Monthly Archives: May 2013

I’m feeling extremely scattered today, so I thought it would be a good time to publish this piece. I love Mexico partly because of its enigmatic nature. I can rarely succinctly summarise what is going on there, politically or otherwise, and when I am actually in the country I understand even less. I believe that this is because Mexico is a country that defies easy definition.

So it is only fitting that I have written an article with which I’m sure some, though not all, Mexicans would disagree. I wish now that I had acknowledged the unrest that did continue after Pena Nieto’s election–first from residual #yosoy132 protests, but now from teachers in Guerrero furious over a proposed education reform. Compounded with lawless chaos in Michoacan and the usual disappearances (though new, “revised” figures released by the government claim that many less disappeared than was thought), Mexico’s grave security problems are adding another facet to the general unrest there.

In depicting #yosoy132 as a failed movement, I was mainly drawing upon what I observed of the trajectory of the #occupywallst movement. I would be interested to know if #yosoy132 continues to be active. The bias of this article is likely a reflection of my skepticism regarding the capacity of people to effect change through revolutionary means, as well as a general pessimism toward human nature. I am quite fond of people, but I deeply doubt their ability to act rationally or in their own best interest. I also had the opportunity to read many interviews with Mexicans on this subject, and many were dismissive of the staying power of the movement. So with that in mind, here is my take on the events that led up to the 2012 election of Enrique Pena Nieto:

Mexican Winter

After igniting a flurry of protest, the #yosoy132 movement comes to naught

At its peak, the #yosoy132 movement was billed as the “Mexican Spring.” Social media sites were inundated with a steady stream of high revolutionary rhetoric, and mass demonstrations throughout Mexico made it seem indisputable that a new era of participatory democracy had dawned in Mexico.

Almost a year on, this is no longer the case. The movement has fallen into obscurity as the protestors’ pet target, PRI presidential candidate Enrique Peña Nieto, has taken power. A visit to the movement’s official website defines #yosoy132 as a “social network.” This is fitting, if not ironic, as the movement spread primarily through social networks—that it was able to circumvent traditional media channels was hailed as proof of the movement’s mettle.

Last June, this scenario would have been unimaginable. The movement began when, on a campaign stop at the Ibero-American University in Mexico City, students grilled Peña Nieto about an incident in which, as governor of the state of Mexico, he authorised police to use excessive force on protestors, resulting in two deaths and numerous human rights violations. His answers did not appease the students, whose ire forced Peña Nieto to hide in the bathroom and sneak out the back door.

As more disenfranchised groups joined its ranks, #yosoy132 became a fragmented movement lacking a unified message. One of the only common grievances was the political influence that media conglomerate Televisa enjoys in Mexico.

Mexicans elected Peña Nieto anyway, and since he was sworn in December of last year, everyone seems to be on board—or at least indifferent—as the President tones down his predecessor’s “war on drugs” rhetoric, declares Mexico open for business, and selectively targets corrupt officials.

Peña Nieto’s once-vocal detractors have gone quiet. One theory is that this silence is forced. #yosoy132 spokesperson Aleph Jiménez disappeared in September of last year only to re-emerge days later, claiming that threats on his life had forced him into hiding. However, it is unlikely that the PRI would risk drawing attention back to protestors just as public interest in them had begun to wane. Any threats are probably unsanctioned by PRI officials.

Another spokesperson, Antonio Attolini, has (ironically) been given his own television program on Televisa, while many of the students that fuelled the movement have simply lost interest. In a trajectory reminiscent of the #occupywallst movement and, to some extent, the Arab Spring, the more noise that is made, the more deafening the silence after it is realised that change initiated by social media must be backed up by real world action, too.


There has been a lot of talk lately about what the mandate of a central bank should be. The Fed has a dual mandate of low inflation and full employment, while the Bank of Canada focuses on keeping inflation between 1% and 3%, 2% being the optimal rate. So how’s that working out?


The latest inflation figures for Canada greatly alarm me. This year we’ve reached lows unseen in the past few years, and though this has happened before, these figures just seem so much more ominous under the current economic conditions than they did in the ’90s. The latest fluctuation was caused by a drop in oil prices, but it’s the second month this year that inflation has dropped substantially below the 1% lower limit. It is becoming clear that low interest rates are becoming more ineffective the longer they are kept down. I am NOT implying that the solution is to raise them, rather I am wondering what good a mandate is if the central bank no longer has the tools to carry it out?

The deflationary saga is one familiar to Japan, which has been experiencing the frustrations borne in part by loose monetary policy rendered ineffective by overuse. The US is faring slightly better:

united-states-inflation-cpi…but is following a trajectory similar to that of Canada. I presume that the Fed would prefer a slightly higher rate–1.1% is lower than it’s been in recent years and the QE continues, albeit amid rumours that it will be tapered off at the end of the summer.

And how is the Fed doing in its quest for full employment?


Not too bad, I suppose. Unemployment is sitting at 7.5%, which is certainly an improvement from the 10% seen in the aftermath of the recession. But it is still too high for the Fed to claim that it has effectively carried out its mandate. Loose monetary policy is supposed to lower unemployment and increase inflation, but it has done neither. The reasons for this are many, as discussed in my groundbreaking magnum opus on “Trekonomics,” but for my purposes right now the reasons aren’t important. What is important is that the Fed is less effective than ever before in carrying out its mandate. It’s not that it’s doing a bad job, it’s simply that the economy has adapted to loose monetary policy in much the same way that the Borg adapt to the frequency of phasers used against them. (Oh geez, the Borg could represent so much in economics. I’m saving this.)

As the chart clearly shows, unemployment rose after the recession caused by the bursting of the dot-com bubble, but declined steadily afterwards due in part to measures taken by the Fed. We can see a comparable decline in unemployment after the Great Recession, also partly due to the actions of the Fed. However, unemployment rose so sharply between 2008 and 2010 that, even though the Fed was able to adjust the unemployment rate by the same amount as it did in the years after the dot-com bubble burst, it has not been enough to get the rate down anywhere near what it was before the recession. So a central bank’s power is limited, which is unsurprising to everyone except, perhaps, Alan Greenspan, (former) Master of the Universe. The powers of central banks are feeling a little too limited lately, however, which in itself is not a problem if governments are prepared to pick up the slack. Unfortunately, what seems to be happening is that central banks are being charged with the tasks of creating economic activity and keeping unemployment down without being given the tools necessary to do so. The mandate is beginning to look like a way for governments to shirk responsibility for these things, while central bankers’ every move comes under unprecedented scrutiny.

A central banker can only react to events such as a housing crash or a drop in oil prices. It is the government’s job to ensure that the economic well-being of its country is not dependent on just one industry. It should accomplish this through regulation and diversification of industry. Oil is a volatile thing to be hinging our entire economy onto, and even if it weren’t, no country should be so dependent on any one resource that its inflation rate tracks price fluctuations of that resource, as Canada’s does.

So now my question is: what good is a mandate? While it’s admirable for people, androids, and institutions to aspire to be more than they are, the refusal to innovate justified by unrealistic expectations is inexcusable. It is realistic to expect that monetary easing will have a measurable effect on unemployment and inflation; it is not reasonable to expect that it will have a greater effect than ever before just because we need it to.

It is hard for me to explain the utter sadness with which I received the news of Mark Carney’s impending departure from the Bank of Canada to head the Bank of England. I wept, I yelled, I even went around a bar asking patrons if they cared about Mark Carney. No one did. I find it significant that, according to my informal survey of six people in a bar in Toronto’s Annex neighborhood, most Canadians have no idea who the guy is. (The recent failure of pollsters in predicting the BC provincial election signals a need for a new polling style. I therefore propose my style, as it is the most impartial and least time-consuming.) I hope he is ready to lose his relative obscurity, because in Britain the press will be obnoxious, ruthless, and, well, rude. People in a bar in London may soon know who he is, and there will be an insatiable demand for irrelevant information about his personal life.

Unfortunately, he has thus far given almost no fodder to journalists hungry for scandalous, or even remotely interesting, material on his personal life. In the absence of such material, the British press will be forced to fabricate outlandish stories that will likely make the privacy-loving banker seethe with rage. In the interest of saving British tabloid reporters time and much-needed brain space, I have devised some suitable scandals based loosely on fact that will pique the interest of tabloid readers while aggravating anyone who thinks the focus should be on Britain’s dire economic situation.

1. Neutral tone of Mark Carney’s suits suggests hidden psychosis, possible kleptomania, say experts.
At first glance, Mark Carney, Governor of the Bank of England, may appear prudent and conservative, with the tailored suit to match. However, self-declared colour psychologist “Al” has a different theory: “the muted tones of Mr. Carney’s suits indicate that he harbours a deep-seated psychosis that could emerge at any moment. My figures indicate too that those who wear such colours have a higher rate of kleptomania as well. It is clearly a case of the closet psychopath trying to convince people that he or she is boring and sensible.” Al’s story checks out: when a correspondent from this paper was caught rifling through Mr. Carney’s trash at 3am last night, Mr. Carney responded in a most untoward manner, brandishing a shovel and uttering phrases that cannot be reprinted here. Our country’s economic future hangs in the balance.

2. Carney’s secret heartbreak: “I just wasn’t good enough to play hockey professionally, so I had to take a dumb job as a banker instead.”
One of the few biographical facts we have been able to verify in regard to Mark Carney was his stint as back-up goalie for Harvard’s hockey team. But in a shocking twist, our exclusive sources tell us that becoming a banker was the last thing he wanted. Carney’s real dream? To play hockey professionally. In his native Canada, hockey is a sport people actually care about, with players earning exorbitant sums and becoming national heroes. No matter that Carney has managed both these feats without having to chase a puck; “when Harvard put him on as back-up goalie, he never fully recovered from the disappointment,” laments a former team member. “He tried everything to convince the coach to let him start–he even prepared a boring PowerPoint presentation about some Dynamic Stochastic Hockey Equilibrium with a bunch of charts that showed how he would improve the team’s prospects. Those were the most boring two hours of our lives.” Indeed, it was likely at this time that Mr. Carney discovered an affinity for long presentations and terrifying charts–two secret weapons that have helped him get to where he is today. “I think it still tears him up inside a little,” observes a source, “but he has this central banker thing he’s fallen back on, so hopefully he’ll be OK.”

3. Which Spice Girl is right for Mark Carney? Bets are on Sporty Spice–but she’ll have stiff competition from Carney’s longtime wife.
While Spice Girl Victoria Beckham went on to marry football star David Beckham, showing a preference for a sporty man, Mark Carney is known to prefer sporty women. He was reportedly attracted to his (future) wife when he saw her score a hat trick (three goals in one game) while playing for Oxford’s hockey team. Now that Carney is back in Britain, his wife had better watch out. Sources say that Diana Carney could be in danger of losing her husband to England’s sportiest lady: Melanie Chisholm, better known as Sporty Spice. While Mrs. Carney has moved on from hockey in favour of charitable pursuits, Sporty Spice has never stopped being sporty. In fact, just last week she was almost killed when a reckless driver blew through a game of street hockey in which she was participating. Mr. Carney has been known to appreciate a woman who risks her life in order to be sporty. Says a longtime friend, “Mr. Carney prefers a woman who pursues sportiness at any cost. If Diana doesn’t dust off her badminton racket or dig out that aerobics costume, there will be trouble.” Even more troubling is Chisholm’s affinity for Canadian men–she dated known Canadian Bryan Adams and may be looking for another polite Canuck with a sensible haircut. All is not lost yet, but Diana Carney would do well to stay vigilant to threats–and to the latest fitness fads.

4. Mark Carney’s bitter feud with Canadian politician Justin Trudeau: “I could have been a contender, if not for that little devil!”
Though many believe that new BoE Governor Mark Carney left Canada because this great opportunity presented itself, another far more sordid story about Carney’s departure from Canada is emerging. For months before Carney announced he would be leaving Canada, he had been denying persistent rumours that he would run for leadership of Canada’s embattled Liberal party. However, when Justin Trudeau, hugely popular politician and son of legendary former PM Pierre Trudeau, announced his plans to run for Liberal leadership, it took Carney less than two months to secure a position outside of the country. Though Carney had never even publicly confirmed that he was considering running, a close friend affirms that “it really hit him hard when Justin decided to run. It really took him back to high school when he ran for treasurer and was beaten out by this one really popular guy with great hair. Mark just kept talking about how Trudeau had the ‘mane of a lion.’ I think the hair really got to him, more than anything else.” Carney was overheard in Edmonton, Canada venting to a friend: “I mean, his dad invented the f***ing constitution. Give someone else a damn chance!! Someone ought to shave his head to teach him a lesson.” While we are saddened to learn that managing England’s economy was a consolation prize for Mr. Carney, we hope that he won’t fall victim to the Trudeau-rage that has clouded the judgment of so many over the years, most recently that of Canada PM Stephen Harper.

5. Is Mark Carney secretly a warlock?
It is generally assumed that BoE Governor Mark Carney got to where he is through hard work and intelligence. However, sources claim that they have an alternative explanation for Mr. Carney’s success that threatens to rock the very foundations of our political structure. He has been promoted to a number of eminent posts seemingly out of the blue, and, once there, he seems to have uncommon luck in the effects his actions have. Could it be that Carney has some help from…magic? Noted occultist Madame Mystikal sure thinks so: “there is no way he could have risen up the ranks like he did without magic. He is probably a practicing warlock. Just look at (Canadian Finance Minister) Jim Flaherty’s eyes when he talks to Carney. George Osborne, too. There is no doubt in my mind that Carney has cast a spell over these men, and that he casts spells over entire parliaments to convince them of his expertise.” Indeed, as Carney advocates for the central bank to have a greater influence on policy, it would seem we are in danger of becoming a pawn in Carney’s bid for world domination. “First it’s the Bank of England, then Carney becomes Prime Minister, and pretty soon he is running the whole world,” warns a prominent political scientist too afraid to give his name. “And there’s nothing we can do about it unless we want him to let loose a million little demons that will kill us all!” Some claim that Mr. Carney’s disproportionate influence on public policy can be traced to another powerful, but not occult, source. Since being spotted in the shadows at a Beyonce concert six months ago, it has been widely speculated that Mr. Carney could have some connection to the Illuminati, a mysterious group that runs the world by planting agents in positions of power. Whatever the truth about Carney’s meteoric rise to power, it is clear that he had some help. “No one gets to where that man is just by working hard and being good at their job. That’s just not how our world works,” claims the petrified political scientist. Of course, these allegations must first be substantiated, and readers can rest assured this paper is rigorously rifling through Mr. Carney’s trash to find relevant evidence. And in the meantime, if Justin Trudeau suddenly loses all his hair, we’ll have a few good guesses as to why.

We’ll miss you, Carney!

Though the allegations that our mayor is an actual crackhead may seem outlandish to many, they probably won’t surprise Torontonians who have been following the mildly catastrophic trajectory of Mayor Ford’s political career. Whether true or not, they represent the latest round in a battle that pits the liberal media (i.e., the Toronto Star) against the conservative faction running City Hall (the Ford brothers and friends).

As I have said in the past, I’m not sure that the amount of media attention dedicated to Mr. Ford’s personal life is entirely warranted. While I don’t agree with him on many points, I think it’s unconscionable for a paper of the Toronto Star’s caliber to dedicate more space to picking apart the mayor’s personal life than to, say, coverage of world events. It is, of course, the media’s job to scrutinize and hold our leaders to account; however, recent detailed coverage of how Ford seemed drunk at a party felt personal and unnecessary. I invite the media to focus instead on what Ford is accomplishing, or not, at City Hall. It is difficult to glean what exactly is going on over there when the majority of coverage is focused on the personal indiscretions of councillors. I’m sure there are myriad ways to take Ford down politically–so let’s keep an eye on his political actions instead of writing blistering 2000-word descriptions of a cellphone video shown to reporters by a scab-ridden drug dealer in the back of the car.

This is certainly investigative journalism, but the kind that’s more evocative of Rupert Murdoch than Seymour Hersh. I realize that this is not the intention of the reporters on the City Hall beat, but at a time when the very existence of the fourth estate is under unprecedented threat due to short attention spans and a general lack of appreciation for its function in a democracy, this type of news story does not help matters. The role of the media, and investigative journalism specifically, is to keep the public informed about how leaders are distributing taxpayer’s money to ensure the healthy functioning of society. Some will argue that bloggers now perform this function, but most do not have the resources, time, or persistence to get to the bottom of egregious governmental cover-ups. People will continue to underestimate the important role the media performs in a democracy if reporters continue to misuse its resources and connections in this manner. How much did those reporters pay to see that video, I wonder?

I’m not saying that anyone should be allowed to smoke crack with abandon–this is a matter that clearly requires law enforcement’s attention. I also understand that it is nearly impossible not to be distracted by yet another bizarre development in the Ford saga. Let us also consider the fact that Italy’s Silvio Berlusconi has managed to stage a political comeback while on trial for various offenses which include tax evasion and PAYING FOR SEX WITH A MINOR. Leaders should certainly be held accountable for their personal indiscretions, though a disastrous personal life need not be a precursor to professional failure (see: Bill Clinton). But in this age of oversharing and social media, it seems the personal and the public have become indistinguishable from one another. It is hard for the average person to have a private life when personal photos of them are splashed across Facebook for all to see; for someone in the public eye, privacy is all but impossible.

People in the public eye tend to deal with these pressures in different ways. I went to a taping of George Stroumboulopoulos’ show the other day and found that he is addicted to the natural energy drink Guru and rides motorcycles at 100MPH for fun. Perhaps that’s just his way of dealing with life in the public eye–jacking himself up on Guru and riding around so quickly that he is nearly invisible! I know that Guru helped me through many a tough time in my customer service jobs. Hey, whatever helps–he is one of the journalists fighting the good fight and making a case for the press’s continued role as investigator, whistleblower, and thought-provoker.

I’m not sure if the harassment (some would say bullying) Ford experiences at the hands of the media had any role in his alleged dalliance with crack-smoking, but if I were under such pressure, I don’t really know how I would react. People with a weaker sense of self, perhaps such as Elvis and Britney Spears, are adversely affected by these very same forces and tend to relieve stress by smashing SUVs with umbrellas. I am not making a case for the media to become uncritical of leaders: rather, I am making a case for clean reporting and taking the high road, whether keeping us informed about Britney Spears or City Hall. To do otherwise is hurting the subjects of such speculation as well as the strength of the press as a whole.

So. I wasn’t actually planning on posting the second or third articles I wrote for The Economist, but in light of Whole Foods’ swift and unceremonious rejection of my application for employment, I no longer have any qualms about discussing the company online for the consideration of my two to five readers! The third article I wrote is on Mexico’s #yosoy132 movement, but I don’t think I’ll post it because I’m not sure that I agree with my own conclusions–surely the mark of a mildly schizophrenic personality.

Researching this article helped me to understand my former employer’s epic descent from profitability into bankruptcy. I really had no idea what was happening at the time–all I knew was that Darren Krissie (POM’s former CFO) sure was buying a lot of pies. And eating them all in one sitting, he assured me. In fact, that man told me a lot of weird stuff that I can never un-know, try as I may. Here’s to you, Darren–I promise to never reveal your favorite movie!

Whole truths

After a dramatic tumble in 2008, the organic food industry is showing strong growth again, both in sales of organic products at traditional grocery stores as well as at specialty retailers. The organic industry’s largest retailer, Whole Foods, has experienced growth in revenues of at least 1B USD per year since 2010. The firm has expanded largely through mergers and acquisitions of smaller companies, and has successfully infiltrated the Canadian and UK markets from its base in the US. It opens stores at an astonishing rate—22 in 2012—and is eyeing more EU markets.

Though Whole Foods claims to have learned a lesson from the recession in 2008, when share prices hit a low of 8.19USD and sales plummeted, it would be well-advised to heed the cautionary tale of one of its competitors to the north. Planet Organic Market, a company founded in Edmonton, Canada, employed a strategy similar to that of Whole Foods, buying up smaller retailers and aggressively expanding throughout Canada and the United States, until it defaulted on 40 million dollars of debt in 2009. The company is now run by its creditor.

While Planet Organic Market financed much of its expansion through debt, a practice that Whole Foods has avoided, its story nonetheless highlights the merits of cautious expansion, as well as the fact that the organics industry is not recession-proof.

The market for organics has since recovered, and optimism for its growth continues to swell, as evidenced in Whole Foods’ share price hitting an all-time high of 101.19USD in October of last year. However, Whole Foods faces stiff competition from chains such as Wal-Mart and Costco, which are eager to cash in on organics’ wide profit margins. This could eventually drive prices down to a level that would make Whole Foods’ business model insufficiently profitable.

On the other hand, customers choose Whole Foods because they do not want to shop at Wal-Mart—both for ethical reasons and because Whole Foods has cultivated a sophisticated and relaxing experience. The décor, staff, and atmosphere of Whole Foods stores are just as important as the product, and Wal-Mart, with its neon lights and blue-vested staff, simply cannot compete.

Less comforting for Whole Foods are the various scandals plaguing the organic farming industry; the most recent has been termed “organic Watergate.” A 2012 report from industry watchdog the Cornucopia Institute blames the “cozy relationship between the USDA and agribusiness lobbyists” for a number of regulations that threaten to undermine the integrity of the Certified Organic label. However, the average consumer still associates the label with higher quality and safety, despite mounting evidence to the contrary.

A more recent development is the endorsement of genetically modified foods by one of their most vocal detractors. In a speech at Oxford University’s annual farming conference in January 2013, perennial food activist Mark Lynas proclaimed, “the GM debate is over. Three trillion meals eaten and there has never been a single substantiated case of harm.” Some argue that GMOs are the only feasible method of feeding the world’s exploding population.

These debates don’t yet seem to be affecting sales, which grew 9.5% in 2011 and should continue to rise. Nor has the controversy sparked by Whole Foods founder Peter Mackey’s bizarre diatribes against Obamacare hurt business. However, in an industry where public perception is inextricably linked to sales, Mr. Mackey would do well to take steps to mitigate the fallout from these PR follies, lest he find himself in the unenviable position of having dug wells from which no one wants to drink.

Star Trek: The Next Generation was never shy about tackling the tough issues, usually in the form of allegory involving alien races. The program has only increased in relevance in the almost two decades since it’s been off the air, spawning an entire generation of psychotic fans, of which I am one. Today I’m going to speak to its relevance in regard to macroeconomic policy. Just bear with me.

A liquidity trap is a special sort of economic quagmire that a country can get itself into. Economist Paul Krugman has been vocal in his claims that the US is sinking/has sunk into the same liquidity trap that Japan has been in for over a decade. A liquidity trap is when low interest rates/influxes of cash, one of the classic Keynesian solutions to a recession, are rendered ineffective due to a belief held by businesses, consumers, and investors that the new money will be taken out of circulation once the recession subsides. This leads firms and individuals to hoard the money that has been put into circulation, instead of investing it and thereby increasing economic activity, which is the central aim of loose monetary policy.

As Krugman has noted in the past, countries that get caught in liquidity traps do so primarily because of their reputation for monetary responsibility. In Zimbabwe, he says, people expect the government to print money to pay its bills. As a result, the currency that it prints circulates with abandon. In contrast, Japan, the United States, and Europe will keep the money they print to stimulate the economy in circulation only as long as needed. When they finally tighten monetary policy, the purchasing power of the currency will increase, as will long term bond yields; looking ahead to this situation, many thus opt to hold onto their cash. This explains why the Fed was able to triple the monetary base and have a negligible effect on inflation and, ultimately, growth.

The USS Enterprise happened to find itself in a similar situation a few years back (a few centuries forward in Trekkie time). In the episode “Booby Trap,” Picard et. al. encounter a Promellian cruiser that had been lost centuries ago in battle against a sneaky species called the Menthars. At first the crew is overjoyed to have found such a relic, but it soon becomes apparent that they have become ensnared in the same ingenious trap that vanquished the Promellians. The trap was designed by the Menthars to redirect ships’ energy emissions back to them in the form of harmful radiation–thus, the harder the Enterprise fights to escape the trap, the graver the danger.

The Enterprise’s conundrum can be seen as analogous to a liquidity trap. In both cases, the more power (money) expended in attempts to escape the trap, the more entangled we become. Now, perhaps it is a stretch to claim that cash-hoarding is the same as lethal radiation, but it actually has similarly pernicious social effects in the long run. Cash-hoarding prevents the economy from running at its full capacity, which hurts people that need companies to hire them–sarcastic young women with Spanish degrees, to take a completely random example. The economy’s potential capacity is shrinking every day that machinery and wo/manpower sit unutilised. It’s as if our society were being bombarded with lethal radiation!! And the longer a loose monetary policy is followed, the stronger the belief of investors that a tightening is just around the corner, thus making them even keener to hold onto their cash. Mark Carney seems to have a great understanding of this mentality, and rightly advocates the practice of promising to keep rates low for a specific time period. He’s also a fan of chastising firms for sitting on cash. I am a fan of him. This seems to be getting off topic.

Of course, loosening monetary policy is essential in times of recession, and is certainly not the cause of the trap. (Though some economists wrongheadedly argue that monetary policy of any kind is detrimental.) It is also debatable whether increasing the monetary base is further miring us in the trap, though many see catastrophic inflationary consequences in the future. The truth is that economic policy looks a lot like trial and error to me: shockingly little can be predicted of the effects of policies until they are tested in the real world. But this is beside the point; mostly because nothing can stop me from making this about Star Trek, but also because what happens next is very interesting.

Once Chief Engineer LaForge realises that the expenditure of power is only feeding the Menthar trap, he devises a way to shut off almost all power. Picard then manages to maneuver out of the trap using just one thruster (don’t ask me what that means–the point is that they use hardly any power) and Picard’s exemplary navigational skills.

I am not suggesting we cut the power, as that goes against my not yet fully formed but strong economic belief system. This solution was right to end the stagflation of the late 1970s, but this is a completely different picture. Obviously, new solutions must be tried. Perhaps one of the macro-prudential tools everyone has been so intent on lately will provide the answer. Either way, central banks/governments must find their “single thruster”; that is, the low-energy unit of propulsion that will allow us to manoeuvre out of the trap and to a place where monetary policy will again be effective. Policy-makers will throw their hands up at the crazy Star Trek lady, saying I’m asking them to find the equivalent of the proverbial purple unicorn (I just made that up). But the growing popularity of Bitcoin shows that people are losing faith in their governments’ and central banks’ ability to manage currency effectively, and this should be addressed. Paul Krugman has been adamant about the need for more fiscal stimulus–it is, in fact, highly likely that fiscal stimulus is the purple unicorn! It’s so simple that no one dares to believe it will work. Instead of putting cash into circulation and trusting investors and firms to use it productively, the government should perform this function until faith is restored. Governments held hostage by their own erroneous perceptions of how bond markets will react to the increased debt load that fiscal stimulus would necessitate need to cool it. The moment a nation’s policy is dictated by investors, it ceases to be sovereign–if the situation is as the excuse-makers claim, then perhaps they need to stop and really think about the implications of what is happening here.

There are two more lessons from this Star Trek episode that policymakers would do well to keep in mind. The first has to do with Picard’s taking the helm. The Enterprise’s escape from the trap required the firm and decisive, not to mention skilful, manoeuvring of which only Picard was capable. When this approach is contrasted with the bumbling and ineffectual efforts of US Congress and the European Commission, one can begin to see why it is so difficult to get anything done around here! I am not suggesting we get ourselves a dictator (and in fact it is very important in this climate to be especially vigilant of potential despots, as this is the situation in which they thrive), but governments in the US and overseas are engaging in internecine bickering that only exacerbates their economic woes. We must call on Picard to lead us. Just kidding…kind of.

The second lesson is that the first thing Geordi did when disaster struck was to reconfigure the warp engine. The parallel to this in our current predicament is REFORM REFORM REFORM. Pumping money into an inefficient system will result in the money being ineffectually allocated, or possibly transmitted back to us in the form of lethal radiation. The US has to get serious about regulating its financial system, and the EU needs to divest itself of about 10,000 pounds of red tape, in addition to resolving all the other various political and banking issues that I won’t get into here.

The overarching lesson from Star Trek episode 6 of season 3 is that radiation will reach lethal levels if we don’t change the way we’re handling this recession. In the show new solutions were reached and it was possible to manoeuvre out of the trap using a combination of ingenuity and unconventionality, not to mention Lieutenant Commander LaForge’s special bond with that lady engineer. If we were to take these lessons and apply them to our liquidity trap, I predict that we would deftly coast from sub-optimal to optimum economic performance in no time at all.

Seeing as The Economist gave my work a miss this time around, I decided I might as well publish it myself. It’s a shaky first attempt at political analysis, but even Hem had to start somewhere! Applying for the internships at The Economist was an amazing experience, made even better by the fact that they actually sent me a personalized (though likely automated) response. I think the way an employer’s rejection style speaks volumes, and The Economist has my vote for Best Rejection Letter Ever. It told me there were over 500 applicants for a single internship, and that the high volume surely says something about the state of the economy and the profound interest in foreign affairs shared by many. It told me not to give up without sounding like S Club 7–not even a bit!

More importantly, the letter reaffirmed my long-held belief that good writing is capable of shaping perceptions and changing the world. Instead of feeling disappointed, I was happy, and that is why we must put down our smartphones and Metro newspapers from time to time and read fantastically written pieces that are the product of months, or years, of careful deliberation and reflection. I hope to someday count myself among those who can write such pieces. Aaaand without further tangential preamble, here it is!

Canada foreign policy (31 Mar 2013)

Canada gets tough

Canada’s government sheds its image of impartial peacekeeper in a series of hardline moves

Canada has traditionally played the impartial helping hand in its dealings with other nations, putting the emphasis on foreign aid and peacekeeping missions. However, lately Canada has been assuming a decidedly hawkish role.

At least part of this transformation can be attributed to Stephen Harper’s Conservative government’s eagerness for showing solidarity with Israel. On September 7th of last year, Foreign Affairs Minister John Baird announced that Canada was suspending diplomatic relations with Iran. When asked why Canada had chosen now to react to decades-old circumstances, Baird vaguely replied, “there’s just a long list of reasons why we’re coming to this decision.” Israeli Prime Minister Binyamin Netanyahu congratulated Canada for its “bold move.”

Another bold move came in November, when Canada was among the nine countries that voted against Palestine’s bid for statehood at the United Nations. The approval of the resolution only served to exacerbate Baird’s hawkish rhetoric—in a speech at the United Nations General Assembly he chided Palestine for acting unilaterally, and ominously declared that Canada would consider “all available next steps.”

However, the next steps available to Canada are few—Canada’s international presence has steadily waned under Mr. Harper’s government. Canada lost its bid for a seat on the UN Security Council in 2010, a historical first, and has dramatically scaled back peacekeeping missions and foreign aid in the past few years. “We’re just not doing enough internationally to have people care about what we think,” observes Alistair Edgar, a political science professor in Waterloo, Ontario.

Despite his embarrassment over losing the Security Council bid, Mr. Harper seems reluctant to change course. In late March, Canada became the only nation in the world to withdraw from the United Nations Convention to Combat Desertification—moving Green Party leader Elizabeth May to comment that Mr. Harper is turning Canada into “the North Korea of environmental law.”

The federal budget released March 21st gives further indication of shifting international priorities by completing a process started in 2006, when the Conservatives merged the International Trade and Foreign Affairs portfolios. This time, the already bloated Foreign Affairs portfolio is to subsume the Canadian International Development Agency, the department responsible for foreign aid. With $377 million in cuts to foreign aid set to be implemented by 2014, the government is peddling a new strategy of promoting Canadian business interests in emerging economies to foster lasting economic growth.

While this is a potentially fruitful approach, it remains to be seen how it will be implemented. In the meantime, Mr. Harper can tell the Palestinians that their cheque was lost in the mail.