Something’s wrong here

According to two Toronto Star articles, the residents of Toronto are simultaneously:

• Enduring $30 million in transit service cuts this year and, possibly, $100 million in cuts next year.
• Subsidizing the other parts of the country by paying $11 billion more in federal and provincial taxes than the amount that is spent in the city.

I don’t want to seem like a whiny complainer (actually, sometimes I do), but something seems wrong with this picture.

When I am feeling pessimistic, I sometimes think that the only thing that will change the funding picture in Toronto is some sort of catastrophic infrastructure failure. Until then, Toronto’s plight will be ignored – or, worse, secretly enjoyed.

You lost me at "hello"

A call I got this afternoon (call display tagged it as “LONG DISTANCE”):

Me: “Hello?”

Recorded voice: “I’m sorry, that was an invalid response. Press 1 to learn how to lower your interest rates…”

Me: [click]

They’d probably have more success if “Hello” was a valid response. Or if they ducked their heads in a vat of steaming sulphuric acid. Either one works for me.

No doctor direction needed

I love spam written by people for whom English is obviously a second, or possibly third, language. Here’s one I got today:

Dear [deleted]:
For years now I have been umaking use of your prescription services for all of my medicines. I was procuring from the purchasing US pharmacy and paying a little fortune for my doctor recommendation. Then I got clever and initiated buying from your Canadian firm. I didn’t even need a doctor direction to order from you. You have saved me in detail above 10,800 dollar in the last five years. Your assistance are fast, consistent, you put forward larger than 2000 medical drugs and your excellence is 2nd to none.

Your blissful customer,

Jim J
Omaha Nebraska

Click here to establish saving on your medical instruction:
[deleted]

And spammers are trying a new trick to get people to view their website: bogus mailing list verifications. Here’s one I got the other day:

We are glad you joined Bartenders Guide.

Membership Number: [deleted]
Your Login ID: [deleted]
Your Password ID: [deleted]

Please keep your account secure by logging in and changing your login info.

Use this link to change your Login info: [bogus link to IP address deleted]

Enjoy,
Internet Support
Bartenders Guide

I haven’t tried following the link, as I figure it’ll be something I definitely don’t want to see.

I’ve been screened

Because I have my resume on monster.ca at the moment, I’m getting a lot of phone calls and email messages from IT recruiters. Many of these recruiters screen potential candidates by asking how many years of experience each candidate has with a particular software application. (For example: “For how many years have you been using FrameMaker?”)

I’m not sure that this is the most effective way to winnow through a pile of resumes. Screening questions such as this reduce the field to two groups of candidates:

• The rare few people who have exactly the right amount of experience with each software application
• People who are willing to lie when asked screening questions

I suspect that there might be more people in group B than in group A.

I think I see a connection

Today, I read a fascinating article titled Debtor Nation. According to this article, the United States is consuming more than it is producing: last year, the difference was $850 billion. This is close to the total annual output of Brazil, the tenth-largest economy on the planet.

Two statements in the article caught my attention. One was this, from page 2:

Between 2000 and 2005, even as the U.S. economy grew 14 percent in real terms, and worker productivity increased a remarkable 16.6 percent, workers’ average hourly wages were stagnant. The median family income fell 2.9 percent.

And, from page 4:

Households that used to be saving about 10 percent of their income as recently as two decades ago are now saving nothing. But, says Richard Cooper, “We don’t know how to make Americans save more.”

I don’t claim to be an economist (as my posts earlier this month prove, rather conclusively), but I’m thinking this: if U.S. workers’ wages were to grow at the same rate as the economy and their own productivity, they might be able to save a bit more.

Fixing the Toronto transit system

The Globe and Mail web site is currently running a web-exclusive article on why and how to rebuild the Toronto transit system. The author of the article, Michael Warren, is a former general manager of the TTC.

One paragraph in this article caught my attention:

The city is asking millions of federal and provincial taxpayers who don’t live here to help fix Toronto’s ailing transit system. To succeed, it will have to give them value for their money.

As it happens, the city is not asking for money from taxpayers outside of Toronto. Torontonians pay federal and provincial tax too, and lots of it – we pay far more than we get back. What we’re asking is that more of the money we give to other levels of government be spent in the city.

The misguided belief that other Ontario taxpayers are being asked to subsidize Toronto is one of the reasons why Toronto’s infrastructure is not well funded. Ontarians who hold this belief are wondering – understandably – why they should send money to Toronto when their own communities have plenty of problems that need to be dealt with.

There’s no question that Toronto is in serious trouble:

• The city is about to be forced to implement steep service cuts because it has no major source of revenue other than property taxes and transfers from other levels of government.
• Toronto is surrounded by huge tracts of suburban sprawl, which appeared during a time when urban planning was seen as interfering with free enterprise. This sprawl is oil-dependent, energy-inefficient, and impossible to provide cost-effective public transit for.
• The federal government is not interested in investing in Toronto (to put it mildly). Presumably, they’d rather spend money in places that are likely to vote Conservative.
• The provincial government doesn’t want to take back any of the fiscal responsibilities downloaded onto municipalities by the Mike Harris government. An election is coming soon, and the provincial Liberals don’t want to spend any more money than they have to. Also, any election-related spending would be more politically effective in suburban swing ridings.

This situation is not likely to change until Toronto’s infrastructure suffers a noticeable, and paralyzing, breakdown. And, even then, things aren’t likely to change unless this breakdown affects Canadians outside of Toronto.

I haven’t gotten a lot further in the economics textbook I’m looking at. I’m up to Chapter 7 (“Consumers, Producers, and the Efficiency of Markets”), and that’s only because I’ve been skimming over a lot of the more complicated graphs.

At the end of this chapter, the book offers a word of warning:

To conclude that markets are efficient, we made several assumptions about how markets work. When these assumptions do not hold, our conclusion that the market equilibrium is efficient may no longer be true.

Some of these assumptions are:

• That markets are perfectly competitive – in other words, no single buyer or seller controls any market.
• That the outcome in a market matters only to the buyers and sellers in that market. (This assumption eliminates concerns such as the effect of pollution.)

The tricky question now becomes: under what circumstances are these assumptions invalid? As I see it, people who are politically left of centre tend to believe that these assumptions seldom are true. People who are right of centre tend to believe that the “invisible hand” of the marketplace normally works well. (But, then again, I’m only on Chapter 7 of the book. I’m at the “a little knowledge is a dangerous thing” stage.)

Pigeon-on-pigeon action

I just spotted two pigeons on my balcony. I think they were getting it on – I didn’t look too closely, but they were certainly rather close to one another.

I shooed them away: not because I am prudish, but because I am generally trying to make the pigeon population relocate to somewhere other than my balcony. I hate cleaning up pigeon poop.

(The Toronto pigeon population has migrated recently: I’ve been living near Broadview and Danforth for six and a half years now, and this is the first year I’ve seen pigeons here.)

Oh, and I saw the Goodyear blimp drifting north of the city about an hour ago. For some reason, I thought this was kind of cool.

Networking and bad manners

I’m currently subscribing to a few job search-related mailing lists. These lists usually aren’t very helpful. When not providing advice on how to create a killer resume, they’re relentlessly flogging web sites that provide a way to send your resume to zillions of employers and recruiters at once.

One of these mailing lists sent me an email this morning describing the supposedly effective use of a networking cover letter:

The networking cover letter is a flexible hard-working tool that will help you reach the individuals in your life who can assist you the most–family members, friends, neighbors, colleagues, and professional acquaintances. And also consider all the people in each of their lives. Ask your friends and relatives for their employment leads, referrals from their circle of influence, and for personal introductions, as well.

Get started quickly by creating a master list of the names of everyone who comes to mind. Look at your collection of business cards. Flip through association rosters and other directories, e-mail address books, and all lists of groups you are affiliated with. Then write or e-mail a networking cover letter to each person on the list, asking for help.

And the Workopolis career site discusses how to use networking to get referrals, and emphasizes the need for persistence:

Getting referrals is essential to developing a network, so don’t give up until you have at least two names of other people who might help you in your job search. You can get referrals from virtually anyone, but only if you are persistent in asking for them. Here are three questions that will generally get you one or more referrals, but often only after you ask the second or third questions:

1. Do you know of anyone who might have an opening for a person with my skills? If no, then,
2. Do you know of anyone else who might know of someone who would? If still no, then,
3. Do you know someone who knows a lot of people (in this or that field)?

Get used to asking each of the three questions until you get what you want – either a lead for a possible job opening, or the names of two people who might be of assistance to you in your search.

Perhaps I was raised in too genteel a fashion, but to me all of this sounds awfully like bad manners. Sure, you might get some job leads this way, but I can’t help but think that persistent questioning will leave behind a trail of scorched earth. It seems almost as bad as being an Amway salesman: your friends stop being your friends, but instead become “contacts” or “leads”. The world becomes one giant market and nothing more.

Mind you, my fastidious attitude might be the reason why I’m not employed right now. As one saying I’ve seen in several places puts it, “Either networking or no working.” At present, I seem to have chosen the latter.

Comparative advantage and exploitation

(Note: edited slightly after rereading.)

I’ve gotten yet a little further into Mankiw’s Principles of Economics, and I am fascinated by the concept of what he calls “comparative advantage”. As I understand it, the basic concept of comparative advantage is that everybody benefits if each of us gets to do what he or she is best at. (Or, to use the definition provided in the book: “The producer who gives up less of other goods to produce Good X has the smaller opportunity cost of producing Good X and is said to have a comparative advantage in producing it.” Well, okay, then.)

To use the example provided in the book: Tiger Woods might very well be the best lawn mower in the world. But it would be a waste of Tiger’s time to have him mow his own lawn. Instead of spending two hours mowing the lawn, Tiger could spend those two hours making a television commercial, which would earn him more money. He’d be better off hiring the boy next door to mow his lawn for him.

According to the book, the boy next door wins too if he earns more money mowing Tiger’s lawn for two hours than he could any other way. If he could earn $20 working at McDonald’s for two hours, and Tiger is willing to pay him more than $20, it’s a win for both Tiger and the boy next door. Everybody wins, and this is why trade is beneficial.

However, I was wondering something. The book makes the following statement:

As long as Woods pays [the boy next door] more than $20 and less than $10,000, both of them are better off.

True – but what if, instead of the boy next door, the person being hired is a poor peasant in a third-world country? His condition is so wretched that almost any wage at all would be an improvement. If an employer notices his situation and hires him for a below-subsistence wage to work in a maquiladora, is the employer exploiting the peasant? At what point is it not good enough to leave someone merely better off than before?

Occasionally hit a soft spot?

I’ve read a bit more of the Principles of Economics textbook: I’m now in the middle of Chapter 2 (“Thinking Like An Economist”). This chapter includes the following, from a commencement address given by Robert D. McTeer Jr., the former president of the Federal Reserve Bank of Dallas:

Economics majors understand the non-intuitive reality that real progress comes from job destruction. It once took 90 percent of our population to grow our food. Now it takes 3 percent. Pardon me, Willie, but are we worse off because of the job losses in architecture? The would-have-been farmers are now college professors and computer gurus…

So instead of counting jobs, we should make every job count. We will occasionally hit a soft spot when we have a mismatch of supply and demand in the labor market. But that is temporary.

Several things struck me when I read this:

• Does “job destruction” (as McTeer calls it) always lead to real progress? That’s what happened throughout the 20th century, but there’s no reason to believe that this is going to keep happening. Eventually, there might not be any more technological advances that create jobs. What happens if the labor market winds up needing only 3 percent of the computer gurus it has now, and there’s no place for them to go?
• How long do these occasional soft spots last? They might very well last for the lifetime of the people whose jobs are destructed. If this is the case, the soft spot only goes away when the destructees themselves go away and are replaced with new, freshly trained workers.
• If new jobs are created, will they be created in North America? Or will they be created in India or China?

And: according to a table in the same chapter, 93% of economists are opposed to rent control and trade barriers. Apparently, one purpose of this textbook is to “help you understand the economist’s view of these and other subjects and, perhaps, to persuade you that it is the right one.” Hmph.

I wonder whether Mr. Mankiw will suggest an alternative to rent control that achieves the goals that rent control is supposed to achieve:

• Decent housing for the poor at a reasonable rent.
• A liveable downtown: if rents become too high in a downtown area, the poor are forced to move out to the burbs (thus creating commuting problems) or sleep on the streets. This has the effect of hollowing out city centres, as has happened in many American cities.

Or do 93% of economists just kinda hope that the “invisible hand” will somehow make it all work out without anybody having to do anything about it? I look forward to finding out.