The Art Economy

Human society is going through an unprecedented transition for the past hundred years or so, and things are quickly coming to a head. But I suspect that most people haven't really thought about it much. And that's not an accident. To understand what I'm getting at, and how I think we can deal with, I'm going to have to take people through a very quick discussion. So put on your helmet and buckle up your seat belts---because this is going to be high-velocity.

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Image by "Swiggity.Swag.YOLO.Bro", c/o Wiki Commons

This is a graphic representation of way our ecoystem generally operates. Almost all the energy that life uses comes from the sun (we'll ignore the thermal vent guys living off chemical energy.) Everything that dies decomposes (fungi rules!) The base "Primary Producers" are green plants, which harvest all the solar energy that then supports everything above them. For example: maple trees harvest sunlight--->deer eat maple buds--->a bobcat eats the deer--->a cougar eats the bobcat--->a human being eats the cougar. As you can see, each step in the pyramid involves a loss of 90% of the energy.

For most of human history human society operated as something of a analogy to the basic energy pyramid. This isn't an accident, as human society was simply operating by the same rules as every other party of the solar economy---only instead of bobcats eating deer that ate maple trees, we had aristocrats eating wheat, gathered by soldiers and scribes, who took it from peasants.

Ancient Egyption Social Pyramid. Used under the "Fair Use" provision of the
copyright act. Image from Saint Albans Secondary College.

The thing to remember about these two graphics is that they are grotesquely out of proportion to the actual shape of the pyramids. In each of these, the top positions are held by an extremely small percentage of people compared to the bottom ones. This was simply because it took a lot human labour to grow food, which left only a small amount of surplus to feed all the people higher up on the pyramid.

Science and technology have changed all of this. One farmer in Canada can produce a lot more agricultural surplus than any peasant in all of human history. I had a hard time finding a graphic to represent this fact, as there are some complexities. Agricultural production can be measured in terms of production per acre, which has gone up significantly in recent memory. Or in terms of production per man hour, which has gone up even more dramatically. Or, it can be measured in terms of output of energy versus input of energy in terms of oil, fertilizer, etc----which not only hasn't gone up, but in many cases actually declined. (This is an artifact of living in a strange period where fossil fuels were incredibly cheap and used recklessly.) There is also an issue of transitioning from family farms to corporate agriculture, which means that government "silos" end up measuring "agricultural workers" versus "farmers"---which brings "guest workers" versus "Canadian citizens" and all sorts of complexities that confuse people reading statistics.

The best way I found to explain this decline in the base of the pyramid is by showing the following graph. It shows the consolidation of land into bigger and bigger farms owned by smaller and smaller numbers of farmers.

A graph from Statistics Canada showing the decline in the number of farms.
Image used under the Fair Use copyright provision. 

As you can see, the number of Canadian farms has declined from a little under 481,000 from 1961 to 194,000 in 2016. (My family farm was part of this phenomenon---my dad bought out his neighbour, and our neighbour bought out my brother after he inherited from him.) I think you can safely assume that the decline in farmers mirrors a decline in the need for farm labour due to increased mechanization (today there are literally robots that milk cows and self-driving tractors.)

A parallel phenomenon is happening in manufacturing. When I was a teen I built a stereo receiver (which I still use) from a kit. That was because a major fraction of the price of anything electronic was the time people spent soldering the thing together in a factory. This meant that if I was willing to put in the long hours soldiering diodes, transistors, etc, to a circuit board, I could save big bucks. Nowadays all this is done by robots and labour is a trivial cost in the price of a stereo. (Do people still buy stereos? Are they a thing? My amplifier is hooked up to a computer.)

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What this all means is that the foundation of the pyramid is hollowing out. As robots take over our jobs, there are fewer and fewer people in society who are growing the food and making the stuff that everyone else eats or uses.

This should be a great thing for all and sundry. I can tell you from experience that shoveling manure and soldering circuits are not activities I look back upon with fond memories. But unfortunately our society has hopelessly muddled two intrinsically different things: production and distribution. The result is that instead of finding a mechanism to redistribute the wealth created by mechanization, society has instead made heroic efforts to create more jobs for the people made redundant.

Part of this just involves raising people's expectations so they spend more and more money on bigger homes, burning jet fuel flying all over the planet, and, buying more expensive crap that they really don't need. The ecological burden alone would make this a problem. But there are other elements to this effort that make it tragic.

Because society has tied distribution exclusively to employment, great efforts have been made to propagate the notion that in some metaphysical, moral sense, "work" simply as work, has some sort of merit.

My dad, Fred Trump, was the smartest and hardest-working man I ever knew. It's because of him that I learned from my youngest age to respect the dignity of work and the dignity of working people. (Donald Trump. This and all the following come from A.Z. Quotes)

The American culture promotes personal responsibility, the dignity of work, the value of education, the merit of service, devotion to a purpose greater than self, and at the foundation, the pre-eminence of family. (Mitt Romney.)

These are quotes from wealthy people who've never really had to work at a poorly paid, dirty, hard, dangerous job their entire lives. Contrast that with this quote from a man who'd worked as a common seaman all over the world before he became a famous novelist.

 They talk of the dignity of work. The dignity is in leisure. (Herman Melville.)

One of the big problems we face right now is that we are saddled with a cultural "operating system" that no longer makes any sense. It was designed to reconcile most people to doing awful jobs simply because someone had to do them. Now that we are quickly mechanizing all of these "grunt work" jobs, that way of looking at the world is not only no longer necessary, it is positively dangerous. That's because the whole "dignity of work" schtick only works if there actually are jobs to be had that will support you. If there are no jobs at all---or they don't pay enough to keep a roof over your head---all that message does is breed resentment. And that leads to a society with masses of angry people who don't know why their world doesn't make any sense looking for someone to blame. 

Does that sound familiar?

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The problem of the discontinuity between distribution and employment has not been lost on people. That's why so many people are pushing for an extension of financial distribution beyond the Old Age Benefit and the Canada Child Benefit (which are both guaranteed annual income programs---even though most people don't think of them that way.)

I suspect, however, that a lot of people are deeply concerned about the idea of guaranteed annual income because they have bought into the whole idea of "the dignity of work". They fear that people who don't earn their bread "by the sweat of their brow" will be failures as human beings.

One of the key barriers to social change is the problem people have with actually envisioning a different way of doing things. To that end, I will introduce what I see as a better future: the art economy. 

I suppose that I'm a bit of an optimist, but I think that most people have something inside themselves that would grow into something like a vocation---if they didn't have it beaten out of them at an early age. That's why so many folks like to tinker with cars, fix up their own houses, garden, knit, cook, sew quilts, etc. The problem is, however, that no one can make any money off doing that because they can't compete with modern mass production. (That certainly defines describes me writing this blog.)

That's why the only people who can afford to have hand-made, artistic furniture---for example---are the super-rich who can afford to buy from the tiny fraction of people who manage to make a living as cabinet makers. But here's an idea. What if there was a really strong "safety net", one that was so strong that it was actually a "safety floor" that no one was allowed to fall below. Wouldn't that encourage a lot of people to do things that they really love doing---like make a beautiful piece of furniture? or grow amazing vegetables? or sew amazing quilts?

One of the really nice things about good stuff is that it generally survives a very long time. This because it's made well in the first place---solid maple instead of particle board. It's also because people love the stuff, so they take good care of it. And that means that it doesn't get tossed out after a few years. It becomes an "heirloom" that gets passed on through generations. And if you pay more for an heirloom, isn't it cheaper in the long run because you never have to buy another one? And your children inherit it for free? And their kids?

There's an added spin-off, of course. If you aren't building disposable things like crappy dining room sets, then you are putting less stress on the planet. And if you personally are building one very nice piece of furniture that you enjoy working on, then aren't you putting less stress on yourself than if you were in a factory knocking off cheap crap to sell at Walmart?

And if more people were spending their lives being creative---artists, inventors, etc---wouldn't they be less cranky and bitter about the world around them? Maybe that would help our society stop fixating on the supposed slights coming from other people and instead just be content living a peaceful life in harmony with nature.

What an idea!

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Furthermore, I say to you---the climate emergency must be dealt with!

Mike Schreiner Talks About Capitalism

The second part of my interview with our MPP deals with some of the complexities and "nitty gritty" of how he sees our society can make a transition towards a sustainable society. Leadership doesn't just entail telling us where we should be going, it also involves navigating the pitfalls and traps set out to derail our migration to the "promised land".

Mike Schreiner, Guelph's member at Queen's Park.
Image from the GPO website.

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Hulet:  I did some articles about solid waste a while back and was horrified by the upfront and brazen way some businesses were trying to confuse the public and sabotage the Ontario government's attempts to control solid waste. One example were public relation campaigns aimed at people who use coffee pods to tell them that they were recyclable and compostable---they're not. Another example involved businesses spending lots of money to install computerized cash registers that separated out disposal fees from the "cost" of the product---instead of just burying the "eco-fee" in the cost of the product. They also put out advertisements  that didn't include the eco-fees in the listed price---which punished competitors who didn't separate the fees. And---just to add a cherry on the top---got caught charging too much! Another example was where the Stewardship Councils set up by the province to reduce solid waste simply ignored the reason why they were created in the first place and instead produced a report that suggested recycling could be cheaper if garbage collection was privatized.  

In light of all this "jiggery-pokery", I have a question for you. How do you think the Ontario government would be able to "house train" business? The system I refer to above---eco-fees and Stewardship Ontario---were attempts by both Conservative and Liberal government to use "market mechanisms" to make solid waste reduction part of their design criteria. Instead, they just played political games and sabotaged the system. You're a business person, how would you deal with this Tom Foolery?

Schreiner:  Yeah, good question. 

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Indeed, this is a very big issue.

It isn't just about solid waste issues either. Capitalism just doesn't play nice with either science or the public good. And contrary to what many people might think, there is almost always no government agency who's job it is to make sure that businesses "do the right thing". Instead, more often there are rules that say that businesses should hire consultants to do the research and then send the results to a government agency to look at. And, as a recent article in the National Observer points out, there is a conflict of interest inherent in that relationship that can result in pressure being put on researchers to "fudge" the results in a way that benefits the company at the expense of public interest.

One of the very first articles I ever wrote---for the Ontarion, in 1978---was about an investigation that was then going on in the USA into a scientific business named "Industrial Bio-Test Laboratories". It turned out that this company had done the "safety tests" on a huge range of different chemicals for various corporations and had often "fudged" the results in order to make sure that things got on the market, whether they were really safe or not. This included some of the most widely used farm chemicals, ones that my family had routinely used when I was a child. I was enraged to find out that scientists would lie about how safe something was in order to protect their jobs---and that the government had set up a system that was based on this insane conflict of interest. But as the article in the National Observer points out, this problem continues to this day.

Schreiner is just talking about the use of market-based solutions to control large amounts of relatively benign waste. But exactly the same issues apply to the greater issue of how businesses interact with any government regulations. That is, they have a tendency to take them over. Indeed, the phenomenon is so common that it has it's own name in academic research: "regulatory capture". So when you read what follows, remember that some of the issues that Mike identifies don't just apply to cutting down on solid waste, but also things like protecting salmon spawning beds and keeping toxic chemicals out of the water supply.

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One of the things is to design "rules of the game" that enable businesses to profit from "doing a good thing" and have enough "sticks" in place to push them along to do the right thing.  

Part of the problem with the way a lot of market mechanisms are designed---cap-and-trade is an example, Stewardship Ontario is another---is we make the market mechanisms so complicated, and so dependent on industry running them that they don't actually become market mechanisms.  

I think that this happens because government is afraid of "laying it on the line" with people , or, being brutally honest with people who try to hide things. So Stewardship Ontario was a way to try to hide waste management fees and costs. Cap-and-trade is a way to try to hide carbon pricing. 

One of the reasons I've always promoted individual producer responsibility is to get away from this whole industry-led bureaucratic apparatus like you had with Stewardship Ontario. You just say "industry, you're responsible for the cost of the waste you produce" and those businesses that don't produce that waste will have a competitive advantage in the marketplace.  

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Schreiner is raising an important point here, one that readers should understand. The current system we have with regard to solid waste (amongst a great many other things) is "industry-wide". Businesses form groups---like the "Stewardship Councils"---and they make collective decisions about how they should deal with a generic problem, such as solid waste. That's where regulatory capture takes place. "Individual producer responsibility" is very different. Mike's suggesting that instead of assigning a cost for a generic thing, such as "litter", and asking for the entire packaging industry to come up with a solution (eg: the Stewardship Ontario model), each individual business should have their own individual price associated with their part of the litter problem.

Consider the following scenario. After a particularly "festive and vibrant" Friday night in the city of Guelph, the downtown early-morning cleanup crews decided to do an audit of what gets left on the sidewalks---what percentage of chicken bones, styrofoam clamshells, half-eaten poutine, etc. Using this information, the city then ascertains what percentage of the clean up budget has been spent cleaning up the mess left by customers of which particular business. Then each of those establishments gets a clean up bill, but the amount varies widely based on what percentage of the mess came from their particular business. If this were done, the business models that create the most mess might find out that when the price of cleaning up is subtracted, they actually lose money. At that point, solid waste becomes part of the "design criteria" when each owner is creating a business plan.

The two points he is emphasizing are that businesses need to be individually identified (through the garbage audit), and, there should also to be significant individualized penalties (ie: the variable clean up bill) assigned to individual companies that will cause enough harm that it forces them to change how they do things. 

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From my perspective, the way to sell this to tax payers---and the government hasn't done a very good job doing this---is to be really clear that you are paying for waste right now in your property taxes. A huge portion of property taxes are dealing with waste, and waste management. So essentially, you as a tax payer are footing the bill and giving businesses an incentive to reduce the waste they produce.  

People mention "tax payer revolts"---I think people should revolt against having to pay for industry's wasteful practices. If we actually had full individual producer responsibility laws that, they would produce the incentives to reduce waste.

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This raises a good question. Just how much does Guelph spend on solid waste?

It's not a simple thing to answer. If you've never looked at a city budget, you might be surprised how complex it is. That's because it is possible to organize information in a lot of different ways. For example, many things the city manages are not paid for through taxes, but instead through revenue. The fees we pay for water and sewer, for example, are not taxes but monthly business fees---just like electricity. That means that this doesn't get included in the "tax-paid" part of the budget. More revenue comes through federal and provincial grants. Also, the budget separates out capital expenditures (eg: new buildings) from day-to-day costs (eg: paying the janitor that cleans the floors). As well, much of the budget is designed to aggregate things like labour costs under one heading instead of separating them out into separate departments.

Topping all of this off is the fact that budgets are obviously written in a hurry by people who's primary skill set isn't being able to express themselves clearly and precisely to the general public. Municipal bureaucrats also speak their own bizarre language that can be tremendously hard to understand. To cite one example, I spent quite a few minutes trying to figure out exactly what a "growth vehicle" is in one section---I think it might be a new garbage truck, but I could be wrong.

Solid waste can be particularly thorny to develop a figure for. Consider the following complications:

• a significant fraction of the waste produced is dealt with by commercial and industrial institutions that have their own private solid waste contractors that by-pass the municipal system
• there are user fees for people who drop off their own materials---so it isn't all tax-funded
• recycled materials are sold on an extremely volatile spot market that means that from week to week the city has a wildly varying revenue stream that they add to the operating budget
• Stewardship Ontario is already paying a significant fraction of the operating budgets of municipal waste systems
•  the cost of "dealing with waste" isn't just a result of dealing with garbage that's been placed in bins and waiting at the curb---it also involves people in other departments (and other parts of the budget) doing things like picking up litter 

I tried to come up with a number for Guelph, but gave up after fighting with the budget document for about an hour. It isn't that important to the issue at hand---especially as Schreiner is a Member of the Provincial Parliament (MPP) instead of a city councilor. Suffice it to say, the number is significant. But the problem with coming up with a real number is part of that "transparency" thing that our MPP is talking about.

I could be argued that trying to figure out what particular business creates what particular fraction of environmental destruction would be far too much work. That's generally the reaction when people propose things like that. From the point-of-view of management there is some truth to this. But with modern computer technology it really shouldn't be that hard to do the odd audit for things like garbage pick up to find out exactly where the garbage is coming from, and charge businesses accordingly.

Where the real problems would lie, I suspect, would be in the realm of governance. Businesses are parts of interconnected webs of commerce and regulation. Create a new regulation on one node in this structure, and results propagate across the entire system. For example---to continue with the example of downtown pickup after an night of "rich and vibrant" activity in the downtown core---some of the businesses that create the filth are franchises. That means you aren't just dealing with the individual business, but the head office. Even if you have a rare independently-owned and operated business, they often have contractual agreements that lock them into buying specific products in exchange for a better price. Margins can be very tight, and a slight disturbance in "the Force" can make the difference between success and failure.

The old law saying that all beer in Ontario had to be sold in exactly the same type of bottle was a wonderful example of how a sustainable society could be organized. Yet it fell apart after Canada liberalized trade laws with other countries. It was simply against the law for the province to legislate packaging that seemed to give an "unfair advantage" to locally-produced beer. It is still against the law, and I would suggest that similar problems would come into play if Ontario tried to bring in "independent producer responsibility" and tried to make it the foundation of government policy.

The reason why it could work in the past but was legislated out of existence was because of a profound change in technology that led to a profound change in commerce. I once met an old economics prof who told me that when he was young he had an exam question that asked "Why will there never be a national beer company?" The point was that beer was a heavy, low-price product. That mean that shipping it thousands of miles would inevitably add a significant fraction to the cost, which would stop people from buying their suds from anyone else but local brewers.

It was exactly the same with several commodities: beer, soda pop, milk. This mean that there were no national bottlers, which meant that consumers were close to the bottling plants. This made it easy to have returnable bottle laws. The trucks were already going to the stores and homes to drop off the milk, pop, and, beer---why not have them pick up the empties and bring them back at the same time? But once the interstate highways, giant transport trucks, and, cheap diesel fuel came along, you could ship heavy, low price commodities long distances and still stay in business. (Bottled water is simply the latest example of this general process.) All the local soda pop producers, dairies, and, breweries went under, and so did the refillable bottle laws with them. There was a fundamental change in the economic ecosystem, and the laws followed suit.

This isn't to say that individual producer responsibility is a bad idea. It isn't even to say that it shouldn't or can't be done. What I am pointing out, however, is that it is a radical thing to suggest and do. It's also important to remember that governments do radical things all the time. For example, the excellent road system that allows transport trucks to move beer across the continent didn't exist at the end of WW2 (that was a conflict run on railroads.) The government decided to spend a lot of money creating them and in the process dramatically changed various aspects of the existing economy. In the same way, creating a system of "independent producer responsibility" would also be a big, radical, disruptive thing for the government to do---but it could do it. And it would also make radical changes to the economy. 

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I recently went to a panel discussion where an academic and Adam Donaldson joined several people who'd worked at the old Guelph Mercury to discuss local news. One thing that I kinda gagged on was the nostalgic blather about the "halcyon days" of working for the old Merc. I was an outside observer of the paper since the late 1980s, and by the time it folded it was a wan shadow of itself. And most of that couldn't be blamed on the Internet or Google---it had been looted by various "media empires" long before they came along.

The event did get me thinking about what this blog is all about, though. I'm obviously not doing straight reporting. Indeed, even when I try to just do traditional reporting---like this interview with our local MPP---things quickly degenerate into something else. The thing is, however, I would feel like I was only doing part of the job if I just hammered out quotes from an interview. I want to explain context. And that involves looking up facts and expanding the argument as best I can so the implications become explicit for the reader. I can only assume that that's not something that is taught or encouraged at journalism school---because so few reporters ever do it.

That means that I'm trying to do something more than just recreate the sort of reportage that you used to get from the Mercury---even before the junk bond artists looted it. If you think that this is a good thing, then why not subscribe through Patreon or PayPal? 

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Hulet: So it's not just the fees, it's the transparency as well?

Schreiner: It's the transparency and the simplicity. Part of the problem with things like Stewardship Ontario was that it was a bureaucratic entity that we just pay some money to so we don't want to think about solid waste as a business---and you guys just minimize the amount of fees we're paying. 

And that "quote", is a "market mechanism"?????  That's not a market mechanism. [You can hear the disgust in Schreiner's voice.]

Take Tim Hortons as an example. I don't want to pick on Tim Hortons---I will because I do a lot of roadside clean-up and Tim Horton's cups are one of the things we pick up the most. If Tim Hortons actually had to pay the cost of picking-up all those cups, they'd figure out a way to reduce the number of cups that go into the waste stream. But right now they have no industry incentive to do that---they just give all that money to Stewardship Ontario and don't worry about it. 

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I wrote earlier that I couldn't find a number for how much the city spends on solid waste, but I did find one number on one particular website.

This advertisement comes from the "Adopt A Highway Inc.".
Image used under the "Fair Use" copyright provision.

We've all seen the "Adopt a Highway" signs, but I think it's somewhat useful to stop and think about what is going on. People volunteer to pick up trash that was created by businesses as part of their business model. Isn't picking up the resulting garbage the same thing as if the local restaurant asked for volunteers to wash dishes and wait on tables so they didn't have to pay hired staff?

I suspect that the difference is that somewhere in our minds most of us have bought into the idea that that it was an individual "choice" for a certain segment of the population to throw garbage out of their cars---and you can't blame the business for that, can you? But maybe you can. If all human decisions simply came down to a conscious personal choice (eg: I freely choose to throw this garbage out the window---fully aware of the implications of that choice for all and sundry), why do we have an advertising industry?

Here's a classic television advert that I believe makes my point. What exactly is it trying to tell the public---that their brand of car is the best for mowing down British soldiers? I'd posit instead that it's suggesting that there's something intrinsic to the American psyche that muscle cars appeals to. Driving fast without having to think about hitting wildlife or creating a climate disaster is what it means to be "free". So if you are a patriotic American, buy one of our autos and "stick it to" those elites who want the government to regulate all the "fun" out of your life. 

Here's another example. This Tim Horton's advert appeals to the emotions and myths that Canadians like to tell about themselves. The immigrant dad brought ideas about life over from the "old country" that he tried to impose on his son. But because of way he was welcomed into his adopted country (the white guy giving him a coffee when he first came into the rink to see his son play), he "came around" and adopted "Canadian" values.

The important thing to realize is that you are rarely going to see someone argue that saving the planet is a bad idea. What instead happens is that that ideal gets "drowned out" by some other message. For example, American "FREEDOM!!!!!", or, Canadian "Can't we all just be nice to each other?"

Several times I've been told by professional advertisers that all they do is "help consumers choose between brands", and that their pitches cannot be blamed for having a bigger influence on society. But that is patent nonsense. Businesses build themselves around a specific message such as "convenience" or "caring", and this results in mountains of unnecessary crap.  And it's also patent nonsense to think that a restaurant who's business model is based on maximizing convenience while totally ignoring the environmental consequences---and sending off people in their cars with bushels of trash---has no responsibility for those who take the next logical step and just throw said trash out the window of their speeding death wagon while they look for British soldiers to run over.

This is such a "thing" that Family Guy even did a hilarious fake ad that lampooned the way businesses create ridiculous products that only appeal to our emotions and make absolutely no sense at all. (When I worked at the University I used to have to throw out heaps of sad veggies and fruit that well-meaning event organizers would order---and which often never got eaten---because a) food means you care, and, b) we all know people don't eat enough fruit and veggies, and, c) ultimately most people don't want to eat fruit and veggies at meetings.)

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I think things like re-instituting bottle deposit return programs is an example of that. I think the Brewer's retail has something like a 98% recapture rate---because people have a nickle or dime incentive to take their bottle back. Unbelievable what a little incentive like that can do to reduce waste. 

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I fear that Schreiner is being a bit optimistic saying that the Brewer's Retail is hitting a 98% recapture rate. The figure I found was 80%, which is still pretty good. It does raise the question, however, about what is going to happen with this bottle return system if Doug Ford and his merry band of "enablers" break up the existing "Beer Store" near monopoly. Will every convenience store and grocery be willing to take on the job of paying out deposits and collecting beer bottles and cans, plus wine and liquor bottles too?

This is the nub of the issue. What we call "free market capitalism" is a very strange thing. Contrary to the propaganda that people get force-fed from a variety of sources, it is not "free". In a totally "free" situation, businesses quickly make arrangements to fix prices. As the patron saint of capitalism, Adam Smith, observed:

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. (Adam Smith, The Wealth of Nations, Book One, Chapter X, Part II, p. 152.)

A marketplace that's controlled by monopolies and cartels isn't really "free". The reason why we have something like a free market is through government intervention that creates a modicum of real competition.

One example of this is the way the Canadian Radio-television and Telecommunications Commission (CRTC) forces Bell Canada and the cable companies to provide bandwidth to independent Internet Service Providers (ISPs), so you can get decent service at a reasonable price. If they didn't, the only people you could buy access to the internet from would be Bell and Rogers---who would probably charge even more than they do now. (I'm a happy Teksavvy customer.)

So what Schreiner is saying is that society needs to expand the regulatory oversight of government to create a new "niche" where freedom can "invade" the marketplace---such as when the CRTC forced the "wire owners" to allow some new competition in the ISP market. As I pointed out in my hypothetical example of the downtown trash audit, there would have to be government mechanisms put into place before we could create a genuine system of "individual producer responsibility", that would force businesses to make environmental sustainability part of the "bottom line". Please note something interesting here. People often talk about "market mechanisms" versus "regulations" when it comes to developing public policy solutions, but as I've suggested above, you can't really have a market mechanism (or a "free" market at all) without introducing some pretty stringent regulations first. 

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This is probably a good place to stop and let the reader mull things over. I think this post---probably more than any other I've done---shows how complicated government policy can be. Because of the practicalities of the job, politicians have to be very brief in their pronouncements: the ten second sound bite on the news, a couple minutes at the doorstep, five minutes at an "all candidates debate". But still, they are dealing with profoundly complex issues. We voters should at least understand the difficulties people like Schreiner are labouring under as they attempt to do their job.

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Furthermore, I say to you---the climate emergency must be dealt with!

Recycling: Stewardship Ontario and "The Authority"!

In my last blog post I tried to make readers aware of how incredibly difficult recycling really is. It isn't just a personal activity, it's something that involves a huge infrastructure and a myriad of collective institutional decisions. I also tried to show how complex the economic and political elements can be through showing how different companies---acting in conjunction with subcontractors like Universities---actively try to confuse people about what is or is not actually recycled once you throw it into the blue bin. In this post, I'm going to try to expose readers to a radical plan by the provincial government to fix these problems by "changing the game" and in the process, completely rebuild the economy of Ontario.

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The Problem:  Waste Recovery Has Stalled

Image from govt publication:
"Strategy for a Waste Free Ontario"

According to the province, waste recovery has been stuck at 25% in Ontario over the last decade. In gross terms, since the average citizen produces about 850 kilos of waste per year, that means that 638 kilos still gets land-filled. Multiply that by 13.6 million people, and you get an astonishing 8.7 million tons of garbage that is just thrown away every year. This is not only already not good, but even worse, waste reduction has also stalled---which means that things will only get worse as the population of Ontario increases. This would mean tax payers would have to pony up money and land to build a lot of new landfills. (Oh yeah, there's that whole destroying the planet thing, too.)

Even worse, there is a climate change element that needs to be considered. When organic waste---like a half-eaten hamburger or it's wax paper wrapper---gets tossed in a landfill it decomposes anaerobically (ie: "without oxygen".) A result of this is the production of methane, which is a greenhouse gas that is 25 times more potent than regular CO2. This means that a little bit of methane can be more hazardous to future generations than a lot of carbon dioxide.

People usually think of the bins on the curb as the core of waste production. But in actual fact, the organic waste that we put to the curb in green bins only represents 47% of the waste---the other 53% comes from what's called the "IC&I", or, "Industrial, Commercial & Institutional" sectors. Some of that does get put into the industrial composting stream---but a lot doesn't. For example, where I work (ie: my "day job" in the "institutional sector") a lot of food waste ends up in the garbage stream because there is no provision for students to separate their compostables from recyclables---and very few would make the effort if they could.

In addition, as I pointed out in my previous article, the physical act of separating trash into various different components is really, really difficult because there are so many different types of materials and when you mix them together you end up with contamination that makes the result worthless as a feed stock for future manufacturing. (And it doesn't help that businesses are trying to throw sand in the eyes of consumers in order to promote their product as being "recyclable" or "compostable".)

What this means is that the only real way to stop throwing out all this garbage is to do that most difficult of political activities:  change human behaviour. And this doesn't just mean getting people like university students to stop throwing half-full cups of coffee or pizza slices into the recycling bins. It also means that businesses will have to start thinking about recycling when they design and market products. (One industry insider told he calls this "lust to dust" product design.)  To be totally honest, it will require "social engineering" on an absolutely huge scale to get every business leader, employee, and, customer "with the program" in order to scale back on the enormous amount of crap we throw away in this province.  If we really want to get a handle on solid waste---and to be honest we don't really have much choice---we have to accept the truth of Naomi Klein's statement about climate change:  "This changes everything".

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It's Hard to Change People's Behaviour!

A lot of people are financially like this woman.
Image used under "fair use" rule,
from Daniele Summerfield's Real Estate Blog

A big part of the problem with changing human behaviour is that a lot of individuals and businesses are like a person standing on their tippy toes in water that is so deep that it only allows them to keep their noses in the air. That is to say, they're only marginally adapted to the status quo and are terrified about any change because they feel it will destroy their life.

As a matter of fact, this is a sad but inevitable part of life. In any given population of both people and businesses there are individuals that are "just barely getting by" and when something unexpected comes along, it wipes them out. It's just like all the really sick folks who die when a flu pandemic hits, or, the people who live pay cheque to pay cheque and lose their homes when they get laid off. Part of this is because of things that are simply outside of their control, and, sometimes it is a problem with people who have made bad decisions (think of someone who spends every spare cent they have on frivolous purchases instead of putting money into a "rainy day" fund.) When the day of reckoning comes, however, because of the way the human mind is constructed almost no one ever says "oh, well that's bad luck" or "ultimately it's my fault for making some bad choices". Instead, they point their finger at the government and scream about "those damn bureaucrats with their unnecessary red tape!!"

As a result, it rarely works well for a politician to simply pass regulations against a specific activity. If they do, they end up being the target of anyone who's business or lifestyle suffers because of the change. So instead, the "best practice" nowadays is to start measuring the activity of a specific thing that society wants to get rid of, and, then create some price mechanism that will encourage businesses and individuals to stop doing it. The iconic example is a carbon tax. The idea isn't to raise extra money for the government, it's to encourage individuals and businesses to avoid paying the tax by insulating their homes or taking public transit instead of driving a car.

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This leads us to the second huge problem with changing people's behaviour. Large swathes of the body politic don't look at issues on an individual, cost/benefit analysis. Instead, they've adopted a "short-hand" for thinking where they compare all human activity to a preconceived template. If it it fits into that worldview, good;  if not, bad. At that point they have decided what "team" they are on, and if it's in opposition, all honest discussion ends and it's time to declare war and use whatever means present itself to make sure that they win. This is what is known in political science as "ideology".

Unfortunately, ideological thinking in our society has "poisoned the well" a bit on price mechanisms because certain political organizations have "banged the drum" over the "tax" part of price mechanisms like carbon taxes and studiously avoided mentioning the "changing human behaviour" side of them. A good example of this comes from an advertisement ran by the Conservatives in the 2008 election.

The lesson to learn from sources like talking oil spots is that if the government is going to get into the social engineering business, it needs to create some distance from itself and the people trying to change human behaviour.

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Some readers may have noticed that I've taken all the Google "Adsense" adverts off the blog. I've done this for two reasons. On-line advertising has changed dramatically over the last few months, with most of the ad revenue being channeled away from "little guys" like this blog, and towards a small number of "big players". This is being explained as a method for cutting down on "fake news", but the end result is that revenue from ads has effectively dried up for a lot of people---including me. (Actually, it never really was that much.) In addition, looking at the stats, it's obvious that more than half of people who read this do so on their cell phone, which doesn't show ads anyway. Toss in folks who use ad-blockers, and advertising just isn't worth it.

This makes subscriptions through Patreon even more important to support people working to keep citizens informed. Even a dollar a month makes a difference! If you do choose to make a larger subscription to the blog, there are rewards:  $5/month gets you a copy of Walking the Talk, and, for $10/month, I'll send you a copy of Digging Your Own Well too! One time donations are also appreciated (all major credit cards plus PayPal accepted), so if you want to avoid making a long term commitment, you can just make a single, lump sum payment. 


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Introducing "Stewardship Ontario"

Recognizing the political minefield that is created by directly intervening in the economy, or even trying to use taxes as a price mechanism to get people to stop wasting so much stuff, the Ontario Liberals tried a new approach. They decided to force the businesses making and importing all the waste to be directly responsible for getting rid of it. To that end, they created a non-profit corporation, "Stewardship Ontario", who's task it is to monitor and deal with all solid waste issues in Ontario. It is governed by a board of directors who are elected by industry members who's ability to vote for directors is directly tied to how much money they pay into the institution.

When you think about this idea, it does a great job of separating out the politics from decision-making on solid waste issues. Take, for example, the disposable coffee pods that I mentioned in the previous blog post. If the province steps in and orders producers to stop producing the darn things, their company will scream bloody murder about "red tape" stifling innovation. If, instead they force the producers to standardize their product so they are all either recyclable or compostable---same thing. If they try to force the companies to pay a lot of money to expand the recycling or composting facilities so they actually are recyclable and compostable instead of just being marketed that way---again, more wailing and gnashing of teeth plus dark complaints about "tax-grabs" from conservative-sponsored talking coffee pods.

But if instead Stewardship Ontario orders the coffee cup manufacturers to standardize their products and come up with some practical, affordable way of dealing with the mountains of waste, there's no way that this can blow up in the government's face. After all, it will be the other companies that create plastic containers that are ordering the coffee pod people to pull up their socks and make products that work in the same system that they use---not evil politicians! And because the people making the decisions are specifically the ones with the most "skin in the game" (remember votes for board members are based on how much money a business has to pony up to pay for the system dealing with all the garbage), they are going to have precious little sympathy for ideologically-based complaints because they are the ones subsidizing the disposable coffee pods gumming up the works.

Ever notice this logo?
It's on the side of lots of factories
Copyleft image c/o ISO

This might seem to be a bizarre "over-reach" by the government but if you know anything about modern industry, it seems less radical. There is an international, non-profit, private corporation by the name of "the International Organization for Standardization", ISO, that has been around since before the Second World War. It's purpose is to help industry work together to standardize parts and processes in order to foster trade and commerce. If you can't imagine what it does, consider what chaos would exist in industry if each manufacturer used their own particular type of bolt and nut. How would your local mechanic have any hope of fixing your car? Not only would he have to stock an astronomical number of parts but he'd have to have a warehouse just to store all his tools. What Stewardship Ontario really is, is a form of "ISO" for the province's solid waste.

I'm sure you've seen this logo.
Image public domain because
it is fundamentally geometric in design.

Another analogy that is even closer to home is "the Beer Store". It is also a private non-profit which is owned by 25 Ontario breweries and has existed since 1927. It was empowered as a regulated monopoly by the Liquor Control Board of Ontario to sell beer and also to manage a deposit return system for beer bottles and draft kegs. It still does, and the average beer bottle in Ontario is reused an average of 15 times before it gets recycled---which is a huge benefit to the environment.


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The stubby!
Standardized perfection,
copyleft by Simon Laird

It is useful to consider one aspect of the history of Brewer's Retail Inc. At one time it operated in an environment where it wasn't constrained by things like international and inter-provincial trade agreements. As a result, it had the authority to impose industry standards---like the ISO. The result was the "stubby" beer bottle. This was the only type of bottle that was allowed in Ontario and it only had lables that were attached with water-based glue. This meant that when someone brought in a case of empties to the Beer Store the staff didn't have to sort them into different brands---because a bottle was a bottle was a bottle. When they were washed the labels fell off and there was no difference between Labatts Blue, Molson Porter, or, Carling Black Label.

Today, things are different. There is a standard type of beer bottle, which is called a "long neck standard". If a business wants to sell beer in a different type of bottle, it can. But if it does so, it pays an extra handling fee. And that's because it's a lot more work to sort different bottles---over 50 different types---into different boxes, and separate the boxes so they can be sent to different bottling plants for reuse. And, of course, all this extra handling results in more breakage and less reuse of the bottles. There's no way around the fact that the old standardized stubby bottle was better than what we have now. But there is an advantage to this new way of doing things:  it can operate in a system based on free trade.

Because Stewardship Ontario is an industry-based, non-profit trade organization, it's decisions are different from government regulation. I've been told that this means that its decisions cannot be over-ridden by the trade organizations like NAFTA. Trade agreements were what did in the stubby, but since all importers will have to deal with solid waste issues inherit with their product through the Stewardship Councils, this takes the government out of the process. This means that this is the way we could see the return of standardization---but through a process that is seen as voluntary instead of imposed.

But it's important to realize that the present regime at the Beer Store exists in an environment where Stewardship Ontario is only paying 50% of the cost for recycling and land-filling waste. The province has set a time line for moving towards 100%. (More about this in my next post.) As increasing amounts of money are levied against businesses, they will start trying to engineer in waste reduction and recovery as part of their product design, instead of just considering it a trivial after-thought. At some point, it will make sense for Stewardship Ontario to start setting standards and charge enough money for deviation that there will be a real penalty for ignoring those stardards. I suspect at that point we very well may see a return to something like the stubby beer bottle. I also suspect that similar things will start popping up in other industries---maybe standardized wine bottles, maybe refillable pickle jars, etc. That's certainly what the government had in mind with this legislation, and what industry insiders think is going to happen.

In other words, Stewardship Ontario allows for the creation of rational packaging---like the stubby beer bottle---again. Only it does so through a price mechanism instead of government regulation. And this price mechanism is done through business self-regulation instead of special taxes, which avoids the creation of talking beer bottle ads during election campaigns. 

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As I mentioned above, advertising revenue has dried up for the "little guy" because of social media attempts to control the spread of "fake news". Other changes to the business model of businesses like FaceBook have hindered the ability of a small blog like this one to spread "virally". Unless you are a huge player, the only way to promote your site is increasingly by having to buy advertising from the social media provider. This means that "word of mouth" is even more important. If you read this blog and find it useful, remember to post a link to it with a description on the "friends" group that you are on. 

And if you do come across the blog, remember to subscribe to it so when the next issue comes out you won't miss it. You can do this in various ways. If you want, you can use the Digg Reader to subscribe to the blog. All you have to do is register with Digg (it's a good business, it won't hurt you), and go to the Reader page. Look at the lower, left hand corner for the reader page, and you will find a little link that says "+add". Click on it and you will find a place to add the URL for the blog (make sure it is the generic blog URL, and not the one for a specific article.) When the next article comes out, it will be listed with all the other unread blog articles that you have subscribed to. (You might want to add Guelph Politico too---Digg Reader has a podcast player built into it.) Sorry, there seems to be an incompatibility between Blogger and the Digg reader that seems have asserted itself recently. I can't get the "Back-Grounder" to work on it today, so I'm not going to ask you to try. It can be hard to keep ahead of changes in on-line platforms, unfortunately. As far as I know, however, the email system mentioned below still works. :-(

If this is too much, you can also subscribe to the blog through email. Just look on the right side of the blog and find the "Follow by Email" title, enter in you email address, and, click on the "submit" button. 

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Introducing the Resource Productivity & Recovery Authority

“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.”
Adam Smith, Capitalist Saint
Public Domain Image, c/o Wiki Commons 

Many of my cynical readers will at this point no doubt be asking themselves: "This sounds all very good---but business people don't care about the public good, THEY WANT MONEY. What's to stop them from perverting this system?"

As the government admits in their 2016 publication "Strategy for a Waste-Free Ontario:  Building the Circular Economy", it is important for there to be a mechanism that stops businesses from abusing their control over price mechanisms aimed at limiting waste.

"The legislation provides the Authority with the tools for a graduated method of ensuring producer compliance with regulated requirements and a fair system that discourages non-compliance and prevents free-riders. Compliance and enforcement tools include inspection powers, the power to issue compliance and administrative penalty orders and the ability to conduct investigations."

P-14, "Strategy for a Waste-Free Ontario"

What the government is talking about is a non-profit corporation that's mandate is to keep the Ontario Stewardship Council honest and transparent. This is not a trivial task, because our province has a history of "shenanigans" when it comes to getting businesses to pay for the cost disposing of their products after they've been used.

One really annoying example came when Stewardship Ontario first introduced "eco-fees" in 2010.  The idea was that each item a company made or imported had to put money into a fund to help municipalities or the province pay for either recycling or land-filling these items. It wasn't so much a tax as an example of "full-cost accounting". (This is the idea that businesses should really pay the full cost for what they do instead of expecting the tax-payer to clean up their mess.) Some retailers had the bright idea of listing their products as costing a certain amount, and then adding on the "eco-fee" at the cash register (eg: exactly the same thing they do with the GST tax---which is also annoying and not done in Europe.) That way, the company managed to act as if the cost of cleaning up the mess they created was just another "cash grab" by the government. As an added bonus, when they advertised their products these companies made it look like they were selling items for a lot less than those competitors who simply accepted that the eco-fee was part of the cost of production and "buried" them in the item's cost. Indeed, some companies even seem to have been able to make a little extra money in the process by over-charging consumers while they were at it. The fact of the matter was that some businesses seem to have just decided that they wanted to stick a finger in the eye of the government by following the talking oil spot manoeuvre.   

Glen Murray
reigning in big business
image from Govt documents

Another annoying example of bad behaviour involved the tire disposal fee. The "Toronto Star" exposed some very suspicious behaviour by executives in the Ontario Tire Stewardship program. These included strange internal accounting practices, what appeared to be money laundering, support of lavish lifestyles for directors, and, money being spent on fundraisers by the Liberal Party. (As a result, the Tire Stewardship program is the first recycling program that is being replaced by the new legislation---it disappears this year.)

It is very clear in reading the introductory documents put out by the then Minister of the Environment and Climate Change, Glen Murray, that the Resource Productivity & Recovery Authority was specifically set up to stop these sorts of excesses. It is even "baked into" the language he uses:  he calls the organization "the Authority".

As a matter of fact, no one I've spoken to calls the Resource Productivity & Recovery Authority (RPRA) "the Authority". Instead, it's called "rip-rah"---after the acronym. But Murray's point should be well taken. The "invisible hand" of capitalism specifically encourages businesses to always pursue the "bottom line". And as everyone knows, that phrase really means "I don't give a damn about anything else except money!!!!" We need a strong "authoritah" to pull over businesses, and start smashing them in the shins with its nightstick to deter them from trying to stick the taxpayer with the cost of cleaning up the messes they create.

If you look at the way RPRA has been set up, it certainly looks like Murray understood that it needed to be protected the same way a lot of other government agencies are, or it would be prone to political influence. So it has specifically been designed to be one step removed from elected politicians. It is a non-profit corporation (like a university) that starts out with the Minister of the Environment and Climate Change appointing a certain number of people to the board of RPRA, and, then these member appointing others. At that point, all the board members then elect a Chair.  And at that point, the Board then goes on to follow a fairly complex set of directives from the Ministry. Primarily, these outline regulations aimed at getting Stewardship Ontario to collect data on solid waste and developing a game plan for reducing it according to a provincially-set time-table. It is also supposed to create and manage transition plans aimed at shutting-down existing recycling systems (things like tires, e-waste, toxic waste, etc) and rolling them into programs set up by Stewardship Ontario. (And of course, it has already done this with the tires, which will no longer involve a separate entity or a consumer-paid "eco-fee" when that program is done away with this year.)

As I've pointed out in previous blog posts, a great deal of what gets done in both Ontario and Guelph gets done not by direct political intervention by Council or Cabinet, or even by career bureaucrats, but instead by appointed boards and commissions. The idea is to create a "fire wall" between people who have to raise money and get votes (which makes them vulnerable to the wealthy and otherwise influential.) These include things like libraries, the police, health boards, the OMB, and so on. In a democracy it is important to have oversight by elected officials so things don't get "taken over" by vested interests---but it is equally important that issues don't become "political footballs" where emotional appeals to public prejudices (like talking oil spots) overwhelm expert opinion about where the public good really lies.

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If you look at the RPRA website, you can see a subset called "Datacall". If you look at the left hand side of the site you can see a line of links. These give a lot of detailed information that allow people to compare things like rates of recycling by municipality. They also show the amount of money that Stewardship Ontario channeled from businesses that create the crap to the municipal governments that have to clean up the mess. How this money gets divided up changes from year to year according to another program called "The Waste Free Ontario Act of 2016". This will have a profound impact on Guelph, because it needs to decide how it is going to adapt to the new regime. My next blog post will deal with these specific issues. What I've written above is more than enough for most people to digest. But unless citizens know about the issues that I've raised here, they will be unable to understand what the city Council is doing as they try to prepare for future changes in solid waste. Which means I had to explain all this stuff first.