Monday, June 24, 2013

The Resource Trap Explained

Canada is suffering from the Resource Trap, or Resource Curse. We don't have it acutely yet, to the point of sterotypical corrupt petro-states, but we are suffering numerous symptoms from the list:
  • Dutch Disease. Yes, Mulcair was right. Oil sales have driven up our dollar and made our manufacturing and service exports less competitive.  This isn't difficult to understand and while you can try to argue the overall effects of oil are net positive (e.g. Alberta buys equipment from Ontario), there's no denying the basic case that manufacturing (concentrated in Ontario and Quebec) have been hurt.
  • Revenue Volatility. Alberta has gone through serious cases of this several times. Now with Newfoundland and Saskatchewan increasingly reliant on oil sales for their provincial budgets, I think we can call this a national problem.
  • Lack of diversification.  Not only are we failing to diversify, we are concentrating ever more of our labour market on extractive industry.  Every article extolling all the people moving out West for work is really about this.  Some of them come from industries that are already in long term decline or outright dead, like various depleted fisheries, but many also come from the manufacturing sector (see Dutch Disease above).
  • Corruption. This one hasn't shown up yet in terms of oil execs doling out sacks of cash to buy off government officials, but if you look you can see our political system restructuring itself to serve the needs of the country's most powerful economic class.  The Federal Government gutted environmental laws to ensure various oil projects would get rapid approvals, and withdrew from Kyoto.  Climate change is just ignored.  Even the Alberta PCs with decades of uninterrupted majority rule were gunshy about raising royalties more than nominally despite credible analysis from all sectors not owned by big oil that this could and should be done.  They were right to fear it, Big Oil nearly put the Wildrose into power in protest over it.  Approval of the Keystone XL pipeline federally was basically a non-issue.  Not even Mulcair is openly opposing it and Trudeau has spoken out in favour.  Oil pipelines spill all the time and the companies are handled with kid gloves, huge ponds of horrific toxic sludge accrue in the north, and there's no plan to do anything about them.  Eventually, a flood will take them into the MacKenzie river.  Problem solved!
Why does this happen?

The basic problem of an abundance of natural resources is that in order to exploit them as a free-market economy, you're bascially expected to sell/rent permits to private owners to extract the resource and sell it for profit (Norway is a noteworthy exception, but sadly not really a model followed by Canada).  You are, by definition, setting up a class of rentiers who draw wealth from the land by virtue of a legalism issued by the state entitling them to that wealth.  These people are not like sterotypical gold prospectors panning rivers from a 19th century gold rush, they will already be rich and powerful since it takes a lot of money to get a modern resource extraction operation running.

Rentiers are not really entrepeneurs.  They are in the business of extracting rents, foremost.  Competition is not that important (except in obtaining more sources of rent in the form of extraction permits to resource rich land).  You're not really going to be able to drive your competition out of business - after all they have guaranteed revenue streams too, from their resource leases.  You can fight for market share, but that's a lot of work. Better ROI on spending your time finding more of the resource in areas not yet exploited.  I really suspect the big oil companies do not actively collude on gas prices, they simply all choose not to compete very hard because competing is a lot of work and effort and it isn't their focus.  We'll buy the product anyway, so why bother?

This is, you might say, the default direction of a resource system.  Avoiding this takes a lot of work and thought in how you design the incentives and how the money is used.  We really didn't engage in such an exercise.  Pierre Trudeau tried to do a few things on this score, but they were undone and they didn't become self-sustaining. 

It becomes a curse when it becomes your society's dominant industry, a sort of "resource industrial complex" that automatically has power and influence over the political system just by dint of its impact on the economy and government revenues. It begins to take over.

Of course rentiers never just sit back and let their influence over the state accrue naturally, they aggressively seek to expand it through all means legal and not so legal.  After all, at some level you understand that your primary source of wealth is not "innovation" or some such nice market concept, but a piece of paper issued by the state which empowers you, and you alone, to profit from this stuff that nature left in the ground (oil, diamonds, whatever).  If government is the source of your wealth, then the easiest place to make yourself wealthier is by influencing government to let you keep more of it.  Decreasing royalties, tax breaks on capital expenditure (which you would have made anyway), and straight up tax cuts all work.  So does gutting labour and environmental standards, which drive up your costs for extracting the stuff.  Annoying!

Canada has gone several steps down this path. At some point, perhaps we've already done it, you cross a kind of Event Horizon where the logic of the system carries you the rest of the way whether you want to or not.   Any hope we have of stopping this rests on not just electing a new government in 2015, but ensuring that government is empowered and emboldened to take us off this path.  I'm afraid neither major opposition party looks likely to do that as they stand (I'd give the NDP better odds, but far from a lock).  This is where ideology matters much more than partisanship.  Broad awareness of our poor strategy in going all-in on oil is key.  Without a change, we may as well join OPEC.

Thursday, June 20, 2013

The Canadian 1% Want To Privatize the CBC

And it's just them, from a new Forum Research poll for the Globe & Mail, Canadians in general oppose privatizing the CBC by a 2:1 margin, and it is a majority (51%) who are decided against, versus only 25% who are for it.  That's the good news, and it is pretty good news considering that it's not like we've been waging a major national debate about this (though movement conservativism in Canada has made this a major goal for at least several years, the PM and Government have made no overt suggestion or move to do this).  The bad news is that those for it are the people who count:

Every other income group is strongly opposed, and what's remarkable is that the merely affluent in the 80-100K and 100-250K groups are very strongly opposed.  It really is the 1% versus the rest here (technically 32 people out of 1525 in the sample is 2%).

Now 32 is a small sample size for the subgroup, so I'm sure the margins of error are fairly large on this group, but I doubt they're enough to reverse a 66% for, 32% against trend.

Citigroup called Canada a "plutonomy" in a memo a few years back, a country ruled by the very rich.  If that's correct, it means the privatization of the CBC is likely to happen.  The 1% want it.  The CBC competes with their private media empires, it accurately informs people, and it isn't beholden to them.  All good reasons to eliminate it (a privatized CBC would not recognizably be the CBC anymore).

Given they're already consistently running behind Trudeau's Liberals, we can hope this scares the Conservatives off any such scheme, but we're in the mid-term period of a majority where you've got time to do things that anger the public and hope they forget in time for election day.  Destroying the CBC has been a long running conservative goal, they might try it whatever the polling.  Once it's done it will be very expensive to undo.

Monday, June 17, 2013

A Short List of Gun Product Safety Laws

One substory of the gun insanity in the US I had been unaware of previous to Newtown, was the bevy of liability shield laws (including a federal one) that protect gun manufacturers from the very normal product liability lawsuits that any other product maker would be subject to when their product's flaws cause injury or death to someone.

This is truly amazing when you stop and think about it.  There are all sorts of very powerful businesses who would love to have blanket immunity from the harm their faulty products bring, and if we include tobacco companies, the obvious and known harms of using their products as intended, but none seem to manage to get such specific protection. 

I'm not even talking about the thousands of people killed deliberately with guns, where the shooter is more or less using the gun in its intended fashion.  I mean, it's arguably fair that gun manufacturers should not suffer liability for that (also arguable that they should, but I can at least understand someone making that claim).  If a person gets beaten to death with a shovel, it would be bizarre to sue the shovel maker (even as that is not the intended use of a shovel). 

But instead, think of all the tragic gun accidents where some better design and additional safety features could actually save lives (and save gun nuts lots of bad press from children getting shot and such).  Week after week, Daily Kos' KagroX posts a round up of "gunfail" stories largely involving such tragedies:
  1. LEALMAN, FL, 2/12/13: Not sure how I missed this one. A Bay Area church congregation is rallying together in prayer for their pastor's daughter. The young woman was accidentally shot. According to officials with the Pinellas County Sheriff's Office, church member Moises Zambrana was showing a 9mm handgun to two young men in a closet near the recreational area. Detectives say one of the men, who is Kelley's boyfriend, was interested in getting a gun. While Zambrana was showing him the safety features, authorities say the gun went off. The bullet went through the wall, and hit Kelley in the head. According to authorities, Zambrana did take out the magazine clip, but a bullet was still in the chamber. She died on Feb. 18.
That's completely typical.  I've noticed people in the comments to his People Who Died posts often rage on about how "stupid" these gun owners are.  I don't disagree, but that's really the point of why widespread gun ownership is not a great idea.  Lots of people are stupid.  Some people are smart most of the time, but everyone has stupid moments.  I was in the Canadian Forces for 8 years, in the Infantry and we drilled safety continuously and I still saw a couple dozen negligent discharge events - most with blank ammo and no one ever got hurt thankfully. Soldiers train regularly and have NCOs enforcing numerous means of gun safety discipline, yet still have ND's be common enough that every soldier knows what an "ND" is (we no longer refer to "accidental discharges" though they're remotely possible if a weapon suffers a mechanical failure which causes a round to fire).

All this is to say while convincing the population they don't need guns and are better off without them is the best approach, it would still be worthwhile to consider what the gun makers should be forced to do in order to make their products moderately safer, such that many moments of stupidity or irresponsibility by gun owners are less likely to end in tragedy:
  • All guns should have a safety mechanism.  It's ridiculous that any gun can lack such. I don't even buy that Police or Military need such a thing. I don't care what design compromises it introduces, a thing that emits death at literally the pull of a trigger needs a safety.
  • All guns need an indicator that shows whether there is a round in the chamber.  Mechanically this isn't hard to engineer.  One of the depressingly common Kagro stories goes "I thought it was empty when I pulled the trigger."  A visible indication from outside showing there's a round in there would save lives.
  • Triggers need to be harder to pull as shipped from the manufacturer.  Yes, I'm sure some gun types will alter it and make a hair trigger.  But many won't bother, default settings should always be safer. If you go out of your way to make it less safe, fine.  Many children would be saved if triggers were harder to pull.  We made cigarette lighters and pill bottles harder for kids to use, why not guns?
  •  Require proof of, or purchase of, a trigger lock when buying any gun, including private sales.  Yes, idiots would game this by having 1 trigger lock for 50 guns.  Nothing's perfect but many people who wouldn't buy one otherwise would get one and would use it, since they have it.
  • The safety should be put on by the act of loading the magazine or chambering a round.  I'm less certain this can be done mechanically but if it can be, it should be.  Safety should be the default, rather than having to remember to put the safety "on" when readying the weapon, you should have to remember to take it off to fire it.  I'd also be more than fine if it is spring loaded and the shooter has to hold the safety off in order to keep firing, that it re-engages once their hand is removed.
  • Require trigger guards.  Stupid but some weapons don't have them. Brushing up agaisnt something or dropping the weapon shouldn't pull the trigger.
  • Two-handed holding to fire.  You could design weapons that required two hands on the weapon to fire.  Rifles could require the weapon be in your shoulder to fire.  There are a variety of ways to really help ensure the weapon only fires when you're positively aiming and mean to pull the trigger.  That won't stop all forms of tragic stupidity, but it will help.
  • Sell a device that is designed to catch at least low power rounds.  Idea here is that this is where you aim when clearing the action of your weapon in the home/garage/etc.  I know at CF bases in warzones, the practice was to require a little sand-bunker area by the gate, so returning patrols could safety their weapons (removing magazines and chambered rounds) and "fire" the empty action into the sandbags - even if a mistake was made and a round fired, no one would be hurt.  Kagro always has a bunch of "pointed it at the floor/wall and it fired, bullet went through and killed someone on the other side" stories.  Like trigger locks require gun owners to have at least one of these things.  One that will stop a .44 or a 7.62mm round is of course likely impractical but something that would stop a .22 is not. Lots of people are killed by .22 rounds.
  • Warning labels on boxes of Ammo ("This calibre can kill children. Don't leave guns loaded!" etc).  Safety manuals with the guns like the ones you get with a kid carseat (lots of diagrams with bad uses of the carseat and warnings "death will result if you do this!").  
All of the design requirements add to the complexity, cost and so forth of guns.  Boo hoo.  Safety addes to the complexity and cost of every system.  The purest designs have to be compromised to handle the rigours of real world application.  All of these are just at the mechanical level.  They've already started adding electronics to guns which means sky's the limit as far as safety features go.  Passwords, biometric coding to owners, detection of human targets, all sorts of features are possible once the thing's computerized.

A basic tenet of user interface design in computer science is to make errors more difficult and the consequences less severe.  Design so that the things people commonly do work out as intended or at least do no harm.  That's why most software will prompt you "are you sure?" when you've chosen to do something irreversible like delete a bunch of files or format a drive.  Why certain powerful options are buried in an "advanced" menu so you have to go looking for that possibly dangerous feature and really mean to turn it on.  Guns delete lives, it's not too much to ask that they get the nearest analog of an "are you sure?" prompt built in at design level.

Oh and don't you dare tell me that gun culture takes seriously safety.  If it did, everything above would already be baked into the design of "mainstream" guns and any guns lacking these features would be some kind of antique or exotic find, like the guy you know who has a car old enough to be grandfathered in before seatbelts were mandatory.  Unsafe guns (as they would be regarded) wouldn't be allowed at ranges and would be illegal to use hunting.  Collectors might have them but they wouldn't be in regular circulation.  Instead, gun culture would fight tooth and nail against most or all of this and instead rely on the proven failure "individual responsibility" as if people themselves will somehow magically evolve to be smarter and more reliable than we really are.  People are flawed, we know that, you address that by improving the system, not demanding better people.