In response to my post about the misdirected-at-best union strategies in regards to auto industry woes in Ontario, SilverMoonWolf writes:

I may not be as informed as you, but I can draw opinion on what I do know about this and the whole “bailout” buzz word now.

When a horse breaks its leg, you don’t coddle it and tend to its weakness as it will NEVER get better. You shoot it so something better can take its place.

The problem is that General Motors is not a horse. You can get a new horse quite easily at the horse store, because there are lots of horses. General Motors, on the other hand, is the ninth-largest corporation in the world. It employs a quarter of a million people in the United States directly and god knows how many indirectly. If GM went out of business tomorrow, the other auto companies can’t pick up the slack because they’re hurting too.1 This is to say nothing of the fact that GM’s primary income stream is not in fact selling their cars, but the car loans they arrange so that people can buy their cars – want to see what happens when a giant creditor goes bankrupt?2

Shooting GM in the head simply isn’t an option: it’s too big and its loss would do too much damage. I’ve seen economists suggest that the loss of GM alone could swing the current American recession into a full-blown depression. You can say “well, we shouldn’t have companies that are too big to fail,” and that’s a valid point of view, but that doesn’t make the economic-violence plan an equally valid answer in response to the current crisis because you can’t do, say, a Ma Bell-style corporate megasplit if said corporation is suddenly nonexistent.

Moreover, shooting GM in the head isn’t even a good comparative idea, because unlike the horse, there’s no reason GM can’t be saved. Its decline was the result of accounting culture taking over the management of the company from the engineering culture that ran it up until the mid-70s (which is also the reason most of their cars are comparatively shitty nowadays). Affecting the management style and roster of GM is something the federal government can do with a bailout. After all, a bailout is, in its purest essence, a loan – and any loan officer worth their salt can require reasonable preconditions for that loan.3

Finally, it’s worth noting that the scandal of the Wall Street buyouts from a rational perspective isn’t that investment firms went buck-wild, because the government let them go buck-wild and voters in turn didn’t bother paying attention and let the government let the firms go buck-wild. The Wall Street meltdown is the result of negligence in all quarters, pure and simple, and nobody has any excuse because really smart people with economics degrees were saying “hey, guys, this is going to end up fucking us in the ass” years ago and nobody paid attention.

No, the scandal of the Wall Street buyouts has been the response from all concerned, from Henry Paulsen initially offering what amounted to a blank cheque to Wall Street firms refusing to trim fat as they got their paydays to the public’s offended face that these investment firms weren’t fiscally responsible when nobody was paying attention (and remember, the average member of the American public has a negative savings rate nowadays, so who the hell are they to complain about others’ fiscal negligence)? It’s the combination of offended self-importance and sheer ignorance of the problems at hand exhibited by just about everybody, be they in charge or not, that irritates me. It’s one of the reasons that Kel Mitchell’s “FIX IT!” analyst character on Saturday Night Live is so painfully unfunny – it’s too on target.4

1. The Japanese companies are hurting less because they planned for this in the long run, but there are limits to one’s ability to plan. [↩]
2. Hint: you really, really don’t. [↩]
3. Also note that the history of government bailouts of the private sector, at least in the United States, is one of eventual government profit as the loans are eventually paid off. [↩]
4. The other reasons, of course, being that Kel Mitchell is not good, and the writers writing the character are not good. [↩]

Matthew Yglesias is right to point out that bailing out car companies when they are making a product that at present is fundamentally unsuited to future profit generation is stupid, but he and his commenters largely place the blame on GM’s corporate culture. Let’s be honest here: speaking as a lefty (and a strongly pro-labour lefty at that), the unions own this idiotic idea just as strongly as management does.

As an Ontarian, I am deeply, deeply familiar with CAW president Buzz Hargrove’s seemingly inexhaustible ability to spew stupid bullshit, but Hargrove’s bullshit is not only stupid but short-sighted: every solution he has boils down to “the government should give auto workers money,” and he’s happy with that strategy regardless of whether that money goes directly to auto workers or to auto companies who will trickle it down to said auto workers. It’s almost like the right wing decided they needed the most stereotypical left-wing labour boss they could imagine, then went to a lab and had Buzz Hargrove grown in a tube.

Of course, the Ontario government particularly shouldn’t give auto companies money to maintain their operations in Ontario, because there is simply not enough money in the coffers to do that successfully, because people are buying less cars. They are especially buying less of the shitty gas guzzlers that for years have been the mainstay of Ontario’s auto production (the list of GM and Ford cars manufactured in Ontario reads like a Consumer’s Digest warning list). Consumer advocates have been saying for years that Ontario manufacturing needed to diversify before things got bad, but Buzz Hargrove wasn’t interested in that because skilled manufacturers might not necessarily be interested in joining the CAW if they weren’t making cars.

Now, things are bad, and it’s going to take a massive effort to turn Ontario’s economy around, and government investment will be vitally necessary to do it. But giving money to car companies, especially in Ontario’s case, is just a bad idea.

…it looks like it’s time to short Washington Mutual.

Canadians should be thankful for the essentially risk-averse nature of Canadian banks. If anything gets us through this shitpile, it’s going to be that.

George W. Bush and John McCain claim that offshore drilling will reduce oil prices because of a psychological benefit. If we think oil will get cheaper, then it will get cheaper.

Even if this is true (which it probably isn’t, because commodities traders are not idiots), the problem with attempting to manage oil prices by instilling mass belief in something other than the stark reality of decreasing oil supply is that when people realize that the drilling isn’t going to help, the likely effect is overreaction in the opposite direction as the market panics to reassert itself.

Or, more simply, it is like this:

“U.S. motorists are risking rampant drug violence in Mexico to drive over the border and fill their tanks with cheap Mexican fuel, some even coming to blows over gas shortages and long queues.”

Read the whole thing.

The Liberal Party released their carbon taxation plan today, and I’d say it’s… okay. It does a lot of what a carbon taxation scheme should, of course, but it misses two major points.

Firstly, there’s no tax on gasoline. I understand that gasoline taxes are unpopular, but the lack of a gas tax in a carbon taxation plan when you are taxing literally every other fossil fuel seems like staggering pandering to me. I don’t even think a gas tax is unsellable – say “look, we’re going to tax gas, yes, but the gas taxes are going to be specifically redirected into a fund to improve public transportation so that in five years you can take a hybrid bus from Chilliwack to the Bay of Fundy or from your home to your grandma’s back yard.” The longer you let people think that their old lifestyles are sustainable – and they just aren’t – the harder it’s going to be to tell them the truth.

Secondly, the tax is revenue-neutral, erring on the side of costing a bit of money. I understand that the Liberals want to make carbon taxation as painless as possible by lowering income taxes at the same time. But this idea is flawed for two reasons:

1.) We desperately need massive energy infrastructure investment. Canada has too much oil power generation as it is; we need to replace that with solar, tidal and wind ASAP, and additional revenues created by a carbon tax in the short term could help fund these initiatives.

2.) Carbon taxation in the short run is revenue neutral, but in the long run it is presumably revenue-lowering because given time everybody will find ecological ways to avoid paying the tax. Which is good, but that means eventually you have to jack income taxes back up to compensate. I don’t look forward to the squabbling when that happens.

Still, on the whole, it’s an all-right plan, a solid B+ effort. Could have been much, much worse.

Also: 350.

I was arguing about this at law school today with some fellow students, and I am genuinely unsure of the answer, so I am throwing it to the masses. Hello, masses!

So we were arguing about taxation to begin with, which in turn led to the various costs of living in the United States and Canada as a measure of comparison purposes – me maintaining that they were higher in the USA, someone else that they were higher in Canada. Now, there’s no such thing as a “median cost of living” – well, I suppose there is, but due to regional variation it’s kind of useless as a statistic. So we turned to consumer price indexes.

Consumer price indexes, for those who do not know (and I want everybody to at least be able to follow the thrust of the conversation) are a method of tracking increasing costs of items as a way of partially measuring cost of living. You set a “year zero” – say, 1984. You buy $100 worth of goods in that era with 1984 dollars. Then you track the costs both backwards and forwards – so how much does it cost to buy that same $100 cost of goods in 1974, and 1994, and 1964, and 2004, and so on and so forth.

Now, when we were Googling for this sort of information, we couldn’t find a good CPI for both countries for the same year zero, so – and this is where the argument begins – I suggested instead using math to create a new year zero on the larger (American) CPI for comparison purposes. Now, I’m not going to pretend that this is exactly scholarly and I wouldn’t use it for a paper, but if, say, you want to turn 1996 into your year zero, and in 1996 it took $153 to buy whatever you bought in the previous year zero for $100, then it follows that if you divide every figure on the table by 1.53 you’ll get at least a rough estimate, suitable for back-of-the-envelope type calculation, of what things look like with 1996 as a year zero.

Needless to say, my friends disagreed. They also kind of disagreed with the concept of cross-comparing CPIs from Canada and the United States because you couldn’t guarantee that the same items would be in the $100 “basket.” My counterargument here is that Canada and the United States, in terms of culture and especially merchandise, are at least relatively equivalent in our shopping patterns – not perfectly homogenous to be sure, but close enough, as they say, for government work. Again, I’m just talking for back-of-the-envelope here, not for any real study.

So, my question is – which of us is right? Or right-er?

Specifically, Canada is totally getting the shaft when it comes to mobile phone costs. Check out those graphs. We’re worse than Rwanda, for crissake.

This is just another example of how Canadian politicians’ rhetoric about wanting to make Canadian industry competitive are all too often just empty rhetoric. See also: Canada’s continuing paucity of funding for scientific research, especially at the university level. It really annoys the shit out of me no end.

Well, Marvel Comics dropped the hammer, and the interblogs are abuzz over their fancy announcement of offering comics online. And rightly so, considering this is something many of us – certainly including me – have agitated for for quite some time.

Things about their model are good and others are not. They’re only dipping their toe in the pool right now (2,500 comics is a drop in the pond, and “twenty new issues every week” doesn’t even cover a week’s worth of new releases). That makes sense considering how bold a move this is, but it’s disappointing to see such a small initial offering being treated as a holy-shit big deal. Wisely, it looks like Marvel will be offering a portion of the content for free in the first-hit-is-always-free method.

And the reader? Yeah, it could be awesome, but I’m not big on a web-based Flash app for something of this nature. I understand that Marvel probably doesn’t want to go big with their own downloadable application expressly for browsing comics stored at a central database – at least not yet – but again, it’s a case of “I understand their caution; it’s just irritating” because this sort of move is now long overdue for the Big Two. (And heck, Dark Horse and Image too, although they don’t have the capital required to really do this on their own. If Marvel is smart, as soon as is possible they’ll be offering other companies the opportunity to E-publish their comics on Marvel’s comic database.) It’s a shame, though, because I was hoping that when this happened, there’d be an option for e-reader tablets.

But the most important element of this model, the one that was absolutely key for it to be a going concern, was pricing. And in this respect, Marvel has done exactly the right thing by offering a relatively cheap subscription model for access to the database. Ten bucks a month for unlimited access, five if you go longterm? That’s a book and a half per month. If they get, say, a mere five thousand subscribers (and five thousand is a very conservative number for initial signups for this service, I think), that’s fifty thousand dollars a month in revenue, which is more than Marvel takes home from most of their individual mid-sales-range comics.

I know people wanted “iTunes for comics,” but reasonably that just wasn’t likely at a price people were willing to pay and would likely require some sort of at least minor protection (a la iTunes) preventing people from easily trading comics online amongst themselves. And, once that was in place, Marvel would also have to figure out a way from killing the secondary market entirely (and likely with it a large number of comics stores).

Bottom line? The service is priced right once the library expands, it can be expanded as Marvel sees fit, and the technical issues (such as comics availability and browser interface) can be tinkered with easily enough when necessary. It’s not quite a slam dunk, but I don’t think this ends up being anything but a winner for Marvel in the long run.

Via United Hollywood, your viral video/writer’s strike mention of the day.

I really kind of suspect that the studios had no idea what they were getting into when they forced a strike.

Found in a Pyjamas Media column’s comments:

I’m not sure you do. Hollywood has made utter garbage at least 90% of the time for at least 10 years, if not more. I will provide just one factoid. In the last two decades, more actresses have won the academy award for portraying a prostitute than for portraying any other profession. Why do current Hollywood writers have such a obsession with prostitution?

First off, I went and checked, because I was pretty sure that “factoid” was not actually, like, true. And of course it isn’t. Only one woman has won an Academy Award in the last twenty years for portraying a prostitute, and it’s kind of a stretch to say that because the woman in question was Charlize Theron for her work as Aileen Wuornos in Monster, and the most distinguishing aspect of the character was not that she was a prostitute but that she was a serial killer.

In comparison: two cops (Helen McDormand in Fargo and Jodie Foster in The Silence of the Lambs) and three rich British ladies (Helen Mirren in The Queen, Emma Thompson in Howard’s End, and Gwyneth Paltrow in Shakespeare In Love). WHY does Hollywood continue to glamourize cops and rich British ladies? WHY?

Secondly, though, I wanted to just make my general disgust with this line of argument known. You can argue against the strike in good faith (and Brad Fox has done so, both here in the comments and at his own joint), even though I won’t agree with you. But the line of argument advanced above – and it’s easily the majority opinion among those (mostly conservative) commenters is “I don’t like it so they don’t deserve anything.”

And that’s just abhorrent. It doesn’t matter if you think Hollywood makes a lot of crap; they also make about a trillion dollars a year in revenue, so the question of whether you personally are invested in the product is moot. It’s both stupid and insulting to think that you have to like a business to determine whether or not its practices are sound.

The question is simple: do writers, having helped to produce a product that is financially successful, deserve a share of that financial success? Answer that question. Jesus, how is this hard?

Let me be plain as possible before I start giving you links:

The WGA writers’ strike is practically the definition of a just strike. This is a battle over corporations earning billions of dollars and unfairly refusing to give those most responsible for the creation of the content which mandates their profits their proper due.

Most screenwriters aren’t rich. Yes, the average salary of a Hollywood screenwriter is $200,000. However, that figure is overinflated by the high end of rich screenwriters, the tiny minority who make millions per picture, the Tina Feys and the Steve Carells. (Both of whom, I might add, are striking.) The median salary for a screenwriter is about twenty thousand dollars. So this isn’t a battle between “billionaires and millionaires,” much like the last actors’ strike, where everybody focused on Leonardo DiCaprio’s salary and ignored the fact that most actors, stunningly enough, are not Leonardo DiCaprio.

So, links:

– John August explains the basics.
– John Rogers lays out some excellent metaphor (“that tiger went tiger“) and some mild prediction.
– Ken Levine provides some perspective.
– Rick Schimpf quotes Micah Wright’s now-infamous “Screwed Over For Spongebob” post and adds some commentary. Also, he provides a link to this informative Youtube.
– An account of what happened at the eleventh-hour negotiations.
– Chris Kelly explains residuals.
– Related to the previous item: Mark Evanier explains why residuals aren’t just fair but also encourage writers to perform better.
– Brian K. Vaughn weighs in.
– And finally, Craig Newmark asks the pressing question on everybody’s minds.

Holy crap, the loonie is at a buck-seven USD. Economic analysts are saying that a jump to $1.10 isn’t just feasible but indeed near-term likely.

The Federal Reserve is just looking at this point for an excuse to cut interest rates, but it has to realize that doing so would be, you know, bad. Like drawing reasonable comparisons to Weimar-era Germany level of bad. Like oil-prices-well-over-$150 bad. And while I quite anticipate being able to buy things from Amazon this Christmas with what essentially amounts to about a fifteen-percent-off coupon, having Americans forced to cart around stacks of $10,000 bills in wheelbarrows to buy loaves of bread is something, on balance, I would prefer to avoid.

For those of you wanting a cold-as-ice pessimistic geopolitical and economic analysis of current U.S. economic policy – and I’m sure there’s ever so many of you! – I would direct you to this screed the Cunning Realist posted last week. Well worth reading. Also, somewhat depressing.

China’s starting to publicly threaten the dumping of its American dollar reserves.

(In other bad news from China, the Yangtze river dolphin is extinct.)