The events of recent weeks belie a larger problem. I'm not at all sure that the students in Quebec really know why they are marching. It resembles a tantrum by a toddler that escalates beyond an attempts at reason. A total meltdown. The students have come off as big winners. Tuition increases have been stretched out beyond the time when they are in school and bursaries have been increased so that most will not leave university with crippling debt. They have claimed the scalp of a Quebec cabinet minister. They only place they are not winners are with the public where only about 12% of whom support the students. So, what's it all about?
A panelist on a recent CBC newscast may have put her finger right on the problem. The protestors no longer trust parliament or any other elected body to act in their interests. The protestors have been joined by anarchists, 1 percenters, occupy (fill in the blank) and other social malcontents to demonstrate that they believe that the whole system is rigged against them. From corrupt politicians in Quebec (and I suspect elsewhere) to corrupt corporations in Quebec (Lavalin) to the inability of young people who do graduate to get any kind of meaningful job, the list of grievances are long and the list of answers are short. While in previous generations the grievances may have been just as germane, the frustration with the establishment and recent successes in empowerment are relatively new. Someone has suggested that these students have roots in the Arab spring.
I believe that it all goes back to empowerment. Even 10 years ago the average citizen had no easy venue to vent his or her anger or frustration. The best one could do was write a letter to the editor. Today, a Facebook page can generate 100,000 signatures in days. A flash mob can be generated in hours. Everyone can have his or her say and each say is equal to every other say. The ultimate in democratization. When I was in university it was taken as a given the university students were going to be socially conscious or even radical but given time, a good job and a stake in society these same students would migrate to a more centrist political position. The closest we came to the current demonstrations were in opposition to the Vietnam war where it was clear the politicians had lied to the electorate. Flower children were a response to over materialism but the movement never went mainstream. Today's social media allows the socially conscious young to have a platform and a kind of center of operations that will allow for serious social action.
There are two other curios observations. Notwithstanding the social activism, young adults do not, generally, vote in any kind of election whether it be civic, provincial or federal. Also, the social activism has not spread to other cities. No one is marching in Ottawa, Toronto, Winnipeg, Calgary or Vancouver. The seed has not germinated in these other cities. Students are generally stoic about their college tuition level. The situation in Quebec is symbiotic. Once the core objection took to the streets the others who believe that they have serious social issues piled on. The others not associated with the student movement attracted most of the attention by breaking windows and torching cars. It took some time before the student movement and the other malcontents joined forces. What is to be learned is that time is the enemy of political inaction.
Today's political and social environment for young people is almost toxic. Tens of thousands of civil servants are getting their pink slip, the unemployment rate among young adults is unacceptably high, older workers need to keep working to make ends meet thereby not creating any space for new hires and the world economy is generally in a mess. Add to this a cadre of 25-30 year olds who are still living in his or her parent's basement and you have a pretty dismal picture of what it is to be a young adult. Our granddaughter graduated near top of her class as a teacher and has no, repeat no, prospects of employment in her field. It is not unreasonable to expect that these grievances and frustrations will not bubble to the top in the form of social action. The only surprise is that it's not come sooner.
Berne.
Friday 18 May 2012
Sunday 6 May 2012
The Brazilian Miracle
I was in Sao Paulo and other southern cities two years ago and hardly saw much of the country. My current trip will take me to the middle of the country. I have had some time to see Sao Paulo and, while there is much to be critical of, (see my last post about crime and congestion) there is much about one has to wonder and admire. From 1996 to 2001 I spent a great deal of time in Brazil--mostly in the middle and the north of the country. It was a dreadful place where wages were subsistence and graft was endemic. During that time government came and went and much did not (despite extravagant promises) change. The change that I now see is extraordinary.
The Brazilian economy rests of several pillars: oil (whose reserves are said to be only second to Saudi) agriculture (including coffee and beef) and mining (some of the best granite in world comes from Brazil). The turn around came with the election of Lulu, a professed socialist. It was feared that Brazil would again fall into promising government funded programs that it not afford. Laterally these promises lead to inflation that was a high as 40 per month! What happened, in fact, is that the confluence of events favoured Lulu's programs. Minimum wage was brought to more than subsistence levels, much of the endemic graft was removed (but considerable graft still exists) and an emerging middle and wealthy class started spending money at home. Oil helped finance that spending spree on social programs and inflation is a highly manageable 7% or so. Banks are flush with money and small and medium businesses can get the financing that is absent from the US recovery. So the lower classes moved up, a consuming middle class was born and the wealthy became more wealthy. What is required here is for the economy to become less protectionist (many import duties are 100% or more of value) and to fix its tax system that leaks so badly that the only way to keep the government afloat is to impose a30% VAT.
Sao Paulo has invested billions in infrastructure (but obviously not enough to dampen the inevitable traffic jams) and has wi fi and other electronic facilities that are equal to or better than any western G8 country. The lower class, once destitute can now have a low paying but sustainable job. Kids can go to school rather than resort to begging and everyone is moving up the ladder. The lower classes now have a tangible stake in the country by way of the Mia Casa program that makes home ownership affordable to the lowest wage earners in society. These folk now have much to lose and will therefore work hard to protect it. My taxi driver can now make enough money to send his kids to college. He lives in a nice apartment and, while his wife is working, can now look forward to a reasonable life and retirement. That is not to say that live in Brazil is Valhalla. But the country has taken positive steps to give the poor a stake in society. This is much more than can be said of India or China. In these countries the rich get richer and the middle class gets bigger but there is a running sore of poverty that never seems to get healed. This is what Lulu and his successor have done for the country.
This phenomena has not gone unnoticed in the rest of Latin America. Columbia, once controlled by the drug lords is now considered prosperous as is Argentina, Chile and Uruguay. If these countries go the way of Brazil, look out. The G8 will still be looking for a way to solve Greece, Italy and France (with the recent election of a socialist president) while Latin America leaves them in the dust.
Canada is well thought of in this country and in the region but is doing its best to become as hated as the US. Canadian mining interests are running roughshod over local communities. They have the backing of governments who are concerned about job creation at the expense of ecology. We have not had any luck in piercing the protective trade barriers in Brazil or (with the exception of a few central American countries) any other place in Latin America (with the exception of Chile). From person experience I can say that the federal trade people in Brazil are next to useless. Ontario has a successful and helpful presence here (and in Chile) in support of small business.
Canada has made the mistake of betting the farm on the US only to find that the farm had egregious systemic problems that may not be fixed for many years. Canada made a run on Europe but the party appears to be over there. The Euro has had a toxic effect on many economies who cannot correct downturns by devaluating money. Much of North Africa is in turmoil. The middle East is a mess. We have had very little luck with China short of selling it our natural resources and India is an enigma to which we export call centre, clerical and programming jobs. That leaves Latin America. We should be on the doorstep banging on the door until they let us in. Do whatever it takes.
Bernie.
The Brazilian economy rests of several pillars: oil (whose reserves are said to be only second to Saudi) agriculture (including coffee and beef) and mining (some of the best granite in world comes from Brazil). The turn around came with the election of Lulu, a professed socialist. It was feared that Brazil would again fall into promising government funded programs that it not afford. Laterally these promises lead to inflation that was a high as 40 per month! What happened, in fact, is that the confluence of events favoured Lulu's programs. Minimum wage was brought to more than subsistence levels, much of the endemic graft was removed (but considerable graft still exists) and an emerging middle and wealthy class started spending money at home. Oil helped finance that spending spree on social programs and inflation is a highly manageable 7% or so. Banks are flush with money and small and medium businesses can get the financing that is absent from the US recovery. So the lower classes moved up, a consuming middle class was born and the wealthy became more wealthy. What is required here is for the economy to become less protectionist (many import duties are 100% or more of value) and to fix its tax system that leaks so badly that the only way to keep the government afloat is to impose a30% VAT.
Sao Paulo has invested billions in infrastructure (but obviously not enough to dampen the inevitable traffic jams) and has wi fi and other electronic facilities that are equal to or better than any western G8 country. The lower class, once destitute can now have a low paying but sustainable job. Kids can go to school rather than resort to begging and everyone is moving up the ladder. The lower classes now have a tangible stake in the country by way of the Mia Casa program that makes home ownership affordable to the lowest wage earners in society. These folk now have much to lose and will therefore work hard to protect it. My taxi driver can now make enough money to send his kids to college. He lives in a nice apartment and, while his wife is working, can now look forward to a reasonable life and retirement. That is not to say that live in Brazil is Valhalla. But the country has taken positive steps to give the poor a stake in society. This is much more than can be said of India or China. In these countries the rich get richer and the middle class gets bigger but there is a running sore of poverty that never seems to get healed. This is what Lulu and his successor have done for the country.
This phenomena has not gone unnoticed in the rest of Latin America. Columbia, once controlled by the drug lords is now considered prosperous as is Argentina, Chile and Uruguay. If these countries go the way of Brazil, look out. The G8 will still be looking for a way to solve Greece, Italy and France (with the recent election of a socialist president) while Latin America leaves them in the dust.
Canada is well thought of in this country and in the region but is doing its best to become as hated as the US. Canadian mining interests are running roughshod over local communities. They have the backing of governments who are concerned about job creation at the expense of ecology. We have not had any luck in piercing the protective trade barriers in Brazil or (with the exception of a few central American countries) any other place in Latin America (with the exception of Chile). From person experience I can say that the federal trade people in Brazil are next to useless. Ontario has a successful and helpful presence here (and in Chile) in support of small business.
Canada has made the mistake of betting the farm on the US only to find that the farm had egregious systemic problems that may not be fixed for many years. Canada made a run on Europe but the party appears to be over there. The Euro has had a toxic effect on many economies who cannot correct downturns by devaluating money. Much of North Africa is in turmoil. The middle East is a mess. We have had very little luck with China short of selling it our natural resources and India is an enigma to which we export call centre, clerical and programming jobs. That leaves Latin America. We should be on the doorstep banging on the door until they let us in. Do whatever it takes.
Bernie.
Friday 4 May 2012
Sao Paulo--The City From Hell
I am spending several days in Sao Paulo before going on to Vittorio to the north. I have been to Sao Paulo or SP as it is affectionately known many times before. Each time I swear that I will never, never return but, here I am. It is now a city of 20 million people in a geographic land mass that once held 5 million people with no room to spare. To house some of its people it has gone super high rise--including some low cost housing that is guaranteed to become an instant slum. The Brazilian government has promised its poor affordable housing. In SP it means high rise housing for people who were formerly living in a tin shack on the side of a hill. They have no concept of communal living and these high rises are becoming the source of very nasty crimes. The security situation is so bad that one of my contacts says that there is room for 1,000 bodyguards for the rich. The rich drive in armoured cars and fly to work in helicopters because driving poses too high a crime risk. I was told to stay inside my hotel at night. I could leave with a trusted cab driver (gypsy cabs abound--they get you into a cab and then either rob or kill you) who must see you to the door, wait for your return and see you to the cab. Who, I ask, would live in such conditions?
What everyone hears is how Brazil is one of the BRIC (that is Brazil, Russia, India, China) emerging economies. It's growing at a rate that the G8 countries can only dream about. Most of the revenue has come from rich oil reserves that were found off the coast of Rio. It has a thriving coffee trade and other agricultural products. Because of stable government a rising middle class has had an impact on consumer spending. Banks are so flush with cash that any reasonable project can be funded. It will soon enjoy the economic benefits of the World Cup Soccer and the summer Olympics. Inflation is reasonable (when you consider that 15 years ago it was 40% per month) and wages have increased beyond the subsistence living that workers got just 10 years ago. Brazil has high import duties (some over 100% but average out to 70%) and a stiff VAT ( because tax collection is sometimes iffy). The salaried worker gets hit hardest because of tax deductions at source. Social taxes paid by the employer averages about 100% of salaries. The Real, the local currency is holding stable at about 55 cents on the US dollar.
There are a couple of things that we can learn from Brazil. One is affordable housing. Lulu, the previous President promised 10 million housing units and the country is about 3.5 million into that promise. These are small homes and condos (about 1,100 square feet of living space) that are 100% government financed with mortgage payments tied to income. Aside from Sao Paulo where there has been indiscriminate social housing without socializing the inhabitants the rest of the country is booming with demand outstripping supply by about 40%. Builders work with a pre arranged price set by the government bank. The developer buys the land and starts construction. When the project is 20% pre sold the government bank starts advancing funds to completion of the project. Returns for the developer are reasonable so that many are in the marketplace. All the buildings are "green" with solar electrical power and recycled grey water. The builders compete on good design and amenities. It is an enviable public private partnership which we might adopt in Canada.
The country is generally clean. The streets are not littered. Cab drivers are required to dress with at least shirt and tie. They bear no resemblance to our Ottawa cab drivers who sometime look like ax murderers. Cabs are clean and, despite the crime, the cabs do no wall off the driver such as is done in New York. Many cabs are going to hybrid engines and the city is surprisingly smog free given its size. Hotel room light operate only when you put your plastic key into a slot. When you take the key out of the slot and leave the room the lights go out.
I will be glad to leave SP and get out of the rat race. Will post on my travels to Vittorio.
Bernie.
What everyone hears is how Brazil is one of the BRIC (that is Brazil, Russia, India, China) emerging economies. It's growing at a rate that the G8 countries can only dream about. Most of the revenue has come from rich oil reserves that were found off the coast of Rio. It has a thriving coffee trade and other agricultural products. Because of stable government a rising middle class has had an impact on consumer spending. Banks are so flush with cash that any reasonable project can be funded. It will soon enjoy the economic benefits of the World Cup Soccer and the summer Olympics. Inflation is reasonable (when you consider that 15 years ago it was 40% per month) and wages have increased beyond the subsistence living that workers got just 10 years ago. Brazil has high import duties (some over 100% but average out to 70%) and a stiff VAT ( because tax collection is sometimes iffy). The salaried worker gets hit hardest because of tax deductions at source. Social taxes paid by the employer averages about 100% of salaries. The Real, the local currency is holding stable at about 55 cents on the US dollar.
There are a couple of things that we can learn from Brazil. One is affordable housing. Lulu, the previous President promised 10 million housing units and the country is about 3.5 million into that promise. These are small homes and condos (about 1,100 square feet of living space) that are 100% government financed with mortgage payments tied to income. Aside from Sao Paulo where there has been indiscriminate social housing without socializing the inhabitants the rest of the country is booming with demand outstripping supply by about 40%. Builders work with a pre arranged price set by the government bank. The developer buys the land and starts construction. When the project is 20% pre sold the government bank starts advancing funds to completion of the project. Returns for the developer are reasonable so that many are in the marketplace. All the buildings are "green" with solar electrical power and recycled grey water. The builders compete on good design and amenities. It is an enviable public private partnership which we might adopt in Canada.
The country is generally clean. The streets are not littered. Cab drivers are required to dress with at least shirt and tie. They bear no resemblance to our Ottawa cab drivers who sometime look like ax murderers. Cabs are clean and, despite the crime, the cabs do no wall off the driver such as is done in New York. Many cabs are going to hybrid engines and the city is surprisingly smog free given its size. Hotel room light operate only when you put your plastic key into a slot. When you take the key out of the slot and leave the room the lights go out.
I will be glad to leave SP and get out of the rat race. Will post on my travels to Vittorio.
Bernie.
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