There was an interesting editorial on Healthcare in today’s Toronto Star. The authors, who are not “Stephen Harper groupies”, urge Canadians to not dismiss economic tools (such as incentives and disincentives) as part of a larger strategy of health care renewal. They argue that failure to view healthcare renewal with an open mind amounts to a ‘national delusion’.

“The national delusion is the feeling in Canada that any breach of the public monopoly on “medically necessary” health care constitutes not only a threat to our public system, but to the very fabric of Canada.”

Articles such as these are necessary to dispel the many myths that exist in Canada about more innovative tools of government action (i.e. anything other than simply direct government ownership & operation and regulation, which Canadians rely heavily upon). Essentially, the authors simply ask readers to open their minds, to focus on the goals of improving healthcare and less on the methods of achieving those goals.

Suppose we were to look at additional economic tools, test them through research to ensure that they actually work — would we then be able to sustain and even enhance our health-care system? Would we dare to implement it? Are we too burdened by ideology even to try?

I have said this time and time again. Canadian governments only use half of the tools available to them; it is time we look at best practices around the world to see if more innovative solutions are worth adopting. Canadian healthcare has a good foundation, and we can be proud of the values it promotes, but like all things, it needs to be constantly improved. We are indeed deluding ourselves, for example, if we don’t think that private healthcare already exists in Canada – it does – 30% of all healthcare expenditures in Canada are private. We are deluding ourselves if we don’t think ‘two-pier’ healthcare already exists – people who do not have private health insurance through employers to cover dental, eye-care and out-of-hospital prescription drugs, must bear the burden. Clearly, professionals typically get these benefits, while low-income Canadians do not. Given these facts, we first need to ask whether we are OK with the present situation. I would hope that most Canadians are not.

So, if we agree that equal access to equal healthcare is important – and I think it is – then we must actually chart a course to ensure we get there rather than simply screaming up-and-down about how this problem was created by past Liberal spending cuts. Yes, spending cuts exacerbated the cash crunch, but when costs are rising at 10% or more each year, and the economy and wages are riding at only 3% (at best), there is a serious sustainability question with healthcare. And if the only course of action is to “throw more money at it”, then we are hopelessly deluding ourselves as to the sustainability of that solution. Canada spends more than every other developed country (other than the U.S., whose system is more fundamentally problematic). The solution isn’t more money per se, but more utility for the money already spent.

We must remain focused on the goals, and less on the methods to achieve those goals i.e. to improve the quality of care available to Canadians, to ensure it is widely and equally available, in a timely manner, regardless of a person’s ability to pay. Access to healthcare is not only socially necessary, but it is also economically necessary, since public healthcare gives Canada a competitive advantage over the United States. While keeping our eye on our goals, we cannot be blind to looking at new ways of tackling the systemic problems of the system. In Canada, just to accept this premise is a difficult task. The sooner we accept it, the sooner we can begin a more serious debate on its necessary improvement.

In the introduction to this on-going series, I commented on a few basic tactics the NDP might consider in reaching out to progressive Canadians. I suggested that the NDP’s goal should always be to achieve social progress, rather than adhere to rigid ideology, particularly if doing so ensures NDP members go unelected and social problems continue unabated. Over the coming weeks, I will outline more specific strategies on various issues. In this article, I outline how the NDP might re-thinking its strategy on affordable housing.

Let me be clear up front: I am NOT advocating moving the NDP to the centre of the political spectrum. Nor am I advocating for the adoption of ‘third way’ politics that was/is popular with Bill Clinton’s Democratic Party and Tony Blair’s Labour Party (which, de facto, moved their respective parties to the centre). It is not necessary to abandon traditional left-of-centre policies and priorities because the majority of Canadians, if you believe the polling, support progressive action. The key is to demonstrate to this large segment of Canadian society that the NDP is the party of innovation, while the Liberals (to whom much of this progressive segment gravitates) are the party of ineffective and outdated solutions. This will necessarily require changes to NDP strategy, but ones that are entirely consistent with its socially progressive goals.

The first step towards innovation is to outline the party’s priorities, literally, in order, from most important to least. It has become clear to many Canadians that the Liberals – particularly under Paul Martin – have promised to solve every problem, all at once. The failure of this strategy is, by now, clear to most Canadians. And when making those priorities, it is important to focus on issues where real results can be achieved and measured (general negative statements about corporations, privatization and globalization don’t offer potential voters much to go on). In other words, it is important for Canadian society – and the NDP as a political party – that the average voter can perceive a difference as a result of a specific approach. When considering what approach to use, I would argue (a modified version of a claim made by other scholars) that government has four – and only four – tools at its disposal when considering how to act on a given issue: 1) direct government ownership or operation, 2) regulation, 3) incentives & disincentives and 4) information. I maintain all government programs and initiatives fall into one of these categories. Try it out yourself – think of a government initiative and see if it falls outside of one of these domains. The vast majority do not. When considering what government action to pursue on a given issue, I believe it is important to first ask three questions:

1) What is the appropriate mix between the public, non-profit and for-profit sectors?
2) Where public sector involvement is desired, what is the appropriate mix between federal, provincial and municipal governments?
3) Where public sector involvement is desired, what is the appropriate mix between the four basic tools of government (direct ownership, regulation, incentives/disincentives, information)?

Step one: prioritize your goals. Step two: develop a method to achieve results. It is important to note that goals and methods are largely independent. You can use the same methods to achieve different goals and you can use different methods to achieve the same goals. But, it is often difficult for most people to separate the two. This is understandable. The party system reinforces the notion that goals and methods are a package deal (to advocate using a new method is often viewed as going against the party!).

For example, the NDP has long had the important goal of increasing the supply of affordable housing in Canadian cities. The accepted method of achieving that goal is for the federal government to directly build public housing. In other words, the traditional answer to question #1 is that the public should be entirely responsible for affordable housing and the private sector should have nothing to do with it. This is received wisdom – it is rarely questioned that there may be other, more effective, ways to achieve affordability – and ways that avoid the unfortunate consequences of government-built housing projects (maintenance budgets that depend on the will of changing legislatures, the concentration of poverty into areas of the city whose land values are low enough for the government to buy at low cost, the stigma associated with cheap, badly-designed, standardized institutional buildings, isolated buildings that are poorly connected to places of work and play, etc). In other words, the NDP should not only continue to be the voice for affordable housing, but that voice should be louder, more vigorous and, most importantly, propose innovative strategies to solve the problem. In the case of affordable housing, it may well be that a mix between the public, private and non-profit sectors is optimal to build affordable units.

Clearly, the NDP policies and priorities need to continue to reflect those of progressive Canadians; standing up for low-income workers and delivering affordable housing is what the NDP should advocate. But, the NDP needs to be willing to innovate on how it achieves such goals. In the case of affordable housing, the start-up and on-going costs of a centralized government-led construction initiative is significant – so much so that as the NDP has held out over the past twelve years of Liberal rule for such a program to emerge, tens of thousands of low income Canadians have slipped into homelessness or continue to pay the majority of their wages on housing. Such rigid adherence to received wisdom has not achieved the desired results.

The NDP must be willing to look for alternative methods of achieving results. For example, if allowing developers to build a few more market units (i.e. a “density bonus”) will ensure 15-20% of the entire building is reserved for low income tenants, then you have made tremendous progress. That the developer might make a little more money on the project due to the additional market units is inconsequential. Think of the alternative: the developer would build a few less units, make a little less money and none of them be reserved as affordable units. Ideologically, it may boil the blood of many NDPers to see developers make more money because of the government (in this case, the municipal government) granting a bonus, but the net result is that you secure a large number of affordable units at effectively no additional cost to the public sector.

Likewise, it may make good sense to directly subsidize someone’s rent, rather than uproot them from their communities are re-locate them to government-built housing. Not only is this more socially stable, but it also means helping more people at once. For example, a $50 million building (with $1 million in annual maintenance) may house 200 families. If, instead, you subsidized a person’s rent in a regular apartment building, let’s say 50% of a $900/month rent, the annual cost for 200 families is about $1 million – the same as the maintenance costs on the government-built project. The $50 million capital cost could go towards helping many more families instead of buying bricks and mortar. These programs also create a partnership between low income workers and the government – each doing its share to pay the rent. Such programs – often called “vouchers” programs – are typically loathed by the NDP as they are viewed as ‘market’-based solutions that are not as ‘cost effective’ as government-built housing is in the long-run. But, it should be clear to anyone that housing ‘the most for the least’ is hardly a socially just way of taking care of our less fortunate citizens.

Governments can also offer incentives to developers (in some case, these developers are community development corporations, i.e. non-profits) to develop properties in traditionally economically depressed neighborhoods (with the understanding that a portion, 15-20%, be dedicated as affordable units). This would help developers overcome the additional lending costs associated with high-risk properties. Governments can also encourage the adaptive re-use of buildings for affordable housing. Governments can also help with soil remediation to make ‘brownfield’ projects more economically viable for developers (again, with the stipulation that a portion of units are affordable). More generally, zoning and tax policies can be adjusted to ensure a more equal distribution of land values across large cities like Toronto (this has the effect of ensuring a more equal rent gradient across neighborhoods). There are many other ways to promote affordable housing. Many involve working in partnership with developers (for-profit and non-profit), rather than categorically dismissing private sector involvement altogether.

The point here is, that the NDP needs to be more innovative in its solutions (all parties do, but if the NDP wants to position itself as uniquely able to solve the problems of our time, they need to take the initiative). This means setting priorities for initiatives for which they can demonstrate real results. It means determining the appropriate mix between government, non-profit and for-profit involvement (rather than opposing anything other than direct government ownership and operation). Also, the tendency for federal parties like the NDP is to see the solution as a federal one – knowing when to have direct federal involvement, when to allocate more resources to the provinces and when to get involved in municipal affairs is an important distinction to make. Innovation means matching the scale of the problem with the appropriately scaled solution. The NDP must be willing to deploy the full resources of government – yes direct ownership & operation and regulation, when necessary, but also working with non-profits and for-profits where the net result is positive (even if it means playing nice with big business). Such tactics adhere to the party’s core values, but distance itself from ideology that, in the case of affordable housing, has not served low-income Canadians particularly well over the past twelve years.

The NDP is at a pivotal moment – the choices its leader and executive makes over the coming months could very well determine the future role of the Left in Canadian politics. Indeed, the very credibility of Canada as a democracy is at stake. In some ways, the NDP is not unlike its Conservative counterpart – in the coming months, it will choose to either pursue a platform that rallies its base of support, or one that appeals to a broader range of Canadians. This is a classic choice for any political party. In light of the 2004 U.S. election – where Karl Rove brilliantly rallied the Conservative base to victory – there is a growing belief that elections are all about getting out your core support. While this may be true in a nearly equally divided two-party state such as the U.S., it is a dreadful strategy in a multi-party state like Canada.

Such a “rally your base” strategy would guarantee a Liberal victory – the only question is whether it would result in a minority or majority government. This is because the Liberals dominate the centre of the political spectrum and have succeeded in pushing that centre further left and right. As such, it has little or no core ideologies – its policies are based on practical decisions about what the largest segment of the population desires. This strategy is very effective, particularly if the competing parties give up on moderates in favor of appeasing their base; this is true for the simple reason that there are far more moderates (centrists) than radicals (ideological leftists or rightists). While many would say the Liberal absence of core ideology is a weakness, I would raise a warning – we need to distinguish between ideology and values. Ideology is best left to political theory and the Ivory Tower of the academe than in the day-to-day actions of government. Values, on the other hand, help set priorities and goals, without strict adherence to methodologies that might actually prevent positive change from getting off the ground. While a party can be non-ideological, it cannot be without values. A party with no core values is nothing more than a chameleon that shifts its positions with the changing wind (whether the Liberals do this is certainly up for debate!).

The NDP must adhere to its core values of equality, human rights and dignity, social justice, and the environment, but success cannot be measured by the degree to which it adheres to its ideological origins. Success must be measured by achieving real results that improve the lives of Canadians, particularly those most vulnerable to being left behind in a competitive world. The NDP does Canadians – and especially the most vulnerable – no favours by claiming moral victories by its adherence to ideology when the environment continues to degrade, homelessness continues to rise, and social programs continue to lack necessary reinvestment. Being the ‘conscience’ of a parliament presiding over such failures is hardly worthy of praise. For the NDP to make a difference on these issues requires power – political power that can only be achieved by electing more MPs. And getting more MPs elected requires innovating party policy to appeal to a broader segment of progressive Canadians.

Such policy innovations are necessary to promote the NDP brand among Canadian electoral consumers who have never given serious thought to voting NDP. It means using the media in all its forms to promote a progressive agenda. It means working with business – small and medium-sized – to empower our citizens and raise living standards. It means forging a new partnership between labour and management, between the public sector and the private sector. Rather than categorically labeling the largest sector of society as the anti-Christ (the private sector), it means having a more mature relationship that promotes a culture of responsibility. It means being responsible to the fiscal management of government, both in the present and for our children. And it means deploying the full range of what government can do – from direct public management and regulation (where NDP policy usually stops) – and, yes using incentives, disincentives and even information as tools for positive social change. Rather than only treating the symptoms, rather than only catching bad behaviour, we must encourage preventative action – to promote good behaviour.

Fortunately for the NDP, there is more growth potential in the left side of the spectrum in Canada than on the right. Polling indicates that the NDP is the second choice for both Conservative and Liberal voters. And yet, we must remind ourselves, that despite nearly 70% of the population self-described as socially progressive, the NDP has not been able to convince Canadians to give it the chance to govern at the federal level – in fact, even in its best election (1988), 80% of Canadians rejected the NDP. So the tried-and-tested model of rallying the NDP base has not be particularly effective.

After twelve consecutive years of Liberal rule, Canada is now being defined in international circles as a “one-party dominant state”, which should give all Canadians pause. Whether Liberal rule continues will be determined not by the Liberals, but by the strategies of the opposition parties. Liberal is the default position for moderate Canadians. It is up to the NDP to convince them to give their party a chance. The NDP will once again be tempted to rally its base and continue the ideological heritage of its founders. The NDP’s core (but by no means only) support – a group that typically includes well-educated, well-to-do socially conscious baby-boomers – knows this heritage well. They lived through a time (the 1960s) when the NDP was born – a heritage founded on very noble and worthwhile goals of equality and social justice. Their children often share these goals but more often that not, they vote Liberal instead of NDP.

It is incumbent upon the NDP executive to examine why this vast pool of socially progressive younger Canadians leans towards the Liberals and to do a better job of reaching out to them. The NDP has viewed itself as the ‘conscience of parliament’, and indeed many important Canadian institutions owe their existence to NDP support in minority governments. But the facts are much more difficult to accept than highlighting a few high points in forty years of existence – for the past 12 years, the NDP has elected, on average, 15 to 16 members, representing, on average just 5% of the seats in parliament. In other words, the NDP’s influence has been small. Many will question the previous statement, especially in light of the passage of the first NDP budget this year. But let’s not kid ourselves: this historic fact was made possible by an evenly split confidence motion, broken only by the Speaker’s allegiance to his party. With less than 20 MPs, the NDP owes its influence more to Canadians’ anger at the Liberals than a new-found swelling of NDP support (which remains consistently in the 15-17% range nationally) – this despite the sponsorship scandal.

The NDP, if it is to represent the future of the Left in Canada, must reach out to the vast pool of progressive Canadians. But it requires the NDP look critically upon itself. It must innovate. I urge the NDP executive and its leader to reject the tested ‘rally your base’ strategy in the up-coming election (one which has, quite frankly, not been very effective at achieving the kinds of desired social change it seeks). By expanding the party’s base, adhering to its core values, but rejecting rigid ideologies, the NDP can secure a place for the Left in Canadian politics – a part of the Canadian political spectrum that so desperately needs a boost.

So after a summer of barbequing, dressing up like a cowboy, and generally slumming it with the ‘folks, Stephen Harper opened up his National Post one morning to see that a senior Toronto-area organizer had called for his resignation. All his hard work of re-branding himself as an approachable guy wasn’t enough for the urban core of his party, so it seems. Yes, Carol Jamieson is just one person and all, but she just happened to voice what a growing minority in the party are thinking — that the Conservatives can’t win under Harper — which doesn’t bode well for Harper’s image in the critical Ontario battleground. This is the stuff over which media folks get excited and if the Conservative Party cannot pull itself together, the next election will be over before it’s started. This latest round of Harper-bashing calls for a pause to assess Harper and the direction of the Conservative Party of Canada.

It is common wisdom by now that Harper isn’t regarded as particularly charming, funny or even a grand philosopher. But so what? Let’s be honest, folks. Not many Canadian politicians are beacons of personality and wisdom – most are dry, evasive and toe the party line on most issues. I maintain that Canadians are willing to accept leaders who are banal if they agree with the policies of his or her party. How else can you explain the dominance of the Liberal Party in an era of Chretien and Martin? That’s not to say that Chretien or Martin is ineffective, but if personality was so important to Canadians, why hasn’t a flashy personality come forward to lead us out of the abyss? I believe it is because Canadians pay attention to the policies more than the people (who they think are all the same bunch of crooks anyway!)

Canadians being more policy- than people-oriented should be music to Conservative ears, at a time when their leader has been blamed for its failure to secure a Conservative government during one of the country’s largest political scandals. However, the problem is this: rather than counter his lackluster image with ideas that capture the hearts and minds of Canadians, Harper has fallen into the trap laid by his opponents. He is playing to his weakness by wasting his time re-branding himself as something he is not. John Kerry did the same thing in the U.S. last year – he had to because personality counts for a lot more there. But it was plain to everyone with Kerry – just as it is now with Harper – that the man is who he is. Take it or leave it. Harper’s conundrum is a curious one for a man who came to be leader of the newly minted Party on the strength of his policy background. Instead of playing to his strengths, he has allowed to opposition to frame the debate.

In Canada, it is possible for a policy wonk to be Prime Minister. But, Harper uses up valuable airtime to state the obvious – that the Liberals have been in power too long and it is time for a chance (only saying it much nastier than that). The sponsorship scandal, its fallout, the deal with NDP, the wheeling-and-dealing the Liberals did to survive the spring session – all gave Harper ample time to ask Canadians to rise above it all with a new direction. Far from being the stiff shirt, he let his emotions drive his response. No, Harper is not unemotional, he just happened to convey all the negative ones on the six o’clock news pretty much every night in May. Canadians tuned out. It’s not that Harper was wrong, per se. He just didn’t offer anything as an alternative.

If Harper had instead come out and laid out a vision for a Canada that was based on innovation in government – about solving the problems of today with compassion and intelligence – Canadians would be willing to listen. It’s the policies, stupid! Instead of hammering Martin for his cuts to healthcare in the 1990s (Canadians understand the bleak fiscal picture in Canada at the time), they should instead focus on measuring the Liberals according to their own record of late. What have the Liberals done to improve healthcare? Nothing. Education? Not much there (I guess they figure it’s not the worst of the problems so better to let sleeping dogs lie). Child care? Where’s the child care deal that’s twelve years late? Gas taxes? Only a dribble has fallen out of Ottawa’s taps. The environment? Talk about an issue that can win votes in Toronto! The fact is, in their ever increasing desire to stretch the party to the right and left, the Liberals have written so many IOUs that they stand no chance of living up to all of them. Canadians can see this. You don’t need to scream up and down every day reminding them. Instead, offer a solution. Canadians will listen.

The Conservative Party can succeed under Stephen Harper. But they need to get back to basics and innovate with policy. Demonstrate to Canadians they are the party of innovation and the Liberals are the party of the old ways. But to do so, the Conservatives must be willing to expand their base – to stand down on divisive social issues, to back the kind of socially responsible government that Canadians in urban Canada expect and rise above the nasty name-calling. A party that cannot represent a quarter of the country, for example, needs to seriously re-examine its policies. The Conservative Party, if it aspires to government, must put western alienation aside and think nationally. If Harper cannot swallow his pride and look at how potential voters think (not those already in his back pocket), then he is destined to lead his party into another disappointing election result.

Harper has one last chance. Of course he will get the opportunity to lead the Conservatives into a new election, likely next spring. But, he needs to care less about his personal image and more about his party’s image. Policy can trump personality. But it’s time that Harper plays those policy cards – spend the fall bombarding Canadians will new ways of achieving results on the basic pillars that matter to Canadians (healthcare, education, child care, environment). If he cannot improve his party’s standing in the next election, he will be the one left standing when the music stops.

I have decided to test a new way of election forecasting. Instead of simply using the latest poll data, I wanted to see what the results would look like using a moving average over the past 5 months. This probably provides a more realistic assessment of voter intention and tends to even out the large swings that individual polls often have. So, using poll data for the past 5 months, the following are the region-by-region support levels (polls include May 20 Ipsos-Reid, June 20 Ipsos-Reid, July 28 Environics, Aug 22 Ipsos-Reid and Sept 18 Leger).

NATIONAL
Liberal: 35.6%
Conservative: 28.0%
NDP: 17.0%
Bloc Quebecois: 12.4%
Green Party: 5.4%
Other: 1.6%

ONTARIO
Liberal: 44.6%
Conservative: 30.2%
NDP: 18.2%
Green Party: 5.4%
Other: 1.6%

QUEBEC
Bloc Quebecois: 50.8%
Liberal: 24.6%
NDP: 10.2%
Conservative: 8.6%
Green Party: 4.2%
Other: 0.7%

BRITISH COLUMBIA
Liberal: 37.4%
Conservative: 26.6%
NDP: 25.4%
Green Party: 9.4%
Other: 1.2%

ALBERTA
Conservative: 55.4%
Liberal: 23.8%
NDP: 13.8%
Green Party: 6.4%
Other: 0.6%

THE PRAIRIES
Conservative: 38.0%
Liberal: 32.4%
NDP: 25.6%
Green Party: 2.8%
Other: 1.2%

ATLANTIC CANADA
Liberal: 42.6%
Conservative: 33.2%
NDP: 19.6%
Green Party:3.2%
Other: 1.4%

So running my Election Forecast Model on a seat-by-seat basis, we find the following seat projection - resulting in a Liberal Minority government (an NDP-Liberal combination would have a clear majority of seats):

	2005 PREDICTED RESULTS - Moving Average (5/20-9/18/05)
	LIB	CPC	NDP	GRN	BQ	OTH
TOTAL SEATS	141	77	25	0	65	0
% OF SEATS	45.8%	25.0%	8.1%	0%	21.1%	0%

The latest comprehensive poll, by Leger Marketing (Sept 18) shows the Liberals pulling away from the pack, with 40% support nationally. Typically support at this level has given a party a majority. Sure enough, when I run my Election Forecast Model shows the Liberals, the Liberals would come out with a majority government. The news is all good for the Liberals, not bad for the Bloc, bad for the NDP and very bad for the Conservatives. The Green Party continues to lack far behind and not within range of winning any seats. The results are so bad for the Conservatives that the Bloc Quebecois is withing striking distance of once again becoming the Official Opposition. For the complete forecast, including riding-by-riding forecasts, see the 2005-06 Election Page on my main site. The current forecast is as follows:

	2005 PREDICTED RESULTS - 9/18/05
	LIB	CPC	NDP	GRN	BQ	OTH
TOTAL SEATS	161	64	21	0	62	0
% OF SEATS	52.3%	20.8%	6.8%	0%	20.1%	0%

In Part I of this series, I make the case for Electoral Reform as a first step towards reconciling the East-West divide in Canada – my argument being that the electoral system tends to exaggerate value differences artificially, leading to the false belief that east and west are radically different politically.

Here in Part II, I examine Provincial Equalization. As most people know, the Canadian federal government attempts to even out the financial differences between provinces that have many resources (the ‘haves’) with those that don’t (the ‘have nots’). The idea is to ensure relative equality of healthcare, education and social services. Recently, this means that Ontario and Alberta have subsidized the rest of the country. This issue more than any other has caused great angst between provinces and the federal government.

But let’s put provincial equalization in context. Collectively, equalization accounts for just 5.1% of the federal budget (2003/04). [It should be noted that provinces are also equalized through different levels of social and health transfers]. So, only 1 out of every 20 dollars spent by the federal government is for direct equalization. Check out my summary of federal spending. So, while people are very passionate about equalization, let’s keep in mind it represents a very small amount of what the federal government does.

I fully support the concept that provinces blessed by geography (and the treasures of natural resources that comes with it) should help out those provinces with fewer resources – it is part of what makes Canada what it is. But here’s where I think the system goes off its tracks – and this is controversial – Quebec and British Columbia have enough people and enough resources to fund the kind of health, education and social programs that Canadians expect without relying on equalization. They are or should be ‘have’ provinces.

Equalization should be reserved for those parts of the country with small populations and few resources – namely the Prairies (Manitoba and Saskatchewan) and Atlantic Canada. Think about it – B.C. has nearly as many people (4.2 million) as, for example, Norway (4.6 million). If Norway can support the kinds of social programs that Scandinavians expect, surely B.C. can too. Quebec, at 7.5 million people, is significantly larger than Norway, Finland and Denmark. It, too, should be able to fund higher-quality social programs without equalization help. British Columbia and Quebec are also home to two out of the country’s largest cities (Montreal and Vancouver) and we know that cities are the economic engines of today’s economies. While there will necessarily be a difficult transition period, I have confidence that British Columbians and Quebeckers can become less dependent on federal equalization.

Removing B.C. and Quebec as beneficiaries of fiscal equalization allows the federal government to collect less taxes overall and yet direct more equalization towards the regions that need it most (the Prairies and Atlantic Canada). Weaning B.C. off equalization entitlements should not be too difficult; over the past few years, B.C. has worked hard to reduce its dependence on these payments (today, B.C. receives just 6% of all equalization). Weaning Quebec off equalization entitlements, however, will be difficult politically, given the tension between Quebec and English Canada. However, it is necessary since Quebec alone accounts for 44% of equalization. Collectively Quebec and B.C. receive half of all equalization payments, while the remaining six provinces (PE, NB, NL, NS, MB, SK) split the other half.

Recommendations:
I propose to redistribute the 50% of equalization that Quebec and B.C. currently receive (almost $5.5 billion) in 2 ways:
1) Return half of it ($2.75 billion) to the ‘have’ provinces – that means that Ontario, Alberta, and now Quebec and B.C. would be less taxed by Ottawa.
2) Increase equalization to the Prairies and Atlantic Canada using the other half ($2.75 billion) – that means that equalization payments in these provinces would increase by 50%, as follows:

PEI: from $277 million to $415 million (+$138 million)
NB: from $1,348 million to $2,020 million (+$672 million)
NL: from $861 million to $1,290 million (+$429 million)
NS: from $1,344 million to $2,014 million (+$670 million)
MB: from $1,601 million to $2,400 million (+$799 million)
SK: from $82 million to $123 million (+$41 million)

This represents a shift in equalization policy by recognizing that the four largest provinces (ON, AB, BC, QC) are better positioned that the six smallest provinces (NS, NB, NL, PE, MB, SK). It is fairer to those four largest provinces in that they keep more of their revenues and fairer to the smallest provinces in that their equalization payments are increased by 50%.

Is it possible that the Westside of L.A. will actually reverse its NIMBY (not-in-my-back-yard) ways and support a mass transit line along the Wilshire Corridor? The L.A. Times is making its case in an editorial from today (I think you need to register to see the L.A. Times link – it’s free). Of course, it is long over-due.

Many libertarians opposite mass transit on ideological grounds. In fact, many conservatives use political theories (libertarianism) to explain economic theories (the benefits of market economies). This is true in some development programs where students learn that transit-oriented development and the broader re-occupation of the central city are fallacies of big government. Do not trust them, they are warned, the government is only trying to set a trap to extort impact fees from you and in the end, you won’t make money.

The problem with this thinking is that it takes a very short-term outlook, which of course is a consequence of developers’ desire to stabilize a property and sell it as quickly as possible. Under this thinking, lowest up-front costs, not long-term values, are what drive development decisions (lower up-front costs means less risk, as it is easier to finance and subsequently sell a cheaper product). But this kind of thinking is outdated. This kind of thinking is what we did when land was cheap and therefore we could build cheap things on it. This kind of thinking resulted in the hundreds of dreadful strip malls that sit on half the major intersections of Los Angeles. Are these developments the highest and best use for the land now? Not even close.

Today, when land values are high, we need to get more economy out of the land. There are two strategies: 1) increase the amount of ‘stuff’ you put on the land and 2) increase the quality of the ‘stuff’ you put on the land (so you get higher returns). Often outdated zoning limits the first option – and there is no question that we need to rethink outdated zoning practices, but that is a post for a different day. So, within the limits of public policy (zoning), developers must make the land work harder. The developers of the Grove recognized this and developed a very high-quality (though slightly Disney-esque) development where retailers pay more than double the national average retail rent. The developer spent more up-front in order to extract higher rent over the long-term. The most astute developers are jumping on board this urban redevelopment train. So, more productive uses of land (or, to speak the evil term: higher-density), mixed-use, transit-oriented, high-quality design, and urban-oriented (addressing the street) are unquestionably one of the most significant medium-term trends in development. Yes, there are still those looking to build cheap housing and they are buying up cheap land on the periphery to do so. Of course, you can give cheap housing the pretense of grandeur by enclosing it within gated communities – and indeed, this is a popular trend in Orange County and many Sunbelt cities (Las Vegas, Phoenix, etc). So we are witnessing a rise in both trends. Ideologues on the right will deny that transit-oriented, high-density urban housing is a viable avenue for development, just as ideologues on the left will deny that gated communities are a viable development strategy (there is another argument about what is the most sustainable – and I think it is hard to argue that higher-density urban environments are more sustainable than low-density developments that eat up the rural periphery).

There is ample evidence that Los Angeles is prepared to go higher-density and more urban that it has in the past. In fact, it has no choice. In a democratic and free society, no municipality can prevent people from relocating to their city. Growth will happen, regardless of whether you want it or not. It’s not a question of if you accommodate growth but how you accommodate growth. L.A. in the past has accommodated growth by growing horizontally. But in the past three years, L.A. has responded to this growth by passing a townhouse ordinance (to allow party-wall residential buildings), an adaptive re-use ordinance (to convert old buildings in residential units), by granting density bonuses for locating near transit, and even by allowing, on most single-family lots, the construction of second units. So, density is upon us. That means more people, more cars, more congestion, and more pollution.

So when anti-transit people say it is old-thinking to say “build it and they will come” (i.e. the idea that transit has to be subsidized until the density is great enough to support it), they are not appreciating the fact that – and this is especially true along the Wilshire Corridor – the density is already here. Wilshire can support a transit line already, let alone the impact of higher land values once the transit is in place (i.e. even more density). For Gordon, it just costs too much. For NIMBYs on the Westside, they just don’t want the riff-raff that might take the train to ‘their’ part of town. Nor do they want to higher-density – although this is a curious argument since Wilshire is already a high-density corridor (it’s not like there are single-family houses along Wilshire!).

I’m not talking about turning L.A. into an east-coast city. People will always need to drive around town – and only 25% of the trips are made by commuters. But, the suggestion offered by most anti-fixed-rail folks is more buses. That’s hardly going to make traffic congestion on the Westside better; in fact, it will make it worse. Dedicated bus lanes will certainly do a better job. But the issue is bigger than just making the numbers work for traffic planners. Unfortunately in today’s hyper-specialized world, the single-minded traffic planner holds much sway. Not that traffic planners are bad people. It’s just that most of them don’t see the bigger picture – they are content to ensure the traffic ‘flows’ as best as possible.

As an architect/planner/urban designer, I think we need a balanced approach to accommodating growth. We do need high-density corridors such as Wilshire. Directing growth to such corridors will ensure the single-family neighborhoods remain as such. We also need to account for the true cost of driving – tolling the freeways is a good place to start. And most importantly, we can improve traffic congestion and the environmental problems with which it is associated by re-thinking the way we regulate urban development more generally (allowing more productive uses of land where the market will bear it). So a balanced approach is needed, not a political one that rejects certain strategies (transit-oriented development) on ideological grounds.

Much has been made of the impending face-off between Alberta and the rest of Canada. To recap: Alberta is in great financial shape on account of its oil and gas royalties (due to the sharp rise in prices). Alberta has paid off its debt and is running a surplus. The rest of Canada, particularly in industrial Central Canada, is facing financial crisis, in fact, for the very same reason as Alberta’s success: the high cost of energy.

Fresh off my visit (an Ontarian) to Alberta a couple weeks ago, I would like to begin approaching this difficult subject by saying a few words about the relationship of east and west in Canada. First of all, the antagonism between Alberta and Eastern/Central Canada is three parts rhetoric and one part fact. While Ontarians would like to label Albertans rabid conservatives of the G.W. Bush variety, the fact is that Albertans share more in common with Ontarians than they do with conservative Americans. If you believe the evidence that Michael Adams presents in Fire and Ice: The United States, Canada and the Myth of Converging Values, the differences between Canadian regions’ values are small, particularly when compared to the U.S.

For example, in one of the more surprising survey results in Adams’ book, when asked whether the “father must be master in his own house” – roughly a metric of a person’s view of the traditional family structure – only 18% of Ontarians said they agree. The lowest in Canada was Quebec at 15% and the highest was Alberta at 21%. In other words, there was very little difference across Canada. Compare this to the highest in the U.S. – the Deep South – where 71% agreed that the “father must be master in his own house”. The lowest in the U.S. was New England which is widely regarded as the most liberal region in the U.S. – 29% of people agreed that father must be master. So Alberta is more ‘liberal’ than even the most liberal U.S. region. The average in Canada was 18% vs. 49% in the U.S., a surprisingly large difference. (Adams’ book highlights many other values that similarly illustrate the differences between regions in Canada is rather small).

I suspect the differences between Ontario and Alberta are exaggerated for partisan purposes: Alberta being the base of the Conservatives and Ontario being the base of the Liberals. But Canada does have the unusual problem of different regions depending on different industries for wealth. British Columbia has lumber, Alberta has oil and gas, the Prairies have agriculture, Ontario and Quebec have manufacturing, and Atlantic Canada has mining and fishing. Given such segmentation of resources, and especially when you look at the shared values across Canada, it should be obvious that Canadians should be working together to secure its place in the world economy instead of facing off against one another. Canada needs a united front to compete in the larger economies of the U.S., China and India.

The real problem – as opposed to differing values – is one of political representation. If you solve this problem, I think much of the alienation felt by Western Canadians will recede to the background. Canadian politics has long been dominated by the French-English tension, which has largely been represented as an Ontario-Quebec tension. Canadian politics has long been dominated by these provinces because traditionally two-thirds of the country has lived in these provinces. The West has long been neglected in Ottawa, without question. And this is not because they don’t have adequate representation – 1/3 of the country lives west of Ontario, 1/3 lives in Ontario and 1/3 lives east of Ontario. The ‘west’ as such is not monolithic – Vancouver and Calgary and Winnipeg are each very different politically. So the ‘west’ has not spoken with a united voice in Ottawa. Nor can it be expected to. If the problem of political representation is to be solved, it will require both the Liberal and Conservative party re-thinking their strategies of tactical assassinations in favor of genuine understanding and compromise.

Liberal governments would not be so toxic to Albertans if they felt that Liberal policies were actually being in part shaped by Westerners. Likewise, Conservative governments would not be so toxic to urban Ontario and Quebec if party policies were being informed by those constituents. I attribute much to the failure of our electoral system to actually reflect our shared values. Electoral reform (see my discussion paper) is needed for so many reasons, not the least of which is to ensure that all parties have representation across the country.

So, before we can tackle the specific issues of fiscal imbalances in Canada, we need to reform our institutions to ensure they don’t artificially divide us. Electoral Reform is the place to start.

Is a Wealthy Country One With the Most Rich People or the Fewest Poor People? To begin to answer that, I consider yet another ridiculous commentary by Bill O’Reilly. O’Reilly has come to the defense of the Bush administration on the issue of poverty, claiming that the poverty rate half-way through President Bush’s term (12.6%) is a full point less than half-way through the Clinton administration. Presumably, the conclusion we’re supposed to reach is that Bush has done better than Clinton on poverty. Now I’ve heard pundits say stupid things but this takes the cake.

Let me re-frame the numbers for O’Reilly and anyone else how wants to defend the Bush record on poverty. In the first 4 years of Clinton, poverty DECREASED from 14.8% to 13.7% (and continued to fall to 11.3% by 2000). In the first 4 years of Bush, poverty INCREASED from 11.3% to 12.7%. Feel free to check out the data yourself — available on the Census website. How can anyone seriously think those numbers indicate that Bush has done better on poverty than Clinton? For someone who claims not to engage in political spin (The O’Reilly Factor. The No Spin Zone), this is one of the most egregious spins I’ve seen all year. O’Reilly better fire his researchers or they will continue to make him look like an ass.

The fact is the U.S. has the highest poverty rate among developed countries. And that poverty is disproportionately felt by people of color. Check out this graph of poverty between 1980 and 2000 — notice that the percentage of white people living in poverty was consistently 7-8%, although it drops by a bit after 1992 (when Clinton took office). The percentage of black people living in poverty was consistently about 30% until 1992, then it dropped to about 23% by 2000. That same holds true for the Hispanic population - poverty was consistently about 25%, then dropped to about 20% by 2000.

But the real comparison isn’t whether Bush or Clinton has done better - the numbers clearly show that Clinton’s administration lowered poverty and Bush’s administration has increased poverty (the direct impact by the administration of course is debatable) — this is according to the government’s own numbers.

The real comparison is with the U.S. and the rest of the developed world. This list (according to UNESCO) illustrates the problem — the U.S. child poverty rate, for example, stands at 22.4%, highest among developed countries. Compare that to, for example, the Scandinavian/Northern European countries: Sweden 2.6%, Norway 3.9%, Finland 4.3%, Belgium 4.4%, Luxembourg 4.5%, Denmark 5.1%. Why is American child poverty 5.5 times higher than Northern Europe? That is the realy question we should be asking. In fact, the English-speaking world has done a terrible job on child poverty: U.S. (22.4%), UK (19.8%), Ireland (16.8%), Canada (15.5%), Australia (12.6%) — an average of 4.3 times higher than the Northern European average. Those are statistically significant differences. It is time for the U.S. and the English-speaking world to get off their high horse and learn from the experiences of Northern Europe.

And yet … people in Northern European countries are also very wealthy on average. GDP per capita is roughly a measure of a nation’s ‘wealth’ — compare the U.S. GDP per capita ($39,732) to the six aforementioned Northern European countries: Luxembourg ($58,198), Norway ($39,843), Denmark ($32,104), Belgium ($30,508), Finland ($28,946), Sweden ($28,372) — an average of $36,328.

So, Northern Europeans have very low poverty and yet among the highest per capita GDPs. Put another way, the U.S. has a GDP per capita of about 10% higher than Northern Europe but child poverty of 550% higher. So, yes, the U.S. has more rich people than Northern Europe, but the U.S. has VASTLY - I mean VASTLY - more poor people.

So going back to the question: Is a Wealthy Country One With the Most Rich People or the Fewest Poor People? Is the U.S. more wealthy than Northern Europe? Comparing GDP per capita with child poverty, it should be clear that a wealthy country is one with the fewest number of poor people, yet one with a higher GDP per capita. And on this basis, Northern Europe scores well on both counts. The U.S., unfortunately, scores well on only one.

To me, a wealthy country isn’t just one with a lot of total money, but one where the distribution of that money ensures that every citizen lives comfortably. By that token, a wealthy country is surely one with the fewest poor people.