Category: Law

Posts about law-making, the courts, and legal concepts in general

Today’s China is not the future we should want

China’s strategy with the Hong Kong ‘security’ law seems intended to send a global message: critics of China will be increasingly punished as the state’s global influence grows.

This is disturbing in many ways, for the welfare of people in China, the region, and around the world. The degree of authoritarian control that technology has granted over citizens’ lives is disturbing in itself, and could permanently inhibit reform or political progress. While it tries to present itself as organized and competent in comparison to chaotic democracies, there is also reason to believe that China is replicating the dysfunctional and corrupt politics of the Soviet Union, with officials at every level incentivized to conceal and misrepresent what is really happening to protect themselves and advance their personal interests. Ethnic and religious nationalism, in India as well as China, are also deeply frightening and drivers of abhorrent humanitarian abuses.

Given the expected trajectory of relative power in global politics — with North America, Europe, and Japan all in relative decline — perhaps the best that can be hoped for is a peaceful revolution within China to remove the Communist Party, potentially along the lines of the establishment of the Sixth Republic in South Korea after 1987.

China hasn’t grown richer out of the brilliance or wisdom of the communist party, but out of that party’s abandonment of communist ideology for a synthesis between export-driven industries making use of inexpensive labour and an unaccountable state willing to smash anyone who gets in the way of the big plans. The idea that there’s an appealing “China model” that other states should consider in the face of American decline is just wrong. It’s a police state rising through cynical diplomatic manipulation and a central role in the global consumerist manufacturing system, not a model for the future that any free people should embrace. Indeed, it is a model we should resist, even when the Chinese government cultivates fear over what the personal costs of doing so will be.

Trudeau’s climate failure

In closing, a few words can be said about other aspects of the PCF [Pan-Canadian Framework on Clean Growth and Climate Change]. The complete ignoring of the 2020 target illustrates the power of the Canadian dynamic of policy failure set out in chapter 1. Disguising the lack of will and effort needed to achieve an international commitment by focusing on a new target, some years distant, was done in 1997, in 2010 and again in 2015. It provides the government in question with environmental legitimacy by allowing it to appear committed to policy action while avoiding the conflicts and costs the must be borne to actually achieve a target. Unless things change, there is a very real chance it will be done again in the years leading up to 2030, regardless of which government is in power. Because we are so willing to push action off into the future, we are able to avoid the regional conflict inherent to the allocation issue. The Justin Trudeau government’s focus on the easy challenge (which, as events turned out, has not been so easy) of ensuring carbon pricing throughout Canada when the big four emitting provinces already had pricing in place, rather than the much more difficult task of convincing those four to do more than they had already themselves decided on, is a continuation of the dynamic first seen with the easy challenge of the 1995 voluntary program. At that time, as discussed, a voluntary program was all that could realistically have been hoped for. In 2015, however, with very different public attitudes, foreign and domestic examples, and a majority government eager to act, the PCF was a missed opportunity. Taking advantage of that opportunity would have required facing the challenges that are the subject of this book, in particular vastly different western and eastern energy interests. That was not done because the Canadian dynamic of favouring peaceful relations over effective policy was exerting its usual force.

As of the spring of 2019, the Pan-Canadian Framework program, so completely a product of this dynamic that has brought only policy failure since 1990, was providing the worst of both worlds. It did not have the programs in place capable of meeting the stated goal, while a major element of the program, federal construction of a pipeline, will if implemented increase emissions. While providing no guarantees of achieving its goal, the PCF is causing considerable damage to national unity and the possibilities of constructive federal-provincial engagement. The outcome of the 2019 Alberta election made that situation even worse since by then a supposedly national program was opposed by half the provinces, representing more than half the population, and three-quarters of total emissions.

Macdonald, Douglas. Carbon Province, Hydro Province: The Challenge of Canadian Energy and Climate Federalism. University of Toronto Press, 2020. p. 232–3

Related:

Christian nationalism in America

Today’s [Christian nationalist] movement leaders have declared a new holy war against America’s ethnically and religiously diverse democracy. Yet the vision of a nation founded on hierarchies enshrined in purportedly biblical law remains now, as it was with the Confederacy and Jim Crow, the foundation of a weak society, not a strong one. If we want to guard against demagogues and theocrats who wish to ‘redeem’ America, we don’t need a new theory of American democracy. We just need to recover and restore the vision of a nation dedicated to the proposition that all men and women are created equal.

Many leaders of the Christian right like to dress up in red, white, and blue to annouce themselves as true patriots. But they are the same people who seek to pervert our institutions, betray our international alliances and make friends with despots, degrade the public discourse, treat the Constitution as a subcategory of their holy texts, demean whole segments of the population, foist their authoritarian creed upon other people’s children, and celebrate the elevation of a ‘king’ to the presidency who has made a sport of violating democratic laws and norms. We don’t need lessons on patriotism from Christian nationalists. We need to challenge them in the name of the nation we actually have—a pluralistic, democratic nation—where no one is above the law and the laws are meant to be made by the people and their representatives in accordance with the Constitution.

Stewart, Katherine. The Power Worshippers: Inside the Dangerous Rise of Religious Nationalism. Bloomsbury Publishing, 2020. p. 275–6

Trudeau’s false radicalism

Geoff Dembicki has a piece out about how Trudeau’s method is to promise substantive reforms to voters, while privately comforting business with the understanding they won’t really be meaningful:

So on climate, for instance, he was presented as this kind of river-paddling environmental Adonis. He promised that fossil fuel projects wouldn’t go ahead without the permission of communities. But the Liberals create these public spectacles of their bold progressiveness while they quietly assure the corporate elite that their interests will be safeguarded. So at the same time Trudeau was going around the country and convincing people that he was this great climate hope, the Liberal party had for years been assuring big oil and gas interests that there would not be any fundamental change to the status quo.

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The Liberal climate plan essentially is a reworking of the business plan of Big Oil and the broader corporate lobby. Most Canadians probably wouldn’t realize this because of the nature of coverage in the mainstream media and the polarized political debate about the carbon tax, but overwhelmingly there is an astonishing consensus among the corporate elite in support of a carbon tax.

The plan is to support a carbon tax and to effectively make it a cover for expanded tarsands production and pipelines. That was a plan hatched by the Business Council of Canada back in 2006, 2007. For 20 years oil companies had resisted any kind of regulation or any kind of carbon tax and fought it seriously. But they started to realize that it would be a kind of concession that they would have to make in order to assure stability and their bottom line not being harmed. The climate bargain that Trudeau went on to strike with Alberta of a carbon tax plus expanded tarsands production was precisely the deal that Big Oil had wanted.

For a long time, Canadians prioritizing climate change have had no effective political option. Under first-past-the-post Green and even NDP votes are often counterproductive protests. I’m wary about criticism of the Liberals increasing the odds of a Conservative win, but I don’t think we should lie either.

Pharma charities and drug co-payments

I hadn’t heard about this weird distortion in the US medical system, where pharmaceutical companies use tax-exempt charities to manipulate the co-payment system used by health insurers for prescription drugs:

Half of America’s 20 largest charities are affiliated with pharmaceutical companies.

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Pharmaceutical companies will often claim that helping patients with their co-payments is a way of making costly drugs more accessible. But it has the fortunate consequence of making their customers price-insensitive, because insurance companies will often use high co-payments to nudge their customers into opting for generics over costlier branded drugs: no co-pay, no incentive to save money.

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The Securities and Exchange Commission (sec) is also looking more closely at independent charities that are sometimes sponsored by pharmaceutical firms. One independent charity offered co-pay support only for a specific type of “breakthrough pain” for cancer patients, a condition its sponsor had a 40% market share in treating. An sec probe has already settled claims with some pharmaceutical firms, though none has admitted wrongdoing. United Therapeutics has settled the biggest claim, worth $210m, with the Department of Justice. Lundbeck, a Danish drugmaker, and Pfizer have settled smaller claims. “Pfizer knew that the third-party foundation was using Pfizer’s money to cover the co-pays of patients taking Pfizer drugs,” according to Andrew Lelling, a us attorney, “masking the effect of Pfizer’s price increases.” Johnson & Johnson, Astellas, Gilead Sciences, Celgene, Biogen and others face investigations.

America’s health system is convoluted to the point of being surreal, as well as manipulated by the huge influence of the pharmaceutical industry on legislators.

Threatening clawback

A central aim of the climate change activist movement is to discourage further investment in fossil fuel projects. This is closely tied to economic analyses showing that the total cost of the transition depends critically on how quickly it starts and how effectively long-term high-carbon projects are avoided. It’s also the inverse of a frequent claim made by pro-fossil proponents: that investor confidence is necessary to keep billions flowing into fossil fuel infrastructure investment. That was the logic that made Canada’s federal government buy the Trans Mountain pipeline, in order to demonstrate to investors that Canada still has a legal and economic climate in which major fossil fuel projects are possible.

A potential strategy that could help avoid further fossil fuel infrastructure investments is the threat that profits earned in the near-term will be clawed back in the longer term to pay for some of the damages arising from climate change. It’s not something that today’s governments in North America are willing to threaten (not least because the longstanding purpose of corporations is to protect investors from personal liability for the actions of the firms they invest in). Nonetheless, it’s something that can be emphasized as a risk in the future in order to increase investor reluctance.

One practical way could be to begin tracking which entities large enough to be worth targeting in the future are profiting from fossil fuels today: fossil fuel corporations directly, but also major stockholders receiving dividends. Having some claim to being able to credibly track the flow of profits is essential to this strategy; otherwise investors will likely believe that they will have spent the profits by the time there is any demand for compensation, or that they will have shifted them through so many other investments as to have ‘cleaned’ them in a sense akin to money laundering.

The threat of clawback could be an argument to use when advocating divestment from the fossil fuel industry, since it would protect the institutional investor from such future claims of compensation, at least as far as future fossil fuel profits go.

It may seem pointless to suggest an idea like this when it is so far outside the political mainstream today, but a central point in the entire stranded assets / carbon bubble argument is that the political possibilities of the future will be different, and governments may grow far less accommodating of fossil fuels as decarbonization proceeds and the impacts of climate change worsen. Putting a little asterisk beside fossil fuel profits (* may be clawed back in the future to pay for climate damages) would both be a fair representation of a reasonable prospect, which can be made more probable through activist effort, and a way to make fossil fuel related returns seem less valuable and more tenuous than returns from alternative investments.

Fixed-term elections and the confidence convention

I have always been taught that the idea in Canada, the UK, and other Westminister-style Parliamentary democracies is that Parliament is sovereign and that the prime minister and cabinet must maintain their confidence to rule legitimately.

A recent Economist article on Brexit makes several references to how their fixed-election law ambiguously alters that:

[T]he Fixed-term Parliaments Act of 2011 upturned established conventions on confidence votes within the Commons, leaving confusion among MPs over both how to bring a government down and what happens when one falls. And the quirks of British parliamentary procedure provide various ways in which a sufficiently bloody-minded prime minister might force a “no-deal” Brexit without a majority in Parliament. This has all the makings of a constitutional crisis.

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The Fixed-term Parliaments Act got rid of the power that prime ministers had previously enjoyed to call an election at any time, thus reassuring the Lib Dems that the Tories would not cut and run as soon as they fancied their chances.

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The country may thus see a new conflict over where sovereignty lies—the constitutional question which, above all others, Brexit has dragged into the light.

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Some of the subsequent mess rests on the back of the Fixed-term Parliaments Act of 2011. Before this a prime minister whose flagship legislation was voted down—just once, never mind repeatedly—would have been expected to call an election. If he or she had not, a vote of confidence would have followed which a minority government would have been near certain to lose. The 2011 act replaced this convention with statute which says that a lost confidence vote triggers a two-week period during which any mp can attempt to win the backing of the Commons and form a government to avoid an election. When asked what this would actually look like, the clerk of the House of Commons responds: “I really don’t know—I don’t think anybody knows.”

It seems remarkable that an ordinary piece of legislation can muddy or upend the most important constitutional convention in Westminister democracies — the confidence convention — and that the legislation in turn was to solve a short-term coalition management problem.

The article also discusses another change that got limited consideration but which has important and open-ended effects: “The hurried inception of the Supreme Court was, in the mocking words of its former president, David Neuberger, ‘a last-minute decision over a glass of whisky’.”

Shareholder activism and fossil fuel corporations

One argument routinely used against divestment from fossil fuels is that, as investors, institutions like universities and pension funds might be able to discourage the most wasteful and damaging new fossil fuel investments and encourage fossil fuel corporations to use their resources and expertise to advance decarbonization.

In the U of T divestment brief we explained our doubts about this justification. Nonetheless, it remains an approach that some are trying:

Bruce Duguid of Hermes Investment Management, who worked with bp on behalf of Climate Action 100+, says that disclosure will help investors understand if the billions which bp continues to spend on oil and gas creates too much risk. bp will describe how big new capital projects stack up against the Paris goal of keeping warming “well below” 2°C relative to preindustrial times. Equinor, Norway’s state behemoth, agreed to something similar in April. As with Shell, bp’s resolution does not require it to cut oil and gas output. Greenpeace, a combative ngo, blocked entrances to bp’s headquarters in London ahead of its annual meeting on May 21st.

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For the time being, though, Shell, bp and ExxonMobil remain members of the American Petroleum Institute, which has sought to ease rules on emissions of methane, a potent greenhouse gas. They also maintain links with the Western States Petroleum Association, which last year fought a carbon tax in Washington state. bp spent over $13m directly to help defeat a ballot initiative in favour of the levy.

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Others are beginning to question the value of shareholder engagement. The Church of England has said it will divest by 2023 if no advances are made. “Investors’ patience is not limitless,” says Mr Logan. “It’s going to be measured in years, not decades.”

There are many reasons to doubt how meaningful shareholder activism can be, and to ask whether it’s a “shadow solution” that creates the impression that action on climate change will happen, while really justifying the continuation of the status quo. These firms have an enormous financial interest in keeping the fossil fuel reserves they own usable, which in turn means blocking climate change action. Furthermore, neither executives nor shareholders can be expected to meaningfully support a transition to decarbonization which would make these firms irrelevant.