Tuesday, May 22, 2018

Wynne's unpopularity and the economy

A key feature of this campaign is the unpopularity of the Wynne Liberals; they have become the unacceptable alternative, making the effective choice between the Doug Ford PCs and Andrea Horwath's NDP. Why? A principal reason is that the Ontario Liberals have been in office a long time. It happens to all governments and the Liberals have been in office in Ontario for almost fifteen years. Grievances accumulate, sharpen and deepen even to the point of being exaggerated as I think now is the case. Most of the issue grievances had their origins in the McGuinty government (with the exception of the privatization of Hydro One, a key Wynne initiative) but she takes the blame. However, economic factors (as discussed below) have also contributed to Liberal woes.

A similar phenomenon happened in Alberta in 2015; a variation of it looks like it will happen to the Quebec Liberals this year.

In the case of  Ontario, underlying this malaise are economic conditions that, despite the strong performance of the last two years, have created discontent.

This chart, adapted from Statistics Canada data, tells a part of the story. It measures growth in median incomes from 2005 to 2015 among the provinces and Ontario finishes dead last. This chart was also discussed recently in the Globe and Mail in the context of the election.

There are a couple of reasons for this outcome. Ontario was extremely hard hit by the deep downturn in the U.S. economy in 2008. That was followed by a high exchange rate that did not drop consistently below 80 cents U.S. until July 2015. Weak overall growth was characteristic for much of the period post 2008. In addition, job growth has been very uneven, as the Globe article cited above noted:
Over the past decade, Ontario has created 580,000 new positions, as measured by the increase in employed people. Metro Toronto, which accounts for less than half of the province’s population, nabbed 80 per cent of those jobs. Ottawa accounts for another 10 per cent. The rest of Ontario, with millions of people from Cornwall to Thunder Bay, accounts for the remaining 10 per cent.
Not surprisingly the Liberals are taking it on the chin, particularly in non-metropolitan parts of the province.

This is not the only time that the economy, which is only partially influenced by Ontario government policy, but whose overall strength is strongly tied to the North American and international economies, has played a decisive role in provincial politics.

The Bob Rae NDP government did make some unwise decisions, but their political fate was sealed from day one because the economy had already started down the road to the deep recession that was to plague them throughout their term before they were even elected. By contrast the Mike Harris PC government was elected just as a strong recovery in North America was beginning to take hold led by the United States. Nobel prize-winning economist and advisor to Bill Clinton, Joseph Stiglitz wrote a compelling book about that decade's economic growth - its title, The Roaring Nineties. On top of the strong U.S. growth the Canadian dollar declined throughout the nineties adding to Ontario's competitive advantage. That did not stop the Harris Tories from thinking it was them. In effect they were born on third base, but thought they hit a triple.

So what should we expect going forward? In the U.S. the recovery from the 2008-2009 downturn is nearing record length and I think we may be seeing the first hints of a negative outlook.  From the Calculated Risk blog a quote from a Merrill Lynch economics research note:
If bad luck intersects with bad policy, a recession becomes a real risk. We would keep a particularly close eye on two traditional business-cycle killers-the Fed response to stronger-than-expected inflation in the US and a growing shortage of oil, pushing prices to new heights.
Perhaps the 2018 Ontario election is not one you want to win.

Thursday, May 17, 2018

The most accurate poll was....

Mainstreet Research (a firm not around for the 2014 Ontario election) is beginning a daily tracking poll today, so with three weeks to go in the campaign we should expect to see this and the results of many other surveys.

There will be much said good and bad about individual polls in this campaign. However, one hard piece of information we do have is how the polling companies performed in 2014.

After it was over I compared the polls conducted in the last week of the 2014 campaign with the results on election day. I calculated the difference between each party's share of the vote and the final public polls, then added them up to get the big picture.

Here are the numbers as I first reported the them in 2014 ranked by total error, the top table looks at just the top three parties, the bottom table all parties:

In addition to the above there was a Nanos poll published about two and a half weeks before election day that ended up being the most accurate. It was excluded from this analysis because of its timing. You will note with all the red that the polls then mostly underestimated Liberal support. That kind of pattern could easily emerge this time, but with some other party's support being understated. The most accurate poll from the last election could change this year and the shift could be significant. To take another example from federal politics, between the 2011 and 2015 federal elections Angus Reid went from most accurate to least.

The 2014 polls were more or less accurate although you could not tell clearly from the closing polls that the Liberals were definitely headed for a majority.

When it comes to policies and complex matters requiring good judgement, polls can make large errors. A recent Ipsos poll makes the argument that Ontarians prefer spending cuts (71%) to running deficits (17%) or raising taxes (12%) as budget policy. Piffle.  For most voters the term "spending" is a difficult to understand abstraction. Substitute the words "less health care and education" for "spending" and see what you get.

Thursday, May 10, 2018

Strategic voting in the 1999 Ontario election failed to defeat the PCs. Can it work in 2018?

Two Ontario Elections

The Mike Harris PC government went to the polls on June 3, 1999, having been elected to a majority government in June 1995.  One striking curiosity about the two election results is that the Tories won just as great a vote share in 1999 as in 1995 but their share of seats in the legislature was smaller. They garnered 63.1 percent of the legislative seats in 1995, 57.3 percent  in 1999 - a consequence of strategic voting. I drafted a 17-page paper on the topic after the election. I discuss some of my conclusions below.

Two Ontario Elections, 1999 & 1995 

Ontario Election
June 3, 1999


Seats - In %

Ontario Election
June 8, 1995

In %
Seats - In %

The PCs had made a lot of enemies by 1999 - teachers, nurses, trade unionists, residents of Toronto, etc. The issues made strategic voting a theme of the election even though it was largely avoided by the parties themselves. Several strategic voting organizations inserted themselves into the campaign regardless. I think their impact was minimal to non-existent, but their mere presence reflected the real grassroots consciousness of strategic voting that had developed. That consciousness did have an impact.

In eight ridings where PC candidates were defeated, strategic voting appears to be the key factor which accounts for the outcome.  Of the eight PC losses, one was to a New Democrat, the other seven to Liberals.

It was not enough to change government. Simply put, about 45 percent was too close to 50 for the combination of opposition votes to achieve the objective of preventing a PC majority. But there were also nine 'near misses' or outright strategic voting 'failures' that, if they had gone the other way, would have left the government holding less than half the legislature.

Strategic voting demonstrated real potential.

Can strategic voting play a significant role in the 2018 election?

I think the answer is yes. However, what will determine its success will be the level of support for the Conservatives.  As the 1999 outcome demonstrated if the Conservative vote is high enough strategic voting, which will inevitably be imperfect, won't succeed. The current PC average in the CBC poll tracker is 41.1 percent and they have a large lead over the NDP currently in second place. Even so, Doug Ford, like his brother before him, is a deeply divisive figure. If anything, he is even more likely than Mike Harris to trigger a coalescing of opposition forces into a strategic vote that could finally succeed this year. To me a strategic voting success in this context is one where a relatively high PC vote is overcome by strategic voting. If PC support collapses (as it did in the 2015 federal election) that is a different phenomenon.

In the eight ridings where strategic voting worked in 1999 the winning percentage ranged from a low of 44.4 percent to 50.6 percent.  The losing PC candidates in all but one case obtained more than 40 percent. That is what we should expect to see if strategic motivation brings opposition voters together around one candidate.

Recent polls suggest it may be the NDP this year that plays the role of appropriate strategic alternative overall. That would mean a dramatic departure from the voting patterns of 2014. NDP support then was uneven, very weak in some places, much stronger in others. To be successful the NDP vote would have rise dramatically in some regions where they were weak last time, taking over from the Liberals the role of principal opponent to the Conservatives. It would have to have a wave like character, certainly a possibility.

A shift of this magnitude would make it difficult to predict individual ridings. My seat forecasting model did not project the 1999 outcome accurately because the pattern of voting changed greatly from 1995. It would be the same this time compared to 2014, not just for my efforts but for others as well.

The turnout last time was low. It would not surprise me if Ford Nation motivated quite a few new voters to turn out for the first time to support them. Intense dislike of Ford could do the same on the other side of the equation.

I will have more on strategic voting in subsequent posts.

*As a footnote the term 'strategic' is not really the precise terminology, 'tactical' would be better but I use the more commonly employed language here and will continue to do so.

Thursday, May 03, 2018

The upside down world of Ontario politics and economics 2018

Current polls suggest an easy victory for Doug Ford on June 7, although this is not yet certain. Assuming he wins, what should we expect that to mean?

To listen to his rhetoric it would mean tax cuts. He has suggested cutting the current corporate tax rate from 11.5% (already lowest in the country) to 10.5% and has even suggested a tax cut for those on the minimum wage (an alternative to actually raising the wage, an action that would leave those affected worse off).

To finance tax cuts would mean cutting spending, which Ford suggests can be achieved by finding efficiencies and not destroying jobs. In an interview with CBC radio morning host Robin Bresnahan he said, as Tabitha Southey put it in Maclean's:
...his “economic plan,” ... is to find close to $6-billion in “efficiencies.” Bresnahan enquired what exactly these efficiencies might be, a question that seemed to alarm the freshly minted PC leader, as if “efficiencies” were in fact small skittish creatures easily spooked by journalists asking questions about them.
Of course most of what government spends is on wages and salaries for teachers, fire fighters, paramedics, nurses, doctors, road maintenance crews, bus drivers etc. etc. Even if we make the unlikely assumption that Ford would find such "efficiencies", they would unequivocally cost jobs and wages.

Beyond that many of his supporters make the assumption that the Wynne government has been spending wildly and it is time to rein in the excess (to some extent Wynne wants to encourage a variation of this view). Some Conservatives probably think of this as similar to what the Harris government confronted when elected to office in 1995. In fact that is not the case. The Ontario government spends less on government programs relative to its population than any other province and that has been true for years. It ranks 10 out of 10. However, that was not true in 1995.

Using the federal fiscal reference tables made available annually by the federal Finance Department and Statistics Canada population numbers I have created several tables to make comparisons.  In one, I ranked all provinces and their program spending over time. The results can be seen in the table below:

If one looks at this chart one can see that Ontario, as recently as 1995-96 (a year that gave us three months of the NDP under Bob Rae and nine months of Mike Harris) ranked second in overall program spending per capita. This was mainly the consequence of the last budget of the Rae government, although Harris started cutting once he got into office. By the time that the PC Harris-Eves government left office they had dropped Ontario's ranking on program spending to 9th and within a few years under Dalton McGuinty the province dropped to 10th place, a rank it still occupied a year ago.

The reality is Ontario spends too little not too much. A couple of examples. There is a website dedicated to increasing spending on school upkeep and maintenance called Fix Our Schools that succeeded in getting an increase in funds for school maintenance last year in part due to its own commendable efforts, but also after a scathing report from the Auditor-General on  the deplorable condition of Ontario schools. There is still a deficit of unmet maintenance of $1.6 billion.

Another example is health care. A recent issue of Toronto Life did a reasonable job of documenting some highly negative consequences of cuts to health care:
Ontario’s hospital-bed heyday was in the 1980s. It’s been pretty much downhill since then. Premiers Davis, Peterson and Rae kicked off the cuts, in what was partly an ideological attempt to deinstitutionalize medical care in the province. The bulk of the rest was the work of Mike Harris, who shut down 39 hospitals and forced the amalgamation of dozens of others. In 1990, Ontario had 33,403 acute care beds, and, even as the population kept growing and aging, by 2014, we had only 18,588. 
Since 1997, a low point in spending, increases to hospital funding have been mostly very modest, and in recent years have often been eclipsed by inflation. The 2008 recession made that bleak scenario even bleaker: 2017 was the first year in five that hospital budgets weren’t outright frozen, even as patient volume, labour costs, energy costs and regulatory requirements all continued to go up. Out of necessity, our hospitals have become lean. Today, Ontario spends on average $389 per patient less than the other provinces. It shows.
Of course some of the reduction of hospital beds reflected things such as moving mental patients out of hospitals into the community. One long term consequence of this, a rise in homelessness, as this web site notes contributions to homelessness include: "... inadequate discharge planning for people leaving hospitals, corrections and mental health and addictions facilities."

Of course the spending inadequacies go way beyond these examples.

What underlies this situation is the other legacy of Mike Harris - taxes that are too low.  We can't afford realistic levels of spending for health care and education and many other needed public services. What Ontario needs are higher rates of taxation, including for the affluent readers of Toronto Life (a point noticeably absent from the article). Despite 15 years of Liberal government it is the ideology of Mike Harris that still dominates government spending overall in Ontario. In terms of total revenues per capita Ontario was 9th out of 10 in the latest data after a decade as 10th out of 10.

This needs to change. If Ford wins Ontario will get the opposite of what it needs.

Of the major parties only the NDP offers some modest tax increases, on corporations and the affluent mostly. However, those increases are largely to finance new spending rather than needed fixes to existing gaps. The NDP also offer a couple of tax cuts (including one that will benefit some upper income citizens).  More ideas to increase revenue are needed from all parties.

I would argue that there is also a major journalistic failure here. What I have described above does not reflect media coverage of Ontario politics and economics. Our major institutions such as the Globe and Mail instead amplify the prevailing mythology, saying such as things as: "This is a dire time for Ontario taxpayers."

This news story and the report from the Financial Accountability Officer, on which it is based, worry about future deficits but imply only spending cuts can close the gap. Neither points out what is obviously true: that if we are worried about deficits shouldn't the province with the lowest per capita revenues be thinking about at least some tax hikes. Deficits are not one-sided affairs.

But can Ford triumph? Can tactical (commonly called strategic voting) keep him from winning a majority?  I will address this in subsequent posts.

Monday, May 08, 2017

Is British Columbia Headed in the Direction of Washington, Oregon and California?

The closing polls in the BC election suggest a close race perhaps trending in the direction of the incumbent BC Liberals, despite the name really small 'c' conservatives. However, it is clearly too close to call.

My seat estimate, which is based on riding boundaries that are out of date, suggests the NDP could finish a couple of seats ahead but one absolutely cannot tell. In the past many Green voters have switched to the NDP at the end of the campaign although so far there is no indication of that this time. If anything the strength of the Greens in this election (they are up from 8% last time to around 20%) may reflect in part that it has become a 'safe' alternative for some disaffected Liberals who are unhappy but want nothing to do with the 'dreaded socialists' (although the Green platform is clearly closer to the NDP than the Liberals).

In the 2013 election the BC Liberals won a comfortable majority of seats while winning the popular vote by just over four percentage points. I have done some poll averaging that suggests how tight it is this time:

British Columbia is a difficult place to poll because it is so diverse, ethnically and geographically. You can see from a map of the 2013 election that overall the NDP is stronger on the coast (as are the Greens) while the Liberals hold sway inland.

But what of the longer run? The small 'c' conservative coalition (originally as a Conservative-Liberal coalition, then Social Credit, and more recently BC Liberal) has dominated BC politics on all save three occasions since World War II. But can it sustain itself over time?

If we look south we a similar geographic pattern overall where the Democrats in blue generally dominate along the U.S. Pacific coast in elections to the U.S. House of Representatives (and Presidential, Senate and Governors races) while Republican strength in red is concentrated inland.

The west coast jurisdictions in the two countries have several key differences. However, one that is important is simply that B.C. extends further inland (its easternmost tip borders on Montana). The Pacific coast in both countries is where the large urban areas of Vancouver, Victoria, Seattle, Portland, San Francisco, Los Angeles and San Diego are located and all lean left of centre.  Support for conservative parties in both places is stronger in rural (whether agricultural or resource-based) communities.

The blue state-red state trend in the U.S. is of relatively recent vintage (until the mid-nineties Republicans were strong in California), but the trend to more left of centre views (and growing green consciousness) is clearly characteristic of the coasts in both places. Can it be too many more years before the trends evident south of the border become typical of B.C.?

Friday, May 05, 2017

Clarence Lyle Barber

One hundred years ago today my father, Clarence Barber, was born on a farm near Wolseley Saskatchewan. His father was a farmer who sent milk to Regina, paying my father as a child to milk the cows. However, his mother had been a school teacher who highly valued education.

Clarence Barber
My dad was the second of four sons, three of whom would receive a PhD. In his early years he attended a one room school house, and loved to tell the story of being called on to give an answer in the late morning, but only after he had put on his skates to play hockey during the lunch hour.

He entered the University of Saskatchewan in 1937 three years after graduating from high school (the depression prevented him from starting sooner). By 1943 he had degrees from the University of Saskatchewan (1939), Clark University in Massachusetts (an MA in 1941) and had completed his course work for a PhD at the University of Minnesota (received in 1951).

At the conclusion of a summer course at the University of Chicago during his doctoral studies, the course professor, Frank Knight, handed him a copy of John Maynard Keynes' General Theory of Employment, Interest and Money. Although trained to that point by Chicago school free market economists, my father, as a result of this encounter, became a life-long Keynesian with an ongoing interest in seeking practical solutions to the economic difficulties facing ordinary people.

After two years in the RCAF he left the air force early in 1945 to participate in the preliminary work at the then Dominion Bureau of Statistics that would lead to the postwar creation of Canada's national accounts.

By 1949 he was established as a professor of economics at the University of Manitoba, where he would remain until his retirement in 1983. However, he worked for one year each at the Queen's (1954-55), McGill (1964-65) and the University of the Philippines while serving as an advisor with the United Nations in Manila in 1959-60.

His very accomplished career had some real high points:
  • He published a seminal article titled simply Canadian Tariff Policy in 1955 that articulated for the first time the theory of "effective protection" provided by the tariff.
  • He served as Director of Research for the Manitoba Royal Commission on Flood Cost-Benefit from 1957 to 1959. Without his pioneering work in cost- benefit analysis, the Red River Floodway around Winnipeg might not have been built. 
  • He served as President of the Canadian Association of University Teachers in 1958-59, at a time when it was dealing the academic freedom scandal at United College in Winnipeg arising from the dismissal of Harry Crowe.  
  • In 1966 he was appointed by the Government of Canada as the only member of the Royal Commission on Farm Machinery, delivering its final report in 1970. 
  • In 1972-73 he served as President of the Canadian Economics Association.
  • In 1977 he was elected to the Royal Society of Canada. 
  • From 1982 to 1985 he was a member of the Royal Commission on the Economic Union and Development Prospects for Canada. 
  • In 1987, he was appointed to the Order of Canada and to the Order of Manitoba in 2001.
His personal side was captured well in the Lives Lived column written by my brother Dave and published in the Globe and Mail in the summer of 2004 following his death at age 86 the previous February 27.
But it wasn't always hard work. In the early 1960s, he built a summer cottage on an island in the Lake of the Woods where he would spend the summers reading and relaxing. He loved to build and fix things: tables, a toy castle, a boat. My brothers and I joked that dad's handiwork was evident when we discovered some broken object that he had pasted back together in some ingenious manner.
Most importantly, he bestowed upon me and my brothers a profound sense of fairness, critical thinking, and acceptance of others. His favourite phrase was, "Where's your evidence?" Always sticking up for the underdog in defending an alternative viewpoint, he loved to debate issues of the day at the dinner table. At the height of Brian Mulroney's problems, I declared: "You know, dad, nobody likes Brian Mulroney." He replied emphatically, "In certain parts of Quebec, they do."  
A world traveler, he took my mother (affectionately known as "Babs"), me and my three brothers all around the world (with stops in the Philippines, Japan and London) when we were just kids. All this travelling exposed us to other cultures at a very young age - that was important. And he passed on to all of us a deep love of music; his record collection included everyone from Miles Davis to Ravi Shankar, Miriam Makeba and Glenn Gould. 
During the cold prairie winters he loved to ski and curl. But eventually Babs persuaded him to retire to a warmer climate in 1985 in Victoria, B.C. He developed a love of gardening, walking, and creating lists of the top 10 books he had read in that past year. Incredibly well-read, his lists reflected a huge curiosity about the world around him. He would often send these out at Christmas time as recommendations to friends. I marveled at the huge diversity of subjects on these lists. My dad championed the values of compassion, fairness and equality. Underlying his life and career was a deep thoughtfulness and kindness to others. If the measure of a man is whether he has made a difference in other's lives then my dad succeeded gloriously. 
There is nothing more for me to say except that we all still miss him.

Sunday, February 05, 2017

Trudeau and electoral reform

This week Justin Trudeau killed the prospect of significant electoral reform in this Parliament. His argument that there isn't a consensus may be true. However, he is rightly getting flack from left and right because his original promise in June 2015 was unequivocal - he pledged that 2015 would be last election to be run under the first-past-the-post system.

It is playing out as one might expect. My guess is that the Liberal calculus is correct: electoral reform is not really a top of mind, critical voting consideration for most of the electorate. However, whenever you promise something in language that strong and then don't keep it, there will inevitably be damage to your trustworthiness. Remember Trudeau senior's problems with "Zap you're frozen!". He lost the next election.

The real winners here are the Conservatives who get to keep the system we now have, which they feel they can exploit by splitting the votes of other parties. They successfully seduced the NDP into supporting a referendum within the House of Commons' electoral reform committee, not a smart move on the NDP's part. The record of referendum results in Canada suggests default support in such votes is for the status quo. One expert testifying before the Electoral Reform Committee said: "The majority of people who came to the polls who knew nothing about it essentially voted against it. I think the Evidence, certainly from Ontario, suggests that the large majority who come to these referendums really know nothing about the substantive details of the issue." (See report, footnote 100 on page 32)

The referendum is not a good way in seeking change. In the current circumstances, the NDP has been strongly asserting that there is a consensus and strong popular support for the idea of proportional representation. I am skeptical of that claim; I suspect most of the electorate has no clear set of feelings on the subject. Had there been a referendum the majority may well have opted to keep first-past-the-post.

If the NDP had offered to support Trudeau's initial inclination for preferential voting the Liberals might still have cancelled electoral reform, but it would have been politically more difficult. From the perspective of those advocating greater changes such as proportional representation, any change in the electoral system, in my view, would have broken the ice in public consciousness on the issue and created the potential for further change.

There are still two future possibilities for electoral reform. The issue has been bubbling away at the provincial as well as the federal level. The BC NDP has promised to hold a referendum on proportional representation in time to implement the change before the subsequent provincial election, if they are elected in the upcoming provincial election on May 9 of this year. If they are successful, reform at the provincial order of government could have a powerful demonstration effect (remember how medicare got its start). BC has already conducted two referendums on electoral reform, one did have a majority in favour but nothing happened because the government set sixty percent as the benchmark for moving forward, and the other had a majority against.

The other possibility of future action is pressure from the NDP after the next election on a future minority Liberal government. At the moment such a prospect is simply in the realm of speculation. For all the talk of democratic reform and the appointment of a new minister, it is clear little will happen between now and the next election. However, compared to 10 years ago there has been considerable growth in support for electoral reform and proportional representation. The activist base supporting it is now much larger. It would be unwise to think its moment has passed forever.