In the global online economy, there are winners and losers. The winners win big and become whales, and the losers go the way of Eaton’s and its mail-order catalog. With 90 per cent of web traffic going to just the top 10 sites, there is no online middle class. The COVID-19 pandemic has elevated major online retails – Amazon especially – to the status of an essential service. Between industry consolidation and being deemed an essential service, are online retails too big to fail, and thus in need of regulatory action?
The first issue is one of creative destruction. If these online whales are too big to fail, what will happen to capitalism without creative destruction? The libertarian argument is that no firm is too big to fail and there should always be creative destruction. Eaton’s was once the largest retail business in Canada and its mail-order catalog played arguably a more important role in the lives of rural families 75 years ago than Amazon Prime does today.
The classic Canadian children’s book, The Hockey Sweater, might have never been written if set today. Instead of accidentally ordering the socially unacceptable jersey of the Toronto Maple Leafs from Eaton’s English mail-order catalog and being stuck with it, Roch Carrier’s mother would have used a French language version of Amazon.ca to ensure she was ordering the correct Maurice “Rocket” Richard number 9. She also would have enjoyed Amazon Prime two-day free shipping and all the related streaming video and music that comes “free” with the Prime membership. Perks that didn’t exist in the town of Sainte-Justine, Quebec in 1946.
While Amazon is the whale of both business-to-business cloud computing and online retail, it is hardly the first large tech business or large retail business. It is also not alone in the competitive landscapes it dominates. In the same way that Eaton’s used to dominate mail-order and large retail, nothing lasts forever, and there’s no grantee that Amazon will enjoy perpetual dominance – or even rival Eaton’s 100+ year corporate existence. Brick and mortar retailers are constantly expanding their online presence to rival Amazon both from an online order standpoint as well as providing live inventory. Free two-to-three-day shipping is convenient, but so is buying online at lunch and picking it up from your local store’s customer service desk on your drive home from work. Although this only applies during normal times, during a pandemic with mass social distancing, the advantage swings back towards Amazon.
In the cloud computing business, Amazon is up against other giants like Google and Microsoft as well as software-as-a-service solutions sold directly by major software vendors like Oracle. When HP purchased IT outsourcing company EDS in 2008 for $14 billion (USD) to become a rival to outsourcing whale IBM, Amazon Web Services (AWS) was two years old and so small that it didn’t even fully host Amazon.com. Fast forward a few years and AWS is the cloud whale that upset the outsourcing industry apple cart. IBM has had to refocus on high margin services, consulting, software, and revolutionary AI solutions like IBM Watson. Whereas HP – once the world’s largest IT company – announced an $8 billion accounting write-down on the value of their EDS outsourcing business in 2012, shut down their AWS competitive cloud business, and split into two much smaller companies in 2015.
While retail giants have typically been dominant over the course of a century, the lives of modern IT companies are at far greater risk of being the victim of creative destruction. The internet survived the rise and fall of Nortel, HP EDS, Blackberry, and many more technology whales. The internet would survive a loss of AWS.
Companies eager to be described as “too big to fail” are often eager for regulatory action tailored to advance their interests. Amazon is no better or worse in this regard, always willing to entertain discussions about regulatory burdens for their competitors and direct taxpayer subsidies. The massive loans and grants being offered in response to COVID-19 have businesses big and small jockeying for a slice of taxpayer money. Taxpayers must remain vigilant lest the aid packages disproportionately end up in the hands of the politically well-connected firms that need it the least.
It has been reported in the Wall Street Journal and the Financial Post that Amazon, as well as other online retailers, benefit greatly from lower delivery costs afforded to them by the money losing U.S. Post Office and Canada Post. While all online businesses that ship using the government-owned post offices benefit relative to retail locations, Amazon – the largest online retailer – enjoys the bulk of the indirect subsidy. Estimates put the value of this subsidy in the billions of dollars in the US. While lobbyists for physical retail businesses are looking for equally generous subsidies the better solution, and the one employed in Germany, is to privatize the postal service and end the taxpayer subsidy for shipping.
A more egregious and direct subsidy was the competition for Amazon’s “HQ2” second headquarters project. The competition involved governments submitting bids – like they would to the International Olympic Committee – to buy Amazon’s residency with tax breaks and direct handouts. New Jersey and Maryland both submitted bids that – had they been successful – would have been close seconds to the largest state funded tax subsidy of a corporation in US history: Washington State’s $8.7 billion (USD) handout to aviation giant Boeing. The blatant crony capitalism was ridiculed by Reason.com with a brilliant satirical video.
With the downturn in the aviation industry caused by COVID-19, Boeing is back at the trough asking for more taxpayer funded handouts. Boeing’s current crisis is largely one of its own making. Its trade dispute with Canada over the Bombardier C-Series jet ended up backfiring spectacularly. The Canadian Government cancelled a planned order for Boeing Super Hornet fighter jets and Bombardier – driven to exit the commercial aviation market – sold the C-Series to Airbus. The deadly 737 Max scandal alone should disqualify Boeing executives from expecting any sympathy from the general public. If Boeing needs money, then it should sell bonds, issue new shares, or sell parts of its business. The military jet businesses Boeing acquired through its 1997 merger with McDonnell Douglas would undoubtedly fetch billions.
On March 31, 2020 Alberta Premier Jason Kenney announced a plan that “will accelerate the diversification of Alberta’s economy:” a plan to invest $1.5 billion in the Keystone XL pipeline for an undisclosed equity state in the project and provide $6 billion in taxpayer loan guarantees to TC Energy (the $1.5 billion “investment” would come from new Alberta Government debt). Premier Kenney explained that this deal was the result of six months of negotiations between TC Energy and government officials and claimed that without this investment the pipeline would have not been built.
In justifying partially nationalizing a pipeline Kenney said, “our failure to get pipelines built has been a failure of government policy and politics, not of markets.” The previous week, the premier accused Russian and Saudi oil companies of “predatory dumping” and proposed trade barriers to keep foreign oil out of North America. Trade barriers, mandated curtailment, and taxpayer ownership of pipelines all adds up to a new National Energy Program based around a government supply management scheme.
TC Energy is a heavily regulated multibillion-dollar company with billions of dollars in annual profits. Until recently, TC Energy seemed committed to building the pipeline. So long as “more government” is the solution, then the taxpayer is always going to be asked to fund bigger and more expensive government. Why would anyone build a multibillion-dollar project in Alberta in the future without first engaging in rent-seeking to see if they too can get a $1.5 billion equity deal with $6 billion in loan guarantees?
In The Wealth of Nations, Adam Smith pointed out that cronyism and collusion are nothing new, writing “People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.” However, he also went on to warn that regulations to prevent such meetings would be inconsistent with liberty and would likely make things worse. The best solution for policy makers wrote Smith, was to simply “do nothing to facilitate” such cronyism.
The old French proverb, “The more things change, the more they stay the same” rings true today. The optimal policy solution for regulating modern commerce remains the same optimal policy solution proposed in 1776, when commerce was powered by sail and horse (steam railways were invented in the early 1800s): policymakers should neither help nor hinder big companies.
Alex McColl is the National Defence Columnist with the Western Standard and a Canadian military analyst
BYFIELD: An open letter to Jason Kenney
Vince Byfield writes that the UCP risks losing power if it does not let Albertans vote directly on its future.
Editors Note: The following guest column is an open letter from Vince Byfield
Dear Premier Kenney,
A recent Alberta poll showed the NDP tied for support with your UCP at 38 per cent, and the remaining 24 per cent broken into a variety of smaller parties, several of them sovereigntist. It appears from this poll that your unification of the right is unravelling, with some Albertans now turning to independence, and some to socialism.
The fault of this splintering of the right falls squarely on your shoulders, and your refusal to explore and explain to Albertans all of the political options available to them.
Instead, your decision to schedule a non-binding referendum on equalization two-and-a-half years after your election just isn’t good enough. You’re moving too slowly, sir. You have to do more, and you have to do it now. That’s what you were elected to do, and with each passing week you are wasting your mandate. Your base is now abandoning you, and you risk re-electing the NDP. Your foot-dragging carries the very real risk of Alberta falling into a socialist oblivion from which it may never recover.
All because you are not doing the right thing for Albertans. Clinging to a confederation that is so unbalanced, so unstable that it has to rob Albertans en masse to bribe Quebecers to stay in Canada is madness. And yet this, Premier Kenney, is precisely what you are perpetuating with your procrastination. Wasting precious time like this effectively buries our children and grandchildren with $200 million more crippling debt every single week.
Enough is enough. This must to stop. By continuing to do nothing constructive to correct Alberta’s biggest grievance, conservative Albertans are left with no choice but to chart a future with someone who will.
As I see it, Albertans have three options: one, remain in confederation; two, become an independent nation; or three, become Americans. Yet of those three options you support the first, dismiss the second, and ignore the third. Why is that? Why do you appear to be going to great lengths to hide the third option from Albertans?
We have tried and failed with option one. We have been a part of confederation for 115 years. There are clear inequalities which we have endeavored earnestly for decades to repair. Time and time again, the rest of Canada has rejected us. Now they don’t even bother to respond. It’s clear to any Albertan with any semblance of common sense that further attempts to work within option one is futile and hopeless. Ottawa politicians are tired of listening to useless whining, and quite frankly, so are Albertans.
Option two is by no means the cure all. Becoming an independent nation of four million souls surrounds us with one nation ten-times our size (the rest of Canada, now angry at our departure) and the other a hundred-times our size (the United States, now self-sufficient in oil and protectionist). History shows us how large nations typically treat much smaller ones, and it is not pretty. Yet, in spite of this dismal future, many Albertans are now so mad about Canada that they see independence as their only recourse. They believe this because their leaders – like you – are not informing them of the third option.
You promised transparency in your government, but then you choose to black out 134 pages – or 90 per cent – of the Fair Deal Panel’s documentation. The idea of conducting a public inquiry and then refusing to let the public see what it found is confusing a great many of your supporters. It is clear you are hiding something. What are you so desperately trying to keep away from Albertans? Why was the third option not even discussed?
When Albertans carefully consider all three options – when the fog of anti-American rhetoric is given time to clear – becoming part of the United States stands out as the only really sensible solution.
Here is the roadmap to Alberta statehood as I understand it. First, we must hold a referendum on independence. The United States cannot recognize or negotiate with Alberta until we sever ties with Canada by having the majority of Albertans vote in favour of independence from Canada. This referendum essentially serves as a declaration of independence.
The biggest benefit of a successful independence referendum is that it effectively serves notice to Ottawa that the equalization and other transfers are over. The Canadian government and its revenue agency would no longer have any standing on Alberta soil. Albertans will file their income taxes – all of their income taxes – with the new national Alberta government. Along with the end of equalization payments the begging to Ottawa will no longer be necessary.
Once we declare ourselves independent, Albertans are well advised to schedule a second referendum swiftly to determine how many Albertans would then want to become a part of the United States of America. If passed, Alberta would then formally apply to be admitted as a territory or protectorate of the United States.
This is not a new path. It has essentially been followed in the vast majority of cases since the first 13 colonies declared independence and formed the United States of America. Other than the original 13 Colonies, most states that joined the union were first unincorporated US territories. We would be following in the footsteps of what would later grow, prosper, and become powerful states in their own right, like California.
Alternatively, Alberta could follow the path of Texas, which was admitted directly to full statehood quickly after declaring its independence from Mexico.
Being a territory or protectorate of the United States is not the same as being a state. Statehood would be an option at a later time and would require a third referendum by Albertans. However, US territorial status gives Albertans at least three very important benefits right away.
First, instant US citizenship to every Albertan and the freedom to travel, work and trade anywhere in that great nation. Furthermore, Americans are free to travel and, more importantly, invest in Alberta. This means badly needed jobs will return. Business will be able to thrive. Albertans will be able to enjoy real freedom and real prosperity once more.
Second, immediate US military protection. When the most powerful nation on the planet vows to defend Alberta, Prime Minister Justin Trudeau knows that sending Canadian soldiers onto Alberta soil would be impossible. Therefore, US territorial status assures a peaceful resolution for Albertans whatever they decide to do next.
Third, freedom to leave the United States at a later date. Being a US territory – and not a state — means Albertans are not obligated to remain a part of the United States. Albertans would be given the freedom and time to heal and consider the future that is best for ourselves.
As a US territory, we even have the freedom to return to Canadian confederation, should Albertans decide to forgive Ottawa and Quebec for their swindles of the past 115 years.
Critically, Alberta would have the right to negotiate the terms of entering the American union. This contrasts with Alberta’s entry into confederation in 1905, which was unilaterally dictated by Ottawa without any negotiation or consultation.
We may also decide to remain as a US territory. This gives us all the freedoms and benefits described above, but US territorial status does have one important price: no political representation in Congress. As a territory, we may not be able to elect Alberta senators or Albertans to the House of Representatives, but we will be able to vote for the next president. This means that Alberta’s liberals and socialists will be free to vote for the Democrats, and conservatives for the Republicans.
Most importantly, as a US territory – and no longer crippled by Quebec’s multi-billion-dollar ransom payments – Albertans would be able to focus on what we do best: working hard and prospering.
Premier Kenney, you still have time, but not much. I propose you schedule a referendum on our independence to be held no later than Alberta Day, August 3, 2021. If you do this, I predict that your base will return – their confidence in you restored – and the nightmarish possibility of another NDP Alberta reign of error banished to the realm of socialist dreams.
Failure to follow through on this proposal puts your supporters in a difficult situation. Failure to show real leadership for Albertans means we have little choice but to find a real leader with the guts to do the job. Are you that leader? I hope and pray your answer is yes, but am prepared to act if you are not.
Please accord Albertans the courtesy of a response and your reasons. If those reasons are examined and found wanting, be assured that conservative Albertans will not sit idly by while you continue to wreck our province. We will act.
Jason, no one would regard your position as enviable. Your love of Canada is without question. We all love Canada. But when put to the test, when forced to choose between Canada and the calculated destruction of Alberta, the needs of Albertans must be your highest priority.
Vincent Byfield is manager of SEARCH, publisher of the 12-volume history series “The Christians: Their First Two Thousand Years” and other history books. Since 1973 Vince has worked with his father, Ted Byfield, to publish Alberta Report Newsmagazine and his brother, Link Byfield, who was elected in 2004 as an independent senator-in-waiting for Alberta.
TERRAZZANO: Alberta needs recall legislation now
“Recall rules would be a big step towards reaffirming the role of citizens as boss. It’s time for Kenney to make good on his promise and pass recall legislation during the upcoming fall legislative session.”
When most of us stink at our jobs, we get sent packing. That standard doesn’t apply to politicians, who don’t need to worry about impressing their boss, taxpayers, outside of an election every four years.
Fortunately, Premier Jason Kenney promised to change that by introducing recall legislation.
“Albertans want their MLAs to be accountable to them. That’s why a United Conservative government would introduce a Recall Act allowing voters to fire their MLA in between elections if they have lost the public’s trust,” Kenney said while on the campaign trail ahead of the 2019 provincial election.
“Empowering citizens to hold their MLAs to account will strengthen Alberta democracy.”
The most obvious benefit of recall legislation is allowing voters to hold misbehaving politicians accountable more than once every four years. Recall legislation in British Columbia helped citizens give former MLA Paul Reitsma the bootwhen he got caught sending fake letters to the editor.
There are several examples where recall could have been used by Alberta voters.
Take the case of former premier Allison Redford. It took months of mounting political pressure over expense scandals, including the infamous $45,000 South Africa trip, for internal political machinery to finally force her to step down. Or consider former Lethbridge coun. Darlene Heatherington, who refused to step down after being charged with fabricating a story about a stalker. In both cases, recall could have been a handy accountability tool for voters, who should be the ones making these decisions.
The on-going scandal over Calgary’s Coun. Joe Magliocca’s expenses is another example where citizens should have the ability to hand out a pink slip through the recall process.
Ensuring citizens can hold their elected officials accountable is crucial, but just as important is the role that recall rules could play in discouraging politicians from messing up in the first place. It doesn’t take a PhD in psychology to understand that a politician will think twice before blowing tax dollars on steaks and martinis if there’s a chance they could have to face the voters immediately rather than in four years.
Alberta’s recall rules must be extended to the local level, so voters have the same ability to hold local councillors and mayors accountable as they will with MLAs. Fortunately, the government’s last throne speech promised exactly that.
“To further make life better for Albertans, my government will undertake significant reforms to strengthen democracy in Alberta, including the tabling of … a recall act, allowing constituents to remove their MLAs, municipal councillors, mayors, and school board trustees from office between elections,” reads the speech.
When designing recall legislation, Kenney must make sure the requirements to force a by-election aren’t too onerous. Beyond the Reitsma example, there hasn’t been any successful recall campaigns in B.C. This is partly because of B.C.’s onerous requirement to collect signatures for more than 40 per cent of eligible voters in that district in 60 days.
This threshold puts B.C. at the upper limit when compared to American states, where the most common requirement is to have 25 per cent of votes cast in the last election to sign the petition to trigger a byelection. A 25 per cent threshold would be a good starting point for Alberta’s recall rules to balance political stability with accountability, and is what the Canadian Taxpayers Federation recommended in our presentation to the Alberta government’s Democratic Accountability Committee. The most important thing to remember when thinking about signature thresholds, however, is that it doesn’t have to be perfect. Albertans need recall now, and politicians can always tinker with the requirements down the road to make improvements.
Recall rules would be a big step towards reaffirming the role of citizens as boss. It’s time for Kenney to make good on his promise and pass recall legislation during the upcoming fall legislative session.
Franco Terrazzano is the Alberta Director for the Canadian Taxpayers Federation. This column is an abbreviated version of the presentation he made for the Alberta government’s Democratic Accountability Committee.
CAMERON: Canada has embraced medical authoritarianism
“We are a long way from a free and democratic society right now. There is nothing “democratic” about public health officials’ orders. Canadians are living in a state of medical authoritarianism where the rule of law is in tatters, and constitutionalism and democracy with it.”
As Canada faces winter 2020 and the citizens of this country are threatened by politicians with a new wave of lockdowns, it is time to take stock and consider.
There has never been a similar six-month period in the history of Canada like the period from April to September 2020. The massive collateral damage from the lockdowns is akin to the national self-amputation of a limb. The self-inflicted damage has been followed by an infuriating political nonchalance at all the blood.
With each passing day, it feels more and more like a stern reminder is needed for the ruling elite: that this figurative blood flows from real people. And it is still flowing.
Over a million jobs have been destroyed, and with them the independence and hopes and plans of millions. The despair of families thus affected is stark and palpable. I’ve met with scores of them recently, and they stare bleakly at their prospects for the future.
The response from the political elite? More pontification about the benefits of the lockdowns. While Doug Ford bloviates and threatens, and Justin Trudeau administers the next dose of the globalist agenda, ratings agencies like Fitch and Moody’s quietly consider the ominous implications of Canada’s ongoing hari-kari.
Against this grim backdrop stands another ugly truth: without a shot being fired, Canada, once renowned for its liberty and constitutionalism, has submitted to medical authoritarianism.
In Canada, the Constitution Act, 1867 apportions law-making power to either Parliament or the provincial legislatures. The Constitution requires that people have representatives who consider, debate and make laws on their behalf.
There is nothing democratic about the oppressive rule of public health officials.
The doctors have been in charge for over six months. In that time, it has become obvious that they are unfit to make decisions on civil governance. They know nothing about tourism. They know nothing about commerce. They know nothing about transportation or agriculture or industry. They know nothing about the Constitution or its importance to Canada’s liberal democracy. They appear to also know nothing, or at least be willfully ignorant about the social consequences of their policy decisions, like domestic violence, suicide, a failing economy and growing civil unrest.
It turns out that public health officials do know something about authoritarianism, however.
Public health officials made the orders that forbade walking or exercising alone in the park, or sitting alone on park benches. A public health order prohibited the gathering of citizens in Alberta to protest the economy-destroying lockdowns, where peaceful protesters were arrested and issued $1200 tickets. It was a public health order that authorized the $900 ticket to a lone teenager in Ottawa with ADHD playing basketball by himself.
From east to west, contradictory and confusing orders have been issued by health officials regarding everything from churches to golf courses. And, of course on masks.
On masks, we’ve heard it all. You don’t have to wear them, they don’t do any good. No, they are like a super power – you are safe if you wear them. You must wear them if you can’t socially distance. No, you have to wear them and socially distance. You have to wear them in church, but not in the restaurants. You can go to the gym and not wear them. You must wear them during sex.
The inanity of it requires that doctors be deposed and the legislatures resume governance.
A frightening progression in this medical authoritarianism was seen two weeks ago., when Dr. Jacques Girard, leader of the Quebec City public health authority, held a press conference to brag that he had ordered the arrest of two citizens and had them incarcerated at a secret location. Dr. Girard announced that the police participation was “exceptional”.
Citizens ought to take notice of the total lack of due process in Dr. Girard’s actions. No lawyers made submissions on behalf of the “accused” persons, no impartial judge considered the constitutional issues. There was no bail hearing. The Crown was not required to “show cause” as to why the liberty interests of two Canadians should be overridden. Dr. Girard alone decided two people were “guilty”, and he decided what their “sentence” would be.
How long can people be confined in these new secret isolation centers? No one but the health officials know.
That’s scary. It ought to be much scarier than COVID-19, which from recent statistics from the Canadian government has a death rate thus far of .009 percent of Canadians below the age of 60.
In Canada, the Charter of Rights and Freedoms says that laws which infringe constitutional rights can only be justified in accordance with the law (meaning laws which are duly enacted by democratically-elected members of Parliament or the legislatures) and within the parameters of a free and democratic society.
We are a long way from a free and democratic society right now. There is nothing “democratic” about public health officials’ orders. Canadians are living in a state of medical authoritarianism where the rule of law is in tatters, and constitutionalism and democracy with it.
Jay Cameron is a guest columnist and the Litigation Manager at the Justice Centre for Constitutional Freedoms.
BYFIELD: An open letter to Jason Kenney
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