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 different people. I mentioned this in 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 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) were 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 unethically, 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:

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. 

Ontario Politics – a brief history of two fighting enfants [Politics]

Intro

So last week, we discussed some root causes behind how the Brexit vote came to be; Britain’s frustrated voter base could have become disillusioned with the pundits, economists and politicians constantly bombarding them with the guidance that they knew what was best for Britain. I blamed it, “the Exit victory”, on collective mistakes generated by successive governments and the lack of a system, that’s able to catch these mistakes – ultimately the British people said “No” to EU mistakes generating costs and debts for the UK government. The big problem is that governments worldwide keeps making decisions, with some leading to mistakes and sometimes these mistakes are counted in the billions of dollars. In this week’s article, we’ll temporarily put aside discussion of the EU, and we’ll look at the smaller economy of Ontario whose market size is $750B (around 38% of Canada’s total economy and comparatively smaller than the EU economy which is around $14.3T). Costly mistakes keep seeming to happen in Ontario, that means the system is missing something, some type of feedback that stops those mistakes from happening in the first place. I will first talk about the current political scene, then go into detail about the political history of Ontario, until finally presenting a solid argument for what qualities a leader should have to lead a political party.

The Scene – it’s members

For those of you not in know, the Liberal Party of Ontario has been anointed the ‘centre-left party’ in Ontario and has dominated the political seen for well over a decade; the right end of the political spectrum is occupied by the Progressive Conservatives (henceforth denoted the PCs) and the left wing, by the NDP, who don’t even get an acronym explanation. The Liberals have been in power since the 2003 provincial election, which granted them a majority government and have basically been in that same position since then; outside of a 3-year window, where they were still the biggest party, but in a minority parliament situation. It’s safe to say they’ve been given ample time to prove their policies out.

Growing up in Ontario, I can tell you that it’s very clear from the election time ads that the Liberals have the support of the public sector. This is clear because in each of the last 2 elections, the Canadian version of superPACs, have bombarded our airways with scare campaigns that the right wing party (PCs) will take away all our rights and sell off public assets to satisfy their ideological viewpoints. Now this is reasonable for them to say because the last time the PCs were in power they passed the single most damaging piece of legislature that any party in Ontario has passed – the privatization of the 407; it’s basically given the Liberals a monopoly on politics for the last decade.

Why the Liberals have had a Monopoly on politics for the last 13 years

To put it into perspective why this was such a damning piece of legislature, to drive ~100 km from Hamilton/Burlington border (where the 407 starts) to Markham (where the 407 ends), it costs anywhere from $20-25 dollars one-way! Depending on if you have a 407 transponder, a $5 surcharge applies whenever you enter the highway with no transponder. Bullshit with a capital B. So let’s say you live in Burlington and get a job in Markham, you can do any one of the following (the number in parentheses is annual cost of each decision with the breakdown followed below):

1. Take the non-privatized highways ($4,000)
2. Take the 407 ($10,400)
3. Move or rent ($16,800)

Cost breakdown – Take the non-privatized highways ($4,000)

Now let’s say you want to stay in Burlington and not pay any toll fees, then option 1 is your course of action. But here’s where things get complicated because instead of paying out of pocket, you’re paying with your sanity. To drive that distance every day non-toll, (which people do) you’ll end up spending at least an extra 8 hours a week in traffic. That ends up being an extra 400 hours a year (if you work 50 weeks a year) that would get completely wasted. Let’s just say you’re getting paid minimum wage – which you won’t be because then you’d actually be crazy to drive the 401 to Markham from Burlington – that’s around a $4,000 annual cost + the opportunity cost of not using that time more productively.

Cost breakdown – Take the 407 ($10,400)

Your next course of action is to just suck it up and take the 407. Let’s see, assume you’re paying the lower end of the spectrum @ $20 per way. So that’s $20 * 2 (times a day) * 5 (days a week) * 52 (weeks in a year) which is  $10,400/year. Ouch. That’s why I’ve hardly ever been on the 407, even when I was working construction, I genuinely felt bad expensing it and I woke up early to avoid having my boss pay that out of pocket.

Cost breakdown – Move or rent ($16,800)

Finally moving costs or renting. Rent in Markham can be expensive and typically you won’t find a ‘nice place’ for less than $1400/month. That ends up being $16,800 annual cost. Remember this is the economic cost, we’re not even taking into account social cost.

Decisions have consequences – Why the PCs are STILL paying for this today

Again, I touched on the ramifications of traffic in my last article and how traffic limits skills to a constrained geographic areas. It brings about inefficiencies to the Southern Ontario labour market because it effectively makes it so people work less in a day – a time tax. But forget people, think companies. This one piece of legislature has made conducting business in Ontario more expensive. It’s also effectively lowered the house prices all along the 407 corridor – again this is in theory, house prices in Ontario have just shot through the roof, and we haven’t been able to really understand precisely why. Btw the fact that policy makers don’t have this data already on hand is kind of embarrassing; the fact that they’re now getting to the data shows me government is in for a data revolution. The governments we currently vote for, react to problems that come up and are not active in observing where risk fundamentally lies. But you get what you pay for and currently I don’t know what exactly I pay for. This criticism of government has to lay dormant until government adopts control plans and PFMEAs, so we can know where we stand from a efficiency standpoint.

But back to the catastrophe which was the privatization of the 407. Let’s see, sold off to a foreign company in 1999 for $3B on a 99-year lease! Now it’s worth ~$10B and that means Ontario lost out on $7B since the PCs decided to sell it.

We did the math. We lost out on $7B.

What’s even worse is in the contract itself. Ontario cannot build any competing highways in a certain geographic area that would take traffic (revenue) away from the 407 (aka converting Highway 7 kind of deal) and the fact that we have 80+ years on the lease, makes it even harder to digest; a politician, who I didn’t vote for, had such a colossal f*** up in asset valuation, that he literally screwed his GREAT GREAT grand kids (who are probably not going to be living in Ontario). I know of Native cultures where the elder statesmen of the tribes consider the effects of a decision seven generations down, but someone should have told Mr. Mike Harris that those policy decisions were supposed to have positive, not negative effects on those downstream generations. I’m also glad that I didn’t vote for the mess that was Tim Hudak either. He was a cabinet minister under the PC government who sold off the 407 and the fact that he wasn’t sly enough to realize his government had been had means he’s not worth my vote. If he was just some backbencher, fine ignore it, but he was a cabinet minister. Moral of the story, if you’re a cabinet minister and your government does something dishonest or proves themselves to be incompetent, then there should indeed be a halo affect that rubs off on you. As I mentioned above, with the increase in pay, the cabinet designation should carry forth added responsibility that your government does not do anything foolish.

Punishing politicians for bad decisions should also carry over in the USA as politicians who voted for the Iraq War should have that badge of dishonor hurt their future ambitions. Such obviously terrible decisions need to be punished and as an electorate our only voice is our vote. If you disregard morally reprehensible actions by politicians by continuing to vote for them, you’ll continue to get that kind of incompetence from your elected officials.

In summary, unless politicians hold a plebiscite, they should be held responsible for major unnecessary cost decisions (e.g. Iraq War for USA & Highway 407 privatization for Ontario) that have negative effects on their countries. We live in a world of unlimited debt, where bad politicians can just mask their incompetency with social program or other promises to effectively selectively bribe the portions of the population they want to vote for them. By the way, this happens with both parties, no matter the level of government. I was disappointed in Stephen Harper and all his selective tax breaks (e.g. income splitting), rather than across the board tax breaks. Earlier in the article, I talked about some type of feedback that stops big mistakes from happening; voting out bad politicians is this feedback. Politicians should put a lot of thought into their votes and should understand that poor decisions have ramifications. This entire 407 debacle is also the primary reason I do not vote for political parties who privatize government assets (cough * Hydro One * cough). They’re not effective asset evaluators and they pay the people who will make the asset evaluation – screams corruption. But don’t worry I’ll write a Hydro One article too. Not this time though.

Liberal Ascension to Power

Now that we’ve kind of covered the primary reason behind why the PC party of Ontario has suffered for so many years, we’ll touch a little on what the Liberals have done since being elected. Since 2003, debt has grown by 230% with no clear end to annual deficits, in sight. The government says they’ll be back in the black by 2019, but who knows. In my mind, they don’t seem focused, and haven’t adopted important private sector efficiency tools. The rest of this article will discuss the three major spending scandals + one non-spending scandal from their checkered past. The scandals are as follows:

Spending scandals

1. E-Health Scandal
2. Ornge scandal
3. Gas plant scandal

 Non-Spending scandal

1. Deleted email scandal

Computers and doctors do not mix

Let’s start this story off with the E-Health Scandal that rocked the Liberal majority government in 2008. E-Health was supposed to be exactly what its name infers, that is an electronic health record system for every citizen in Ontario. I guess it was supposed to replace some of the bureaucracy present in the current day healthcare system – all told it was supposed to save $6B dollars a year. Whatever that means and how those cost savings would have come to fruition are uncertain. What is certain is that this was a scenario where the auditor general brought up government incompetence as the root cause of $1B being wasted over a 6-year window (2002-2008). Everything from no-competition contracts being handed out, to clear evidence of corruption in sourcing those no-competition contracts, to over relying on consultants (auditor generals words not mine), to effectively giving an incompetent person a blank checkbook as the CEO. But the greatest error of judgement was the lack of accountability at the top – McGuinty (old Premier) did not go to jail over this, and neither did his Health Minister. Clear negligence and someone (ex-CEO) only got fired – McGuinty would go on to be Premier for another 5 years.

Ornge on the outside, rotten on the inside

The Ornge scandal was not one that was in the $1B ballpark, it was only in the tens of millions of dollars but it goes to show another case where control plans and PFMEAs could have saved the taxpayer money. In 2011, it was “uncovered” to the shock and dismay of the government that someone who headed the provincially funded air ambulance service, was hiding his salary from the public “sunshine list”. It’s been documented that there were examples of misuse of procurement in the Ornge scandal as well, specifically an inflated payment for helicopters whose owners provided an odd payment of nearly $7M to one of the CEO’s other companies. Who knows how much the CEO actually managed to extort from taxpayers (this is unknown) but again another scenario where the people at the top, found a scapegoat and a way to breathe another day. McGuinty did not take the fall and neither did the Health Minister, I’m surprised to see that the CEO got the axe but again, why don’t these guys go to jail. I could be sent to jail for stealing milk from a corner store, but steal millions from the taxpayer? Just hope the party in power has your back.

Gas plants & how we deleted how we talked about it

And here’s when we get to the straw that broke the camel’s back and finally saw Premier Dad (McGuinty nickname) leave the highest office of the Ontarian land. The Gas plant scandal and the deleted email scandal go hand in hand, adding much needed drama to the 2014 election. One (deleted email scandal) happened after the other (gas plant scandal) and they were directly tied to each other. They should have taken out the current premier (Wynne) along with the last premier (McGuinty). The current premier was able to apologize in a debate on public television and somehow that was enough to convince Ontarians that the Liberals were fit to lead. This scandal was so big that the government went to the extent of wiping email servers (not just hit delete on the email), so that it wouldn’t get around to the public that the government was fully aware of how it had lied about the cancellation costs. Long story long, power plant was supposed to be built at the Oakville/Mississauga border (south of the Ford plant), and after much debate the Liberals finally decided to cancel it, for purely a political means, might I add. Liberals blamed it on re-analyzing the supply & demand and seeing the plant really was unnecessary but it’s been basically proven they cancelled it because the Party knew it would lose 3-4 seats in and around where the gas plant was being build. How it got to the point that the province was still on the hook for $1.1B before having this realization is still not explained – partially deleted emails and partially politicians just straight up lying to our faces. During a transition of one government to the next (aka Premier dad quitting because the opposition pressed him into admitting that the cancellation costs were misrepresented), someone who didn’t work for the government, logged into “the system” and just so happened to delete emails related to the government cancellation of the plants. Forget that when initially asked how much the cost of cancelling the plants was going to be the government said $40M – the cost ended up being $1.1B (a mere 4% of the grand total). I don’t get how politicians (Premier Dad) can just claim that they didn’t know what was going on and allow for that to be an adequate reason for criminal activities going on. This is the biggest reason why we need control plans and PFMEAs, to stop mistakes like this from happening again. Imagine knowing what our politicians actually do and where their responsibilities begin & end. We need to know those types of things so citizens can better direct their input to the right person so that actual work gets done. There also needs to be a log of open action items so issues don’t linger. We shouldn’t allow for situations like the gas-plant cover-up to happen again. Due to a transition period between governments, we’re supposed to believe that that made it okay for someone who didn’t work for the government to log into the government system and delete sensitive emails? Really? This is where it’s important for young people to realize that if you want government to change to work for you, instead of you working for it, it’s essential to vote corruption like this out. Just like how the PCs got voted out for the 407 issue, we need to vote in parties that utilize the private industry tools of efficiency.

Moral of the story

For the reasons listed above it’s important for Conservatives to not put up with incompetence from our Conservative parties. Last time we voted (Canadians & USA) Conservative, our governments just flat out kept being dishonest (Bush & Harper) and it burnt us with left wing glory boys following them up. We (Canadians) elected someone who if he weren’t the son of an ex prime minister, would not have been elected prime minister, literally the textbook definition of nepotism. Mr. Trudeau does not have the economic knowledge to lead a country, for those of you who believe that he just needs to surround himself with an adept team? Well I prefer my PM’s to think for themselves because when tough times come (economically), I’d prefer my leader to not have to defer to someone for knowledge.

For left wing party supporters – you’re getting fooled, unless costs are controlled, the government can’t really do anything because they spend a ton of your money on non-value add tasks. Government is bloated and has services implemented that solved problems from 10 years ago with the technology present 10 years ago. You shouldn’t be solving problems and designing processes (essentially what government does) unless it’s the most efficient way to solve it or if you at least have efficiency tools set in place to optimize processes down the immediate line. Think about it… if we want more problems solved (World Peace, Space Travel, Global Warming, Homelessness etc.) we have to free up the capital & labour from the problems we already have solved (e.g. BUREAUCRACY) and re-train our public sector as this will carry over to the private sector. We also need to document and make sure that the problems we currently solve do not fail the “quality/$” relationship. When I vote for right wing parties who are not going to implement control plans and PFMEAs, I worry that this “quality/$” relationship will not be maintained. In this article, I spoke to the water catastrophe in Flint and how by utilizing Control Plans and PFMEAs, poisoning innocent lives could’ve been avoided. Right wing politicians should be cost cutting using those tools (as well as Pareto charting) since this is the way private industry regulates costs while accounting for RISK. Utilizing control plans and PFMEAs, will be the key to creating innovation in the workforce and society. Learn, if a politician makes a mistake. Punish them by not voting for them. Tell people about it so those politicians are unable to make poor future decisions. Politicians will stop doing a poor job because they understand that one poor decision means they’ll lose their job.

Primary reason I wrote this article

The primary reason for this article was to communicate that conservatives need to reject Donald Trump as the Republican candidate. The man is a racist & bigot and his election will lead to the public at large rejecting Conservative political parties. He has slip-ups and when those slip-ups occur, it shows his true character. I thought being a businessman, growing up in NYC, I thought that would’ve made him a non-racist person but the positions he eschews are not those of a President. The President controls an army. Obama did one great thing during his presidency and that was he did not start wars. He was diplomatic. I love Obama for this, even though he doesn’t know anything about the economy. I’m thankful for no new wars. I’m thankful for relative world peace and Trump’s antics from the previous few weeks have turned me from a full on Trump fan, to someone who would vote Gary Johnson (even though he has some precarious views) in a heartbeat. It’s disheartening as a voter when no new wars is looked at as a redeeming quality from a President. Obama got elected on so much of a promise for transparent and responsible government and 8 years later, trillions more in debt, there’s still no semblance of a transparent government.

At the end of the day, I don’t want a war and if you vote for Trump, I now no longer believe he would not start one. In my article from two weeks ago, I don’t think he can responsibly “ban all Muslims from entering the USA” either. He will push forth with a ban but he certainly won’t do it responsibly and I predict he’ll empower racists across the USA, if he’s voted President. Additionally, there’s a trend of disturbing things happening at a few recent Trump ralleys. Specifically there was violence and it wasn’t met with stern disapproval, Trump did not even condemn it on the spot. Conservatives do not need someone like Mr. Trump representing us. Trump should’ve at least said “no violence here please”; the fact that he didn’t disappoints me, along with the combination of his reaction to the Orlando shooter being gay, to how he talked about the Mexican judge, who was overseeing the Trump University case. It bugs me to the point where I’m not going to defend a person who I’ve never known before (outside of Celebrity Apprentice) just because he won the Repub primaries – as far as I’m concerned, I’m perplexed how this trust fund baby has been able to somehow finagle his way to the top of the Repub party. This shows me that the Republican voters of the USA are not ready to transform government – they got swayed by a tacky marketing campaign, forget the chance for real change. If I had my ideal President he wouldn’t be bringing people down and he certainly wouldn’t be advocating for violence at his ralleys. Trump will introduce inefficiencies in millions of American’s lives, forget about making America great. In the case of the Mexican judge, he shouldn’t be talking about race Period. If he wants to talk about how he thinks the judge will be biased, present thorough arguments and let people decide for themselves. The fact he defaulted to race as ‘a publicly held view’ makes me question him and certainly question his ability to be president. This is because Trump WILL make a major mistake and for the consequent 15 years, we’ll have a person even more left wing than Obama in office. Trump will fuck up. It’ll be royal. Then you can usher in the age of Left wing problem solving and see humanity crumble because that’s what Ontario just went through for the last (almost) decade and a half. It’ll happen if Trump is elected President & it cannot be stated that Trump is a racist and that’s why people shouldn’t vote for him. Urge Bernie to come into the race, and organize republicans to force Trump to run in a 1-on-1-on-1-on-1 otherwise it’s Shillary or the NYC Trust Fund Racist.

Future Articles

No more Trump articles, I promise. I’ve said all that needs to be said and I hope I’ve been able to effectively communicate why Conservatives shouldn’t want to associate with him. I also thought I’d make a little summary of important topic of conversation that need to be discussed in the near to immediate future. I hope to have articles on all topics listed below completed within the next 6 months.

1. Pareto Charts – how they’re used alongside Control Plans & PFMEAs to control costs
2. Fishbone Diagrams & 8D decision making – where they’re used, why they’re used
3. Toronto Public Transit Summary
4. Hydro One Privatization – timeline and what Ontario ACTUALLY got
5. Green Energy Act – from the view of a Mechanical Engineer

I’ll also sprinkle in some articles on the NBA and cold showers in there as well but hopefully I can present great articles in the time period I’ve mentioned above.

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. 

Brexit: The signs of a frustrated voter base

What has the Brexit taught us?

There is a point where people stop believing what the institution says to do and they just vote with their key issues in mind. In the UK, we first hand got to see what that exactly means. It would be rash to think that the entire country has one & only one key issue; while perusing the interwebz in the lead up to the vote, it dawned on me that the media had framed the argument, as the British people voting against immigration. It’s disingenuous for the media to portray immigration being the “end all and be all” issue. I would have voted ‘leave’, but I would have ranked control over immigration as a secondary or tertiary issue. All we can tell from the Brexit is that collectively, the British people rejected the advice of their politicians, which was to remain in the EU; we shouldn’t try to pinpoint one issue, it’s not just one key issue that changed the minds of many. I’m going to talk about a few other key issues that may have motivated people to vote “leave”.

Maybe the perpetual debt cycle we see passed in congress, year in and year out does have a price. In Britain’s case, maybe politicians constantly over-promising but under-delivering, it ends with remaining in the Euro. The key issue for some people was national security. Imagine being British, having an attack, then having to deal with people all across the EU (many who don’t speak English) regarding how to react to a situation like this. Sure the EU would support but when you give up the ability to cheaply deport people from an island, maybe that island becomes no more. By this I mean, as of June 2016, the obvious solution to the terrorism problem from a British standpoint, is just to deport those they perceive as threats. You accept free flow of people and the situation deteriorates, all of a sudden a more complex solution will need to be generated. A more complex solution that will cost government money and potentially innocent lives while trying to implement their solution. Government cannot be trusted to deliver public transit on time, I would be terrified to imagine their solution to this problem. Maybe in the future, there will be a more efficient solution to the terrorist problem, but right now Britain doesn’t have to import this exceptionally European problem. We can’t defintively give a breakdown of everyone’s key issue but the British people accepted the responsibility of greater self determination & for that, newfound respect has been won.

The corrupt systems we currently have in place in the government, lead to many decisions being made without appropriate oversight, this is the modern day reality of present-day politics – they are especially more prevalent the bigger government gets because we (the electorate) don’t know if every segment of government performs value added tasks. Surely some do but there are also some that are outdated and need to be modernized. Without doing the adequate work (e.g. writing up control plans and pfmeas for each government service), it’s hard to be able to give an accurate breakdown. Since we don’t know one can assume the bigger a government gets, the slower the response would be to an attack like this in Britain. At least Britain will not be forced to deal with this symptom. These corrupt systems also insulate politicians from going to jail for poor decisions that are made; no corruption trials seem to ever take place, even when it appears there was merit for one – in my mind this is the key reason for the Brexit. There’s no traceability of government funds nor is there accountability to the top levels of government. Being a cabinet member doesn’t mean anything other than an increase in pay – I will present the example of Tim Hudak in next weeks article. Again all these are just as important as the immigration problem but seem to have gotten no pub from the media.

Hopefully Britain takes step towards self sustainability because that will be a key performance indicator for them to succeed. By accountability, if you read through my articles on government efficiency, there are private industry tools (control plans and pfmeas) that need to be implemented for each and every government service.

Regardless of all the key issues discussed, it seems like British people are finally just saying:
“reject the system, we need to control our own destiny”
& that’s why Brexit happened. While the rest of Europe waits, each member state should now be asking one and another if the Euro is really worth it. Asking, or perhaps pondering silently, if having one or two countries (France & Germany) pushing policy down your throat is worth a few extra bucks. Those countries pushing free trade and free movement of people, but for a country’s complete sovereignty. Is that current deal fair?

What Brexit actually means?


By this time, everyone’s probably heard of all the doom and gloom arguments coming from the euro supporting parties (e.g. Labour Party); how the currency is going to plummet, how the jobs are all going to disappear, how Britain is at a severe disadvantage due to having to renegotiate all their free trade deals over again from a weaker negotiating position. All notable points but just like the great Warren Buffet says:
“I will tell you how to become rich. Close the doors. Be fearful when others are greedy. Be greedy when others are fearful.”

The Euro vote is just a blip on the screen. The UK is at an enormous cost advantage because it’s stationed as the only English speaking country in all of Europe as well as the fact that it’s right at Europe’s doorway & that’s something no one can take away from that country. I love seeing the Monday morning quarterback articles where people accuse the ‘leave’ team of being stupid in a roundabout way. Examples include articles calling for a new EU referendum, which is basically circumventing democracy to get the results your side (remain) wants; to how “what is the EU” trending on Google UK trends, insinuating that British people made an uneducated vote; to how all the young people voted to remain while the older people voted to leave, meaning that old people are all racists who voted out of fear rather than common sense. Forget the fact that only 30% of young people (18-25 year olds voted), the British PM (Cameron) did a piss poor job of reaching out to young people and that’s why Britain didn’t Bremain. Young people need to understand, voting is your voice, in a democracy, we don’t riot in the streets, voting is your avenue to get heard, so VOTE. Don’t bitch and moan after the fact, this is why political discourse is so important. Also people neglect the fact that as people age, they see what government actually does, which is inefficiently deliver goods and services. They inefficiently deliver it because with many government services, they are the monopoly service provider and in situations with only one service provider, there’s less innovation rather than in markets with many service providers. All a Brexit means, is Britain will now have to start working to make sure their country doesn’t go under.

Again we don’t expect our government to work and that’s why so much of the establishment are pro-EU. Additionally, a Brexit means the rest of Britain also better start getting to work. Free trade leads to countries specializing in a skill or trade, as a member of the EU, Britain was a net importer of goods and services, what Britain now has to do is get to work and satisfy domestic demand. The government there needs to ensure that adequate information is flowing to business leaders detailing the products and services that the market wants. If the government and private sector can work collaboratively, then the EU’s worst nightmare could come true; that nightmare you ask? A lean mean British manufacturing machine could awaken. If manufacturing is done in an efficient manner, they’ll be able to kill the EU-based competition because staying in the EU means greater taxes. Again this is actually the primary reason why the large EU-based countries want to see Britain stay in; with the Brexit, those countries now have another competitor for their exports (think French cheese and wines or German automobiles).

No one talks about this point either and it is membership into the EU also means taking on any future liabilities that they may issue. Specifically when the EU issues spending, the U.K. being a member, would be obligated to its future indebtedness. So when Greece or Italy or Spain finally builds that border defense system that’s badly needed, then guess who’s going to be paying for it?

Why do young people not vote?

1. Because it won’t matter
2. Because I don’t know anything
3. Because I don’t like either candidate

All valid reasons but ones that spout ignorance at every corner. If you don’t vote, you accept the elected representatives as your voice. If you don’t vote and get trump, then notice that American hostility has increased around the world? Should’ve at least voted for the non-racist or accept the consequences.

I wanted to add why I think voter turnout is so low amongst young people. I believe the answer is the public school system we currently have. A school system that is responsible for educating 99% of our young people and one that has inefficiencies at every corner. Inefficiencies that have not been rooted out through private industry intervention, and due to the gatekeeper inefficiency – remain deeply ingrained to our children’s education system.

It’s a system that you really have no control over either and you can’t really judge fully until you go through it. That is why what I’m saying is relevant, because I’ve had the chance to go through 2 different high schools, University & many other continuing education courses so I carry that experience with what I say. Firstly, education should be free and I’m thoroughly discouraged when I see the amount of money people pay for it. If government intervention increases costs by 10% at every corner and doesn’t focus on actively decreasing costs then education will never be free. This is a fundamental fact of life. The cheaper you make things to learn the lower the cost of it becomes – economics 101. This is also the fundamental belief of why for consumers, a purely competitive market is superior to a monopoly or oligopoly. Also in purely competitive markets, employment and satisfaction is higher (think cell phone manufacturing vs cell phone service providers). Btw if there are more private schools, what this does is increase employment in the domestic education sector so if you’re a Canadian teachers college graduate with no job? Vote for the party who implements a voucher system.

The Internet has helped many industries (e.g. cabs, brick and mortar stores, textbooks) breakdown the monopolies that existed previously and that is because information became more cheaply available and innovation happened. This revolution has not happened yet to the public school system. It’s a government monopoly that we’ve entrusted to educate our kids and rather than teach more they seem to be teaching less. Education is slowly becoming privatized and we’re not even noticing it. The media machine is successfully convincing everyone that it’s not broken. One example of this is when I was in grade 12, rather than continue to make the math curriculum teach more, the Halton school board decided to teach less (specifically some vector math & imaginary numbers were removed). Complaints from parents that the material was too difficult forced their hands and now that 90+% in grade 12 calculus and discrete math just became attainable. The system downloaded those subjects from free public school to private school (university) and because of gatekeeper efficiency, I described a few articles ago, it’s basically impossible to reverse that change. Now you’re probably asking “How do you fix the school system?” That answer is easy. With a little infusion of competition (allow more entrants into the market) and vigilant data collection to ensure key kpis (standardized tests, surprise visits, and student feedback) are achieved, education can be fixed. Modelling our education system after the German education system will transform Canada, otherwise we’re on the slow road to becoming the 52nd state after Mexico. Btw that vector calculus sets the stage for matrix algebra and in the future, all of the high value jobs associated with machine learning and deep learning algorithms have their core in matrix algebra. Again it’s easier to get people to learn things gradually than expect them to learn so many new concepts in the short span of 4 years of university. This would also bridge the skills gap that new entrants in the job market feel – one of the key reasons that engineering companies would rather hire 3-5 years experience. But at the end of the day, if you educate everyone, then there will be no stupid people to sell worthless things to.

In next week’s article, I’ll go into a little more detail of how government decisions have cost the taxpayer billions of dollars. We’ll do a deep dive of the Ontario political scene and I’ll try my best to summarize the scene over the last 20 years. If you’re new to Ontario or just want to gain a better appreciation for why Ontario has voted the way it has over the last two decades, you’ll really enjoy next week’s article.

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. 

How to solve the traffic problem [Engineering] [Economics]

There’s estimates that traffic adds economic costs which are in the billions of dollars to Toronto’s economy. So much so that different organizations have completely different estimates for the exact impact. Government estimates come in at around $5B while some private think-tanks place the damage in the $10-11B range.

It’s quite simple to understand where the costs come from. A large cost would come from Toronto’s most productive citizens and companies doing less business because they’re stuck in one geographic region. By stuck in one area, I mean companies only have 7am-7pm to sell products and service everywhere around the globe. Now if in one region (GTA) you spend an extra 1H30M in traffic, this cost can add up for everyone. So not only do Toronto’s most productive suffer but everyone effectively has 90 minutes less in a day.  Another major cost comes from the fact that people spending more time in traffic means less time with family. Imagine being able to spend 5 more hours with your family a week, rather than in the iron cages we are forced to drive to and from work in. Then another major costs come from foreign companies who choose metropolitan regions with less traffic because traffic is an additional cost of doing business in the GTA. Quite simply, it is difficult to add up all the costs so it makes sense why it’s hard for people to agree on it, however we can agree that it does exist and it is substantial.

So while I was watching a documentary on the majestic water fountains outside of Dubai’s largest mall, their talk of the laminar flow of the fountains got me thinking. Before I explain the thinking, the Dubai fountains perform a show every day where the water from the fountains effectively dances on an artificial lake (think outside Las Vegas’ Bellagio casino). To get the water to shoot 50 ft into the air, in a solid stream of water, the water must be of laminar flow. There’s two types of Fluid flow, laminar and turbulent, and basically when the speed of a fluid in a hose becomes too great, it passes the threshold of laminar flow and becomes turbulent. Turbulent flow is difficult to analyze, hard to describe mathematically and basically can be thought of as just being too chaotic to deal with. So you’re probably wondering why I am talking about laminar & turbulent flow of water and traffic in the same article?

I equate the flow of water to the flow of traffic in this way, water through a hose, kind of acts like cars on a highway. There’s only a certain amount of cars I can fit onto a road before there happens to be traffic, or there’s only a certain amount of cars on a road before driving conditions become chaotic (turbulent). Those of you who’ve been on the highway as it slows to 100, and you’re no longer able to go 120, you know it’s only a matter of time before you slow to the crawl of stop ‘n go. Why does stop and go happen? I’ve been told, to answer this question, one must realize traffic cannot be modelled, there are too many variables to account for and traffic should be thought of as random. But the way I see it, traffic is the result of increased chances for decision making situations; I classify that as scenarios where ‘someone’ wants to push the envelope and drive faster than traffic, or tailgating someone close or creating other dangerous road conditions for everyone on the road. I am of the opinion that this is one of the main determinants behind what causes traffic. When you have a few drivers who wants to continue to drive 100 when traffic is moving at 70 or 80, they create situations for other drivers to make decisions because you can bet driving faster than  traffic means you’re not staying in the same lane. These decisions are unnecessary and cause time delays & since they are all additive, they add up to me sitting in traffic. By additive I mean, if I have to stop my vehicle because someone with a long response time (maybe an elderly driver) stops, then I cannot go until they are comfortable moving their car. This brings me to the main point of how these ‘fast drivers’ cause traffic to move from laminar to turbulent. Just as with water and a hose, if you have the flow rate (or speed of water) set too high, you get turbulent flow; the easy way to attain laminar flow is to reduce the speed of the water to get that smooth predictable laminar flow. Trust me you don’t want turbulent flow on the road.

So the next thought to think of is it’s so easy to get water to slow down (you just reduce the hose pressure) but how in the world can you possibly get all drivers to slow down to the same speed at the same time? How do you reduce this ‘fast driver’ situation that I think is the main cause of traffic. The answer is simple and obvious, but requires the effort of the Toronto police force. Instead of sitting idly by and watching people speed during rush hour on the Gardiner and 404, it would be awesome if they could ticket people for breaking the posted speed limit. This is an effective way to reduce speeding during rush hour while helping traffic move, rather than the stop and go mess we have now. What could make traffic move even faster is for the police to enforce the 2 car minimum on the highway during rush hour. Would you tailgate someone if it meant risking a $100 fine? I definitely wouldn’t. This way, there’d always be a self correcting mechanism by which the speed of traffic would gradually reduce as more cars entered the highway and would never slow down to an absolute crawl.

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. 

Why Conservatives should not support Donald Trump

Donald Trump. Before 2016, bringing him up in any meaningful political conversation would’ve been conversation suicide. Not only for the lack of political experience (which is overrated) but also because Trump is brash & more importantly, he doesn’t always think before he speaks. Now this entire 2016 election campaign has amplified those points and the people who support Trump have learned, it’s better to just zone out and not listen because you know he’s going to say something offensive. In the real world, you can’t just say something and then 2 days later say the complete opposite and pretend like you didn’t take a stand 2 days before. It’s really getting past the point of no return and no matter what issue you discuss in regards to Trump, you only have to look at the last 6 months before you find video evidence of him on both sides of an argument (e.g. gay marriage & invading Iran). Then there’s some issues where he’s just taken the radical approach and holds opinions that are clearly dangerous & not to mention anti-American (e.g. banning Muslims & building a wall with Mexico). He’s lost my vote because I just don’t know which side of the coin he stands on with so many key issues. I also think if there’s another terrorist attack, he’d take the nuclear reaction towards Muslims and that’s not what America needs. By nuclear reaction, I mean he’d overreact in anything he does because Trump seems to be wanting to appease the most radical elements of the Republican party. Also the idea of banning a group of people because of a personal choice is the most un-American stance I’ve ever heard any politician say. I cannot believe that recent comments commending racial profiling were not met with a stern disapproval from his supporters. Americans who are Conservative, should not support someone who vehemently supports such policies. They are symptoms of BIG government and will add layers of inefficiency to the bureaucratic monster we already have.

Non-Trump minute – why I think terror attacks happen

Terrorist attacks happen because terrorists have too much time on their hands. One of the reasons I will avoid Paris and Belgium in any future trips is because they have too many people sitting around doing nothing with their time. Islamic unemployment rates in those countries are higher than non-Muslim unemployment rates and they wonder how terrorists were able to plan attacks like the Bataclan attack. I don’t believe that religion makes terrorists kill people because killing people is crazy. This is not a symptom that the religion is sick, this is a symptom that the person is sick. If you’re ready to kill someone then you deserve treatment and that’s one of the faults of our society. This is evident by the sheer number of veterans that come back from Afghanistan & Iraq and suffer silently from PTSD. It’s time we stop blaming a religion and blame the simple fact that we don’t care about treating mental health as a society. The fact is that mental health is ignored and rather than try to fix mental health issues, we as a society are more comfortable in supplying medicine in pill format and hoping the issue go away. I believe that one day, when the baby-boomers are long gone, we’ll be able to transform our healthcare system into one that focuses on helping all those who have fallen between the cracks rather than wait for those cracks to grow and take innocent lives with them.

— back to the article —

Back to Trump. Before this week, I would have voted for Trump for the following reasons:

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

Each of these points deserves a little explanation so I will detail it below.

I like his anti-free trade stance. Free trade in the classical form is ideal. It allows citizens of a nation to benefit from cheaper prices because foreign countries are able to specialize in skills and build a competitive advantage with which to trade with. I like this. But it also makes countries dependent on other countries. Steel production has decreased steadily over the past 30 years in the USA and with the abundance of cheap steel coming from China, this may present a national security issue in 5-10 years.This means even free trade should have it’s limits. Additionally, this would undoubtedly bring more jobs back to America than it would cost it.

9/11 edit – Additionally by offloading industries to other countries due to present day benefits provided by free trade, countries essentially consent to offloading future R&D productivity improvements in the selected industries as well. For example, how can you perform R&D on improvements in automotive technologies if you have no automotive base to start with? So for a country like Canada, when we offload automotive to Mexico, we essentially give up future R&D improvements and that’s why there’s a glut of automotive engineers who cannot find work in the GTA.

/9/11 edit

With the recent citizen’s united ruling, politicians can literally spend whatever they want on their campaigns in order to get elected. This is a ruling that I believe should’ve been passed because it allows greater transparency in viewing how much politicians raise in order to get elected. I believe it reduces corruption on a national level because now politicians don’t have to do behind closed doors wheeling and dealing with their biggest campaign contributors. You can clearly see how much money certain politicians raise and from what industries and I believe in the future it could help people avoid certain politicians who’ve taken too much money from a certain avenue. This is counter to conventional wisdom that people use in setting up contribution limits as this is supposed to even the playing field for all entrants into a political race. Personally, not sure which side is the right side to stand on but either way I appreciated that Trump was self-funding his campaign. Don’t forget to mention this was the only guy on the Republican side who was doing this.

9/11 edit – http://www.bloomberg.com/politics/graphics/2016-presidential-campaign-fundraising/ Just wanted to include a link highlighting campaign fundraising to date

Trump is on record saying that he wouldn’t start an unnecessary war (a la Bush) because he believe in communication with foreign leaders rather than dropping bombs. I don’t believe that Hillary will go her 4 years without escalating things with Iran. I base this on the fact that Hillary has received $50M in campaign contributions from Saudi & Kuwait (see that Citizen’s United ruling paying off). But again with all the flip flopping and appeasement of the radical elements of the party, this is a stance I believe Trump would renege on.

Lastly, deporting illegal immigrants is not racist. It will incentivize people to immigrate to the USA legally and would actually raise the wages of people in the industries currently dominated by illegals. It would hinder human trafficking from Central America because most people immigrate to the USA based on economic benefits. It’s reported that it costs upwards of 19k to immigrate to the USA from central American countries. If Trump follows through and deports the 10M or so illegals currently residing in the USA, those people in Central America would have to weigh the additional risk of getting deported back to their home countries, rather than just working perpetually in the USA’s shadow economy. Basically these are all valid reasons why people supported (and many still support) Trump.

Now that I’ve listed the main reasons I supported Trump, the biggest dealbreaker in not supporting him is I don’t believe in supporting someone who has a hateful message. It’s a deal-breaker and it makes Conservatism in America look bad (halo effect). In fact, it makes Conservatism all across the world look bad and stops us from transforming America’s government into one that focuses on efficiency and solving problems. Another 4 years of democratic leadership lends credence to “left-wing” policy all across the world and if Republicans don’t stand up to Trump and tell him to stop with his hate speech, Conservatism suffers and inadvertently left wing policy gets a temporary boost. America is not the land of systematic discrimination. In the past, America may have discriminated against the Germans and Japanese, however we recognized the errors in that judgement. America is not the land of discriminating against its minorities, we shouldn’t bring ourselves down to countries like Turkey, Pakistan and other countries where they actively persecute their minorities. I’ll leave you with this old saying from WW2:

First they came for the Socialists, and I did not speak out—
Because I was not a Socialist.

Then they came for the Trade Unionists, and I did not speak out—
Because I was not a Trade Unionist.

Then they came for the Jews, and I did not speak out—
Because I was not a Jew.

Then they came for me—and there was no one left to speak for me.

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. 

Last – 9/11 edit

I’ve received a lot of negative feedback regarding my Pakistan and Turkey comment but I’m just looking at facts. Since the 1950’s, minority populations in countries around the world (e.g. China, UAE, India, USA, Canada) have exploded relative to the majority population. You can just go and look up demographic charts comparing the demographics in the 50’s compared to now.

In China, the Han population has decreased relative to its 50’s figure.

In the UAE, the local Arab population has decreased relative to its 50’s figure.

In India, the Hindu population has decreased relative to its 50’s figure.

In Canada & the USA, the white populations have decreased relative to its 50’s figure.

In Pakistan & Turkey, minority populations have decreased while the majority populations have increased. This to me says that those states have state sponsored systematic discrimination in place, which they absolutely do.

If the USA passes legislation to discriminate based on religion, there is no difference morally, between them and Turkey & Pakistan.

Why control Plans and PFMEAs are important for policy makers

Before we get into the meat and bones of my article, I will present some introductory reading, which will answer questions like:

1. Why do inefficient systems exist in the first place?
2. What kinds of inefficiencies are there?
3. Intro into control plans and PFMEAs

This article will introduce concepts like deadweight loss to society and showcase 1 instance of where government intervention has led to an inefficiency in society; it will then touch ramifications of that government intervention. We will do a deep dive of a government service and how a control plan and PFMEA would look like in a future article.

In the real world, “there’s no shortcut to getting rich”. But for most services in Canada, we don’t pay the true cost for services. One reason for this is that there’s often some form of government intervention (often taxes) that has lead to the inflated costs that we pay.

I will bring up the taxi industry as an example where government intervention has led to a inefficient solution and now a more efficient solution (Uber) is winning out. Once more efficient solutions come around, the inefficient solutions are at a disadvantage as they have permanent fixed costs that still must be paid.

The taxi industry is a solution to matching those people who require short km transportation (<50km) but lack access to a vehicle of their own to those who are renting out their time driving people around. It’s a transportation solution where government policy (the medallion system) has led to limiting the supply of taxi cab drivers on the road; in turn this policy has created an entire generation of inflated wages for taxi cab drivers. For anyone who’s taken a basic economics class, supply normally intersects demand at a given market price and that’s the price that is supposed to be paid out as wages to drivers (in this example). When government limits supply (by utilization of a medallion system), this raises prices and creates inefficiencies (in economics classes, this is termed dead-weight loss). When government artificially raises the wages for a certain class of workers, it creates many untold inefficiencies that are not captured in any published government metric.

Imagine, I am a 17 year old, fresh graduate from high school, deciding whether to pursue post secondary education or enter the labour market right away. I see my friend who makes 90-100k (not a stretch for a taxi cab driver who works 60-70 hours a week) from driving cab and figure it’s an easy job, which also happens to pay great. Well I drive cab for 5-10 years, then Uber comes to town and because of fixed costs inherent in the traditional system (e.g. paying for the government issued medallion) I’m not able to compete on price. Since price is a main determinant in a customer’s mind, I am at a permanent disadvantage all because of municipal government policy (municipal governments issue medallions and collect revenues for each medallion issued). On top of this, since I’ve been driving cab for 5-10 years, I have become disillusioned with school and am unlikely to go back leading to an immeasurable deadweight loss on society.

Economist’s Moment – deadweight loss and what does that actually mean?

By deadweight loss, I mean the economic cost associated with this loss of potential from a worker. When that worker foregoes training/education for short term cash flow, those short sighted decisions have a cost. For many jobs that have a 20-30 year lifespans, this notion is a non-factor, however since many jobs are (effectively) coming to an end, the impact is now noticeable. This deadweight loss can deliver a massive blow to a country’s GDP and devastate communities. Examples of this type of deadweight loss include:

• in Alberta, many younger people who forewent school to work in the oil sands
• people driving cab & trucks who will now face lower wages because of competition/automation
• when people forego formal education or private sector training to become high-paying public servants

I have no problem with public servants getting paid the prevailing market wage because that’s what they deserve. I have issue when people want to gain employment with the government because it’s ‘easy’ or because the pay is ‘really good’. Getting through engineering, I can tell you I saw many bright individuals give up on their dreams for a chance at the public sector and many only made the choice because the public sector provided job security (as well as a pension). I look at that as unfortunate. I’m not going to be someone who’d call out anyone as overpaid until I see some data but control plans and PFMEAs will help to illustrate exactly what kinds of government jobs deliver value and what kinds don’t.

–back to article–

But back to taxi drivers. Through the medallion system, taxi drivers paid for the government monopoly and now in many big cities, they are getting screwed. I use Uber all the time, I see it as a better solution to the transportation problem I detailed earlier, but I understand why many cab drivers are angry. They are being left out to dry by their municipal governments and that’s because government itself does not have its costs controlled. This government issued monopoly was really the previous generation’s solution to the logistics problem of matching those who need a ride to those who have a car. Taxi cab drivers are not happy since their livelihoods are being threatened but maybe they deserve what’s coming to them since they entrusted government to protect their livelihoods – moral of the story, don’t become dependent on the government to take care of you.This is also one of the reasons why more auto companies are investing in Mexico than ever before. The unnecessary taxes (note I don’t think all taxes are unnecessary but some taxes definitely are) we expect private industry to pay are this form of unnecessary overhead; directly comparable to the extra overhead cab companies have to pay in the form of the medallion tax. Right now auto is booming, but if sales were to stop growing at the 7-10% clip the industry has been accustomed to the last few years, that’s when pressure will be added to reducing costs. That’s when companies will have to compete more so on costs and less on quality and reputation. Those companies that didn’t diversify into Mexico will be at a disadvantage and in the end could suffer the same fate as the taxi industry.

For public sector employees who have “guaranteed” pensions, go and ask government employees in Detroit or Greece what happened with their “guaranteed” pensions. When you cannot afford something (due to perpetual budget deficits), do not pay for it, because you’ll end up selling the assets you do own to cover the costs you owe (ask any Greek of how many public assets have turned private). Does this mean I am suggesting for governments to go the austerity route? No. What I am suggesting is for governments at least know their own costs! Currently, I don’t think they do. Modern day (wreckless) government fiscal policy is putting the future generation at risk; when debt payments become due, we’re going to be selling our public assets in a desperate state (a la Hydro One) or a state where the government just flat out undervalued a key asset (e.g. the 407). That’s only going to cost us because we will be selling our public assets in a position of weakness; never sell in a position of weakness. You cannot just flip the tax switch and expect to get guaranteed revenue. I covered the elasticity of taxing the rich in my Economist’s moment of this previous article, the people who have less money to spend (on accountants) will be the ones paying.

At the end of the day, when I pay taxes, I don’t know where they go, I don’t know what percentage of each dollar is spend efficiently and there’s been no real initiative by the government to clarify this. This is where control plans and PFMEAs come into play. They will trace dollars spent to government actions and allow for citizens to look at very concise summaries of government programs to understand how their taxes are being spent. This is why they are important for the future of modern day government.

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. 

Control Plans & PFMEAs – It’s here [Economics] [Manufacturing]

Introduction

The long awaited article on how private industry controls costs, while managing risk, is finally here! Before starting our in-depth discussion on control plans and PFMEAs, we will review a few more essential concepts. In last week’s article, we dissected the different kinds of inefficiencies that may exist; control plans and PFMEAs strictly deal with productive inefficiencies. Two weeks ago, I summarized why we have inefficient systems to begin with; long story short (from that article) inefficient systems exist because before you create the optimal system, you must start with an inefficient one. Alongside Pareto charts (which will be a future blog article), these are the main tools used by private industry to lower costs (while accounting for risk).

It can be assumed there are 2 inputs into delivering products/services and those inputs are capital and labour. Modern day companies compete to deliver products and services and in turn, focus on minimizing those inputs as this directly translates into lower costs. In manufacturing, the two primary tools that have helped contain costs are the control plan and the PFMEA. The breakdown is as follows on what will be covered in this article:

• How were control plans & PFMEAs first developed
• What are control plans
• What are PFMEAs

How were control plans & PFMEAs first developed?

Before talking CPs (control plans) & PFMEAs, it is necessary to discuss how free market prices come to be. The following affect the price that can be demanded by service providers:

• How essential the need is
• The complexity of the solution
• How old the solution is
• How removed the customer is from paying for the service

It’s important to undetstand prices before we talk about cost control. CPs and PFMEAs are focused on cost side of the business equation. As to how CPs and PFMEAs were first developed, the simple answer is free and open competition (aka the free market) while the long answer just describes the simple answer in more detail. A lesson from private industry is never make the same mistake twice, as in the business world, mistakes add unnecessary costs and make your company less competitive. Making the same mistake twice is also indicative of an inefficient organization – one that likely doesn’t utilize PFMEAs properly, as this is the live document, in which mistakes are ‘captured’.

To utilize CPs & PFMEAs, it starts with the need from the market, that your company satisfies. This need will determine the price you can charge for your service – needs that are more essential (e.g. need for a home) will demand higher prices than non-essential needs (e.g. solving bad breath). The price is also determined by how many people can perform your service with more difficult services earning higher wages, and simpler tasks earning lower wages. Mature services (e.g. road maintenance) will also have lower prices as mature services translate to more people being able to perform that service. How removed the customer is from paying for the service is also an important determinant in attaining the true free market price. As a case study let me present the socialized form of medicine we have in Canada. Canadians just go into the emergency or doctor’s office, get checked out and assume it’s free. But there’s no care or worry on behalf of the service recipient that a fair cost was assessed to the service one receives – that’s why when Canadians say that we receive free healthcare, I want to scream out there’s NO such thing as free anything. We pay for it but the costs are hidden and this goes against one of my key beliefs, which is the more eyes on a problem the better the end solution. When costs are hidden or not communicated this is a symptom of an inefficient system. For the record, I think Canada has a great single payer model, one that should be emulated by the USA, however there’s still a lack of feedback to ensure that fair costs are assessed to services delivered. If the USA were to emulate single payer, some form of cost feedback would need to be instituted. By lack of a cost feedback I mean, why can’t I go to a web portal and see the cost breakdown for medical services offered by each provider in a community. This type of transparency could also be used by doctors to guide themselves on what type of future training to undertake, as they’d be able to clearly see what services get paid the most. This is a massive inefficiency in the Canadian system and one that we, as a collective nation, ignore.

So CPs (control plans) and PFMEAs were the end result of competition in the free market. They were developed by companies who understood that limiting mistakes was key to minimizing costs; from a process standpoint, they were organically created documents that have the primary purpose of minimizing costs.

What are control plans

Control plans and PFMEAs are both live documents, I will communicate rough details of what that means in this section of the article. Live documents mean that the control plan (& PFMEAs) of today could change as new information is made available, however the PFMEA is the document that gets changed more frequently. Control plans are documents that lay out the step-by-step process steps and accompanying quality standards, training documents & any other documents (e.g. Gage R&Rs frequencies for required measurement tools) needed for each process step. You can imagine that for a manufacturing line, this would detail each process step a product has to go through before shipping the product to the customer. For a service, this would likely be all the different people whose labour a company would require to deliver that service. For products, quality standards are most often quality specs that need to be satisfied to move to the next process step. Here’s where you’d be right to ask, what quality documents make the cut, as to what quality documents should be included. The experts who wrote the control plan would define “critical parameters” that would be observed and analyzed quantitatively to ensure that manufacturing is robust. For services, it would likely be customer satisfaction targets derived from those who received the service (e.g. 99% customer satisfaction rating). I mentioned in a previous article how the “quality/$ spent” relationship is important when producing goods or delivering services; it is most often captured in the control plan by these quality standards. This is why automotive companies can pick up their operations and move at a whim (or an additional tax or levy that makes their product offering uncompetitive in the current market). New auto investment is being spent mainly in Mexico for this reason as in 2014, 90% of investment spending was done in Mexico ($7B vs $0.75B in Canada). So the next question would be if all quality standards are captured in the control plan, why haven’t all automotive companies just picked up and left for Mexico. This is partially due to fixed costs already sunk into the home country but more importantly, it takes time to understand all quality control documents that need to be referenced in the control plan. If all risks are not properly assessed, then you can have customer escapes that ruin a company’s quality reputation. For services, this would be easier to detail, since the service provider would receive feedback from the customer instantly (e.g. a package was late, or a massage was unsatisfactory). For product offerings, this can be more of an unknown, since failure modes are not always apparent – especially for mass manufactured products. Suspected failure modes are not referenced in the control plan as that is what the PFMEA is for. I have yet to discuss the PFMEA in detail so here goes.

What are PFMEAs?

The PFMEA stands for Process Failure Modes Effects & Analysis – it is also a live document, which is essentially a risk barometer for each process step detailed in the control plan. Even though I said that quality documents are most often referenced in the control plan, I have also seen them referenced in the PFMEA.

Risk is assessed for each process number through a RPN (risk priority number) score. This is a quantitative score based on the occurrence of a failure mode, the severity of a failure mode and the detection methods in place. Note that one process step can have many, some or even no failure modes present.

For each process step, if it has no failure modes attributed to it, it will have not be referenced in the PFMEA. If it has 1 potential failure mode, then that 1 score will be assessed. If the process step has many failure modes, each prospective failure mode will need to be assessed with an RPN score. The max RPN score is 1000 with each of severity, occurrence and detection, scored on scales of 1-10, then multiplied together (e.g. Severity (10) * Occurrence (10) * Detection Measures (10) = 1000, but in practice this high a score would never happen). If any process step has a score above 125, this should trigger corrective action by process engineers to bring this number below 125. So you might ask how is the RPN score for each process step determined? It’s determined by a team of experts; typically in manufacturing environments, this team includes a line worker, the process engineer, an individual from the supply chain team and someone from quality control. The process engineer is then tasked with targeting high risk process steps, and imparting corrective actions to bring the RPN score down. Through the use of experiments or increased inspection at certain process steps, value add activities can be implemented to make a process more robust.

From a policy perspective, lessons learned from the Flint water disaster could have been avoided with the proper use of control plans and PFMEAs. For those of you who don’t know, the governor appointed an EM (emergency city manager) to perform the mayor’s work as the city was near bankruptcy. The EM authorized a decision to change water supply and eliminate an expensive treatment chemical that led to lead poisoning of ten thousand kids. Again, due to financial mismanagement, a desperate city was forced to make short sighted business decisions that ended up poisoning many of its children. A city where the tax base fell from under it, and raising taxes on the rich did nothing; a city where the most vulnerable were put at risk because of money. To cut costs, the EM made an ill-advised decision. However had he had a control plan and PFMEA, he would have seen that cutting that treatment chemical out for the sake of cost savings had a high RPN score. Literally looking at 1 number (specifically a score of 10 under the severity column of that process step) would’ve helped the lives of 10 thousand kids, but now we sit, with those kids poisoned and the government still acting aimlessly.

In next week’s article, we will go over an example of a government service and try to apply the concepts of control plans and PFMEAs to it and observe how they would help manage costs.

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. 

Gatekeeper inefficiency [Economics]

Introduction

So now that we’ve hit all the big inefficiencies they teach in economics classes worldwide, I have another concept that I wanted to add to the list. This is ever present in the world of today and if you grew up in Canada you have been affected by this. When you interact with the government and you observe some sort of inefficiency, whether it is in the form of waiting in a line or just waiting, or even missing out on relevant information in your formative years, you’ve been hit by it. I’ve termed it gatekeeper inefficiency, based on the government deeming itself to be the sole provider of certain services (e.g. education or electricity or public transit) and the inefficiencies that exist in trying to fix those systems as an outsider. Inefficiencies often manifest themselves as higher prices or longer wait lines – just because you don’t see the cost of something doesn’t mean you don’t pay it. Implementing control plans and PFMEAs to communicate government products and services would do a lot to eliminating this gatekeeper inefficiency, however the government doesn’t use those tools presently, so this gatekeeper inefficiency is still present.

An example of the gatekeeper inefficiency is the time and effort required of normal every day citizens, when trying to change a government service/policy. Remember in the world where nothing is free, the government expects you to take time out of your day and get things moving for them, for FREE. You don’t get to document those hours and deduct them in your taxes… No; don’t mention the fact that no incentivization model exists that would make ordinary citizens want to improve government outside of sheer will. Think about the hoops you need to jump through to get government action started and the percentage chance that the suggestions you make will be ignored – two additional stumbling blocks for suggesting change. I’ve had to deal with sponsoring my wife from Dubai and let me tell you the amount of bureaucracy that currently exists provides little to no added value to Canadians – or at least this added value has not been quantified and implementing control plans and PFMEAs would allow them to quantify it. Control plans and PFMEAs would allow ordinary citizens to take a look at a summary of each government service provided and ensure that value is delivered to its citizens. If value is not being delivered, the control plan and PFMEA would allow for a solid starting point to implement change. Remember, before you know where you want to go, you have to know where you stand and the more eyes you have looking at a solution, the better the solution will be. Obviously the eyes looking at the solution will have to be trained to a certain degree, but the PFMEA and control plans would accomplish that. To put it into a different perspective, NO auto company would even consider entering business with a company if they didn’t have a control plan AND accompanying PFMEA for the process because they’re deemed that integral. This is the biggest qualm that fiscally conservative people such as myself have with government programs and that is, before raising taxes, take a look at where you spend money and make sure it’s spent smartly.

Anectdotal Example

Back to my wife’s immigration, I’ve spoken to many CIC officials and they’re all trained to provide you with nondescript answers as giving firm answers, adds the potential for unneeded liabilities to CIC’s workload. For example, recently I was notified by a border guard while crossing the border that CBSA and CIC shared the same system, so I could go into a CBSA office and view where my application was in processing; something you cannot even do at a CIC office as they tell you to go online to check it. The online portal is a 1-line summary that lets you know your application has been received and nothing more. My wife completed the application without the help of an immigration lawyer – someone who charges 3-5 g’s to complete the application – so she thought maybe she made a mistake, as the application was off the timeline initially stated on the CIC website. By the way, my wife is a smart, proactive woman. She went through the entire application website and spent money on a police check and health exam to further expedite our application because it was supposed to put you on the lower end of the wait time spectrum. By the way, the timeline has increased from 18 months – when we submitted which was April 2015 – to what’s currently 26 months and really there’s nothing ordinary citizens can do, if this timeline is further increased. It is a timeline that changed around the 2015 election, in which the Liberals took power from the Conservatives, so change of government can be considered a non-factor. The only issue I have with this new Liberal government is that when they made the claim that the Syrian refugee crisis was not going to add additional processing times for applications already submitted, that this wasn’t a half truth. It would be a half-truth that certainly could have been verified pre-election by looking at the CIC control plan and PFMEA. There’s no current way for to see government capacity or throughput other than 1 line summaries offered through government portals. With respect to the immigration applications, we’re at the 15-month mark now and we’ve received very little information from CIC; if you’re going to make me wait 26 months, than at least tell me where you are in the process. Officially, they do not provide feedback unless the waiting time has passed their magical prescribed wait list time, which is now 26 months. So CIC can just increase that wait time anytime it gets a lot of people inquiring about their applications because then people can’t call in to inquire about their application until this wait time has been met.

I figure walking into the CBSA office to inquire on the application is something that CBSA will likely change in their own procedures, as I was clearly one of the first people who came to the border to inquire about immigration applications through this venue. At this 26 month mark, this is when they provide you feedback into whether your application is missing information, and if it is missing information, then guess what? You’re waiting even further. Time is money. Money is power. We’re effectively powerless. In my opinion, they do this because providing more information would allow people to aggregate how long it takes for each step in an application to get processed and see what step in their process takes the longest (something that would be covered under the control plan and PFMEA). Actually I was told by the CBSA official to contact my local MP, and they’d make things happen with CIC. So I have to go through the gatekeeper to eliminate an inefficiency, but who even knows if the gatekeeper would fix that for all or just myself? The system wouldn’t be fixed because who knows if the gatekeeper would actually fix the system or just quiet the symptom (aka me complaining).

Another example of gatekeeper inefficiency

It is clear to me that robust services do not currently exist in government and are not being developed at a federal or provincial level. For example, provincially-run public schools STILL lack mandatory computer science classes. It’s not right that growing up I was told by what seemed like 50% of the teachers, that getting an arts degree was worthy as those were all the arts teachers who were telling me that. Now I didn’t listen to them, instead pursuing engineering, however had I listened, I’d be in the same situation as many arts grads, and that is working in an industry that I did not study in University. I don’t mean this as a slight against people with arts degrees, but data shows that people with arts degrees default on their osap higher than STEM grads and it’s nice to make money. I was even told by a grade 11 guidance counselor, that I should drop my desire to be an Engineer or go to college because I scored a 62% in grade 11 Physics. Besides that, going to college is vilified in high schools. Forget the fact that you could get a 40-60k job after just 2 years in college, for some reason we’re still brainwashing our youth into this belief. Again that’s another anecdotal observation I’ve made from talking to my younger family members but it was a belief I definitely held until I graduated University and hit the job market. Graduating into the real world and getting a job related to your degree, is looked at, as a badge of honour; a sign that you know what you’re doing, but sometimes you get lucky. Imagine… in 5 years, hydro prices in Ontario skyrocket and Mexico continues on the slow yet steady pace of winning all new auto business. Is this a likely scenario? I’d say it has a chance to happen, especially if companies don’t invest in new products here. That means that the current education system is graduating engineers for basically no new jobs. What does this do to all of the Mechanical Engineering programs across South Western Ontario? I’d venture to say that it puts them directly at risk and that’s due to the lagged reaction, of years of government inaction to adequately train young engineers. Right after graduating from university, there was a lot of technical knowledge that I’d be now embarrassed to say I didn’t know back then.

But this article isn’t about anecdotal observations about education, it’s about the gatekeeper inefficiency. To change these programs there’s layers of bureaucracy you have to run through to get minor changes through. Again the school board administrators (school boards across the country) are the gatekeepers you have to convince to change the one service (arguably the most important government services of educating our youth). Please noone mention the fact that the TDSB – the largest school board in the country – just ran through a spending scandal where their very existence was threatened. Just remember, these are the people running your children’s education.

I hope I’ve been able to express my definition of gatekeeper inefficiency well. If not let me know and I’ll do my best to communicate it further.

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.