Mar 29, 2015

How much should graduate students be paid?

Being a graduate student is in some sense in the middle of two extremes: being a student primarily benefiting oneself and being a paid worker benefiting society. Before graduate studies, one is an undergraduate where nobody would expect to be paid to be an undergraduate. After graduate studies, one is (hopefully) going to be paid a paid a sum commensurate with the skill the knowledge accrued during graduate studies and be doing work that, by and large, can be said to "benefit society". During graduate studies, however  it is somewhere in between. Graduate students are both benefiting themselves by increasing their future potential and also doing teaching and research that is benefiting society. How much, then, ought they be paid?

How graduate studies typically work:
A graduate student typically has two major roles. The smaller of the two roles is what makes up a higher portion of their funding package: teaching work. They are being teaching assistants that run tutorials, mark midterms, hold office hours, and the like. In latter years they are also course instructors which run full courses much like a professor. This is unquestionably real work. If you blind yourself to anything but this specific work, graduate students are typically well compensated for this specific work, over $40 and hour at the University of Toronto. That is very comparable to a moderately high skill hourly wage in the private sector. I have no problem here. The issue is that the number of hours is fairly small, something like 200 hours a year, so about 10% of what "full time" work is. 

The larger role is doing research to produce a thesis. This sucks up the vast majority of the time spent in the latter years after courses and comprehensive exams and the like are completed, and for this portion of work graduate students are paid very little, far less than what research work in the private sector might be. Together the compensation for these two components is typically a less than poverty line amount to take home. 

Graduate students are usually paid an amount in between these two extremes of undergraduate and full time work, something like the 15k minimum funding package offered by the University of Toronto. It varies from school to school. This is an amount far larger than what undergraduates are paid (nothing, minus tuition), and an amount far smaller than what is typically paid for full time work after one graduates. It doesn't seem immediately wrong to me that this in between place in life gets paid an in between amount of money, the question will be one more of where, precisely, to put the number. 

No graduate student becomes a graduate student for the money earned while in graduate studies. One is almost certainly going to be paid far less than if one tried to find a job after completing their undergraduate degree. However, the main motivation for being willing to spend 4-6+ years severely underpaid relative to the undergraduate degree job market is because of a combination of increasing future earnings (a PhD being far more competitive than a BSc) and/or a genuine passion and interest for the subject of one's studies. Part of the calculus that goes into the decision to go to graduate school is the assumption of a (relative) loss now. 

Two types of arguments: 
As with many questions of policy, there are typically two rather different types of arguments. Firstly, we have what I will call "economic" arguments. These claim some sort of larger economic or perhaps soceioeconomic benefit from the policy. For instance, when talking about TFSAs, one can argue that a society with more middle class savings has smaller recessions which is good. This is at its root an economic argument. 

Secondly, there are what I will call "social" arguments, that presents some form of normative benefit like equality or freedom that will benefit from the policy. I support gay marriage not because I think society will be better off economically, but because of these ideals of freedom and equality. 

The best policies are often ones where there are strong arguments in favour considered both ways. For instance, during a recession, spending money on employment insurance is one of the best stimulative policies possible (as the money so quickly enters the local economy) so there are strong economic arguments for it but there are also strong social arguments about reducing inequality and suffering. 

Returning to graduate funding, I'm going to find that sweeping macroeconomic arguments for increased funding are somewhat lacking, but that there nonetheless remains strong social arguments. The economics first:

In between two extremes:
Let's take this to the salary extremes to see the effect on graduate schools. Firstly, let's act as if graduate studies is comparable to undergraduate studies, as in it is primarily about advancing one's own knowledge and ability to compete in the market later in life. Let's assume we pay zero dollars for graduate studies, and charge tuition to boot. The same motivation mentioned above (that people would earn more in the future with an advanced degree) still applies, but the threshold changes. A half decade of going into debt requires a huge future return on investment that for many people won't be justified. The obvious effect is going to be a substantial decline in the number of people applying to graduate schools, resulting in less of the best BSc graduates ending up going to get graduate degrees. There are strong arguments that a highly educated society has many positive socioeconomic consequences, and so far less competent people wanting to go into graduate schools would be a loss. Of course, there would be the gain that provinces would have to pay less for universities and could thus tax less or spending elsewhere.

There is also something of a tipping point effect. Four years of unpaid undergraduate work is a serious strain on either family finances or building up of student debt for many people. It is doable, just, but hard. A decade of it (undergrad and graduate together) is simply too much to be sustainable for many people, no matter how positive the future return on investment. So this extreme seems like it would have a big cost in the terms of having a high quality, highly educated society with marginal benefits on tax bills. 

Now take the other side, that graduate studies are paid similar to private sector jobs. Say, $40k per year, just to pick a number. This is going to make graduate school even more desirable since your get the future earning potential as well as being paid reasonably well immediately. If we hold the number of graduate positions constant (this will already be a substantial burden on governments to finance, increasing the number of positions would be yet more again), what this increased incentive will do is mean that the composition of graduate students will improve. Very bright people who might not have done graduate school will now do it and so we will have, on average, a better cohort of graduate students (and a worse cohort of people who go to the jobs market after BSc). The problem here is that we likely come upon a resistance point. The best and brightest typically (not always, but typically) already go to graduate school, because the incentive structure already is enough for them. And for those that don't - bright people who leave to the job market leaving less bright people to get accepted to graduate school - it isn't clear to me that keeping these people in graduate school is actually that big of an advantage for society. I also want very bright people to found startups in the private sector and the like. So this extreme seems like a big cost on provincial coffers for little socioeconomic gain. 

In between the two extremes thus seems like a reasonable place to be. Not $0, not $40k. Can we argue for the difference between $25k and $15k (the UofT minimum now)? Clearly this is going to require more detailed arguments than the more sweeping big pictures arguments thus far. Indeed, from these sort of bigger picture arguments there doesn't seem to be any clear reason why one is better, it really depends on the sensitivity of these smaller changes in price to the incentive structure. 

Unaffordable for some:
For me personally, the level of funding is sufficient. While obviously I would like more, the  advantages that graduate school provides meant that the benefit relative to working after my undergraduate were not that sensitive to how much I was going to be paid. However, I have various advantages (family support during undergraduate, having savings, cost sharing with my wife, etc) that meant that living on graduate funding was a very doable position. I have a reasonable quality of life despite living in Toronto and extra money at this point would only be saved for future spending. 

For many, especially those without my financial advantages, this is not the case. Without financial support such as being able to live at home during their undergraduates, one will often leave with substantial debt and spending a decade running a deficit is simply untenable for many people, particularly those with children. Graduate school funding minimums are substantially below the poverty line, and while this can be often tolerated for amount of time (during ones undergraduate, for instance), it is hard to maintain for so long. 

Economically, the consequence of graduate funding being at this level is that it pushes some people out of graduate school and into the general market based on its level of unaffordibility. As such, the calibre of the graduate school cohort declines as otherwise competent people don't enter. 

Higher packages probably don't cost society much:
If we tax higher incomes slightly more (as in the incomes graduate students will often make) and pay graduate students a little bit more, what is effectively happening is a forward shift of future money to the present. The income curve with respect to time will be less steep with more money made in the first decade and less in latter ones. Even if we act as if there are precisely no other socioeconomic consequences (this move very likely isn't zero sum), it is probably a preferable switch for most people who will get graduate degrees. It would, of course, be a negative for people who end up earning high incomes but didn't do graduate school, but these are people already privileged by ending up with high incomes and being paid more during the years graduate students are students. 

The net economic argument:
Putting all this together on the economic front, I think it is something of a wash. The majority of the cohort is not sensitive to very large increased wages in the sense that increasing pay isn't going to make more of the best students go into graduate studies versus entering the job market after undergraduate as the advantages of graduate school are sufficient to dominate already. That said, there is still nonetheless a portion of the potential cohort where the financial challenges do push them out of the possibility of grad school. Large increases simply are not necessary to increase the quality of the graduate school cohort, but small increases will pull those who simply can't continue at the current levels (due to debt, kids, lack of family support, etc) to stay in. Taxing more on higher wages to pay for higher funding now largely transfer the time distribution of money from two similar cohorts.

What precisely the "slightly higher" level of funding is debatable, and changes substantially depending on the local cost of living. One convenient metric is the poverty line which already takes into account many of the financial challenges facing people. Changing the minimum funding package to being the poverty line will pull up those currently unable to do graduate school based on financial challenges. 

The social argument: 
Regardless of the above economic considerations, I think there are strong social reasons to consider moving up to poverty line levels of funding. At its core, this is an argument about equality. There is a portion of the potential graduate school cohort who can't go to graduate school due to financial challenges, whether this is the need to help out family, whether it is kids of one's own, whether it is due to past debt (for instance from an unassisted undergraduate). Disproportionately these people are going to come from lower income families.

 I've always believed that a key role for for governance in society is to create a broad floor beneath which we can't fall. Graduate school is not like access to healthcare in that it is meritocratic and can't be done by everybody. There are plenty of ways where demographic considerations change one's potential to be able to get accepted for graduate school and nothing in this post is going to address this. But at a minimum, I think we can accept the idea that people should not be unable to attend graduate school based on reasonable financial limitations. There are people in that category. We should change that. 
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Mar 12, 2015

Media bias in covering the University of Toronto TA strike

At a bare minimum, when the media covers a major conflict between two sides - a union striking, say - it should include the briefest of quotes from people representing both sides of the conflict. This is not exactly a high bar to meet requiring the cheapest and simplest method in journalism: asking the leadership of both sides to provide a quote. We could well wish for higher standard, but this is a bare minimum. 

Unfortunately, coverage of the University of Toronto strike by the union representing Teaching Assistants and Course Instructors (of which I am a member), fails this lowest of standards. 

Take, for instance, this piece in the Globe and Mail, which covers first York University then University of Toronto. In the latter half, it quote at some length from an open (and rather misleading) letter posted by the University on the University's website. There is no attempt made to go to the Union's website, to quote from open letters on the Union's website, or to quote in any way any representative or supporter of the Union. We get the Universities perspective at some length, with absolutely no mention of the Union's. 

The lack of better media:
One of the most systemic biases in the media is that they are so often stenographers for the powerful, repeating their statements and views while ignoring that of the less powerful. There are many factors that reinforce this bias. 

Firstly, it is cheap and easy to just publish quotes from spokespeople, to show up at organized press conferences and repeat what was said. Doing research to contextualize issues, back up statistics, trying to source well reasoned quotes from the general public or the disenfranchised and package it all together in an objective and detailed way is far harder. Better, of course, but harder and more expensive. 

Secondly, there is a need to preserve access for the future that encourages non-critical coverage. Media that are known to excoriate certain groups end up not being able to get interviews with those people. Conversely, media that typically white wash authority figures will be able to keep getting access to those authority figures. 

Thirdly, there is always a need to present information with credibility. For instance, on a scientific issue, actual scientists are needed so that the issue is presented with credibility. Spokespeople for governments and companies and the like have a built in sense of credibility with the public. Humans operate based on appealed to authority more than is often recognized, and using these figures makes conveying that sense of credibility easy for the media. The problem is that on issues where the powerful has a definitive bias (such as the University wanting to make their position in the strike seem very reasonable), such authority figures are not actually very credible commentators on the issue, despite the simplistic appeal that they are by definition "the authority". 

There are many more, but collectively these result in a system that tends not to spend the time and effort to provide objective, unbiased, contextualized news, but instead tends far more towards being stenographers for the powerful. The position of governments and companies and the like is widely disseminated no matter how ridiculous those positions are, and countervailing voices get a far smaller microphone. To exacerbate this, given these the pressures the system starts to habitually work this way, employing people that think that way, promoting people that think that way, and extending this type of reporting outwards into far more than is needed by the pressures alone. 

How this works in this case:
In this case of the Union/University coverage asymmetry, I don't believe there is anything intentionally malicious going on. It isn't that collectively the media is deliberately trying to distort the coverage so as to sway people to support the university over the union. Instead, it is simpler but no less powerful effects going on. 

Very likely, to the writer this was a fairly low priority piece, written under a time crunch. The simple, fast, and (most importantly) cheap way to fill in some context and interest beyond the headline is to do nothing more than go the university's website and quote a couple sentences from the open letter published there. The reporter doesn't need to know anything detailed, doesn't need to call people, doesn't need to go and travel to the university and speak with people, doesn't need to research facts, and so on. It can be quickly whipped up and sent out and on to the next story. 

If they had managed to go to the union's website as well, to quote from one of the open letters from key union members just as they quoted a key university member, I could have accepted this. Lazy, context-less, repetition from officials is its own set of problems in the media, but at least it would be equally lazy to both sides and get those couple sentence quotes out for readers to compare. But for this to be taken so far that they don't say anything - not one word - from someone either representing or supporting the union is simply unacceptably bad journalism. 

And why not? Why didn't they go to the union's website and quote something from there? While at campus to take photos anyways, how hard is it really to get a quote from any of the protesters? Perhaps it really is nothing more than that less than ten minutes was spent on this story and this is what you get. But I suspect it is representative of the systemic pattern of behavior that just gets exhibited in a situation like this even when it is so trivial to put one quote from the Union in the article. 

In this case, students are just intrinsically not the kind of authority the media tends towards. For the general public the view of a generic student is not going to be taken with the same level of credibility as that of the University leadership who have this sort of default assumption of being the more reasonable and more authoritative. Regardless of how valid this assumption might be generally (lots of students say lots of unreasonable things), when it comes to a core conflict between the University and the Union, taking just one of the sides because of these default asymmetries results in a massive bias. 

We might wish for a media that rose to a much higher standard. Indeed, this is a big part of why I blog here. But the media is failing to uphold even the lowest of standards. 

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Dec 13, 2014

The US Budget Deal is atrocious for progressives, and the GOP base

The 2014 US midterm elections were a massive win for the GOP and, rightly or wrongly, gave them a mandate to act on the issues they campaigned upon. However, the big new budget bill is drawing controversy over something few GOP supporters are going to have thought was core to their election mandate: loosening restrictions on investment firms doing derivatives training, and a ten fold increase in allowable campaign donations. 

Appealing to the base was never the point, of course. On the derivatives side, it is the pay off to Wall Street, and all the millions of dollars they just spent on both sides, but particularly the Republicans. This is the reason those millions were spent. The new Congress hasn't even been sworn in yet, but the Republicans are already making sure that the first thing they do is reward their financial backers, and who cares really if this has nothing to do with the mandate they received from the American people. The Dodd-Frank financial reform bill, passed by Democrats after the Great Recession, is far from perfect, but for the most part it's attempt to reign in the kinds of crazy financial engineering from Wall Street that underpinned the recession are commendable. This is a move to partially roll it back. 

As for the order of magnitude increase in the individual political contribution increase from $32,400 to $324,000, this is something that both sides are more or less happy with. The system in its current state operate by funnelling huge amounts of money from the rich and the special interest into the political process (in exchange for favours like the change in derivatives law mentioned above). Republicans do it but so do the Democrats. Of course, with the SuperPAC system, huge amounts of money get to flow in regardless, but this allows more to flow a little easier, and also flow through the establishment political groups easier opposed to the putatively at arms length away that the SuperPACs are supposed to be. 

However, the GOP base largely doesn't like the enormous amounts of money in politics either, it is one of those points where progressives can find common ground. This happens despite the view of the base because the base doesn't matter nearly as much as entrenching the system does. Obama and some Democrats do use this issue as a political talking point, but while attacking the system rhetorically, they also make use of it (I can't really oppose this, putting themselves at a disadvantage would be silly). At the end of the day, though, the nice rhetoric is going to get lost in the reality of a system that is become increasingly entrenched in big money politics. 

There are a few riders intended more for the base that don't come about as a payoff to a financial interest. They effectively block marijuana legalization in DC (against the wishes of the people as expressed through ballot initiative). And they cut funding to the environmental protection agency which fits both bases: the populist GOP base hates the EPA and approves of cutting it, but so does a range of special interests who wants environmental regulation as lax as possible. 

It is interesting that the GOP has worked to form a long deal, funding the government until next September. Effectively what happens is that all the spending levels and the like continue at previously negotiated levels, just with these different riders attached. In previous years since the Democrats lost the Senate in 2010, there have been a series of pretty contentious showdowns with the GOP effectively putting as hostage both the funding of the government and defaulting when the government hits its debt ceiling. The idea was to force substantial spending cuts, including entitlements like Social Security, from the Democrats. This led to the whole business of the sequester which eventually fizzled, largely because even when Obama offered an enormous amount of concessions I and many Democrats opposed, the GOP still couldn't take yes for an answer. 

While it is a lame duck Congress at the moment, the Republicans could easily have opted for a shorter term deal and push the big concessions shortly after taking Congress. Instead, they have opted for the timing that effectively allows for one big showdown halfway through the final two year stint of Obama's presidency and will lay the groundwork and framing for the 2016 presidential battle. 

I think this is good for both sides. For someone on the left like me, I think this tactic is good because I think it will lessen the severity of the concessions the Republicans will demand, that it won't be some enormous Grand Bargain that sets the structure of entitlements for the next generation. It will be a much smaller package of spending cuts and other reforms that will be demand that might hurt, but won't hurt as the kinds of options that were floating around during the Sequester period. In other words, punting to next September is really a punt to the next president. For the right, this is a good tactic as while some may ideologically wish for a bigger win, they are correct to think that the public does not and generally did not take too kindly to them holding the government funding and debt as hostage. A framing in 2016 where they tried to spending cuts by playing a game of chicken with Obama in his last year is not a framing that is particularly kind to them. 

The one thing not decided is the big immigration fight. That one got punted until February and will undoubtably be e big public showdown between Democrats and Republicans for this year. 

Regardless of this political calculus, the earlier issues still slip in. They may hit the status quo button, but things like the changes to the financial markets, changes to campaign finance laws, these happen regardless. 
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Dec 8, 2014

Adorable Coming Out Video from Connor Franta

Because it's always worth taking a moment to reflect on what really matters in life:




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Dec 3, 2014

John Tory's ascension and the Metro's ridiculous narrative

As John Tory is now officially the mayor of Toronto, everyone - particularly the media - is in search of an appropriate narrative to go with it. Some of those narratives are good and some are bad, but the Toronto Metro (a free daily mainly consumed on public transit) choose a just laughably terrible narrative.

Before I get in to it, note that nothing has actually happened to change whatever narratives we had about John Tory before. All that happened was the pomp and circumstance of officially becoming a mayor, and that ceremonial nonsense is more or less entirely uninteresting in terms of telling us something about what the Tory administration might be like. Not that this stopped the Metro.

The cover story doesn't appear to be online (but is maybe loosely based on this). It shows four quirky pictures of Tory smiling with the heading "Tory let's his true face show - His human side". We are quickly told that the "inaugeration taught us a lot about life with our new mayor" and that "bits of his real personality [was] peeking through".

Um, okay. Going through a formal inaugeration ceremony get's at his "real personality", "true face" and "human side"? Well, let's see what this real personality really is all about then! We are told that only partially using notes is somehow meaningful, and he apparently genuinely likes his family in a way Rob Ford apparently didn't. He also dropped a line about people of other skin colours so apparently throwing out a token platitude is getting at his "real personality". Puhlease.

I'm having fun, obviously. Media has to run narratives on events and silly puff pieces about this are everywhere, this is just one of many. It is just sad because these early narratives are so important and to run it as the front page on a newspaper with massive readership when it is so vacuous is frustrating.

The narrative that actually matters:
There actually is a pretty important thing we have learned recently about John Tory recently that will profoundly impact his governance of the city and creates the perfect narrative to talk about. Namely, is first major action is to stuff the executive with conservatives and Ford loyalists, ignoring the left flank of the council. As in, all that bullshit about working together and "One Toronto" was nonsense, as we probably could have guessed. As soon as it came time for real action, it is going to be a very conservative, very Ford-esque mayorship just without the drama (we can hope).

Now that is a real action that one can put a real narrative on. Why isn't this on the front page? Why is it stupid comments about how him walking off camera momentarily to shake someone's hand a sign of him being genuine? Some will be glad he is doing this, other's will hate it, but it is actually consequential in a way that some inaugeration ceremony simply isn't.

Fearing GOP tactics, Toronto style:
Now if all that isn't infuriating enough, you'll like the "expert" analysis from Siri Agrell who was quoted on the front page puff piece but gets into the grittier stuff buried on page 20. Tory is just "hedging his bets, alienating the left to avoid retribution from the right. The people on the left side of the equation will continue to work towards what they want to achieve, but if you spurn people on the right there's a greater possibility that they'll make life difficult for you."

Firstly, how terrible does this make the right look? The right are apparently these little spoiled children who will huff and puff at you if you don't appease them while the left are actually decent enough humans to continue to work towards what they want to achieve. I don't think she is necessarily wrong, but it does make me glad to be on the adult side of the table.

More importantly, this is just terrible strategic advice. Tory is a conservative, OF COURSE the right is going to vote with him. Thinking they are suddenly not going to vote with him if Tory puts in some downtown progressive in the executive is nonsense. The actual problem is that the council has a tonne of left leaning members that he has to win over if he wants to actually accomplish anything. Spurning them for the easy solution of the conservative old boys club is not going to help with that one bit.

This is just such a nonsense strategy, and it is often the strategy we see from the right in the US. Appeasing the right is something that the establishment like Boehner and even moderates like Obama feel they need to do. The Tea Party is given a tonne of deference despite being crazy goons. But the left? No, no, nobody needs to appease those guys. They are going to keep fighting for what they believe regardless. So you get this continual shift to appease the people on the right and do everything to be nice to them and you can't even put a downtown progressive into the executive anywhere.

Rob Ford's fond farewell:
The final issue that is just tickling me is Tory's choice of a first move by proposing a symbolic motion to praise Rob Ford for his service. Are you freaking kidding me? No, I don't think this issue is all that illustrative of Tory's approach to the city either, but symbolically it is just terrible. Rob Ford was literally stripped of every mayoral power council could strip from him due to, well, you know the damned story. He doesn't need an iota of praise, least of all from John Tory who is supposed to be symbolically representing change from that garbled messed. I get it, he wants to try and appease the Ford base or whatever (and clearly doesn't care about Chow's base), but it was still simply the wrong thing to do.





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Nov 26, 2014

The Conservative's scripted talking points get them into trouble

This little scandal Tories have gotten themselves into is a bit delightful, but underscores a more important point about the dissemination of talking points.

The problem started when a Conservative operative secretly recorded a conversation including, allegedly, Banff-Airdrie Liberal candidate Marlo Raynolds saying some not-so-lovely things about the people benefiting from the Conservative's income splitting proposals. The problem? It now appears it wasn't the Liberal who said it, but the conservative supporter he was talking to. 

In the short time after Sun news put this up, no less than four MPs - including Employment Minister Jason Kenney -  used the quote to mock the Liberals in the House of Commons. Now that they have been caught in error, they are refusing to apologize. 

This is a pretty minor scandal, of course, and mainly gives a source of amusement at the egg-on-face. The larger point though is that this only happens in the scale it did because of the way the Conservatives disseminate their talking points. It isn't as if these different MPs all happened to watch Sun news and each independently thought it was a clever jab they could throw at the Liberals. Instead, it was understood by all that today this was the talking point to use. And each MP in turn dutifully showed up to take their turn at the bat with it.

This process happens every day, and most of the time the talking points are silly. But this time the talking point was also just flat wrong. The larger criticism isn't that one of the talking points turned out to be false; that is going to happen every once in a while no matter how dutiful one is. The criticism is more on the nature of how these talking points get disseminated and how it makes the entire political process - particularly in the House of Commons - so vapid and vacuous where any attempt at a serious dialogue is eschewed in favour of repeating the talking points of the day no matter how ridiculous (and in this case false) they are. 

These days, when something goes wrong in car manufacturing, there are often recalls measuring into the millions. The basic reason is that because of standardization, the exact same part is used in so many different cars and models so that if anything little thing goes wrong, it becomes a massive recall. This is the basic dynamic here. Tory talking points are so quickly and widely disseminated that if one of them proves bad, you have this whole swath of people that need to come forward to apologize. They are in the business of mass production of talking points, and are experiencing one of the pitfalls that comes from that.
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Nov 24, 2014

The NDP's 7% problem

The NDP's biggest problem electorally isn't a question of policy or values or leadership or connecting with voters or just about anything else perennially brought up to explain their difficulties in the polls both federally and provincially across Canada. Their big problem comes down to one stat: only 7% of Canadians think they will win the next federal election, less than a fifth the number the Liberals get. If nobody thinks they can win, there are going to be hordes of theoretical supporters who will vote instead for the person they think might win, typically a Liberal.

Of all the questions you can poll people on, this is the number the NDP polls worst on. Large numbers of people generally like the NDP, generally like Mulcair, and generally like values and policies that the NDP prioritizes. If that was all that mattered, they would be competitive. However, if large numbers of people don't bother actually voting for them because basically nobody thinks they can actually win, none of this matters.

This basic dynamic has long plagued the NDP, but never before have they had as much of an opportunity to reverse it. In 2011 they went to record highs, become the Official Opposition while reducing the Liberals to a seat count in the thirties, and staking the claim as heir apparent to the federal throne. They elected a competent - although not particularly likeable - leader who has received mainly plaudits by the press and had little negative press. And they rightward shift of the NDP puts their policies and values firmly within acceptable territory of the Canadian public when polled.

If there was ever a moment in time where the NDP could reverse the "but they won't win, so why vote for them?" dynamic, this was it. What do they get? Seven percent. Seven heart-sinking, demoralizing percent that cements the dynamic as being as alive as it ever was. The Liberals, by the way, get 39% and the Tories 25%.

Abacus ran the numbers in more depth in Quebec recently comparing the Liberals and NDP and they paint a similar, if less extreme picture. Quebecors would prefer (60%) Mulcair over Trudeau and think his values are closer to their own (55%). But they think Trudeau is more likely to win (67%). The key though is in how they are actually going to vote. 56% of people will vote for whoever they think is most likely to beat Harper.

There are always going to be loyalists who will vote for their party even if they are going to lose. Indeed, while I am not a loyalist, I have written in past many reasons why one might want to vote for third parties beyond them actually going to win. However, a majority of people are not going to do this. They are going to pick and choose between the Liberals and the NDP to find the party they think will win.

The silver lining for the NDP is that latent support for them is likely much higher than election results and polls indicate. Indeed, this is precisely what happened in the so called Orange Wave in Quebec in the 2011 election. When it suddenly became clear that the NDP had a real shot, a huge portion of the country very quickly moved camp to the NDP and there became something of a self fulfilling prophesy where appearing like a possible winner was the key to giving their first huge win in the province. The NDP can only hope something similar happens outside of Quebec in the future, that the base of support for their party is really much larger than sometimes appears, it just doesn't manifest in elections since nobody thinks they can actually win. Gain enough momentum to convince people they might win, and it may become a tipping point that propels them to actually do so.
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Tech on the Side: Airbnb vs Uber and the power of mobile

Airbnb and Uber are similar in many ways. They both use tech (particularly mobile) to solve a distribution problem and they are both market darlings with skyrocketing valuations. They are both massively disrupting the established hotel and taxi industries respectively, complete with significant legal battles in these highly regulated industries that have arguably outdated business models and regulations.

The distribution problem works like this: Airbnb makes it vastly easier for anyone to rent out their property and become effectively a hotel; Uber makes it vastly easier for anyone to rent out their time and vehicle and become effectively a taxi. Previously, the resources (houses and cars/drivers) were plentiful, but there wasn't an effective distribution mechanism to connect customers to providers so we relied on the traditional hotel and taxi industries which provided a distribution system, but a distribution system that cut out small players. You had big dedicated hotels and large taxi fleets, not any old person with a spare room or a car and time to spend.

That said, there is an important difference between the two that illustrates the power of mobile. Uber is entirely dependent upon everyone having a smartphone. That is, the system just wouldn't work with a desktop site because people are calling their Uber rides out and about with their smartphone, they see the car approach on their smartphone, they pay on their smartphone, etc. The smartphone is integral to the entire experience.

Airbnb, however, works just fine as a desktop website. They could have just as easily operated a decade ago. The reason is that booking a place to stay on a trip is something you typically do far in advance, and can easily peruse at your pleasure at home or at work. For the most part*, the service is just as useful on the desktop website as on the mobile app (and there isn't even an iPad app for it). Airbnb in this way is much closer to eBay (which started as an entirely desktop site). Yet, Airbnb didn't exist until the smartphone boom.

Today, huge swathes of computing is being transferred from desktops, laptops, even tablets, to smartphones. This change is not exact, however. That is, people don't switch the amount of computing they did on the desktop to doing the same amount on a smartphone, they typically vastly increase their use. So it isn't just that people start using Facebook on phones opposed to the desktop, they also use Facebook quite a bit more.

This is the basic dynamic with Airbnb. Smartphones are so effective at reducing the friction of computing, that they end up doing far more computing and are much happier using computing solutions to solve problems. Airbnb has made a pretty frictionless system for both customers and home owners to be able to connect the two groups. It isn't that this model doesn't work in a desktop only world - it does - it is just that computing in general is so much easier and more convenient that people can do this from anywhere with the power of their phones. And they do, in droves.

The potential globally of smartphones truly is enormous, and I believe we are still only scratching the surface.




*This is not to say there are not advantages of mobile. Mobile makes finding a place to stay while travelling on the fly far easier, and particularly for hosts they get to manage their bookings without disrupting their lives since it can all be done on mobile.
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Nov 15, 2014

Dealing with Climate Change and Inequality


Two of the defining problems of our times are wealth inequality (both globally and within the first world) and climate change. With any socioeconomic order - our mixture of capitalism and government being just one - there are going to be consequences both good and bad. There are going to be challenges that the socioeconomic order is particularly good or bad at addressing. The point of this post is to expand on how these two defining problems - global warming and inequality - are products of our particular socioeconomic order, that they are two problems that our system is particularly ill-equipped to deal with.

Government vs Markets:
We have this mixture of systems because markets and governments have different strengths and weaknesses. By using a combination of the two, we are able to try and minimize the weakness of each.

On the market side, a negative externality occurs when the cost of a particular market transaction (going fishing, say) is not directly felt in full by the immediate actors in the transaction, but negatively affects others. For instance, in a fishing habitat, any individual fisherman contributes to a problem of over fishing which lowers the future availability of fish. While in aggregate the externality becomes very negative, the contribution from any individual fisherman is quite small and they would be in their rational best interest to continue fishing since the cost of their overfishing is spread out among so many others. This is the so called tragedy of the commons.

Capitalism as a socioeconomic construct is particularly poor at addressing tragedy of the common problems. Because the system is one where individual and voluntary actions are free to occur, there is no mechanism in capitalism, by definition, to pay the costs of negative externalities. It is perhaps ironic that one of the greatest strengths of capitalism is its ability to finely tune pricing structures to account for the costs that it "sees" with ruthless efficiency, yet one of its greatest weaknesses is the inability to "see" certain types of costs.

In contrast, government is very successful at dealing with these types of problems. By using the fiat power that governments have, they can manage tragedy of the commons situations by, say, putting regulations on fishing in a fish habitat to prevent the negative externality of unsustainable declining fish populations. Indeed, many of these environmental roles like legislating against certain forms of pollution tend to be where the role of government is most complementary to the role of markets and has the strongest cases for government intervention.

Global Warming:
Global warming is the mother of all negative externality problems, where the true costs from our energy consumption paradigm doesn't manifest itself locally, but manifests itself in the "commons" of our global ecosystem. The consequence of climate change is felt widely, but for any individual there is a massive cost with marginal gain for changing their individual actions to help. We all drive to work and heat our homes (in the first world, at least), and each individual contribution to global warming is miniscule. The cost benefit analysis for an individual is clearly to continue. But these effects on aggregate are enormously consequential.

The problem for global warming is that despite it being exactly the type of tragedy of the commons problem that government, not markets, are best suited to address, there simply lacks a sufficiently powerful global governance mechanism to make this happen. It is a global problem, but we don't have a global government to impose regulations by fiat.We have been reduced to try and form some agreement between countries to voluntarily act together.

This has been, for the most part, rather unsuccessful and actually suffers from a tragedy of the commons problem itself, just at a larger jurisdiction. Thinking of countries as individual actors in a larger market, the tragedy of the commons problem returns. Any individual government would be massively advantaged if it didn't have to pay the cost of dealing with climate change while everyone else did the heavy lifting. Somewhat unsurprisingly, no comprehensive agreement has yet been made.

Inequality:
I previously wrote about how the dominant role of government (both descriptively and normatively) is wealth distribution, providing a massive net equalizing force on our world that taxes disproportionately from the wealthy but distributes education and infrastructure and healthcare and so on relatively equally. This underlines just how staggeringly powerful the tendency for capitalism to be unequal really is. The basic dynamic (which can be expanded on at some length) is that the tremendous opportunities that capitalism provides are easiest to take advantage of from those who have resources, which means that the benefits of capitalism disproportionately accrue to those with resources.

Within a country like Canada, inequality is a problem but it is a problem that is mitigated considerably by our redistributive government policies. As a progressive, I believe we should do more, but we are undoubtedly doing a lot already. Between countries, however, inequality falls to the same problem that global warming does, namely a lack of sufficiently powerful governance at the inter-country level. It isn't exactly zero; the UN, the WTO, and the like, curb some of the rough edges. There is a small (relative to GDP) trickle of wealth voluntarily from rich to poor countries. However, these redistributing effects are nothing like what they are within countries, and help explain why there is such staggering differences between the countries, and between whole continents.

Both of these two problems are problems coming from the market side of our socioeconomic system, problems that would normally be left for the government to try and ameliorate but due to their scale are particularly difficult to deal with. This shouldn't be taken as a criticism of capitalism per se. Indeed, we have some pretty striking examples in history of one way things can go horribly bad when the role of government is taken to far. Nonetheless, for our mixture of the two, the two biggest problems of our times are products of market side that the government side is ill equipped to deal with. Indeed, perhaps together they make the case that we should strengthen considerably our inter-country governmental organizations.











Read more » "Dealing with Climate Change and Inequality"
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