Sunday, 26 June 2016

Blue skies after Brexit

On Thursday June 23, 2016, Great Britain went to the polls to vote in a referendum about their continued membership in the European Union. While most polls, political pundits and business reporters either favored or indicated a ‘remain’ vote, the public had a different opinion. To the surprise of most of the world, citizens voted to ‘leave’ 51.9% to 48.1% or by 1,269,501 votes. While there will be consequences pros and cons, from my point of view, the reasons and reactions to the result may differ.

First and foremost the result of the referendum is a reflection on the division that exist in The United Kingdom. Scotland, Norther Ireland voted overwhelmingly to ‘remain, while most of England and Wales voted to ‘leave’. This clear division may trigger further referenda from parts of Britain that will want to separate from the U.K. It is ironic that in a year which sees the celebration of her Jubilee, that the Queen may witness the breakup of her kingdom.

A united Europe was part of Churchill’s vision to stop the warring ways of Europeans. Later Harold Wilson became a strong proponent of Britain’s membership in the EU while Margaret Thatcher was skeptical about a complete integration. Although Britain signed the 1992 Maastricht Treaty which gave Eurocrats more power to intervene in the economy, we should remember that Britain refused to join the euro snake and kept the pound as its currency.
What started as a great idea years ago slowly deteriorated into a burdensome, multilateral organization with a growing liberal agenda. Over the years the bureaucrats in Brussels exerted more power and imposed increasing number of regulations, which in many ways saw Britain contribute more than they were getting out of Brussels. In addition the false sense of security provided by the central bank allowed governments to borrow huge amounts of euro to support their mismanaged economies. Portugal, Ireland, Greece and Spain (PIGS) became some of the nations that overburdened the system, creating volatility and risk in the union.

A growing penchant for leftist/socialist policies made matters even worse. Interference in national matters such as security, and immigration contributed too much of the antagonism which triggered the ‘leave’ vote. Britons, especially baby boomers voted 61% to leave while 75% of millennials voted to ‘remain’. The question is why? Most baby boomers are more culturally nationalist, while the millennials have known only one system which was the EU. The latter demographics may see the benefit of freedom of labor and the idea of a continent free of passport and visas as plusses. However the older generation may see the EU as interventionist and long for a sovereign Britain with less interference from Brussels. Scotland which narrowly voted to stay in the United Kingdom may now want to join the EU on its own, because historically they have always wanted independence from an occupying force that is England.

There will be many economic and political consequences to the watershed decision made by Britain, not all of them bad. The problem that I have is the reaction to a democratic vote by the elite establishment. The six founder members of the EU met and the reactions were mixed. While Germany was more subdued the rest were downright hostile and wanted Britain to exit as quickly as possible, fearing more exits from other nations. Many liberal intellectuals have condemned the results as being racist, xenophobic, and made by blue collar and uneducated people. Instead of looking at the real problem they blame everything on populism. Similarly, the former U.S Treasury of State Hank Paulson, who presided over both the meltdown of the U.S. economy and the subsequent bank bailout, commenting on a Trump’s presidency, said that we were witnessing “… a brand of populism rooted in ignorance, prejudice, fear and isolationism.”  What the establishment elite misses, is that the ordinary citizen is fed up with politicians and the establishment not listening to their complaints and continuing in the merry ways to impose rules, regulations and of course taxes to support their agenda.

Furthermore, the Brexit was also influenced by the EU’s immigration policy; a policy which allowed the free movement of labor and the growth of the economy. With wars in the Middle East and economic ravages in Northern Africa, this policy became a burden on Britain.  Immigrants from Eastern Europe converged on Britain, while contributing to the economy the immigrants were also sending money back to their countries of origin. The construction of the Channel Tunnel also added a new gateway for illegal immigrants. Angela Merkel’s policy which allowed for millions of migrants from Syria and other countries created real economic and security problems because of terrorism.  Immigrants and potential terrorists automatically accepted in EU countries would be eligible to move to Britain at a later date. Brussels’ action to impose fines on EU countries that would not accept refugees may also have been a trigger for Brexit.

The world’s elite has always believed that we should have centralized governments, and even one world government, hence Obama’s support for a greater role for the U.N and his support for a ‘remain’ vote. The U.S should really take notice of what happened in Britain. Trump may be a neophyte politician, but he may have tapped into the real feelings of a vast majority of people, certainly some 14 million who nominated him as the presumptive GOP Presidential candidate.

Brexit may be the trigger to a better world, less dominated by the liberal elite. The EU has a great opportunity to review its structure, and allow Britain to operate under a bilateral relationship just like Switzerland, and expand its participation in NATO.  This watershed change should be a stark reminder that there is a growing feeling of nationalism around the world. From an economic point of view it may be negative to have a trend towards protectionism, but from a security point of view, immigration should be a national and not an international policy. Too often Liberal elites have seen immigration as a tool for votes and gerrymandering
 It may well be that Brexit was not about ignorance and economics but all about sovereignty and a rejection of establishment elitism.

Wednesday, 15 June 2016

Orlando Terrorist Attack

After the tragedy of Orlando everyone is taking sides. The problem is that ordinary people have opinions of their own, but leaders and politicians should be very careful on how they categorize the senseless killing of 49 innocent people who were just having fun. Completely ignored is that after reports of ISIS involvement the media is still ambivalent in their reports on whether it was a hate crime or and act of terrorism. In my opinion it was both a hate crime perpetrated by an Islamic Jihadist who swore allegiance to ISIS.
President Obama instead of reassuring his country and the world went on a rant against gun control and the Presidential GOP candidate Donald Trump.
From a political point of view the President can argue with Trump as much as he likes, however from a leadership point of view he failed again in identifying the real cause of the problem. For seven and half years he has yet to identify the problem as coming from 'radical Islam' as if these atrocities were being committed by some strange unidentified enemy. He is worried that the label 'radical Islam' would offend all Muslims; reality is that by using the word 'radical' already differentiates the bad ones from the majority of good Muslims.
As for the issue of gun control, his DNC party have long been opponents of the second amendment. He should be reminded that the bad guys will always get whatever weapon they want to use despite rules, regulations and laws. In countries where there exists strict gun laws terrorists still found a way to get guns. Guns have not been the sole weapons used in terrorism attacks around the world: 9/11 -box cutters, Boston- pressure cooker, Paris and other places -knives, not to mention IEDs and gas.
Of course Mrs. Clinton who has now clinched the DNC nomination is somewhat departing from the President's rhetoric, after years of being part of the problem. She is now using a different tone to identify the terrorists
Mr President stop lecturing us in the use of words and semantics.
Tzun Zu in his Art of War, said. 'Know thy enemy, know thyself". If you cannot identify your enemy it is very likely that you cannot formulate a strategy to defeat them. We have been in the middle of a war for more than 15 years with one identifiable enemy, and yet the response by the President is an attack on a politician, who may be boisterous at best, instead of an attack on the real perpetrators. The real shame is that the media continuously provides a narrative that supports his rhetoric instead of producing unbiased reporting to inform the public, who ultimately will be the electorate.
As for Mr. Trump he should articulate his policies in a less bombastic and personal attack way and perhaps he will get more traction and support, because in the end the crisis is not about politicians. It is about people of all creed, race and color -this is an international conflict that can only be solved by a purposeful strategy with no caveats, or conditions
Mr. President we are at war whether you believe it or not, and despite your Nobel Peace Prize you are a war President. Just do your job.

Wednesday, 8 June 2016

The Great Tax Scam

Calgary City Council continues to be disingenuous in its budget and taxation processes. Over the past years this Council has raised taxes and fees under the same excuse that costs are rising and that the province is not covering its fair share of municipal expenditures. While there are several factors that determine the imposition of taxes, citizens are often kept in the dark about the use of fees and dubious economic and financial concepts to manage the city finances.
First let us start with the budget. Despite our constant request for the use of Zero Base Budgeting, Council and administration have chosen to use their own version of a system called Zero Base Reviews; these concepts has very rarely provided any reduction in costs and therefore reduced taxes. Furthermore the City uses a concocted statistical measurement called The Municipal Price Index (MPI) instead of the universally accepted Consumer Price Index (CPI) produced by Statistics Canada. The MPI has always been higher than the CPI and therefore costs have been inflated higher than necessary. So in effect there seems to be a pattern of over estimating costs and under estimating revenues, which constantly results in surpluses. These surpluses are in effect over taxation and not caused by any efficiencies, they are then placed in reserves or used for additional expenditures which were never budgeted for in the first place.
In December 2015, administration declared that they had found a surplus of $30 million, and immediately the mayor proposed a number of initiatives to spend the money. Three months later it is revised to a surprising $86 million surplus achieved through unfilled job vacancies, fuel savings, higher utility fees, cheaper capital projects and other factors. This time very little is said but we now talk of increasing taxes in the midst of an economic collapse in the province due to the fall in the price of oil.
In just seven years, council has pushed through compounded residential tax rate increases of 55 per cent, and business tax rate increases of a whopping 180 per cent. The 2016 tax hike is pegged at 3.5 per cent. In addition the province decided to impose a 10.2 % tax increase. As if there was not enough financial hardship in the province and in Calgary, the province will impose a carbon tax which will be passed to the consumer by businesses and also by the municipality. This additional tax has not been factored in yet.
Notwithstanding the increase in taxes, the City will also increase its utility rates and other fees ranging from water to LRT and many others. In addition a new $6.50 fee will be imposed for the use of green garbage bins. Year ago I labelled these additional fees and rates as ‘vicarious taxation’, because that’s what they are –taxes- pure and simple. You may mitigate the use of a service by using less but you cannot reduce your taxes. When the recycling by-law and use of bins were being discussed I clearly warned that the City will impose fees in lieu of taxes to manage this ever growing bureaucracy. Ald. Madeleine King challenged me and there we are today. There are many of us who compost already, why are we subjected to a service that we shall never use, and more importantly why have we not seen an equivalent reduction in our taxes?
As the province contemplates a new Municipal Government Act which will increase the sharing of costs with local authorities, it will be another reason for further taxes and fees in the future. Property taxes are most unfair to low-income residents. In my view these taxes have no correlation with education costs. The market value concept used to raise these taxes does not reflect reality. As we can see in Calgary, the value of housing has dropped by some 4%, if not more, due to the economic downturn. Under the current property assessment many citizens are seeing their taxes go up while their property values have sunk. Where is the fairness? We need a complete re-think on property taxes, including their use to raise taxes to fund education. IPSA will offer some thoughts on this matter in the future.
By the way, remember the surprise surplus for 2015? The $86 million is equivalent to approximately 6% tax. Why have Councilors not considered its use to mitigate and reduce taxes in a time of economic hardship? It seems that no one on Council has either the financial acumen or the intestinal fortitude to go against the grain and put forward a proper use of zero base budgets and fair taxation. A surplus after reserves have been accounted for, is no surplus’ it is over taxation pure and simple, and it should be returned to the taxpayer without any caveats or any proposals for additional non budgeted expenditures