Category: Economics

Matters of money

The Varsity on fossil fuel divestment

In todays’ edition of The Varsity, there is an interview about the Toronto350.org divestment campaign at the University of Toronto.

In addition to quoting me and the Office of the President, it quotes Justin Lee, president of U of T’s Rational Capital Investment Fund, claiming that we are needlessly politicizing the issue of investment and implying that divestment would be bad for the portfolio. I wish he had read section 4 of the brief, in which we explain why divestment is a smart idea financially. These investments are not compatible with long-term prosperity for the world, since the business plans of these companies are focused on activities that would guarantee dangerous climate change. They are also incompatible with the long-term prosperity of the university itself, since the assumption that these companies will be able to burn all the fuel they own will eventually be invalidated.

Also, the fact that the university has a divestment policy in the first place shows that they understand how their investment choices do have ethical implications which are rightly a concern of the school. This isn’t a matter of needlessly politicizing university investment – it’s about bringing U of T’s investment policy in line with its values and long-term financial interest.

Thinking of going phone-free

My three-year iPhone contract ends in February, and I am thinking about selling the phone. I am tempted to go entirely phone-free, but there are times when having a phone is necessary to get information (like when things are available for pickup) or for coordinating meetings.

Part of my reluctance to continue with smartphones is the cost. My monthly bills were consistently over $100 until I called Fido to try to cancel and they switched me onto a $60 ‘retention’ plan, which provided more than my previous $100 plan.

Another major motivation is distraction. One part of that is the annoyingly intrusive character of all phones. They allow anybody to demand your immediate attention at any time. Mine is usually on ‘airplane mode’ or off, but that doesn’t entirely eliminate the anxiety, since there is always a nagging sense in my mind that someone might be setting down a batch of missed calls.

A bigger distraction issue comes from just having a smartphone with you. Ordinarily, that means getting periodically interrupted by texts and emails. More subtly, there is the constant temptation to take a peek at the news, have a glance at Twitter, and the like. It takes a person out of the present moment, which makes relatively unpleasant tasks like comp prep more difficult and makes relatively pleasant tasks like walking on a cool fall afternoon less immersive.

The constant tracking and NSA / CSEC paranoia is another cause for skepticism about cell phones.

Going phone-free is probably a bridge too far. I would go with that option if I had someone who could take the occasional message for me and pass it on by email, but I don’t want to burden anyone with that, at least until I get an unpaid intern or two. More plausibly, I will get a very small, very cheap pay-as-you go phone for very occasional use.

It’s hard to say whether three years with the iPhone has provided good value for money. It’s certainly a capable device – especially when traveling – and I have made extensive use of the camera, email functionality, tethering capability, Google Maps connectivity, and web access. At $100 per month for most of the span, the total cost to date has been over $3500 – as much as a 5D Mark III (before battery grip and other necessary extras), or a couple of Fuji X100S cameras (one of which would be a gratuitous 30th-birthday-gift-to-self if I had the funds).

Once my contract ends, I think I can shift to paying month-by-month. As a trial, I may try cancelling it for 2-3 months without selling the phone and testing my experience with the pay-as-you-go option. At that point, I can re-evaluate.

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.