All posts by Phil Smith

Live Writing Trump’s February 28th Speech to Congress

Rather than a live blog today you will be reading a live writing. That is, I will be watching Trump’s joint address to congress and writing my live reactions but only publishing it at the end.

Let’s begin.

8:58 – They won’t stop applauding for Melania.  Awkward.

8:59 – “Mr. Speaker. The President’s cabinet!” Many Cheers. It is so strange how things like this in the US are presented like sporting events.  This is not a Trump problem.  Cheering for people as they walk in is so strange.  I feel like Trump is going to run out through a banner.

9:03 – This is likely Trump’s last opportunity to walk back some of the craziness.  If he presents a lighter vision on immigration I assume right wing will say he is extending an olive branch. The left will say he is flip flopping.

9:04 – There was no banner.

9:05 – Lots of hand shaking.  He seems to making a good effort not to do the strange yank shake.

9:08 – The gavel strikes.

9:08 – First standing ovation.

9:09 – He begins… oh they have to standing O the first lady for some reason.

9:10 – wtf.  Another standing O.

9:11 – Standing O.  Condemning hate and evil.

9:11 – “deeply delivered from my heart” – that was written for him?

9:12 – Attempted standing O.  denied by most.

9:13 – “the mistakes of recent decades past” Common.  Who is the writer?

9:14 – “in 2016 the earth shifted beneath our feet…” This whole segment sounds like a children’s author attempting lofty dialogue.

9:15 – Standing 0 for “make America great again”

9:16 – Standing O for Trump taking credit for business decisions taken before his election.

9:17 – Claiming credit for planned cost reductions of the F35.

9:18 – half standing O for their efforts to eliminate corruption.

9:18 – 1 regulation in, 2 must go out.

9:19 – stop regulations that stop our great coal miners.  Standing O. Fuck you water.

9:19 – Keystone! Standing O! And a Woo!

9:20 – American pipelines be made with American steel. Standing O.

9:20 – Shout out to Trudeau! Women’s council! Standing O.

9:21 – Standing O to take care of the cartels.

9:21 – Expansion of treatment for drug addicts.  Wow.  That is new. Standing O.

9:22 – We must restore the rule of law at our borders. Standing O.  Except border agents don’t need warrants to search you. So not really rule of law.

9:23 – Build the wall! Standing O.

9:24 – Radical. Islamic. Terrorism.  Republicans really get off on hearing that.  Standing O.

9:25 –  Standing O.  We need proper vetting. I cannot keep up with the Standing Os.

9:26 – I had hoped for more details but I also understand that these joint sessions rarely have any details.

9:27 – Standing O to defeat ISIS.

9:27 – Standing O for the alliance with Israel.

9:27 – Standing O for saying our SC judges will defend the constitution!

9:28 – Standing O for Maureen Scalia.

9:29 – Standing O for the request that the SC pick be confirmed.

9:29 – He is going through economic stats now. Fact checkers are going to have a field day on this segment.

9:31 – Standing O for making it harder for companies to leave our country. Standing O from Republicans and nothing from Democrats.  Pretty backwards.

9:31 – Tax cuts all around.  companies and citizens.

9:32 – Harley Davidson did not get a standing O.  Don’t think the senate is the target demo.

9:33 – Standing O to asking for a change on international tariffs on American goods.  I actually agree with this.  I often find myself agreeing with on Trump on some aspects of his anti tariff views.

9:35 –  Shout out to Canadian immigration system.  Merit based systems.  He is proposing the same. Interesting. “Immigrant families enter the middle class quickly’

9:36 – good bit on the three concepts we will follow.  Half a standing O for that.

9:37 – Eisenhower reference. Calls for a national rebuilding.  Standing O.  Expect a few more details here.

9:37 – Ripping on the middle east wars. $1 trillion of infrastructure with both public and private capital.  Standing O.

9:38 – “buy American and hire American” Standing O

9:39 – Repeal and Replace Obamacare.  Loud standing O.  No details.  Better healthcare for lower costs with better choice! Unicorns and pots of gold all around.

9:40 – He is going to “lower the cost of health insurance”. Standing O.  how?

9:40 – Obamacare made rates go up! Nevermind that the states blocked Medicaid expansion which was supposed to keep costs down. So that is why the companies are leaving.  This is Republican state governments straight up sabotaging the healthcare system for politics. Fucking horrible. Another Standing O here.

9:42 – He wants a stable transition for people on healthcare.  Standing O. Health savings accounts, tax credits. Standing O.

9:43 – give states power to make sure no one is left out of Medicaid. See earlier point.  Fuck you.

9:43 – bring down of prices of drugs immediately. Standing O

9:44 – Purchase insurance across state lines! Standing O. I think that was a Republican addition in the first place.

9:44 – joint forces to get the job done right – Standing O.

9:45 – child care accessible and affordable.  Paid family leave. Standing O.  That is new.

9:45 – Invest in women’s health. But I guess not through planned parenthood. Is Pence “Make them have a funeral for their aborted fetus” Pence going to lead that charge?

9:46 – Standing O for Pompei disease victim.

9:48 – Uh oh. Using a sick kid to make the point that food and drug approval process should be easier. Not sure I can get on board with that.

9:48 – Education is the civil right issue of our time. Not racism. Standing O.

9:50 – Oh this is about vouchers.  DeVos knows all about vouchers. The camera did not pan to her. Standing O

9:51 – violence is not acceptable in our society. Standing O

9:51 – We must work with, not against law enforcement. Standing O. Of course you want to work with them.

9:52 – Pure unasulterable division! I think that was off script.

9:52 – support law enforcement. Standing O.

9:53 – VOICE.  Victims of immigration crime. A new department of the homeland security. This is not going to work out well.  Audible gasps, likely from Democrats.

9:54 – Standing O for the father of a murder victim. Murdered by an illegal immigrant.

9:55 – Standing O for another victim’s family.  I never like this type of thing. I never like guests of any kind being pointed out at these things.

9:56 – Some off script or flubbed line about winning wars. Standing O. “They only have to winnnnnn”

9:57 – Increase funding for our veterans. Standing O. Who doesn’t agree with that?

9:57 – Support our troops again. Standing O.

9:58 – Standing O for soldier’s wife. I believe it was the solder that died in the Yemen raid.

9:59 – Defending the Yemen raid. Standing O. we got a lot of intelligence from that.   Cheers and extended Standing O.

10:00 – Standing O continues. Pretty sure these are all people that voted against increased veteran benefits.

10:01 – Still on Ryan.  Never forget him.  Standing O.  I can’t disagree with the words but man I hate this kind of stuff.

10:02 – NATO Standing ovation.  Kind of strange. But partners must pay their fair share. After discussions with other countries the money is “pouring in”

10:03 – a confusing set of lines about respecting international rights of other nations.

10:04 – I represent the United States of America. Standing O.

10:06 – Its’ been 2 mins since a standing Ovation.

10:06 – footprints on distant worlds –  interesting reference.

10:07 – standing O. I think we are winding down here. He is getting into more poorly written whimsy.

10:07 – We are all made by the same god.  But not the Muslims I assume. Standing O.

10:08 – “trivial fights” and points to the Democrats. Clueless.

10:09 – Okay he is at least using compare and contrast along with repetition now as we winds down.

Standing O to close out.

 

Final thoughts.  As expected not much detail here.  The VOICE addition to homeland security is a bombshell.  Many things in there that sound good are likely terrible like “better schools!” Which actually means vouchers. Less regulation which includes the EPA. A lot of talk about getting, better, cheaper, easier healthcare.  So lots of pandering I guess but the details are always where the devil lies of course.

Let me give you a preview of the post speech analysis from talking heads.

It’s his best speech yet.

Yes but that is such a low bar. All he has to do was not swear and people would like it.

He really struck a softer tone.

But the things he said have no detail so we won’t know until we get details.

Etc. Etc. Etc.

61.5 Standing ovations.  Obnoxious

 

This was typed live while watching. Please excuse any major errors.

Story: Daily, Weekly, Monthly, Yearly.

With the news cycle dominated by huge terrible news stories these days I think it is important remember the little terrible things in life. For your enjoyment I give you what I hope is the first of many short stories.

Daily, Weekly, Monthly, Yearly

Medium coffee, black. Please.

I don’t think we have you on file.  We can add you if you like, then you get the coffee for free.

No, thank you.  Just the one coffee.

For the price of a single coffee you could have a week’s worth of coffee.

How long?

We have short programs.  Only 6 months.

I already have a coffee plan. I just thought I would try something new today.

Well let me take a look.  Yes okay.  You are currently on separate coffee and breakfast plans from different restaurants.  For you they add up to a total of 3%.  We could replace the both for 2.7%.

I just want the coffee.

But that 0.3% would go back into your disposable.  Might be useful somewhere else. I mean you are doing pretty well with 12% free but who couldn’t use another few points?

I haven’t even tried your food, I don’t want to switch.

If you switch then you get both the coffee and your choice from 3 breakfast options. You will like our selection; it matches your current favourite meals exactly and we have a daily special which you don’t currently have access to.

I am still locked into my old plan.

No, you are unlocked as of 3 days ago.

I am?

Yes. So you can easily sign on here and save your income for something else.  Even better, why not upgrade to the premium coffee.  Only an extra 0.3%.

I just wanted the coffee.

And you’ll definitely get it.  Actually, over 50% the people in your office already drink our premium coffee. Most enjoy it at an above average level compared to your old restaurant which is only average.

Fine.  Just give me the damn coffee.

You know we also offer lunch and dinner plans at some of our affiliated restaurants.  It looks like you are paying disposable income every evening for dinner?  What a waste!  You often eat at our affiliated locations.

I just like variety so I don’t sign a plan.

Understandable!  However from your history it looks like you end up spending between 6% and 9% on one-off dinner purchases!  So that 12% disposable you have is more like 3% to 6%.  Then it isn’t looking so great. You want to keep those disposable funds for the fun stuff.  Am I right?

Do I really spend that much on my dinners?

3 of the last 7 months were right near 9%.  We can pretty much exactly match your current eating pattern but now it would only be 4%.

Fine.

That is 4% for all the restaurants you see on the list I am sending over.

I said fine.

Great! So we have you on a 3% coffee and breakfast plan and a 4% dinner plan. Leaving you with 9% disposable.

Yeah I see nine remaining.  Can I get the coffee now?

Sure thing.  I will prepare it for you now.  While I do, I can tell you that you should look at some of our other plans when you get home tonight.  We have affiliates everywhere you could want: taxis, haircuts, laundry services, you name it!  Once you move over 10% you are granted gold status which activates discounts across the board.

Great.

Just something to think about.  Here is your coffee, premium blend.  Just remember, we offer– hey careful! Don’t drink it so fast, it will be hot! Are you okay?

This is terrible.

 

2016 in Review and 2017 Predictions

Another year comes to a close. It is time to review last year’s predictions and make new ones for 2017. As an annual tradition this post is written at the last minute in haste so please forgive any errors.

The biggest predictions talked about the US.  I thought that if Trump went up against Sanders he could win but that Clinton would beat him. I even put money down on Clinton winning last month which was obviously a yuge mistake. I stand by my statement that the Democrats should have run Kerry.

One suggestion was that Obama should go after huge sweeping laws to try and change things like gun control to expose the Republicans as obstructionists. I now realize it would not have mattered because calling out Republicans as hypocrites, liars or anything else simply has no effect.

In Canadian politics the prediction was that the Liberals would need to make some decisions on fighter jets, TPP, ISIS bombing and Syrian refugees. One prediction was that the bid for fighter jets would be opened up but that the F35 would be eligible for the tender.  Instead the Liberals are looking into getting some Super Hornets until they can decide when or how to start the decision process. They should ask Chretien how his helicopters worked out. If Trudeau calls the F35 the Cadillac of jets we are in real trouble.

We allowed Syrian refugees but did not send troops or air power to Syria.

The TPP might be dead in the water with Trump being elected but we did get a trade deal signed with the Euro zone which was a good thing. Trump said he would pull out of the TPP but he is not against completely ignoring what he says when it comes to taking action. He will likely walk back the strength of his anti-TPP rhetoric.

Brexit happened. I didn’t really think that was a possibility but it did happen. Now the UK has to make their article 50 declaration and start the process of leaving the Euro zone. Decades of laws need to be re-written. New trade policy established. It is not going to be pretty.  Many expected there to be some big implosion as soon as the vote happened and then when there were no major market changes took it as a sign that the Brexit was not going to cause any problems. The problems that will be caused by Brexit are much longer term and the cracks will start to show in 2017. The UK will very quickly need to establish the free movement of goods and money to the continent or businesses will start to look to move their supply chains and offices into Europe. Uncertainty is never good for business. Along with the Article 50 declarations they need a very clear roadmap for the transition; without it there will be some serious issues.  Capital will flow out of the country and the pound will start to lose strength.

The inquiry into Missing and Murdered Indigenous Women and Girls has a preliminary report due on November 1st 2017 with a final report due on November 1st, 2018.  It has begun as predicted but we will need to wait for the conclusion to confirm the second part of that prediction that a major cause of this issue is poverty. The inquiry did not expand to include all missing and murdered aboriginal people as was suggested. The budget has been set at $53.8 million. My prediction is that they use up more than three quarters of that budget before the end of the year.

The prediction on pipelines was quite short.  “Pipelines. There will be much talk of pipelines. Many protests. Then some more talking.” Well we have had massive protests, one pipeline approved here in Canada but nothing really resolved. Trump will approve the Keystone XL in 2017.

Let’s do some more 2017 predictions.

First, Trump and US politics.  It is a madhouse down there right now. Trump is said to be unpredictable but really he is very consistent. “Do what is best for Trump and Trump’s family and friends” should be his motto.

There have already been several instances of this but members foreign governments will be encouraged to use/invest in/endorse Trump-owned assets. Hotels, golf courses, etc.

Pull out of any climate talks and claim that the science is not clear on the human effects on the planet.

Continue to take credit for business decisions he had nothing to do with like Ford keeping jobs in the US or Japanese high tech investment.

Announce he is not building a wall and possibly claim he never said that in the first place and instead say he will add to the border patrol budget.

Increase spending across the board without any protest from Republicans about deficits or debt ceilings.

Have to defend himself in court while being president. Republicans will be silent about impeachment.

Threaten China with military action without actually understanding what he is doing.  Example: “If China puts their carriers where we don’t want them then we can sink them.” Then the next day claim he loves China and that people are twisting his words.

2017 is going to be a shitshow in the US.

One positive thing to come out of the election is that Twitter and Facebook are going to start cracking down on fake news. Now like many things the far right wing have taken a term, in this case “fake news”, that applies to their news sources like InfoWars and Breitbart and applied it to ABC, NBC, NYT and real news sites but at least we can get the real junk off people’s Facebook news feeds.

In Canada our dollar is going to have a rough year.  With more interest rate increases in the US and the BoC holding their current level we should see our dollar start to drop even more. The bigger issues is that if bonds continue to move then we could see increases on mortgage rates even without any move by the BoC. With Poloz at the helm the BoC mandate has never been crystal clear. It could be that they welcome a lower Canadian dollar in order to stimulate exports.

The Canadian housing market has been predicted to crash for years now. Every year Toronto and Vancouver continue to have massive price increases.  This could certainly slow down in 2017 with extra taxes in Vancouver but it could be that the problem isn’t all that evil Chinese money flowing in but a lack of housing supply. Canada will begin tracking foreign ownership data this year so we should see some interesting results. Also, it will take a few months for people to find ways around the tax laws like foreigners paying citizens to buy the houses in their names.

As for Webernet.ca, it will continue to live on in its 7th year. The low bar of a post a month will continue. Every year I think about all the extra things I am going to add but then I stick with the 1 post a month.

It is said that saying you are going to do something gives a similar satisfaction to actually doing it as long as people are listening. This year I will simply say that my goal is create more and hope it leads to a better website experience for you.

Thanks for reading in 2016, see you next year.

US Election. Money Where My Mouth Is

We have yet to look at the US election here at Webernet and we are not going to do it in any great detail for this post. Also, we have not done any Free Money posts this year so I figured it would be a good idea to combine the two ideas.

First idea was to place a standard bet on Clinton to win. Oh, Webernet.ca officially endorses Hillary Clinton.  Bold, I know. Unfortunately most bookies believe that Clinton will win so the odds are only 1.2 for her to win.  That is, only $20 profit on a $100 bet. Not good enough for readers of Webernet.ca.

Next came a look through other options like by-state bets, total electoral votes etc.  None of the options were both possible and well paying.  The ideal situation would have been the ability to parlay state by state results but no one is offering that option.

Instead, we will work under two assumptions.  One, Clinton will win the election. Two, Clinton winning the election will be good for the US dollar. This means we need to buy some USD.  Now simply going to a bank and asking for some USD is not the best way to make this bet.  Instead we will use Canadian dollars to buy some USD and then use those USD to open a leveraged position in an foreign exchange (FX) trading market.

There were some leftover funds in an FX account used in past Free Money posts and another $200 USD has been added to that total. Because of the way the FX platform works with holding fees we invested $55 and then $190 about 15 mins apart.  The FX pair selected? USA/Canada of course.  Average purchase price, $1.3379. Here is the screenshot of the “portfolio”.
usd2

As you see in that image the leverage rate is 400X.  Now we’re talking. 

The take profit level has been set to 1.35. Total investment: $245 USD.  What makes this method more interesting than a standard sports bookie bet?  Risk. The stop loss settings have been limited for the US election so the stop loss has been set to 1.3347.  If the USD drops $0.0032 before it increases $0.0121 against the Loonie then this bet is a total loss. If, instead, it rises $0.0121 first then the total payout will be $877.63 USD.

We deserve at least that much for having to live through this dumpster fire of an election season.

 

 

Fox News Falls Into Its Own Trap

A quick note at the end of October here.  I will try to have something more about the US elections before that actual event.

A lot of people get confused when they see the working poor or people below the poverty line in the US voting Republican.  It is often said that these people are voting against their own interests. This thought should be expressed more precisely because they are actually voting against their own economic self interest.  Someone that is poor and likely to have their benefits cut under a Republican government might put more priority on their candidate being against abortion, gun control, gay marriage or any other polarizing social issue.  It should also be said that when you are watching outlets like Fox News you begin to believe that lower taxes for the rich and for corporations is the way to grow the economy even though it has never proven to be true.

Fox News. The echo chamber of the Republican party. Many people find this channel hard to watch because of both implicit and explicit bias it has for all things Republican. This channel has been supporting Trump since his nomination. Yes, Megyn Kelly and Trump got into some arguments and no Chris Wallace didn’t hand him the debate on a silver platter but Fox certainly supports him.  How do they do it?  By simply hating Hillary Clinton so much.  They make every attempt to tear her down.  It is not clear if they have yet realized their mistake.

Trump TV.  There have been a number of stories about Trump starting his own TV channel, Network, streaming service after the election whether he wins or loses.  It is likely, even after the latest email “scandal” from the FBI, that Clinton will win.  After this happens Trump will be bitter but still craving attention.  He will launch some form of media service that caters to his angry set of followers. It is not hard to guess which network stands to lose the most viewers when Trump TV hits the air. Fox News. For years Fox has been convincing people to focus on social issues and politics and to ignore the personal financial repercussions. Now it finds itself in a situation where it has spent so much time focusing on destroying Hillary Clinton and propping up Trump that it didn’t realize it was actually working against its own self interest.

Smartphone Design is Broken

The iPhone 7 was released this week so it is a good time to talk about smartphones and the Broken Window Fallacy. We have talked about this concept in the past but we’ll modify the idea a bit and apply to the current state of smartphone design.

The Broken Window Fallacy was first explored by the French economist Bastiat. The original thought experiment involved a group of people deciding that the economy benefited when a pane of glass was smashed because it gave work to the glazier.  It has been mentioned on this site before talking about flooding. In reality it is good for the glazier but not for the economy as a whole because using resources to fix the window would have been used in a more efficient manner. With the broken window you end up in the same state after the fixes as when you began but the tradesperson has made money. If you spend the money instead on curtains for the window then you end up with the window still existing, a tradesperson has still made money and you have the curtains.

So how does this apply to smartphones?  Quite simply, smartphones are not designed correctly.  That is,  they are designed with form over function in mind.  You have an expensive electronic device that you use for all manner of information retrieval and communication throughout the day but if you drop it from more than 2 feet off the ground, it is severely damaged.  What was the first thing that popped into your head when you read the previous sentence?  It likely involved something about a case.  Not mine, I have a case or not if you put it in a case. The first time a consumer decided it was okay for a company to sell a expensive piece of gear that looked pretty on the internet and in ads but that needed to instantly be put in a big rubber case the moment you started using it we got a modern variation of the Broken Window Fallacy which we will call Design Flaw Industries.

Design Flaw Industries (DFI) are exactly what they sound like.  The two examples we will use here are phone cases and phone screen repair services/shops.

Phone cases account for about 29% of all mobile phone accessory sales.  It is estimated that the global accessory market will be about $50 billion this year.  Screen protectors make up another 7%.

Squaretrade, a seller of smartphone insurance (which we can surely count as another DFI) says that since 2007 US consumers have spent $23.5 billion on phone screen repairs.  On top of that, 15% of the iPhone users they surveyed currently had an un-repaired broken screen. You can see phone screen repair shops/kiosks in every major city.  These are not repairs on things that wear out like you may experience on a TV, these shops almost always have a big sign that says something about being able to fix your broken screen.

So here we have a global industry based almost entirely on the fact that smartphones are designed poorly.  Apple, at least, has moved to a metal back rather than glass but many companies still use glass.  Even if it is the Gorilla glass kind(one of the all time great marketing jobs, it’s unbreakable). Samsung even made their phone MORE fragile with the wrap around screen on their Edge models. There are rugged phones of course but this should not be a niche category.

Keep in mind that we are not talking about accessories.  Charge cables, headphones, etc., all make sense. What we are talking about here is something that could easily be improved at the design level.  How about a phone that is made with a carbon fiber frame with a slight edge so even if you dropped in flat on its face it didn’t shatter the screen?  Many would think carbon fiber looks cool but some people want to see the rose gold backing on their phone for the 8 minutes between when it comes out of the box and when it is put into a case that helps define them as a person.

So the designers are to blame but so are the consumers because they keep buying phones designed to look good and be fragile.  They choose to put their money into an industry that really should not need to exist. This is not a perfect match to the Broken Window Fallacy but because of the billions of dollars spent on smartphone screen breaks and screen break prevention could be used on almost anything else that would be of greater benefit, Design Flaw Industries can at least be considered an economic cousin.

David Bowie

Why was it different when David Bowie died?  A few artists that I enjoyed throughout my life have died. Alice in Chains was big band for me in high school and when Layne Staley died I was disappointed but I wouldn’t call it sad.  The first time I ever had a noticeable emotional response to an artist dying was Bowie and I have not quite been able to put my finger on why.  It’s not like I am a fanatical fan; I didn’t even know he was sick before he died. I would guess that I listen to a wider range of his catalogue than most but never really considered myself a die hard fan. It took me years to warm up to Thursday’s Child but I love it now.

He always did his own thing.  Whether it was Ziggy Stardust or mixing songs with Trent Reznor there was always something slightly different about the projects he worked on.  There were countless tributes written about him after his death talking about his career and all his accomplishments so I won’t do that here.

I have, however, been thinking about this site and what its purpose is. I write about current events and the small number of people that visit come to read those things.  If I wanted to write about something else would I need a new site?  Would people stay away if the subject matter became less focused?  Bowie wouldn’t care about the answers to those questions.  He would do what he wanted.  So from now on I will not limit my topics to economics and politics. This is not a “be like Bowie” revelation by any means but if I feel like writing a movie review or posting a short story, maybe I will.

In that spirit I will talk about what Bowie’s song Blackstar says to me when I listen to it.

The entire Blackstar album was recorded during a time where Bowie knew he was close to the end.  The title track is his acknowledgement of his fame, his skill and his optimistic view of the future without him.

On the day of execution
Only women kneel and smile

I am dying.  The cancer is killing me.  I choose not to kneel and accept my fate quietly.  I choose to stand up and in my final time here create as I always have.

How many times does an angel fall?
How many people lie instead of talking tall?
He trod on sacred ground, he cried loud into the crowd
(I’m a blackstar, I’m a blackstar, I’m not a gangster)

How many people sell out? Do what they are told just to make money?  I entered the music industry and stayed true to what I wanted.

I can’t answer why (I’m a blackstar)
Just go with me (I’m not a filmstar)
I’m-a take you home (I’m a blackstar)
Take your passport and shoes (I’m not a popstar)
And your sedatives, boo (I’m a blackstar)
You’re a flash in the pan (I’m not a marvel star)
I’m the great I am (I’m a blackstar)

So, do it. Come with me on the journey of creation. I am the master but I am near my end so I can teach you.

I’m a blackstar, way up, oh honey, I’ve got game
I see right so white, so open-heart it’s pain
I want eagles in my daydreams, diamonds in my eyes
(I’m a blackstar, I’m a blackstar)

I see the positive. I dream big. I am a superstar.

Something happened on the day he died
Spirit rose a metre then stepped aside
Somebody else took his place, and bravely cried
(I’m a blackstar, I’m a blackstar)

Bowie was the Blackstar and when he died a bit of what he was stayed with everyone that listened to his music.  No one will replace him but he tried to make the world a more beautiful place and he believes that when he is gone others will do that same.

Census 2016 – Not the Government Trying to Oppress You

After filling out my 2016 census online I remembered how much traffic an old post had gotten during the 2011 census.  All of the traffic came from a similar set of search terms. Some examples from this year:

census_search

So you can see there is a theme.  I had to update my original post talking about the penalty for not filling out the forms because the government changed the link.  Also, they make the penalty rather hard to find so I thought it would be a good public service.  Feel free to read through the comment section there to really get a good idea as to the mindset of the people reading and posting comments.   For the record the penalty (that has never been applied) for not filling out the 2016 census reads like this:

“guilty of an offence and liable on summary conviction to a fine not exceeding five hundred dollars or to imprisonment for a term not exceeding three months or to both.”

There are many things that a government does that are questionable.  If they were spying on your location and listening to your phone calls all the time then there are major concerns.  This is not the same thing.  This is trying to use your infrastructure dollars more efficiently.  Roads, sewers, doctors, fire services, etc. are all influenced by the census data.  The government is already inefficient enough, there is no need to hinder this part of their work.

If it makes the doubters feel better, this data is extremely hard to get a look at.  There is a question on the census that allows easier access to historians 92 years from now for a reason. This is not just some database that you can google and grab personal data out of.  Even researchers have to submit an application that contains a literature review and research goal to StatsCan just to get access to the single terminal that might exist on a university campus.  There are rules about what you are allowed to have with you when you look at the data and what you can take away with you.  On top of that the data is all reworked as to be completely anonymous. If there are too few people in some subset of data then it is coded.  For example, if they were using income brackets that were $20,000 – $40,000  and $40,000 – $60,000 and kept going up like that they wouldn’t use something like $10,000,000 – $10,020,000 because that subset would have too few people in it and you might be able to combine the information and then figure out who the person was (Then you would know if they spoke French or not!). StatsCan would just set some cutoff and top code it by saying $500,000+ to ensure there was enough people in the subset to make it impossible to identify any individual.

Short post today because I am just getting back into it after the website hack which was supremely aggravating.

If you have not already, go do your census.

Website News – May 2016

Site was hacked, again.  I know you are itching for the next post but I am still verifying if there is any long term damage.  This is about the 5th time is has happened so I am getting much better at fixing things.

In other news, May is the 6th Anniversary of Webernet.ca.  6 years of fun and insight!  Thanks for reading.

New Gas Tax in the Ontario 2016 Budget

The previous post was rather weak so let’s try looking at something else from the new Ontario budget.

One of the funny, funny things that economists like to say about economics is that it is the simple made complex. An idea that seems very straightforward can be made to look extremely complicated once you model it out and try to quantify everything. There are a few good examples of this but since we are talking about politics and taxation (did I mentioned we are talking about taxation?) then we will use Ramsey’s Optimal Tax formula as our example.

Some definitions.

Deadweight Loss. This is basically waste in an economic system. If something changes in a model, like say a new tax, and there is money wasted then that is referred to as a deadweight loss.

Price Elasticity. The percentage change in the quantity demanded of a good for every percentage change in the price. If something is perfectly elastic then when the price changes, everyone stops buying it. If it is perfectly inelastic then people buy it at any price.

Hicksian Demand. This is a mathematical function that describes the bundle of goods a person can buy with minimal spending such that their total utility (enjoyment) remains unchanged. So as prices change, you change what you buy to keep yourself happy.

Externality. Something that is caused by a modelled system that is not accounted for in the model. If a factory is polluting the environment and pays no penalty for it then we say that is a negative externality. There is a social cost that is not taken into account.

What does the Ramsey Tax rule looks like while it is being derived? Well I don’t have any math plugins loaded so I am just going to use images.

formual1

That is: Minimize deadweight loss such that total new tax revenue is higher than current revenue

So a person wants to raise the most tax revenue while creating the least deadweight loss. Makes sense. What does that look like when you place the Hicksian demand function in there to calculate total tax revenue as well as the total DWL generated?  

formual2

Now we’re getting somewhere!  Next we do some Lagrange calculations and get our result for good i ( i being just some number. It is a placeholder for any good) and then do it all again for good j (some other good) and divide the two together. This gives us the outcome:

formual3

Fantastic! This is adequately complex.  (Full derivation here)

Now what does this formula tell us? Well, quite simply it means that if you want to raise the most revenue while creating the least deadweight loss, and therefore select the best possible product to tax, then you should select something that has highly inelastic demand . Or, tax things that people are going to buy anyway. The simple made complex.

Let’s apply this to the new budget. The government has two new taxes in there that we care about for this article. One is the higher cigarette tax and the other is the higher gas tax. Both of these are highly inelastic products. Cigarettes because they are addictive and gas because you are just going to buy the gas you need; it isn’t a luxury item. In both cases the government is trying to present them as a Pigouvian tax…

Forgot to define those. Pigouvian taxes are quite straightforward. They are designed to add a tax where there are negative externalities. The Pigouvian tax essentially puts a price on the externality and ideally the revenue generated would be used to offset the ill effects.

So the Ontario government brings in this gas tax claiming it is to save the environment and that they are doing this for the future of the world. Basically, selling it to the electorate as a Pigouvian tax. In reality they have all the sales data from the last decade where gas prices have had wild swings. They know the exact elasticity of gasoline. The result? A new tax on a highly inelastic product that would make Ramsey proud.

This isn’t being done for the environment; it’s a cash grab by a terrible provincial government