Jonathan Brun


Harvard Economists lose to Open Scientific Data

Open Data in scientific studies is just as important as open government data. Just last week, a major study by prominent Harvard economists was completely demolished because a grad student looked at their raw data and determined there were multiple computing errors. No need to repeat what has been said, so go read this and this.

Imagine if government published its data on hospital performance vs. investment, comparisons of school teaching strategies and other valuable datasets? Grad students, citizens and organizations would surely find errors, issues and room for improvement.


Open Data Muscle


Canadian open data needs to get pumped up! In the past year, the UK government has announced a 10 million pound investment into the  Open Data Institute and the Google Foundation gave over 1.6 million dollars to the UK group MySociety and over 2.1 million to the US Sunlight Foundation. In Canada, we have yet to see a similar engagement from a government, a private individual or foundations.

Without adequate resources, the open data enthusiasts in Canada will be unable to compete with their UK or US counterparts. The limited supply of software developers who are passionate about technology, transparency and government will be drawn to companies that can put bread on the table. Jurisdictions with political leadership and who offer long term financial backing to talented developers and designers will develop the open data ecosystem first. Their technologies will eventually be implemented in Canada, when the data becomes available, but the brains and jobs will stay firmly planted offshore.

Canada’s Scientific Research and Development program supports thousands of tech companies across Canada, but non-profits are ineligible. Québec poured money into video games and aerospace, Ontario supported Waterloo’s RIM and the car industry and Alberta has the Tar Sands. We need an investment program for government data analysis and use. If open data apps can improve government and public service performance by just 1%, the returns will be massive.

Despite lots of talk, no provincial, municipal or federal government in Canada has shown leadership on open data in the form that matters most – money. Like it or not, without substantial financial support from government, projects such as OpenParliament, What Do They Know, Represent or MaMairie cannot survive. In addition to user facing applications, groups across the country need support to ensure our outdated access to information laws are reformed, that democratic institutions are modernized and that citizens take action on pressing social issues. If Sweden brought its deficit from nearly 80% of GDP to under 33% through the modernization of its democratic institutions, we can do the same and open government is part of the solution.

Jake Porway, of DataKind, recently wrote a great piece in the Harvard Business Review outlining the need to increase the financing behind open data. We need to somehow convince Canadian foundations, citizens, companies and governments of the pressing need to invest real cash into open data and apps. Without the build up of talent and resources, weekend Hackathon projects will continue to be just that: weekend projects. We need institutional capacity to affect political change. Who will have the courage to take a risk on Canada’s burgeoning open data community?

The Value of Democracy

Civic participation isn’t for everyone. In the non-profit and democratic fields, we too often attempt to convert the general public to our worldview that all citizens should be actively engaged in their communities, participate in votes, attend public assemblies and actively engage with their elected officials. This idealistic view of society drives many folks towards apathy and a perception that we’re a bunch of goodie-two-shoes.

If we are honest, most folks want a safe neighbourhood, a strong economy and fair opportunities of their children to succeed in society. While those elements absolutly require strong democratic institutions and an active population; we should not expect everyone to get engaged. The vast majority of our lives are managed by other people, plumbers plumb, electricians electrify, aerospace engineers build airplanes, painters paint, and bakers bake; why should democratic institution building be different?

Democratic activists improve democracy. Just as people are willing to pay for good plumbing, they should be willing to open their pocketbooks to improve democracy. The challenge then becomes to demonstrate the value of a strong democracy and its overarching impact on their lives and then allow them citizen to easily contribute towards our work. With the financial support of our fellow citizens, great things can be accomplished by the staff at Open North, the Sunlight Foundation, MySociety and other groups. The task at hand is to effectively communicate of the value of democracy and the urgency of change, two tasks that are harder than one might imagine.

P.S. Sorry for the lack of posts, see QuebecOuvert and Nimonik for my more recent blog posts.

Political vision and daringness


Today’s politicians seem to be play to the centre; not the political centre, but the intellectual centre. Instead of grand, bold, crazy ideas such as putting a man to the moon, eradicating horrible diseases, or fundamentally reforming society through constitutional amendments, they propose moderate reforms that risk few upset stomachs.

The lack of vision saddens me. In our times of global economic turmoil, changing world order and environmental challenge, we need bold people willing to take risks. Nations remember the dreamers and doers not the tinkerers, we love the ones who dared us to extend our self-image to new heights. Our fascination and admiration of these people is easily confirmed by a cursory glance at our history books or by polls such as the one that puts Trudeau as our most popular prime minister. While historical romance may not be the best test of quality leadership, it is a sign of their impact on the country. While Trudeau had more than his fair share of enemies and he put Canada on the road to financial catastrophe, we love him for his daringness and his refusal to compromise. We need more people like that.

Why are so few politicians willing to dream big today? The canadian David Foot once stated, “Two thirds of everything can be explained by demographics” and interestingly, the population during the tenure of many of our great leaders was significantly younger than today. The reckless youth that were once the base of change are now aging baby boomers concerned with cashing out their home equity and retiring in comfort. Our lack of boldness is due to more than an aging population, but it certainly plays a role.

As the thinker Slavok Zizek recently put it, “The philosopher Jean-Claude Milner recently proposed the notion of the “stabilising class”: not the old ruling class, but all who are committed to the stability and continuity of the existing social, economic and political order – the class of those who, even when they call for a change, do so to ensure that nothing really will change. The key to electoral success in today’s developed states is winning over this class… The majority who voted for him [Obama] were put off by the radical changes advocated by the Republican market and religious fundamentalists.” Though that might be an over-simplification of Obama’s victory, there is an essence of truth: the electorate seems highly risk averse and afraid to think of a different world that might be.

The the radical changes proposed by the tea party, the evangelical right, the Occupy movement and even the more moderate student protests in Québec were too much for the middle class to swallow. Yet, the frustration that has boiled to the surface on both the right and the left expresses a deep frustration with our political system. Our  current trajectory of environmental destruction, increased debt and lack of social mobility must change much faster if we hope to avoid dire consequences.

From Drapeau in Montréal to Levesque in Québec to Trudeau in Canada, bold visionaries forge history, not the elected administrators we have today. The fact that the daring ones got elected and re-elected multiple times is a testament to their ability to enthral a nation, set a bold vision and execute – even if not perfectly. Today’s Canadian political landscape is sadly devoid of intellectual depth and leadership willing to upset the status quo or challenge our assumptions – yet, that is exactly what we need, more than ever (1). I’m convinced citizens are hungry for it; someone just needs to step up to the plate dare us.

In the private sector, Elon Musk is changing the world. After co-founding Paypal and selling it for billions, he set about revolutionizing the solar panel industry, creating electric cars and putting people in space. He aims to get us off fossil fuels and make humans a multi-planetary species, ambitious might be an understatement. Despite the grandeur of his goals he is succeeding. The Tesla Model S electric sedan just won Motor Trend Car of the year and Space X has launched two successful shipments to the International Space Station. He has created the greatest car in the world, that happens to be electric, and he has reduced space travel costs by over 95% (yes, you read that right). He did what most said was impossible and he did it with far less means than the current players in the market. If he can do it in technology, someone can do it in politics. We need a political Elon Musk.

P.S. Of course, the classic Apple Ad “The Crazy Ones” says this better than I can.

(1) See Foreign Policy top 100 thinkers and the lack of any Canadians on the list.

On Debt and the Rolling Jubilee from Occupy

Bourdon, Sébastien (1616-1671) The Selling of Joseph into Slavery


The Occupy mouvement that took hold in 2011 has transformed its efforts into something quite interesting. They recently launched the Rolling Jubilee, a program to use past and new donations to purchase and forgive distressed debt from individuals (see Guardian article). The aim is to relieve pressure from people who are being chased by debt collectors and allow them to rebuild their lives. Because it targets distressed debt being sold on secondary markets, the Rolling Jubilee can be purchase debt for pennies on the dollar. They claim to be able to purchase $1ooo of distressed debt for only $50.

Few doubt that debt loads are serious problem in our society. With consumer and household debt near record highs, this financial ball and chain inhibits investments in businesses, harms communities, slows new purchases and reduces our ability to relaunch the economy. As described in the amazing article “Debt: The first five thousand years“, debt forgiveness has been with us since debt itself, “Biblical prophets instituted a similar custom, the Jubilee, whereby after seven years all debts were similarly cancelled.” A modern massive debt forgiveness program would have a significant impact, freeing millions of people to reinvest in our societies.

The Rolling Jubilee from Occupy and debt forgiveness programs in general should not be employed for everyone at once. Instead, debt annulments should target people who incurred large medical expenses, unforeseen accidents or who invested in education. Debt incurred during times of duress is the classic path towards bondage and indentured labour. Releasing people from their debts is akin to blowing fresh air into society. The Rolling Jubilee claims 62% of US bankruptcies are due to medical accidents, so their program should help individuals who needed medical assistance, but lacked insurance coverage. However, because student debt cannot be resold on secondary markets, the rolling jubilee is not capable of purchasing and forgiving student loans.

Student debt, currently over 14 billion dollars in Canada, is a huge restriction on economic growth (see article). Young people, looking to invest in a home, have children and make big purchases after graduation inevitably have to put those decisions off until they can relieve some student debt. This harms all of us. And, as a nation we could accelerate that debt repayment. Similar to Occupy’s Rolling Jubilee, the government and individuals could create a debt matching program where any student loan repayment is matched, or more, by a fund, allowing individuals to pay back their loans much faster.

Such a repayment matching program would encourage responsible individuals to prioritize student loan repayment and would reward people who spent their money on education. The freed individuals will be more likely to purchase homes, buy cars and have children – helping lift the economy out of the doldrums, grow tax revenues and restore confidence in our country.

A massive debt forgiveness program for students, individuals with medical issues and other unforeseen accidents would be a noble and efficient path towards a renewed Canada.


P.S. Of course, a long term solution to student loans would be to reduce tuition fees and innovate in education delivery mechanisms, but one thing at a time! (see my other article in french here).

P.P.S. Also watch the Al Jazeera series on modern slavery to see how 27 million modern slaves were often entrapped through debt.

La hausse des frais de scolarité au Québec

La crise étudiante de 2012 a déjà fait couler beaucoup d’encre, mais je propose néanmoins d’offrir quelques réflexions. Avec l’élection du Parti Québecois, il semble que la crise soit terminée –  enfin, pour le moment. Lors des démonstrations du printemps dernier, j’ai eu de nombreuses discussions avec des personnes des deux côtés du débat. Les arguments avancés étaient sensibles et logiques; financement des universités, juste part vs. accessibilité pour tous les étudiants. Ils n’allaient toutefois pas toujours au fond de la question de la juste valeur de l’éducation supérieure et des priorités d’une société.

J’avoue que je n’ai pas participé aux manifestations, mais je ne soutenais pas non plus la hausse proposée. Je crois que la situation est plus complexe et nuancée que les positions simplistes de l’ancien gouvernement et des associations étudiantes. Selon moi, notre but en tant que société devrait être d’offrir un système d’éducation accessible à tous les jeunes avec des frais de scolarité modulés selon le salaire et le diplôme obtenu.

Il est objectivement vrai que la vie des jeunes finissants universitaires est plus difficile aujourd’hui qu’elle l’était en 1965 ou en 1985. Les emplois sont plus précaires, moins accessibles et moins rémunérés. Le logement coûte beaucoup plus cher, même en tenant compte de l’inflation, et beaucoup de jeunes se demandent comment ils vont faire pour acheter une maison et élever une famille sans s’endetter à vie. Ces craintes et angoisses sont une des grandes sources des manifestations et réclamations des jeunes Québécois et Québécoises (on constate les mêmes craintes dans le mouvement mondial d’Occupons Wall Street en 2012).

Il demeure néanmoins que beaucoup de gouvernements à travers le monde peinent à combler leurs budgets et qu’ils sont nombreux à couper dans les programmes sociaux. Au Québec et ailleurs, les dépenses d’État grimpent sans cesse, dû à un système de santé qui doit servir une population vieillissante et le besoin d’investir dans le renouvellement des infrastructures.

Au Québec, nous avons déjà les impôts les plus élevés en Amérique du Nord et nous venons d’augmenter les taxes de ventes, ce qui affecte particulièrement les personnes de la classe moyenne. Même avec ces efforts, nous sommes une province pauvre. En 2012, le Québec recevra près de 4,4 milliards de dollars en transferts de péréquation. Cette situation ne peut durer, surtout avec un gouvernement fédéral conservateur et les négociations des transferts de péréquation en 2013. Il faut donc absolument trouver des moyens d’améliorer l’efficacité des services publics et de les rendre plus “intelligents”.

Pour résoudre des problèmes de société comme la hausse des frais de scolarité, il faut entamer un dialogue de société. D’une part, on doit mieux comprendre et exposer les états financiers de nos institutions d’enseignement (voir article de Québec Ouvert). D’autre part, les étudiants doivent comprendre qu’il faut modifier le système actuel. Une démocratie qui fonctionne demande l’action constructive des citoyens et du gouvernement. Trop souvent, les citoyens revendiquent sans offrir de travailler à trouver des solutions réalisables. Ce manque de communication oblige le gouvernement à prendre des décisions sans la participation des citoyens concernés, ce qui peut mener à des manifestations comme nous en avons connues.

Le principe qui devrait guider nos discussions à propos des frais de scolarité est simple : garantir l’accessibilité de notre système d’éducation à chaque Québécois et Québécoise. Si nous sommes en accord sur notre but, la question devient alors comment fait-on?

Mon profond désir pour le Québec est que nous devenons une méritocratie. Une société où les personnes peuvent monter et descendre les échelles socioéconomiques selon leurs compétences et éthiques de travail. Pour cela, il est absolument essentiel d’avoir un système d’éducation accessible à tous les citoyens car l’éducation est le meilleur moyen pour égaliser le terrain de jeu entre les couches sociales.

Des études démontrent qu’il y a peu de corrélation entre le coût d’un diplôme universitaire et l’accessibilité, mais beaucoup entre l’accès et la mobilité sociale. Le gel des frais de scolarité proposé par les étudiants est une approche « bulldozeur » où l’on devrait employer un couteau. Pourquoi ne pas augmenter les frais d’un diplôme médical qui coûte beaucoup plus cher à offrir et qui mène à un emploi quasi garanti avec un salaire de 150 000$? Mis à part quelques professions, il est vrai qu’il est impossible de prévoir la valeur d’un diplôme, ce système n’est donc pas simple à implanter. Il s’agit toutefois d’une bonne piste de reflexion.

D’un autre côté, il semble logique que l’on offre la gratuité scolaire pour des bacs en histoire, philosophie et autres domaines qui offrent moins de possibilités d’emploi, mais qui enrichissent la vie des étudiants et la culture générale de notre société. Ces diplômés en histoire et en arts pourront ensuite s’investir dans une formation plus technique telle que la médecine, le droit et l’ingénierie qui proposent de meilleures opportunités d’emploi. L’excellent article du magazine Walrus explique clairement les difficultés démographiques et socio-économiques de notre système d’éducation actuel.

Pour offrir une éducation de qualité à un prix abordable ou nul, il nous faut une économie qui fonctionne. Le mouvement étudiant du printemps 2012 s’est trop mêlé avec des mouvements anticapitalistes et anarchistes en visant le Grand Prix de Montréal, Power Corporation ou les banques. Peu de citoyens de la classe moyenne croient à présent dans une vision anarchiste ou anticapitaliste. Ils sont plutôt de l’opinion que la richesse d’une société provient des entreprises qui emploient des personnes, produisent des produits et paient des impôts. Nos écoles, musées, arts et cultures ont besoin d’un secteur privé fort, responsable et stable. L’inverse est également vrai, les entreprises ont besoin de citoyens et travailleurs bien instruits. Lorsque j’ai traversé la Russie, j’ai souvent entendu la blague que c’est le seul pays où l’on peut embaucher une femme de ménage détenant un doctorat.

Comme vous l’aurez deviné, je n’ai pas de solution magique à proposer à ce problème de société. Je souhaite tout de même proposer quelques idées qui pourraient aider à moderniser nos institutions d’éducation et améliorer leur état fiscal.

1. Gratuité pour certains diplômes

Je propose la gratuité scolaire pour certains diplômes et des hausses des frais de scolarité pour d’autres. Un baccalauréat en histoire n’est pas la même chose qu’un diplôme en médecine. Geler tous les frais pour tous les programmes, comme le propose les associations étudiantes, c’est l’équivalent de mettre le même prix sur tous les produits dans un supermarché. En augmentant les frais de scolarité pour tout le monde, on finit par encourager les personnes à se concentrer dans des professions qui sont rentables. Cela risque de mener à une société sans fond culturel, philosophique et politique — bref, sans profondeur.

À ce sujet, le système australien, que je ne prétends pas connaître en détails, me semble logique. Les frais de scolarité dépendent du salaire après les études. Par exemple, si une personne fait des études en droit et devient avocat en droit des affaires, celle-ci doit payer plus de frais de scolarité qu’un avocat pratiquant en droit social par exemple. En modulant les frais de scolarité selon le salaire après les études, nous communiquerons mieux la valeur d’une éducation tout en garantissant la liberté de choisir ses études sans crainte d’endettement excessif. Cette approche rend le financement du système d’éducation plus intelligent (même le président Obama propose quelque chose de semblable aux États-Unis).

2. Transparence dans les états financiers des universités

Comme l’initiative populaire Québec Ouvert (dont je suis cofondateur) l’a très bien décrit, nous devons augmenter la transparence des finances de nos institutions d’enseignement. Si le public et les étudiants ne peuvent pas facilement analyser les finances, comment peut-on proposer des solutions? Les états financiers, les dépenses et les salaires des employés devraient être rendus publics en format ouvert et numérique. Avec ces informations, les étudiants pourront davantage être en mesure de participer aux grandes décisions et aider dans la gestion de leur université.

3. Diffuser gratuitement le contenu des universités québécoises en ligne

Il faut non seulement moderniser la gestion financière, mais aussi les méthodes d’enseignement. À ma connaissance, il n’y a aucune université québécoise qui diffuse gratuitement les cours sur Internet. Pourtant, des universités américaines telles que MIT et Stanford le font depuis plusieurs années. La diffusion des cours serait un moyen d’offrir plus d’éducation aux Québecois, de faire rayonner nos institutions à l’extérieur du Québec et de valoriser le travail de nos professeurs et chercheurs. On pourrait contribuer à Open CourseWare (OCW) ou à d’autres programmes d’enseignement gratuits en ligne. Des cours tel que Justice à Harvard aide à diffuser la philosophie morale à des millions de personnes à travers le monde et Khan Academy aide les étudiants à l’école secondaire (voir son TED Talk). Cela pourrait également contribuer à augmenter l’intérêt des étudiants à fréquenter l’université et réduire le décrochage scolaire en démontrant ce que les universités ont à offrir.

4. Révolutionner la publication des livres scolaires

Nous pourrions également embarquer dans la libération d’information d’enseignement en rendant les livres de cours gratuits sur Internet à tous les niveaux du système d’éducation. L’industrie du livre d’éducation est déjà très connue pour ses moyens néfastes d’extraire le plus d’argent possible des étudiants (billet en anglais ici et commentaires). Le Québec pourrait devenir un exemple à travers le monde en encourageant nos professeurs à créer ou à collaborer pour offrir des livres libre source sur internet. En travaillant à libérer nos connaissances et les offrir aux autres, les institutions d’enseignement québécoises rayonneront à l’échelle internationale et pourront aider l’enseignement dans des pays francophones en voie de développement. La Californie vient de signer une loi qui permettra la création de livres de cours en format ouvert et qui aidera à réduire les coûts d’enseignement. Et lors d’un Hackathon en Finlande, des professeurs ont créé un livre gratuit en ligne pour leurs étudiants.

Certes ces idées proposées semblent peut être dramatiques et demandent un changement de culture profond, mais je crois que nous pourrons seulement résoudre nos problèmes de société en apportant des changements majeurs. Il faut s’attaquer à la racine de nos problèmes, pas simplement appliquer des pansements temporaires. Nos institutions d’enseignement ont été conçues pour le 20ième siècle sans internet, nous devons les moderniser en tenant compte des possibilité de diffusion de contenu, de partage de responsabilité et de transparence de gestion.

Il n’y a pas de solution facile à ces problèmes, mais il est évident que nous ne pouvons pas continuer sur la voie actuelle. Le gouvernement et les étudiants doivent laisser leurs positions idéologiques derrière eux et changer le paradigme dans lequel notre système d’éducation se trouve. La justice sociale ne se règlera pas cet automne, il est donc essentiel que nous entamions une discussion de profondeur à propos de nos valeurs de société et de nos institutions d’enseignement.

L’article par Clay Shirky à propos de l’éducation en ligne est fortement recomendé.

On Silent Films

My two favourite films are Baraka and now, Samsara. Both are silent movies that travel the globe in exquisite detail. Far too many movies use speech, sound effects and music as a form of filler for mediocre stories, images, and acting. These two films show you factory farms, sex workers, garbage pickers, wealth, poverty, and beautiful art – but they do not tell you what to think. In many ways I find the experience more fulfilling. The absence of a narrator seems to be a sign of respect by the director for the audience’s intelligence. That respect conveyed through emptiness is perhaps what differentiates art from entertainment. Art makes you think, entertainment tells you what to think – or not to think.

Manufactured Landscapes and Koyaanisqatsi are similar, but lack a je ne sais quoi. That’s all I have to say.

Blue Monochrome byYves Klein

Oh and who can forget Chaplin’s one and only use of speaking film:

Quick thoughts on the Québec Election

So far, it has been a fairly standard election campaign – ridiculous promises, libel and mud slinging from all sides. Only a few days in, it remains impossible to say how it will all end; however, I will dare to make one or two small predictions. The political landscape will be significantly different after the election.

The Parti Québecois, created by René Levesque with the sole purpose of Québec independence, has run its course. While the independence mouvement fell short of complete independence, it had a massive impact on the distribution of federal-provincial powers. Québec and other provinces dramatically increased their share of political power thanks to the PQ and for that we should be thankful. However, it is time to move on from the indpendance debate (for now). The PQ needs to break apart – with centre-left voters moving to a provincial NDP or a more moderate Québec Solidaire (QS) and hardcore nationalists moving to Option Nationale (ON). Similarly, the Liberal party will lose voters to the CAQ, but potentially pick up some centre-right PQ voters.

In Québec, one never knows how elections will end, but it seems unlikely any party has enough support for a majority government. The old bi-polar PQ – PLQ world is crumbling. Already, many of my left wing francophone friends are planning to vote Québec Solidaire and some of my moderate and fiscally right-wing anglophone friends are seriously looking at the CAQ. The PQ can no longer coherently hold so many different political views together – left, centre-left, francophone, and sovereignty. Reading the PQ electoral platform is like taking a time machine back 20 years, they are out of touch. More common than not, citizens vote governments out not in and my guess is that will happen with Charest. Everyone seems tired of him and as long as the CAQ, ON and QS don’t do anything too stupid we should end up with a very diverse National Assemble this fall.

Who knows, but that’s my read so far.

There are no shortcuts

National debt, taxes and government inefficiency are regular dinner table talk these days. The discussion usually boils down to: pro-government save the poor vs. anti-(big)-government do-it-yourself arguments. Both sides have valid points and deserve being listened to, but when push comes to shove, there is no denying that the services we take for granted cost lots of money. Fire trucks, roads, schools, hospitals are expensive and cuts are harder than most people think.

Working in China in 2005 was my first in-depth experience in a emerging country. Of all the things I learned there, the lack of public services really hit home. It was only by going to China and later to other developing countries, that I realized the vast amount of relatively high quality services we have. From retirement homes, to the justice system, to free healthcare and honest police; our government provides a lot of services.

Could some of our services be delivered more efficiently, handed over to the private sector or given back to the citizens? Of course. But on the whole, I firmly believe that high quality and costly services are a required ingredient of a free society. To deliver those services, we need large and robust intitutions. Michael Ignatieff’s point that “government is the granite under our feet” is accurate. Yet, what matters most is not the rate of taxation or the size of government, but rather the perceived value of those taxes. As when you go shopping, we want our money’s worth.

Unsurprisingly, we continue to think there is a better, faster and easier way – the grass is always greener on the other side. Way back in the late 20th century, we were proclaiming the rise of the Asian Tigers as a new economic powerhouse. Their growth was a steady 10% and they seemed invincible, yet it all came to a screeching halt in 1997 with the asian financial crisis. Paul Krugman’s seminal paper The Myth of Asia’s Miracle on the frailty of South East Asian economies in 1994 prophetically predicted the outcome. His point can be boiled down to diminishing returns on investment as your economy grows. Infrastructure in an emerging country is an easy win, it’s easy to get 10% growth when you dodge environmental laws, build basic infrastructure, skip over worker’s rights and pay minimal heed to a functioning justice system. For a while, you can achieve amazing growth – the Soviet Union did it between 1930 – 1970 and China is doing it now, but eventually, your lack of institutional human infrastructure catches up with you. (see Three little pigs case study)

Some countries avoid the pitfalls of relying on easy growth – South Korea comes to mind, but most fail. While we bemoan the low growth in the EU and the US, we fail to realize it is the natural evolution of the system. It is not that you cannot continue to grow once you are a developed economy, but rather that economic growth becomes harder and harder. However, the value of the extra dollar of growth in a developing country has far more resilience than in a country lacking infrastructure. Not all dollars are equal, an extra GDP point in a country where you respect the environment and worker’s rights is more valuable than a GDP point where you do not. Not morally more valuable, but tangibly more valuable; the dollar of GDP is more durable, can withstand more shock and is more robust. Canada’s Tar Sands driven growth is a mirage, just as Baku was once a prosperous economy, Alberta’s growth is based on a depleting resource with increasing extraction costs. Alberta, and Canada, should follow the Norwegian practice and pour oil profits into a safe fund for the future.

There are many instances of decisions we have taken as society to reduce growth in the name of social stability and human rights. From union protecting laws to our complex justice system, we place citizens before GDP. Building up intelligent environmental laws might slow economic growth temporarily, but it will reinforce the foundation of our economy and lay the ground for long term stability.

Our admittedly imperfect legal system is a prime example of doing the right thing despite gigantic costs. It is extremely expensive to have due process and it’s much, much cheaper to torture or just toss people in jail. China’s failure to modernize its legal system will inevitably bite it in the butt. In fact, the lack of due process already drives many wealthy Chinese to flee their homeland for Canada and the US.

So, the next time a discussion turns to taxation rates, unions or the cost of environmental regulations, remember that it is not the individual value of a service or law that matters, but its role in sustaining a vibrant and robust human society.

Also see KPMG report on cost-cutting via Rob Ford in Toronto and the privatization of services in Denver, Colorado on This American Life.

Corruption in the banking sector

As I prance around Montréal and Québec trying to improve government services with open data, talks, activism and apps, I often get blank stares. Following the blank stares come the proclamations only slightly less direct than, “Government is a huge bureaucratic mess that spends like a drunken sailor and needs to be cut down to size.” While there are parts of this that are clearly true – government is often inefficient – people often fail to realize that government is not external to society. Government does not work in a vaccum, it is dependant on taxes (personal, property, corporate, other), people, civil society, and a vibrant economy. Importantly, access to capital and an ability to earn interest on assets is as important for government as it is for private companies.

Today, we are seeing dramatic austerity programs implemented in Spain, UK, Greece and other parts of the world. It is a social experiment on a global scale. On one side, we have the United States, Canada and Australia who are spending money and avoiding dramatic cuts and on the other side we have European countries making massive cuts. We will see the results, but it is interesting to understand the causes. In a global economy, money flows to places of security and banks are happy to accomodate both the wealthy fleeing failing countries and the governments desperately requiring capital to mask their faltering finances.

It is becoming clearer and clearer that the banks played a nefarious role in the evolving crisis. More than money changers, they actively entrapped governments and short changed them on their returns. We now know Goldman Sachs lent massive amounts of money to Greece in complex packages with restrictive terms few mortals could comprehend, a behaviour not dissimilar from a loan shark. In the same manner a drug dealer makes his clients dependant on them, Goldman Sachs made Greece dependent on their loans. Concurrently, banks around the world were rigging interest rates on municipal bonds and capital, reducing revenues to governments and further pushing them into dependency.

The magnitude of the scandal is just starting to emerge into sight, LIBOR being the biggest baking scandal ever. The evolving LIBOR (infographic) scandal affects 800 Trillion dollars (not a typo) of debt and securities and the municipal bond fixing scheme in the United States harmed thousands of towns. I encourage you to read the Rolling Stone piece on interest rate bidding by banks for management of municipalities’ capital, but basically both scandals are price fixing on a massive scale (see Bill Moyer’s show). These tactics of price fixing undermine the integrity of the system and lay bare the hypocrisy of solely blaming governments for budget shortfalls and overspending.

Fixing these problems and ensuring good governance by national and municipal governments requires diligent and talented people. Getting talented people into public service is harder than ever. Our society’s culture, since perhaps the 1980s, values private sector work over public work. Consequently, the best and brightest minds go into the private sector. This leads to further erosion of government services as mediocrity permeates government services, pushing yet more talented members of society into the private sector. And on and on until we hit a wall, we might be there.

Long story short, let us not be so quick to judge, sentence, and execute government for gross incompetence; the entire system is at fault and it will take a lot of hard work to fix it.

P.S., this is whole situation is similar to the run-up of the french revolution.