Quotulatiousness

April 11, 2013

Ontario’s LCBO workers vote in favour of a strike

Filed under: Bureaucracy, Cancon, Government — Tags: , , , , , — Nicholas @ 08:50

Michael Pinkus is looking forward to a potential LCBO strike:

Call me an anarchist but I want the LCBO to go on a nice, big, long strike. And by the time you read this newsletter I am 100% sure that the sheeple of the LCBO will have given their bargaining team the go ahead for strike action. Now the LCBO’s contract was up on March 31, 2013 — which means currently the guys and gals roaming, stocking and generally keeping track of the aisles are without a legal contract with the provincial liquor board. I’m not about to get into the nitty-gritty of the contract negotiations, but when I read in the Liquor Board Employees Division (LBED) Bargaining Bulletin: “The offer we received from management can only be described in one word: Outrageous!” — well I just felt that I had to look a little deeper to see how the LCBO was screwing their own people (which is a nice change from the people of Ontario they screw daily).

What outrage would I find on the pages of the LCBO’s proposal? Are they locking the doors and throwing employees out on their ears? Are they proposing actual punishment for selling to minors (like the sting David Menzies did in July of 2012)? Will there be repercussions for doing a bad job, breaking the law, real penalties?

Now I have met, had dealings with, and actually, once upon a time, worked alongside some very good LCBO employees, most of them casual part-timers — but I can tell you that for every one good one there’s two that are lazy, surly and just generally people you don’t want to deal with in a retail situation — and sadly, those are the one’s you are likely to remember. So from the LBED Bargain Bulletin dated March 1, 2013 here are 2 of the 9 crazy demands the LCBO is making of their employees and the Union’s response to those “outrageous” proposals (I highlight my favs, but you can read the full bulletin here):

[. . .]

But who really suffers from an LCBO strike? California, Spain, Italy, France, Australia, Chile, in other words import wines and liquor producers, who can ONLY sell through the Province run monopoly, and they’ll be demanding the LCBO settle so their products get into the hands of Ontarians instead of sitting idly in warehouses collecting dust. Meanwhile local producers could see a boon as Ontarians thirst for wine is not met by the LCBO but instead by in-province wineries. Tourism to wine producing areas should also see an uptick; instead of visiting Grandma on a Saturday afternoon the family would pile into the car (with Grandma) to tour the highways and bi-ways of Ontario wine country. A long LCBO walk could mean that Ontarians finally get the taste for their homegrown wines en masse and will then demand greater access — one weekend away is quaint, but having to make the trek each and every weekend may prove too much. And with that kind of demand we could see movement in this province towards a freer market system with independent and corner wine stores. Maybe the government will get tired of having to pay all those wages, negotiating with an inflexible union and decide to sell off the LCBO — preferring instead to reap the rewards from taxes instead of paying the price of labour unrest … sigh, wouldn’t that be nice?!? As for the employees, the good ones will have no trouble finding a job in the public sector [I think Michael means private sector here], many in the same kind of newly created positions. The others? Well they’ll just go back to ditch digging where they belonged in the first place.

March 29, 2013

If cable company ads were honest, we’d see something very similar to this

Filed under: Business, Cancon, Media — Tags: , , , , — Nicholas @ 10:10

H/T to Joey “Accordion Guy” deVilla for the link.

If North American cable-and-internet providers were honest, they’d produce an ad that went like this. Note that there’s some swearing involved, as is often the case with cable-and-internet providers.

March 6, 2013

QotD: Canada Syndrome

Filed under: Cancon, Economics, Quotations — Tags: , , , , — Nicholas @ 00:02

It’s one of the marvels of the Canadian electorate. Show Canadians a special interest group that uses its government-granted privileges to fleece consumers, and they’ll embrace it as a “national champion,” a “uniquely Canadian way of life” or some equally vapid catch-phrase.

This is from the Wikipedia entry for Stockholm Syndrome:

    Stockholm syndrome, or capture–bonding, is a psychological phenomenon in which hostages express empathy and sympathy and have positive feelings toward their captors, sometimes to the point of defending them.

What we suffer from is the economic policy equivalent. Call it “Canada Syndrome”: a tendency for consumers to identify with the producer interests that are holding them hostage.

Stephen F. Gordon, “Our Stockholm Syndrome about supply management”, Maclean’s, 2013-03-05

February 23, 2013

QotD: “Cultural Sovereignty” (aka piracy)

Filed under: Cancon, Government, Media, Quotations — Tags: , , , , — Nicholas @ 10:52

Canada originally became one of the most wire-cabled countries in the world because of the insatiable and inviolable addiction of English-speaking Canadians to American programming. To salvage a television industry in Canada, the regulators approved the acquisition of American programming by Canadian channels, which would simulcast them with the networks by or for which they were produced. The Canadian channels were authorized to sell and insert their own advertising on those American programs. This practice, outright piracy in fact, was justified by Canadian media executives as an exercise in “cultural sovereignty” when they appeared before U.S. congressional committees.

Conrad Black, “Opening up the must-carry spectrum”, National Post, 2013-02-23

January 28, 2013

Let’s get real reform at the CRTC: eliminate “mandatory carriage” altogether

Filed under: Bureaucracy, Business, Cancon, Media — Tags: , , , — Nicholas @ 08:49

In the Toronto Star, Michael Geist calls for the CRTC to stop the “mandatory carriage” provision that forces cable providers to carry certain channels on their “basic” packages:

Canadians frustrated with ever-increasing cable and satellite bills received bad news last week with the announcement that the Canadian Radio-television and Telecommunications Commission will consider whether to require cable and satellite companies to include nearly two-dozen niche channels as part of their basic service packages. If approved, the new broadcast distribution rules would significantly increase monthly cable bills with consumers forced to pay for channels they may not want.

Two issues sit at the heart of the broadcast distribution rules. First, whether the CRTC should grant any broadcaster mandatory distribution across all cable and satellite providers such that all subscribers are required to pay for them as part of their basic packages. Second, in the absence of mandatory distribution, whether broadcast distributors should be required to at least offer the services so that consumers have the option of subscribing.

[. . .]

While the financial benefits for broadcasters are enormous, the policy represents a near-complete elimination of consumer choice for the channels at issue. Rather than convincing millions of Canadian consumers that their services are worth buying, the broadcasters need only convince a handful of CRTC commissioners that their service meets criteria such as making “an exceptional contribution to Canadian expression.” That is supposedly a high bar, yet it is surely far easier than convincing millions of people to pay for your service each month.

Last year, CRTC chair Jean Pierre Blais emphasized that the Commission’s top priority was to “put Canadians at the centre of their communications system.” The mandatory distribution rules do the opposite. Rather than focusing on consumer interests and choice, the rules place broadcasters at the centre of the communications system by offering up the prospect of millions in revenue without regard for what consumers actually want.

There are few, if any, broadcasters that can be considered so essential as to merit mandatory distribution. Niche cultural broadcasters have a myriad of distribution possibilities and should be forced to compete like any other content creator or distributor. In fact, even broadcasters that position themselves as “public services” can often be replicated by Internet-based alternatives.

I always find it interesting how cable providers usually manage to group their offerings so that you can’t get the group of channels you actually want in the same package. I doubt that this would change even if the regulator allowed the change from “must carry” to “must offer”, however: there’s too much potential profit to the cable companies in crafty packaging strategies. You’ll almost certainly not see the opportunity to pay for just the individual channels you want, as that would be too consumer friendly (and, we’re assured by cable company reps, would kill off lots of niche channels because they wouldn’t get enough subscribers).

Of course, if a TV channel can’t attract enough subscribers, that’s usually a pretty strong economic signal that they shouldn’t be broadcasting anyway.

January 24, 2013

The LCBO’s tentative, faltering steps to allowing wider sales of wine

Filed under: Bureaucracy, Cancon, Wine — Tags: , , , , , — Nicholas @ 09:39

In the latest Ontario Wine Review, Michael Pinkus pours scorn on the LCBO’s latest attempt to fend off an actual competitive market:

The LCBO is about money and profits — and about control. I know I will have people freaking out at me for saying this but I want you to ask yourself “why?” Why would the LCBO suddenly decide that grocery stores are the place to put locations? Doesn’t sound all that smart to me — and not what we asked for. We asked for the right to pick up booze and bread in the same place — the government has said fine but you’ll still have to visit two cashiers and wait in line. Heck, I could have gone across to the mall parking lot to the LCBO location, got a bigger selection than in that tiny kiosk they’ll most likely rent and I still would have had to stand in line at a different cashier — where’s the convenience?

Plus we already have Wine Rack and Wine Shoppe locations in grocery stores … and therein lies the rub (as Shakespeare would say). The LCBO already knows those stores are profitable, the “pilot project” is done, there’s no study needed, Vincor and Peller have already done the research (and if you don’t think the LCBO has had a look at those numbers you’ve got another surprise coming) — this is just another way for the LCBO to compete with those two companies — and by extension, the wineries of Ontario. [Ed. Note: just in case you don’t know Peller and Vincor hold the majority of private liquor store licenses in the province — something they acquired before 1988 when free trade came in].

“… and will also create new VQA boutiques for Ontario wines inside five of its own stores.” A novel idea? I don’t think so. They have one in St. Catharines already (of all places), and what do you want to bet the LCBO will place these new “boutiques” where they are most needed like Niagara, Prince Edward County and Windsor where wineries already exist — no better way to compete with your competition than on their own turf.

January 22, 2013

The free (and un-free) markets in water

Filed under: Economics — Tags: , — Nicholas @ 09:58

Water is often described as a “natural monopoly”, because most of us only encounter a water bill from a municipally owned water utility company. But there are other markets for water where the price varies exactly the same way as it does for other commodities:

Earlier this year the Aurora Sentinel reported that the city will sell $9.5 million worth of water to an energy company. Why? Because the company is offering four times the price offered by other customary buyers. Potential profits in oil and gas make the water highly valued by drillers. Of course, this valuation is subject to change along with the prices of oil, crops, and all of the other resources required to produce them. If oil prices decline relative to crop prices, drillers will bid less for the water and farmers more, and water will flow to its most highly valued use. In other words, when markets are allowed to work, it’s a beautiful thing.

Public utility customers aren’t used to, and don’t really understand, how a free market works when it comes to water. Because a local water utility is seen by most economists as a natural monopoly, retail costs are fixed at low levels despite potential fluctuations in supply and demand. These low costs are accomplished not only through price fixing, but also through rationing (i.e., the public utility regulates when and how much water can be used, rather than consumers responding to true prices).

Water rationing usually affects what the utility considers a low-value use of the good, such as lawn watering. You are permitted to water your lawn only during certain hours, on certain days, and for a certain amount of time. Even if you have a prize-winning English garden in the middle of a desert and would gladly pay more for water, you aren’t given that opportunity. The guy next door with the dandelion lawn, whose sprinkler spends more time spraying the sidewalk than the grass, has no incentive to be more careful with his water, except when he’s forced to follow the directive of the local authority and water his sidewalk on Tuesdays and Thursdays between the hours of 6 and 8 p.m.

Because there is no price incentive for the average public utility water customer to respond to, there are very few creative conservationists. Instead, public utilities resort to ridiculous advertising campaigns aimed at persuading their customers to use less of their products. You’ve probably received the flyers or seen TV ads sponsored by your water and electric utilities offering tips on how to use less. A more direct way to economize on water and energy use might be to let prices fluctuate for public utility customers like they do for customers in the wholesale market.

December 23, 2012

China’s rare earth monopoly bid goes smash

Filed under: Business, China, Economics, Technology — Tags: , , — Nicholas @ 11:20

Remember the headlines from a few years back, when China was the source of a disproportional amount of the rare earth required for many of our modern electronic toys like iPhones and hard drives and such? China’s ham-handed attempt to constrain supply and jack up the prices has signally failed:

For I’ve been saying for years now that this “China will control all the rare earths” thing is nonsense and so it has turned out to be: nonsense.

Not that it hasn’t tried to control it all, mind, it’s just that it has failed. Failed for the reason we’d expect from communist state: its officials don’t understand free market economics. Specifically, it’s possible to successfully exercise monopoly power only if that monopoly is not contestable.

[. . .]

We were also continually reminded that China has 30 per cent of the world’s reserves: which simply shows that people don’t know what a reserve is. It’s not, as just about everyone assumes, the amount of something that’s available. It’s an amount whose exact location is known, which we’ve measured, drilled, sampled and baked a fluffy cake from – and which we can mine with current techniques AND with which we make a profit at current prices. Miss any of those steps (except maybe the cake) and it is not a reserve: it’s a resource. And resources of rare earths are vast: several are individually more common than copper for example. China has 30 per cent of the proven fluffiness, not 30 per cent of all that is available.

I will admit to a certain suspicion that the stories we heard were rather more a well-organised PR campaign to allow a couple of companies to suck subsidies out of the US taxpayer. Or perhaps even, given the conversation I had with a lobbyist about how to try to get on that gravy train, a plot to enrich lobbyists via companies paying to try to suck subsidies out of the US taxpayer.

So, now that I have finished puffing out my chest to “We Will Rock You”, on to what to economists is the blindingly obvious point of this story and what it means for the tech business. You might well have a monopoly: but it ain’t going to do you much good if, when you try to exercise your monopoly power, people come along and successfully contest your monopoly. We thus need to divide monopolies into two classes: those that are contestable and those that are not.

Back in 2010, I commented on Tim’s original debunking of the story:

So, if they have a monopoly on 95% of the world supply, why won’t it hold up? Because in spite of the name, they’re not as rare as all that … and there are substitutions that can be made for some or all of the current application needs. By restricting the supply and/or driving up the price, China will spur new competitors to enter the field and new sources of rare earths to be developed. In the short term, it will definitely create price increases (which, of course, will be passed on to the consumer), but in the medium-to-long term they will create a vibrant competitive marketplace which will almost inevitably drive the prices down below current levels.

Isn’t economics fascinating?

November 30, 2012

Stopping by the Copyright Office on a Snowy Evening

Filed under: Law, Media, USA — Tags: , , , — Nicholas @ 11:28

Virginia Postrel charts the ever-expanding copyright protections under US law:

Even as digital technology has made reproducing, remixing and repurposing creative works easier — with potentially enormous benefits for consumers and producers of new works — the monopoly privileges of copyright have expanded. The result is a bizarre combination of rampant copyright violations, frequent encroachment on legitimate fair use, suppression of new technologies and business models, and the ever-present threat of draconian penalties.

Consider how the law applies to Robert Frost’s classic poem “Stopping by Woods on a Snowy Evening,” first published in 1923. Back then you only got copyright privileges for works officially registered with the copyright office, and only for a term of 28 years, which could be renewed if you filed again, as Frost did in 1951.

Requiring such simple procedures reserved copyright privileges for creators with strong commercial or sentimental interests in limiting the publication of their works. Today, by contrast, copyright automatically applies to every eligible work, including your vacation snapshots and your 4-year-old’s handmade Mother’s Day card.

Under the law when Frost wrote his poem and renewed the copyright on the volume including it, it would have presumably entered the public domain in 1979, more than a decade after its author’s death in 1963. That’s not what happened. Beginning in 1962, Congress gradually extended copyright terms, and in 1976 it passed a new copyright act that gives works already under copyright a new term of 75 years from their first publication. That meant “Stopping by Woods” wouldn’t go into the public domain until 1998.

That’s not what happened either. Just as the poem’s copyright was about to expire, Congress passed the Sonny Bono Copyright Term Extension Act, which gave existing works a new copyright term of 95 years. (The 1923 Frost volume including the poem was one of the works cited in a lawsuit unsuccessfully challenging the act’s constitutionality.) So Frost’s poem won’t enter the public domain until 2018 — assuming that Congress doesn’t pass yet another extension.

November 11, 2012

The natural lifecycle of a “monopoly”

Filed under: Asia, China, Economics, Technology — Tags: , , — Nicholas @ 12:53

In Forbes, Tim Worstall celebrates the natural end to a “monopoly” — the quasi-monopoly of Chinese exports of rare earth compounds:

These past several years I’ve been shouting to all who would listen that while China does indeed have a stranglehold on current production of rare earths that’s not something that we really need to worry about. For the important thing about rare earths is that they’re not rare (nor earths either). There are plenty of deposits around and we can get all we need from other areas of the world if we should care to.

    The same cannot be said of Kuantan, the Malaysian locale where Lynas plans to build a rare earth processing plant, a type of facility residents and Australian supporters say, in online campaigns, will result in “millions of tonnes of toxic radioactive waste left behind”.

    Residents took Lynas to court in Malaysia, resulting in the suspension of its operating licence. That decision was overturned yesterday.

Lynas is the company desiring to mine the Mt. Weld deposit (a nice rich one it is too). They are going to separate the RE concentrate at that plant in Malaysia. There’s been a vocal campaign against the licensing of that extraction plant and Lynas has, as above, just succeeded in over-turning a previous license refusal. Once up and operating fully the plant should supply some 20,000 tonnes a year of REs. This is a substantial portion of demand outside China: it’s some 15% or so of entire global demand in fact.

And thus we again see how an apparent monopoly isn’t really all that much use to the supposed monopolist. It certainly was true that China supplied 95-97% of the world’s REs. Largely because they were willing to mine and supply at prices that made it not worth anyone else’s while to do so. But when they tried to constrain supply, to exercise that monopoly, instead of being able to exploit us all they simply encouraged the competition that destroys that monopoly.

Markets do indeed work and the only monopoly that can really be exploited is one that isn’t contestable. And an attempted monopoly in something as common as rare earths simply is contestable and thus cannot be exploited.

October 26, 2012

“Canada has effectively become the Digital Third World”

Filed under: Business, Cancon, Media, Technology — Tags: , , — Nicholas @ 09:21

In Forbes, Reuven Cohen looks at the state of internet access in Canada:

Before I get into what was discussed, I need to provide some context to the current state of Internet connectivity in Canada. To understand the Internet landscape in Canada is to endeavour into the realm of duopolies, bandwidth caps and mediocre Internet connections. As it stands today, Canada has effectively become the Digital Third World.

A recent video interview with The Globe and Mail’s Omar El Akkad and Netflix CEO Reed Hastings summaries the problems with cloud computing in Canada. Hastings’ specifically calls out capped Internet plans as compared to the rest of the world saying “Canada has the misfortune of being the country with the lowest internet caps maybe in the world but certainly in the developed world and in all of the Netflix world. In Mexico, Internet is largely uncapped; in the US it’s largely uncapped; in the UK it’s completely uncapped; in Canada there’s a number of providers with very low caps…I don’t quite understand it.”

Herein lies the problem, the widespread use of bandwidth caps in Canada is partially the result of a market defined by vast geographies and a limited population base. This has resulted in a highly concentrated market controlled by a small group of ISPs. Making things worse is a highly government controlled telecom industry that prevents foreign investments, particularly for wireless and broadband services. This combination of factors has led to one of the most restrictive markets for cloud computing as well as other internet related services found in any of the major industrialized nations today.

October 24, 2012

Persuading Michigan voters to refuse a new free bridge to Canada

Filed under: Cancon, Politics, USA — Tags: , , , , , , , — Nicholas @ 10:05

The announcement back in June must have appeared too good to be true: a new bridge between Detroit, Michigan and Windsor, Ontario to be completely funded by Canada. Michigan voters are being urged to refuse the deal:

Canada, understand, has agreed to pay for the bridge in full, including liabilities — and potential cost overruns — under an agreement that was about a decade-in-the-making and officially announced to much fanfare, at least on the Canadian side of the border, by Prime Minister Stephen Harper and Michigan Governor Rick Snyder in Windsor/Detroit in mid-June.

For Michigan, it is a slam-dunk arrangement. As Mr. Norton told one audience: ‘‘If this proves to be a dumb financial decision, it’s on us, not on you.’’

It’s a free bridge, a vital new piece of publicly owned infrastructure — for both countries — and yet one that is in grave danger of being demolished before construction even begins when Michigan voters head to the polls for a ballot initiative attached to the Nov. 6 elections.

[. . .]

Manuel (Matty) Moroun, an 85-year-old self-made billionaire who owns the 83-year-old Ambassador Bridge, is Cynic-in-Chief. The Ambassador is currently the only transport truck-bearing bridge in town. Twenty-five percent of Canadian-American trade, representing about $120-billion, flows across it each year.

It is a perfect monopoly for the Moroun family, a golden goose that just keeps on laying eggs, putting upwards of $80-million a year in tolls, duty free gas and shopping sales in their pockets. Allowing a Canadian-financed competitor into the ring without a fight isn’t an option.

September 3, 2012

The great maple syrup heist must have been an inside job

Filed under: Business, Cancon, Food — Tags: , , , — Nicholas @ 10:02

The first time I heard about Quebec’s strategic maple syrup reserve was when someone made off with a quarter of the province’s sweet, sticky liquid:

On Friday, news broke that thieves had stolen $30 million dollars worth of Quebec’s strategic maple syrup reserves. Much as the United States keeps a stock of extra oil buried in underground salt caverns to use in case of a geopolitical emergency, the Federation of Quebec Maple Syrup Producers has been managing warehouses full of surplus sweetener since 2000. The crooks seem to have made off with more than a quarter of the province’s backup supply.

[. . .]

But harvesting maple is a fickle business, and that makes expanding the industry tricky. The trees need cold nights and mildly warm days to yield sap, meaning production can vary greatly year to year based on the weather. That’s a potential problem for the big syrup buyers, whether they’re bottlers or large food companies that make cookies or cereal. Quaker can’t pour a bunch of time and money into developing a maple-and-brown-sugar-flavored version of Life, only to find out it won’t be able to get enough of its ingredients, or that they’ll have to pay through the nose for each liter of syrup.

H/T to Nicholas Packwood for the link.

August 21, 2012

Verity Stob learns to love IPv6

Filed under: Humour, Technology — Tags: , — Nicholas @ 08:45

A love story, of sorts:

Somewhere in the near future…

There were more than 50 people in the room, so it was hot and airless, and it smelled of stale sweat. Government-sponsored crisis posters, tatty and torn, were sticky-taped to the yellowish walls. One urged its readers: ‘Don’t let your selfishness come between little Johnny and his Wikipedia’, another enquired: ‘Do you NATter with your Neighbours? Don’t squander the nation’s resource!’

(The latter effort was illustrated with a carefully posed photo of a beaming, bosomy Minister for IT Conservation encouraging a weedy-looking Everybloke to plug his laptop into her generously exposed router socket. The photo had recently acquired a pleasing piquancy. This same Minister had been caught selling a bunch of government-owned IP addresses, supposedly earmarked for use in schools for the next generation of Olympic heroes, to the International Bank of Fatcat and Taxhavenia.)

Under the flickering fluorescent lighting, a shuffling, miserable queue of the desperate and the hopeless zigzagged towards the bullet- sound- and Windolene-proof glass of the counter. At the front of the queue was me.

The official behind the glass pursed his lips, flicked my carefully filled-in paperwork to one side with disdain, and leaned forward to speak into his goose-neck microphone…

August 6, 2012

India’s blackouts are a sign that reform is desperately needed

Filed under: Economics, India — Tags: , , , , — Nicholas @ 10:20

The Economist on the massive blackouts in India recently:

FOR an aspiring economic superpower, there can be few more chastening events than electricity cuts as massive as those that struck northern and eastern India this week. An area (including the capital, Delhi) in which more than 600m people live faced blackouts over two days. Infrastructure, from traffic lights to trains, stopped working. Hospitals, sanitation plants and offices ground to a halt. Airports and factories had to rely on backup generators, often fuelled by truckloads of diesel.

The impact on India’s economy goes far beyond lost output. The blackout will badly damage the country’s reputation, and highlights the rotten infrastructure that is hobbling its efforts to catch up with China.

[. . .]

At one end, not enough cheap coal is being dug up and gasfields are sputtering. At the other, the national transmission grid needs investment. Meanwhile the “last mile” distribution companies, largely state-owned, that buy power and deliver it to homes and firms, are financial zombies. Much of their power is pinched or given away free. Local politicians put pressure on them to keep tariffs low, which leads to huge losses. Squeezed between a shortage of fuel and end-customers who are nearly bust, those private generating firms are now cutting back on vital long-term investment in new plants.

[. . .]

The solution is to cut graft, tackle vested interests and allow markets to work better. The coal monopoly needs to be broken up and local distribution firms privatised. Yet despite the looming crisis, for a decade the government has shirked doing what is clearly necessary, just as it has failed to implement key tax reforms, cut public borrowing or open the retail sector to competition. It has allowed corruption and red tape to damage other vital industries, such as telecoms.

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