How Not to Build a Country: Canada’s Late Soviet Pessimism

https://palladiummag.com/2019/09/19/how-not-to-build-a-country-canadas-late-soviet-pessimism/

by molteanu • 7 years ago

143 136 7 years ago

While the article is kind of slog in the beginning to establish its context, this struck me as especially true/relevant:

“When innovative companies begin making decent profits, landlords raise the rents to adjust for the new ability to pay. As a result, these additional wages are neither reinvested, nor reflected in the disposable income of employees. This is the dynamic behind the mystery of stagnant wages. When workers in a particularly well-paid sector begin pouring into a city, landlords likewise raise the rent to absorb these incomes. It isn’t gentrification, but absorption through monopoly power.”

The housing affordability crisis is really a crisis of land owner cartels, especially in major urban centers. Short of some massive investment in public housing, there’s not much that can be done to course correct.

ttul• 7 years ago

Public investment is surely one option. Another is appropriate taxation. Vancouver’s residential property taxes are amongst the world’s lowest in terms of total tax take vs properly value. Property taxes should be massively higher and income taxes substantially lower. Too much of the tax burden is on the middle income worker and far too little on the wealthy landowner.

ggcdn• 7 years ago

Wouldn't increased property taxes, combined with increased ability of renter's to pay, cause rents to increase?

all22• 7 years ago

From a pragmatic standpoint, property tax _is_ rent. I make this comparison because the consequences of not paying taxes is the same as not paying rent.

If there is property tax, only the government owns the property and rents it to citizens.

knowaveragejoe• 7 years ago

Replacing existing taxes on real estate with a Land Value Tax is probably the best way, tax-wise, to address the situation:

https://en.wikipedia.org/wiki/Land_value_tax

AdrianB15• 7 years ago

Taxation is a passive measure and these never solved problems, just kept it under control for a while. I would like to read about solutions, not the catchall "tax them". Well, tax them and then what? New buildings will grow out of the trees? Lower prices will come by train?

mieseratte• 7 years ago

That’s not a cartel, that’s a free market. It’s not as if two or three landlords run the show.

claudeganon3• 7 years ago

If you bother to read the article, it makes heavy reference to Adam Smith’s opposition to landlords and their rent-seeking because of the heavy drag they place on markets. They capture and enclose too much capital that could otherwise be used for dynamic and productive investment. He was as right then as he is now.

gimboland• 7 years ago

"Free market" is supposed to mean "free from rentiers", i.e. exactly what this does not describe.

jdc• 7 years ago

Let's review the definition of cartel: "a combination of independent commercial or industrial enterprises designed to limit competition or fix prices"

So a cartel doesn't have to be any particular size.

https://www.merriam-webster.com/dictionary/cartel

Mikeb854• 7 years ago

In city centres, there often is a group of only a few landlords who own entire blocks, then a few housing/investment companies who own most of the development projects (apartments). They collude and conspire with each other and local government to lower their own taxes, have the city improve streets near their properties, restrict supply/development permits, etc...

tryptophan• 7 years ago

But for a certain piece of land, its a complete monopoly. And unlike with goods or services, you can't go somewhere else to get that exact piece of land.

In my opinion there are two issues: #1: Land owners are not taxed for the un-earned value of their land. Making lots of money for just owning a piece of land is absurd. Normally this doesn't matter due to how large the USA is, but you can see its ugly result when land is very constricted like in major cities.

#2: Land owners are very limited by what they can build on their land by local laws and such, which prevents development of high density buildings, which would lower rents due to the increased number of units and efficiency at which these can be built. A land tax would even necessitate this sort of construction so that it would be profitable for the landlord to even keep the land.

rdiddly• 7 years ago

Thank you for persevering, extracting the nugget, and also validating my notion that this was a pretty bad opening sentence and paragraph.

yborg• 7 years ago

I hope the author's technical thinking is a lot more organized than what was represented in this mass of meandering confusion, that this represents the mind of a startup CTO would cause me as a potential investor to run the hell away.

The essay falls on its face with its central thesis that 2010's Canada = 1970's Soviet Union, which beyond being absurd on its face the author fails to make any case for other than observing, correctly, that bureaucracy exists in Canada and that individuals that are established in a social hierarchy take advantage of it. The underlying motivation for this screed seems to boil down to 1) rents are too high in Vancouver, and 2) firms don't want to pay techies enough in Vancouver. This is then extrapolated linearly to mean 'Canada'.

As for the observation on the housing situation, this is recognized generally as a problem in many markets, but his actual argument here is that these high rents thus smother "wealth creation". This may be true in Vancouver, but doesn't seem to be true in other areas like the Valley or NYC, which remain hotbeds of economic activity. Vancouver's specific problem seems to be that the Soviet leadership in British Columbia has been unable to curb the very capitalist problem of money laundering profits from the People's Republic of China into Canadian real estate.

throwaway87378• 7 years ago

Vancouver's specific problem seems to be that the Soviet leadership in British Columbia has been unable to curb the very capitalist problem of money laundering profits from the People's Republic of China into Canadian real estate.

It's not just money laundering, but an entire "industry" of investment and tax fraud schemes:

https://www.theglobeandmail.com/real-estate/vancouver/out-of...

Mikeb854• 7 years ago

A lot of these issues describe Calgary (where I'm from), but we have the advantage of near limitless land to develop (everything north, east and south of the city is basically flat farmland, not even particularly productive farmland at that) and the local oil industry's near collapse has caused rents in the city centre to plummet. 20 years ago this article could have described our city nearly perfectly but even today is pertinent. The biggest obstacles to development are still bureaucracy and cartels, but thankfully at least some of their power is reduced by the relatively poor economy and tons of space.

waterlaw• 7 years ago

I believe what he's referring to is this:

The word hypernormalisation was coined by Alexei Yurchak, a professor of anthropology who was born in Leningrad and later went to teach in the United States. He introduced the word in his book Everything Was Forever, Until It Was No More: The Last Soviet Generation (2006), which describes paradoxes of Soviet life during the 1970s and 1980s.[3][4] He says that everyone in the Soviet Union knew the system was failing, but no one could imagine an alternative to the status quo, and politicians and citizens alike were resigned to maintaining the pretense of a functioning society.[5] Over time, this delusion became a self-fulfilling prophecy and the fakeness was accepted by everyone as real, an effect that Yurchak termed hypernormalisation.[6]

https://en.wikipedia.org/wiki/HyperNormalisation

phkahler• 7 years ago

One idea is to limit the percentage of the purchase price that can be borrowed. That would reduce a lot of the longet term problems but would upset some short term.

novok2• 7 years ago

It's already happened a couple of years ago canada wide, through income requirements to mortgage a place with ratios that are small for the market.

To the point where a typical house requires $250k+ family incomes in a place where typical family incomes are one fourth to one half of that.

wendyshu• 7 years ago

Land owners want to build higher density, increasing supply, lowering price. The government prevents high density, decreasing supply, increasing price.

scythe2• 7 years ago

Only some land owners. Other land owners join organizations like the National Association of Realtors (the second-largest U.S. lobbying spender only after the Chamber of Commerce itself) and try to influence the government to prevent high-density development.

amiga_5003• 7 years ago

Progress and Poverty. All as clear as day, over 100 years ago:

https://www.amazon.co.uk/Progress-Poverty-Henry-George/dp/09...

Any productivity gains flow into land. "Everybody works but the empty lot"

BurningFrog• 7 years ago

The housing affordability crisis is really a crisis of land owner cartels

If you consider the city counsel a land owner cartel, I guess I can agree.

Cities where land owners can build what they want on their land does not have this problem. WHat a central government can do is ban most zoning, and make sure cities have incentives to welcome new inhabitants.

In California Prop 13 make cities lose money when people live inside them, with predictable result.

drawkbox2• 7 years ago

Solution: push remote work as a housing crisis solution.

Remote work allows the people to place themselves in better, affordable places, while helping companies get the best from all over, rather than bound to a physical location.

This works unless the companies/investors are doing a dual strategy of having real estate that they collect on while having their companies located in them that they are investing in. So a big part of the investment never leaves the building. I suspect a large part of Silicon Valley has a scheme like this, investors are usually real estate investors as well, they like people concentrated in areas and supply/demand to benefit them.

The other bigger wage absorber right now is healthcare tied to a job. When healthcare goes up, wages are diverted into healthcare and healthcare and housing have teamed up to sap all wage growth in actual dollars in pockets of consumers,. 'Real compensation' or 'total compensation' doesn't go into cashflow/liquid assets at the individual level and means nothing to consumer spending power which needs to go to housing and life.

roenxi4• 7 years ago

Remote work comes up against the harsh phenomena studied in economic geography. Even for knowledge work, there is a supply chain (in that case education, funding, knowledge sharing and adsorption of a certain type of culture).

Once there is a supply chain, an industrial hub with a concentrated supply chain will outperform a disparate network of workers. At that point, market forces will optimise to use the industrial hub for everything. Workers who live in the industrial hub will have an advantage over those that do not.

throwaway20482• 7 years ago

Remote work is a band-aid that throws its arms up and says we can't possibly hope to address these issues.

Its a loser mentality and it sucks.

The only thing that its going to ensure is the same forces take over basically every livable city, why don't we stand up and fight them?

dredmorbius2• 7 years ago

The reason that industry hubs form and exist is because not all work can be remote, and there are economies of scale and efficiencies in grouping related and essential services and capabilities in one place. This is most pronounced, ironically, in the least material sectors: cinema, television, music, publishing, banking, and software are all activities in which the end result can literally be wired arond the world in an instant, but each has very strong primary locus hubs: Hollywood, New York, Nashville, and Silicon Valley, in these cases.

Yes, there are regional centres: regulation, language, and culture can create the necessity for localised services, so that film also has national traditions (Bollywood, China, Japan, small local productions in the UK and continental Europe, and a few smaller hubs), banking (London, Frankfurt, Tokyo, Shanghai), etc. But to the extant a single hub can dominate, it often does.

It's the support sectors especially which create anchors. For film, casting departments, carpenters, electricians, caterers, props, lighting, riggers, and a whole host of services and suppliers are best met within central hubs. Software operates similarly -- VC, training, presentations, networking services, and the like, tend to focus on major cities such as San Francisco-San Jose, Seattle, New York, and a number of also-rans. Trying to get highly-qualified services outside those areas is difficult at best.

And even if you do manage to allow software and design folks to work remotely, it's the other staff, often far less-well paid, who still have to show up at the office. And who pay the eye-bleeding rents.

Remote work isn't the solution.

Rents, as a claim to all consumer surplus, can be ameliorated through a land value tax. That's the solution which is badly needed.

meerita• 7 years ago

Is not landlords raising because of the decent profits, it is because more people want to live in one specific zone, increasing the demand, therefore, prices rises due por offer. It is not all landlords coordinately find out how the economy is going and acting in coordination to raise the prices.

narrator• 7 years ago

The housing affordability crisis is a crisis that rich people who have money to invest in companies want to live next to those companies in nice places and nice houses and keep the rest of the people who work at those places living further away.

L.A is not a tech hub because the omnidirectional traffic kind of wrecks the whole thing, while the bridges in the bay area mean that the worker bees are rate limited in their ability to get in and out of the nice places in cars somewhat lessening the omnidirectional traffic nightmare for the rich people who invest in companies. Have you ever watched people trying to get to the east bay over the bay or peninsula bridges during rush hour? That's rate limiting for ya.

refurb3• 7 years ago

That doesn’t make a lot of sense. Even if you’re talking about real wage stagnation, inflation (as measure to adjust for real wages) has been very low.

AdrianB15• 7 years ago

In some places, it is, but in many places is an exaggerated demand that cannot be easily satisfied. There are some hot sports on the planet where everyone wants to be there, of course that is not really possible and this leads to unhealthy demand.

timwaagh• 7 years ago

This piece is about so much more than the usual complaint against an increase in rent. It does not talk about public housing. Rather it points out the problem of bureaucracy that acts as a multiplier to the market power of landlords.

d1zzy• 7 years ago

I want to see graphs that support this assertion. Yes, I expect that in an area with higher income housing becomes more expensive, but so does everything else. Unless you can show data to prove this I really doubt that an increase of median income of X% results in rent increasing X%, I rather suspect the rents increase to some smaller percentage of that together with increase in other things.

Rents are demand and offer, if the offer is perfectly static (no new housing/rental units are being made available) then if you have immigration in an area you should see rental pricing increasing according to that, rather than increase according to medium income.

EDIT: As for solving this with public housing, that'll simply make it that the market price is not reflecting the demand, but it doesn't change the underlying issue that there is more demand than offer. Which means that there will be other ways to "fight" for those limited units (instead of market price it will be "favors" or lottery or "first come first served" which tends to favor existing residents over newer ones).

bryanlarsen• 7 years ago

We're in the middle of an election right now and housing is an important issue. However, most promises will make things worse rather than better. For example, the Conservatives' plan to allow thirty year mortgages will do more to increase prices and indebtedness then to lower payments.

cperciva5• 7 years ago

I'm honestly not sure which is worse, the Conservative plan to allow 30 year mortgages or the Liberal plan to have the government loan people money for their downpayments...

cheez2• 7 years ago

Both plans seem geared to draw the votes of current homeowners, also more likely to vote in elections.

cpach• 7 years ago

What is the standard today in Canada? Less than 30 years?

dghughes• 7 years ago

Housing sure is an election issue it's pretty much 0% vacancy here (acutual is 0.2%) on PEI in Charlottetown. Airbnb causing "renovictions" and it's impossible to find a place to live if you do you're soon forced out. There are quite a few college students that study here too they arrive looking for a place.

Of the total population here 50% of people live in the capital city. It's getting to the point where everyone will have to move 30 minutes to an hour away.

There was a story in the local paper about a front porch being offered for rent. Living in someone's front porch! I think someone actually took the offer.

The 30 year mortgage reminds me of a former co-worker who got a brand new truck. His salary was half what I made and he worked four days per week. The dealership had a seven year payment plan. My co-worker friend thought that was a great deal. I just shook my head.

cmrdporcupine7• 7 years ago

Absolutely. It feels like the Canadian Real Estate Association is writing these policies.

Baby boomers have a death grip on everything.

kashprime• 7 years ago

A pretty accurate but damning portrayal of the economy in Canada. I wonder how smaller but more successful economies like Sweden or Israel manage to consistently build great companies?

AdrianB15• 7 years ago

Usually it is not because of, but in spite of their governments. With the mention that Israel has some great companies, but Sweden is on a strong descending trend.

thinkingkong• 7 years ago

One interesting solution to home ownership and rent seeking might be to spread the rent increase revenue around. In BC at least its common to disallow sublets. Whereas in NY its more or less allowed by law. This means as the rent goes up, land owners are the only ones who have the ability to make money.

cperciva5• 7 years ago

Landlordism in cities is (correctly) blamed for a worsening of income inequality.

While I agree that landlordism tends to increase income inequality -- especially in the form Vancouver suffers, where protests convince the city to reject the construction of new housing even when the land is already appropriately zoned and the proposed building complies with the approved local development plan -- but it's wrong to refer to a worsening of income inequality.

Income inequality in Canada increased substantially through the 1980s and 1990s, but it peaked around 2004-2007 (depending on exactly which measure you use) and has been steadily declining since then.

mistermann4• 7 years ago

Wealth equality on the other hand...

cperciva5• 7 years ago

Right, that's a completely different issue. (And much harder to measure, never mind address. Even defining it is hard; do you count the NPV of pensions, for example?)

todipa• 7 years ago

The success of a cities and nations has always dependent on a couple of variables: 1. Human capital (increasing size and quality) 2. Cheap real estate (ever decreasing share of real estate costs as an input of value creation machinery) 3. Cheap energy costs

In the U.S. and in most developed countries, we've had (1), in some cases (3) but (2) is become scarce.

In my opinion, there are very few modern cities that are able to provide cheap housing these days. It requires an activist government fighting two very powerful forces: existing home owners and corporate landlords. Truth is that the lobby of those interest groups are way more powerful than low income renters.

The other problem is that expanding the housing stock is not sufficient, governments have to provide basic services: water, public transportation access, sewage, etc.

Who is going to pay for them? In most cases, the cost is paid via property taxes (existing homeowners and corporate landlords)

The truth is that we have disincentivized the creation of new housing stock and until we fix the underlying issues of bringing more supply to the market, this issue will continue to worsen.

https://www.zillow.com/research/new-construction-shortgage-2...

Mountain_Skies2• 7 years ago

Does this mean that the use of TIF/TAD funding should be expanded? With TIF, bonds for infrastructure needed to support new housing are paid off by property taxes on the new housing. While this should keep the rest of the community from shouldering the burden of new infrastructure, opposition often comes from activists who claim it's another way for the rich to exclude themselves from the rest of the community by keeping their taxes to themselves. Typically the bonds last 30 years, after which the taxes that went to pay them off are directed back to the community's general fund.

seem_22114• 7 years ago

I don't agree. Coming from NZ to America, I am amazed at how cheap housing is (outside of a few select areas - California, New York and a few major urban metros), and the fact that you can fix your interest rates for the length of the entire loan. America has many problems - and California definitely has a housing crisis, but that's not true for the country at large.

Mountain_Skies2• 7 years ago

If supply proves too difficult to increase, why not try reducing demand? Or course that would be unpopular with the infinite GDP growth folks but sooner or later will have to be confronted. Seems like the entire political spectrum supports infinite growth even if it manifests in different ways in different political parties.

chobeat• 7 years ago

De-growth movement and accelerationism don't. I guess anarcho-primitivism doesn't either but they are not really active in mainstream politics.

sdinsn• 7 years ago

Because in a global economy, countries are competing against each other. If Canada slows down, other countries will catch up and eclipse them.

rightbyte• 7 years ago

How is that? Canada got an army and if they slow down they will keep their maple trees just fine. There is no need to play a economy arms race just becouse.

teunispeters• 7 years ago

A good way to reduce demand is to both vastly increase the amount of identity reported in real estate (especially for out of country buyers) as well as to have foreign ownership taxes.

it would crash the BC economy hard though. There's very little left there that isn't driven by foreign purchases. (quite a lot of it illegal in their home countries, eg the USA)

mistermann4• 7 years ago

Proposing reporting on the amount of foreign cash in the real estate market gets into the racism category, and that can spell a quick end to a successful career in politics.

TMWNN• 7 years ago

I thought money from China (legal and illegal), not America, was driving BC real estate.

Mikeb854• 7 years ago

This is pretty accurate. Rent seeking in Canada is at an extreme, monopolies are maintained through excessive government regulation, cartels in real estate as well as many industries are definitely a thing and almost the whole country is under-employed.

Don't have a ton of time ATM but we're in dire need of deregulating a lot of industries and breaking up cartels.

deskamess2• 7 years ago

Could not agree more! There is a general malaise and slowness in companies/industries I have had to interact with (Telco, Banking).

cmrdporcupine7• 7 years ago

I'm not convinced that regulation is the problem. There are certainly places (wine industry in Ontario for example) where the regulations encourage monopoly. But honestly, I think it's cultural: the investment climate, the fear of risk, but above all ... the easy easy money to be made just drilling oil out of the ground and selling it, or investing in the people who do so. Before that it was trees. Before that, furs.

According to wikipedia, mining, oil and gas make up 8.1% of GDP. Below manufacturing (which we're told is dead in Canada) and real estate.

And yet if you look at the TSX, and the make-up of most mutual funds people are invested in, it's heavily heavily biased towards the oil and gas sector.

Not to mention the CAD being basically a petro dollar at this point.

Not exactly set up to win in a post-carbon world, are we?

deskamess2• 7 years ago

""" But Canada is, and has always been, an oligarchy where the ruling families—the Saputos, Demarais, Reichmans, etc.—have relied on their own Brezhnevites to preserve their wealth by shielding them not just from competition, but from any kind of change.

The key to acquiring wealth in this country is creating bottlenecks by saturating public and private institutions with members of this class. """

So true. The general feeling that incompetence at these big companies has no consequence.

The depresssing and true: """This is how much a developer should make. We’re not paying a penny more."

Sorry to say, but tech is not valued in Canada by Canadian companies. American companies operating in Canada have a better mindset.

cmrdporcupine7• 7 years ago

Yes, your best bet as a Canadian software eng is to get a job working for an American company. It's good for them because of the currency differential and the high quality of the talent here.

The downside is that often these jobs end up with a pattern of 'branch plant' or 'nearshore' perceptions; I've had several jobs where the relationship between the Canadian office and the U.S. one was strained due to an assumption of command and control from the American office.

xxxpupugo• 7 years ago

This is how much a developer should make. We’re not paying a penny more.

This almost reads as if there is a cast system, where there is place for everyone to be comfortable with and shut up demanding more...

seem_22114• 7 years ago

Reading this as someone who has moved from New Zealand to San Francisco, the parallels are depressing.

In New Zealand the price of housing has skyrocketed, and exists in a similar plane to Canada's housing market. We have the same issues of low productivity and relatively low wages as well.

There's a toxic cycle that's created. Boomers made all of their money in housing appreciation, and heavily encourage millennials to continue the cycle (which, taking the most optimistic view of it all, makes sense). But a house doesn't cost 2.5x your income now - it costs 8-10x. So you're married to a mortgage (which unlike America has its interest rate fixed for <5 years), have probably got a lot of your parents money invested as well (because you aren't earning enough to come up with a $200k down payment on your own).

Because real estate has 'proven' results, and the media make a lot of money advertising houses for sale, that's a lot of what you get told to do. As an individual you're so heavily indebted you can't afford to take risks, but at the same time, companies aren't trying to improve their productivity - because the best ROI has been in the property market. So wages suck too.

New Zealand is a bad place to be a young person. That's why I don't live there anymore. And I don't think I'll move back anytime soon unfortunately.

laurencerowe2• 7 years ago

This generational change in house price to income ratios is also apparent in Britain and supply constrained US cities. It can be largely explained by the fall in mortgage interest rates from the 12-15% in the 80's to the 3-5% we see in the 2010's.

This windfall provided a massive generational wealth transfer from young to old, and with interest rates near the zero lower bound cannot be replicated. This makes housing a far worse bet for our generation, even for those of us earning sufficiently more than our parents to be able to take a shot at home ownership.

seem_22114• 7 years ago

100% agreed. It won't end well, and politicians being politicians (and voters being voters), we're going to continue this mad show as long as possible, ensuing we get the worst possible outcome here.

The weird bit is that San Francisco prices make more sense than where I grew up (suburban New Zealand). Sure a house in SF might cost $1.2m but two people working in tech can expect to make $250-300k all in by their early thirties. That's only $200k more than a house in New Zealand, but you're working with an income that's easily 2x the size.

sgt101• 7 years ago

In Britain the concentration of wealth and opportunity in London and the SE is a fundamental driver. If Government were to focus on creating alternative centres of wealth generation the vast stock of infrastructure that surround some of the urban centres in England could be unlocked. For example within 40km of Manchester there is Bolton, Preston, Blackburn, St Helens, Wigan, Halifax, Warrington, Macclesfield. All of these are substantial urban centres in their own right with working infrastructures including schools, hospitals, parks, leisure centres, shopping, residential districts and so on. None of them are economically exploited at this time. Similar pictures exist for the northeast.

anon1m0us• 7 years ago

because the best ROI has been in the property market.

That is not true. It seems like it is true because we can look at our parents and grandparents and see that the house they bought in 1980 for $300,000 is worth a million dollars now, but that's not a great return. It seems like it because they are millionaires, but you'd have been better off in bonds with a better return and a whole lot less risk.

seem_22114• 7 years ago

While you are technically correct, the common man on the street so to say would say that property is where the returns would be (even if the returns have technically been 0% once property taxes, mortgage interest, insurance and repairs are taken into account).

Perhaps I should have been more precise: the perception is that the best ROI has been in the property market.

cmrdporcupine7• 7 years ago

Unfortunately it's deep in the Canadian business community DNA; the family compact, the Hudson's Bay Company, whatever... Exempted from population density, rapid growth, and revolutionary fervor of our neighbours to the south, we were a place where colonial money could just sit and go stale.

It was the fur industry and logging then, now it's crappy oil from the tar sands that sells for little more than it costs to dig it up; but nobody in Calgary has the balls to admit it.

I have American friends who talk about Canada in glowing terms as a place without the same corruption as the US. It's just a different kind of corruption, that this article aludes to throughout.

And yes, nothing ever gets done. Everything goes over budget. Not a problem confined to B.C. by any means.

cmrdporcupine7• 7 years ago

I feel like Kevin O'Leary's boat crash (with fatality) on the Georgian Bay last month is a metaphor for the entire country's economy:

Arrogant baby boomers driving around in luxury in the pitch black night, with the lights out, running into each other on the lake -- and then shirking all responsibility.

ant6n• 7 years ago

For a moment I thought the witch is dead, turns out O'Leary wasn't one of the victims.

playing_colours• 7 years ago

I am reading an interesting book now: Why nations fail https://en.m.wikipedia.org/wiki/Why_Nations_Fail

The author discusses that for a country to be successful there must be institutions that encourage working hard and entrepreneurship. More, the political system should be organised in a way that stimulates creation and support of such institutions. The negative consequences for politicians supporting oligarchy must be worse than for ones who introduces changes that can improve lives of regular people.

My guess the problem is not in real estate speculations - it is just consequences of underlying system inefficiencies.

I see Canada has good educational system, right? But as they say in the article, there is not a lot of motivation and places for smart engineers to do their best.

There are barriers to make changes in many areas like medicine, real estate (based on the article).

The government seems to be in a situation where due to corruption and lobbies it does not do appropriate changes. They know what to do, but they do not find it good for them personally. Oligarchy wants to keep their positions unchallenged.

It is just my guess and pure speculation, I do not know much about Canada.

EDIT: added more on concequences

corodra• 7 years ago

Y'all don't know the meaning of cartel. It's being thrown around here like beads at mardis gras. I'm just sure I don't want to see most of you without shirts on.

A cartel is an agreement between organizations/people throughout a supply chain. Landowners twisting their mustaches and rubbing their hands together do not make a cartel. Rule of thumb, at least 3 steps in a supply chain. What they would be, is a trust. They're at the same level of the supply chain working together. If you're going to cry "late stage capitalism", for fuck's sake actually know how capitalism works and how to cheat the system properly. There are rules on how to cheat in capitalism. A 10 minute youtube video won't do that for you or the rantings of a crazy frenchman.

dredmorbius2• 7 years ago

Citation requested.

Counterpoint, definition 2:

https://www.merriam-webster.com/dictionary/cartel

drevil-v22• 7 years ago

Having lived through a Soviet inspired bureaucracy where the wait times to get a phone line was years, getting a car could take up to 5 years; this article is spot on. Eerily familiar. That same tingling of dread from decades ago washed over me haha.

Everything was mandated by a bureaucrat, how many factories there could be, how many goods they could produce. There was no concept of supply and demand, instead there was five year plan from the central government and that was what would be implemented regardless of the ground reality.

When people got a phone line installed in their house, the neighbours would come over to marvel as if visiting a new born baby.

When my uncle got his allotment for a scooter after two years, he distributed sweets to his co-workers. It was a great occasion.

drevil-v22• 7 years ago

I just remembered an incident; My grandfather had to call his sister who lived in a different country.

The middle class and the poor did not have access to International Direct Dialling because the central telecom commission had not accepted the demand for more international connectivity. There were no private telecom companies only state owned because we were good socialists. And International Direct Dialling was a luxury reserved for the political elites and the rich industrialists.

No what we had to do was book a "person-to-person" call. They would give you a 2-3 hour time slot in which the call might be connected and you would have to wait by the phone. And when it was connected the operator could hear everything.

This is mid-1980's I am talking about haha

cmrdporcupine7• 7 years ago

This part of the article was a bit silly -- Canada is nothing like this. I feel like he tied his own experiences with late-soviet bureaucracy to his frustrations with conservative Canadian business climate; but the two are not analogous really.

Canada is a market economy with very low corporate taxes and when compared to European economies regulation is actually very light. Our business norms and regulations are tied in most part very closely to the United States.

But the investment culture is very conservative and the economy is tied excessively to resource extraction.

And yes, there is a long history of a few families having strong dominance over everything, and of businesses/companies gaining monopolistic positions through regulation. An example of this is the wine industry in Ontario -- I could go on a long rant about that... but I'll restrain myself.

How Not to Build a Country: Canada’s Late Soviet Pessimism

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