Smart Picks -- Equalize Us, Greek Disease, Other Excellent Futures, Freedom of Exaggeration, Liar Liar Tim's On Fire

On Federal Budget Day interesting articles on how equalisation payments results in more generous public services in have-not provinces (those that get equalisation payments) than those who tax dollars are redistributed by the Federal Government. All federations have this challenge, which level of government has the right to raise taxes, which has the right to spend those dollars and and how to manage different levels of regional economic strength both cyclically and structurally. The equalisation debate also shines a light on the challenge that any Federal government will have in managing its budget because of the politics and economics of indirect spending (transfers to provinces) and direct spending (programmes that Ottawa controls).

An excellent video on the mess behind Greece's fiscal nightmare, and articles on rising Spanish unemployment, the challenges facing the excellent futures of India, Saudi Arabia, the US, and China. Also how some Canadian politicians are smartly handling Israel Apartheid Week and the dangers of stretching the truth to sell coffee and doughnuts.

A report by the Frontier Centre for Public Policy shows than in some key areas of education and health that provinces that receive equalisation payments have a higher level of public services than the provinces funding the payments.

While useful the report is old news.

First, it is not the equalisation payments per se that create higher levels of public spending it is the willingness of those provincial governments to spend in those areas. For example, why does PEI have almost twice the regulated day care spaces as Quebec although both receive equalisation payments, and why does Ontario have the same result as Saskatchewan although both receive no payments.

Second, the real thrust of the debate is that there is no political accountability between the government that raises the taxes (Federal government) and the governments that spend (the provinces). Welcome to federalism.

However, the report and its aftermath do underline that economic fault line that runs underneath Canada, namely the shift in economic power to the West as Ontario restructures along with the United States. Managing this transition will be part of any future excellent or otherwise for Canada. Thanks to John in Toronto for sending this in.

The Real Have-Nots in Confederation: Ontario, Alberta and British Columbia http://www.fcpp.org/files/1/10-02-24-Equalization%20FINAL.pdf

The problem of measurement.

Despite a 50-year history of massive fiscal transfers – $2,500 in 2008 alone for every man, woman and child in Ontario and Alberta, for example – the most disturbing thing is that there has been no measurement system in place to determine whether or not this is effective, efficient and fair to all Canadians. http://www.thestar.com/opinion/article/772276--inequalities-of-equalization-leave-ontarians-worse-off

This from Maclean's on how difficult it will be for the Prime Minister to have any meaningful impact on the Federal government deficit if they do not cut indirect spending in which equalisation payments are imbedded.

Let’s assume the federal budget to be delivered day after tomorrow maintains, as advertised, more or less a holding pattern for 2010-11 on spending and taxes. The real news (after any fun surprises) will be in whatever framework it sets for shrinking the deficit over the next few years. http://www2.macleans.ca/2010/03/02/boiling-the-budget-down-to-the-number-that-matters-most/

Canada's finances, like all federations, is complicated by the fact that not all parts are created equal.

A gap is emerging between Canada's have- and have-not provinces on how easy it will be to rid their ledgers of red ink. http://www.theglobeandmail.com/news/politics/an-unequal-race-among-provinces-to-clean-up-their-deficits/article1487711/

This 10-minute video from the Wall Street Journal on the mess that Greece is in. Does it really take 39 licenses to start a business? Is 30% of the economy underground because of the unwillingness to collect and pay taxes? Yikes!

A wakeup call for Greece and the euro. WSJ's Andy Jordan and Joe Parkinson report from Athens on the threat of a potentially contagious debt crisis and the moral hazard of bailing out a country with bad fiscal habits. http://online.wsj.com/video/greece-on-the-brink-anatomy-of-a-debt-crisis/5AEAD5AC-6C7E-424C-BF51-FA0A40B350C9.html?mod=WSJ_hps_videocarousel_2

Attempts to deflect the blame for Greece's problems onto financial markets points in the wrong direction. Financial markets are incentived to destroy the reckless. Which is a good thing.

AS TENSIONS OVER GREEK DEBT APPEARED COOL, at least temporarily, rhetoric heated up over derivatives that are alleged to have exacerbated the crisis. http://online.barrons.com/article/SB126745534704353901.html?mod=djembdr_h

Why Spain is next. It was fun while it lasted.

The number of people registering as unemployed in Spain continued to rise in February, as the recession which began with a collapsing housing market spread further into other sectors. http://www.ft.com/cms/s/0/0bac8382-25dc-11df-b2fc-00144feabdc0.html

Excellent futures depend on many things. In Canada's case public policy that gives women a greater share of economic and political power and Aboriginal children first and not fourth world but Canadian education, health, community and economic outcomes.

For India ending abject poverty, for Saudi Arabia edging women into public view, for the US investment in infrastructure and basic education, and for China managing the coming bust in its banking system.

India's excellent future.

Crisis? What crisis? Indian policymakers are not asking such a complacent question. But India has had a “good crisis”. Now its task is to unwind the exceptional support given to the economy and push through the reforms needed to sustain fast and inclusive growth. http://www.ft.com/cms/s/0/750747e0-262c-11df-aff3-00144feabdc0.html

Making India slum-free is a major public policy challenge, requiring Centre-state coordination. http://timesofindia.indiatimes.com/home/opinion/edit-page/Property-Matters/articleshow/5634204.cms

Saudi Arabia's excellent future.

The Middle Eastern foreign minister was talking about enlightened “liberal” trends in his country, contrasting that with the benighted “extreme” conservative religious movement in a neighboring state. http://www.nytimes.com/2010/03/03/opinion/03dowd.html?hp

The United State's excellent future.

I was traveling via Los Angeles International Airport — LAX — last week. Walking through its faded, cramped domestic terminal, I got the feeling of a place that once thought of itself as modern but has had one too many face-lifts and simply can’t hide the wrinkles anymore. http://www.nytimes.com/2010/03/03/opinion/03friedman.html?hp

China's excellent future.

The world has watched in awe as China has sailed, seemingly without effort, through the worst global financial crisis in decades. In 2009, the economy barely paused for breath, racking up 8.7 per cent growth. This year, Beijing’s challenge is to prevent overheating without slamming on the brakes too hard. http://www.ft.com/cms/s/0/93016f96-262c-11df-aff3-00144feabdc0,dwp_uuid=9c33700c-4c86-11da-89df-0000779e2340.html?ftcamp=rss

For all of you excited about Israel Apartheid Week coming to a university campus near you we are glad to report that many public figures are condemning not the right for people to speak their minds but the content of their analysis. Odious and bigoted indeed.

Israeli Apartheid Week (IAW), which began on Monday on dozens of university campuses, is an odious and bigoted annual ritual. http://www.nationalpost.com/scripts/story.html?id=2629574

Yesterday a golfing buddy who smokes told me an interesting story.

While having a smoke the other day a man approached him and offered to "buy a smoke".

My friend answered, "sure, how much?"

The man fumbled around for an answer and then confessed that he was out of work, waiting to get worker's compensation, had a persistent health problem, and had no money.

My friend then asked, "so why did you offer to buy a smoke when you didn't have the money?"

The man fumbled some more and answered, "because I thought you would be more likely to give it to me if I offered to buy it."

My friend answered, "why would I be more likely to give it you if you started with a lie?"

No answer.

My friend ultimately gave him the smoke.

I offer this up only because of the sad story that another golden brand -- this one Canadian -- stretched the truth to Canadians.

People, nothing is private anymore, particularly the truth.

If the latest Tim Hortons ad didn’t make you well up, you’re part of the minority.  http://www.theglobeandmail.com/life/work/that-tim-hortons-welcome-home-ad-whats-the-true-story/article1487186/

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Twin Virtues

Ultimately, the most successful societies find the balance between the twin virtues of inequality of outcomes and equality of opportunity.

The new politics must marry the twin virtues of unequal outcomes and equality of opportunity.

When too few get too much everybody loses.

Feminism is about women living their lives on their own terms, marshaling the resources of the society to make that possible, and men embracing this as vital to a successful society and their own liberation.

Can it be that striving for equality of opportunity however imperfect the process not only benefits the individual but also creates benefits for the society that are unintended but wonderful?

Economics must be a 'moral enterprise' as much as politics claims to be. Economic outcomes need to be framed in terms of right and wrong not just efficiency if only because these often align in surprising ways that are good for society and the economy.

My vision of Canada is that any Canadian child from a family of limited circumstance can expect to have a chance at lifetime of unlimited opportunities.

Tax policy should be founded on the principle of generating steady tax revenues sufficient to maximise environmentally sustainable economic growth in order to fund fair government.

Public policy should be designed to decrease inequality before the law and increase equality of opportunity.

Capitalism is not the problem; the problem is what we do with capitalism.

Content is always more difficult to argue than conspiracy.

Let the state regulate and the market operate (most things).

Welfare strategies are best designed as a hand up, not as a hand out.

Political debate should not be fact free fighting.

Explanation lasts longer than eloquence.

Always favour empowerment over dependency.

The most enduring public figures are embraced for the causes they fought for and not the concept of themselves they hoped others would remember them by.

Find your voice and don't be the echo of somebody else.

It is possible to operate on two different levels: the practical, cautious and conservative; and the realm of ideas, open, free, and radical.