Dive into the deep, no lifejacket necessary

Supply and Demand stupid. The reason given for the recent upshoot in home prices. Seems simple enough, a very obvious solution to the giant elephant in every Canadian who hasn’t bought real estate’s life. How can we not understand, the supply of homes is low and more immigrants are coming into the country therefore prices will rise. Even a simpleton can understand that. Try to go to a Real Estate Agent, and they’ll tell you the same thing, forget inflation, forget unemployment, forget the economic argument (because there isn’t one) and buy now otherwise pay 20% more next year. Forget the fact that if house prices fall, guess who’ll be under water in their mortgage? Not the realtor.
Unfairness defined
For those who remain homeless, should’ve bought when the economic fundamentals behind 10% YoY house price increases were weak at best (think 2015). Now that the fundamentals are even shabbier, young people are supposed to throw themselves into an even more twisted market and over leverage themselves more to barely afford a mortgage, property tax and utilities. Even for condos this ratio can make up at least 50% of a single earners income. Most people I know who are looking to buy only have between 5-8% saved up to put down on a house. Now in most situations this would be considered crazy but in Toronto, that represents approx. 1.5 years of savings, and that’s if you live at home. Right now prices for townhomes are between 400-600k. That means to have 30-40k saved up, I’d need to save for about a year and a half. But here’s where the situation becomes even more unfair. I’m supposed to throw myself into a bubble of prices competing against people who weren’t born in this country and made their money elsewhere for what reason exactly? I’ve paid income taxes and property taxes and HST on the income I’m putting my money down with. I’ve had it documented through T4s and Notice of Assessments for the last few years, yet I have to compete against people who come in from other countries where they made money in those countries systems. This is fundamentally unfair. There’s no level playing field. Vancouver just implemented a foreign buyer’s tax and their property market fell by 40% but the people over in Toronto will tell you that foreign buyer’s only make up 5% of recent sales. This is a bullshit fact. Notice they (CREA, specifically Tim “Lost 3 elections when my party was up in the polls a month before the election” or “I’ll cut 100k public sector jobs” Hudak) tell you the amount of sales but they don’t tell you the total percentage of sales volume. What I mean by this is that what if the 5% is at the top end of the spectrum, what if it’s driving higher prices? They don’t tell you this because they (real estate) wants to keep it’s closed garden of data hidden because if it was open, Realtors would not make as much money. Tim Hudak is incentivized to lie or misconstrue facts to fit his narrative. This is why having people of authority who happen to be uneducated people spewing facts is dangerous. Now everyone who hears that only 5% of purchases are made by foreign buyers will take this to be gospel but no one has asked the important followup question of what percentage of the market (in $ terms) does this make up.
I’m used to paying tax, they’re not
Also who’s to say that “foreign investors” actually lead to more prosperity after their initial splurge on real estate. Think about this. Think about how welfare rates in the richest parts of Vancouver shot up after “foreign investors” invested in the real estate there. This is documented by Statistics Canada (Google ‘Thousands of Metro Vancouver mansion owners avoiding taxes’). We have people who have never paid tax in their lives (this is the Blog writers opinion) who come to Canada, buy a house and take advantage of our system. Again as a Canadian who has made money in Canada, my net worth is documented. Yet when the spigot is finally closed and property does not increase at a 20% YoY pace, how is real estate going to be marketed to sell? We are selling our financial future for short term gain that is going to the least deserving of our labour class (e.g. Real Estate Agents). This is also skewing our labour output as a nation because why be an Engineer or Doctor or other skilled trade when you can just go be a real estate agent. Again these kinds of trends do not manifest over a short time period but rather over the long time horizon. This artificially makes certain trades more expensive because we have a period in time where our young people were herded into becoming realtors. This is the exact same thing that happened to Alberta during the oil expansion, where many young people bypassed University and College for the six figure salaries on the oil rigs.
I explained this to a realtor friend of mine recently. Canada and China are supposed to be 2 separate systems. Free trade untangles this definition but forget even that. Think about this. You have 100 people in China & 100 people in Canada. In China, those 100 people are doing things. They’re working in factories, they’re working on developing needle work skills, they’re working on expanding their technical skillsets. In Canada, there’s a higher proportion of people doing real estate. This is partially due to lack of capital controls that allows foreign capital to come into Canada and devour our real estate market, artificially increasing the value. But since there’s an artificial increase in the value of Canadian real estate it’s a double edged sword because that cost is baked into each and every single corporation’s rent costs. So now we’ve identified 2 areas where costs are artificially higher in Canada due to the influx in Chinese money:
1) Labour rates are higher because there’s more realtors
2) Real estate costs are higher because land is artificially increased in value
Free trade – a globalist’s saving grace
But free trade actually blindsides you into thinking that Canada is still a manufacturing powerhouse. This is because we can still get stuff for cheap. But guess what? We don’t have control over that production and since our consumption isn’t likely to decrease, this makes us more likely to bend over backwards to satisfy Chinese demands. Remember this is an undemocratic country that I wish Canada to not emulate. I’m not going to touch on this but increasing immigration to make up for the fact that Canadians are not procreating at a respectable rate is also a farce of a stat. Since housing is such a big cost, how can anyone afford kids? How do you afford kids without a house? How do you afford kids when there’s such a high daycare cost. Again politicians want to take the easy route to prosperity. Not the one that requires work. These issues were the same issues from 10 years ago but now they’re even worse & the answer is plain and simple, free trade.
Here’s where we get to a common sense problem, one that I’m not really sure why it exists. But it is the ability to apply for a mortgage. I don’t understand why T4s are not the basis for applying for a mortgage. It’s what we use to pay taxes, yet there’s other means of income declaration that we can use to increase the value of a mortgage we can buy. When you have shoddy practices for income verification in the mortgage process, this will likely increase the value of dishonest mortgages. This will also increase the size of a bubble because you’ll have a certain percentage of people carrying mortgages they cannot afford. Again I’d love some government data here but they’re too busy arguing Bill M103. Stopping bad mortgages that seems to be an obvious KPI that the government should minimize. Now I’m not someone who believes in government intervention for private industry. But when the government buys mortgages off banks (who issue the mortgages) and guarantee them, I get nervous. I’m a tax payer and when my future tax liabilities are going to go up because of government inefficiencies, I get irritated. For those who say this doesn’t happen (google “1 in 5 Canadian Homeowners commits mortgage fraud, says top broker”). Again this isn’t Statcan releasing data but just go to a mortgage broker and try to take out a mortgage that’s bigger than you can afford, see if you can get away with it. Now the reason I get irritated is because the same type of system that almost brought down the US Banking system has the same type of underlying system present in Canada. That is the Federal Government has a Crown Corp (CMHC) that is responsible for buying mortgages from Banks. This frees up capital on the banks’ balance sheets and makes it so banks no longer have those liabilities on their balance sheets. The banks transfer the risk of default from the private industry to the CMHC and tax payers. Again life is all about incentives and now you’ve taken away the incentive to only write good mortgages from banks.
So what can the government do in order of effectiveness
1) Implement foreign buyer’s tax – BC had the balls. Ontario has ovaries in the Premier’s Office and Canada has them in the PM’s chair. No chance of this.
2) Lessen mortgage fraud – again will require work. Politicians don’t do work, so no chance of this
3) Increase interest rates – very little chance of this happening. The reason is plain and simple, it’ll increase interest payments the government has to make to service debt (both provincial and federal guvs are deep in the red). No incentive but would be most effective behind foreign buyer’s tax
3) Enforce tax on primary residency – thegreaterfool seems to think this I what the government will implement. Again, it’s uncertain how much this will lessen the market. It’s the least effective of the top 4 government actions
4) Come up with some convoluted law that enriches their buddies and makes it so they do as little work as possible. Bingo bango now everyone go back to work…

Why Metrics are Important

The majority of this post will be devoted to the title matter, of why metrics are important. The rest of the post will be attributed to why deficiencies in a system can overwhelm and cause disproportionate damage to a system.

Why Metrics are Important

What I’ve learned by working in a manufacturing environment is the continued proliferation of data driven results is driving productivities higher and higher. One specific KPI that is often used is the number of parts made or services delivered per hour. A simple metric that lets you judge very quickly how much money a company (or person) can make. When you break a process down in steps (Hi Control Plan), it’s also a metric that allows one to understand an end-to-end process and see where the gate in a process exists. This can drive down process cycle times and allow for throughput into a process to be maximized. Remember throughput being maximized.

For when services are delivered, you can scan geographic zones and quickly find out where the quantity is most demanded and where demand may be weak. You can see similarities into how services are delivered, but you can also very quickly see how services delineate in different regions. It is easy to identify KPIs and observe how KPIs differ. This may be the result of differing political conditions, skillset concentration, foreign relations between countries or other variables, but generally in a country, conditions should be standardized. This is to say no matter if I open up a plant in Mississauga or Inuvik, the costs should be the same, so the services that I deliver should not differ much region to region. Now that we’ve kind of created a baseline for nations, what about if external stressors within a country caused services to be a delivered a certain way. Let’s say in the non competitive areas, regions which have slower growth and sparser populations (e.g. Nunavut), services are delivered with services technicians who don’t really have to focus on payment of a mortgage as one of their principal payments. It’s not a stressors in the noncompetitive region day-to-day lives, since this stressor does not exist (or is limited) where they live. I would argue a definite advantage, since we’re talking about finding a place to live, not picking out strawberries. Also if the money stressor is minimized on people, who knows how the service they deliver might evolve. Again this is something that could be better understood with additional (or any) KPI supervision. If you think about your healthcare & how sometimes you don’t feel like the doctor has listened to you (or spent the full 1 hr of a physical with you even though they charge the province for a full hr), I feel this kind of exercise would be an appropriate root cause to see if your doctor has acted in an efficient manner. These complaints are all symptomatic of a broken system and the only way to fix a broken system is through the implementation of a formal QMS. A formal QMS allows you to define customer needs and document tailor made skills that serve that need so that costs are not wasted (or hidden). A short term fix could be increased vigilence when it comes to dealing with doctors, however this will not solve many of the inherent inefficiencies in the Canadian way of delivering medical care. Many will give the excuses that, ‘well doctoring is such a specialized skill and that’s the reason there’s a skills shortage’. But Cuba did it, and they have some of the lowest healthcare costs in the Western World & guess what? Hospitals there are ISO 9001 certified. Now I haven’t been able to view any audit specifications, or control/risk documents so I’m only going by the sentence on their website, but they’re QMS certified so it is an interesting coincidence.

The point of this article, is that when optimizing processes, I can see a quick dashboard of relevant KPIs to ensure service standardization. The reason I mentioned throughput maximization above was because that can point out any service abnormalities. For example, if doctors with a mortgage and substantial debt, have higher throughputs, is that because they’re spending less time on clients or because of a different reason? If you incorrectly identify an unrealistic baseline throughput this could act as an additional stressor, cutting the quality of canadian healthcare.

However we will never be able to define this grey area without the work and we haven’t done the work as of yet. The introduction of a QMS would allow for cost transparency and eventually cost feedback into the process of delivering medical care. This is where I’m going to state, I love my Canadian healthcare and certain aspect of it (as summarized by Ralph Nader. But costs are going up, and to be ignorant of costs is setting the Canadian public down the path for failure – and if not failure, then longer wait times and less options. No analysis is done to ensure sustainability or cost effectiveness (or at least public papers). It seems like the only analysis I ever see thrown around is how Canadians (& nearly every other country with socialized medicine) pay significantly less for healthcare compared to the USA. But as someone with a background in Data Analysis, I always question a single stat that is supposed to summarize everything. For example, simple questions like, does that include R&D spending towards healthcare as well? Do the exact same services cost more or less in the USA? Questions like these.

The rest of this article, I will discuss failure and what happens when something small fails in a big system. To think about idea, I’m going to illustrate eating food in a way you probably haven’t thought of before. The concept is general enough that it can be applied to any process with subprocesses that interrelate. If one of the subprocesses fails to work, then it can put excess load on other subsystem components and cause them to fail prematurely.

Think about when you eat and chew your food to a sufficiently ‘mushy level’. Your body performs best when it is focused on one task at a time. Meaning, if you chew your food slowly and allow the food to enter your stomach little by little, your body can extract maximum nutrition from the food because your body first focuses on chewing, then transporting the food down your throat into your stomach then the rest of the digestion process. You might actually end up feeling more full from less food by this means as well. But if you don’t chew your food properly, then this one habit can end up having long term debilitating effects. You can end up overeating and over the course of many years this can put excess strain on everything from your esophagus to your colon. This is because the body now has to act more to digest the food because the work centre responsible for mushing the food (mouth) did not do its job. This can cause early failure of ‘other’ subsystem components because they were forced to do the work they weren’t designed to do. This exact phenomenon can be present in company documentation and also in government service documentation as well. It’s frustrating to see inefficiencies in a government service that you see present as a service recipient, however since the system doesn’t account for this potential feedback, the system will never get better. The system also does not account for visibility of continuous improvement exercises but that is a step 2 behind setting up a formal QMS.

The “Great Job” Fallacy

As someone who’s worked with a few “large” manufacturers (revenues ranging from 50M-500M), I’ve observed a constant that is how different org groups work together to deliver value to their customers. Before Quality Management Systems were “a thing”, organizations discovered best practices through having a customer complaint travel up the org structure, until someone was sick enough of hearing these complaints, that they established a best practice. If the complaints died down, then the corrective action worked and if the complaints did not die down, then maybe it was just something the worker was going to have to permanently deal with.

These inefficiencies were the end result of a couple of things:

  1. No formal oversight in the service/product delivery cycle
  2. Companies who grew too fast
  3. Protected industries

Now I could just summarize all three as competition not rearing it’s ugly head (yet) as it’s obvious to Quality Engineers that if you get it right the first time, you don’t need a QMS to correct (internal or external) services since no inefficiencies exist. But this is unlikely and hence the need to document processes to deliver services.

Before we discuss the “Great Job” fallacy, we’ll do a deep dive of how responsive and flexible organizations come to be by discussing the inefficiencies introduced above. Regarding the first point, this is often the case when a company is delivering parts & services and there’s no active (or passive) feedback mechanism from the customer or its users. This is synonymous to having a closed loop feedback system as compared to an open loop feedback system.

Relating it back to the paragraph just above, imagine having two companies who deliver tires to their customers and they both have the exact business processes and similar cost structure. Assume that one of the companies, decides to invest some money and distribute a survey to their customers and then they use their data to improve their product or even to give better advice as to how customer behaviour (e.g. getting tires rotated or maintaining a certain level of PSI) can lead to increased product performance. This is an example of oversight being created and using the data to improve the product reliability stats. This can provide competitive advantages for companies as it helps them improve internal processes to better suit the needs of their customer. Systematic problem solving has been an industry focus since the 70’s with industry tools ranging from Control Plans, PFMEAs, 8D Problem Solving and PDCA problem solving cycles all being developed.

To the second point, companies that grew too fast, can often have holes in their documentation. It’s a good problem to have since being ahead on the technology curve is usually the root cause for growth. As a result of innovation pushing the limits of the organization to new heights, this gives them a leg up on the competition. However, it’s important to note that this increase in product adoption will only take place until the competition catches up to the new product technology. It’s hoped that the innovative companies were able to cash in on their advances in technology, as catch-up is being played by industry competition. It’s important for innovative companies to document processes so that inefficiencies can be rooted out during a revenue growth phase. It’s hoped that companies who are already large have processes that can appropriately oversee new tech innovation so this block of knowledge is targeted at companies who truly found a new market for their products.

Protected industries do not face competition. This is important to note because this eliminates an incentive for those organizations to reduce their cost structure.

So here’s where we talk about the subject matter of the article, the “Great Job” fallacy. Let’s say your company’s processes could be more thorough and indepth, or they don’t really cover the reality of what a job is presently doing. This can happen as processes mature, process documents need to become live and require updating regularly. The reason for this is that for an auditor or a QA, those documents need to be an accurate representation of what an employee’s labour input is actually being used for. If they’re not periodically updated, then this is impossible. During updates, when gaps are identified, such as a gate process being overseen – this can lead to inefficiencies and the premise of the audit is to drive these inefficiencies into the ground.

For example, let’s say an employee has specific job duties that could cover some customer service aspects as well as some engineering aspects. Now let’s say employee X’s manager thinks he’s spending 75% of this time engineering and the remaining on customer service duties but this is far from reality. Since employee time is a scarce resource (~40 hrs a week) and the primary input into satisfying the needs of his/her manager, it can get neglected in the daily grind of a 9-5. This is what I mean by gate process that gets overseen. The customer service aspect might be taking upwards of 50% of employee X’s time, so it’s the gate between what the manager (& upper mgmt) wants and what the employee is actually doing. The employee can still being doing a “Great Job” but because process flows are ill-defined, it’s difficult for that employee to delegate tasks without going through a ‘learning period’ with whoever they train. Employees who are not especially fond of these ‘learning periods’, might just bite the bullet and inadvertently create that gap between what’s expected and what happens. Over time, this gap between what the employee is actually doing and what the manager needs the employee to do for the organization to succeed, widens. This can rear its ugly head since without a proper organizational QMS, these inefficiencies often go by the wayside. This is an organizational problem that gets overlooked and it’s primarily because of ill defined processes. Proper QMS control can lead to a more flexible organization that better knows its own capabilities and can react better to unexpected events. Knowledge capital can be more effectively reallocated to high priority events, while not affecting the day to day ops of a business.

Economist Moment – Protected Industries

The OPG (Ontario Power Generation) is a prime example of an organization that is completely protected, has no focus on implementing QMS and therefore fails to accurately reallocate their engineering resources. Once a thorough analysis is done of the OPGs processes, I would put money on the “Great Job” fallacy being systemic across the OPG. I only say this because OPG is solely responsible for delivering electricity to the domestic (Ontario) market and costs are going up. When engineering is a key labour input, costs should never go up. Unless it’s a completely unforeseen circumstance that affects global supply chains, costs to engineer a product usually go down over time. OPG has not reinvested profits back into solar or other high capital Green forms of energy either. This is due to non-Engineers creating Energy & Policy decisions for Ontarians without adequate input from Engineers. The Ontario government’s plan to increase the amount of Green Energy was the Green Energy Act of 2007, this led to long term cost commitments that cannot be neglected. It’s equivalent to the 1998 privatisation of the 407 by the Ontario PC party. The Green Energy act has tied the Provincial Government to 25 year contracts with select providers, paying them out upwards of 10x the amount of money, for electricity generated from green energy sources (with rooftop residential receiving the highest payout of 81cents/kWh). I would argue that paying out contracts as large as 100-300k at a 16% interest rate (effectively what the contracts ended up being) was a terrible policy move. Why not just invest in a giant provincially owned solar field? This is why Quality Engineers need to be more included in government. A competent Quality Engineer would’ve flagged the risks of paying out capital projects at a 16% for 25 years.

Is Stephen Poloz setting up Canada’s Economy for Failure in 2017?

A key decision made by the Bank of Canada head, Stephen Poloz, to keep the Overnight Interest Rate at 0.50% for another quarter continues to affect regular Canadians in key ways. This rate is essentially the fixed cost for much public & private borrowing that occurs in Canada; whether it be borrowing for a mortgage or an auto loan; maybe even government parties borrowing to finance an annual deficit. When this rate increases, borrowing is made more expensive and when this rate is kept low, then borrowing is made cheaper. How this affects housing prices is if borrowing is made more expensive, people are unable to overleverage themselves or take out big mortgages, so prices stay low. Interest is a tax (inefficiency) on not having full payment today. That much is obvious to some, but to the new generation of Canadians we had to learn the hard way.

Inefficiency Currently Present in Society

Untold millions of dollars of profits have been made in the credit industry in the last decade due to Financial Illiteracy. These are ‘Beginner mistakes’ occurring to a class of people who were not aware of the penalties because no one taught them the basics of that industry. Imagine going scuba diving or even starting at a new job, you must sit through some form of mandatory training where the basics of the activity, and risks associated with the activity are explained. But when getting a credit card, you’re just thrown in the deep end right away. I would argue this is why blame for financial malfeasance lays only partially on end user behavior, since there’s no mandatory kind of personal finance/credit class that can currently be taken in the public school sector. This directly hurts end users. Public education is supposed to be a chance for people who don’t always have the means to pay for that level of training and it’s getting squandered. People are spending 12-15 years of their life in public education and are graduating these public schools not knowing the basics behind credit.

The Bank of Canada might be complicit in not fostering this ideal of Financial Literacy because more people find out about Economics and the faster they’ll realize how having such low interest rates is not necessarily a good thing. We’ve had 0-1% interest rates for 8 years now, (since the US Housing Recession of 2007) and this is training my entire generation of people that cash is forever cheap & it is driving more people to over-leverage themselves. Fancy way of saying that since the cost of carrying cash is so cheap (<1%) bake that into your business plan. Low interest rates are also doing away with training my generation that saving is the way to future wealth. So what happens when rates finally do rise? What’s going to happen to an untold percentage of market players, especially those that bought in late? They will be forced to liquidate (or eat the loss of the value of their properties) and that’s when the bubble bursts. There’s evidence of this in the Canadian Market as of late with the high-ratio mortgages increasing in the Toronto/Vancouver real estate markets. Once interest rates start to rise what will become of housing?

So every month that Stephen Poloz sits back and let’s money stay cheap he’s fueling this addiction to cheap credit, one that has led to Housing accounting for a $7.4 billion increase in GDP — about half of Canada’s economic growth in 2015. This could be described as political football since the Bank of Canada is supposed to make monetary policy decisions that ensure long term Canadian Economic Growth. But it could also be looked at as Stephen Poloz setting up the CDN economy for failure. By setting up this generation for a bubble to pop, he did not ensure growth was unsustainable. The reason I say this is because housing has had such a dramatic growth, and brought in so many tax dollars, a fall in housing activity will lead to a fall in tax revenue and would force tax rates up on those who can still pay. Inadvertently this will kill a lot of private industry because the private industry who’s still making money will end up paying a higher tax bill. This is the series of activities that has occurred in Greece over the last few years and has decimated their private sector leading to a lot of long term unemployment. Now Greece also doesn’t control their own currency so Canada might just see our currency debased by a further 20-30%. Stephen Poloz may be setting the stage for either one of two things to occur in 2017:

1) Keep rate the same which will see the CDN dollar fall so the real estate sector can continue to grow

2) Increase rates and raise the fixed costs for debt penalizing people with high-ratio mortgages disproportionately

Damned if you do and damned if you don’t, I guess that’s why you don’t base your monetary policy on perpetuating a bubble.

Now we switch gears to discuss Public Debt. All levels of government will be affected by this increase in the Overnight Rate as this increases borrowing costs for governments financing of deficits. I bet that the Ontario Liberal Party is not accounting for this risk of increasing debt service costs in their deficit projections even though it’s likely to happen in 2017. The reason I say this is because the US just decided to raise their Interest Rate to the %0.75 level as well, thereby increasing pressure on our dollar to depreciate relative to theirs. We usually try to mimic US interest rate behaviour but this time we may not. Now this will be good for Canadian Export driven corps but if the USA increases their corporate tax rate to 15% (from 35%) and provide a one time amnesty clause to corps holding foreign funds, this may lead to further long term structural currency depreciation.

Economist’s Moment – the Carbon Tax

I’ve spoken to how Free Trade can affect a nation’s Economy before and I will use this Economist’s Moment to further add on to this.

Free trade benefits:

  • Comparative advantage allows for net consumption to increase because individual countries are specializing in what they’re good at
  • Consumers can afford more with less
  • Supposed to lead to a net increase in people working

Free trade negatives:

  • Since countries are now specializing in the production of goods and services, entire technology skillsets get outsourced
  • Domestic production will not be allowed to innovate on current designs out on the market because the opportunity will not be there
  • Costs and labour practices are hidden since they happen in a different country (how can we send food inspectors half way across the world if that’s where our food is made)
  • Allows for corporations to pick up and move operations easier
  • Labour mobility is clearly hampered because corps can move but the labour cannot
  • Countries have to give up sovereignty to be signatories to many free trade agreements

I’m not a fan of free trade. I believe that perfect competition can lead to the lowest prices for consumers and the only reason Western societies are more pro-Free Trade (until Trump was elected) is because the costs to start up a business in the West are so high. I would argue government regulation has a big part to play in this but I cannot pinpoint an exact percent cost attributed to government. Governments are careful to not audit themselves, or show cost transparency and implement a series of measures to ensure secrecy so they can hide the costs they pass on to their citizens. For these reasons, perfect competition is impossible to attain in the West and that’s why Free Trade is such an easy thing for bureaucrats to campaign on.

But here’s the part where they don’t like to talk about and that is once all the auto jobs are outsourced, what happens to the supporting infrastructure (engineering, skilled trade & post secondary education jobs) for that industry? They leave too. All the future innovation that would have happened in Canada disappears as well. This is the reason why free trade does not make sense for countries like Canada. Once we outsource an industry completely, we not only lose the ability to innovate on that industry but all of a sudden we are also dependent on foreign countries. Kind of like how Trudeau cannot risk to damage Chinese-Canadian ties. He cannot bring up Human Rights Abuses carried out by the Chinese. They control his purse strings and the ability to deliver product to our domestic industry. When dealing with a country like China, it’s important to understand that unfair government subsidies are also a temporary way for Chinese goods to gain a foothold in the Canadian market. Deceptively tricking the Canadian Market into believing that cost savings are greater than they would be if those subsidies did not exist. Again disadvantages of free trade.

Now we get to the carbon tax, that the Trudeau government has advocated for. This will kill Canadian jobs because he’s pursuing a policy to tax dirty industry and chase it from Canada. Again he’s not focused on utilizing information to educate Canadians to change consumption habits (e.g. discussing the impact of carbon intensive food manufacturing). I get the overall point, which is he’s hoping for corporations to invest in green energy so that carbon footprints can be minimized. But again that’s discounting free trade. Let’s look at the example of Chyna selling phone cases at the local mall. She has a successful business where she sells 200 cases a month and sources all her phone cases from a Canadian manufacturer. She pays $1 a case in costs and this happens to be the same cost as Chinese producers. Now with the incoming carbon tax, costs will rise to $1.3 per case from the Canadian manufacturer but because China does not have an equivalent tax, those cases will remain at $1. Who is going to lose out? This is going to happen all across the economy because we don’t tax incoming product the same way. We unfairly penalize Canadian manufacturing then wonder why manufacturing is moving overseas. I understand why free trade exists and why it’s important to foster free trade relationships worldwide, but politicians too often don’t know when to strike a balance with free trade partners. If free trade partners are using child labour, or 16 hour working days to churn out cheap product, how is that fair to Canadian workers? This is where I don’t understand how only 1 Canadian Premier stands against the incoming Carbon tax. You can’t just ship ALL industry out of Canada. There will be no jobs left. Time has come where we need to stand up on our own two feet and see domestic manufacturing flourish.

What is public transit? [Economics]

What is public transit? What do those words mean to you? What do those words mean to those who use it & why doesn’t everyone use public transit, if it truly is public? Public transit was supposed to answer the age old question of how do I (as a city or region) reliably and efficiently move around the people who live, work or commute through my city, so its users can meet their own personal goals and aspirations for their day. It’s supposed to lift people out of poverty and enable those who cannot afford to make the move across town, still accept that job because public transit will solve ‘the moving problem’. Noble concepts and from what we have discussed it is obvious that public transit is supposed to solve what we will refer to as the “moving” question all the while saving people money and time. I will preface my article by stating I present no new ideas, only old ideas recycled.

So here’s where we will take a look at the public transit problem from a different lens. As mentioned above we’ll take a look at a theoretical system that transports 100% of its citizenry across town and compare it to one that transports none. It’s pretty easy to imagine the latter; look at many major American metropolis’s as they currently stand. Living in Detroit for a year, I can tell you, the public transit there is non-existent. To get from one end of the city to the other? It would be a 2-2.5 hr venture and forget considering that option if I had to commute. I’d rather just stomach whatever it took to afford a car out there because 4-5 hours a day of commuting is just not something I’d be able to stomach. This also leads to more income inequality because there’s less labour mobility – fancy way of saying you won’t take a job that’s 1hr+. That and it’s been said, that providing a convenient way for people who live in the ghetto to get downtown, is the fastest way to empower those citizens because you bring them directly to high paying jobs. Forget the immediate benefits, even if someone from disenfranchised community lands a good job, it motivates everyone around her. Detroit is not alone in this poor public transit question. I was shocked to find out after visiting San Francisco how absolutely non-existent its public transit happens to be. Growing up and watching Full House I thought the cable cars were everywhere, not just a few streets. I find it quite amazing that Toronto, SF & other cities who claim to be at the forefront of stopping climate change, drag their heels when it comes to implementing efficient solutions for the public transit question. Better and more efficient public transit directly translates to more cars off the road and better labour mobility. As someone who lives in the Hamilton area, I’d shoot myself in the foot rather than take a job past Mississauga; directly hampering labour mobility and with real estate growing 10+% YoY, this has a tangible detrimental effect on our economy. I covered how traffic limits skills to constrained geographic areas in this article, but this article and that article get to the same point; that point is combining the effects of traffic and poor public transit, hinders the economic progress of a region. Not only economic but social as well, how many times have you used ‘the traffic excuse’ when avoiding to go crosstown for a social event.

Now let’s compare this to a system where everyone takes public transit. For this to happen, you must consider competition. For the masses to all ditch their cars public transit requires these critical features:

1) It must have the confidence from its population that it will operate when they require it

2) It must offer travel times that are comparable to driving in your own car

3) It must be affordable

Your politicians would put these three features on the corners of a triangle and ask you to pick two because picking all three is impossible. Here’s where you have to think about public transit as a system. Think about your body. It has thicker arteries that carry a high bandwidth of blood to and from the bodies major organs then it has smaller arteries that carry blood into every little nook and cranny of your body.

By utilizing outside the box thinking, a private & public partnerships combined with an Uber like data-driven payment and logistics engine, would allow all three corners of the triangle can be satisfied. Take a deep breath. Remember without thinking about the basic problem you’re trying to solve, you’ll end up thinking like a politician who all just think the same way. In Toronto, they’ve been arguing about a subway extension for the last 20 years. What if I told you, you could get that quick, affordable public transit tomorrow. Minimal investment, only retraining and a reallocation of government owned resources. Now here’s where you’ll say you presented too simple of a solution for such a complex problem and here is where I will expand on it.

Firstly payment and logistics. All handled through an app. No need to have payment handling done in person. If people want to pay in person, make those people pay a surcharge to maintain the existing infrastructure, a city like Toronto could even keep the token system. This will organically incentivize people to pay in-app. App also lets the required party know where to pick up and drop off. I bet once the system is worn in, it would even be able to guestimate pickup and dropoff times accurate to within minutes (you know like Uber currently does). I would recommend people still pay a flat rate, which would be shared between the private and public parties that facilitates the person movement. The large arteries are the high traffic areas that require busloads of people. Since municipalities already possess busses and the resources required to maintain them, they’d be the ideal candidate to handle all high traffic movement (think Main St) or to and from a University and Central Station. Next we get to the tricky part, the little arteries that have to navigate from the central drop-off stations to the individual homes people need to be dropped off at. Again another old idea. Dollar cabs. They work in New York (maybe because the density permits it) but without trying its unknown whether or not this would work in elsewhere. Burlington (my hometown) has ~170k people living in it. If the system attains a penetration rate of 60% where users use the system 3 times in a day paying upwards of $2.5 a trip, that’s potentially a $90M industry. My point is that private investment could be attracted by this industry and you could make it so licenses are dependent on customer service delivered by the private operators, since they’d be ideally picking you up and dropping you off. This policy would have a side effect of eroding current auto sales but also it would also deliver considerable environmental savings from a carbon footprint point of view.

Right now people don’t commute because it does not make sense to. If I want to go to my friends house in downtown Toronto from my current place of residence, I would have to take 2 buses totaling 45 minutes, the go bus (an hour) & then the subway (40 minutes) all the while costing ~$12-14 bucks 1-way. Compare that to 45 minutes & maybe 5 bucks for gas, insurance & wear and tear on my car. Noone wants to pay that extra amount, especially when it comes to their commute because those costs add up. What if I also intended to go to a Raptor game a month (again 12-14 bucks 1-way) or maybe even a trip to Niagara Falls (similar time and money perspective). I wouldn’t, if I didn’t have a car and that’s not fair. The government does not even price public transit fairly. The government performs many services inefficiently, they use public transit as a way of funneling money from what’s supposed to be a lean service (people movement) into government programs that no longer serve their purpose effectively. As a citizen of Toronto, I’d be asking myself why I have to stomach another decade of arguing over a subway, when I could have my dollar cab + bus trip deliver me the public transit I deserve NOW. Btw this is Uber’s current strategy, to utilize high traffic routes where demand is pent up but unfulfilled because of government inaction, and service it through ride sharing, all the while reducing our carbon footprint. I mean most public transit could be automated if we dropped the requirement for transit to fill the general municipal coffers. If people want transit they should get it. It shouldn’t be every year the TTC delivers a surplus to the government then when the TTC needs investment they have to BEG government for the money. It’s not smart policy but because everyone on your city council does not think about the big picture, you’re stuck with the government you vote in.

Why Conservatives should still NOT support Donald Trump

How on earth did we get to this point? Electing a man so controversial, so boisterous, so YUGGGEEE yet he still garnered enough support to win the Presidency. Forget the fact that he lost the popular vote (by about 1.5M votes). In the USA, the popular vote means as much as participation awards at youth sport tournaments. The electoral college is the law of the land in the USA and President Trump won it fair and square. He campaigned where it mattered and it paid off. He won states that Republicans hadn’t won in many elections and those happened to be the states where Hillary choked the hardest. This will not be an article where I cross reference similarities to Brexit and compare the rise of US Nationalism, it will be an article based on my observations of the campaign.

In a past article, I mentioned the reasons I would have voted for Trump. These are actually reasons that many people attribute to his victory but I called them out in this summer article:

  1. He’s opposed to TPP
  2. He’s self-funding his campaign
  3. He won’t start WW3
  4. He’s about fair immigration

I also mentioned the giant elephant in the room, which were his racist and sexist ‘tendencies’. Again these are habits that really cannot be proven but President Trump has some telling shows, some which deserve to be reprimanded. For example, let’s say I were a US army soldier who had died while protecting the USA, then I would take great offense to a future Presidential candidate assailing my parents with callous and incendiary remarks, regarding my personal religious views. I have family members who have served in the military, & I cannot imagine the pain of having someone make remarks like Trump made and that’s with all my family members surviving battle. Moments like these are magnify why respect is earnt and not bestowed on someone because of their office or title. I will respect you less when I see moments like how President Trump treated the Khan family. Note that also doesn’t mean I disrespect people I don’t know but in this example, showing prejudice against one person is equivalent to showing prejudice against the entire of humanity. In the region of the world where my family is from, an important life rule when dealing with people is: “Farkh nay karna” which translate to “Having no bias”. Having no bias means treating people equally and not favouring when making decisions between parties. This is a bedrock of our justice system and it is common sense attitude that I wouldn’t want to vote for someone who exhibits farkh. By creating divisions, Trump is isolating a select demographic and that is not the right way to deal with people. I’d venture to say 90% of Muslim immigrants come from the ME, Turkey, Pakistan & other countries where their citizens have limits on freedom of speech. Freedom of speech is the key to seeing extremism fall by the wayside not disrespecting people. Disrespecting people makes like people more isolated & less likely to interact with other groups of people. I mentioned this is my last article as well, however it is worth saying a second time. Donald Trump needs to condemn racism in all its forms, not by just saying in a 60 minutes interview to “Stop it”. He needs to be more stern with those who perpetuate violence especially with the circles that he’s had support him. It’s not fair to me, as someone who’s ideologically similar to Trump in many ways, to have to deal with how he’s talked of minorities in the past.

Aside – Why is Western Democracy better than Islamic Nations

I will explain this with the idea of freedom. Freedom to choose. Freedom to not choose and the motivations behind it. The idea of safety of women is essential to discuss because there’s a difference between how women are kept safe in Western society and the ME and from a male perspective there’s freedom to choose to be a creep or not. In the ME, women are looked at to keep sexual energy down by dressing down. If a women dresses scanty then it’s assumed ‘she’s down’. In some countries, if a woman is sexually assaulted, the blame is placed on the woman rather than the group who assaulted her. This is a fundamental shift in how woman are treated overseas and here. From a female perspective, there’s a lot less freedom in choosing to how to act in the ME as compared to the West. In the West, that burden is placed moreso on men, in asking them not to act wild when a girl dresses however she pleases. This incentivizes men and women differently in both countries; there’s a greater percentage of men in the ME, who act humane towards women because of the punishments handed down by the criminal justice system in the ME. Take away the justice system punishment and there is nothing inherent in keeping some men them from acting out of their element and fulfilling a sexual appetite. This is one of the reasons that Western Society trumps societies where punishment keeps you from acting out. Western Society realize the inherent evil in sexually assaulting someone by having men & women grow up as equals. No divisions are created so a higher percentage of men who grow up in the Western World don’t need the long arm of the law to keep civil. ME society requires that overarching justice system to keep itself civil. I refer to ME in this paragraph however I mean all societies where this kind of persecution happens.

— /Aside —

But now we flip to the other side of the coin and realize that his competition was not as formidable as polling companies said it was. I grow quite alarmed because Clinton had to have known that the Blue Wall (Great Lake States) was showing cracks. I hope she didn’t trust the polling companies, because Michigan was up by 5-7% in some state polls. As the establishment candidate, she could be counted on not to ruffle any feathers and she managed to outraise Trump 2 to 1 ($1B to $500M). She spent 30 some odd year building her reputation, but she came up short. The top reasons I would not have voted for Hillary:

  1. She got outworked by Trump
  2. She was successfully painted with the corruption brush
  3. She assumed she won

The Art of War says that getting the enemy to talk about you and not their own views is a sign of victory. By being able to take a hold of the conversation you set up a false dichotomy in the eyes of the public because everyone is discussing your views and not necessarily the candidate’s views. Having your views being discussed lends credibility to them. How many times did we hear about the Wall, or how Hillary created ISIS or how NAFTA was the worst trade deal ever? The media did an excellent job of spreading Donald Trump’s message but it would not have happened had Trump not worked as hard as he did. He ensured everyone had an opinion and that surely motivated Trump’s base to act. Donald Trump did a great job courting and knowing his base. He held 3-4 rallies per day all across the ever so important swing states. I guess the fundraising gap wasn’t such a big advantage since Trump seemed to have outhustled & outplayed her in every aspect of running for President. For him, it was a full time job. He was selling out arenas and motivating his base to get out & vote. He was also subtly brainwashing them into believing whatever narrative he wanted to push. Note that this creates a dangerous precedent, which is for a considerable portion of the population to believe whatever its candidate says; since the media has lost its trust factor, if trump does act unethicall, his base will just ignore those claims. Trump was very open to holding controversial viewpoints, chief amongst them being how he wanted to jail Hillary Clinton. You don’t just backtrack from “I will appoint a special prosecutor to send you to prison”, which he said during the second Nationally televised debate. This was a claim so impassioned in his followers that, during the victory party, pro-Trump supporters were actually chanting “lock her up” whenever video of her came on the screen. This election should have sent a message to politicians worldwide that incompetence or at least its perception, is not the paint that you want brushed with because it becomes hard to shake. People do not want to vote for someone they and others believe to be corrupt. Highlighting that was another key to the Trump victory.

I wonder how many Democrats (party represented by Hillary Clinton) the corruption association, stopped from voting. Hillary was able to get 6-8M less votes than Obama and that was the deciding factor. Early voting accounted for 1/3 of all votes cast, so the week that FBI director came out and reopened the investigation definitely cost her votes. Now was it enough to change the results the election? I would say so. The FBI had that investigation open for 9 days and I would imagine that stopped a lot of people from going to vote for Clinton. In one way, I’m glad that she lost. If a candidate even has the slightest chance of having a criminal investigation open up during the campaign the political party that picks her, should not pick her. There’s a thing called baggage and for people to just assume it wouldn’t have hurt her, that was the greatest mistake at all. During the Primary Season, when the Democrats had the choice between someone who championed progressive rights and values (Bernie Sanders) and someone who a real chance of a criminal investigation opening up, why would you pick the latter? I’ve also looked at data that really has not been shot down in terms of evidence for voter fraud in the democratic primaries. You reap what you sow, but the attitude that kept Hillary in it was that she had already believed she had won. She didn’t even campaign in Wisconsin and I don’t know how many times she visited Pennsylvania and Michigan in the final two weeks. She even rented a grand hall and had a victory party that was energized at 7 pm (before votes were counted). When people look back at this election they’ll agree that you do not count your chickens before they hatch. She took her eyes off the ball and because of that, it was the biggest turnover anyone could have imagined.

If Trump sucks, then America was conned. Trump’s tax plan will cost $1.5T over 10 years and definitively return the greatest investment to America’s richest 2%, which includes the Trump family. Trump’s tax plan is supposed to actually increase the rate of taxation for America’s poorest citizens from 10-12%. I don’t think he actually knows what he’s going to do for many policies. Even the economy? How do you repair the economy if you have an education system that’s in the type of state that the USA’s is presently in. Trump will and should also limit the influx of foreign knowledge capital coming into the USA. This is the H1-B program it’s been used and abused by some of Silicon Valley’s biggest and most profitable organizations. I’m afraid Trump will cut, cut, cut, just like Republicans before him and that some of those cuts will have a dramatic effect on its end users. Effects so dramatic that failure to adequately ensure that service cuts are not detrimental to the end user could see Democrats win the next two elections out of anger. Again the only way I know how to responsibly cut is through the implementation of a QMS system that gives key decision makers the flexibility and knowledge of their system, in order to make decisions tied directly to measured performance indicators. Another ineffective Trump policy move will be removing 2 pieces of legislation for every piece of legislation the house passes. This is something he can go to his base with and show how he’s making American government smaller when in actuality that kind of policy has been proven to be ineffective. How do you know the effects of legislation you’re removing? You cannot know this with an adequate QMS system.

Read some more of my articles, I cover how government can change itself from a bloated bureaucracy to a lean mean flexible services machine in my series of articles on control plans and PFMEAs. These articles were written for an audience with absolutely no knowledge of control plans or PFMEAs and step you from novice to an intermediate level of understanding when it comes to those very quality important tools.

  1. Inefficient systems – why do they exist [Manufacturing] [Economics]
  2. Inefficiencies – what kinds are there [Economics] [Manufacturing]
  3. Control Plans & PFMEAs – It’s here [Economics] [Manufacturing]

Pareto Charts Example & Discussion [Economics] [Manufacturing]

Introduction

What do I do?

Well this article will cover how to break down a process, segment costs and make more meaningful decisions that hopefully lead to a greater focus on value add activities.

Firstly, in my series of three articles discussing manufacturing efficiency, we covered:

1. Why inefficient systems exist in the first place
2. What kinds of inefficiencies exist
3. How private companies minimize productive efficiencies (one of the inefficiencies I discuss in article two)

Those articles are important because they introduce the concepts of PFMEAs and control plans. I will discuss Pareto charting & 8D decision making at the beginning of this article. I will first discuss how efficiency tools (Pareto charts, PFMEAs, control plans, 8D decision making) that can help organizations make smarter decisions. I will then go into a discussion on government why I think corruption has managed its way into our public sector.

Pareto Charts & 8D Decision making

In this article, we will discuss two main issues and they are:
1. How companies target cost savings or Pareto charting
2. How companies avoid making the same mistake twice or the 8D decision making model

Pareto charting
What is Pareto charting and how does it help contain costs? These are the answers I hope to answer below. Before getting to that answer I will recount a brief history of the term Pareto and how it came to be used in manufacturing. Being Pareto efficient means utilizing all inputs optimally into reaching a desired outcome – in other words, since inputs are measured in dollar terms, if you can create the same desired output while lowering costs you’ve made a Pareto improvement. Once these improvements are no longer possible, your process is Pareto efficient – this should be the goal of every process. For the econ majors out there, this is when production is on the PPF as opposed to inside of it. Pareto charts also typically have high cost items charted first with lower cost items to follow in order of cost. Since they have costs illustrated in this manner, they become a really good quick summary for viewing costs from a process.

From my own experience, what Pareto charting allows for companies to do is look at a process and break down overall costs into segments. Then companies focus on lowering high dollar cost items in order of magnitude. This not only allows for continuous improvement & innovation but it allows for companies to solve more problems tomorrow than they were solving not today. Btw obviously companies will try their best to lower the high dollar value items but sometimes costs are fixed so companies try to lower those costs that are in their direct control (e.g. scrap or unnecessary inspection).

In a manufacturing setting, once the costs are segmented, process engineers will typically work to decrease the high item costs first. Instead of looking at manufacturing, I’ll utilize the taxi cab industry as a brief example. I’ve drawn a brief Pareto chart highlighting the costs over a typical week. Btw these costs are made up because I don’t have any inside information on taxi cab companies but I wanted to highlight the differences between how uber delivers the service and how the service has traditionally been delivered. In the chart, the red line represents how much the additional segment adds to costs. For example the car costs make up 40% of the total business cost so that’s why when the car cost is included the red line jumps from 60% –> 100%. A taxi company might look at the following chart and realize that something like gas, which makes up ~8% of total costs could be eliminated by either buying a more fuel efficient vehicle or maybe even invest in electric vehicles. The chart is detailed in the image below:

Screen Shot 2016-07-15 at 12.02.03 PM

Where:

Per week Business breakdown
Revenue
Work for 4 days 500
Rent out for 3 days 100
Total for week 2300
Costs
Insurance $100
Gas $150
Dispatcher $280
License $500
Car $700
Total for week 1730
Some assumptions for the costs
Dispatcher 24 (hours) * 20 ($/hour) * 7 (days) / 12 cabs
License $100k cost amortized over 4 years
Car cost Includes 30k for car and 5k for repairs amortized over 4 years
Insurance $5000 annual cost

8D decision making
What is it and how do they help manufacturing?

First, a little historical background. 8D decision making was established by the Ford Motor Company to deal with repeated quality problems and trying to identify a root cause for failure modes they observed. If you think about it, if you keep making a part poorly there has to be a root cause from how it was manufactured. Until you fix this root cause that part will continue to be made poorly. Utilizing the PFMEA, a root cause can be identified & if your PFMEA doesn’t have this failure mode in it, that means that your PFMEA is not complete. 8D reports are essentially a database of failure modes with the respective root causes tied to it. If 8D reports are successful, then each failure mode should only have one 8D report since the root cause should have been successfully identified in a previous report.

There’s a lot of extra steps associated with 8D reports, however I’ve identified their main purpose. Other steps talk to ensuring the right team is working on the problem and containment actions are issued. Containment actions means that if a problem is discovered, make sure you know the parts affected, how they’re affected, how you’re containing the problem so more parts aren’t affected, basically actions that contain the problem parts. Identifying the root cause is the main value add from 8D reports and the step when identifying the root cause is the step that engineering teams spend the most time on.

It’s important to note that the majority of time spent writing the 8D report is spent trying to identify the correct root cause. Engineers use other tools (e.g. Fishbone diagrams) to fine tune and ensure the correct root cause has been properly identified. Fishbone diagrams attempt to break down the root cause into the components that affect part quality (e.g. People, Process, Machine) to identify prospective variations from what is expected when manufacturing a normal part. Engineers also utilize a 5 why methodology to drive down to why a certain failure mode occurred. Failure modes are always easy to identify after it’s apparent, however during an exercise, this insistence on continuously asking ‘why’ is a valued skill. The tools mentioned in this paragraph are especially useful, when the root cause is not apparent and since not all parameters are known (when manufacturing a product) these can be worthwhile exercises.

Corporations in disguise

First, a little discussion on how governments are actually just private corporations in disguise. No politician ever refers to them as corporations and that’s why I refer to them as “in disguise”. Since they are corporations, it is possible to change them, and it’s likely that governments do not refer to them as corporations for the simple reason that it reaffirms the belief that change is difficult to achieve. Governments all over the world promise the sun, star and the moon but at the end of the day, fall short on many of their promises. They fall short because they don’t have their resources realized and because their processes are not fully documented – really two in the same. Government has potential to do great things but currently that potential lays dormant and will continue to lay dormant until processes are standardized, knowledge capital is freed up, and focused efforts are led to solve problems.

For this reason, I always like to sprinkle in how the private industry concepts I discuss are directly applicable to government (public sector); this is because all process improvement methods I discuss are all relatively new. Many were developed in the 60’s by Japanese automotive manufacturing and since they are new they have yet to diffuse into the public sector. Currently, even American automotive manufacturers are implementing these new initiatives because they create value for their shareholders, they are not just meaningless exercises only applicable to manufacturing cars. These are the future of process and continuous improvements and that is why I’m so confident to shout it from the rooftops. I want to educate people so we can get our government to work for us rather than the other way around.

The first thing that needs to be accepted is that all public sector employees are directly employed by a company. That company on the municipal level, ends up being municipal governments, on the provincial level, ends up being provincial governments and on a federal level, the federal governments. Btw the reason we have different levels of government is because they are all responsible for different things. This is fairly obvious but I have been told sometimes I gloss over facts that are obvious, but those are obvious to me because I already know them. Look it up, most governments are actually termed corporation of the city of so&so because these governments are actually just companies. That company ends up having shareholders who are its citizens but we don’t actually receive a direct financial dividend like shareholders do. We receive public sector services as our dividends but if those public sector services are not efficient, then that’s the equivalent of receiving a low dividend that should be higher. A dividend that will increase with the implementation of private sector efficiency tools. Currently, we do not know if these services are efficient, so when the government wants to solve a new problem it’s difficult to do so without harming our current standard of living. As I mentioned earlier, private companies are implementing these efficiency improvements because they create value for their shareholders; if private companies see value for their shareholders, then why don’t public companies see it?

Another key difference between public and private corporations is that the CEO in private corporations are beholden to a company’s board of directors (BOD), while in public corporations, this equivalent doesn’t exist. They’re both technically also beholden to their respective shareholders, but if unpopular decisions are made, then there exists a longer time period between when shareholders are able to voice their opinions for public companies. Again for public corporations shareholders, (citizens of a country or province or city) we only get to voice our opinions through voting since the private sector equivalent of a BOD does not exist. We have to wait sometimes 4 to 5 years before were able to to express displeasure over a decision and because of this time period, we sometimes forget.

That is how these private industry tools will help; they are the responsible way to transform government to deliver the services we currently need, without losing to the services we already have. All without trying to implement a public sector equivalent of a BOD.

How democracy has been hijacked

To talk to the point of how Canadians have allowed democracy to be hijacked, it is a subtle point with major ramifications. Our governments transformed the idea of democracy through their implementation of political parties. This is also a key reason why I don’t believe in the Trudeau hype and a reason why I didn’t support Imperial Commander Harper as PM. Both are major proponents of the current broken system. In the ideal form of government, our elected MPs are supposed to answer to their riding, but in the twisted form of democracy we currently have, they do not. In our form of democracy, MPs have to receive the rubber stamp of approval from the party leaders and therefore answer to one man (or woman) before the people who elected them. This is a policy that centralizes power with one man and makes it easier for the system to be corrupted. The system is easier corruptible because now only the PM has to be bought instead of a multitude of MPs. Instead of individual ridings electing MPs, a form of gatekeeper inefficiency is present where the PM can reject a candidate from representing their party in that riding and place their own candidate there. Now party leaders have argued that this allows the party to reject candidates who hold controversial positions (e.g. a Liberal candidate who holds a pro-abortion position but is otherwise Liberal) but I still think this is a way for the rich to easily buy a party and consequently a country.

Remember these political parties themselves are corporations who raise money and peddle influence all in efforts to lead a country with their ideology, in theory. In reality, the imperfections of man can be manipulated with arguments based on self benefit and maybe this is why things don’t get done.

In Canada & the USA certain parties have held a monopoly on the political scene and this is directly a result of policy decisions that have been passed by those monopoly powers (e.g. voter subsidies & 75% tax breaks for political contributions). It has allowed their political oligopoly to wield disproportionate power compared to if those policies did not exist. Those policies have also made it difficult for new political parties to come up. Remember something that they teach all business students is that the more barriers you put up in an industry for new players to come up. Consequently the more the established players can stay and maintain power. Btw for those who’d like to know this is one of the market forces of Porter’s Five Forces. For the record, this is one reason I support Michael Chong for leader of the Federal Conservative party, he has really made effort towards introducing legislation and starting the discussion as to why it’s important to disband this requirement (party leader rubber stamping riding MPs) for the Federal Conservatives. People believed Justin Trudeau when he said that he wouldn’t interfere in a riding electing the MP it wanted. But he was quick to reject entrants into open primaries in certain Toronto ridings (e.g. Christina Freeland’s Toronto riding), thus making it easier for his pick to win the Liberal nomination.

Article was written by gtareguy (Greater Toronto area real Estate guy) . I release a new article every Friday and I write about economics, the nba and real estate in the GTA.