The News Rundown

Calgarians think economy is worse than it really is: study

A story regarding the economy and in particular how psychology actually affects the economy.
Standard metrics: GDP, household income, unemployment, and inflation.
An economy can be doing fine on paper by the standard metrics but the sentiment on the ground can be entirely different.
In back to back year studies conducted in 2017 and 2018 by Forum Research they found that sentiment regarding the provincial and local economy in Calgary worsened.
Just north of 60% of respondents said the economy in Alberta has worsened compared to about 50% in 2017.
Meanwhile, the number who said it was the same or better decreased.
This was true for the respondents in Calgary as well.
The story talking about this poll notes that average weekly earnings in Alberta at $1,155 exceed any province by “a wide margin” and we’ve recovered two-thirds of our job losses from the recession.
Delving into economic data for Calgary, the employment rate has almost reached pre-recession levels for the 25–54 age group though the employment rate for those aged 15–24 is only 50%.
Calgary’s unemployment rate is hovering around 8% heading into 2019 while Edmonton’s is at about 6.5%, both above the national average.
The study suggests the negative sentiment expressed by many survey respondents could reflect ongoing uncertainty, disappointment at the slowing pace of recovery or concern for jobless family members (especially children).
In regards to the Alberta election that is on the horizon, those who say the economy is improving are more likely to support the NDP while those who say it is getting worse are leaning towards the UCP.
A modern economy relies on signals just as much as real economic data to grow and prosper.
Upon the election of US President Donald Trump the stock market took off after the initial shock of his victory and only began to slow down this past year.
How did this happen while Barack Obama was still President? Signals and psychology. Like them or not, Republican presidents are seen as more friendly to business and this makes the stock market happy. Plus on the side of the population, you don’t get more upbeat than red and the slogan “Make America Great Again”
Looking at Canada, we are all acutely aware of the connotation of Alberta and oil. The 2015 recession was due to the fall in oil prices.
Since then our government has stayed the same on both levels and the Alberta unemployment rate remains above the national average.
All of these are signals to you and me that the economy is not recovering because nothing has changed, business sees this too and that’s why combined with unfavourable tax policies, we haven’t seen a return to growth.
As friendly as the NDP and Justin Trudeau can be, they have huge inherent liabilities they must overcome to oversee a positive economy in Alberta.
The NDP because of the carbon tax and the stigma known across the prairies from the years of the Saskatchewan NDP to the stories of the 1990s NDP in BC leading to their 2001 blow out.
Justin Trudeau because of the failure of Trans Mountain and the Trudeau name going back to the 80s.
So while the conditions may look good on paper there are many perceptual issues for the economy (and citizenry) to overcome.
This article just begins to scratch the surface.

BC Liberals have 13-point lead ahead Nanaimo byelection: Mainstreet Research poll

This past Monday, we got a conclusion to a BC story that's been brewing ever since the municipal elections in October. In those elections, Nanaimo MLA Leonard Krog was voted in as mayor of Nanaimo, triggering his resignation from the Legislature, and therefore also causing a crucial by-election for January 30th.
Crucial, because the strong stable minority NDP government of John Horgan was then hanging by a thread. Before the by-election, the governing NDP had 40 seats, their governing partners in the Green Party had 3, and the Opposition Liberals had 42. So it was a 1 seat majority with the independent (and maverick) Speaker Darryl Plecas, who I talked about last week with the report on the Legislature scandal, go check that episode out if you haven't already.
Now, Nanaimo is traditionally an NDP stronghold, being on Vancouver Island. With one exception, it had voted for the NDP since 1972, so it was widely accepted to still go for the NDP. Still, the Liberals and the NDP knew what was hanging in the balance. If Nanaimo switched to the Liberals, it would produce a tie in every vote in the Legislature, causing the Speaker to have to break the tie on every vote.
I talked a bit about the lead up to the byelection 3 weeks ago on episode 101. The NDP got local MP Sheila Malcolmson to resign from the federal caucus to run provincially, knowing how important it was to get a popular local candidate. The Liberals had the same idea, nominating well known and popular local businessman Tony Harris.
Lots of discussion went back and forth online about the two star candidates, and who would win. There appeared to be a breakthrough when Mainstreet Research released a poll that was reported on by Global News and many other local media outlets throughout the province. The story came with the impressively decisive headline "BC Liberals have 13-point lead ahead Nanaimo byelection: Mainstreet Research poll".
Wow. That's quite the lead right? Especially in NDP stronghold Nanaimo. At Western Context, we always say to take polls with a grain of salt, and this story is a pure example of that.
Mainstreet surveyed 753 voters in Nanaimo between Jan. 23 and 24, and plugged the Liberals at 44.7% support, NDP with 32.2%, the Greens with 13.7%, and the basically irrelevant BC Conservative Party at 7%. The margin of error on the survey was plus or minus 3.5% and accurate 19 times out of 20.
At the time, I thought that was a bit of a high turnout for the invisible Conservative Party, and that the NDP numbers were too low. However, when the by-election results starting coming in, the poll turned out to be so wrong and so far off base, it really throws into question the validity of polls entirely.
The results of the by-election was an overwhelming NDP victory. Malcolmson won with 49.22% of the vote to Harris' 40.47%, and with the Greens putting up a miserable 7% and the BC Cons with 2%.
So rather than losing by 13%, the NDP won by 9%. That's an astounding margin of error of 22%.
This is why you can't take polls too seriously, even though they can really impact an election outcome. If Liberal supporters saw the 13% lead story, they might not have bothered to vote, and likewise, NDP supporters would have wanted to vote even more. Green supporters would have seen the writing on the wall and voted NDP just to keep the governing coalition alive.
And that's basically what happened. The Greens put up a token vote, and the NDP won, so Horgan's government continues to live on.
Horgan said he does not believe the Green vote decline will affect the power-sharing arrangement between the two parties. “I’m confident our relationship will continue to be as it has been — rocky some days but at the end of the day we focus on what’s best for people,” said Horgan.
The Liberal’s Harris tried to capitalize on his career as a car salesman and developer, as well as his family’s well-known name. His father, the late Tom Harris, was a local business legend in Nanaimo for his car dealerships and mobile phone stores. At one point in the campaign, Harris channelled the nostalgia of his father’s legacy by using some of his old television ads and jingles in byelection marketing.
But the NDP’s recruitment of popular local MP Malcolmson to run provincially had been considered by many to all but lock up the riding for New Democrats.
The governing party backstopped its candidate with several conveniently timed funding announcements, including Health Minister Adrian Dix visiting Malcolmson’s campaign office to announce Nanaimo was “next” on government’s list of urgent primary care centres, and Education Minister Rob Fleming announcing $18 million in new school funding in a neighbourhood Malcolmson had called for in her campaign.
Malcolmson had to sidestep her own government’s unpopular decisions on homelessness, modular housing and a speculation tax that only applies to certain cities (Nanaimo included) that appeared to weigh heavily on the campaign in its final weeks.
The government also revealed mid-byelection it was sending out speculation tax notices to 1.3 million British Columbians who own multiple properties in Nanaimo, Metro Vancouver, Greater Victoria and Kelowna. The move angered residents because it threatened to tax everyone who owns a home — whether they are speculators or not — if they failed to fill out a multi-page online exemption form.
The NDP had sought to counter those losses with an appeal that the future of its government was at stake with voters, and a loss would spark an election that could return the B.C. Liberals to power.
The NDP seized upon a spending scandal at the legislature, which it blamed on the previous Liberal government. Packaged with a probe into money-laundering, the housing affordability crisis and cost overruns at the Insurance Corp. of B.C., the NDP spun a narrative of 16 years of arrogant and reckless Liberal government it hoped would appeal to frustrated voters.
It appeared that it has worked. Despite the failure of Mainstreet, the NDP were confident in their victory. And so closes another chapter in the turbulent story that is BC politics.
Supplementals:

2018 saw us mark the Trans Mountain Pipeline as one of the newsmakers of the year, this was because Ottawa bought the project for $4.5b.
This week the non-partisan parliamentary budget officer estimated that the government may have overpaid by up to $1b.
The existing pipeline as well as the expansion project are together valued at between $3.6 and $4.6b.
This means of course that being the sole bidder, Ottawa could have ultimately struck a better deal.
This is the equivalent of the government paying sticker price for a car and not negotiating.
The fact no one else in the private sector made a bid shows the pure risk surrounding the project. The risk factor hasn’t decreased.
The report also mentions that as construction is delayed longer, the value of the project could ultimately go down.
A one year delay could de-value the project by as much as $700m.
The only caveat in the report is that Ottawa doesn’t know how much the terminals and the Puget Sound pipeline are worth (both of which the government acquired in the purchase).
The report also states what we have been saying all along: a reduction in the gap between WCS and WTI oil prices are good for the economy.
A $5 reduction in that gap is equivalent to a 0.1% increase in GDP.
If the project were running on its 2019 completion date, “That would translate into a $6 billion annual impact on GDP during the five-year period from 2019 to 2023.”
In closing it’s determined that at its peak, the pipeline will create 8,000 new jobs and if it is ultimately not built, the project will only be worth $2b.
To recap: the government paid near top price, it needs to be built to have any chance in making the money back, and finally, our GDP suffers to the tune of 0.1% missed growth for every $5 discount we sell our oil at. Today that is about 0.3%.

Firing Line

Fury over Google listing Khadr as a 'Canadian soldier'

This story is rather bizarre. Before a few days ago, when you did a regular Google search for "Canadian soldiers", Google throws up a bunch of pictures of Canadian soldiers, famous for their heroic actions. There's Nathan Cirillo, who was killed in the 2014 terrorist attack on Ottawa; Rick Hillier, former Chief of the Defense Staff; Nichola Godard, the first female Canadian soldier casualty in the war in Afghanistan; as well as countless heroes of WW1 and WW2.
The Google search for Canadian soldier also included Omar Khadr. the former Guantanamo detainee who pled guilty to the murder of US Army medic Christopher Speer in Afghanistan in 2002.
There was a huge furor over this story, which bypassed most mainstream outlets, and instead took place mostly on Twitter, with some later traction on Reddit as well. Both sides of the political spectrum decided to use the occasion to make political snipes at each other, instead of looking at the facts.
After it had circulated through Twitter and Reddit, it was picked up by Andrew Scheer, who said "Omar Khadr is a convicted terrorist who murdered a medic and blinded another. He is not a victim, nor should he be portrayed in this way alongside real Canadian heroes. @googlecanada: fix this."
Left wing commentators lambasted Scheer over this, with one saying "If I have this right, earlier today some idiot made this observation on the EXTREME-right metacanada subreddit, not realizing Google results are personalized to one's search history. Hours later, Scheer blasted the meme to his followers, repeating the error. Correct?"
Another said "That's not how that works at all. The little arrow to the left means you scrolled through photos of different Canadian soldiers until you saw something that outraged you. Taking lessons from the alt-right and trying to discredit organizations like Google? Not ideal."
The twitter user then said "And when I say taking lessons from the alt-right, I mean that literally. /r/MetaCanada is the heart of the Canadian alt-right movement on Reddit. This post was done 4 hours before Andrew Scheer's tweet. There's no beating around the bush on this one."
Normally this would not be a cause for concern. It's just Twitter noise right? However, this is where the story gets worse. This last tweet was retweeted by Justin Trudeau's Chief of Staff Gerald Butts.
Gerald Butts is basically the second most powerful man in the Canadian government after Trudeau, and he's not even elected. He's a close friend of the Prime Minister, and one of his closest and most trusted advisors. He's also not shy about displaying his blatant partisanship on Twitter.
However, this left wing fear mongering about the so called "alt-right" not understanding Google searches was simply incorrect. Danny Sullivan, Google's public liaison of search (basically, the guy who talks about how Google search works) chimed in. "Personalization of our results is minimal...Personalization wasn't involved here. This was present for anyone doing the search, though exact position may have changed as our results can be very dynamic...we simply saw concern being raised widely. We reviewed, and because it was an issue with the Knowledge Graph, we took action there (we do not take action on search listings). And yes, on the last because it is accurate."
Andrew Scheer responded a few hours later, saying "It appears @googlecanada has now corrected this obvious error. Glad that Canadians spoke out alongside me and got it fixed. Omar Khadr should never be celebrated as a Canadian hero."
This whole story just shows the dangers of social media, and how a wrong opinion with bad information can get blasted all over social media, when it isn't even correct. That is the very definition of fake news, and the rising phenomena of fake news needs to be taken seriously.
Supplementals:

Word of the Week

Psychology - the scientific study of the human mind and its functions, especially those affecting behavior in a given context.

How to Find Us
Westerncontext.ca

westerncontext.ca/subscribe

twitter.com/westerncontext

facebook.com/westerncontext

Show Data

Episode Title: Psychological Warfare

Teaser: Albertans feel the economy is worse than it is, a poll on the Nanaimo by-election is wrong by 22%, and the federal government overpaid for the Trans Mountain Pipeline. Also, we talk about the evolution of fake news on social media.

Recorded Date: February 2, 2019

Release Date: February 3, 2019

Duration: 45:56

Edit Notes: Internet cut at Nanaimo by-election

Podcast Summary Notes

Duration: XX:XX