented herself as a victim of Ruis while running him over with a forklift. How she hired a career fashion retailer to run what most Canadians still understand as a book chain and complained that he took the business off brand. How his barbecues and dildo merchandising was a logical extension of the cheeseboards and blankets merchandising she’d been doing for a decade.

If we were a serious business publication, we’d have to talk about her supposed powerlessness to do anything about the dildo-happy Ruis. The people who run public companies have duties to their shareholders, one of which is to keep them informed—promptly, honestly, transparently—about the management of the business. If Heather was gone “formally for over a year” and “informally for two and a half years,” investors should have known, right?

Let’s start with “formally for over a year.” Heather is referring to the most recent period of September 2022 to August 2023 during which Barbecue Boy was CEO of the company. Was Heather gone?

She was no longer CEO, a title she’d held for a quarter century, but according to corporate records she remained executive chairman of Indigo during that time, drawing an annual salary of almost a million. Titles matter in public companies. The difference between an executive chairman and a run-of-the-mill chairman is that the former is recognized as having an active role in the operations of the business, hence the executive-level salary. Executive chairman is higher on the org chart than CEO. If the company was moving off brand, betraying its customers, she was the one person with the formal role and the moral authority, as founder, to send the “four hours of fun” Firefighter Vibrator from Smile Makers ($75.00) back to the warehouse. Either Heather misspoke to Amanda last week about being “gone” or she spent her last year at Indigo misrepresenting herself to her shareholders and drawing a salary under false pretenses.

Magic In Metal (1969)

Filed under: Britain, Business, History — Tags: , , , , — Nicholas @ 02:00

PauliosVids
Published 15 Dec 2018

From the British Motor Corporation Ltd (BMC).

October 18, 2023

Why the Canadian Surface Combatant (CSC) program will cost so much more than equivalent US or British ships

Filed under: Business, Cancon, Military — Tags: , , , , , — Nicholas @ 03:00

In The Line, Philippe Lagassé outlines the Canadian Surface Combatant (CSC) program — the next-generation front-line combat ships for the Royal Canadian Navy intended to replace the current Halifax-class frigates and the already retired Iroquois-class destroyers:

Building warships is an expensive business, especially if you’re getting back into it after a few decades. Take the Canadian Surface Combatant (CSC). Fifteen CSCs will be built at Halifax’s Irving Shipbuilding to replace Canada’s current frigates and decommissioned destroyers. According to a 2022 study by the Parliamentary Budget Officer (PBO), the CSC acquisition will cost $80.2 billion. Given that defence inflation is well above regular inflation, and that regular inflation is running hot, that number isn’t going to go down.

Canada’s CSC will be a variant of the Type 26 Global Combat Ship originally designed for the Royal Navy. The Canadian variant includes significant changes to the original Type 26 design, notably to the combat systems. With the estimated per unit cost of each ship topping $5.6 billion, the National Post‘s John Ivison warns that the CSC is out of control. Ivison notes that the United States Navy (USN) acquired its Constellation-class frigates for $1.66 billion. Why, he understandably asks, is Canada paying so much for the CSC, and to what end?

The Canadian government always views major military purchases for the Canadian Armed Forces primarily as regional economic development projects and always attempts to get all or at least a major part of the construction done in Canada. To most people this sounds sensible: big military equipment acquisitions mean a lot of money being spent, so why shouldn’t most of that money be spent inside Canada? The answer, in almost every case, is that it will be significantly more expensive because Canadian industry doesn’t regularly produce these ships/planes/helicopters/tanks, so a lot of money will need to be spent to construct the factories or shipyards, import the specialized equipment, hire and train the workforce, etc., and no rational private industry will spend that kind of money unless they’re guaranteed to be repaid (plus profit).

Ordinary items for the Canadian military like clothing, food, non-specialized vehicles (cars, trucks, etc.) may carry a small extra margin over run-of-the-mill stuff, but it will generally be competitive with imported equivalents. Highly specialized items generally won’t be competitively priced exactly because of those specialized qualities. The bigger and more unusual the item to be purchased, the less economic sense it makes to buy domestically.

There are also the conflicting desires of the elected government (who generally want to target the spending to electoral districts or regions that benefit “their” voters), the permanent bureaucracy (who want to ensure that programs last a long time to ensure jobs within the civil service), and the military procurement teams (who have a tendency to over-optimistically estimate up-front and long-term costs because they want to get the procurement process underway … it’s tougher to stop something already in-process than one that still needs formal approval).

Once there’s a budget and capabilities are identified, the requirements for individual projects are prepared. It’s here that the comparison with lower cost, off-the-shelf alternatives runs into difficultly. The USN has lots of different types of ships that do lots of specific things. The above-mentioned Constellation-class is one of many different types of warships that the USN will sail, each with specific mission sets and roles. The Canadian military has only been directed to acquire fifteen CSCs, but the government expects the CAF to do a variety of missions at sea — not as many as the USN, of course, but still a good number. Canada has other military ships, including the Arctic Offshore Patrol Vessels (AOPS) also being built by Irving, but the CSC will be Royal Canadian Navy (RCN)’s primary expeditionary platform. Canadian defence planners, therefore, need those 15 ships to be capable of undertaking various missions and roles. Compounding this challenge are technological changes and the ever-evolving threat. The requirements for the CSC need to be continuously updated, and in some cases expanded, to keep pace with these developments, too.

An artist’s rendition of BAE’s Type 26 Global Combat Ship, which was selected as the Canadian Surface Combatant design in 2019, the most recent “largest single expenditure in Canadian government history” (as all major weapon systems purchases tend to be).
(BAE Systems, via Flickr)

On purely economic grounds, it would often make sense to add Canada’s order on to existing US, British, or other allied military orders to benefit from the economies of scale … but pure economic benefits don’t rank highly on the overall scale of importance. There’s also the understandable desire of the government to buy fewer items with wider capabilities as the government’s requirements for the military change with time and circumstance.

Were Canadian defence planners too cavalier in their requirements and design modifications? Maybe. Looking at it from their perspective, though, we should appreciate that they thinking about capabilities for a ship that Canada will use until the 2100s.

Doubts about the CSC are going to keep multiplying. The per unit costs can only increase so much before people start seriously discussing reducing how many of them will be built. You can be sure that some within government are already asking “Why 15? Why not 12?” Serious concerns are also being raised about whether the defence budget can afford to maintain CSC and keep them technologically up to date after the fleet is introduced. Given the CAF’s personnel recruitment troubles, moreover, it’s unclear if the RCN will have enough sailors to operate the full fleet. The first CSC that hits the water, furthermore, will have all sorts of kinks and problems that will need to be sorted out. That’s standard for first ships off the line, but you can be sure that every failing will be met with handwringing and charges of incompetence.

To address these concerns, the government must let DND/CAF better explain what the CSC is designed to do and why it needs to do it. Simply telling Canadians that it’s the right ship isn’t enough when it’s easy to point to lower-cost alternatives. As well, the government needs to be far more transparent about estimates of costs and what’s driving them. Political and public support for the CSC shouldn’t be taken for granted, and growing concerns about the program can’t be simply brushed away.

October 14, 2023

A Jacobite spy for Bonnie Prince Charlie

Filed under: Britain, Business, France, History, Military — Tags: , , , , — Nicholas @ 03:00

In the latest Age of Invention newsletter, Anton Howes talks about the career of John Holker of Manchester, cloth manufacturer, who joined the army of Prince Charles Edward Stewart in 1745, and eventually became an expert in industrial espionage:

Prince Charles Edward Stuart, 1720 – 1788. Eldest Son of Prince James Francis Edward Stuart.
Portrait by Allan Ramsay, National Galleries Scotland via Wikimedia Commons.

I’ve lately been reading about one of history’s greatest spies — not a James Bond-like agent with licence to kill, but a master of industrial espionage, John Holker.1

Holker was originally from Manchester, in Lancashire, where he was a skilled cloth manufacturer in the early eighteenth century, his specialty being calendering — a finishing process to give cloth a kind of sheen or glazed effect. But Holker was also a Catholic and a Jacobite — a believer in the claim of the Catholic descendants of the deposed king James II to be the rightful rulers of Great Britain, instead of the Hanoverian George I and George II who had only succeeded to the throne because they were Protestants. In 1745 James II’s grandson Charles, also known as Bonnie Prince Charlie — likely the “Bonnie” who lies over the ocean in the famous song — landed in the Scottish Highlands and raised the royal standard. Charles’s uprising defeated the British troops stationed in Scotland, captured Edinburgh, and then marched down the west coast of England, capturing Carlisle and entering Lancashire.

To Holker, who had been born in the same year as the last Jacobite rebellion in 1719, the arrival of Charles in Manchester must have seemed like a once-in-a-generation opportunity. He and his business partner instantly joined Charles’s troops and he was appointed a lieutenant. But Manchester was the last place to provide many eager volunteers for the uprising, and when Charles reached Derby he lost heart and turned around. Holker and his business partner ended up being left to garrison Carlisle as Charles and his force retreated into Scotland to hunker down, and they were soon captured by the British troops sent to quash the uprising. They were then, as officers, sent to Newgate prison in London to sit with their legs bound in irons and await trial and certain execution.

But they never made it to trial. In the first demonstration of Holker’s extraordinary talent for espionage, they escaped. Holker had been allowed visitors in prison, so had drawn on London’s crypto-Jacobite circle to smuggle in files, ropes, and information about the prison and its surroundings. They managed to file through the leg-irons and window bars, climbed up the gutters onto the prison roof, and then used planks from the cell’s tabletop to cross onto the roof of a nearby house. In the event, they disturbed a dog guarding the house, and so Holker hid in a water-butt and became separated from the others. He eventually found refuge at a crypto-Jacobite’s house, then escaped into the countryside before managing to make his way to France.

In France, Holker joined his fellow veterans of the failed uprising of ‘45, becoming a lieutenant in a Jacobite regiment of the French army. He fought for the French in the Austrian Netherlands — present-day Belgium — against the Hapsburgs, the Hanoverians, the Dutch, and the British. Even more extraordinary, however, was that when Bonnie Prince Charlie wanted to go in secret to England in 1750, it was Holker who went with him as his sole companion and guide. Although Charles failed to persuade his supporters in England to rise up in rebellion on their own, Holker managed to get the prince secretly and safely to London and back.

By the time Holker reached his early thirties he had been an industrialist, rebel, prisoner, fugitive, soldier, undercover agent, and even spy-catcher: he successfully identified a spy for the British in Charles’s circle, even if Charles failed to heed his warning. But in 1751 Holker’s career took yet another turn when he was recruited by the French government as an industrial spymaster.

Holker’s chief task was to steal British textile technologies.

    1. Unless otherwise stated, I’ve drawn much of my information on Holker and the industries that the French attempted to copy from John R. Harris, Industrial Espionage and Technology Transfer: Britain and France in the 18th Century (Taylor & Francis, 2017), particularly chapter 3.

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