Category: Passing Scene

Cineplex Fail!

So I decided to go to a movie at one of the local Cineplex multiplexes. That’s not particularly unusual nor is it noteworthy. Since I don’t particularly like dealing with the box office and I wanted to be sure of a seat, I did the online purchase thing. Historically that has worked well, and without any particular trouble. However, this time that was not the case. Continue reading “Cineplex Fail!”

Is the Earth Really Doomed?

If one listens to the currently fashionable hype, the entire planet is doomed simply because some primate creatures are muddling about on and near its surface. The hype can be succinctly summed up with the following statement: “ZOMG! The Earth is Doomed!” But is it really? Sure, if you take a sufficiently long term view. Eventually, the Earth really will be doomed as a result of proton decay if it somehow survives the death of the Sun. But let’s consider things on a smaller time scale than cosmic or even geological time. Continue reading “Is the Earth Really Doomed?”

On Debt Ceilings and Defaults

There has been much commentary about the furore in Washington, DC. The US Treasury is running out of credit because it has reached the maximum it is allowed to borrow (the “debt ceiling”). Congress can fix that by raising the debt ceiling. However this would require cooperation between both houses and the President. And this is not happening. As I write this, the wrangling continues with no end in sight.

For the past week or so, the big “D” word has been bandied about. Is the US Treasury going to default? Is it going to miss interest payments on bonds? Or is it going to do something else? Or is it simply going to be business as usual because Congress raises the debt ceiling?

First, let’s consider if the debt ceiling is raised. That will obviously stave off immediate consequences. However, unless spending comes under control, the whole drama will repeat itself in a few years. The US nation debt will continue to grow at an alarming pace and that growth will likely accelerate as the US population continues to age. So raising the debt ceiling is a temporary measure at best. At least one commentator has suggested that by 2015, things will be looking quite bleak, even in this scenario.

Now, suppose the US Treasury defaults on its obligations, or part of them. This would, of course, have far reaching consequences. The precise magnitude and reach of those consequences is difficult to predict, however. It will certainly cause a major shakeup in the world financial markets as the lemmings who have bought into the USD as a reserve currency flock to another currency to use as such (the Euro? Something else?). It could even touch off another round of “depression” (the other “D” word).

So, it seems that defaulting is not a good option in the short term though it might turn out better in the very long term. It also seems that raising the debt ceiling without changing the status quo is only a very short term solution. Is there another option?

Well, there is. The US Treasury could actually issue more money. That’s right. I said “print money”. Now I can hear everyone screaming at me. That’s bad. It will lead to runaway inflation leading to bread costing $25000 per loaf. There is no way printing more money is going to help! But if you will bear with me long enough to explain, you may find the result interesting.

What is the purpose of the US Treasury borrowing money? You may think it is to meat its obligations when it is short. And, on the surface, that would be correct. However, the net effect of the Treasury borrowing money is to increase the amount of money in circulation. This happens through the magic of fractional reserve lending, which I will not explain in detail here as there are many sites which expend a great deal of effort explaining it. Think about what I just said. The US Treasury is actually adding money to circulation by borrowing money. (See www.positivemoney.org.uk for an explanation of the mechanics and why this is a bad idea.)

Now that we’ve established that the US Treasury borrowing money is actually increasing the circulating money supply, let’s consider the option. Printing money also increases the money supply, but it does so directly. No magic is required. No fractional reserve lending. And, best of all, no hidden interest costs to cover later. (Borrowing to create money using fractional reserve magic requires continual inflation to simply stave off collapse.) And here’s the best part. There is no need to increase the debt ceiling because this new money would not be borrowed from anywhere.

To answer the runaway inflation concerns, this is easily handled by limiting government spending to something reasonable. If the current level of spending is not causing runaway inflation, then financing it by printing money instead of borrowing money will not either. And printing money instead of issuing bonds will have the net beneficial effect of reducing annual operation costs by eliminating interest payments over time. While these interest payments may be a fairly small fraction of the overall budget, when you are facing a debt crisis, every cut matters. You do not solve personal financial woes by eliminating your biggest expense (housing probably), but by cutting a bit here and a bit there until it adds up to enough to balance the books. The same applies to a government. Reduce debt service costs as part of an overall strategy to reduce the deficit. Every dollar saved by reducing debt servicing is one less dollar that needs to be cut from social security or health care or which has to be raised through additional taxes.

I’ll leave with one final note about printing money as a solution. It is critical that printing money not become the primary mechanism by which governments fund operation for that way leads to runaway inflation. Instead, the government must fund its operations at a level that keeps new money creation at a level that maintains inflation at an approximately neutral level. That is, enough to keep the economy liquid and no more. Thus, balanced budgets are still needed and are, in fact, critical.

The positive money site I mentioned above talks about much of this from the perspective of the United Kingdom, and without reference to debt ceilings. However, the basic concepts still apply, regardless of the specific implementation referenced. In this particular case, the United States and the United Kingdom have similar enough structures that the same problems and solutions generally apply.

 

Canada Post Shutdown

Canada Post is currently not operating. That means that no mail is being delivered anywhere in Canada. This is, of course, only the most recent development in a long running feud between CUPW and Canada Post.

For the tl;dr crowd: the lockout is justified on purely economic grounds that arise from the consequences of CUPW’s rotating strike action.

Now, I have not kept up with the precise details of the dispute. CUPW may well have legitimate grievances which Canada Post is not addressing. On the other hand, Canada Post may well have legitimate concerns that CUPW refuses to concede. Rather than focusing on the relative merits of the two sides in the dispute, I want to talk about tactics.

It used to be that when a union or employer decided that bargaining was not working, a total strike or total lockout would happen. This would be painful for both sides – the employer because operations are halted and the employees because the longer the strike continues, the more likely they can’t make their mortgage payments and other obligations. This state of affairs can be seen as a disincentive for either of these actions to be taken so they are only taken as a last resort.

CUPW’s tactics this time, however, were short localized strikes affecting one or more areas for a day or two. The idea behind it is obviously to hurt Canada Post without decimating the earnings of their members since they would still be paid their usual wage for the days worked. It also has the side benefit that mail still gets delivered if more slowly. The problem, however, is that it imposes substantial costs on Canada Post with relatively little cost on the union members. Thus, there is no incentive for CUPW to bargain in any better faith than they have been all along. In other words, it’s an extortion tactic, pure and simple.

Canada Post continued operations with this labour action going on for nearly two weeks. However, the public simply threw up their hands and said, “Why should I trust the post office to deliver things during a strike when I can use the Internet?” Thus, unlike in previous cases, the pain felt by the public is relatively minimal. In fact, a lot of people simply don’t care. As a result, because the opportunity cost of using the post office has suddenly become very high or unpredictable, many people that had simply been using traditional post because they had always done, or because it was convenient, have switched to alternatives such as the Internet. And, of course, companies like FedEx and UPS are still operating. This, of course, means that mail volumes are substantially down.

With reduced mail volumes, inability to meet delivery guarantees, and continued operating overhead, Canada Post determined it was simply not economically viable to continue operating. As a matter of fact, any well managed corporation would have made the same determination given the same equations. It would be irresponsible to continue any operation that is hemorrhaging money, crown corporation or not. Of course, I don’t think CUPW thought that Canada Post would have the guts to take the action it did simply because it is a crown corporation and, thus, has “unlimited” resources.

The end result is that all CUPW members are currently out of work and receiving “strike pay” (don’t get me started on that) and many are moaning because it’s not enough to make ends meet. That’s the bleeping point, people! Going on strike should be painful! However, all other employees of Canada Post are also currently out of work and NOT drawing any sort of strike pay! (To be fair, the same result would likely have occurred if CUPW had gone for a full blown strike in the first place due to the nature of Canada Post’s operations.)

Now, with the lockout, CUPW and Canada Post are an even footing. Nobody is happy. That means it is more likely that both sides will find a solution that does not involve one side completely yielding to the other. It also means that the longer the lockout continues, the less likely CUPW is going to get a favourable result and the more likely its members will say “Screw it! Make a deal. I need to eat!” In fact, I am reminded of the transit strike in Calgary a few years ago when the union remained out on strike for several weeks and the final deal they ended up with was actually worse than the final offer from the city before the strike. (Of course, every situation is different.)

Now, as I said earlier, I don’t know the relative merits of the respective positions of CUPW and Canada Post. Whether CUPW’s strike action is justified is not something I can comment on. Whether either side has a better case is for them to decide. What I can say, however, is that the lockout the inevitable result of CUPW’s partial strike action. It was also completely justified.

If you don’t agree that the lockout was justified, stow your emotions for a bit. Forget that Canada Post is a crown corporation. Now consider it as a stand alone entity. If that entity was losing millions of dollars due reduced work and was likely to run out of operating capital, what would happen if it continued to operate? Yes, that’s right. Bankruptcy. What good would it do the union or its members if the employer they are picketing no longer exists? How happy would the share holders be if the company did not take action to protect its solvency? Now, put that back in context. As a crown corporation, every citizen of Canada is a shareholder by proxy! We should be outraged if they do NOT take cost saving measures in this situation. And while Canada Post is unlikely to disappear due to bankruptcy, that should NOT be a factor in the decision!

So, my opinion is that the lockout is justified in light of economic realities.

As a final note, people who know me know I am vehemently anti-union. But that does not mean I always take the employer’s side in a dispute. There have been cases in the past where I have agreed that the union had a grievance and the employer was problematic. The point of this comment is to say that my opinion on the lockout has nothing to do with my views on the validity of either side of the dispute.

Census Time Again

Well, it’s census time again. Some might recall that I complained about the online census process five years ago. To this day, I don’t know what they were thinking when they went with that overly complicated and buggy garbage in 2006.

This year, however, the experience was much better. First, I got a notice in the mail with an access code. My first thought was whether they were still using the same horrible software as last time. I was pleasantly surprised to find that the site loaded quickly and had no notices about browser compatibility or anything like that, nor did it require Java. Of course, that was no guarantee they didn’t mess it up, but it was promising.

As I worked through the various questions, I was pleased to note that it ran very smoothly. Other than the fact that answering the questions is freaking annoying, I would have to say it was a pleasant experience overall.

So it seems they either took complaints to heart five years ago or they had an equally unpleasant experience internally. For once, they got something right.

Now, if only they would do their other survey junk the same way so (or at least give the option) to avoid pissing people off, things would be better.

IANA IPv4 Endgame Arrives

To borrow terminology, the IPv4 middlegame has ended from the perspective of the IANA. Officially, APNIC received two /8s on January 31 (or February 1, depending where you are. I’m in North America so January 31 it is). That leaves the IANA free pool at five /8s which are already spoken for as the result of a coordinated global policy which allocates one /8 to each RIR when the free pool reaches the number of RIRs, which happens to be five. We will very likely see the announcement of the allocation of the final five /8s very soon. That puts IANA into the endgame scenario for IPv4. No matter how much need or justification or other metric there is for a new allocation, there is nothing left to allocate. Continue reading “IANA IPv4 Endgame Arrives”

Global Warming again

I previously discussed global warming. I have since encountered a write-up by James Randi which articulates a similar position to my own. Learn more about James Randi and the James Randi Educational Foundation at www.randi.org. I strongly encourage anyone who believes in psychics and the paranormal to visit the JREF site and take not of the still unclaimed million dollar prize for actual proof of such abilities.