The Liberal Party in Five Years

While I distrust polls it would seem that the bloom is off Justin Trudeau’s rose and it is now a question of whether he’ll manage to hold the Orange tide sufficiently to save Harper or if he’ll be relegated to also-ran status once the debates occur. Either way, the Liberal Party will be a shadow of itself come October. So might the Conservative Party and thus a question – what should the Liberal Party do?

The easy answer is to dump Trudeau and his advisors and find a new leader. Which is, I suspect, exactly what they will do. However, there is another alternative and one which in the privacy of my own blog I want to think about.

Step one: yes, dump the advisors. They appear to be idiots and lack the essential Liberal instinct for the jugular. 32 point Democratic policy papers are a pretty sure sign that the war room has lost the thread. But keep Justin.

Step two: understand that politics is about to undergo a huge and deeply upsetting change. No, it isn’t global warming which isn’t happening. No it isn’t Prime Minister Mulcair repealing Bill C-51. It is about the underlying economy of the world shifting in a way that none of the mainline parties has a clue about dealing with.

Step three: Robots. In fact robots and artificial intelligence and a bunch of interesting biotech and, well, robots. Technology is poised to change the way we do virtually everything, from driving to fast food to drafting wills, we are perilously close to machines being able to deliver the goods without human intervention.

Step four: Yikes. No jobs. Jobs are the way we allocate resources in our current economy. To make stuff, to approve loans, to create new products, to deliver things, to get food to the grocery store, we need people and we pay those people. Because they are paid they can buy stuff and the wonders of a market economy continue. What happens when a 200k a year haul truck driver is replaced by an autonomous driving robot? Well, that is 200k which will not be spent on F-150s and hot tubs in Fort MacMurray.

Step five: Whether the NDP or the Conservatives win the election, neither party has the freedom to think about the implications of an increasingly jobless economy. Pure capitalism, where labour is largely irrelevant to the production of goods and services, is a world that neither the Conservatives nor the NDP have or can contemplate.

Step six: Young Mr. Trudeau, humbled by his deep losses reaches back to his father’s legacy of intelligence and begins to askthe questions the other parties are incapable of. How do we deal with an economy of abundance? How can we finance government when individual earned income plummets? What do we do when “work” is delinked from production? How can we create a new economy out of the ashes of the old?

Step seven: A humbled Mr. Trudeau walks out those questions and looks for really smart people to answer them, for Canada.

It is not at all clear what the answers will be. The advent of serious robotics and the beginnings of applied artificial intelligence will create a situation which has not existed since the dawn of the Industrial Revolution. It will be the equivalent of bringing an agrarian society into the machine and factory age. At the moment there is no Canadian political party remotely thinking about any of this.

The Liberal Party, much as I hate its cronyism and its cynicism, has a long tradition of channeling intelligence towards national goals. Not that this has worked out so terribly well but Liberals have for decades at least been open to new ideas and, in a pinch, new paradigms. While the Party is a shadow of its former self and has rushed to embrace the cant of assorted climate change/inequality/SJW cranks, it still has the capacity to embrace and explore new ideas.

As importantly, while it may be wiped out in the next election, rendered a rump in Parliament, it has the history and the credibility to offer solutions which Canadians may take seriously.

Nothing will please me more than seeing the Liberal Party crushed in the next election; but it has the capacity to return and to deal with a new world which is rushing towards us. Justin is about to learn a useful lesson. Where he goes from here may end up being as important as his father’s single-minded determination to keep Canada one nation.

 

Immigration: What Choice Do We Have?

culturally neutral

It is a rather sad fact that my generation of Canadians, as Mark Steyn puts it, couldn’t be bothered to reproduce. Which leads to the grand issue of what to do about the missing babies of the Boomers given that those boomers want things like pensions, health care and the pleasures of the welfare state.

The answer which we have been given by out political elite for the last thirty years is “immigration”. Essentially, Canada will fill its baby gap with immigrants and all will be well. Last year we naturalized 260,000 people. As Frau Katze at BlazingCatFur.ca points out, that means that 3/4 of 1% of our total population became citizens in 2014. Which is, by any measure, a lot.

Obviously that level of immigration changes Canada quite radically. Various bits of culture fall away when your city is 50% Chinese. Which is not the end of the world and, for the same reason, the Vancouver Symphony goes from strength to strength. But we are rapidly running out of high end, well educated, entreprenural Chinese and Sikh immigrants. China and India are presenting huge opportunity while Canada is looking economically sluggish.

Rather than reduce immigration Canada has been welcoming immigrants and “refugees” from less dynamic cultures. Immigrants from North Africa, the Middle East and Pakistan are beginning to fill up the available slots. Is this a good idea? I’ll be looking at that in future posts. What I want to think about here are choices.

The elite refrain seems to be that if we want to maintain our welfare system, pensions, healthcare and the like we have simply no choice but to import drafts of tax serfs to make up our declining numbers. Is that true?

Here are a few ideas to extend the independence of the Boomers and reduce the need for immigrants at any cost.

• Postpone retirement to 70 or even 75: the boomers parents are extending life expectancy rapidly. 90 is the new 70. Greater activity, a keener sense of healthy life style choices and, as Doug Coupland put it, “Vitamin D and baby asprin and (mum’s) going to live forever.” Boomers are nuts to be thinking of retirement at 60 unless they really are too sick to work. So don’t. Pushing back the retirement and pension ages saves a lot of pension money and reduces the need to bring in more people.
• Have more children. Not something the boomers can do but our kids can and should. But to do this we need a lot of very family friendly policy. Income splitting is a cute idea but hardly a huge incentive to family formation. Big tax deductions for kids number three, four and five could help a bit. But those are governmental changes.

  What can the average citizen do to encourage a baby boom? Start with your own family. Rather than suggesting that your two precious children wait for the “right” person before they get married, learn from your own couple of marriages and recognize that the “right” person may not show up. Marriage in your twenties with kids shortly thereafter is no bad thing. If it all goes to hell, well, you are really only stuck for 12 to 15 years. But you can also grow up together. So, early marriage.

  Start training your kids early that having children is a joy rather than a burden. And teach them that there is no magic point financially or career wise when having children suddenly makes sense or is easy. Have your kids when you can and as many as you can. Telling your children this can help.

• Where possible transfer wealth early. There are a lot of older boomers whose parents have died and left good big whacks of dough. And those same boomers are coming to the end of their mortgages. Here is a hint: offer your kids some money. And not, ideally, as a loan. An outright gift is more useful. Don’t tie it to real estate either. There is going to be a massive correction in Canadian real estate but even if there wasn’t tying a gift to what is usually a debt and endless expense is a poor idea.

  In general gifts are not taxable in Canada. So, for example, parents could give their kids enough to top up his and her TFSA’s and then an annual gift to let them max out the TSFA contribution room every year. If you do this when your children are in their early twenties they will, fairly quickly (with a balanced portfolio rather than the dumb .5% interest products offered by the banks) have a serious sum of money for the crunch years in their early 30’s. Which will give them the confidence to have kids themselves at a much earlier point.

• Build houses and condos which can adapt to the changing needs and means of families. Everything from in-law suites to legally easy house splitting needs to be done to drive down the price of housing in Canada. Yes there is a correction coming but that does not change the fact there are many cities where housing is unaffordable. Build rental housing for families. Build up market rental housing. Encourage density. Make it possible to rent with a 1/5 of your average income rather than 1/2.

  For this to happen government just needs to step back a bit. Upzone a little, perhaps create a few tax shelters for rental housing. But the goal is not cheap housing per se, rather the goal is family formation.

• Use technology in place of people. A lot of the jobs “Canadians just will not do” should not be done at all by anyone. From self cleaning toilets – already done in Japan – to robotic floor cleaners and fast food “servers” there are lots of jobs which can and will be done by robots. Pushing that sort of technology will reduce the need for more immigrants.

  So will the IT driven revolutions in ordering (see Uber/Amazon) and transportation. Self driving cars and trucks are going to change a lot of how we do business. Again, this is going to displace – probably forever – a lot of people. So plan for that now by reducing the number of people we are importing.

  In 2011 371,000 women worked as retail clerks in Canada. 316,565 worked as administrative assistants, 260,190 as cashiers and 184,720 as general office support workers. Call it million jobs. Men: 285,050 retail clerks, 253,385 truck drivers, 138,435 material handlers, 112,125 food counter attendants and 100,190 store shelf stockers. Call it 800,000 jobs. If robots and IT capture 10% of those jobs per year over the next decade there will be 1.8 million less jobs to be filled. (stats here)

  We could worry about this or we can embrace it and adjust our immigration requirements accordingly.

If you actually look at those numbers seriously and, instead of 10% use 5%, you’ll see that 900,000 low skill jobs are going to get eaten by robots and IT over the next decade. 90,000 a year. Now, look at the naturalized Canadian number for 2014 again 260,000. If half our new citizens are entering the labour force that is 130,000 new workers per year in an economy which will be shedding 90,000 jobs per year. Does that make any sense at all?

I’ll be returning to this over the next year but the next time someone tells you Canada has no choice but to accept whatever immigrants it can attract, at least think about some of the choices we actually do have.

Form Factor Future

Tackle Box Robot

A lot of the substantive content with my homeschooled boys is looking at interesting things and then discussing them and digging a bit deeper.

For no particular reason this past couple of weeks we’ve been discussing:

• pallets and containers
• delivery drones
• 3D printing
• autonomous and electric cars
• economic aspects thereof

Now the fun part of this is that we can find useful things on the internet like Captain Capitalism’s thought provoking post on “Post Scarcity Economics” or Walter Russell Mead’s post on “Is Downton Abbey the Future of the US Economy?”.

While the economics are interesting, the actual history of things like containers can be riveting for boys and their father. (Susan decamps with a good book.) An article about the humble pallet gives the boys a fair bit of insight into everything from the global economy to the logistics of Ikea cup design.

One of the recurring themes which has emerged is how standardization improves efficiency. Containers have to be the same size, pallets – in an ideal world – would be the same size. A decision would be made about metric vs. imperial. Merchandise packaging would be optimized to max out pallet efficiency. There’s room for a bit of math and some basic geometry.

Once you start talking about pallets and containers you can also consider the “last mile” problem. How do you get the goods to the customer? Amazon uses the mail and UPS. Walmart wants you to actually go to their store. Nothing is more fun than thinking about how that last mile can be crossed without a trip to the mall or the UPS guy finding you are not at home.

In Australia there is a company set to deliver text books by helicopter drone. (And, yes, we did discuss this quaint idea of a paper “textbook” in a Kindle world.) No question that for things like pizza, prescriptions and drycleaning the flying delivery drone makes sense.

But, for my money, the autonomous vehicle is a better bet for the day to day business of getting stuff to people. (3D printing is still a distance away for every day use.) The excitement and hype in the autonomous car world has been about passengers – essentially moving people rather than things. But moving things is a huge business and it could get much bigger if an easy, inexpensive, means to get your groceries to your house could be devised.

We already have automated warehousing. (Worth looking at this video at Amazon’s Kiva systems site. However those robots merely pack the boxes with the customer’s order. Now what?

The last mile problem is going to get a lot of attention in the next few years. Autonomous delivery vehicles are one part of the solution; but the other part is actually delivering to the customer. Canadian start-up Buffer Box (recently bought by Google) has a fairly elegant partial solution. Your stuff is delivered to a Buffer Box kiosk which has electronic lockers you can open with a passcode from your phone. Nice for your online kite purchase, not too brilliant for the chicken you want to cook tonight.

There are lots of ways to attack the last mile problem. Each family gets a personal box and deliveries are made right to your box. Or, if price can be brought down, a person or family would have one or more “boxes on wheels” which would travel on some sort of schedule to the various places the family needs to have stuff picked up.

Part of the educational process here is that these are not questions which, at present, have answers. But they are not abstract issues: even a partial solution to the last mile problem is a billion dollar business. And it is a business which will occur very, very quickly. The horse was replaced by the internal combustion engine in less than 20 years.

Marrying a GPS/internet/Google Map aware computer to the rather well understood technology of the golf cart or electric scooter and you have an autonomous delivery vehicle prototype. With a secure storage capacity – think trunk of a car – you could probably build such things for $1000. They don’t have to go fast and, with good logistics design, they would not likely have to go far.

Now, think about what the introduction of such personal pick up and delivery ‘bots would change, especially in cities. Just one example: at the moment even if the Lady of the House is hyper aware of which items are on sale at which grocery stores this particular week, she is not particularly willing to make five stops and go through five checkout lines to save a total of, say, $10-20. But her pick up agent would be delighted to make those stops. (And, of course, now the supermarkets – if they are smart – are going to want to attract the pick-up agents so the scope for price matching and agent loyalty programs is huge.) On the other hand, think of the congestion these pick-up agents might cause. How to solve that problem. (Two hints – first, the number of car trips to get stuff would go down as would the number of manned delivery vehicles, second, it should be possible to build anti-congestion imperative right into the software which runs the pick up agents.

As I have pointed out to the boys, one interesting thing about robotic pick up agents is that they can operate continuously and therefore quite slowly. If your agent has to make four pick ups all within a one mile radius of your home over the course of, say, three hours it can accomplish that at a walking pace even allowing a ten minute stop at each pick up location. While I am not all that thrilled with the prospect of driverless semi-trailer trucks running at 60 miles an hour (which is an irrational fear but there it is), box toting pick-up agents sauntering on the sidewalk or in designated road lanes seems pretty manageable.