Wednesday, November 21, 2012

The Tru(deau)th of the Matter

To follow up my last post, I decided to attend Justin Trudeau's Edmonton event last night with a couple other friends. Muclair hasn't impressed me very much, and Trudeau's charisma, youth appeal, and attitude are intriguing. He essentially has presented himself as a representative of a reinvigorated Liberal Party of Canada. He's also come out supporting the CNOOC deal which I wanted to hear him expand on. It's a contradictory stance putting him more in line with the Conservatives than the NDP and also I find his supporting argument weak at best and also to be the exact same economic arguments used by the Conservatives.

Unfortunately the event itself was quite underwhelming and somewhat contradictory unto itself of what was being said and proclaimed. I haven't been able to find a transcript so I will paraphrase as best I can. A large portion of the speech centred on low voter turnout, those who didn't believe in any party, and the need for a new level of engagement. Essentially, my two friends and I were the target demographic of the speech, and this was their opportunity to prove us wrong, to make us feel engaged, and to return a glimmer of hope that it's not the system that's broken, but rather the parties. They failed, miserably.

To start with, the mood was off-putting. My friends and I did not clap after every abstract or meaningless one liner. We were there to hear real facts, real issues, and real solutions; not one was presented. Instead we endured a 45 minute ramble about hard work and the middle class and our dependency on trade and how rich we are but need foreign capital to do anything with it. The typical yadda yadda - but even more underwhelming and pointless than I have come to expect. We stood out in the crowd as the few non-supporters that were there and as a result got a lot of weird looks. Nobody attempted to engage us and explain the positions or to convince of us a platform, or anything. It seemed odd considering the speech was heavily centred on their "revolutionary" idea to allow any Canadian to vote for the leader and "be engaged".

The whole appearance was largely uni-directional. No questions were taken afterwards although he did stick around for a few minutes to meet individually with people. This meet-n-greet moment didn't help us much though as the many fanboys quickly lined up to shake his hand.

His portion on the CNOOC deal was brief. He mentioned he had written an article on the CNOOC deal and then said "but it wasn't really about the CNOOC deal...". He then continued to go on about abstract concepts of trade and the middle class and foreign capital, etc. That was it - a simple directionless rehash. For me, his explanation of his position on the CNOOC deal amounted to "these are not the droids you're looking for".

What wasn't mentioned at all was that our current heavy dependence on trade, particularly with the U.S., comes from and is enabled by NAFTA. Our inability to be self-sufficient largely comes from these "trade deals" already in effect. NAFTA of course passed under the Liberals. There was no mention of the new FIPA with China either. It was like he is referencing the CNOOC deal but arguing the FIPA deal.

The CNOOC-Nexen Op-Ed

In his speech last night Trudeau framed opponents to these new trade deals as extremists essentially, against "trade" completely, or against the middle-class. However if you want to reach the disenfranchised voter, or perhaps those who no longer believe the vote represents a voice in democracy then you had better figure out why they feel this way and what their real position is.

CNOOC-Nexen deal is good for Canada
I opened my campaign last month with the argument that, if the Liberal Party is to become a positive force for change in Canada, we need to give voice to the aspirations of our middle class.

Personal income for middle-class Canadians has stagnated for more than a generation. This deeply troubling development is masked by a rise in family income, due to the entry of a new generation of well-educated, hard-working women into the workforce. While this phenomenon is overwhelmingly positive, we must be clear-eyed in understanding that it is a one-time benefit.
This is an interesting way to say: "It's overwhelmingly positive that both parents now have to work to put food on the table". It's spun as being good because women are working, and I agree women having equal opportunities in the job market is good, but that's not what's really being said here now is it? What's being said is it's good that women have been forced to work to make enough for the family to live comfortably, taking time away from the child's relationship with their parents. This is because wages have stagnated over "the last decade" (the time of full-out NAFTA and the result of the globalization of our industries and privatization of our currency).
So, we’re left with the vexing question: where will the next wave of growth for the middle class come from?
Here Trudeau has now framed the argument and possibilities for you.
Public and private investment in science, and the innovation and productivity growth it spurs will unquestionably play a major role. A renewed national commitment to build the world’s most educated citizenry is essential, as is a more strategic approach to our natural resources. We also need to keep costs competitive and make smart infrastructure investments.

But all of these, while necessary, will be insufficient to provide the opportunities we want for the middle class unless we get one big thing right.
What is sufficient? What opportunities do we want for the middle class? Trinkets? Bigger TVs? It's abstract, it means whatever you want it to mean. Sort of like Obama's "yes we can". Yes you can.. what? That's for your imagination to decide.
Canada’s economic prospects have always been tied to trade. We are a small market that must export and attract investment to create jobs and growth, and import to keep costs down and provide choice for middle-class families.
Note, he says "import to keep costs down". Yes, we keep costs down by exporting our jobs to low wage factories that would be illegal here, this "keeps costs down" on imported goods. However, it's not working anymore as energy prices are destroying that advantage and so as a result we are now "importing" the workers. Now, how does any of this result in a more prosperous middle class?
For much of our history, the only trading relationship that mattered was with the United States. From Laurier to Mulroney, it defined our politics in watershed elections that bookended the last century, and inflamed passionate debates about national identity throughout. As we grew more confident, Canadians arrived at the conclusion, supported by the evidence, that openness to trade is good for us. It expands our horizons, as well as our national wealth.

That was the 20th century. The 21st century is different. Trade remains a paramount objective, but we can no longer rely on the U.S. alone to drive our growth.
Please, do go on.
I am not one of those who believe the U.S. is in serious decline. Our relationship with our southern neighbour remains our most important, but we cannot afford to miss vital opportunities elsewhere. By 2030, two-thirds of the planet’s middle class will be in Asia. How we define and manage our relationship with Asian economies to play a Canadian role in fuelling that growth will matter as much to the Canadian middle class in this century as our relationship with the U.S. did in the last.

So how are we doing? Canada benefited from being the first western country to recognize the People’s Republic of China, but we have lost ground recently. The Conservatives kicked off their stewardship of the relationship with unhelpful sabre-rattling, followed by a stubborn silence. Recently, they have made attempts at courtship, but China’s leadership has a long memory. Influence and trust is built through consistent, constructive engagement.

Further, the Conservatives have developed their approach to Asia, such as it is, behind closed doors. This is a mistake. Where is the leadership to explain to Canadians why this relationship is so important, to engage Canadians in the conversation, to make us aware of the opportunities?

Because we have failed to make the case for trade, Canadians are understandably anxious. Because we failed to ensure that the middle class participates in the growth created by trade, support for it has recently broken down.
So - did anyone else catch the contradiction here?
As we grew more confident, Canadians arrived at the conclusion, supported by the evidence, that openness to trade is good for us. It expands our horizons, as well as our national wealth.
But then
Because we failed to ensure that the middle class participates in the growth created by trade
So, the solution is to move our dependence from the U.S., to Asia? Like, these guys?

“They said they will pay me this month, but it seems I’m fooled again,” said Niu, who supplied nets for protecting workers from falling off bamboo scaffolding at the half-completed Purple Palace, a development including a luxury hotel and three residential buildings in the city of Ordos. “The doorman was still here last week, but now even he’s gone.”
So we just figured out that essentially we can't depend on the U.S. because you know.. their housing bubbles propped up by fraud tend to blow up. So, as a result the future of the middle class is in trade which we admit already failed to include them with a country that is also experiencing a large and risky shadow banking system teetering on collapse. Oh, and this time - middle class - you'll be included, promise. China loves the middle class, just ask Foxconn.

Why don't we try addressing this dependence that our ponzi-conomy requires?
Why is the CNOOC-Nexen deal good for Canada? Because Chinese and other foreign investors will create middle-class Canadian jobs. Foreign investment raises productivity, and hence the living standards of Canadian families. More fundamentally, it is in Canada’s interest to broaden and deepen our relationship with the world’s second-largest economy.
Of course there should be conditions attached. All foreign investors must obey the letter and the spirit of Canadian labour, environment, corporate governance and immigration laws. In certain sectors, national security concerns will be real. However, in the CNOOC case, Chinese ownership of three per cent of oilsands leases hardly constitutes a national security issue.
Oh, yea.. what security issue right? It's not like CSIS is issuing warnings or anything like that about the Chinese here. No, the CNOOC deal is an island, it does not in any way, shape or form tie into anything else. Nope sir eee. You want middle class jobs afterall, don't you?
Most important, the big picture isn’t about CNOOC or Petronas, but the many opportunities like them that will follow in their footsteps. China is scanning the world for acquisitions like a shopper in a grocery store. Just a decade ago, China’s outward foreign direct investment was negligible; today it approaches $100 billion. Canada has perhaps more potential to capitalize on this context than any other country. From minerals to energy, from education expertise to construction, we have a lot of what China needs.
Yea, see: The CNOOC deal is very small, so it's not a security issue but what is most important is that opens the door for ever larger investment. We've got minerals, energy, and China needs it all.
We should be creative when thinking about what a trade deal with China could look like. For example, according to (global management consulting firm) McKinsey and Company, China will have 221 cities of more than a million people by 2025 (up from 160 today). Asia will invest trillions in infrastructure over that time. That growth requires exactly the kind of expertise we have in Canada. What if our goal was to become Asia’s designers and builders of livable cities? What if we got our world-class financial institutions and pension funds together with our world-class engineering and construction industries to secure a leadership role for Canada in Asia’s growth?
That's your idea of creativity, creating yet more empty cities over there? While our own infrastructure here in Canada continues to crumble.
This is one idea. There are many more. There is a leadership opportunity in Asia that could create thousands of jobs here at home, and a generation of Canadian wealth. In order to take it, we need courage and vision.
Oh, ok good. There is more ideas.

This isn't courage or vision, this is doing the same thing over again expecting different results. Courage or vision would be to address the deep seeded economic issues Canada faces not to promote the continued exploitation of Canada resources and labour.
We deceive ourselves by thinking that trade with Asia can be squeezed into the 20th-century mould. China, for one, sets its own rules and will continue to do so because it can. China has a game plan. There is nothing inherently sinister about that. They have needs and the world has resources to meet those needs. We Canadians have more of those resources — and therefore more leverage — than any nation on Earth.
The Conservatives are missing the boat. Their erratic approach and secretive behaviour inspire the opposite of confidence among potential investors and Canadians alike.
Interesting choice of words: sinister. Who has been saying they are sinister? Their interests are self-promoting - duh. Just as ours should be. Of course China has a game plan, what's our game plan? "here, take it"?
In the end, this is more about our core values than the pure economic value of rising middle-class income. If we really believe in a Canada built on equality of opportunity, upward mobility, and expanded individual freedom and choice, then we must get this right. Real leadership means fighting for, not pandering to, middle-class Canadians.
This can only happen if we are direct with Canadians and ready to trust them. If we expect our citizens to be open to the world, the least their government can do is be open with them.
I'm not convinced, Justin.

Canadian Trends: Compensating bad decisions with worse solutions
Canadian Trends: Steady on the course towards a downward recovery
Canadian Trends: Oilsands Prosperity is a Lie

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Richard Fantin is a self-taught software developer who has mostly throughout his career focused on financial applications and high frequency trading. He currently works for CenturyLink

Nazayh Zanidean is a Project Coordinator for a mid-sized construction contractor in Calgary, Alberta. He enjoys writing as a hobby on topics that include foreign policy, international human rights, security and systemic media bias.

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