The Occupations of Vancouver and Victoria could be evicted any day now, as the previously supportive municipal governments are changing their tune. Although legally the mayor throughout the election period, the mayors have no moral authority to make decisions like this right before an election. But the mayors do have responsibility. Every public servant at every level of government is told to maintain the status quo until a new government is sworn in (November 28) – and the status quo is Occupied.

But I’m amazed that the two centre-left mayors would come down against a progressive movement right before an election. I suppose this signals that their more serious electoral threats are from the right (Paul Brown in Victoria and Suzanne Anton in Vancouver), but both mayoral seats are considered quite safe. It just goes to show that the centre-left in BC is more centre than left. (Gregor Robertson is an ex-NDP MLA; Dean Fortin is associated with the NDP.)

In Victoria the mayor has gone so far as to say that the Occupation needs to be evicted to make space for Christian-consumerist activities in Centennial Square. I guess democracy only gets one month of the year?

The Occupations are requiring larger amounts of police and other emergency responder time, but it is far from an emergency situation. The authorities should work with the Occupation General Assemblies to establish collaborative solutions. If the Occupation requires a continual police presence, so be it: the government has no right to constrain freedoms because they’re inconvenient or expensive.

The incumbent mayors are part of the problem, not part of the solution. Based on this, I am endorsing Steve Filipovic for Mayor of Victoria and Randy Helten for Mayor of Vancouver.

When I write a briefing note, one of the options I always include is #0. The Status Quo. Every other option needs to be weighed against the opportunity cost of staying the course. I don’t see a big difference between PST+GST and HST, so my impulse is not to pay $1.6 billion to switch back. Although I wasn’t convinced enough to write this blog post earlier.

HST taxes a few items higher than PST+GST and doesn’t impose taxes on the supply chain, so it is a higher consumption tax and lower corporate tax. But taxing each step of the supply chain is far more distorting than a corporate income tax and benefits vertically-integrated large businesses over small businesses. Cutting the HST (11% would be enough) and raising corporate taxes undoes this redistribution.

Having a single agency collect HST makes good administrative sense and it does nothing to reduce BC’s sovereignty: the provincial government can decide to apply point-of-sale rebates on whatever they want – they just happen to have chosen gas over bicycles.

A lot of people who are against the HST are not paying attention to the fact that stuff poor people buy (food, children’s clothes, etc.) still has no sales tax. And a lot of the items that people are upset about (restaurant food and theatre tickets are two examples from my social network) are disproportionately bought by rich people: trust me when I say I pay more HST on my French bistro dinners than you do on your McDonalds.

I absolutely agree with the Canadian Centre for Policy Alternatives that BC’s entire tax system needs to be redesigned, but I’m not convinced that voting either way on this referendum will be a step in that direction.

Yesterday was the 90th anniversary of the repeal of prohibition in BC (by referendum). Fans of alcohol in Vancouver celebrated by getting drunk and having a riot. And that, precisely, is why I think prohibition was good policy.

Alcohol is a hell of a drug with a significant cost to society. Heavy alcohol use has a higher direct health cost than most other drugs and alcohol is unique in its ability to cause injuries, particularly motor vehicle accidents. Because of its legal status, alcohol has free reign to cause domestic breakdown and poor job performance.

The problems with prohibition are that:

• it was not implemented consistently: many speakeasies continued to operate and the wealthy could easily access smuggled alcohol
• it was implemented only through regulation: the government did not make an effort to convince people to lower their demand for alcohol both before and after the ban
• no substitutes were available

The last two points get at the crux of the problem: alcohol is both traditional and vital to our culture. Successfully banning alcohol would require widescale cultural change, cultural engineering if you will. Given that many cultures throughout history have practiced intoxication, it seems that humans might have an inherent desire that would be easier to satisfy with a safer alternative drug than suppress completely. David Nutt, the ex British drug czar, is working on an alcohol substitute based on benzodiazepines (eg: Valium).

I believe that reducing alcohol abuse is an important public goal that the government should be willing to use radical means to achieve.

Gordon Campbell will be retiring as leader of the BC Liberals. The BC Liberals have a convention scheduled for November 19 – I have no idea if that’s enough time for a leadership race. Vaughn Palmer very quickly wrote a list of possible contenders:

• Kevin Falcon
• Mike de Jong
• Dianne Watts
• Rich Coleman
• George Abbott

I question the ability of current cabinet members Falcon, de Jong, Coleman and Abbott to distance themselves from the HST and other unpopular Liberal decisions. I think Blair Lekstrom’s decision to resign from caucus over the HST has to at least put him in the running (would he have resigned just to avoid a recall campaign?). I don’t know why everyone trusts Carol Taylor when she said she’s not returning to politics: people say that all the time when there’s no position available and then they change their mind when a backroom kingmaker drafts them.

I’m sure there are all sorts of dark horse candidates that I don’t know about, but I think Dianne Watts has got to be the most interesting candidate from Palmer’s list. Two premiers have been past mayors of Vancouver, but Surrey is catching up as BC’s second largest municipality, so mayor of Surrey seems like reasonable training for premier. Apparently she has been doing a good job: she is a finalist for this year’s World Mayor prize (results announced December 7). Watts would be particularly amusing if Gregor Robertson is the next leader of the NDP: an election between them could be known as the “SkyTrain Series”.

Another question is what impact Campbell’s announcement will have on the recall campaigns that can begin November 15?

If ICBC were a private-sector monopolist, we would expect to see high prices and high profits. But ICBC is a public entity with no profit mandate and we observe the lowest prices for primary insurance for any province. What can explain these low prices?

A monopoly supplier is a larger organization than a set of competitive suppliers. Large organizations benefit from economies of scale. Monopolists of low-elasticity goods do not need to spend money on marketing. Competitive firms sometimes engage in price wars outside of price equilibria, which is a waste of resources when the war ends in a stalemate.

Private-sector firms are required by their owners or shareholders to “skim” profit off the difference between sales and costs. From the consumer’s point of view, this profit is an inefficiency (it would be cheaper to buy the firm’s inputs directly). Since ICBC has no profit motive, they should be able to provide their product for a slightly lower price. If ICBC suffers a shortfall in revenue, it will be covered by the taxpayers of BC.

Since primary insurance is legally required, the government would likely regulate a competitive market. This regulation, possibly in the form of a commission office, adds an additional cost to BC taxpayers. ICBC currently regulates itself, so essentially it may be impossible to privatize this function.

Insurers’ costs go down when the number and severity of accidents goes down. As a public entity, ICBC can directly offer policy advice on safety, for example the recent ban on cell phone use, to cabinet. A private insurer has more options for reducing costs and even an industry association does not have the lobbying power of a Crown corporation. BC should have less accidents with a public insurance agency than a competitive market, but it is difficult to calculate this benefit.

Car insurance provides opportunity for insider fraud. Despite recent high-profile cases, it may be easier to control corruption with public sector values than private-sector monitoring. Public servants believe that the social cost of fraud is higher than private employees. Lower fraud results in lower costs.

There are some reasons why BC should consider privatizing ICBC and opening the primary insurance market to competition:

ICBC has a legislated monopoly on a low-elasticity good: primary insurance is legally required and few consumers are willing to go without a car. If ICBC were a private sector company, they would increase the price of primary insurance to maximize profits. Since ICBC does not have a mandate to profit, they do not maximize the price but they also do not minimize it. A primary insurance market with competition should result in lower prices.

Since ICBC is not collecting a profit from the non-minimal prices, where else is the money going? It is being passed along to their suppliers. ICBC’s bigger supplier, by far, is their employees. Employees in monopolies engage in “rent seeking”: earning a higher wage by virtue of their position in the market. A market with competition of employers should result in lower wages (the savings passed on to consumers).

ICBC’s employees also have no incentives to work smarter: there’s no competition attacking their market share and, as public sector employees, their pay is not linked to company performance. Competition in a market increases productivity. Existing firms invest and innovate to increase their competitiveness and new firms grab a share of the market through innovation. Higher productivity results in lower cost.

As the sole supplier, ICBC has less incentive and opportunity to innovate. For example, many economists advocate pay-as-you-drive insurance rates. But ICBC has no reason to implement changes without political will. A competitive market would produce more innovative services.

Recent scandals at ICBC demonstrate a sense of entitlement. Employees of a monopolist feel that they “own” the market. Being a Crown corporation under control of a Minister opens the door to political meddling. Consumers would receive higher quality from independent organizations.

All provincial and federal public servants are supposed to be non-partisan during work hours. Most of them are free to do partisan activity in their free time. We’ve come a long way since 1960 when Dave Barrett had to get special permission to run, and even longer since 1899 when public servants weren’t allowed to vote in BC. I happen to be in one of the few positions that has a higher burden of non-partisanship (although that hasn’t been tested in court, as far as I know): I am expected to remain non-partisan in my private life.

The members of the Local Government Elections Task Force were all appointed by Cabinet. Apparently some people^[who?] consider the Task Force to have a partisan slant. To maintain my squeaky-clean image, my employer asked me to remove my personal opinions from my post on the Task Force.

The impact of social media on the political status of public servants is an active area of research. Requests for interviews with me can be left in the comments.

BC local government is made up of municipalities, regional districts, the Islands Trust, the Vancouver Park Board and school districts (the UBC Endowment Lands committees are advisory, not governing; First Nations governments represent off-reserve members so they’re not considered local).

[Redacted]

The Local Government Elections Task Force is developing a new model [for local government elections] and started soliticing feedback today.

[Redacted]

I’d like a Cowichan Sweater. But the ones available in thrift and tourist stores have, for historical or practical reasons, very unflattering cuts.

There’s a Richmond (Coast Salish land) company called Granted that is producing what they call “Cowichan-inspired” sweaters with local (read: Asian immigrant) knitters. Both CBC 3 and The Straight have featured them without questioning their bona fides.

Four Horsemen menswear store in Victoria contracted Granted to produce custom sweaters which are being sold as “Cowichans”. The owner of Four Horsemen said something about Granted being a subsidiary of a traditional Cowichan company, but I can’t find any information about that online.

The question is whether Granted sweaters count as cultural appropriation? If not, buying one of those sweaters is stealing the Cowichan people’s intellectual property and depriving them of one of their few economic niches (see also: HBC’s Olympic sweaters).

BC Ferries is one of the key pieces of infrastructure in BC. It used to be a Crown corporation. Now it’s…something else. “Independently-operated public corporation”, let’s say.

I think very few people know how BC Ferries is structured despite the importance of the service. I had the opportunity to do an assignment on BC Ferries so now I can explain it to you:

BC Ferry Services Inc (BCFS) owns the ferries, leases the terminals (from the province) and employs the unionized workers that run them. BCFS has a contract with the Ministry of Transportation that includes subsidies for some of the routes. BCFS has issued some bonds that are mostly held by national banks – as far as I can tell, there are no covenants on those bonds that give the holders control of BCFS.

Ferry ticket prices are set by the BC Ferry Commission, which is an independent statutory office appointed by the Legislative Assembly. (So if you think prices are too high, write your MLA.)

The board of BCFS is mostly members of the BC Ferry Authority (BCFA), which is a public partnership. The BCFA is appointed as follows:

• 4 by coastal regional districts
• 2 by Cabinet
• 1 by the BC Ferry & Marine Workers’ Union
• 2 by the previous directors of the BCFA

I think the point of having the two-layer BCFA-BCFS board is to prevent political meddling and accountability but mostly to make BCFS independent enough to secure its own bonds. The other value of independence is that the only constraints on BC Ferries is the contract. (If you don’t like the terms of the contract, write the Minister of Transportation.)

The two big questions I have are:

• What principles is the BCFS board operating under? Maximizing shareholder value doesn’t make sense.
• How do the banks and the markets see the reality of this whole thing? How would you create a model for the value of the bonds?