The WSJ/Heritage Foundation rankings for 2007 are out, and it makes for some fascinating reading as usual.

In the overall ratings Hong Kong, Singapore and Australia come out on top (here's the top-10), but if you want to have some fun download the excel worksheet and start sorting the data per category. What is the best place to be free from corruption? Iceland. And where can you best hire and fire your employees? Georgia. And finally, my favorite probably: the 'freedom from government' category. Best place to go? Guatemala, closely followed by Haiti. Hmm.

(hat tip: Johan Norberg, who as a Swede finds himself on the bottom of the 'freedom from government' rankings, together with Libya and Cuba)

As you know, I've always considered 'liquor boards' highly problematic institutions, especially in cases where they curb free trade and force the consumer to fork out obscene amounts to fund government budgets and fat nunion contracts. But now it appears that free speech is equally endangered by overzealous liquor administrators, in Maine this time:

The state’s Bureau of Liquor Enforcement in September rejected three beer labels proposed by Shelton Brothers, a Massachusetts beer importer, including one for “Santa’s Butt Winter Porter” that depicts St. Nick from behind, checking a list and drinking a beer, his ample posterior on a wooden barrel.

The bureau said the labels violated a regulation stating that alcohol advertisements cannot contain “undignified or improper illustrations.”

The Maine Civil Liberties Union sued the bureau on Thursday in Federal District Court in Portland on behalf of Shelton Brothers, claiming that its right to free speech was being violated.

As they should, and Santa's butt looks pretty harmless to me too:

This beer was also targeted by Maine's liquor board. Whatever the outcome, Shelton Brothers is getting some nice free publicity out of this affair and if their beers are as as good as their creative inclinations then their future looks pretty bright.

In what may be a first, Germany has decided to start charging a licence fee for using the internet to access TV and radio programmes. And that relates to internet access only, what logically follows is that governments will eventually want to have a chunk of the ever increasing amounts of real cash that change hands in online virtual worlds. Let's see what revenue hungry country moves in first.

Here is an area where the EU is clearly failing to promote competition: taxes.

It's not just Europe that needs to take a closer look at its work habits, according to one of Quebec's eminent politicians:

Former premier Lucien Bouchard has set off a firestorm of debate by saying Quebeckers do not work hard enough.

The former separatist leader of the Parti Québécois said Quebec trails Ontario and the United States in economic terms, in part because its residents lack the same work ethic.

In a television interview, Mr. Bouchard said Quebec is failing to make economic headway and that its future could be very, very difficult. Labour leaders were enraged.

I bet they were. Quebec’s unionization rate is one of the highest in the world and their hold on the local economy has not only throttled fresh investment, it has created a culture where ‘work’ or ‘effort’ are often secondary to perceived basic rights such as leisure time and other off-the-job perks. It reminds me of the late 80s in The Netherlands where supermarket employees went on strike, protesting plans to keep stores open after 6 PM in order to enable other workers to shop. Closing hours eventually were relaxed, but the right to a 'social life' for workers at the check-out counter remained a very potent obstacle to rationalizing shopping hours.

To be clear, I remain an ardent supporter of holidays and various other breaks, which is one of the reasons I work for myself. In the end I devote more time of my waking hours to working, I do however have the ability to schedule them flexibly and are able to negotiate a decent price for this arrangement in the marketplace. And that is precisely what is lacking in economies that are either overregulated or highly unionized. The inability to attract various types of workers in different time slots prevents businesses from offering more services at a better price and in the end creates a barrier to raise an adaptable workforce. And no, this is not a clever argument for the creation of a low wage labor pool waiting to be abused 24/7 although that is most likely what Bouchard and other economic reformers will hear when they make their point. It is an argument for wealth, for all.

What America's social conservatives have done to U.K. gaming companies, and Russia's siloviki are doing to international oil companies, E.U. protectionists are trying to do to American farmers.

According to Irwin Stelzer who argues that despite globalization, many barriers to free trade continue to be erected all over the world. Not all of his logic is sound - there is a difference between extra-territorial legislation and using domestic law to curb certain economic activity at home - but his basic point about the increasing complexity of economic interdependence stands.

Fascinating piece from the 2006 Nobel Prize winner for economics, Edmund Phelps which among other things touches on the fundamental differences between capitalism in the US, UK and Canada on the one hand and Western Europe on the other. The key focus is on dynamism and innovation and I loved this bit in particular:

I must mention a "derived" benefit from dynamism that flows from its effects on productivity and self-realization. A more innovative economy tends to devote more resources to investing of all kinds--in new employees and customers as well as new office and factory space. And although this may come about through a shift of resources from the consumer-goods sector, it also comes through the recruitment of new participants to the labor force. Also, the resulting increase of employee-engagement serves to lower quit rates and, hence, to make possible a reduction of the "natural" unemployment rate. Thus, high dynamism tends to bring a pervasive prosperity to the economy on top of the productivity advances and all the self-realization going on. True, that may not be pronounced every month or year. Just as the creative artist does not create all the time, but rather in episodes and breaks, so the dynamic economy has heightened high-frequency volatility and may go through wide swings. Perhaps this volatility is not only normal but also productive from the point of view of creativity and, ultimately, achievement.

Remember that the next time we're in a downturn.

It is May Day today, or International Workers Day. Although there is nothing against celebrating the worker - by turning today into a day of work for instance - we can all agree that this particular issue was hijacked by history’s most unsavory characters. I tried to find a fitting photo for you, but after a long google journey settled on the two men who were able to transform the concept of workers’ rights into a veritable workers’ paradise.

Throughout the 1950s, 1960s and 1970s their ideas and political legacy found a significant market all over the world, but in particular Europe’s political culture was open to the ideas of 'progress' as promoted by Marxism and Communism. It leaves us to wonder if on a day like today there will be any attempts to remember the millions of victims whose lives were terminated for no other reason than not fitting into the vision of Karl Marx’ intellectual heirs.

Today May Day continues to be celebrated around the world. In the US the illegal immigrants have turned it into a day of action and ‘walk-outs’. Pajamas Media will cover events from Los Angeles and Michelle Malkin has a video primer for today.

UPDATE: Andrew Sullivan:

On May Day, the evil of communism needs to be remembered; and its millions of victims mourned and recalled.

And over at Catallarchy there is a round-up of May Day posts:

Contrary to the promises of ideology, nations whose governments pledged to create a workers’ paradise usually became places of rampant slave labor. The plight of the less fortunate became even less fortunate. Today, we chronicle a small part of their lives.

Canada’s new conservative government is on a roll with Stephen Harper threatening an early election if his budget – which contains a few controversial items – is rejected by parliament. And poll numbers indicate he would do well if such a snap election were held today.

This week the debate has centered around one of the more interesting features of the upcoming budget, the proposed childcare benefit which amounts to a taxable $1200 cash benefit per year for each pre-school child. Of course, the critics are correct in pointing out that this is a pretty measly hand-out which won’t buy you an awful lot of care for your child. But that is not the point here.

With the proposed childcare benefit, Harper aims to achieve a few things. Firstly, in order to fund it he will scrap the bloated one-size-fits-all solution put in place by the previous Liberal government which will inevitably create a unionized, huge in overheads, behemoth that will benefit and take care of everyone except your child. It’s an outdated solution, based on an outdated nanny-state philosophy. Secondly, and this is the more interesting part, the new childcare benefit seeks to give parents who have made the choice to stay at home something of value which they would miss out on if the one-size-fits-all solution were to be implemented. You want to invest in your child? Great, but don’t expect to see any of your tax dollars coming your way as we need it to fund our cradle-to-grave plans for other children. So, the new plan above all gives parents the right to make their own choice and frees them from being subject to an expensive institutionalized system of almost mandatory daycare.

All sound logic you will say, but the left has reacted as if bitten by a snake. Yesterday’s Globe and Mail ran the same picture of Harper as the one you see above, but it was accompanied by the headline “Social Conservatives to sell Tory daycare plan”. The positive, well-meaning and sometimes costly choice to stay at home for the first few formative years of your child’s life is for some not a particularly progressive choice. Worse, today’s “progressives” tend to look down upon moms and dads that are willing to forego income to help raise their child.

One other thing will also take center stage here. Many opponents to Harper’s plan will argue that some do need the old statist solution to their problems because some just can’t make ends meet without it. You won’t here a response to this argument from the conservatives, too awkward politically, but I will hand it to you: If you can’t make ends meet, you shouldn’t have a baby; if you’re a single mom you haven’t exactly acted very responsibly in getting pregnant in the first place; if your marriage is rocky then maybe you shouldn’t have a baby. In short, take responsibility.

It is too early a stage to throw a value as “socially conservative” as ‘responsibility’ in front of your average citizen, but with his childcare plans Stephen Harper has at least made an earnest beginning. By the time the little kid that pinches his nose is a grown up, maybe citizens can be expected to responsibly make their own choices without the omnipresent state as the giver of last resort.

Via Baroneblog, I came across this highly instructive piece by John Miller about the need to eliminate Indian reservations as a way to eradicate Indian poverty. This is surely one of the other famed legacies of the age of political correctness that has prevented Indian communities from lifting themselves out of poverty. And the reasons are plain and simple:

Maybe we should give land back to the rez-dwellers, so that they may own private property the way other Americans do. Currently, the inability to put up land as collateral for personal mortgages and loans is a major obstacle to economic development. This problem is complicated by the fact that not all reservations have adopted uniform commercial codes or created court systems that are independent branches of tribal government--the sorts of devices and institutions that give confidence to investors who might have the means to fund the small businesses that are the engines of rural economies.

This issue is prevalent in both the US and Canada, but I suspect that entrenched interests in both nations make reform too onerous and risky a process for any sane politician to try his or her hands on. And there is probably little to be gained from allowing some poor Indian families to own their property and help build some equity in their quest to better their lives. But it remains a terrible stain on North America that can only be washed away by promoting certain basic economic freedoms.

The NY Times is reporting that a Madison WI internet startup company is challenging the Realtor hegemony.

The service, FSBOMadison allows home owners to list their properties for sale. Instead of a commission, the site charges a flat fee of $150, and throws in a lawn sign. The site now claims a 20% share of the local market, which must just have local Realtors freaking out. The Times has gone so far as to compare the service to the NASDAQ, and calculates that in 2005 alone, the site theoretically cost local realtors $17 million in lost commissions.

Of course, FSBO sites are not new. (I count 7 just covering British Columbia.) But looking at the site, the owners have done a number of things right. First, the price can't be beat. Second, they have an easily searchable interface for buyers, and most importantly they link to a map. This seems obvious but a brief survey of the competition suggests it is not.

I loved the story as to how it all came about:

The cousins contacted for-sale-by-owner sellers in the local newspaper, about 25 of them, and offered a free listing on a Web site. Ms. Miller's husband paid $50 for a used power saw at a garage sale to make yard signs. They checked out library books on making a Web site. With eight listings, including Ms. Murphy's, FsboMadison went live Feb. 28, 1998.

A young couple found the site and bought Ms. Murphy's house. "We sat there and had a glass of wine," Ms. Murphy recalled. "And they said, 'Hey, there's that crack in the basement wall.' And we said, 'No problem. We'll take care of it.' "

Dealing directly with each other seemed so civilized, she said. "I keep coming back to that."

I think this is what really upsets Realtors. Most want you to believe that real estate is a high-stakes, high-emotion game, and you need their protection. When I was looking for houses, I initially used a Realtor to shop around. But I was frustrated with the service. I found most of the listings myself, and wondered what exactly he was providing. In the meantime, the houses he did find for me did not meet my explicit requirements, which he claimed were impossible. I wanted a house like my friends P&E, I said. It had everything I wanted. So I ditched my realtor and bought P&E's house privately when they announced they were moving to Vancouver. Somehow we managed to come to an agreement just fine without ending the friendship.

In the end it's just not that hard. A lawyer can help you with the sale papers, and you have to pay him anyway.

William A. Black, a lawyer for the Wisconsin Department of Regulation and Licensing, says he does not think consumers who bypass real estate agents are missing much. "The majority of residential transactions are very simple: 99 percent can be done without a broker. And the 1 percent screwed up - the broker couldn't have prevented it."

So no wonder Realtors are testy about the business:

To real estate agents, "for sale by owner" conjures up some cranky tightwad trying to sell an overpriced, ramshackle house. Agents utter FSBO as if there was something foul stuck to the bottom of their shoe. "It's a commission-avoidance scheme," said Sheridan Glen [well yeah - ed.], manager of the downtown Madison office for Wisconsin's biggest real estate broker, the First Weber Group.

Mr. Glen ticks off the tasks that real estate agents handle: using market expertise to price a house; advertising and showing it; negotiating an offer; organizing the paperwork for closing. "We do a good job," he said. "We deserve 6 or 7 percent."

Well Mr. Glen, clearly there are many, many people out there who disagree with that statement. Especially since most sellers simply do not see their agents working that hard.

But good luck with that attitude.

(Posted by Ginna Dowler)

(Here's a topic which I'm sure will be new to Peaktalk readers!)

Further to my comments about Walmart and suppliers digging their own graves, I'm making a confession here which will surprise not one of the readers who know me in real life:

I read romance novels.

Yes, it's true. I used to feel guilty and try to hide it, but I don't even bother anymore. I'm not alone though - Romance novels make up 18% of all adult books sold, and more than half of all paperback fiction, accounting for a staggering $1.63 billion in sales in 2002.

Okay. So part of that $1.63 billion is my money. In my youth, I bought Harlequins because they were cheap. In university, my roomate and I shared a subscription to Harlequin's mail order club. For something like $20 a month, 5 or 6 books were mailed to us. Magic!

Anyway, as the years went on, I moved away from "category" romance, as it's known in the book trade. I realize now that I did so after TorStar bought both Harlequin and Silhouette and started making changes.

Up until a few years ago, Harlequin/Silhouette (same company) was the cash cow of the TorStar empire. Category romance used to be king in the industry, but the percentage of readers who only read series romances has dropped to 18%.

Part of this is that TorStar seemed determined to kill the category romance. It's not clear why. According to their 2004 annual report, revenue was down 20% from 2003. They complained that the mail order business was "challenging", so they axed it altogether this year., driving more women to the stores, where they might select romance novels from many publishers. Good one.

Now, they've decided to shrink the things even further. Smart Bitches - Trashy Books (which is one of my favourite sites, although not always work-safe) reports that Harlequin is sick of getting complaints from readers that the fonts are too small and the margins too narrow. The solution? Shrink the word count.

For their "long" books, instead of 80-85K words, the size restriction for authors will now be 70-75K words. Same price, of course. Is this likely to drive me back into the arms of Harlequin? Ummm, no. Unlikely.

The other strange strategy they have adopted is that of increasing category granularity. At eHarlequin, I count 32 separate categories. I couldn't tell you the difference between them to save my life. Strangely, their annual report insists this is a winning strategy, and plan to increase the number of lines they offer. Romances used to be broadly divided in categories such as modern, historical, paranormal or sci-fi, Christian (no sex) etc. Well those old categories as so passé.

Meanwhile, romance authors complain that the once extra-tight guidelines are getting a tad ridiculous. I leave you with the writing guidelines from the Silhouette Desire series:

At 57,000 words, Silhouette Desire books are filled to the brim with strong, intense storylines. These sensual love stories immediately involve the reader in the romantic conflict and the quest for a happily-ever-after resolution. The novels should be fast-paced reads, and present the hero and heroine's conflict by the end of chapter one in order for the reader to understand what obstacles will impact the characters for the remainder of the novel.
The Desire hero should be powerful, wealthy — an alpha male with a sense of arrogance and entitlement. While he may be harsh and direct, he is never physically cruel. He is capable of being saved and it's up to the heroine to get him there. The Texan hero should own the ranch, not work on it, and the urban hero should be the company CEO, not a handyman.
The Desire heroine is complex and flawed. She is strong-willed and smart though capable of making terrible mistakes when it comes to matters of the heart. This is primarily her story so much of the book should be from her point-of-view. There is room for the hero's perspective as long as his thoughts are centered on the heroine and their conflict. Instead of dividing the novel equally between both protagonists' points-of-view, Desires should be more 60% heroine and 40% hero.
The conflict should be dramatic with such classic plot lines as revenge, secret pregnancies, marriages of convenience and reunion romances. Plots which focus on suspense, paranormal or character-driven concerns are best directed elsewhere. The story can be set anywhere in the world, but the tone should be true to the author's voice.

Wow, that is awfully specific.

Posted by Ginna Dowler
(Cross-posted to Gin and Tonic)

Instapundit links to this NY Sun editorial calling for automation in the NYTC system.

Already, trains in Paris, Cairo, and Calcutta operate with computerized or automated systems. In Paris, the Meteor Project was launched in 1998, with an automatic piloting system that controls the train line’s traffic, regulates speed, manages alarm devices, and allows for traffic of automatic and traditional conductor trains on the same line. There have been no serious accidents reported since this system deployed in the late 1990s, and more than a billion people have been transported. Computers make the trains run on time and they don’t threaten to walk off the job. All of us are replaceable, but some are more quickly replaceable than others.

Ahem. Since I know a little something about Computer-Based Train Control (CBTC), I will comment on how wrong this is.

First off, New Yorkers do not have to look to Calcutta to find CBTC in action - they only need to look as far as the JFK Airport. Airtrain is as automated a transit system as they come - completely driverless. (It's a Bombardier Mk II Linear Induction Motor vehicle with an Alcatel SELTRAC Automatic Train Control system, if you must know.)

But it is still entirely and completely dependent on unionized workers to make the system run. Believe me, I know. (1) Automation will not solve the labour problem. You still need maintenance personnel, train conductors, operations specialists, and without them, the trains do not move.

Actually, there are really only two arguments for automation - safety and service speed. Automation increases the safety of the system, because the single greatest cause of accident is driver error. (This is not because drivers are incompetent, but merely because they are human.) Furthermore, train safety analyses are easier and more predictable if you can minimize the dreaded human error factor.

Headway, or the required space between trains, can be reduced with an automated system as well, increasing service.

So could the NYCT make use of CBTC? Yes and no. Several trains have systems on board, but the stations, guideways and infrastructure is not in place to accomodate wide-scale implementation, and it would be very expensive (i.e. billions of dollars) to make it happen. The L trains are already out-fitted with CBTC, and my understanding is that with management support they are running with limited service.

Eventually as wireless technologies become more secure and sophisticated, the implementation of CBTC will be more feasible.

But it still won't help with the strike threat. You can't remove humans from this equation entirely.

Posted by Ginna Dowler

(Will eventually by cross-posted to Gin and Tonic.)

(True, if tangential, story: Last winter I was at Airtrain doing a software upgrade for our equipment - a procedure which had to be done over night. After 5 nights, I only had one train left to upgrade. Operations agreed to bring the train in if maintenance would send one more out. There was a train ready and waiting in the shop. To get them out into the yard, you collected some workers and pushed the train out the door until it hit a powered rail - not as hard as it sounds, as the bearings make the train easy to move. But I could not collect enough people to push out the train, and the shop supervisor kept shrugging his shoulders and telling me it was a Union shop, so what could he do. My plane was leaving in the morning, and as the hours ticked by it seemded more and more likely I would have to stay another night just to get this one car. Consumed with rage, I started pushing. Now, I am not a big woman, but damned if I didn't get that puppy moving. All of a sudden I was surrounded by big guys shouting at me, but they did push out that train, and I made my flight.)

I've been following the NYC Transit strike with interest. I think it's hard for many of us to imagine the scale of such an event, but one comparison I like to make for Canadians is that the NYC Transit Authority is larger than the government of Ontario.

The NY Times has been all over the story naturally. To be honest, although I'm not usually a big supporter of labour, where the complaint is working conditions I see the union's point here. The front-line workers do have difficult conditions, and they deal first-hand with security threats. In fact, one of the chief complaints from transit workers that I used to hear is that the operators and conductors are now considered the front-line in the anti-terror war. The are expected to watch passengers for suspicious behaviour, and make the decision to call in police or other security. On the other hand, they will be blamed if it's a false alarm and causes a delay in revenue service. I'm not actually supporting the TWU-local 100 strikers, but having seen their working conditions first-hand, they have a far more legitimate beef than say, the BC teachers ever did.

What's most interesting for me though is how little support the union is getting from other organized labour groups, most importantly their own parent organization. The local union is in serious trouble with penalties, and even considering selling their building to cover costs. The union is facing fines up to $1 million a day, and they only have $3.6 in cash. From that they have to also pay strike wages. They don't even seem to be getting support from left-wing bloggers.

Maybe I'm cynical, but it seems to me that the level of support for a strike has nothing to do with the issues involved, and everything to do with the level of inconvenience it causes locals.

Posted by Ginna Dowler

(Cross-posted to Gin and Tonic)

I've spent the last three weeks taking an incredibly intensive course for budding entrepreneurs. I call it business boot camp, and it was easily one of the best courses I've ever taken, including anything at University. One of the first things our instructor told us was that as prospective founders, we had to take responsibility for how our businesses progressed, or didn't. "It's all your fault" he told us. If your business fails, it won't be because of your competitors, or mysterious market forces, or your clients, or the weather, or your employees - it will be all you. You will have failed to adapt, failed to respond, failed to innovate.

With that in mind, I read a good serious of articles over at Fast Company documenting how Walmart is mean to their suppliers, and often drives them out of business. In a companion piece entitled "Ten Steps to Turn Around Walmart", another author argues is that Walmart is struggling, which I'm not sure I believe, and that among other things, they should be nicer to their suppliers.

I don't know if Walmart is struggling. Their share price is lower than at many points over the last five years, but on the other hand, growth and sales are both strong.

But the issue of Walmart's behaviour to their suppliers is what interests me. The Fast Company article documents the sad story of Vlasic Pickles, who are struggling now because of Walmart.

Young remembers begging Wal-Mart for relief. "They said, 'No way,' " says Young. "We said we'll increase the price"--even $3.49 would have helped tremendously--"and they said, 'If you do that, all the other products of yours we buy, we'll stop buying.' It was a clear threat." Hunn recalls things a little differently, if just as ominously: "They said, 'We want the $2.97 gallon of pickles. If you don't do it, we'll see if someone else might.' I knew our competitors were saying to Wal-Mart, 'We'll do the $2.97 gallons if you give us your other business.' " Wal-Mart's business was so indispensable to Vlasic, and the gallon so central to the Wal-Mart relationship, that decisions about the future of the gallon were made at the CEO level.

The story is that Vlasis, a premium pickle brand, agreed to sell a gallon jar of pickles in Walmart for an absurdly cheap price. What happened is fairly predictable. Why would conumers buy a small jar for $3.00 when they could get a gallon for the same price? Yet the margin on the gallon jar was incredibly thin, so despite the increased volumes, the pickle maker took in less and less, especially when you factor in Walmart's insistence (stated up front) that suppliers lower their prices each year. So are Vlasic's troubles really the fault of Walmart?

Finally, Wal-Mart let Vlasic up for air. "The Wal-Mart guy's response was classic," Young recalls. "He said, 'Well, we've done to pickles what we did to orange juice. We've killed it. We can back off.' " Vlasic got to take it down to just over half a gallon of pickles, for $2.79. Not long after that, in January 2001, Vlasic filed for bankruptcy--although the gallon jar of pickles, everyone agrees, wasn't a critical factor.

So if the gallon jar wasn't a critical factor, what was it? The point here seems to me that the Vlasic management team made an incredibly stupid move in agreeing to the gallon pickle jar anyway. Once again, it was all their fault.

The article then goes on to discuss the tale of Levi Strauss's entry into the Walmart fray, which seems like a company-killing decision to me. The short version is that Levis has been struggling over the years because of competition from low-cost brands at, of course, Walmart. (In reality, the demand for premium jeans remains strong, but Levis has failed utterly to hold that market.) So now they are diluting the premium brand by selling a cheaply-made and cheaply-priced version through Walmart.

I will make a prediction: In a few years, Levi Strauss will file for bankruptcy, and blame their failures on Walmart's rapacious supplier management. There will be much sniffing in the mainsteam press.

And people will continue to buy cheap clothes at Walmart so they can have enough money to buy one pair of DKNY or other premium brand jeans - just not Levis.

Posted by Ginna Dowler
(Cross-posted to Gin and Tonic, where comments are enabled.)

You know where I stand on public and private sector unions. The discussion continues here. One thing is abundantly clear, unions are exactly like universal child-care programs (see post below). They both are relics that share two key traits: negating the rights of the individual and eliminating choice.

It's not looking good for Schwarzenegger and those who support curbing union power. If you want to know the background to the importance of this issue, visit the Economic Freedom archives.

Lots more on the Califorina elections here.

Thanks to all of you who wrote or expressed an interest in, or suggested some links, about the teacher’s strike (or shakedown), which thankfully is over now. It is of course, not a local issue, hardly. It all comes down to economic freedom and that’s the category where I’ve put the many posts that dealt with the issue, so take a look there if you’re interested in (re)reading them. That interest taught me something as well, most importantly that the same problems are prevalent in the US, something which came as a bit of a surprise to me. One reader in Washington state observed:

We’ve been watching the BC teacher strike with great interest here in Washington state. In 2003 we had a district go on strike for 49 days – the longest in state history – despite clear precedent that teacher strikes are illegal. This year at least 5 local education unions threatened strikes in order to wring compensation concessions from the district negotiators. No elected officials were willing to challenge the union’s tactics.

And would that be because of the dominance of one party in that particular state? Or could it be that unions have such a hold on public opinion that parties from either side are reluctant to take on so obvious a problem? Or could it be that the social and economic make-up of places like Washington State and British Columbia produces a particularly perverted style of politics? Consider what James Na, of the excellent Guns and Butter blog and a former Seattle resident, has to say about it:

Alas, I think Seattle, like Vancouver, is following the San Francisco model, where the warped policies are turning the city into an enclave of rich, active retirees and the young, beautiful people crowd in a sea of poor, badly-educated underclass (including proliferating vagrants). Meanwhile, expensive real estate, lack of wide-scale industry and poor public schools force the middle-class out.

And if the middle class votes with its feet, then the market for simple and compelling free market thinking stands a good chance of evaporating for good. But hey, you got clean air and great views so who cares?

The debate on public schools continues. A reader - who has all the time as he's grounded by Hurricane Wilma - writes:

Surely the government knows what needs to be done? The answer is that the targets are set by the state Department of Education, and/or a Federal judge. And when you have only one group of people determining the course of education in a state, you are in essence putting all your eggs in that one DOE basket. How does the state DOE determine the targets? By consulting academic pedagogues, their own specialists, and, of course the relevant committee jurisdictions within the state legislature. The result is a set of standards that, no doubt, reflect the thinking of academics and legislators, but not necessarily the needs of the students. Notice, in the end, it is actually a VERY small group of people who are deciding what the "needs" are, and, therefore direction of EVERY school district in the state will be.

The upshot is that performance targets, to work in the schools, can only work if one can say: " We have carefully and truly identified the unmet needs of our customers (the student), and based our targets on those needs. Because of that, we can be sure that the targets will orient our investment, our workforce, management (administration) and the entire organization toward meeting those needs. If we have somehow misjudged what the customer truly wants, we can be sure we will receive feedback immediately in the marketplace, and we will, in such a case, immediately reassess and reorient our efforts to align with our customer's wishes"

The tragedy is, the energy and creativity of the teacher, the one person in the education supply chain that truly can see, and remedy, unmet needs in their students, is thwarted because of the package tour "if it is Tuesday, we must be studying statistics" approach guaranteed by a state-mandated curriculum.

Judging from some of the reactions I want to reiterate that I am not advocating a wholesale privatization of education, something that would be politically unpalatable in any jurisdiction. No, a public system should be needs driven, accountable and give parents and students options when it comes to making choices. These factors in turn should help to introduce some performance related targets for schools which should help in giving teachers a more market-based incentive scheme rather than the year-on-year blanket increases, enforced by unions, regardless of performance.

That is exactly where western democracies have been moving in recent years (note the emergence of school vouchers and the willingness of parents to go private if they don’t like what they see) and it is precisely this scenario that public sector unions fear so much. That’s been the key motivation behind the recent British Columbia teachers strike and the excessive militancy displayed by their union. It was all driven by the acute awareness that this could be one of the last chances to try and salvage a crippled and inefficient system that had benefited them for ages and which therefore should be preserved at all cost. Even if a portion could be saved from 21th century realities, then it would be worth the damage and inconvenience to parents and students alike. That’s also why the real issues where obfuscated and why the unions pushed forward a series of myths, all of which are succinctly debunked by Erin Airton.

Yet, there were few, if any, media outlets that were willing to look beyond these myths – apart from a few conservative bloggers and columnists - and consequently the union was able to retain a significant measure of public support, as some poll numbers indicated. Fine, but the blame for that rests not just with a heavily biased media, but also with a government whose ability to engage the public and drive its economic policies forward in a credible manner faltered hopelessly. As a consequence, it has been a baffling experience to listen to hardworking middle to higher income earners in the private sector who are serving up some of the talking points prepared by the union. Or who fail to make the crucial distinction between teachers and the radical union that claims to represent them. But some have taken action and with the help of the Canadian Taxpayers Federation are now suing the teacher’s union, the BCTF, for the failure to provide services. It's an important move that deserves respect, highlighting that there are committed people in Canada that are willing to stand up to the left's bullying tactics.

In summary, the immediate tasks ahead are to find to creative ways in ensuring that an excellent public education system meets the needs of a new economic era, while forcefully taking on the dark forces that seek to prevent such a natural move forward.

UPDATE I: It's over, finally.

UPDATE II: This is just hilarious, a union picketed by its own staff:

The school year has begun, but the Washington Education Association’s (WEA) labor battles are not over. In a strange bit of irony, the state’s largest and most powerful union is embroiled in a bitter dispute with its own employees over wages, benefits, and other employment policies. That’s ironic since its local affiliates habitually threaten individual school districts with illegal public sector strikes on a regular basis.

(...)

Apparently the WEA understands the importance of “fiscal responsibility” when it comes to its own bottom line, but could care less about the struggles facing local school districts or the taxpayers of Washington.

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We’re in the final stages of the teacher’s strike it seems, now that both sides have accepted the recommendations of the mediator and the courts have fined the teacher’s union BCTF half a million dollars for their contempt of court:

Justice Brenda Brown of the B.C. Supreme Court said she based the amount of the fine on the fact it appears the teachers are about to return to work. She said otherwise the fine would have been "very significantly larger."

It’s a somewhat questionable ruling as of today there is no absolute certainty that the teachers will indeed return to work, as the union will vote over the weekend. It appears to be a small amount (around 4% of BCTF’s net cash position) especially given the fact that the striking teachers did breach – and continue to breach – the law for a period of two weeks. If the judge feels the imminent end justifies a lower fine than maybe there should been a conditional fine on top of the one she has just given. Still the judge made a very crucial point:

She said there are two misconceptions regarding the contempt -- that the teachers were defying an unjust law and that citizens have the right to breach a court order in defying an unjust law. "They do not," Brown said.

This outcome as well as the union’s “reluctant recommendation” to its members to accept the mediator’s recommendations point to an end of the conflict. And while organized labor and some media will do everything to spin the final outcome, it will be a government win which, given the illegal nature of the strike, was almost a given from day one. In fact, as The Shotgun points out, by foregoing pay during the strike, the teachers have essentially funded the compromise that is now on the table.

So, from a broader perspective was the disruption to the educational services worth it? Hardly. Although the unions lost it is absurd that a full two weeks were needed to arrive at this obvious point. Given the mixed public reaction it remains to be seen whether the people of British Columbia – as voters the ultimate arbiters - understand the need to reform provincial education and take a decisive stand against militant employee groups that benefit from antiquated and illiberal labor laws. While the Campbell government has taken a commendable stand, it hasn’t really been able to get its message across more effectively. You have to be able to communicate with the voters about the need and rationale for steady reform. Granted, the local media are deeply biased as even the more neutral outlets always take care in not offending or otherwise criticizing the unions.

The initial assessment is that after two weeks of closed schools, we have seen relatively weak court rulings, an overly careful media reaction and two battling parties who as a result are prone to lock horns again in the not too distant future. If it was really all about the children and the law - my position - then there should have been a far more direct approach from both the courts and the government. As for the BCTF, their intentions were clear from day one, it was about everything, but not the children.

Related:
Well, in Washington State they don’t need the government to get rid of unions with questionable political motives. In the Sprague-Lamont School District the teachers voted to decertify their union:

"because teachers were fed up with annual dues of nearly $700 per teacher, much of which was used by the W.E.A. to further social and political agendas they found offensive"

Howard at Oraculations updates us on the potential for the deal between the United Auto Workers and GM to fall through, and interestingly, the financial crisis in the municipality of San Diego caused by intransigent public sector unions. It seems that, in both the US and Canada, organized public employees are the last bastions of labor radicalism. It's probably easier to bully the taxpayer when you're providing an essential service than asking a consumer to buy an overpriced car to fund your retirement plan.

The teacher's strike continues and the rhetoric from the union leadership is increasingly becoming unhinged, more evidence that rational behavior is probably the last thing one can expect from this teacher's union. Mark Milke, one of the better local pro-free market commentators sums it up in one excellent column.

UPDATE: There are people googling "Jinny Sims = Castro" and end up here. Sims is the teacher's union leader and she loves historical analogies, alluding to Mahatma Gandhi in one recent interview, while teachers on strike invoked Mandela, Parks, and in an act of total ignorance, Walesa. Again it underlines the totally inept rhetoric that is supposed to support the strike, and in my view it is indicative of the quality of the political debate in British Columbia. The average citizen here – both those on the left and the right – are clueless about what is at stake, the historical context, or the economic dynamics. It’s similar to my native Holland: turn your back on it, and hopefully it will go away, it’s not really my business. It’s a pathetic attitude that produces very mediocre results and terrible political discourse.

Of course, Sims can’t even stand in the shadow of any of these great political and civic leaders. She comes across as someone from the lower ranks of her organization who with a bit of media talent, some incendiary rhetoric and hard-handed tactics secured her position, a process all too typical of far-left or far-right movements. No visionary material at all. Sims immigrated to Canada in the mid-1970s from Britain, so she totally missed the Thatcher revolution and its decisive impact on organized labor, and from that perspective she is truly a political anachronism. In British Columbia there’s a huge market for that sort of talent. With that in mind we do indeed have to go back some decades to find appropriate historical analogies and Castro may not be that far fetched at all.

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The school boards and the unions were back in court today, but it won’t be until Friday when the judge will rule on penalties for the errant teacher’s union, the BCTF. In the meantime the appointment of a mediator was announced in what some conceive to be a sign that the government may not be as unyielding as they have positioned themselves to be. Ginna Dowler doesn’t think so, and makes the compelling argument that the Campbell administration has all the time in the world to wear the union down as its election victory is only a few months old. I hope she’s right.

The emergence of a facilitator may get the parties talking and if the judge abets this process with another ruling that lacks teeth, we may end up with a compromise which no doubt will be hailed as a union victory. Sure, it will get the children back in school, which is good, but the opportunity to really damage militant labor forces will have suffered a setback. Still, it’s too early to draw conclusions, so stay tuned.

The LA Times comes out in favor of Proposition 75 (via Sullivan) and makes a very important point:

Proposition 75 opponents argue that this is unfair because there is no similar move to curtail the discretion of business lobbyists to invest shareholder resources in politics. But the analogy is flawed, given that this initiative applies only to public employee unions. It's not private businesses that sit across the negotiating table from public employee unions; it's the taxpayers and their elected representatives, acting as stewards of the public interest.

If this notion sounds almost quaint, it is, because it has become so divorced from reality. At many levels of government, public employee unions, aided by their political war chests, have gained control over both sides of the negotiating process. When public employee unions wield the type of influence they now do in California, too much governing becomes an exercise in self-dealing.

British Columbians, take note. As I've mentioned before, the demise of union power - especially the public sector variety - is global.

The answer to the question is of course self-evident for those of you who have been following this saga unfold in several episodes: it’s a shakedown, and a hard one at that. Union claims that the curriculum of the affected children will not suffer are just not sustainable after an illegal shutdown of educational facilities for a full seven days. In fact, they’re an affront to parents and children alike.

The provincial government weighed in today with the appointment of a special prosecutor who will have to determine if the teacher’s union should face criminal contempt charges. And while the union continues to lament the hard-line approach by the local government, it doesn’t seem to be hard at all according to its leader, Gordon Campbell:

"At the end of the day, it is hardly a hard line situation to say people should respect the law. The fact of the matter is, in a civil society, we must obey the law."

Unions should be lucky that Campbell is their opponent. While his approach has so far been unyielding, he hasn’t stated the obvious, namely that public education is broken and that new solutions – decentralization, school vouchers and other market mechanisms – need to be considered. As much as the teachers owe it to the parents and children to get back to work, the government has a fiduciary duty to the taxpayer to ensure it is no longer forced to pay for an education system that breaks down in pieces the moment some left-wing militants get it in their heads that it’s the 1970s all over again. It’s a simple truth that very few stakeholders have figured out yet, but it is simply unavoidable. If that’s the long-term plan Campbell has, then this ugly battle may be the first and necessary installment in a journey to better and freer education. Let’s see how quickly the special prosecutor will move.

NOTE: There’s quite a bit of interest from readers based in Washington State, one of whom was kind enough to send me a link to the Evergreen Freedom Foundation with a list of their teacher’s strikes, their respective duration and resolutions going back to 1972.

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UPDATE: A reader from Florida e-mails the following:

The classroom teacher, here, has the same responsibility for results - making things work - as entrepreneurs do in small businesses, or, to perhaps use a more apt analogy, as lower-level managers do in large corporations. I would argue that such a mindset is not apt to produce a militant union mindset, but quite the opposite; and management (the school board) gets the best of both worlds: labor force stability (contracted labor), with a single compliant union head (or negotiating team) to negotiate with the school board. Here, they just got a 20% increase in class load, for a less than 10% increase in payroll.

The legalized extortion your B.C. teacher's unions engage in simply doesn't happen, in this particular school district. But in both
cases, the unions have a net negative effect, and a change in labor laws to strict neutrality - not requiring or facilitating union formation, would be much better than the status quo.

This Floridian case shows that some middle ground and less adversarial labor relations are possible within a public setting.

The teachers strike here continues and is now attracting attention from various readers who have e-mailed and asked for updates in light of the unprecedented ruling that a British Columbia Supreme Court judge handed down yesterday.

To recap: the government legislated the teachers back to work, the strike was ruled illegal by the courts last weekend, the labour relations board confirmed that fact a few days ago in a separate ruling and yesterday everyone was expecting that during the penalty phase the judge would hand out some hefty fines to deplete the union coffers. The militant teachers union had anticipated this and maintained adequate reserves, so the ultimate ruling in which the judge did not fine but froze the union’s assets came as a thunderbolt on a clear day for a deeply perplexed union. The bottom line: it prevents it from paying strike pay and accepting funds from third parties to do so. Apart from neutering its ability to strike, it has given them a “way out” to end the strike without losing too much face, or so the argument goes. The unions remained very quiet today – still not sure what hit them – but nevertheless ordered a continuation of the illegal strike. Other unions may join later and launch a massive protest next week. To be frank, it’s not a pretty spectacle and it is increasingly reeking of anarchy.

As it happens I have just started reading Tammy Bruce’s The Death of Right and Wrong and the teacher’s strike here is another excellent example of the book’s theme: the way in which the Left has forced our society to abandon concepts of right and wrong and how it has succeeded in doing that with the help of a number of compliant institutions, most notably, the media. The situation here this week is really no exception and this morning I explained to the head teacher at our local school – who by virtue of her managerial role is not on strike – why this no longer is an issue about money or class size (the apparent action items that are driving this strike) but about what is right and what is wrong. Ignoring a pre-agreed conflict resolution mechanism and following it up by contempt of court would land you and me in jail, but organized labor is undeterred, raises the stakes unhindered and somehow gets away with it.

The teacher’s union has deliberately chosen to ignore a court order under the guise of claiming that it is not a strike but “civic obedience”, a warped theory that is also used as a rebuttal to those who argue that it is disgusting to draw young children in what is increasingly a political battle. Yet, the teachers can count on large pockets of the media that dutifully report that parents are supporting the strike and that teachers have a right to illegally picket schools and daycare centers as it will teach children the values of civic protest. Even Martin Luther King and Rosa Parks have made surprise appearances on billboards in order to bolster the case of a thuggish union. It’s amazing what people can come up with, and it’s even scarier how many eat it, accept it and celebrate it.

The union is also banking on parents to stay quiet or even support their actions on the premise that no one wants to upset a teacher that has responsibility for their kid in class. Well, that is probably the best reason to not stay quiet and speak up. As an example, this from an e-mail I got last week:

Last year the kids were reading a book called "The Wave" which dealt with the concept of totalitarianism. The teacher then had the kids make collages with pictures of totalitarian rulers. This was in November right after the US election. Some of the kids made posters with pictures of Stalin, Hitler and George W Bush. The teacher was a real Bush hater and permitted this and in fact displayed the posters. Well, I was pretty upset, as I didn't want my son to misunderstand what totalitarianism is. I also found it funny that Fidel Castro was nowhere to be seen on these posters. My son made me promise that I wouldn't say anything, as he is really concerned about his grades, so I had a third party complain and the posters came down.

If a generation of children here is being educated by a militant union that has lost the moral compass to make a distinction between right and wrong and incites its members to ignore court orders than maybe parents do need to speak up to fix a system that is badly broken. And not only parents are made to cower in silence, teachers who have every right under the current law to disobey orders from the union are threatened, union leader Jinny Sims made that pretty clear earlier this week:

She says there will be consequences for teachers who cross BCTF picket lines – noting that they have to live in their communities and they will still have to work with people who are currently picketing.

Sims of course will not publicly acknowledge the fact that her mandate to strike was given to her by less than 50% of her members, contravening a law adopted by the elected provincial legislature, a labour board ruling, and to top it off, a court order. Once more, to get an idea of what we’re dealing with, this was also the union that last year adopted a motion that called on Israel to dismantle its security wall, in a highly selective and bizarre excursion into foreign affairs.

Some of you have pointed correctly to Reagan and PATCO and wondered why the British Columbia government has not resorted to firing all the teachers. The answer is that the air traffic controllers back in 1981 were clearly in violation of their contracts which is something that may not necessarily be the case here and equally important, it would be too much of a political gamble for the current government. The outcome however would not be as different as the likely outcome if the union backs off: a workforce where union power is sharply diminished.

No free society can suffer the indignity of labor relations skewed in favor of one highly organized protected group that will not hesitate to flaunt the law and resort to street rule. Any democracy that gives in to that is perilously close to its own extinction. Both Reagan and Thatcher in the 1980s understood that when they took on the forces that stifled freedom, growth and progress in Britain and the US. Present day union leaders who lament the treatment they are getting from the government and the courts in British Columbia should for once reflect on what really happened to the societies that crushed union power. They became wealthier and freer across the board.

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UPDATE: Some interesting thoughts here.

One of my readers weighs in with the argument that it is education that is ultimately responsible for creating a generation of citizens that is totally unprepared for the contract society which I described below. Well, that takes us back to the striking teachers doesn’t it?

How can we expect a system where teachers illegally throw down the gauntlet to get their hands at 1970 style benefits to prepare children for a world where there probably will be far less, if any? But as my reader goes on, it’s not just the teacher; blame can equally be apportioned to the parents:

You talk about the expectations of the unions. Unfortunately, that air of unreality is deeply imbued across society, the idea that somehow one need not plan for the future, particularly concerning learning a profession.

In the US, we have to totally change the system in which children are educated and brought up - no responsibility, very permissive child-rearing, no responsibility for learning in the schools; you get the flavor of it. (See Michael Barone's latest book).

The elected school board, here, seems to be the root of the problem; they are scared to death of antagonizing the laissez-faire style parent by making school rigorous. Surprisingly, the parent problem seems to be as large in the high schools in affluent neighborhoods, as in the poorer ones - many of the parents in the richer areas have great careers - such as real estate sales - in spite of weak knowledge of the disciplines.

They have a narrow, and deep competency in their field, and although their mouths may tell their child that it is important they do well, when push comes to shove, there seems to be very spotty accountability, at best.

Which is exactly my observation. It’s been discussed before: the care and education of today’s children is increasingly being outsourced to a variety of institutions, almost all of them outside the family.

The teachers strike here continues and it may need to be re-emphasized that organized labor’s actions are driven to a large extent by its anger of not having seen its political allies win at provincial elections earlier this year. This despite spending millions of dollars in campaign support for the New Democrats, who lost for the second time in a row to the pro-business BC Liberal party.

It can hardly be a coincidence that California is gearing up for the battle over Proposition 75 which actually asks the voter if campaign contributions by unions should be subject to approval by individual union members. To give you a flavor:

Larry Sand, an eighth-grade teacher in West Los Angeles who supports the measure, said he doesn't like the unions spending his dues primarily because he disagrees with their views. He is a member of the United Teachers Los Angeles, which is affiliated with the California Teachers Association and the National Education Association.

"It's wrong for the union to take my money and spend it on political issues and candidates," Sand said. "It's especially wrong because their spending is way to the left. And I'm a conservative, so I especially resent that."

The coincidental nature of these two events on North America’s west coast is evident. Unions, especially public sector ones, have for too long been a drain on the public purse and governments have been forced to rationalize services such as teaching and healthcare and bring them into line with market practices. I can’t judge the California situation - although I have an idea – but here in British Columbia government workers have been overpaid during the decade the New Democrats were in power and too much work was in government hands, being carried out by too many people. Efficiency and market pricing was never part of the vocabulary, and the march to deregulation and privatization has only started recently. The largest obstacles to the rationalization of the government checkbook are unions and the pro-market Campbell administration here has been drastic in taking on public sector unions.

But this is not just a public sector scourge; the private sector is caught up in a process where the forces of globalization and an ageing population are putting some severe pressure on the chances of survival of some businesses. Take Delphi, the GM spin-off which is now in Chapter 11. Its CEO, Steve Miller, is blunt when he assesses his career in the steel, airlines and automotive industries:

What those three industries have in common is a social contract, worked out over the past half century with strong centralised labour unions, to elevate their workforces with elaborate defined benefit retirement programmes. Back in the days when you worked for one employer till age 65 and then died at age 70, and when health care was unsophisticated and inexpensive, the social contract inherent in defined benefit programmes perhaps made economic sense.

Today, defined benefit programmes are an anachronism, and we are witnessing the slow agonising death of defined benefits as industrial compensation policy.

In the midst of these trends, the unions in the traditional steel companies and the traditional auto companies bargained for thirty-and-out. The theory was, create more jobs by retiring people sooner. And aren't 30 years in a grimy factory enough? But this means people can start work at age 20, retire at age 50, and expect full pensions and health care til age 90 or so. In other words, enjoy the fruits of your labour for more years than you were at labour. As a society, somebody has to pay. And to the shock of the Big-3 automakers, they've found that customers won't pay when they have choices.

I urge you to read the entire piece (on Brad DeLong's blog) as Miller explains very clearly that the mechanics that are now bankrupting America’s car industry are also undermining the sustainability of public services, such as social security. And yes, it’s to a large extent globalization that is the causing factor. One of the sticking points during the handover of Hong Kong to China in 1997 was the attempt of the outgoing colonial administration to implement a fairly rich package of social entitlements. Mainland China, knew full well that there could be a spillover effect into China at large which could be a severe drain on its overall competitiveness, strongly rejected the proposals.

Unions are the last vestiges of an economy which peaked in the second half of the last century. It’s easy to bash organized labor, but the adversarial and militant attitudes it often displays demand a fierce and unemotional counter-reaction based on economic logic. But it shouldn’t give us any ideological pleasure to do so, in a way we’re all in it and we will all have to adjust to a new and uncertain economic reality: once we have fed some union contracts into the shredder we will have to ask ourselves how we are going to pay for our care. We’re steadily moving away from the social contract to a contract society where employment as we once knew it will cease to exist. That society will ask a lot of its members.

It therefore doesn’t surprise me that the most ardent people on the picket lines here this week were all in the fifty-plus category. They have grown up in the belief that the raison d’être of business and government is basically to take care of its employees during life and until death. Their deep beliefs in social justice have been bruised and adjusted by the Thatcher and Reagan revolutions, but they somehow survived to now see them shattered for good by globalization.

In a way it is a deep irony that the forces of democracy and populism were once spurred by disgruntled workers and the underprivileged. These very forces have now created a class of sophisticated consumers and taxpayers who are simply no longer willing to pay a premium for a product or a service if they don’t really have to.

The teachers union here, the BCTF, is now ignoring a supreme court order and is continuing its illegal strike. It reveals once more the desperate state of organized labor in a world where freedom of contract and respect for the law are on the winning hand when it comes to defining economic relations. The world that nurtured and protected these undemocratic arrangements - the costs of which are passed on to the average consumer and taxpayer - is steadily disappearing. The latest government leader to have thrown down the gauntlet is Australia's John Howard whose WorkChoices legislation heralds the end of union power. Other jurisdictions should take note and act accordingly. Faster, please.

I’m home this morning with my five-year old as the teachers here have gone on strike. If you scroll down my economic freedom archive you will guess where I stand on this issue.

While in the entire western world unions are in retreat – in The Netherlands they’re co-operative and ineffective talking shops, a strike was actually broken by upset workers last week – there are pockets of resistance in places such as California and in particular, British Columbia. The “closed shop” mandatory union membership here is protected by law and even if strikes like this one are ruled illegal as it concerns an essential` service, unions feel comfortable enough to ignore the rule of law and proceed regardless. They’re backed up by years of misguided ‘respect’ for unions and the media, while critical, refuse to treat these institutionalized shakedown programs as Matt Rosenberg accurately calls them, for what they are. During last year’s ferry workers strike some citizens were even ignorant enough to show up at picket lines with “solidarity coffee” to support the strikers, oblivious to the fact that these very people had been raiding their wallets for decades.

We are led to believe that the current strike is supported by 90% of the teachers and the union leadership has gone out of its way to argue that their absence will have no impact on the curriculum. Patent nonsense of course; and it conflicts with the stack of home activities and apologies with which my daughter’s teacher tried to mitigate the situation. There are many teachers like her, but they’re too often too afraid to speak out. Unions namely, believe it or not, have a say in career, promotions and things like that too. What’s worse, the teacher’s union not only seeks a wage increase that no other public employees have been granted and that even the private sector in the best of times can’t support, they regularly venture into the domain of foreign policy. Selectively of course: last year the teacher’s union here adopted a resolution to condemn Israel’s security wall.

All of this has nothing to do with teaching or even with wages. The unions and their old-school leftist political affiliates have been sidelined in two successive elections here, and years of looting the taxpayer’s kitty have finally come to an end. The battle could no longer be won at the ballot box and has now moved onto the streets, disrupting education, healthcare and other vital services. It’s a disgusting and highly undemocratic spectacle.

My jaw dropped, even the Dutch are now considering it (note: it's a Dutch link). At least, that's what a report of the Council of Economic Advisers concludes after a study for Dutch parliament which had asked for advice on the matter. We will have a long way to go and there are some serious drawbacks to implementing a flat tax, but it seems as if there's a realization on both sides of the ocean that the current complicated system of progressive taxes combined with endless deductions and exemptions is in serious need of a massive overhaul.

Yesterday I briefly highlighted how the new Dutch budget introduces a package of reforms by making some incremental changes to the welfare and healthcare arrangements that have characterized the country since the late 1960s. It got a vigorous response from the opposition – the Social Democrats or PvdA – by way of their leader Bos:

“This government keeps hammering on the responsibility of its citizens. That makes people uncertain and eventually it will lead to chaos”, according to PvdA leader Wouter Bos on Wednesday during the parliamentary debate. He thinks that the cabinet should offer more security and protection and is making the assumption that citizens want, and are able to handle, more responsibility. “If you want flexibility from people, then you have to offer them security. But you ask for flexibility and only offer insecurity”.

More laws, more rules and thus less choice: it never occurred to me that more security would give me more flexibility. Return to the risk-free society, that seems to be the basic message here.

In The Netherlands you don’t win elections by playing the anti-America card or any other divisive tactics, and Bos is shrewd enough to know that the threat of a disappearing comfort zone might well tip the electoral balance in his favor. Both he and the other opposition parties have announced they will undo all of the reforms that are presently on the table. The victory of capitalism and free-markets that forced Europe’s (and North America’s) left closer to the center during the 1990s is clearly under pressure, witness the German elections. Promoting responsibility wrapped in a package of privatization and dergulation was relatively easy during economic boom times, now it is a much harder sell.

And not just in Europe. Even in decidedly free-market societies with conservative governments there is always the anticipation or assumption that government is really there to absorb all risk, premium free. In a must-read assessment of America's current economic plight (oil, Katrina, budget deficits) the Cunning Realist makes that point convincingly:

Reckless risk taking is encouraged, because the public sees the government give a wink and a nod that it will be there as a backstop should problems occur. Often it's far more than a wink and a nod. President Bush just announced that the government is going to throw hundreds of billions of dollars into rebuilding the Gulf coast states after the hurricane. If you knew the government would pay for your temporary relocation, rebuild your house, give you a job, and send you a nice check after a natural disaster, would you buy insurance? Would you live in a place less vulnerable to a natural disaster? Would you evaluate your overall risk profile rationally and take appropriate measures to protect yourself? And importantly, what incentive does government have to live up to its own responsibility to prepare for disasters if the printing press is always available as a salve when something happens?

In turn this has a significant impact on the value of the dollar and the US economy for years to come. In America it's big government conservatism, in Europe it's reinvigorated socialism. The appetite to neutralize reform and hand responsibilty back to the state remains a strong force to be reckoned with. Expect more of it in the years ahead.

Some observers are attributing Angela Merkel’s poor showing at the polls to her designated finance minister whose drastic economic proposals, notably including a flat tax, turned him into an easy target for Schroeder’s fear mongering. He promptly resigned from his role yesterday to return to academics where he can no doubt spend more time researching drastic tax reforms for there will eventually be a time for it, even in Germany. And in the US the climate has shifted to ways to fund the endless appetite for debt with, in addition to severe spending cuts, tax increases back on some fiscally conservative agendas.

Hardly the climate for the ‘flat tax’ campaigners to sustain their momentum it seems, and the Economist poured some cold water on the idea too last week by pointing out that the only beneficiaries of a flat tax in Britain (at a 30% level and a US$18,000 tax-free allowance) would be the poor and the rich, a point made a bit more stridently by Johann Hari last week. It turns the whole flat-tax idea into a very difficult proposition as the very people who would have to give it electoral wings are the ones that as a group will suffer increased taxes once a flat rate is implemented: the middle classes.

Of course, the debate got traction when the solid economic performance of some former communist countries started to make headlines, something that was conveniently linked to their adoption of a flat-tax rate. And yes, I joined that bandwagon too. It seems though that when these countries transformed into capitalist entities they had little other option then to go for a flat-tax regime as it was far easier to implement than any of the byzantine taxation systems that the real capitalist world had come up with. Furthermore, there were hardly any income differences in Eastern Europe so any idea to start taxing progressively made little economic sense at all; they had had their experience with equality. It is therefore probably better to see the flat-tax as only a part of these economic growth stories as foreign investment and growth can equally be explained by the presence of low wages and relatively little regulation.

Does that mean we should now reject the flat tax idea? No, but it’s a proposition with some serious issues and you have to play around with the numbers long and hard to make them work for everyone. That may well be a point where its wealthier supporters, who are arguably the greatest benefactors of the idea, will long have lost interest in pursuing it. Whichever way you look at it, it remains an income tax and is thus inherently socialist in nature. Real tax reform should be a combination of adjusting and simplifying income taxes - you can definitely make income taxes a lot flatter - and creatively shift a part of the income tax burden to direct taxes, such as one national sales tax. That solution would have disadvantages too, but it would at least preserve a measure of individual choice and for those struggling with the redistribution aspect, some very progressive features.

Canada's National Post makes the case:

In most jurisdictions that have adopted flat taxes, economic activity has increased and government revenues have risen. The lower rates spur greater investment, and also encourage greater compliance with tax laws, which means government's tax take increases from both a rise in national production and a fall in cheating.

[...]

Here in Canada, Alberta adopted a 10% single-rate tax on personal income in 2001. And for those who charge that a one-rate tax is "regressive," hitting low-income workers disproportionately hard, Alberta's results provide ample evidence to the contrary: So long as generous basic personal exemptions are maintained, low-income filers are generally the biggest winners.

The sharia debate in Ontario is over (via Nealenews):

Ontario will not become the first Western jurisdiction to allow the use of a set of centuries' old religious rules called Shariah law to settle Muslim family disputes, and will ban all religious arbitrations in the province, Premier Dalton McGuinty told The Canadian Press on Sunday.

In a telephone interview with the national news agency, McGuinty announced his government would move quickly to outlaw existing religious tribunals used for years by Christians and Jews under Ontario's Arbitration Act.

Not the outcome I predicted, but the consequences for Catholics and Jews are probably not unexpected , but that doesn't make it the right decision. It does indeed feel like a drastic approach that fails to take account of the rights and traditions of other groups, so let's see if this legislation stands the test of being challenged under Canada's Charter of Rights and Freedoms. And let's also see how the various religious groups will react to this surpise move.

UPDATE: Excellent commentary at Civitatensis who appear to be one of the few to understand what is going on here.

ONE MORE UPDATE: Another important observation from David Mader:

Now I'm going to suggest a positive reason why Sharia tribunals ought to be allowed: banning such tribunals only reinforces the sense that Islam and democracy are incompatible. Sharia tribunals subject to common-law oversight would have demonstrated the ease of compatibility even as it suggested that certain aspects of Sharia would have to be modified to make it compatible with western law. In other words, it would have gently nudged Muslims in the west towards an interpretation of Sharia that would be more reflective of western norms.

Here’s something to chew on over the weekend: the plans of the government of Ontario to allow the application of sharia in settling civil disputes under its provincial Arbitration Act.

I’ve written about this issue before and argued that you can’t realistically deny a practice to one religion while allowing it to others as long as the application of that religious law does not violate basic constitutional rights. And it seems that in this case, there are ample constitutional safeguards. Yes, there will definitely be aberrations, but that shouldn’t result in giving preferential treatment to one religion over another. A similar argument is made here, and the National Post – hardly a defender of the Muslim cause – who came with up a comprehensive editorial today which I will summarize for you as it’s behind a subscriber wall. Their argument is fourfold:

1. Sharia is based on a voluntary ‘opt-in’ 2. All rulings are ultimately subject to Canada’s Charter of Rights and Freedoms, meaning that discriminatory rulings against women would be struck down; 3. The application of sharia in Ontario is subject to certain conditions protecting women’s rights the result of which is a very watered down version of Sharia; 4. Similar arbitration rights have been granted to Jews and Catholics and there is no good reason to not allow Muslims to apply the same rights.

All four are compelling arguments and the NP adds that the fight against jihadist terror should not be confused with the issue that is currently on the table in Ontario. To that I would add that by coming down hard on a very restricted form of sharia which is encapsulated in a framework of western rights, while giving a pass to Jews and Catholics, is likely a counter-productive move in the current environment.

But the implications of this issue go far deeper. Those that argue that secular law should be the norm and that all forms of faih-based arbitration should consequently be banned have to realize that it would create an entirely different debate. Firstly, it would bring out those of whatever religious denomination arguing that the state cannot interfere with certain clerical traditions, which are in turn guaranteed as a religious freedom. Secondly, the entire concept of arbitration would be undermined by opening the door to the option of settling all commercial and civil disputes by the state. It would put an end to one of free market capitalism’s time-tested traditions of conflict resolution: arbitration. If you’re interested in that scenario, by all means take on the Ontario government and its plans to allow a limited form of sharia.

NOTE: Another way to look at this is to see whether allowing certain forms of religious arbitration meet the test of "plurality, subject to unity". And, is it not the case that if you regulate something it will alllow you to keep an eye on it? Would we favor driving sharia courts underground?

As discussed earlier, Dutch unions have long abandoned their leftist and confrontational stance and transformed themselves into a willing partner of business and government in promoting free market solutions. This week they recommended that the minimum wage for the young should be abolished as it is detrimental to their chances to find employment. Employer's gladly accepted the recommendation and so the Dutch have added another small milestone into the chronology of the slow and steady demise of unions as a public force.

In Britain where the Conservative Party is starting to embrace the idea as an important ingredient of their new policy platform on taxes. It may not be a vote winner yet, but if Gordon Brown's fiscal policies herald further tax increases, then this may be the kind of creative renewal that will draw the British middle class back to a party that has been an idle bystander in oposition for eight years now.

Here’s an excellent example of how unions are able to restrain free market forces, a practice for which consumers end up paying a hefty bill. Not that I can blame these unions for it, they take advantage of a politically inept culture that simply lets them put their hands in the till. But more than that it’s a majority of the voters – in this case in Ontario - that stands idly by when the combined forces of government and organized labor raid their wallets.

A reader weighs in following my earlier post:

"I can't resist mentioning that new cars became unaffordable in the US for so many (which comprise 25% of all retail sales in the US) because of the oligopoly that has bowed to every demand of the UAW, throwing up the defense that they couldn't " afford " a strike. Now that Toyota has a larger market cap than all the American makers, together, I hope their owners no longer will tolerate this level of irresponsibility in those they entrust with their capital"

The deep irony of course is that unions have worked so hard to render the industries upon which their members depend so uncompetitive that their short term gains translated in long term losses for America (and other industrialized economies) as a whole. That by the way applies to public sector unions too. The numerous privatizations that took place in many countries over the past few decades removed a large burden from taxpayer's bills.

Arguing that the AFL-CIO hasn't done enough to stem the rapid decline in membership, four of its constituent unions are pulling out, effectively forcing a break-up of America's largest organized labor federation. The immediate reaction is of course centered around the impact it will have on fundraising for the Democrats. However it's far more important to note that in today's global economy the scope for organized labor to play a role is rapidly diminishing. Think about it: (a) low-level jobs are increasingly exported overseas; (b) labor legislation protecting workers rights for jobs that stay in North America has made unions largely superfluous; (c) the shift of a manufacturing based economy to a services driven economy has created a wealthier and far more mobile working population; (d) western countries have deregulated and opened up their economies over the past decades and unions are no longer compatible with the spirit of free trade and free markets; and resulting from all of this is (e) an erosion of public support for unions and the tactics they tend to employ.

So, organized labor is in decline and that may explain the level of desperation that characterizes the actions of some North American unions, here and here. In the past I pointed to the Dutch model where unions during the 1990s became partners of government and employers by agreeing to wage controls, a system often referred to as the "poldermodel":

" ... mechanism encourages wide consultation between employers and unions, and not only over wages. This is made much easier by the country's small size, and by its traditionally sensible trade unions. Lodewijk de Waal, head of the unions' federation, talks openly of the need for higher profits and more labour-market flexibility"

Of course, the fact that The Neherlands is largely a services based economy with a political culture based on consensus has made it a unique case. Still, it's notable that a country noted for its leftist traditions produces union leaders who argue convincingly for market driven solutions. It has turned Dutch unions into consultative entities with little economic power and that's what they essentially should be in today's global economy.

Mark Steyn puts together his thoughts on the Live 8 event and like many others reaches the inescapable conclusion that capitalism is a far better cure for Africa's ills than following the advice given to us by aging rockstars: force the taxpayer to pick up the tab. Even in Canada such a message is falling on deaf ears.

When it comes to rockstar driven fundraising my fondest memories go back to 1992 when some of rock's finest performed in Wembley for the Freddy Mercury Concert for Aids Awareness. The cause, but especially the emotion following shortly after Freddy's death brought out some superb performances and raised a huge chunk of change for AIDS research. But even here, market forces are most likely to provide the fastest route to a cure, here's Sullivan on the benefits of profit driven pharmaceutical companies:

" ... the "evil" pharmaceutical companies are, in fact, among the most beneficent organizations in the history of mankind and their research in the last couple of decades will one day be recognized as the revolution it truly is. Yes, they're motivated by profits. Duh. That's the genius of capitalism - to harness human improvement to the always-reliable yoke of human greed. Long may those companies prosper. I owe them literally my life"

Raising public awareness is great, but let the market figure out the best way to pay for it.

UPDATE: Some revealing comments from a Kenyan economist here.

Like Kate, I was exploited as an adolescent as I was forced into hard labor. You know, working the assembly line in a metal sheets factory, in a candy factory (where the sweet stench of flavouring materials would almost make you puke) and of course, the good old newspaper run. My parents were adamant that I get exploited, for if there's one important lesson to learn is that if you want something badly, you work for it. That's how I earned my numerous rail trips through Europe and many other things on my wish list.

But it in addition to cash and a lesson in life it had one other material benefit. Long after the rigors of hard underage factorywork were behind me and, instead of stinking clothes, I was wearing a nice suit and fashionable tie it became evident why. Grilled by some executives of the company I wanted to work for in the City of London I related the work experiences of my teenage years. It impressed them visibly for it said something about character, responsiblity and the ability to understand the value of money, the latter being a somewhat vital asset for a career in finance. It helped turn the interview and it probably contributed to securing my first real job. But some disagree and think otherwise:

Critics are warning that the new regulation will make it easier to exploit adolescents, who are already considered more vulnerable than older workers.

Labour groups have condemned the change, saying it strips away another level of protection for adolescent workers. "They're children, they don't know their rights in the workplace," Gil McGowan, a spokesman for the Alberta Federation of Labour, said. "They are much less likely to stand up for themselves against a bullying employer."

There's little doubt some of our rights were violated, I clearly remember being booted out of the manager's office at the candy factory when we asked for the vacation pay that we were legally entitled to. We never got it and went dutifully back to work. But, we learned from it. As I've mentioned before, the destruction of our society will not come from the outside. If we continue to unlearn vital skills and if we take away responsibilities from our children we are raising a generation destined for disaster. But there's hope:

Kim Alessio, 14, welcomed the change, which led to her landing a job on Thursday at Earls, an upscale chain restaurant in Edmonton.

"I don't think it matters about your age," Alessio said. "I think maturity is the biggest point and that's what they are looking for when they hire you."

I am sure there are more kids like Kim. Get out there and work. The experience will go a long way.

Here's a great example of European social and economic engineering of the worst kind, this time in Norway:

Norway will shut companies that refuse to recruit at least 40 percent women to their boards by 2007 under an unprecedented equality drive, a cabinet minister said on Tuesday.

And if you think this is a joke, take a look at what Norwegian Children and Family Affairs Minister Laila Daavoey told Reuters to support the plan:

"Companies have been dragging their feet. They really have to recruit more women," She said the threat of closure was meant as a spur. "I don't believe that companies will get into a situation where they risk closure. Companies will obviously find women," she said.

No doubt, you can always find some qualified board members on the street if you really have to. As long as Norway keeps pumping lots of North Sea oil they can probably afford themselves this nonsense, but eventually their economy will become very uncompetitive in a world that is on a steady march to free and deregulated markets. By the time that Laila Daavoey will be sitting on the boards of a number of Norwegian corporations her wisdom may well be called into question.

Abandoning progressive income taxes and replacing them with a national sales tax. It's an idea that has traction and the folks at Wunderkraut have done some research and built a compelling case for its implementation, also addressing the key objections that are often heard. Check it out.

It probably helps if you can build a new economy from scratch because I don't expect mature Western economies to replicate Slovakia's success anytime soon:

Last January, Slovakia became the sixth Eastern European country to adopt a flat tax, which means all income-earners pay the same rate. Since then, Romania and Georgia have followed suit, creating a global proving ground for the concept. In the process, flat-taxers have moved Eastern Europe from a Communist backwater to an investment spring - pressuring its higher-taxed Western neighbors to adapt to the new environment.

So the pressure's on, and it may spur older European economies to take a very hard look at their outdated tax regimes. Now, who was that other fellow who is looking to reform his country's tax system?

The struggle between management and unions at Wal-Mart is getting uglier, this week in Canada:

Wal-Mart yesterday accused the food and commercial workers union of intimidating workers and, in one case, physically assaulting a store employee during an altercation over the weekend.

In the past I’ve looked at this from the perspective of economic freedom, but you can also look at it purely from a business perspective and contrast Wal-Mart with the trials and tribulations of other giants in order to see where things will be headed. Hey, if even conservatives start to become critical of Wal-Mart, something must be going on.

Via Virginia Postrel I found this NYT column making an extremely valid point about the underlying economics of investing in Wal-Mart, a point that the store’s opponents surely have never taken to heart:

Like the airlines, whose investors generously provide low fares and convenient service while forgoing gains for themselves, Wal-Mart has kindly mustered considerable capital from investors with the goal of providing all kinds of basic goods under one roof at convenient locations and amazingly low prices. These investors must be charitably minded because they aren't the main beneficiaries of Wal-Mart's business.

Indeed buying Wal-Mart stock hasn’t been that great an experience recently. In a way what Wal-Mart is undergoing is very similar to what McDonald’s has had to endure in recent years. The fast-food giant opened stores in even the remotest corners of the world, blasting a path of hegemony in the fast-food market using aggressive marketing strategies, driving out competition and especially driving hard bargains with suppliers and labor. As a result there’s was a very cheap meal to be had at the golden arches. Yet, there was a limit and McDonald’s stock price began to suffer from a combination of competition, health conscious consumers, food critics, labor activists and the anti-globalization movement who saw Ronald McDonald as the embodiment of corporate evil. Fatty food in neon-lit restaurants seemed oddly out of place in a day and age where a plethora of fast and healthy food alternatives are available and Golden Arches replacing ancient alleyways in central Beijing just doesn’t play all that well, even I got to dislike the steady march of the fast food giant.

Still, I do like a good Big Mac deal now and then and last week I took my daughters to a revamped McDonald’s outlet and to my surprise I found a warmly lit and redecorated outlet with a new and healthier menu to pick from. Of course, we stuck to the traditional fare (why eat a salad at McDonalds?) but things looked better and a quick look at the financial charts told me that the company’s stock has performed pretty well after a nasty slump a few years ago.

McDonald's has been able to turn things around and while there are many factors playing a role in this, it seems - from a consumer’s point of view - that the company has managed to improve the dining experience. And of course, Wal-Mart has kindly taken over the role of global corporate bogeyman and the latter is now going through the same rough patch as McDonalds earlier: a plunging stock price, dynamic competitors (especially Target), struggles with various interests groups and as a result ongoing negative publicity.

The bottom line is, like McDonald's, they have a huge market they can serve, they have good products at a very low price, but somehow the machine has run out of steam. The delivery of the product - and maybe the slate of products offered - needs a revamp (again think Target) and at the same time some wounds need to be healed regardless of the fact that others have unreasonably inflicted some of them on Wal-Mart. It needs a rethink at senior management levels and until then it seems that McDonald’s stock offers far better value.

After privatization and deregulation could it indeed be that flat tax is going to be the next big thing that will reform and further liberate western economies? George Bush’s plans to streamline the US tax system may be the first step in that direction. It’s hardly a coincidence that Alan Greenspan this week weighed in on the possible introduction of a sales tax but was cautious about its implementation:

“ … but he cautioned that the government would face significant problems making the transition to such a system. Switching from an income tax to a consumption tax would generate huge opposition from Democrats, who argue that taxing food and other goods would fall hardest on the poor”

And the poor were never well organized in former communist countries where apparently the flat tax is making inroads as a very successful fiscal tool. It will indeed be a hard sell in mature western economies, but the erosion of the proportional system is well underway with a concurrent shift to user fees and value added taxes. That process will accelerate if emerging markets are able to increase their competitive position by virtue of having a flat tax rate.

It seems that the NHL player’s union is now getting busted in a way that you won’t see when public healthcare or transportation unions are involved. Here's hockey expert Ron MacLean:

"I think when the owners had the cap, the players had literally caved and it's incomprehensible to me that the league didn't do a deal," MacLean continued. "My only summation is that they have decided 'let's get Bob Goodenow and the union out of the picture, once and for all.'

"I really don't know what option the players have. My theory is that they should have taken the last NHL offer and waited for a better day when the courts might be more friendly or the [U.S.] Congress might be more friendly. So it will be very intriguing to see what the players think their options are."

The entire NHL lock-out has me puzzled for as long as it lasted but the length of it and the unwillingness of both sides to reach a timely compromise indicated that the entire franchise was ready for a drastic overhaul. That may now be happening.

Continued over the weekend with Wal-Mart's CEO explaining why the company doesn't think its employees need union representation. As much as I agree with him, it's probably best if a third party would make that point, so let's pay some attention to Colby Cosh who has come up with a very clear common sense defense of Wal-Mart's actions.

Making the call that it can not be bullied, Wal-Mart has decided to shut down its first unionized outlet in North America. This is a victory of free markets over stifling and outdated labor legislation (think of pre-Thatcher Britain) which has been a drain on economic activity in Canada:

The world's largest retailer, Wal-Mart has been union-averse. It has said it would shut a store only for economic -- not union-related -- reasons, but in October it warned it might have to close the Jonquière outlet unless it could reach a contract with the 190 or so employees.

Well, union-related reasons are economic reasons. Workers these days enjoy more than adequate protection through various labor related laws and statutes and from that perspective unions have achieved what they set out to do when they first emerged in the late 19th century. Their excessive demands, their protected status through certification processes and their hold on employees (even those that refuse to join have to pay union dues) have now ironically resulted in some 190 employees losing their job and a community losing a retail outlet that with its very competitive prices served lower income families. It’s unfortunate that many smaller entities do not have the muscle to thwart unions, but Wal-Mart’s stand can only send the right signal that unions have outstayed their welcome.

Those familiar with my biography will know I lived in London for two years and for a young Dutchman in such a city the big mystery was why you were always forced to quickly empty your glass when visiting a pub in order to find yourself on the street at a time when most continental Europeans would leave their house to slowly walk over to a nearby bar for a drink. First World War licensing laws is the answer, with the original intention to ensure that the British war machine would not suffer from an incapacitated workforce that spent its time at a bar rather than an assembly line. But Tony Blair's team has surprisingly put the knife into this outdated nonsense and pubs can now stay open for 24 hours a day, addressing issues such as this:

Currently, many British drinkers imbibe as much as they can as quickly as they can before pubs shut at 11 p.m. Heavy drinkers then all stumble into the streets at the same time, often leading to fights and other misbehavior. The government says the new laws will help curb the problem because people will drink in a more relaxed manner and leave at different times.

That I agree with. British drinking culture is nothing short of absurd and they have exported it all over the Anglosphere which has in effect caused the problems and rampant alcoholism it sought to prevent. Again, when I just arrived in London it was baffling to work with people who downed three pints for lunch and who would drop everything at the end of the working day in order to not miss one minute in the pub. The new laws will no doubt cause an unrpecendented culture shock, but to the British I would say: enjoy it.

The National Post has been running a series on conservative America in anticipation of this week’s Presidential inauguration. It makes for interesting reading – no link available - but here’s an excerpt that is not only interesting, it’s telling. It’s about Jeanne Berry, a South Dakota woman who had fallen on hard times when the ranch where they worked went into bankruptcy:

In the worst times, Ms. Berry cleaned houses to pay the bills. Her husband eventually found work at another ranch, while she landed a stable federal position at the Badlands National Park office down the hill, where she is an administrative clerk. Her job, she says is a blessing.

Ms. Berry never sought government assistance for all the hardship she endured. A staunch conservative, she and her husband did not want others help.

Like most South Dakotans, Ms. Berry fiercely defends her independence. The best thing the government could do to help, she says, is leave them alone.

“We like the idea of small government. We like the idea of individualism. We like the idea of small businesses being able to make it”, she explains.

"People here are pretty much down-home country people. We just want to work and want to be paid for what we've don. We don't want government handouts. We just want to do what we can do".

People that are struggling to get by but refuse government hand-outs, a rare phenomenon in many western countries. In Europe and Canada they generally take to the streets to demonstrate against cutbacks in social programs or lament the “unfairness of the system”. In the United States the reverse is true where they tell the government to back off, take a risk and work hard to improve their lives. These people are the backbone of a vibrant and fiercely independent economic spirit that explains to a large extent why the US economy outperforms most if not all other western democracies.

Rather than ridicule their decision to put a man with similar values in the White House and superficially label their land and lives as “Jesusland” it’s probably time for complacent western democracies to re-acquaint themselves with the values of individualism, hard work, and optimism. And less taxes. And limited government.

Dean Esmay thinks I am shallow. Dean’s argument to let Electronic Arts’ workforce unionize is that (a) working conditions at EA are pretty abysmal and (b) corporations have an “array of legal protections and privileges that no individual or small family business is ever allowed to hold”.

It’s an interesting argument but my response to Dean is that if working conditions at EA are so poor how come so many programmers, animators and modelers sign up for a job at the games giant? And if they suffer inhumane working conditions, why don’t they vote with their feet? The interactive games industry is booming - job opportunities everywhere - and EA’s success has spawned many smaller game development companies all over North America. In fact, the industry is so vibrant because many former EA workers want to pursue their own dream and use their experience to set up smaller firms that allow them to be to be more, independent, creative and ultimately, if they are successful, be acquired by EA or other lager outfits. Unionizing developers and engineers would create a huge impediment to these smaller start-ups in the business to get going. With little capital and uncertain revenue streams the one thing that small companies need above all are flexible labor laws. Unionization at EA would therefore set a very bad precedent for start-ups who are at risk of having to accept collective bargaining arrangements, in fact it may set a devastating precedent for the hi-tech industry at large. This brings me to Dean’s second point: protection by the state. The proliferation of federal and local labor laws have pretty much obliterated the need for labor unions, if the corporation is a creation of the state than so is the today’s worker: protected and laden with rights.

Yes, advocating a tax on excessive consumption. It's not a new idea but it hardly ever has been argued by a conservative to my knowledge. Although a tax construed as a user fee is preferable to a blanket income tax to fund health issues I am bothered by the fact that Frum overlooks personal responsibility as the tool of choice to get people to manage their health. And there's another issue: if a penny tax on sodas as Frum proposes gets traction, all food and beverages will be fair game, the Atkins crowd will surely lobby for a tax on bread and pasta. Let's put some more thinking into this.

In what is a worrying trend, a number of governments around the world are starting to crack down on prostitution. Puritans appear to have the upper hand in a debate by focusing on the negative side effects of selling sex for money. True, enslavement, abuse and drugs are often linked with the red light business, but the old argument that legalization would make those excesses far easier to monitor and manage still stands. But there’s a far more basic reason why we should let the sex business get on with things as the Economist points out:

Which brings us back to that discreet transaction between two people in private. If there's no evidence that it harms others, then the state should let them get on with it. People should be allowed to buy and sell whatever they like, including their own bodies. Prostitution may be a grubby business, but it's not the government's.

Indeed. And who would want to drive Alexa out of business?

UPDATE I: Vice Quad sees a different trend: gradual steps towards legalization.

UPDATE II: Entered into OTB's Traffic Jam

UPDATE III: Some comprehensive research on the sex trade in China by Andres Gentry.

Environmentalists, unions, anti-globalists may on their own no longer be the strongest force to fight corporate expansion, together they can form a potent coalition to take on engines of economic growth, notably that symbol of American capitalist expansion: Wal-Mart. In addition various towns and cities have joined the fight in a quest to preserve the rural character of their communities, and in Canada that coalition can feed on an additional force: anti-Americanism. Yet, Wal-Mart hasn’t exactly been bruised by all these attempts to stifle its growth; they have been pretty successful in expanding their network in the US and Canada. One of the pillars of its success has been to take on unions and in doing so it not only is able to increase its performance by aligning management and employees, it also is taking on one of the key constituents of the coalition that opposes it. Last year they scored a victory against unions in Manitoba, earlier this year a masterstroke ensured that Wal-Mart could open a big outlet on Vancouver Island.

How did they achieve this? Elizabeth Nickson reports that native Indian bands invited the retailer onto their reserves, allowing Wal-Mart to circumvent unions and environmental and rezoning regulations. As Nickson notes, it drove a wedge right through the anti-Wal-Mart coalition as environmentalists realized they couldn’t pick a fight with their natural allies: native Indians. On a number of occasions I have pointed to the economic benefits of Wal-Mart's wealth and efficiency generating machine and Nickson points to a report from McKinsey which provides some numbers to back-up that claim:

The august McKinsey Consulting Group in their report, The Wal-Mart Effect, estimates that the retailer's focus on low prices and its constant stream of money-saving innovations accounted for up to 25% of the U.S. economy's productivity gains during the '90s. Warren Buffet believes that Wal-Mart contributes more to the health of the U.S. economy than Microsoft. The Manhattan Institute's Steve Malanga reports that a study sponsored by Wal-Mart but conducted by the Los Angeles Country Economic Development Corporation estimates that "Wal-Mart's entry into the local market would save county shoppers about US$1.78-billion annually, and southern California shoppers US$3.76-billion annually or nearly US$600 per household. Those savings, redirected to other spending would create up to 36,000 jobs, compared with the maximum of 5,000 jobs lost among competitors."

What the native band in Canada has essentially done is providing Wal-Mart exactly with the centerpiece of its path to success: taking advantage of a highly unregulated environment. The McKinsey numbers can easily be replicated in other geographical areas and once more provide evidence that a dearth of regulation in the long run provides huge benefits to society. True, there are aesthetic and valid environmental concerns that should always be taken into account when giving Wal-Mart access to operate its business, but it seems that a band of native Indians, in Canada no less, have provided the latest installment in a phenomenon that’s running out of steam: the war against Wal-Mart.

Regular visitors at Peaktalk will know that basic economic freedoms feature high on the agenda here. The continued omnipresence of radical left-wing unions in Canada, protected by hopelessly out-of-date legislation (but then Canada never had a Reagan or Thatcher), has contributed in no small part to the country’s inability to really tap into the unlimited potential gains of free markets. In particular in British Columbia the situation is dire.

Only a few months ago health support workers launched an illegal strike that severely disrupted the delivery of medical services and shut down numerous hospitals. This practice goes hand in hand with influencing as well as outright intimidation of other unionized workers who have been “convinced” to show solidarity with their partners on strike. A general strike loomed but the provincial government managed to get the strike declared illegal by another anachronism, the Labour Relations board, a quasi governmental body whose rulings tend to be skewed in favor of unions. Had simple logic been applied to this situation (note: it was support staff that was on strike) the government should have fired anyone staying off the job after the strike was declared illegal. But no, the law apparently allows food workers and dishwashers to cripple hospitals and care facilities causing an estimated 6 million dollars in damage and, worse, a build-up of waiting lists that only recently had been reduced to manageable levels. Luckily, with the ruling of the Labour Relations board in hand the government had a case and went to court where a judge fined the Hospital Employees Union, by historical comparisons, a hefty $150,000. Compared to the actual damage caused, the union got off lightly to say the least. In fact it is absurd that a union can force its members into an illegal strike, cause damage and the walk away with a slap on the wrist. However with no political will to seriously take on the anachronistic labor relations in Canada I continue to take a very dim view of the prospects of bringing them in line with the rest of the western world.

Joe Katzman yesterday touched on the issue of free market economies dominated by a wealthy ethnic minority where deregulation and democracy could set the stage for ethnic prosecution. The argument was originally put forward by Amy Chua, a Yale professor, whose article draws on personal experience, descending from an ethnic Chinese family in The Philippines. As Joe argues, it is a very interesting matter and can be used as a starting point for a very comprehensive discussion, for now I would like to zoom in on just two aspects.

First, it is indeed an interesting problem and Chua touches for instance on the Chinese minority in Indonesia who while only making up 3% of the local population, control about 70% of economic activity, largely through private conglomerates. As I have discussed before on these pages, the Suharto regime had established a very cozy relationship with a number of Chinese tycoons, but when Suharto fell and economic hardship struck in Indonesia the consequences for the Chinese minority were disastrous:

The fall of Suharto's Indonesian dictatorship in May 1998, for example, was accompanied by an eruption of anti-Chinese violence. For three days, Chinese shopkeepers huddled behind locked doors while Muslim mobs looted. In the end 2,000 people died and tens of billions of dollars - belonging to Chinese cronies of Suharto - left the country, plunging the economy into a crisis from which it has still not recovered.

I highlight this because in the Christopher Hitchens article in Vanity Fair which I discussed the day before yesterday, he points to the fact that when we consider the Islamist threat in Indonesia, the Achilles heel of Indonesian society may well be the ethnic-Chinese community. Islamic fundamentalists may face an uphill struggle in destabilizing Indonesia and uniting the country’s Muslims behind them, but when they would turn their attention to the Chinese minority they might find broad-based sympathy among the impoverished Indonesian population. And not only that, it would send a very wealthy business elite packing, guaranteeing an economic collapse which in turn would provide an even better climate for al-Qaeda and its political allies to build support. Taking the Indonesian example I fail to see how democracy plays a part in channeling resentment into anger, hate and finally persecution, it is equally a playball in autocratic regimes, just look at Germany in the 1930s. Manipulating ethnic emotions in Indonesia’s case goes back as far as the Dutch colonial days and it played a part equally during both the Sukarno and Suharto years which spanned the 1949-1998 period. Whatever the case, the Chinese minority does appear to be holding a very important key to the island republic’s future.

The second point I would like to discuss is that Chua points to the argument that some have made that keeping a lid on democracy and free speech may help foster a climate of stability which in turn would enable economic progress and a much easier transition to full democracy:

Commentators such as Fareed Zakaria and Robert D Kaplan have suggested holding back on democracy until free markets produce enough economic and social development to make democracy sustainable.

When we compare the cases of Russia and China there is indeed a case to be made for gradual reform with an iron fist, rather than an instant abandonment of autocracy in favor of democracy. It’s a tough choice really, and in my Asian days I often marveled how some could confidently state that the Tiananmen massacre was a necessary and justifiable prelude to economic growth. No wonder that Singapore’s Lee Kuan Yew is revered in China, he has demonstrated that you can create a prosperous western economy without giving up political control. This is the 1990s case for Asian Values: keep political and social forces in check by suppressing dissent and rule with a strong fist, in such an environment free markets will prosper. The spectacular growth rates recorded by autocracies or quasi—democracies like Thailand, Korea, Singapore, Hong Kong, Indonesia, Malaysia bolstered the case of the Asian Values school. Chua does not accept this train of thought and neither do I (although admittedly I was briefly influenced by it in the early 1990s) and there’s a good reason for that. The spectacular collapse of a number of Asian currencies in 1997-98 followed by some drastic political realignments revealed that the Asian Values model was not sustainable, attractive though it was for some. Former Hong Kong Governor Chris Patten has written a very good book about the tension between autocracy and free markets with a focus on South-East Asia and China, “East and West” (if I ever go broke I will throw my signed copies on eBay), making it very clear that free markets can not thrive, can not exist in a society that is not fundamentally free, democratic and open. This assertion does not solve Chua’s concern over the often controversial role of dominant economic minorities, nor does it give us a precise compass to help rebuild fledgling democracies like Indonesia, Iraq or The Philippines. It does however set a goal of what should ultimately be achieved.

Update: Yes, I made a case for the acceptability of corruption a little while ago, but I believe that a certain level of greasing the wheels is often required in certain situations and that does not alter my fundamental belief in the essence of free societies operating free markets.

OK, credit to Kevin, he managed to come up with at least one positive aspect of Wal-Mart’s international expansion. This is a subject that raises some interesting emotions judging from some of the e-mail I got, some arguing that the problem with Wal-Mart is the fact that they destroy jobs by exporting work to other countries, affecting American workers while abusing the low wage situation abroad. There are two distinct criticisms I can level against that.

First of all trying to protect American jobs is a pointless exercise in a globalized free-market. Advantages offered by regional differences make economies competitive and, in theory, forces them to be adaptable. Shifting labor around the world has a positive effect as it forces the regions that have lost jobs to reinvent themselves and focus on what they’re good at, this a dynamic process that has been around for as long as there has been life on earth. Although their objectives are different, the anti-globalization movement and trade unions have found each other in fighting those who want to give a free rein to this economic mechanism. They are prepared to do anything to turn back the clock and that makes them real conservatives, artificially protecting economies through barriers, tariffs and subsidies is the worst of conservatism and socialism combined. Canada has a history in this department and the cost has been phenomenal. What’s more, even after clear evidence of the enormous benefits of free trade to the Canadian economy during the 1990s, a significant portion of the electorate is still bemoaning this economic concept. For all my criticisms of the European Union I should note that in essence the fundamental idea of free movement of goods, people and capital that underpinned the European dream is a valid and commendable one, wealth is created by removing barriers that try to control and thwart such movement.

That brings me to cheap labor. Many emerging economies start to compete in the world market once they allow foreign investment to take advantage of low wages; in fact low wages are a key accelerator in any economic growth process. Take Asia for instance. Hong Kong as an economy started out a as a pool of cheap labor which combined with free capital flows ensured an early take-off and, once other cheap labor markets opened, a flexibility to adapt to the new world and build on the wealth it gained to retool its economy. Many present day wealthy Hong Kong Chinese descend from very poor and demoralized mainland refugees that were scraping by on lowly paid factory work. True, the Hong Kong case was unique and there were other factors at play, most of which were local and not imposed by foreign capitalists, yet that really proves that a dynamic adaptation of foreign capital inflows should lay the groundwork for future economic growth. Local governments and businesses thus play an equally important role in creating wealth and allowing workers to move up the social-economic ladder and blaming abysmal labor conditions on just Wal-Mart or other corporate giants, just does not fly.

As with any business that is unusually successful and profitable (Microsoft, Martha Stewart) the time has come to take on another icon of American capitalism and there has been a steady momentum over the past few months to take that battle to Wal-Mart. Yesterday Kevin Drum pitched in; pointing out that Wal-Mart’s ability to pay low wages to its workers (read: resist unionization) has created a squeezed and impoverished blue-collar workforce. The low-price level that Wal-Mart is able to compete with is creating value for the company’s shareholders and clients, but Kevin believes that rewarding the megastore’s chain workforce in line with union requirements would give them more money to spend and in turn create more wealth. Absent a union I think Kevin would still favor paying workers above market in order to create a growing class of people that can afford to buy the output of American businesses.

I do not agree with his position and I think the logic he uses is lost on me. Especially his implied assertion that the aggressive stand of Wal-Mart vis-à-vis unions creates a class of underpaid workers that ultimately can afford less as opposed to a unionized workforce that can afford more, needs a closer look. Regular readers will now how much I abhor unions as they are known to restrict not only market-driven downward movement on the socio-economic ladder, but more importantly they have a habit of destroying upward mobility. In addition, unions add, through collective bargaining a significant cost to the economic process that does not necessarily represent a concurrent gain in productivity. Unions did play a role at one point in time, think late 19th and early 20th century, but in a society where the largest social stratum is a middle class with an ability to migrate geographically as well as economically, unions are antiquated entities destroying opportunities rather than creating them, and to the extent they create them they come with a price-tag significantly higher than the cost. How come union membership in all western economies has been declining over the past few decades?

Wal-Marts ability to keep unions out of its doors and drive the prices of its suppliers down results in a very competitively priced product that allows their clients (ranging from low to high income groups) to spend more on other goods and thus increasing their purchasing power and wealth. Yes, Kevin, you can pay your employees more allowing them to buy the same amount of goods at a higher price point, but where’s the gain for them or for society at large? Note that not everybody is working for Wal-Mart and while I understand the existence of economic hardships for lower income groups, I do think that a flexible economy offers them a far better road to affluence than submission to rigid unionism that results in less career opportunities and reduced purchasing power. And if unions were absent, who would be likely be able to retain his or her employment in the long run: a check-out clerk working at market rates or one that is paid an above market wage?

Following the BBC’s fall from grace, the Canadian CBC has decided to pre-empt any negative publicity and retained the services of Edelman Worldwide, a New York-based PR agency specialized in disasters. I do not know if the CBC is a disaster waiting to happen, but unbiased they ain’t. By hiring a renowned PR firm they probably believe that spinning their content is a better approach than radically changing it. And they do not have to really worry about their content, as a state-owned entity in a highly regulated market they inhabit a very comfortable world, especially given the fact that for many Canadians the CBC is the only source of objective wisdom. Note that last week Canadian authorities rejected a formal request from cable companies to allow American channels like HBO and ESPN direct access to the Canadian cable network. The argument against access of course was the negative impact they may have on the position of Canadian broadcasters, but with an increasing demand and about 750,000 illegal signal downloads the writing may be on the wall for the overly protected Canadian media world. Open it up!

Unions continue to be a formidable force with a very strong ability to relegate great ideas and plans to the trashcan, if somehow these ideas threaten their interests. This happens not just in Canada, here’s a story from Detroit where the plans of a very wealthy and generous entrepreneur, Bob Thompson, to start a number of private schools in inner cities were nixed once the Detroit teachers union figured out that the plan to offer a road to college education for disadvantaged inner city kids might threaten their job stability. That union power goes a long way is proven by the point that even an initially excited mayor of Detroit withdrew his support from the plan once unions engaged in work stoppages. This is just too absurd for words all the more since Thompson’s generosity proves once more that the super-rich just do not sit on their assets but are more than willing to make them work in ways that governments very often can’t. Wealthy people, and I run into them regularly in the hi-tech and venture deal world, are often deeply aware of the fact that the society that has allowed them to become wealthy may need something in return and what better way to do that than to help other people fulfill their dreams. But in this case that does not exactly fit into the worldview of narrow-minded union-members who would be more than happy to preserve people’s deprived situation in order to maintain their outdated self-serving dream of stability without change, of stability without challenge.

In my discussion on alcohol distribution I did what Irene often accuses me of: painting too rosy a picture of the US. I got an e-mail from Mitch Hagmaier today who points out that liquor laws in the US are byzantine at best:

You mean "in Oregon and Washington", not "in the US". Liquor laws in the states are highly variable on a state or even local level. Where I live, in the commonwealth of Pennsylvania, we have a complicated web of alcohol licenses and state stores. There are "dry" towns scattered here and there, my parents used to live outside of Mars, PA, which was a "dry" town, which I always thought was a great gag - "Mars is dry!" "Well, dur!" "Dry" counties or localities are much more common in the South.

Correct, in my enthusiasm following my trip to Oregon I forgot all about the "dry towns". David Janes weighs in on the topic as well.

As some of you may remember I hinted at doing a GWB on my 40th birthday, but the fact that I celebrated it in the US made that very difficult. Why? Because in the US, like in most free economies, liquor is available in supermarkets and other retail outlets at decent prices and I could not resist to celebrate the day in style with a very good Benziger cabernet. The bottle was thus reasonably priced but had I bought it at the government owned liquor stores here in British Columbia it would have cost me a small fortune. Plans of the BC government to put an end to the archaic monopoly of government retailing of alcohol have now been suspended as the government reached an agreement with the unions that staff the various outlets to extend their deal to 2006. This comes not only as a disappointment to many consumers, but also the pro-business lobby that helped the current government get elected in 2001, not to mention the various businesses that had planned to actually get into the business of selling liquor.

There are some signs of hope however as the government has scrapped many outdated laws relating to the consumption of alcohol and it does currently allow some privately owned outlets to sell beer and wine. More importantly, it would appear that by going slow on the unions the BC government has decided to take a gradual approach and will probably revisit the privatization issue after the next election in 2005. There’s only so much disruption from the unions they can handle and given the many other cutbacks and privatizations there must have been a train of thought in this right-of-center administration that the liquor franchise wasn’t worth the battle. A pity, especially since the one province in Canada that has privatized liquor distribution (not surprisingly in Alberta) has to date proven the merits of freely available liquor. Of course , the Alberta case tells us what many of us know already as the practice of putting the sale of alcohol in private hands is, well, fairly prevalent in the rest of the world.

Colby Cosh has a column up today in the National Post discussing self-employment, or depending on how you got to be self-employed, “involuntary entrepreneurship”. I discussed this topic briefly a little while ago because not only am I self-employed, and in my case it was not really involuntary, it also is a trend that has been gaining some momentum over recent years. There’s a good book about and if you consider striking out on your own I recommend you have a look at it, it’s Daniel Pink’s Free Agent Nation. Daniel took the route of independent entrepreneurship after a spell as Al Gore’s speechwriter and that probably in itself was a good enough incentive to leave the world of being a full-time employee behind, he elaborates on that in the prologue of the book.

Self-employment is not always easy, especially if you do it in an environment - like I did - where you have no network to speak of. The lengthy road to get a positive cashflow going and to witness a rapid depletion of your savings does not always contribute to feeling good about yourself and the choices you have made. But, after about four years I can genuinely say that stepping outside the comfort zone has been worth it, yes the cost was not insignificant, but to date especially the non-quantifiable benefits have been enormous. Spending more time at home with the family, having flexibility in your daily schedule are phenomenal contributors to a feeling of well-being and on the professional side I have discovered unique business opportunities, met people whom I otherwise would never have met and learnt things that would never have been within my reach as an employee working for a financial institution as I used to do. And on top of that I have found time to develop this site, which I can update on a regular basis whenever I have time in my generally flexible schedule.

The one thing that I wonder about is how easy it would be for the self-employed to return into the traditional employment fold after a while, and if their employability decreases over time as they would no longer fit in a highly regulated environment. My guess would be that the longer you are self-employed, the harder it would be to rejoin the workforce, but more than that it seems likely that our economies are undergoing such structural change that there will be hardly any employment opportunities to return to. Companies and institutions will gladly draw on the army of self-employed entrepreneurs in a flexible and cost-effective manner in order to remain competitive and profitable. The army of self-employed entrepreneurs is likely to stay and grow.

This is not the first time I have highlighted the issue of unions and their detrimental impact on economies in general on this site. A few months back I discussed that in British Columbia consumers are not able to pay a market price for their glass of beer or wine thanks to the pervasive unionization of government owned liquor stores. The past Labor Day weekend brought out a few interesting pieces on this issue, in the US it was fellow blogger Mrs. du Toit who alerted me to it and she provided a link to an interesting piece by the Heritage Foundation called Still Laboring. Here in Canada, it was the Fraser Institute that publicized some disturbing figures outlining that unionization in the Canadian workforce stands at about 32% which is an astonishing number if you compare it to the American number of 15%. I was able to deduct that the Dutch number is about 25%, which is more or less what I expected, but it should be noted that Dutch unions have, like their British counterparts, lost their significance and have been reduced to talking shops with little effective power.

Not so in Canada where the so-called closed-shop legislation forces workers in union certified companies to join and/or financially support a union as a condition of employment. No choice is given to either the employee or the employer and this has driven especially many small or medium sized businesses to despair. Here in Vancouver a while ago a family-owned business was driven to the brink by the endless union certification process that benefited neither the employees, who had been treated very well over the years, nor the business. It was the union that benefited at the expense of the small company and the employees it claimed to represent. But it is not just the private sector where these practices disrupt wealth creation, the large public sector in Canada in turn ensures that there are large public sector unions who willingly and knowingly put a very high price tag on public services, a price that is passed on to the average citizen through high tax rates.

There are essentially two basic problems with unionization. The first one is that it imposes a hefty cost on the economy and has a consequent impact on competitiveness. That in the long run will affect the ability of a nation to attract business, investment and generate wealth which has an impact on the people whose interest the unions claim to represent, the employees: less jobs and lower wages. Especially in the case of Canada there is a strong argument to start to de-unionize and the only way open is to abolish antique labor laws. Margaret Thatcher did that in Britain in the years 1980 to 1983, crushing a force that had rendered the country ungovernable with what she called “bogus social contracts”. As a result a lot of disillusioned union members migrated to Canada over the past twenty years looking for a market where they could dust off and apply their destructive skills. Well, they have succeeded.

That brings me to my second point. At the end of the day we live in a free world and any contract between an employer and employee is entered into voluntarily, where the market determines the range of compensation and where the individual negotiation will fine tune the terms under which one enters into an employment contract. To ask an employee who has voluntarily chosen a job to subject him or herself to union dues, seniority schemes and other rules enforced by unions is not only out of date, it does not belong in a free, market-based economy and is an insult to any free human being. Top-down, state sanctioned socialism with dire consequences if you refuse to participate. It reminds me of an incident two years ago when the unions shut down the bus services for an entire summer over here, including the government-owned ferry services that bring commuters from Vancouver’s north shore to the downtown area. Some creative business minds came up with a plan to launch a private ferry service on some leased vessels, but the port authority refused them any permits as “the union would not approve of it”. Or what about the entrepreneurial immigrant who set up a hot-dog stand on campus, only to be kicked off by the university administration for fear of upsetting the food services unions? What? This guy was trying to make an honest buck! Who is governing this world? The people or the unions? Time for a change and this is also why Fortuyn so vigorously believed in a “contract-society” rather than in an “employment society”. More freedom, more risk, yet more opportunity, flexibility and in the end: more wealth. For all.

Free markets scored a victory yesterday in Canada where Wal-Mart workers in the province of Manitoba rejected unionization. This is not an unimportant piece of news; I have argued before on these pages (in the post An Archaic Monoply), the overpowering hold that some unions have on the economic process in Canada with the average consumer footing the bill. Legislation is very often heavily skewed in favour of unions, which has often been devastating for especially small and medium sized businesses. Wal-Mart is not exactly small but unionization would most likely have resulted in less flexibility for management and higher prices for consumers, which in turn would have undermined the success formula of the retail chain and scared away job and wealth creating investment into that province. According to the reports a majority of employees is perfectly happy with the contracts they have with Wal-Mart.

Attempts by the left-leaning city council in Vancouver to stop the construction of a Wal-Mart store in that city a little while back I believe also failed, but it was weird to see socialists taking on the cause of small businesses who claimed they would suffer from the presence of a successful low-price retail chain such as Wal-Mart. Do unions and socialists ever make an effort to really take on the cause of those who they purport to represent?

One of the most baffling things I came across here in British Columbia is the monopoly that the government has on liquor sales. If you want to buy any alcohol you will have to go through a government owned and managed store, or through a private store knowing that the distribution network that got the booze to that private store is owned by the provincial authorities who have also set the retail price. For a Dutchman used to his freedoms this was not just inexplicable, it was scary, I could honestly not believe that such a thing still existed. It gets scarier if you look at the underlying mechanics that are at work here, especially the collusion of diverse interest groups that seek to maintain the status quo at all cost.

We all know the origins of a state monopoly on alcohol distribution. It dates back to the puritan days where any form of pleasure or fun was deemed to be close to immorality and an area where the authorities had to step in to prevent further reckless behaviour by the masses. They have to work; we cannot let them get drunk. Think of prohibition in the US. So, tightly controlled distribution led to a government cartel that proved to be extremely lucrative and a source of ongoing, and over time increasing, revenues. In a number of provinces in Canada and in Sweden it continues to exist to this very day. In British Columbia the mark-up on a bottle of liquor is phenomenal, I believe it is close to 90% resulting in the provincial government netting over a billion dollars in profits annually. Bizarre, especially in a province that has a nascent wine industry; the Okanagan Valley benefits from a moderate climate and while not in the Napa and Sonoma range that region is producing some very exciting wines. There are also great microbreweries here, all of whom have unlimited access to fresh clean mountain water in order to brew excellent beer that is guaranteed to not give you a headache.

The scary part came in when a new government, somewhat right of the center, started to privatize and cut back government involvement and it was only a matter of time before the liquor distribution branch came under review. That review was of course not very favourable and the idea to privatize the whole apparatus was recommended. Great idea as it came packaged together with scrapping hundreds of other related laws and regulations that were all designed to take the fun out of drinking. Privatization however set the alarm bells ringing in the offices of union leaders, as all employees in liquor distribution branches are unionized public workers and enjoy generous benefits. I understand they oppose privatization, if you are making twenty bucks an hour at the checkout and your buddies next door at Safeway are making ten bucks, then yes, privatization is something to be very fearful about. The unions then started a campaign, teaming up with a number of left leaning municipal councils, to spread the word of the danger of privatization. Drunkenness, public disturbances, all those great arguments used by the puritanical conservatives of the distant past were brushed off to prevent market forces from playing a role in retailing and consuming alcohol. The point is that they could not care less about alcohol’s adverse side effects; they care about their jobs and the unique benefits that the status quo provides them with by working in an area that is nicely sheltered from the laws of supply and demand. And who is footing the bill? Right, the consumer. The number of organized employees in the liquor network is only 3,500 but they plug into the larger union network of government employees who have vigorously taken up their case. The provincial government is halfway through its term and has cut and deregulated where possible, but it is now entering a phase where elections come into the picture again so it is time to backtrack and be nice and sweet. And so a number of proposed privatizations are now under review, the liquor branch plan being one of them.

The problem is that the absurd prices have been around for a long time and have deep roots so the urgency to bring them down is not all that pressing, people are used to it and there is no consumer campaign that addresses this piece of economic injustice. A strange majority of leftists and old style conservative puritans are able to continue to force a peculiar system of alcohol retailing on the citizens of British Columbia. For me it takes the fun out of buying a bottle of wine completely, although the liquor branch is doing everything to make the shopping experience more pleasant. I experience every visit to a liquor distribution store as a cruel humiliation by Stalinist forces that seek to control and belittle me and empty my wallet at the same time. This year I will turn forty, time to do a George W. Bush.

Whenever I report some interesting news I always make it a point of letting you know where things end up. Well, the committee in the northern part of The Netherlands that had recommended that CNN be taken off the cable has retracted its recommendation and it appears that Dutch cable news fans can continue to tune in to CNN. I cannot even consider this to be good news, as it is still preposterous that such ideas can take the form of a formal recommendation, especially in light of the claim that CNN was deemed to be too pro-American during operation Iraqi Freedom. A phenomenal outcry among the cable network’s clients and even parliamentary questions did in the end prompt cooler heads to prevail. That did not stop the chairman of the committee to comment that some “overreacting” had taken place after their recommendation. Well, what did they expect, that viewers would thank the committee for their well-informed observation that viewers should be prevented from making an independent choice as to where they should gather their news?

There has always been some sort of notion that the western world enjoys freedom and in particular a free press with unlimited venues for free expression and information gathering without any government interference. Well, last week provided evidence that that is not always the case. In the northern part of The Netherlands steps are being taken to take CNN off the cable network as it is deemed to be to pro-American. Now let’s for a moment ignore the stance CNN is taking (and I bet you I will find many Americans who would qualify CNN as anti-American) and consider that on average a Dutch cable channel provides access to let’s say, 60 TV-stations. Ample choice in my opinion as there are many other broadcasters from a variety of countries represented. Cable providers in The Netherlands are governed by committees that get appointed by regionally elected layers of government and some of these appointed thinkers have now found it necessary to limit that very choice and kick CNN off the cable. They have not succeeded for now, but it is telling and quite scary that in a country that looks at itself as a beacon of freedom and individual choice a number of appointed social engineers have room to even seriously put ideas like this forward. I know that in the past they have very often succeeded in getting their way with the public having very little recourse to such dictatorial decisionmaking.

In Canada, another country that is notorious for government control of the media, the Senate last week launched a review of media legislation in order to come up with a report or some set of recommendations that would help guide Canada’s media into the new century. Canada is known for its byzantine set of rules that govern the media, all designed to limit foreign ownership, artificially promote Canadian content and in the end maintain a significant measure of government control. Believe it or not, one of the key advisers during the Senate hearings has suggested that the federal government should get involved in the newspaper business. The reason for this, according to former CBC Chairman Patrick Watson, is as follows:

“ … Watson condemned the advertising culture he said has overrun the media, and said an arms-length newspaper funded by a government endowment could be the antidote. "The servitude of the media to the advertiser is almost universal," he said. "The culture has succeeded pretty well in changing the concept of citizen into the concept of consumer." He also said the CBC needs to become commercial-free to differentiate itself from private broadcasters. "The purpose of the public broadcaster should be to give citizens more reasons to love their country," but most people wouldn't be upset if CBC Television were closed tomorrow, he said.

There are a few very interesting bits here. Firstly, Watson has a problem with the citizen being a consumer. So effectively what he is saying is that the citizen can not be relied upon to make a sound and well-informed choice so we, as government, have to tailor the number of choices available to the consumer. Exactly what they were thinking in The Netherlands by trying to turf CNN. Let’s tinker with the choices the consumers have so they will not be exposed to ideas and news that do not fit into our political agenda. Then there is this weird piece of national-socialist hyperbole: "The purpose of the public broadcaster should be to give citizens more reasons to love their country". So while we acknowledge that most people are not that concerned if the government-funded CBC disappears, we should nevertheless force public media on them, as it will give them more reasons to love their country. Watch public TV in order to start loving your country? Sure, and before you start implementing that better check if there are some useful instruction manuals available in Havana, Pyongyang or Baghdad. With socialism and dictatorships collapsing all over the world it is truly astounding to see senior politicians in Canada attempting to resurrect good old-fashioned government control. They will probably not succeed but it is beyond belief that there are people who are seriously putting ideas like this on the table. In fact, it is pretty menacing, I wonder when someone conjures up the notion that filters be placed on internet traffic and newsgathering or apply content restrictions to such things as, well, blogs.

The advertising argument is not that relevant anyway. The reason that these days we can pick from a smorgasbord of TV-stations, newspapers and magazines is that each particular media outlet is able to attract a sufficient number of advertisers that cater to the specific markets that each media outlet services. Just last week I was reading the Atlantic Monthly and I came across a number of advertisers that I had never even heard of before prompting me to question who they were and why they would advertise in that periodical. Well, they advertise there because they know that the demographic of the Atlantic’s readership makes it suitable for them to advertise in that magazine, it’s a good market for them, simple as that. And there are many examples for that, right up to extremely obscure magazines and boutique periodicals that have been able to capture a niche readership and an advertiser base servicing that particular niche. To some extent, I buy into the irritation over TV-advertising, watching linear entertainment on TV has become almost impossible and as a result my wife and I usually wait for stuff to come out on DVD and then watch it. So you see, the market already provides an alternative to too much advertising. The only thing that we watch on TV is the news and, yes, we still continue to have access to CNN as well a many other North American news outlets.