Category: Economics

Matters of money

The cost of a summer

The PhD student funding mechanism at the University of Toronto varies a bit depending on whether you are part of the standard funded cohort, receiving a scholarship like the Ontario Graduate Scholarship, or in some other situation. Still, the basic setup is similar for most people: you probably get three lump sum payments per year, from which you must pay your tuition if it is not automatically deducted. You then receive monthly paycheques for eight months out of the year, as compensation for work as a teaching assistant (TA).

As a PhD student, you are basically expected to do academic work over the summer, but only a minority of people get work as TAs. That makes financing the summer a challenge. It’s possible to do paid work outside the university, but quite challenging to do so if you have academic research obligations and (in your first couple of years) comprehensive exams to prepare for.

I moved out of Massey College for the summer because it is a relatively costly residence with no summer meals. Instead, I spent the span from May 9th until August 21st in University College’s Morrison Hall. Rent for the span was $2,130. In addition to rent, I had to buy food a few gifts, pay my cell phone bill, pay for transportation, and so on. I also did a few short trips over the summer: notably, a few days in Montreal for my brother’s graduation and a day in Ottawa for my friend Andrea’s wedding. All told, non-rent expenses were about $2,869.89 – akin to $27.58 per day.

With after-tuition income of about $15,000 per year, I can’t afford to spend so much on summers for the rest of my PhD. I suppose I will need to work, or win a bigger scholarship.

The Economist on China and climate change

Some important and sobering information from a recent article:

China’s impact on the climate, though, is unique. Its economy is not only large but also resource-hungry.

…

The country’s energy use is… gargantuan. This is in part because, under Mao, the use of energy was recklessly profligate. China’s consumption of energy per unit of GDP tripled in 1950-78—an unprecedented “achievement”. In the early 1990s, at the start of its period of greatest growth, China was still using 800 tonnes of coal equivalent (tce, a unit of energy) to produce $1m of output, far more than other developing countries. Energy efficiency has since improved; China used 390tce per $1m in 2009. But that was still more than the global average of 300tce and far more than Germany, which used only 173tce.

Despite a huge hydroelectric programme, most of this energy comes from burning coal on a vast scale. China currently burns about half the world’s supplies. In 2006 it surpassed America in carbon-dioxide emissions from energy. By 2014 or 2015 it will emit twice America’s total. Between 1990 and 2050 its cumulative emissions from energy will amount to some 500 billion tonnes—roughly the same as those of the whole world from the beginning of the industrial revolution to 1970. And the total is what matters. The climate reacts to the stock of carbon, not to annual rises.

These emissions are adding to a build-up of carbon already pushed to unprecedented heights by earlier industrialisations. When Britain began the process in the 18th century, the atmosphere’s carbon-dioxide level was 280 parts per million (ppm). When Japan was industrialising fastest in the late 1950s, it had risen a bit, to 315ppm. This year the level hit 400ppm. Avoiding dangerous climate change is widely taken to mean keeping below 450ppm, although there are significant uncertainties surrounding this figure. At current rates that threshold will be reached in 2037. China is likely to be the largest emitter between now and then.

About a quarter of China’s carbon emissions is produced making goods for export. If the carbon embodied in those goods were marked against the ledgers of the importing countries China would look a little less damaging, the rich world a lot less virtuous. But even allowing for that, China is not playing catch-up any more. It is doing more damage to the stability of the global climate than any other country.

The claim that stabilizing the atmospheric concentration at 450 ppm will be enough to keep temperature increases below 2˚C is dubious. In James Hansen et al. “Target Atmospheric CO2: Where Should Humanity Aim?“, they conclude that: “If humanity wishes to preserve a planet similar to that on which civilization developed and to which life on Earth is adapted, paleoclimate evidence and ongoing climate change suggest that CO2 will need to be reduced from its current 385 ppm to at most 350 ppm”.

Doing that would require much more aggressive action than what this article suggests.

Governing from the Centre: The Concentration of Power in Canadian Politics

Donald Savoie’s 1999 book is the single-best account I have read of the functioning of Canada’s federal government. It focuses on the growth of the strength of ‘the centre’ of government over the previous thirty years, meaning the prime minister, Prime Minister’s Office, Privy Council Office, Department of Finance, and Treasury Board Secretariat. It discusses every important actor in Canada’s federal government, with specific attention paid to the prime minister, cabinet, deputy ministers, the Clerk of the Privy Council, line departments, the Public Service Commission, and so on.

The overwhelming message is about the new dominance of the Prime Minister: over cabinet colleagues, the central agencies, and over parliament itself, which Savoie argues has a diminished capacity to hold the government to account. Savoie devotes considerable attention to the internal structures and machinery of the civil service, as well as the incentives experienced by individuals within it.

I strongly recommend the book for civil servants (especially those who deal with the central agencies or aspire to join them) and for anyone with a strong interest in how Canada’s government functions.

Environmental Defence on the oil sands

Environmental Defence has issued a new report, explaining why Canada’s oil sands expansion policies risk more than cancelling out efforts to control greenhouse gas emissions in other areas:

“Emissions from the tar sands are projected to double from 2010 levels by 2020, cancelling out all other efforts across the country to reduce emissions and sending Canada soaring past the 2020 climate change target that it shares with the United States.”

Barriers to mitigating the climate impacts of the tar sands (PDF)

Innis on the Northwest Company as a forerunner to Confederation

By 1821 the Northwest Company had built up an organization which extended from the Atlantic to the Pacific. The foundations of the present Dominion of Canada had been securely laid. The boundaries of the trade were changed slightly in later periods but primarily the territory over which the Northwest Company had organized its trade was the territory which later became the Dominion. The work of the French traders and explorers and of the English who built upon foundations laid down by them was complete. The fur trade had pushed beyond the St. Lawrence drainage basin to the north and the northwest along the edge of the Pre-Cambrian shield and the forest regions, and had organized the bases of provisions in the more fertile territory to the south at Detroit, the Assiniboine, the Saskatchewan, the Peace, and lastly, the Columbia. The Northwest Company was the forerunner of confederation and it was built on the work of the French voyageur, the contributions of the Indian, especially the canoe, Indian corn, and pemmican, and the organizing ability of Anglo-American merchants. (p. 262 hardcover)

Innis, Harold. The Fur Trade in Canada. 1930.

Advertising on this site

I am mindful of the fact that the advertising on this site is ugly, and often runs counter to the main lines of argument here. For instance, there are often ads for oil companies.

All told, the ads yield roughly $100 per year, which is enough to cover the costs of hosting the site.

Would people strongly prefer a site without ads? If so, would they be willing to donate to make that happen?

To be fair, I have always encouraged people to use advertising blocking plugins. Adblock Plus, for Chrome and Firefox, is excellent.

Harrison on federalism and environmental policy

While not denying the existence of either constitutional limitations or resistance from at least some of the provinces, I argue that the explanation for federal and provincial roles in environmental protection is not complete without considering governments’ electoral incentives to extend or defend their jurisdiction over the environment in the first place. Environmental protection typically involves diffuse benefits and concentrated costs, and thus offers few political benefits but significant political costs. One can expect the opponents of environmental regulation to be better organized, informed, and funded than the beneficiaries. Moreover, since environmental protection typically involves the imposition of costs on business, strengthening environmental standards can run counter to voters’ concerns about the economy and unemployment. Thus, the absence of electoral incentives, rather than constitutional constraints or provincial opposition per se, may explain why the federal government did not pursue a larger role in environmental protection throughout the 1970s and early 1980s. The reality may be closer to a federal surrender than the provincial victory implied by many authors. (p. 5 hardcover)

Harrison, Kathryn. Passing the Buck: Federalism and Canadian Environmental Policy. 1996.

Strangers Devour the Land

Boyce Richardson’s Strangers Devour the Land is not an academic text, but rather a series of personal narratives interspersed with selections of courtroom testimony. The book describes the traditional lifestyle of the Cree of northern Quebec, and the influence the James Bay hydroelectric developments had upon their lives between the inception of the project in the 1970s and the author’s return visits during the 1990s. Richardson is clear in his advocacy of the Cree perspective and is open about his willingness to edit his work to meet with the approval of his Cree subjects and rebut the arguments made by their opponents at Hydro-Quebec and within the Quebecois government. (p. 204, 289, 290 paperback) Nonetheless, the account comes across as a sensitive, sympathetic, and honest one for all parties concerned – a text that both furnishes detailed observations of what has transpired and which engages in a nuanced way with the political and moral complexities that accompany them.

The dynamic at the heart of the book – between First Nations people trying to maintain their most important traditions and an encroaching world hungry for natural resources – continues to play out in Canada. While the parallels between the James Bay hydroelectric projects of the 1970s and today’s oil, gas, and mining projects are numerous, it is not fully clear what the experience with the former can help us improve about the latter. If anything, the contemporary parallels show how the tension between peoples seeking to perpetuate traditional lifestyles on territory they have held for centuries and others who wish to disrupt those lifestyles for economic or nationalistic purposes persists and how Canada has a poor record of reaching equitable outcomes through fair means.

Quebecois nationalism and the northern Cree

Robert Bourassa – Premier of Quebec from 1970 to 1976 and 1985 to 1994 – did more than anyone to advance the James Bay hydroelectric projects. Now, his name is attached to a 7,722 megawatt generating station and a reservoir with a surface area of 2,835 square kilometres. For Bourassa, the construction of hydroelectric capacity in the James Bay region was a vital measure for promoting Quebecois economic growth and thus the national integrity of Quebec. (p. 22, 303, 329) The scale of work envisioned was indeed vast: the entire La Grande river would cease to flow below the blockage for an entire year as the reservoir filled. (p. 191)

Richardson’s intimate account of the hunting lifestyle of the Cree contrasts sharply with the perception of the province that they had essentially abandoned their traditional practices and that the lands they inhabited were effectively empty. (p.33-4, 72, 76, 195, 280) Richardson convincingly documents the inadequacy of the environmental and social impact studies conducted by the government of Quebec, as well as their quickness to discount the importance of the land and the people reliant upon it. (p.112, 132, 163, 173, 246, 298, 344) Similarly, the Quebecois government was biased toward the over-estimation of future electrical needs, and quick to use unrealistic projections as justification for the scale of the massive James Bay projects. (p. 255-259) It is logically possible to separate procedural questions from questions about outcomes; the construction of the dams may have been much less objectionable with the full prior and informed consent of the First Nations in the region and with suitable compensation. At the same time, such an approach may still have clashed with the perceived relationship between the Cree and the land described by Richardson, and in particular with the notion of the people as perpetual stewards of the bounty of nature. (p. 89) Arguably, it would be inappropriate for any one generation or small set of generations to break that stewardship, even if compensated financially. Indeed, this perspective is highlighted in the book’s epilogue, in which the Cree who have benefitted from the 1975 James Bay And Northern Quebec Agreement were nonetheless resisting Quebecois proposals for additional dams on the La Grande River, the Great Whale and surrounding rivers, and the Nottaway, Broadback, and Rupert Rivers. (p. 347)

Court proceedings and settlement

In addition to quoting at length from the testimony given by members of the Cree community and expert witnesses, Richardson comments extensively on the legal process through which the Cree community sought to respond to the work initiated without consultation by Hydro-Quebec. He discusses the strategies employed by lawyers arguing both sides of the case, and describes Quebec Superior Court Justice Albert Malouf’s 1973 judgment in favour of the Cree, ordering the James Bay Development Corporation to “immediately cease, desist, and refrain” from construction and from interfering with the rights and territories of the Cree petitioners (orders which Richardson alleges were not followed, even during the short span before the first appeal was heard). (p. 296, 299) The book goes on to describe the subsequent Quebec Court of Appeal decisions that stripped the Malouf ruling of effectiveness and eventually compelled the acceptance of the James Bay and Northern Quebec Agreement in 1975. (p. 296-309)

The most notable feature of the initial legal proceedings may be the way in which they demonstrated the inadequacy of the social and environmental impact studies conducted by Hydro-Quebec and the government of the province. Most startlingly, Richardson describes how construction on the first phase of the James Bay project began with no prior consultation and that even when the Cree first sought remedy through the courts, lawyers from the James Bay Development Corporation continued to argue that they had no rights which could be infringed. Later, the corporation’s own staff anthropologist Paul Betrand testified that the project would create a “crisis… in the Cree culture”, that there would be an “immense impact”, and that “the shock [was] going to be brutal”. (p. 247-248) Such testimony was effectively rejected by the various courts of appeal that assessed Malouf’s initial conclusions, preferring to see the Cree as having transitioned to a white-style life and lacking the legal right to object to Hydro-Quebec’s plans. It is therefore convincing that the subsequent settlement – though it did involve considerable financial compensation – was effectively made under duress, with the prospect of the complete dismissal of the Cree claims driving them to accept an arrangement that would not have been tolerated without coercion. Under the terms of the settlement, the hunting territory of the Mistassini (who feature prominently in Richardson’s account) is reduced from 100,000 square miles to 7,000 and their exclusive right to hunt is granted provided with the provision that it not “conflict with other physical activity or public safety”. (p. 324)

Reading Richardson in a climate change context

In one passage, Richardson neatly summarizes many of the key ethical claims of the book:

Since eighty-eight square miles of the island of Montreal support 2 million, most people cannot see how such huge territories can in equity be left to so few people. If these lands are needed in the public interest, it is argued, then unfortunately the Indians will have to adjust. The question is, however, how are the lands to be handled and how will the Indians be allowed to adjust? The manner of doing the deed reveals our quality as a civilization. For the Indians have always been there: it is not their fault that other people have arrived, making claim to the lands on which their whole culture and way of life has been built. In decency and justice, they cannot simply be trampled over: our own society would be infinitely richer if we could find the means to give Indians a genuine choice, some real control over the pace of change, as they face the inevitable arrival in force of this alien civilization. (p. 225)

To these challenges must now be added the additional challenge of adapting all of Canadian society to the needs of the global climate. Failure to do so risks imposing as large a change in circumstances as has been experienced by the Cree of northern Quebec upon people everywhere, indigenous and non-indigenous alike.

There are many parallels between the James Bay development that began in the 1970s and the expanding oil sands today. Indeed, much of the language about the economic potential of resource exploitation is nearly identical. In the context of the James Bay project, Richardson describes how politicians and engineers defending the project “rave[d] on about how hospitals, factories and schools will have to close down if the project is not built” (p. 255); in 2011, Minister of the Environment Peter Kent asserted that for Canada to meet its Kyoto target it would be necessary to “clos[e] down the entire farming and agricultural sector and cut… heat to every home, office, hospital, factory and building in Canada”. As Quebec aspired to achieve influence and prosperity on the basis of exporting hydro-electricity, Alberta and Saskatchewan now hope to do likewise with synthetic crude exports processed from the vast Athabasca oil sands reserves. In both cases, the prospect of wealth could only be achieved by appropriating vast amounts of traditional territory used by First Nations for centuries, and by severely disrupting the lifestyles of these inhabitants. In both cases, aboriginal people are presented with the question of how to respond to resource development, with a difficult choice to be made between resistance through legal or political means and accommodation, which carried the possibility of financial reward.

Richardson’s epilogue complicates the story told by the book. He describes how Cree society has evolved into the 1990s, with new deals between the First Nation and Hydro-Quebec, further expansion of white Canadians into resource industries in the region, and the development of extensive commercial holdings and civil service bureaucracy by the Cree. He highlights the persistence of a hunting culture, while also commenting extensively on the economic and social transformation that has taken place since the James Bay project was first proposed. While the physical impact of the dams is certainly on a vast scale, he concentrates more on the impact of development on the Cree way of life, which has been ambiguous.

Environmentalists and policy-makers today can no longer ignore the dangers associated with the accumulation of greenhouse gasses in the atmosphere. This adds fresh complexity to the utilitarian calculations described in Richardson’s book, such as how the interests of relatively small numbers of hunters with lifestyles dependent on vast amounts of land integrate with the interests of southern urbanites desirous of electricity and a nationalist Quebecois society desirous of wealth and influence, both in and of themselves and as the tangible means of protecting a distinctive culture. All else being equal, the risks associated with climate change must make us more open to dams compared with fossil-fuel sources of electricity, though that rebalancing certainly doesn’t make dams appropriate in all circumstances or nullify the arguments raised against them.

Richardson himself discusses the possibility of moral dilemma “so dearly beloved of moral philosophers, in which both sides were right”. (p.289) Even that categorization may over-simplify the ethical situation presented to the Cree in the 1970s and to Canada’s First Nations today. How are the values and practices of a traditional lifestyle to be maintained or altered as resource nationalism and encroaching globalization inevitably affect Canada’s wildernesses and their traditional inhabitants? How are the possibilities of enrichment through natural resources to be balanced against the reality of degraded land, air, and water – and the increasing reality of a degraded and threatened global climate? Thinking about energy supply in the context of a changing climate also encourages perplexing counterfactual questions: had Quebec not built so much hydroelectric capacity, would people have turned to more climatically-damaging alternatives to produce the same quantity, or would demand simply have been more moderate in the face of higher prices?

The injustices so articulately described by Richardson cannot be denied. They include the influx of thousands of outsiders into their traditional territories, the flooding of trapping land, the diminishment of animal population, and the contamination of fish and drinking water from methyl mercury. (p.344) Without question, Cree families that had subsisted by fishing, hunting, and trapping for centuries had strong grounds to object to construction projects dreamed up for the benefit of outsiders that caused enormous damage to their way of life and culture. Unfortunately, the imposition of undeserved suffering on one group by another is a deeply engrained feature of globalized, capitalist, industrialized society. Indeed, the choices humanity is making now about fossil fuel use threaten to permanently damage the entire planet and the lives of all of its inhabitants for thousands of years, as well as totally destroy the lifestyles and cultures of those living in especially vulnerable areas like the arctic. Quite possibly, the human race has reached a point in which we can no longer avoid inflicting undeserved suffering on one group or another. The question has become how much suffering, imposed through what means, and with what (if any) compensation.