Friday, December 30, 2011

More wind watchers

We are the masters of our fate, the captains of our souls.

Thursday, December 22, 2011

Bankrupt Pension Plans Drive Businesses Out of the State – A Lesson for Wyoming

Companies were talking about leaving the state of Illinois. Chicago Mercantile Exchange and Sears’ corporate headquarters were among the companies looking to head to states farther away -- from fiscal collapse that is. Indiana governor Mitch Daniels is busy promoting his state as a place with an attractive business climate. Wyoming is likely doing the same. However, Wyoming suffers from the same problem that is tanking the Illinois state budget – an unsustainable pension plan for bureaucrats.

Wyoming’s bureaucrats have it made – for now. When they retire, they’ve been promised a pension most people in the private sector can only dream about. Bureaucrats get a defined-benefit pension plan, one that pays a sum of money defined by the bureaucrat’s last five-year-average salary and the length of time in government, whether there is enough money in the pension fund or not.
Neither the Illinois nor the Wyoming pension plans have enough money to pay their promised benefits. Wyoming’s public sector pension plan is 84 per cent funded. That means, should it close down today, the government would have enough money to pay for 84 per cent of its promised benefits.
Technically, these types of funds are considered beyond recovery when they fall below 71 per cent funded. Illinois’ public sector pension plans are 51 per cent funded. Illinois’s pension plans do not have enough money to pay the promised benefits and are too far gone to recover.
The Illinois government is in a state of denial. Instead of reforming its pension plan it hiked corporate income tax rates from 7.3 per cent to 9.5 per cent and personal income tax rates from three per cent to five per cent to try to Band-Aid over the problem. These tax hikes were sold to businesses and individuals as a temporary tax measure, but with an aging bureaucrat population, the drag on the state’s budget will only get worse.
Businesses, not wanting to get stuck paying for politician’s unaffordable promises, responded by looking for greener pastures until the governor backed off and cut the tax hike. Of course, none of this changes the reality that Illinois’ pension plan is bankrupt so these cuts will likely only keep business in the state until the next budget crisis. 
Wyoming has no corporate or personal income tax so would be a good place for these companies to relocate to, on the surface. That’s because Wyoming’s bureaucrats enjoy the same type of pension plan as those in Illinois. Some Wyoming legislators have faced reality and a bill is heading to the Wyoming legislature to reform the Wyoming bureaucrat pension plan before the state has the same problems now sinking Illinois. But will enough Wyoming legislators take the necessary steps to reform the plan? All Wyoming legislators must face reality now and reform this pension plan.
These defined benefit pension plans are a relic of bygone times. That’s why almost all companies in the private sector have moved employees to the type of plan outlined in the new Wyoming bill -- a defined contribution pension plan. In this type of plan, retirees’ pensions are determined by how well their investments did over time. The money is in an account a person owns and controls. People don’t depend on false promises and taxpayers aren’t on the hook to support pensions far grander than anything they could ever hope for.
Businesses and private-sector taxpayers, many who do not even have a pension, cannot be expected to fund the retirement bliss, even if illusory, of bureaucrats. As defined benefit plans become a bigger ball and chain on the economy, they drive taxes up which drives business out of the state. By empowering all people to control their own retirement future, Wyoming can avoid this fate.
Let’s not be Illinoyed.

Cat view

My latest painting. I'm working in pastel on paper.

30x22 inches

Monday, December 19, 2011

Big government and big business conspire to restrain Internet sales

Adam Smith, the father of modern capitalism, loved the free market system but distrusted businessmen. Back in 1776 he said, "People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.
Although this no doubt still happens, a more modern version of this phenomenon is big government politicians and big business executives conspiring against small business and the public to destroy competition and raise prices.

As recently as September 2011, Amazon, the giant online retailer, prevented state governments such a California from collecting sales taxes from online retail sales.

That was then.

In November 2011, Sen. Mike Enzi (R-Wyo) introduced The Marketplace Fairness Act, to allow states to collect sales taxes from out-of-state Internet sellers but exempted businesses making less than $500,000 in annual sales.

According to Amazon vice president Paul Misener, only one percent of online sellers sell more than $150,000 annually.

So Sen. Enzi’s bill would exempt 99 per cent of Internet retailers, pretty much everybody except Amazon, and that would be bad for Amazon. But with threats come opportunity and now instead of combatting the Internet retail sales tax, Amazon has jumped onto its bandwagon.

In his testimony to congress Mr. Misener said congress “should authorize the states to require collection, with the great objects of … leveling the playing field for all sellers.” By this he meant congress should not exempt small online businesses from collecting sales taxes in all states. Is that because he really cares about big government’s need to feed its spending addiction with more tax revenue?

Oh no.

Amazon is a big company with lots of lawyers and accountants so can easily absorb the added cost of collecting the spider’s web of sales taxes in 50 different states. Small mom and pop shops, on the other hand, would be forced out of business if they had to take on that additional cost.

Jim Estabrook, a small business owner near Gillette, Wyoming says, “I have had multiple small businesses that have mainly me doing all the work. I do not believe he [Sen. Enzi] understands the nightmare that would be created for dealing with sales tax collected for 49 states. Personally, I would have to spend a lot of time taking care of those requirements for about a month or two. Then I would be out of business because I wouldn't have had any time to sell products or services.”

Destroying competition will certainly help Amazon, but it will hurt small business, hurt the economy and as usual, hurt the consumer.

Saturday, December 10, 2011

Turbines in pastel

It's true, I do more than cycle around and write about politics. I must say, though, it is amazing the things you see when you cycle around army bases that you would never see if you were sitting inside a car.

These are the three latest installments in my Windmills of Doom series.


Not us

Windmills of Doom

Friday, November 25, 2011

Cat artist

Maulana and Mufti like to steal my chair, but won't sit still the moment I get even the little iPhone camera out.

Here's my latest work in pastel. I'm going to have to up the 'diabolical' level on these paintings to fit in with my Windmills of Doom series. Stay tuned ....

Another day at the windfarm

I've been trying to figure out how to express in a photo just how massive these windturbines can be. The turbine in the background is truly massive, but don't just take my word for it.

The smaller turbine in the foreground is spinning like mad but the big one in the background isn't budging. When I cycled past, the wind almost blew the bike's wheels out from under me, it was that windy. Maybe it's some type of not-so-secret US Army experiment. At least this time the army helicopter didn't chase me away.

Saturday, November 19, 2011

Mainstream media really is biased

We often hear how the media is biased leftward -- it has a Liberal bias. I was never really sure what that meant until I saw it in action. When I wrote editorials in Canada, I often spoke with the editors of the editorial pages and I can tell you with absolute assurance I found no left-wing bias in the people I worked with. Since I've been in the US, what I've found is a left-wing bias in news reporting. This article explains how it works in one of the biggest daily newspapers in Wyoming.  (PS, I didn't create the cartoon ....)


If you've ever wondered if some in the mainstream media love big government, wonder no longer.

A couple of weeks ago, the Casper Star-Tribune (CST) posted a front page article highlighting the story of an enrollee in the Wyoming Healthy Frontiers Demonstration program, the state government's attempt to expand Medicaid. The story mentioned a Wyoming Liberty Group series criticizing Healthy Frontiers, but then, a few days later, the CST published a staff editorial that praised Healthy Frontiers' expansion. Wyoming's largest newspaper removed the last vestiges of impartiality by condoning an unproven and controversial new government program.

At no point did the CST news article or editorial reveal how this program would leave low-income earners to languish in yet another poorly run government program.

Even worse, the article and editorial chose to ignore the back door funding received by the private contractor, Dr. Hank Gardner, the president and CEO of Human Capital Management Services (HCMS) and alleged brain behind Healthy Frontiers.

The legislative appropriations for Healthy Frontiers were earmarked for costs associated with enrollees. But HCMS gets paid through office of the governor and Workforce Services contracts. This amounts to more than $45,000 per month for data analysis and clinical prevention services.

This, no one wants to talk about.

HCMS declined to respond to legitimate access requests for records that could either justify or discredit the design of Healthy Frontiers. It claims to have data and research from thousands of state welfare recipients but says that as a private company, it does not have to make them public because, it claims, it is not required to submit to the same level of transparency as the government. In effect, HCMS gets paid thousands of tax dollars every year for a program designed with data it refuses to reveal.

What is it hiding? Well, according to Sen. Charles Scott, R-Natrona, "[we] are looking for data that doesn't exist."

Just when you think it can't get any worse, it does.

Not only did the CST articles fail to reveal the link between HCMS and Healthy Frontiers, it referred readers who wanted information on Healthy Frontiers to a private company in a blog post.

The post referred readers to one Brenda Burnett of Nova Solutions (sic). Nova Solutions, however, is a furniture company.

Knova Solutions, though, is a private health services provider which also happens to be a subsidiary of - wait for it - HCMS!

Why is one of the state's largest daily newspapers referring readers to a private company receiving millions in taxpayer dollars to keep Healthy Frontiers, a government program, on life support?

What's going on here? We have a state agency using its own budget to fund a program through a private company that is not subject to public scrutiny. Nobody reports to anyone and the money keeps flowing to HCMS. In the meantime, the people this program is supposedly designed to help receive a sub-standard product at the taxpayers' expense - and the mainstream media cheers them on. This is crazy!

Learn more about the Wyoming Liberty Group's battle to obtain the elusive data Healthy Frontiers is allegedly based on. Wyoming Liberty Group's articles, written by our investigative journalist, JP Eichmiller articles can be read here.

Saturday, November 5, 2011

Wind Turbines

Out cycling again, this time around Warren Air Force base - an air force base with no runway - you don't want to know. Not only does this base have 'things that must not be named,' they have a few wind turbines. For those of you wondering how loud these things are (when they are turning, that is), I couldn't hear the small ones (that were, in fact, turning) over the program I was listening to on my iPhone.

I could hear, however, the sound of a helicopter. I thought, "I didn't realize wind turbines made helicopter sounds." Then I saw the helicopter and thought, "Well, I guess it's time for me to get outta here."

The near turbine had blades that looked about twice as long as the blades on the turbines you can see in the distance. The big blades stood silent in the breeze. The far blades were turning, though.
 These are close ups of the massive turbine.

Saturday, October 15, 2011

Antelope siting

On my bike ride in the high prairie of Wyoming, I saw, sitting in a field by the road, a herd of antelope (don't know what kind). The video of the cyclist in Africa who was attacked by an antelope came to mind but the herd I saw was behind a fence. Still ....
When I got off my bike, they got interested.

Bye this time almost all of them had stood up. The leader was looking in my direction.

At this point, it looked like they were deciding which way to go. I, needless to say was hoping they weren't going to come in my direction. These guys could jump the fence, no problem.

Phew, they decided to run away.
And yes, I must figure out how to work the zoom on that camera !

Sunday, October 9, 2011

Was the hailstorm ‘good’ for Cheyenne?

Shortly before I moved to Cheyenne, Wyoming, a massive hailstorm hit the city and destroyed hundreds of roofs. The day I moved into my house, about two months later, a roofing company showed up at the door to inform me they would be replacing the roof. One of the roofers said she used to live in Cheyenne but moved to Denver because she could find no work in Cheyenne. Now she had lots of work in Cheyenne; the storm had been good for Cheyenne, she said. 

Wow, I thought to myself. Here it is -- a real-life example of the broken window fallacy. 

If we understand how this fallacy works we can see through the self-serving demands of special interest groups and look beyond the immediate effect of some action or government policy to its long-term consequences. 

The French economist Frederic Bastiat first explained this fallacy using a story about a broken window. I’ve modified it here:

Suppose some boys are playing and one throws a rock and accidentally breaks a window in his neighbor’s house. The neighbor tells the boy’s parents who agree to pay for it. 

The father shrugs his shoulders and says, well, there’s a bright side. It will mean more business for the glass company. He ponders a bit more and says this will cost about $100, but after all, now the glass company will have $100 to spend, and that money will get spent again and again. Hey, he says, our boy is helping to stimulate the economy! 

Wait a second, says the mother. I could have used that $100 to buy shoes for the boy. Sure, now the glass company will have $100 to spend, but the shoe company won’t. The glass company’s gain is the shoe company’s loss. Plus, the boy won’t get new shoes. 

So back in Cheyenne, the roofing company will have more income but it comes at a cost to someone else. The owner of the house (not me – it’s a rental) won’t be able to buy something else because he has to pay for a new roof. All we see, though, is more money in the roofer’s pocketbook. What we don’t see is the person who was made worse off. Destruction might help one group but it comes at a cost to another. 

If we want to avoid one of the most common economic fallacies we must look beyond the seen to the unseen, from the short-term to the long-term consequences of events and actions. 

Saturday, October 8, 2011

Global Fooling ?

It's a good thing I bought a snow shovel last week.

I was so looking forward to global warming.

Tuesday, September 20, 2011

Green job killer

Jon Stewart has some great writers. Check out this video showing once again that governments can't pick winners but are an easy mark for losers, especially those pedaling the latest eco fad.

Sunday, September 18, 2011

Wind Farm near Cheyenne Wy

You won't understand why I was happy to find a big wind farm near Cheyenne Wy, where I am now living, unless you know I've been working on a Windmills of Doom painting series. I took a few pics today but they don't convey just how HUGE these wind turbines really are.

Saturday, September 3, 2011

Maureen's next big adventure

I'm off to Cheyenne, Wyoming to start a new job with the Wyoming Liberty Group (WLG), a free-market think tank that focuses on individual liberty and limited government. I will be blasting away again at government policy - fun times are back. 

The WLG will begin to publish its own newspaper, The Frontier Monitor. This will ensure government transparency and accountability as state and national newspapers continue to downsize. 

The online version will be launched soon. 

My first campaign will be -- wait for it -- health care. More on that later. 

Friday, July 22, 2011

Kayak adventure a paddle away

Here are some of the experience available to you in British Columbia, if you are adventurous, and if you have a kayak. I'm selling the Perception Avatar, 15.5 inch sea kayak with all its accessories, for $1,000 (BMW, and BMW roof rack extra). Please email me if you are interested:

Wednesday, July 13, 2011

Winds of Change

A painting from my Windmills of Doom series.

Winds of Change
30x48 inches

Monday, July 11, 2011

Half a million dollar men (and women)

One of the things that makes the CEO of BC Ferries, David Hahn, stand out from the rest of the Crown Corporation CEOs is that he makes more than any other. In fact, he is the highest paid bureaucrat in the public sector.

Mr. Hahn is the million dollar man - he made 1.0 million in salary and perks in (fiscal year) 2011, $500,000 in salary, $161,563 in an annual bonus, $237,172 long term incentive, and about $98,464 in pension contribution.

Taxpayers and ferry users are forced to fund a monopoly ferry service and as a result, are forced to fund this salary and pension.

But there are plenty of half and quarter million dollar men (and a couple of women) in the bureaucracy we are forced to fund as well.

For example, in (fiscal year) 2010, BC Hydro's CEO Bob Elton made $749,213 in total salary and bonuses, Pavco CEO Warren Buckley made $560,307, ICBC CEO Jon Schubert made $507,306 and BCSC CEO Brenda Leong made $499,251.

These are just a few examples but there are about 30 crown corporations in B.C. They employ about 22,000 people and if we add up all the wages paid to bureaucrats we get an idea of how much of a burden these Crown Corporations create. In B.C., the wage burden went up from about $650 million to about $1 billion between 1990 and 1997, then stayed fairly steady until 2008, when it took off to $1.6 billion.

We tend to focus on a single person, but in reality, we face a massive wage bill from Crown Corporations. Crown Corporations don't face the discipline of a competitive marketplace, so wages go nowhere but up. It's time to get government out of the business of providing services better provided by the private sector.  Taxes just can't go any higher to pay for a system that is unaccountable and out of control.

Sunday, July 10, 2011

Carbon taxes are a job-killing, inefficient failure

Did you have a Happy Carbon Tax Day?

We all probably had a happy Canada Day on July 1, but July 1 was also the day the carbon tax went up. B.C.'s not-so-happy Carbon Tax Day is the day you get to pay more for gasoline, natural gas and home heating fuel.
Why? To pay for your climate crimes.

Read my whole article in the Province newspaper here.

Friday, July 8, 2011

Cabin Fever

My art website has been down for a while so I've been asked to post some of my paintings here.

This one is called Cabin Fever

45x27 inches, oil on canvas

Saturday, July 2, 2011

A problem with pragmatism

At an event the other night, I spoke to a person who proclaimed he had no ideology. I asked him what principles he used to guide his life's decisions. He fumbled a bit at the question but recovered and said, "I do whatever works at that moment."

I said, "Oh, you're a pragmatist."

He puffed himself up and said yes. He then went on to wax at great length about how pragmatism was our reality, and it was a good thing too. He told me he travelled a lot, had seen things, and that's why he was a pragmatist. As my eyebrows rose higher and higher, he explained he'd been to places and had seen people living in a desperate state. He seemed to conclude that pragmatism, practised here, and not there (where ever there was) was the reason we lived well and they (whoever they were) didn't.

I walked away from that conversation depressed, wondering how an educated person could let pragmatism muddle his thinking so badly. (For anyone who wants to understand why some countries are rich and others poor, they might want to start with P.J. O'Rourke's book 'Eat the Rich.')

A while later, I sat next to someone who was a big fan of Ayn Rand and I concluded maybe there is hope after all.

Ayn Rand, author of Atlas Shrugged, the second most influential book ever written according to the Library of Congress, says pragmatism is the opposite of principles. Pragmatism is action resulting from a short-term impulse and for a pragmatist, facts are derived from group consensus. Principles, in contrast, are general truths that other truths depend upon and most important, principles are based on the facts of reality.

If someone says or does whatever is convenient at that moment and doesn't think independently for himself is it really such a big problem? 

According to Rand, an independent thinker does not sacrifice his beliefs for a momentary benefit and stays focused on the facts of reality; he sticks to his principles. For the pragmatist, conformity is more important than living in reality.

Although it might seem easier to cling parasitically to the beliefs of other people and say whatever, whenever convenient, the pragmatist is depending on other people to guide his life. The inability or unwillingness to distinguish between fantasy and reality leaves a person floating around in a mass of muddled delusions.

Friday, July 1, 2011

Global Warnings - Sea Level Rise?

When I spoke at the BC Conservative Leadership conference a while back, I said the way to counter climate alarmism was to simply point out the facts of reality. The sea level scare is a good example of what to do.

The Intergovernmental Panel on Climate Change says sea level will rise by five inches over the next 100 years. 

Is that really a cataclysmic increase as many global warmists alarmingly claim?

Well, over the past 150 years, the sea level rose by about five inches.

Ask your grandfather which were the most significant events over the past century. He's likely to say two world wars, the cold war, and the advance of technology. He's very unlikely to say the sea level rose by five inches. 

It's time to turn down the alarmist volume and the facts will do just that.

Wednesday, June 29, 2011

Win an election on a spending cut platform?

Here in British Columbia we have yet to hear from a political party with a small government platform. Maybe that's because politicians worry they wouldn't get elected if they openly and honestly said what they were going to do. But experience right her in Canada shows it is possible to promise to cut government spend and get elected, and get re-elected.

During the 1992 Alberta Progressive Conservative leadership race, Ralph Klein promised to balance the budget in four years, reduce the size of cabinet and implement a balanced budget law. He went on to win the 1993 election with 44.5 per cent of the vote and immediately reduced the government cabinet from 26 to 17. He then eliminated the gold-plated pension plan and introduced the Deficit Elimination Act.

Klein didn't stop there. He then:
  • Reduced government spending by 20% over four years
  • Reduced MLA salaries by 5%
  • Achieved a 5% rollback on bureaucrat salaries, including unionized bureaucrats.
  • Cut health care spending by 6.3%
  • Cut kindergarten funding in half
  • Reduced municipal grants by 47%
  • Removed university tuition caps
  • AND Cut 30,000 from the welfare rolls.
By 1995, Alberta had its first balanced budget in a decade.

So, was Klein universally despised and decried throughout the province? Was he tarred and feathered? Was he run out on a rail? 

No, he had a 73% approval rating and was re-elected in 1997, 2001 and 2004.

With proper planning and follow through, a clear honest defense of limited government can, and will, be rewarded by voters.

Tuesday, June 28, 2011

Art subsidies violate free speech

The Federal government announced it would no longer give the SummerWorks Theatre Festival in Toronto any more money. This is good news and we should applaud any government effort to cut back on subsidies to business, any business, including the arts.

That's because art, like any business, should live or die by providing a good or service that people want.

Government shouldn't subsidize businesses because if forces people to pay for things they don't want.

But there is an even bigger reason why government shouldn't subsidize the arts. Art is the expression of ideas and using tax dollars to support ideas people disagree with is immoral and violates their freedom of speech.

Politicians should be fostering fellowship, not strife. One group shouldn't be abused to fund another.

If artists cannot get people to voluntarily buy their wares, then taxpayers shouldn't be forced to pay for it -- and the artist should keep his day job.

Monday, June 27, 2011

Fat and the nanny state

I read an article the other day suggesting government force chip manufacturers to put pictures of morbidly obese, bed-ridden slobs on a bag of chips. The writer was making a satirical comment on cigarette packaging, but this is a point we should flesh out a bit.

The nanny state has become an essential feature of the social and economic ideology of our times.

But before we let government take over all of our most basic decisions, even about what to eat,  we really need to ask ourselves:  is it the role of government to force people to do something as long as someone else thinks it's good for them. Is it really OK to force "the good" as defined by someone else, down peoples' throats?

One of the things I often hear from supporters of a government solution to every problem is that the government has an obligation to stop people from getting too fat because in our socialized medical system, the cost of people eating whatever they want falls to the taxpayer. But people engage in risky behaviour all the time and that costs the taxpayer too.

If we accept the idea that government can arbitrarily decide what we can and cannot do, the door opens to unlimited government interference in our most basic personal decisions.

Thursday, June 23, 2011

Regional district spending is out of control

If you feel like you are paying more but getting less, it's in part because you are paying for the lifestyle of someone else.

Find out how in my article in the Province newspaper here.

Sunday, June 19, 2011

Why is socialism still so popular?

Why would the NDP want to keep socialism in its charter?

Because a lot of voters still think socialism is a good idea. Socialism's defining myth is voters can get something for nothing, all they have to do is vote for the NDP.  The NDP left out the part about how everything we consume has to be produced. Just because voters want something doesn't mean they have the right to just take it away from the producer. It also doesn't mean this taking is can go on forever.

Those plundered aren't too happy about it, and they react. When what is left to take starts to fall but what voters want to take continues to rise, voters, who were told that votes somehow create things to take, aren't too happy either. The politicians get worried about losing the next election and are then forced to ration. Rationing is unpopular but the usual scapegoats, such as greedy businessman, Arab oil sheikhs, the rich or bad weather will be dragged out to justified it. It's never the government's fault.

When rationing doesn't work anymore, those who are still able to produce must be motivated to produce more for even less. Eventually, they must be forced to produce -- they are enslaved.

How can socialism lead to the collapse of a nation?

Voting produces nothing.
Force produces less and less.

Monday, June 13, 2011

Unplug electricity self-sufficiency strategy

Premier Clark's family first agenda has sent the energy minister, Rich Coleman, off to review what's up at BC Hydro. What's up, besides massive salaries and crumbling infrastructure, is a dimwitted policy for electricity self-sufficiency. 

The government is forcing B.C. Hydro to make the province self-sufficient in electricity production by 2016, just five years away. By 2020, Hydro must be self-sufficient - in the worst case scenario. In other words, BC Hydro has to be able to produce all the electricity we need each year, plus an additional 3,000 gigawatt hours of energy, above and beyond the basic requirement. This means most of the time, we'll have a lot of electricity generating capacity sitting around unused.


In fact, electricity self-sufficiency is one of the political mandates driving electricity rates up by 50 per cent over the next five years. It would probably be a lot less costly for Hydro - and families trying to make ends meet - to continue importing power to meet peak demand instead of having all this infrastructure sitting around.

Ironically, the BC Liberals go on and on about how they are a free-market party, but self-sufficiency comes right out of the communist handbook. 

Self-sufficiency is an old fashioned and discredited economic theory that used to be supported only by the loony left. For some though, no policy seems too loony these days. The government is telling us we need to be energy self-sufficient and what this will magically do is let us take care of the environment at the same time. To take care of the environment, the government is increasing taxes on energy and channeling subsidies and tax breaks to companies that meet its definition of green.

What people here need, though, is not energy self-sufficiency, but energy security - the ability to buy energy whenever we need it. If we build a big supply of subsidized energy projects, we pay higher taxes, waste tax dollars, and could make people a lot worse off. For example, Spain, the country often heralded as the model of green electricity generation, now has an unemployment rate hovering around 20 per cent.

Self-sufficiency could reduce our energy security and anyway,  energy self sufficiency makes no sense for B.C. B.C.'s electricity grid is integrated with Alberta and the western United States. So it very easy for us to buy and sell electricity - to trade. In fact, BC Hydro's trading arm, Powerex, makes billions of dollars every year trading electricity. A lot of that money goes back to government general revenue. Economic growth and all the benefits that come with it will allow us to continue to import energy to meet domestic demand if we ever do have a supply shortage. The government's focus on energy self sufficiency is a step backward  and --  in fact -- contradicts its commitment to free trade.

We can have energy security if government gets out of the way and lets economic growth increase the wealth of the citizens of B.C. Energy self-sufficiency will not provide us with a secure, reliable supply of affordable energy. Don't be fooled and let fear of a lack of energy let government get back into the business of subsidizing businesses in a losing attempt to pick winners.

Sunday, June 5, 2011

Feedback from readers

People who are concerned about big-spending government responded to my article in the Province.

Check out today's Province letter page. Pick up the paper or read it here

Thursday, June 2, 2011

We want better, not just less bad government

Fewer and fewer voters head to the voting booth these days and one reason might be they have no real choice.

British Columbia has two parties competing to deliver more, to more people, but people know big spending leaves the province with a legacy of deficits and debt, which translates into higher taxes later, no matter which party does the spending.

The B.C. Liberal government goes on and on about how they are different from the NDP, but how?

Are they better or simply less bad?

Read the whole story in the Province newspaper here.

Wednesday, May 18, 2011

Gov must top interfering with art

Last night on the Sun News program Byline, I talked about how art subsidies create both financial and moral costs to society.

I based those comments on my National Post article. Read it here.

When politicians put publicly-funded arts groups on a diet, they can be sure those groups will bite back. Prime Minister Stephen Harper found that out the hard way during the 2008 federal election, when he cut arts funding by a miniscule three per cent.  According to political analysts, the resulting backlash in Quebec may have cost him a majority government.   But even between elections, arts groups across the country clamour for more access to other people’s money, and politicians, fearful of their next trip to the polls, do their best to comply. As a result, billions of hard-earned tax dollars land in the pockets of these groups every year, creating a visible benefit for some – the winners - but an unseen cost for others – the losers.

Read more here.

Tuesday, May 17, 2011

B.C. Hydro high-flyers consume your money

If a company in the private sector pays huge salaries to its workforce instead of investing in infrastructure to serve its customers, the company's share price would go down and it would eventually either go bankrupt or be taken over by a corporate raider.

Organizations in the government sector don't have share prices and don't need to worry about raiders. This means priorities in the government sector are very different from those in the private sector. B.C. Hydro is a case in point.

Read the whole story here.

Saturday, May 14, 2011

Cashing in on climate change - the carbon offset scam

Who would pay $25 for something when other people would only pay 14 cents? Why, the government of course!

The B.C. government is forcing its ministries, agencies, schools and hospitals to pay for the amount of carbon they emit. This was part of Gordon Campbell's plan to have a carbon neutral public sector to stop the globe from warming. But when the BBC and even the Globe and Mail start pointing out we haven't had any global warming since 1998 even though  carbon dioxide levels continue to rise, we know the global warming bandwagon has derailed and it's time for B.C. to jump off.

As we've seen recently, businesses still have time to cash in on global warming, and they are. The government  will send tax dollars to businesses if they lower their carbon emissions, and to companies set up specifically to absorb those funds. The government created a  Crown Corporation to collect other peoples' money already in the budgets of government organizations and distribute them yet again, this time to businesses. It's called the Pacific Carbon Trust.

How does this work? Schools and hospitals pay $25 dollars per tonne of carbon they emit to the Pacific Carbon Trust, then the Pacific Carbon Trust sends that money to companies that have lowered their emissions. The Trust has not disclosed how much it pays to companies for each tonne of reduced emissions. We can only hope it is not more than $25 per tonne.

If the school or hospital wanted to pay only 14 cents for that tonne of carbon, it used to be possible at the Chicago Climate Exchange. Used to, that is, because the Chicago Climate Exchange shut down, in part for lack of interest.

But anyway, taxpayers in B.C. are still on the hook to pay $25 for that same tonne of carbon emissions.

Why?  Because when government spends other peoples' money, it does so for political, not economic, reasons. Would you use your own money to pay $25 dollars for hot air  when you could pay for 14 cents?  For that matter, would you pay for hot air at all? Of course not.

The BC government gave $14 million in 'seed' money to the Trust then paid about $860,000 to offset 34,370 tonnes of carbon emissions. Instead of paying for hot air, what could the government have done with money?  How about reducing the deficit or even to school sports programs? But wait, it gets worse. Instead of funding for students, right now government is forcing school boards to purchase software to measure their carbon emissions. This will cost 42 cents per student for the software alone. But that is only part of it. This also involves hiring people to go around to the schools and do important things like measure the emissions coming out of the old fridge in the staff room.  The government's priorities are all wrong.

How does this benefit business?  Well, if a company like Encana or Shell Oil reduces the amount of carbon dioxide it emits by one tonne, it gets a credit paid to it of some amount from the Pacific Carbon Trust. So in other words, schools send money to companies like Encana or Shell instead of paying for school programs. A fine example of our tax dollars at work.

But wait, Shell Oil received $856 million dollars from the federal and Alberta governments for its carbon capture and storage project. It will capture carbon dioxide in the air then bury it. So, it got tax dollars to create the technology to reduce its carbon dioxide emissions, and now it can also get more money from government for reducing its carbon dioxide emssions. If you've ever wondered why some companies are extremely profitable, here's a good example. Some companies can drill for oil and gas and for tax dollars at the same time.

When the Chicago Climate Exchange was still up and running, carbon offset promoters said the  Exchange wasn't as trustworthy as a government program. After all, bureaucrats work altruistically for the greater public good, right? Just like the managers at ICBC's research facility who were buying salvaged vehicles for themselves using insider information and getting their own cars repaired on the cheap. This scam went on for 10 years before the whistle blew.

While perhaps well intentioned, government spending to stop global warming will do nothing to stop global warming but it will hurt families and children and redistribute tax dollars to businesses. It's time to jump off the global warming bandwagon.

Monday, May 9, 2011

HST - another "hold your nose" vote

I used to get emails from outraged people saying they were going to be forced to pay an extra $10,000 per year because of the HST. I thought - wow, you must get a lot of haircuts, but it wasn't all that funny. It showed how confused people were, and probably still are, about the HST. Now it's true, the HST does hit more goods and services with an additional 7%, but only on about 20% of what we buy. The cost of 80% of what we buy is not affected by the change to the HST. Yes, the HST will take more out of your pocket but unless you put a new roof on your house, not anywhere near $10,000.

To explain all this, the government commissioned a report to lay out the facts about the HST before the referendum.

I would encourage people to take a look at it as it also lays out the many ways the government gouges us. The provincial government alone will take $41.3 billion of our money this year. The HST accounts for about 14%,  personal income tax about 14%, other taxes such as the carbon tax and sin taxes like tobacco and alcohol taxes take another 14%, another 21% is taken from another "other" category of  taxes such as the health tax, and 7% comes from Crown Corporations like BC Hydro and ICBC, which of course, also get their money from you and me.

Then the report goes on to justify why government takes so much of our money away. Government spends on our needs (as if a bunch of politicians and bureaucrats know what we need better that we do).  Where most of our dollars go is to health care and education spending. Health care takes up about 42% of the provincial budget and education about 27%.  While it's true, we all need medical care when we are sick and kids need education, it doesn't follow that we need state hospitals and state schools.

If you've ever wondered why services provided by government get more expensive every year, it's because in a state system, priorities get skewed. In the current state hospital system, we have people languishing and dying on wait lists. Sure we're told we have universal access to health care, but access to a wait list is not access to health care.  We need to address the inefficiencies of the system - not just feed it more money. For example, eye doctors make more than brain surgeons and some school board superintendents make $250,000 per year. In 2010, one assistant superintendent made $600,000. Until this gets straightened out, taxes will continue to rise.

What else does the Dinning report show?

We already knew the average person would pay more with the HST. The report showed the tax is going to take an extra $350 dollars per year out of the pockets of families. We also already knew people with high incomes would pick up the bulk of the HST. The report showed more than half of the HST is paid by families with incomes over $80,000 per year. We also already knew people with low incomes would be better off. The report showed people making less than $10,000 per year are better off under the HST because of the rebate cheque they get.

There was one surprise. The HST is not revenue neutral. Well, maybe it wasn't that much of a surprise. For starters, whenever you hear the words revenue neutral you should worry. It's code for -- government never gets less of your money. Anyway, that's the intention. But we shouldn't be all that surprised when government revenue forecasts are wrong. After all, the carbon tax was supposed to be revenue neutral but turned out to be revenue negative. How did that happen? Because of the recession, people drove less than expected so government earned less in carbon taxes.

The old PST took about $5 billion out of your pocket each year. According to the report, under the HST, the provincial government brings in an extra $820 million per year. So obviously, the personal and business income tax cuts weren't big enough to offset the revenue brought in by the HST.

In the referendum on June 24, we can choose whether to keep the HST or extinguish the HST (get rid of it) and re-instate the old PST/GST system. What it doesn't mean is an end to the sales tax in B.C. 

The report makes a couple of interesting points about this choice. Should people decide to go back to the old PST/GST system, the transition period could take up to two years - so if people think after the referendum the entire system will magically go back to what it was, they need to think again. The government would also have to give back whatever it already received of the $1.6 billion bribe from the federal government. More importantly, if we go back to the PST/GST system, we'd lose all the economic benefits and future economic growth a more efficient tax system would bring. The benefits to business, and therefore job growth and wealth creation in the province, would be lost.

What to do?

The government needs to lower the BC portion of the HST by two percentage points.

Why? Because the tax takes much more money out of our pockets than the old PST. One of the selling points for harmonization was the tax change would be revenue neutral. Let's make it so.

As the report notes, we are only stuck with the HST in its current form until July 1, 2012 unless we can get the Federal government to agree to a change. After that, we can change the rate once per year.

So the obvious strategy is for the government to reduce the rate by one percentage point on July 1, 2012, and another point on July 1, 2013.

The sad reality is, until people are willing to do more for themselves and stop asking the government to solve every problem under the sun, we will be forced to hand over more and more of our income to government. In the meantime, we should have a tax system that is the least destructive to personal initiative and the incentive to work save and invest. For the moment, the HST fits the bill.

The last thing we should do is go back to the PST.

Tuesday, April 26, 2011

Who's the fearmongerer now?

How enlightening. The NDP accuses me of fearmongering then turns around and does exactly the same thing. The NDP just doesn't get it, and I'm not the only one who thinks so.

Check this response to NDP Finance Critic Bruce Ralston's attack here

Thursday, April 21, 2011

Tax hikes unlikely to fund Dix's spending

"Government is the great fiction through which everybody endeavours to live at the expense of everybody else." -Frederic Bastiat, French political theorist and politician, (1801-1850)

Check out Maureen's article in the Province here

The NDP's hard-left turn promises big spending paid for by corporate tax hikes. It's unlikely, however, to work out as promised. Higher tax rates can bring in lower tax revenue.

Check out the evidence here.

Friday, March 25, 2011

Will a fat tax reduce obesity?

My article in today's Province newspaper explains the likely outcome of giving government permission to tax products nanny statists deem undesirable. 

Read the entire article here

Governments love sin taxes and not because they want to punish sinners. Taxes on 'sins' like smoking, boozing and gambling rake in billions of dollars every year. In March, the B.C. government called for input on what to do about childhood obesity. Well, the BC Medical Association, worried about the growth in other peoples' waistlines, wants government to create a new sin – drinking soda pop – and tax it.

The prospect of getting permission for a new tax to fight fat has, no doubt, politicians and bureaucrats licking their lips in anticipation. However, if we let government invent a new sin and tax it, will we lose weight, or will our wallets just be lighter because government now has more of our money to waste?

Read the rest of the article here.

Monday, March 21, 2011

Minimum wage hike - good politics, bad economics

Christy Clark promised, during the Liberal Party leadership campaign, to increase the minimum wage, and now she has. The Liberals have long said a minimum wage hike would hurt first-time job entrants, so some people are asking, "why they are raising the minimum wage now?" A better question might be, "why did they wait so long?"

Raising the minimum wage is a no-lose political move. That's because conventional wisdom says a higher minimum wage will 'do something' to help the poor. Let's face it - governments can't free themselves from the pressure of public opinion, no matter how misguided. As Milton Friedman explained in A Conversation, in a representative democracy, if 80 per cent of voters believe in witchcraft, then politicians have to believe in witchcraft. The idea that minimum wages help the poor is today's witchcraft.

There are a couple of other reasons why increasing the minimum wage is good politics. The people hurt by the minimum wage hike, first-time job entrants, like young people and new immigrants, tend not to vote. Better still, hiking the the minimum wage takes the issue away from the NDP. 

When government fixes prices above the level they would naturally flow to, it increases supply and reduces demand. When government fixes a high minimum wage, more people with low labour skills try to enter the labour market but the demand for low-skilled workers falls. Increasing the minimum wage is like kicking rungs off the bottom of the wage ladder. It will make it even harder for young people and other first-time job entrants to find jobs and start moving up the income scale. 

Poor people in B.C. are poor because they are not working, not because they earn the minimum wage. The way to reduce poverty is to improve conditions for job creation,  not well-intentioned policies that might be good at election time but don't work to reduce poverty.

Monday, March 14, 2011

Will we see real change in BC?

Christy Clark will be sworn-in today as BC's new premier. She has a family first platform and says she'll focus on job creation, growing the 'innovative economy' and nurturing the resource sector and rural economy.

Ms. Clark had former Encana CEO Gwyn Morgan as part of her economic advisory group.

Mr. Morgan is a regular columnist with the Globe and Mail. He wrote an excellent article last January called "Three key fixes for stronger growth and future success."

He talked about what a great country we live in and what we need to do to make sure it stays that way. He had three reforms on his wish list. If Christy Clark listened to Mr. Morgan, we can expect to see real change. If not, it will be business as usual.

What was on Mr. Morgan's with list?

1. Overhaul the health care system. We've talked lots of times here before about how health care costs are spiraling out of control and without reform, the system will become unaffordable.

Canada's government run-and-rationed health care monopoly is strained and produces poor results.  The 2010 Euro-Canada Health Consumer Index report shows that although we have the fourth-highest per capita spending, Canada's system ranked 25th when compared to 33 European countries. So we're not getting good value for money and there is a lot of waste in the system.

Health is B.C.'s biggest spending program. In 2001, healthcare spending totaled $10.6 billion, or 34.8 per cent of all government spending. It now totals $16.5 billion and will climb to $17.9 billion by 2012, or 42 per cent of government spending. Without reform, the health budget will eventually take up all the government budget.  

The underlying issue is demographics. About 14 per cent of B.C.'s population is 65 or older now, and by 2032, 25 per cent of our population will be over 65.  People over 65 account for about 44 per cent of health care spending so without reform of the health care system, health costs will likely accelerate and more of the provincial budget will be diverted to health care. 

We need to get beyond the myth that a monopolized government system works best. What we need is an injection of choice into the heath system  to achieve better outcomes and lower costs.  By empowering patients with private and not-for-profit options, hospitals and care givers that provide the most valued service will be rewarded.

2. Re-invent the Universities. I recently worked on a series for Global TV on government waste. One area I looked at was how salaries have skyrocketed at colleges and universities.  Between 1990 and 2010, salaries at institutions of higher education went up by 343 per cent. To put that into perspective, the average salary went up by about 42 per cent during that same time period.

Put that together with what Gwyn Morgan talked about in his article, how Canadian universities are churning out large numbers of unemployable graduates, and you see why we need change at the university level. The Organization for Economic Co-operation and Development's study called "Education at a Glance 2010" looked at whether university graduates from 11 countries were working in the area they studied in. It found that about 38 per cent of Canadian graduates between 25-29 weren't and that was the second worst of the 11 countries. Here as well, we are not getting value for money. Besides, should taxpayers be forced to fund sociology degrees for waiters when we have a shortage of doctors and engineers?

3. Get provincial finances under control. The BC government has a spending problem. Spending hovered at about $30 billion per year between 2001 and 2004 then started to ramp up in 2005 as that dreaded second-term spending disease infected politicians looking to buy their way to re-election. Spending soared to $39.3 billion in 2009 and is expected to hit  $42.3 billion in 2012.

Meanwhile, the B.C. provincial debt sits at about $48 billion now and is expected to rise to about $57 billion by 2012, almost double what it was in 2006.

We're back in a deficit so will we see cuts to spending?

In fact, Finance Minister Jim Flaherty warned Canada is heading for a European-style debt crisis unless the provinces set a firm course toward balanced budgets. Mr. Morgan says that fairy-tale provincial forecasting is fuelling a dangerous complacently. Provinces aren't taking the actions needed to ensure they avoid the disastrous financial wall facing several European states.

In an article in the Vancouver Sun today, Jock Finlayson, the EVP of the BC Business Council says the economic outlook for 2011 isn't as rosy as it used to be. Higher energy and food prices, if sustained, will lower economic growth in some of our biggest export markets - the US and China.

If we go back to the PST, we'll have to pay back what the feds gave us and put the PST bureaucracy back in place.

So it will be very interesting to see what happens later on today. Will we see real change or will it be business as usual.

Monday, February 28, 2011

Crown Corporation salary burden

British Columbia has about 30 Crown Corporations, and these cost money. To put Crown Corporation growth into perspective, let's compare the situation in B.C. with Ontario and Alberta. Between 1990 and 2010, the number of bureaucrats employed in Crown Corporations fell by 16 per cent in Ontario, 64 per cent in Alberta, but grew at about 1 per cent in B.C.

What about the wage burden? In Ontario, the total wages paid to bureaucrats increased by 94 per cent between 1990 and 2010, but actually fell in Alberta, by 16.4 per cent. In B.C., however, the wage burden grew by a whopping 146 per cent.

Employment and Salary Change

Number of Employees
Salary Burden
Source: Statistics Canada

If we take a closer look at BC Crown Corporations, according to Statistics Canada data, total employment fluctuated between about 22,000 to 24,000 in the 1990's, then fell to about 18,000 in 2006, before it took off again and now sits back at about 22,000. 

What about wages?  If we add up all the wages paid to bureaucrats at Crown Corporations, we get an idea of how much of a burden these crown corporations create for taxpayers. In B.C., the wage burden went up from about $650 million to about $1 billion between 1990 and 1997, then stayed fairly steady until 2008, when it took off to $1.6 billion.

BC Hydro pays huge salaries. At the moment, it is asking for a 50 per cent increase in electricity rates over the next five years to cover off increased costs, but why do we never hear about cost-savings measures? In 2010, Bob Elton, the former CEO, made almost $680,000 in salary and $40,000 in expenses. There, employees making over $75,000 per year account for more than 75 per cent of the total wage burden of about $570 million. If you are wondering why BC Hydro rates are going up, high and growing wage costs is one of the reasons.

Crown corporations don't face the discipline of a competitive marketplace, so costs go nowhere but up. It's time to get government out of the business of providing services better provided by the private sector.  Taxes just can't go any higher to pay for a system that is unaccountable and out of control.

Link to government sector pay

As I promised today during my regular Monday morning CFAX interview, this is the link to the executive salary disclosure statements of government sector organizations such as Crown Corporations.
Executive Compensation Disclosure

Friday, February 25, 2011

Crown Corporations you've never heard of

I commented last night on Global TV during Ted Chernecki's Dollars and Sense series. The comment outlined a much bigger problem - well-intentioned policies often have very destructive results. 

What happens when government sees a problem? It tries to do something about it, and that something sometimes results in a new Crown Corporation.

One of those Crown Corporations is the First Peoples' Heritage, Language and Culture Council. This Crown has the mandate  to ensure aboriginal languages don't become extinct. I has been around for 20 years, spent about $1 million per year, and now, aboriginal languages are becoming extinct.

It is, of course, clamouring for more money. But will other peoples' money help save aboriginal languages in the future when it hasn't in the past?

It's time to judge policies by their results, not their intentions. If people truly value aboriginal languages, they have to take responsibility themselves. They can't pass responsibility off onto someone else.

Monday, January 17, 2011

Property tax burden unlimited

What would your boss say if you walked into his office and said, "hey, I've done the analysis, I've talked to all my friends, they think I deserve it, so I'm giving myself a 50% pay increase!

Probably something along the lines of, "you're kidding," if not, "you're fired."

So why do municipal politicians in British Columbia think they can increase their pay level just because everyone else is doing it?  Because they get away with it every time, that's why. What does this mean for a homeowner's property tax burden? It means it will go up, year after year, with no increase in service, but with increasingly high-priced help. 

In the Vancouver Island community of Esquimalt, the Mayor is considering a pay increase of 50 per cent. Meanwhile, residential property tax rates are higher than those in Victoria, and the property tax burden has skyrocketed. In 2010, Equimalt's residential property tax rate was 4.6, while Victoria's was 3.66. 

A homeowner's tax burden in Esquimalt is higher than that in Victoria. As the charts below show, the per person property tax burden in Esquimalt went up by 65 per cent between 2008 and 2010.  
% increase (08-10)
Property tax burden
$10.3 million
$9.16 million
Property tax per person
source: Schedule 707_2010 and 2008
In Victoria, the burden has also gone up, but by 10.4 per cent.

% increase (08-10)
Property tax burden
$47.6 million
$41 million
Prop tax per person
source: Schedule 707_2010 and 2008

Until politicians' ability to spend and increase taxes is limited, property taxes will continue to rise year after year. That's because municipal politicians first decide how much they are going to spend and then decide how much taxes have to go up by to pay for it all. One answer is a cap on property tax rates. That way, politicians would know how much revenue they would have available and then would have to - gasp - prioritize their spending, instead of just hiking spending every year.