Quotulatiousness

November 1, 2018

Change appears to be inevitable for North American railways

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

In a recent column in Trains, Fred Frailey examines the long-term impact of the late Hunter Harrison’s railway management reforms:

Union Pacific locomotive 5587, a General Electric AC4400CW-CTE(AC44CWCTE)
Photo by Terry Cantrell via Wikimedia Commons.

In the year since Hunter Harrison’s death, Precision Scheduled Railroading, or PSR, has progressed from crackpot railroading (in the eyes of some railroaders and shippers) to the gold standard. And it happened so fast we are still trying to wrap our arms around what it means for the future of this industry.

The facts are these: Canadian National, Canadian Pacific, and CSX Transportation have been put through Harrison’s PSR wringer, emerging in every case much leaner in terms of productive assets — cars, locomotives, trackage, and employees. That meant tons of savings to hand to investors. Interesting to me is what happened after that. CN, which Harrison ran as president or CEO from 1998 through 2009, went on a growth spurt in that period that continues to this day. Revenue ton miles at CN — the most basic measure of what a railroad does — rose 48 percent between Harrison’s retirement in 2009 and 2017. So it’s clear that downsizing the railroad’s assets didn’t inhibit Canadian National’s growth, because no other railroad even approaches what it accomplished during this period. Revenue ton miles rose slightly during Harrison’s tenure at Canadian Pacific and are now rising faster. His successor there, Keith Creel, says CP is game to grow. That’s the same story coming from Jim Foote, who succeeded Harrison late in 2017 at CSX.

Harrison’s impact on the other railroads of North America is palpable. The man was scarcely buried before financial analysts forgot the chaos he unleashed in his hurry to implement PSR at CSX and began asking other railroads why they weren’t more like CN, CP and CSX. Union Pacific, the oldest surviving nameplate in American railroading, capitulated and began implementing PSR practices last October on the eastern part of the railroad, with a goal of expanding the transformation to the entire system within several years. Chief Executive Lance Fritz insists this isn’t a case of PSR Lite.

[…] To change the railroad, you must change the culture. Harrison did it in every instance by force majeure — if you didn’t embrace his plan, goodbye. Who will change the culture at Union Pacific? I am at a loss to know. My sources say the impetus for PSR came not from within the railroad, but from the board of directors, which puts Lance Fritz in a thankless position. He must lead the effort, but this isn’t his idea, and morale in management ranks is low to begin with. His chief operations officer is new to the job, and nothing in the man’s background shouts to me that he is up to this.

Yet there are a lot of smart people at Union Pacific, and no company of its stature launches something of this magnitude with a will to fail. I am heartened that UP began by pruning its management ranks — in 2017 it counted 3,678 executives, officials and staff assistants, versus BNSF’s 1,511. (In fairness, BNSF outsources its information technology, whereas UP does not, accounting for some of the difference.) UP revealed in late 2018 it would eliminate 500 nonunion jobs by year’s end, plus 200 contract workers.

But let’s face it: As done by Harrison, you begin the PSR process by stripping a railroad to its underwear. At CSX it meant cutting every conceivable cost, denuding the railroad of field supervisors and just about everything else, until it began to be dysfunctional. That’s when he knew he had cut enough and could add back assets to make the railroad workable. This method is like becoming pregnant; there is no half way. Union Pacific began Precision Scheduled Railroading with a go-slow approach, not wanting to punish shippers and arouse regulators. Hmm. The way to looks to me now, UP may achieve some good financial results but not the sort that Hunter Harrison could or that its directors might expect. It would be a lot easier for UP to simply buy Canadian Pacific and let Keith Creel, a Harrison acolyte who knows PSR inside and out, come in as an outsider and do the dirty work. And if the process will be hard for Union Pacific, imagine the barriers to PSR in front of BNSF, KCS, and NS, all under pressure to walk the walk but so far unwilling to do so.

October 31, 2018

Premier Ford’s promise to lower electricity rates in Ontario

Filed under: Business, Cancon, Government — Tags: , , , , — Nicholas @ 05:00

In the Financial Post, Lawrence Solomon says Doug Ford can’t risk abandoning his promises about Ontario electricity costs, despite his cabinet’s worries about provincial reputation damage:

Ford has every reason to return the power system to some semblance of economic sanity. Ontario is now burdened by some of the highest power rates of any jurisdiction in North America, throwing households into energy poverty and forcing industries to close shop or move to the U.S. The biggest reason by far for the power sector’s dysfunction is its renewables, which account for just seven per cent of Ontario’s electricity output but consume 40 per cent of the above-market fees consumers are forced to provide. Cancelling those contracts would lower residential rates by a whopping 24 per cent, making good on Ford’s promise to aid consumers.

[…]

To date, Ford has stopped renewable developments that haven’t been completed, which will prevent things from getting worse, but he has failed to tear up the egregious contracts of completed developments, which will prevent things from getting better. Based on conversations that I and others have had with government officials, it appears that Ford is inclined to cancel the contracts and honour his signature promise, but he is being thwarted by cabinet colleagues who fear that Ontario’s reputation will take a hit in the business community if they don’t play nice.

Except, there’s nothing nice about betraying a promise to the voters who democratically put you in power in order to avoid pressure from lobby groups who think governments are entitled to hand out sweetheart deals to their favoured cronies. There’s also nothing democratic about it. It is an axiom of parliamentary government that “no government can bind another.”

Canadian governments, including Ontario governments, have in the past torn up odious contracts, including those in the energy sector. When they did, upon passing binding legislation, they were able to reset the terms, offering as little or as much compensation as they wished. Outraged business lobbies’ claims that the reputation of governments would be affected were not borne out. Moreover, such rightings of political wrongs serve the interest of small government and free markets, because businesses have always understood that there’s an inherent risk in contracting with governments that are able to unilaterally rewrite contracts. To overcome that inherent risk, businesses add a risk premium when getting in bed with government, helping to explain the rich contracts the renewables developers demanded. That risk premium acts to make business-to-business dealings more economic than business-to-government dealings.

October 28, 2018

Newspapers today “are huddled amongst notional rivals in a tremulous infantry square, facing outward”

Filed under: Cancon, History, Media — Tags: — Nicholas @ 05:00

Colby Cosh wasn’t one of the “founders” of the National Post, but his byline showed up early in the newspaper’s history. Here is his contribution to the “how the hell have we survived the last 20 years?” issue of the paper:

On the 20th birthday of the National Post, we have assembled alumni and associates to celebrate the mistake that was its creation. In saying so, I speak of it strictly as a commercial proposition. The Post was created in a spirit of newspaper warfare — overbuilt for an imagined future that evaporated almost immediately. All newspapers, for most of the last 20 years, have seen their attention oriented to exterior non-newspaper predators. We are huddled amongst notional rivals in a tremulous infantry square, facing outward.

If you sent a time-travelling accountant back from 2018 to advise the founders of the Post on their new project, his advice could not possibly be “Yep, you guys have the right idea, do it exactly that way.” The advice might even be the one word “Don’t.” The financial story he would have to tell from the future is one of nearly continuous pain and frustration.

But, like many megaprojects gone awry, the Post has been glorious and useful, too. No intelligent reader can stand to imagine the last 20 years without the Post’s distinctive colour in the Canadian media palette. Rival outlets have recruited too many Posties to deny the value of its existence. Persons who will never set eyes on these words or touch a copy of the Post have benefited from its existence in a hundred ways. It’s a story of survival rather than triumph — of a creature born at the wrong moment, defying fate and having a worthwhile life despite everything.

When I was asked to write a column about the paper’s anniversary, I spent the next few days feeling subtly annoyed, without being sure why. Eventually I put my finger on it. I sensed that this anniversary would involve a certain quantity of National Post Day Oners telling fun stories of exotic news heroism from the early, lavishly funded months (weeks?) of the paper.

Some of us can only feel nausea at the sound of these anecdotes, having missed the grand, ultra-adventurous part of the war. I myself am a failed Day Oner. If I had managed to impress Terence Corcoran in our pre-launch job interview, I might not have retreated to Edmonton, where the cost of living is low and the competition for freelance work is less savage. It was probably fortunate that I failed the audition (as opposed to failing at the job), but failing it did leave me outside the band of Day One foxhole brethren.

Andrew Coyne (for once, not riding his electoral reform hobby horse):

With a lineup that included every prominent conservative columnist — a couple less reliably so — plus a desk full of nervy British editors who had been in a newspaper war all their lives, the Post flouted every convention of how a quality newspaper should act or look, broke every rule, and generally took hell to the Globe and Mail. I imagine pop-eyed Globe editors, sputtering incredulously: “What? They did what? They, they can’t do that — can they?”

I think we could have made a fair claim to being the best newspaper — certainly the best written — in the world. Every single day the paper was bursting with lively, mischievous pieces in a style that crossed the Daily Telegraph with the New York Observer (when that paper was still in print and still interesting). It had, someone said, the brains of a broadsheet and the loins of a tabloid, and though it took a staunchly, even rabidly conservative editorial line, it remained a guilty pleasure for many on the left. It was simply too much fun not to read.

It couldn’t last, of course, as we were informed more or less from the first day. And yet, improbably, it has. Our industry has declined into not-so-genteel poverty since then — in retrospect, the idea of launching a nationally distributed, ink-on-newsprint newspaper just as the internet was about to consume us all has an almost suicidal gallantry about it — but the Post carries on, if not surrounded by quite the same richesse then with the same culture: that bullish irreverence, that smile of amusement, that jaunty informality, relaxed and subversive at once.

Chris Selley:

The Post in a nutshell, for me, came on a Friday night in 2013 as I arrived at a friend’s cottage two-and-a-half hours north of Toronto. Looking at my phone, I found a wee joke I had made at Calgary’s expense had been widely misinterpreted as a sincere characterization of Edmontonians as “twitchy eyed, machete-wielding savages.” Half of Edmonton was calling for my head on a pike. The city’s mayor (!) was on the warpath against Postmedia. My phone rang. It was Steve Meurice, then the Post’s editor-in-chief. If I had worked for any other paper I’d have voided my bowels.

He was as baffled and amused as I was, and wished me a good weekend. He ordered me a “Twitchy-eyed, machete-wielding savages” t-shirt, which awaited me on my chair in Don Mills when I returned.

October 25, 2018

It’s not a “bribe” … it’s an “incentive”!

Filed under: Cancon, Economics, Environment, Government, Politics — Tags: , , , , , — Nicholas @ 05:00

Terence Corcoran explains why the federal government’s promised “incentive” isn’t in any way, shape, or form any kind of bribe:

Step right up, ladies and gentlemen. Welcome aboard the all-new Canadian Cynical Circular Carbon Circus, the amazing Liberal climate control spectacle that will send you on a great environmental ride into the future.

Come on in! We will pay you to not consume fossil fuels — as individuals and as industries. It’s an economic revolution that takes us beyond blockchain and cryptocurrencies and cannabis into a brave new universe in which money goes round and round and everybody wins. We will pay Canadians with their own money — more than $20 billion over five years in carbon taxes that will raise the price of gasoline by 11 cents a litre by 2022, and ever higher thereafter if not sooner. Everybody pays and everybody wins, except for those who don’t. And some people win more than they pay. It’s better than a lottery!

For the people of Ontario, Saskatchewan, Manitoba and New Brunswick, the federal carbon circus cash comes via a new “Climate Action Incentive Payment.” An Ontario family of four will receive $307 for this year, the amount to be claimed on 2018 income tax returns. A Saskatchewan family will get a Climate Action Incentive Payment of $609.

What’s the Climate Action Incentive Payment for? The Liberal plan unveiled by Prime Minister Justin Trudeau and Environment Minister Catherine McKenna Tuesday doesn’t specify. What are taxpayers in the four provinces being incented to do, exactly, with this new wad of free cash? There is only one explanation: Vote Liberal in 2019!

The payments are based on a 2019 carbon price of $20 a tonne, rising to $50 by 2022. As the carbon tax goes up, Ontario families will receive $718 in 2022 and Saskatchewan families $1,459. And there will be more to come, presumably, since the latest doomsday scenario from the UN Intergovernmental Panel on Climate Change — the font of all speculation and data manipulation on climate issues — warned that by 2030 (only 12 years from now) a carbon price of somewhere between $135 to $5,500 per tonne would be needed to keep global warming below 1.5 degrees Celsius.

Every publication in Canada must have had lots of volunteers for this story

Filed under: Cancon, Humour, Media — Tags: , , — Nicholas @ 03:00

In the National Post, Marie-Danielle Smith gets high for science!

I just remembered I am supposed to be writing.

I am stoned on legal weed, which finally came into my hands this morning after six days of waiting. Thank you, government!

It is a different thing to get high alone — to get high alone for work reasons, right after question period. I’m sitting at my dining room table, drifting off every now and then to examine the patterns on my stuccoed walls or to focus, intensely, on the album I am listening to, the one that Kurt Vile and Courtney Barnett collaborated on. It would be a different thing to get high with the two of them.

The first thing you notice, after opening the cardboard box, which is just a little too large for your knapsack (backpack? knapsack? backpack?) … uh, you notice how much packaging there is. Tape. Crumpled-up papers. A box with government warnings and the logo of the licensed weed producer. A plastic bottle inside with a child lock cap that reminds you of Advil.

“She’s so easy,” sing Courtney and Kurt, repeatedly. Such a good album. This song has been on forever. Time stretches out. I’ve smoked a sativa-heavy hybrid strain called “Super Sonic,” which is supposed to make you feel creative rather than sleepy. On the Ontario Cannabis Store website, it’s described as having “a strong, earthy, sweet aroma, reminiscent of Quantum Kush.” I don’t know what Quantum Kush is but maybe our prime minister can explain it? (Remember that time? Anyway.)

Of course, not everyone is impressed:

October 24, 2018

Scheer’s campaign opening has about as much attraction as a cold bucket of sick

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

Some guy we’re supposed to believe is the leader of Her Majesty’s Loyal Opposition … Andrew Shear? Shea? No, that’s not it. Something like Scheer? Yeah, maybe it’s Scheer. He’s been in some kind of witness protection for the last year or so, I guess. Anyway, he’s finally emerged to announce the start of the Conservative Party’s year-long campaign to get Justin Trudeau re-elected and to protect our sacred Supply Management system.

No, wait. That’s not quite it. Oh, it’s to get Scheer elected? Okay, then. Got it.

In the National Post, Colby Cosh attempts to find reasons for Canadians to support the Tories next year:

Andrew Scheer meets British Prime Minister Theresa May
Photo via Wikimedia Commons

Andrew Scheer published an “open letter to Canadians” in the Toronto Sun this Saturday. “Sunday marks exactly one year until the next federal election,” the federal Conservative leader observed, proceeding thereupon to a critique of Justin Trudeau’s government. As someone who is still trying to take stock of Scheer, I read the letter hoping for clues to his plan of attack for the 2019 election. I’m afraid it merely served to emphasize how much Scheer has remained on the defensive since winning the Tory leadership almost a year and a half ago.

That is part of the issue here: does it seem to you like a year and a half since Scheer became leader? Forgive me a very subjective observation, but I found myself hardly believing that we are much closer in time to the next election than we are to the choosing of an opposition leader who still seems like the enigmatic new guy. What are his signature issues? I am afraid the first answer that springs to mind is “dairy supply management” — which is a continuing controversy that has exposed Scheer to embarrassment, and has helped to split his party, albeit in what is likely to be an electorally insignificant way. (Maxime Bernier won’t be the next Prime Minister of Canada, but party morale is a thing in elections.)

The other major issues that have presented themselves to Scheer as opportunities haven’t proved much more helpful. When it comes to the federalization of carbon taxation, Scheer still has no good answers when he is called upon to reconcile his hypothetical support for emissions reductions with his opposition to the Trudeau plan. He doesn’t like carbon taxes, period, which will play well with climate skeptics who have three-SUV garages; I do not underestimate the impetus of that voting bloc, but the Conservatives own those voters already. Scheer also cornered himself into a lame position on the campus free-speech wars, and he is pulling sour faces about marijuana legalization, even though he is one of the few Canadian politicians who will admit to having smoked the stuff personally.

October 19, 2018

Ontario’s lack of retail cannabis stores – “What have they been smoking at Queen’s Park?”

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

In the Financial Post, William Watson points out the weirdness of Ontario’s decision to delay the opening of legal cannabis stores until next Spring:

For several years now, dozens of dispensaries have been operating quite openly. (They call themselves dispensaries to further the narrative that, like your grandmother’s rye, marijuana is for medicinal purposes.) Only now, with pot use becoming legal, are these dispensaries being shut down — although Toronto’s chief of police says not right away, as he doesn’t have [the] person power to do it all at once.

If they don’t shut down, they may forfeit their chance at a licence to sell pot legally once licensed retail operations do finally start in the province on (when else?) April 1st of next year — 166 days after legalization. Why would they not be granted a licence? Not because they trafficked in marijuana when its use was strictly illegal, if seldom prosecuted. But because they continued to traffic in marijuana after it became legal but before the government gave them a licence, an offence that will be prosecuted slowly, if at all.

Silly me. I thought marijuana legalization would simply say that after a certain date the police wouldn’t arrest you for having such-and-such an amount of marijuana in your possession. End of story.

[…]

Countrywide, as the Financial Post’s Vanmala Subramaniam recently reported, a big roadblock to timely legal supply has been the need to seal products with federal excise revenue stamps. But there’s only one supplier and the stamps come without adhesive. Stamps! In 2018!

In American movies of the 1930s and 1940s, moonshiners and bootleggers waged war against “revenuers,” federal agents charged with levying excise taxes on booze. It seems the revenuers have now taken charge of Canada’s marijuana industry. You might plausibly argue that the former illegal market operated in the interests of consumers. There seems little doubt the new legal market will operate in the interest of governments, their unions and their revenue departments.

When cops did enforce the country’s no-toking laws, they could plausibly tell themselves they were doing it to protect young people and other innocents. Now when they enforce the laws they’re doing it to protect legally privileged producers against producers who find themselves offside with often arbitrary licensing laws. Protecting kids was one thing. Protecting cartels is quite another.

October 18, 2018

Canada legalizes cannabis … then takes the rest of the week off

Filed under: Cancon, Health, Law, Politics — Tags: , — Nicholas @ 03:00

What do you know? Justin Trudeau actually followed through on his promise to legalize marijuana across the country! Of all his election promises, that’s probably the one that most voters expected him to ditch as soon as the votes were counted, yet here we are in the second country in the world to legalize the stuff. So, everyone not here in Canuckistan, we’ll probably be back sometime next week as we’ve got a lot of mellowing to get done…

Oh, you want a blog post? Duuuude, just take another hit.

Oh, okay, here ya go:

An Abacus Data poll released this week suggests Canadians are ready for marijuana legalization even if their governments might not be: Strong majorities of respondents in every age group and in every region said they could support or at least “accept” the framework that goes into effect Oct. 17. Even 54 per cent of Conservative voters said they could support or accept legal weed.

[…]

The resistance continues, certainly. In a special meeting on Tuesday, just days before Ontario’s municipal elections, City Council in Markham, Ont., passed a bylaw restricting marijuana smoking to private residences. It had earlier voted 12-1 in favour of “opting out” of storefront retail, as allowed for under provincial regulations.

“When you’re taking your grandmother down the street for a walk, (we don’t want you) having to be exposed to a number of individuals potentially at a street corner participating in it,” says Mayor Frank Scarpitti.

Richmond, B.C., is another refusenik jurisdiction. Mayor Malcolm Brodie notes the city took a much harsher approach than neighbouring Vancouver to the proliferation of illegal dispensaries, throwing the book at the only one that attempted to open. And he credits the provincial government with listening to municipalities’ concerns and allowing them to go their own ways

Indeed, considering the Reefer Madness-level debate, it seems somewhat remarkable how peacefully this sea change is washing over the country — and it seems the patchwork of provincial and municipal rules, much derided by Conservatives, is partly to credit for that.

A quick run-down of the new rules.

Thanks to time zones, the first legal sale of marijuana happened in Newfoundland:

One of the first customers to buy legal recreational cannabis in Canada says he has no intention of smoking, vaping or otherwise consuming the gram of weed he bought at a store in St. John’s.

Ian Power, who was first in line at one of several stores in the country’s easternmost province that opened just after midnight local time, says he plans to frame his purchase.

Hundreds of customers were lined up around the block at the private store on Water Street, the main commercial drag in the Newfoundland and Labrador capital, by the time the clock struck midnight.

A festive atmosphere broke out, with some customers lighting up on the sidewalk and motorists honking their horns in support as they drove by the crowd.

Cannabis NL expected 22 stores to open on Oct. 17, but not all opted to open in the middle of the night to commemorate the event.

Licensed marijuana producer Canopy Growth Corp. opened the Tweed-branded store in St. John’s at the late hour, while retailer Loblaw Companies Ltd. planned to start selling cannabis at its 10 locations at 9 a.m.

October 17, 2018

How Toronto got its name

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

Colby Cosh on the origins of the name of Canada’s largest city (which, surprisingly, isn’t the Mississauga name for “big stink on the water”):

Detail from a 1688 map of western New France by Vincenzo Coronelli that locates “Lac Taronto” at Lake Simcoe.
City of Toronto Culture Division/Library and Archives Canada via the National Post

By the time of Franquelin, “Tkaronto” had already become “Taronto,” a generic name for the highway between Lake Simcoe and Lake Ontario. The Humber River was called the Toronto River by the French before Gen. John Graves Simcoe and the British got hold of everything. The word, in turn, became attached to a trading settlement at the southern end of the trail — a pretty crummy place, by all accounts, but one destined for bigger things as part of a global seafaring empire.

The miracle is that it held on to the name. Simcoe insisted that “Toronto,” on being anointed as the site of the new capital of Upper Canada in 1793, be dubbed “York” in honour of Prince Frederick (1763-1827), Duke of York and second son of George III. This Duke of York is the “Grand Old Duke of York” from the satirical verse about military futility. He was also commander-in-chief of the British armies that helped to chase Napoleon out of Europe twice, and is thought to deserve genuine credit for this, so be careful who you write insulting rhymes about.

Simcoe dubbed Toronto “York” just because he was sucking up to a very identifiable future boss, and for no other reason. The people of Toronto seem to have understood this and resented it. In the decades to come, it was occasionally observed that there were something like a dozen other places in Upper Canada called “York.” Moreover, Simcoe’s “Little York,” as it was often called, seems to have presented an increasingly embarrassing parallel with the Americans’ bustling New York.

In 1834, when the Legislative Council of Upper Canada decided that the capital needed to be formally incorporated as a city, the citizenry remembered that they belonged to “Toronto” and appealed to the council to have the more musical old name restored. Over four decades their annoyance had not receded. Diehards who wanted York to remain York for imperial-grandeur reasons were outvoted, and Toronto’s formal Act of Incorporation observes that “it is desirable, for avoiding inconvenience and confusion, to designate the Capital of the Province by a name which will better distinguish it.” The appellation “Toronto,” of course, had actually been nicked from a spot some way off, but the white settlers had mislaid that information, and didn’t check with anyone who would know better.

October 13, 2018

On the cusp of legalization

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

Colby Cosh finally gets to take a victory lap:

On Thursday the marijuana company Sundial Growers held a ribbon-cutting for its new grow-op in the Alberta town of Olds. I am not sure whether “grow-op” is an acceptable word in the new setting of giant legal cannabis cultivation facilities, but let’s stick with it, if only to call attention to the extraordinariness of what we are witnessing this month in Canada. The launch was held in a small office, and Sundial only received its cultivation licence from Health Canada on Sept. 14, but the first fruits of its pot business are already budding in a room nearby.

The company intends to have a 500,000-square-foot growing facility built in 2019, but its press release points out that it can add more space quickly. I might have been stopped short by the spectacle of the mayor and the (United Conservative) MLA rejoicing as a CEO explained the details of his craft weed business and remarked on plans for a “Sweet Jesus” varietal. But what really struck me is something the mayor said: When the company is up and fully running, he observed, it is going to hire 500 people in Olds, becoming the town’s largest single employer. Olds is, of course, home to Olds College, a century-old agriculture and food research institute: this was a major reason for the new marijuana industry to locate there.

How long ago would this scene — being played, as it is, in a naturally conservative part of the Alberta hinterland — have seemed like science fiction or parody? The Sundial facility is dwarfed by the 800,000-square-foot Aurora Sky factory, strategically located near Edmonton’s awkwardly remote international airport in the suburb of Nisku. Everyone who has ever tried to flee Edmonton or come to it through that airport has complained about its preposterous distance from the capital’s downtown, but this turns out to have an unimagined advantage. You can build a spacious agri-pharmaceutical facility at low cost practically next to the runway, establish an ultra-secure, ultra-short supply chain, and presto hemp-o: overnight response to a worldwide medical market for cannabis products becomes a snap.

I am someone who is entitled to a victory lap for having insisted years ago that we were not, as a country, properly imagining the dimensions of a legally unleashed cannabis industry. We had no idea how much economic activity was being annihilated by a perverse, illogical feature of criminal law. Maybe it is time, as Finally Doing The Obvious Thing Day nears, for me to take that victory lap.

October 12, 2018

Carbon taxes may be efficient, but let’s not rush into it quite yet…

Filed under: Cancon, Economics, Environment, Government — Tags: , , , , — Nicholas @ 05:00

Terence Corcoran says we shouldn’t jump at the chance to kill our economy just because carbon taxes are efficient:

It didn’t take long for federal Environment Minister Catherine McKenna to tweet out the news implying that the Nobel committee supported the government of Canada’s carbon-price scheme. The Montreal-based carbon-taxing NGO, the Ecofiscal Commission, hailed Nordhaus for having “demonstrated” that a universal price on carbon was the most “efficient” way to curb climate change.

Before jumping aboard the Nordhaus bandwagon, however, carbon-taxing politicians and all Canadians might want to take a closer look at what they are being led into.

[…]

Nordhaus and his co-winner of this year’s Nobel in economics, former Stanford economist Paul Romer, are great believers in “incentives.” As Romer said in a post-Nobel interview (tweeted by McKenna, naturally): “I believe, and I think Bill (Nordhaus) believes, that if we start encouraging people to find ways to produce lower carbon energy, everybody’s going to be surprised at the progress we’ll make as we go down that path. All we need to do is create some incentives that get people going in that direction, and that we don’t know exactly what solution will come out of it — but we’ll make big progress.”

But why a tax? If all we need to do is deploy the price mechanism, why impose a tax? Let’s ignore for a moment the dubious assumption that the science and economics of climate change are sound and settled. Would it still not be better to have the government set the carbon price, require the energy companies to charge it, but allow the revenue to flow not to government but through to energy companies and their shareholders, and others in the supply chain? That’s where market forces and the above-mentioned miracle price mechanisms — rather than government planners — would determine where to invest and what energy alternatives are best. (No gas retailer could possibly eat the cost of a 90-cent-per-litre carbon tax, so they’d have no choice but to pass at least most of it along to the customer).

One of the ironies of carbon taxation is the enthusiasm for “market mechanisms” and “prices” among politicians who otherwise abhor and resist market pricing of everything from roads to health care to rental housing to public transit to education to broadcasting and telecom and the internet and the price of cannabis, not to mention the Canadian price of milk and chickens. With carbon, market pricing is suddenly a great idea, no matter how fanciful the analyses and speculative the projections.

Stephen Harper, premature populist?

Filed under: Books, Cancon, Politics — Tags: , , , — Nicholas @ 03:00

Andrew Coyne reads the new book by former Prime Minister Stephen Harper, so you don’t have to:

Throughout his time as prime minister, theories abounded as to what philosophy of government, if any, could explain Stephen Harper’s apparently rudderless course. A few die-hards on the left persisted in describing his government as ideological or hard-right, even as it was borrowing billions, adding new regional development agencies and nationalizing the auto industry.

Others insisted he was a libertarian at heart who was either forced or tempted, by reality or expediency, to alter his approach once in power. A couple of loyalists essayed a reconstruction after the fact, in which the Harper government’s many disparate and contradictory policies were somehow made to fit into a single philosophical template called “ordered liberty.”

Well now we have it from the proverbial horse’s mouth. The young firebrand who famously deserted Preston Manning for being too populist and not enough of a conservative now claims the mantle of populism for himself: if not as a whole-hearted adherent, then as the statesman who understands where others only condemn. His new book Right Here, Right Now, is indeed in large part an attempt to portray his own government, not as the cynical power-seeking machine it appeared to be, but as populist before its time. In defending populism, he defends himself.

And yet the mind it reveals is not that of the subtle, sometimes rueful voice of experience he clearly wishes the reader to imagine. It is, rather, all too conventional, even banal. What are presented as iconoclastic insights, in which the rise of populism is explained in terms of the failings of conservatism — former Conservative prime minister breaks with decades of conservative orthodoxy! — are a mix of received wisdom and undergraduate shibboleths, many of them long debunked.

October 10, 2018

Riding the Rocky Mountaineer

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

Fred Frailey just got back from a trip on the Rocky Mountaineer and he’s enthusiastic about the train and the experiences it offers (for a price):

I’m just back from railing from Banff, Alta., to Vancouver, B.C., aboard the Rocky Mountaineer … my first such trip in 23 years. Then, it was eight or nine Silver Leaf coaches and a single Gold Leaf bilevel first-class car. This time, it was two coaches and five packed Gold Leaf cars. From the rail trip alone, I figure that Armstrong Group grossed a minimum of $600,000.

The Rocky Mountaineer in the Rockies.
Photo by The Land via Wikimedia Commons.

Usually (but not this time) there’s a section of roughly equal length out of Jasper, Alta., that joins the Banff train at Kamloops, B.C., so this train can easily be a $2 million-dollar baby when the passenger count tops 1,000 (we had 350). But my sense is that Armstrong Group brings in a at least a much money booking people on pre-train and post-train tours and luxury hotel stays.

I’ve always sensed a lot of railfan resentment of Peter Armstrong. The beef is that he “stole” from VIA Rail Canada the idea of an all-daylight trip along the Rocky and Selkirk mountains and the Thompson and Fraser rivers. For sure, the man plays for keeps; he is forever wishing to axe VIA’s Toronto-Vancouver Canadian as a government-funded competitor west of Jasper or to have the train sold to his company to redo in some Rocky Mountaineer manner.

But give the man his due. He created something lasting by becoming one of the few people to run passenger trains more than a few miles and make money at it. Who knows where the Canadian will be in a decade; it keeps losing fingers and hands as frequencies are trimmed and schedules lengthened. But the Rocky earns its way commercially, having proven its durability by weathering 2008-2009’s Great Recession.

In the latest issue of Trains, my colleague Bob Johnston writes an excellent capsule history of this service: “One factor driving the decision to move the Canadian over to [the Canadian National] route was lobbying by Vancouver entrepreneur Peter Armstrong to privatize VIA’s summer excursions to Banff, Alta., introduced in 1988. This came with the understanding that his fledging operation would get route exclusivity and some initial financial assistance from VIA to ensure the venture’s success. After a few shaky early years, Armstrong invested heavily in specialty dome cars to make Rocky Mountaineer a financial and creative success in a way the public funded operator never could.”

October 7, 2018

A measurable positive from the USMCA process

Filed under: Cancon, Law, Liberty — Tags: , , — Nicholas @ 03:00

Michael Geist points out that one of the aspects of the son-of-NAFTA deal will be to help Canadians exercise their freedom of speech online by providing a “Safe Harbour” provision similar to the one that US law provides:

Internet free speech is not typically an issue associated with trade agreements, but a somewhat overlooked provision in the newly-minted U.S.-Mexico-Canada Agreement (USMCA) promises to safeguard freedom of expression by encouraging Internet companies to resist pressure to remove content. My Policy Options op-ed notes the USMCA’s Internet safe harbour rule – modelled on U.S. law – remedies a longstanding problem in Canada that left large Internet platforms reluctant to leave third party content such as product reviews, blog posts, and social media commentary online in the face of unsubstantiated complaints.

Once implemented, Internet companies will benefit from assurances they will not face liability for failing to take down third party content or for proactively taking action against content considered harmful or objectionable. While the safe harbour provision does not apply to intellectual property, when combined with the preservation in the deal of the USMCA protects Canada’s notice-and-notice system for copyright, whereby rights holders can file complaints over alleged infringements but there is no takedown procedure for the removal of content. Taken together, the Canadian legal framework will encourage free speech, largely looking to court orders for mandated takedowns of content or good faith efforts by platforms to address harmful content.

The absence of a Canadian safe harbour rule has meant the same companies that require court orders prior to the removal of content for claims originating in the U.S., frequently take down lawful content in Canada based on mere unproven allegations due to fears of legal liability. Further, the absence of safe harbour protections creates a disincentive for both new and established services to use Canada to store data or maintain a local presence.

The Internet safe harbour approach originates from the earliest days of the commercial Internet. In 1996, the United States enacted the Communications Decency Act, legislation designed to address two emerging concerns: the online availability of obscene materials and the liability of Internet services for hosting third party content. The U.S. Supreme Court struck down the obscenity provisions on constitutional grounds, but the safe harbour remained intact and quickly emerged as a cornerstone of U.S. Internet policy.

October 5, 2018

A quick way for Doug Ford to reduce Ontario’s electrical rates

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

Ross McKitrick, Elmira Aliakbari and Ashley Stedman outline one of the fastest ways for the Ontario government to get Ontario electricity rates back down toward the national average:

The Ford government seems to want to repair Ontario’s electricity market. It recently moved to scrap the Green Energy Act and reportedly plans to eliminate or alter the so-called Fair Hydro Plan.

While these moves will mitigate future price increases, they won’t reduce current electricity prices. In fact, according to a Fraser Institute study being released today, to lower existing prices the government must reduce what’s known as the “Global Adjustment” — an extra charge on electricity. It won’t be easy, but reducing the global adjustment could bring down electricity prices by about 24 per cent.

This would be welcome news for Ontarians, as electricity prices increased 71 per cent from 2008 to 2016, far outpacing electricity-price growth in other provinces.

[…]

Between 2008 and 2017, the GA grew from less than one cent per kilowatt-hour (a common billing unit for energy) to about 10 cents, accounting for the entire increase in Ontario electricity commodity costs over that time. Therefore, the key to lowering power prices in Ontario is to reduce the GA.

In our study, we use reports published by the Ontario Energy Board to breakdown the GA to better understand where the money goes and provide specific recommendations on how to lower electricity prices. We found that the largest component of the GA charge — nearly 40 per cent — funds subsidies paid to renewable energy sources (wind, solar, etc.) under feed-in-tariff contracts, yet these sources only provide seven per cent of Ontario’s power output.

And notably, the GA provides almost 90 per cent of revenue earned by renewable generators, with only 10 per cent coming from actual power sales. This overwhelming reliance on government subsidies (paid by ratepayers) rather than actual electricity sales reveals how distorted the pricing structure has become in Ontario.

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