The Green Party of Canada, which is led by Ms. Elizabeth May, is facing tough battles in this election.  I argue, for whatever noble causes the party may have, the mere existence of the party is slowly killing the green movement.  The party’s narrowly focused economic and social platforms appeals only to die-hard environmentalists, literally making the party unelectable and irrelevant to majority of Canadians.

To force all other electable parties to reintroduce environmental issues into their election platforms, the Green Party of Canada must go.

The link to the article is here.

I intent to comment not on this specific deal, but the practice of reverse takeover.

Reverse takeover comes with different names such as “reverse merger”.  The practice is better known as “back-door registration” in the financial world.  The concept is fairly simple: a private equity firm takes over a public listed “shell” company.  There is nothing groundbreaking on the surface, but careful examination of why the practice is widely exercised reviews some troubling questions.  Again, I’m not commenting on this deal specifically.

Why back-door registration?  Because it is a cheap way to raise capital.  First, the private equity firm which initiates the reverse-merger benefits greatly from avoid paying hefty underwriting fees to investment banks.  Second, the private firm involved does not have to disclose its financial sources fully.  It could cook up its books in his home country with less stringent accounting standards and business laws to quickly snap up legitimate assets to strengthen their position, making illegitimate firms become legitimate overnight avoiding the often truth reviewing IPO process.

In 2009, one single case took the spotlight.  Chinese MediaExpress tried to reverse-merged its way onto NASDAQ.  During the preliminary listing process, its appointed auditing firm Deloitte, quit after it learned many of the private firm’s sales were manufactured and contracts were untraceable.

Unless more stringent auditing standards are applied to close the loopholes, many small private equity firms will try to crash the back-doors.

I am no nuclear scientist.  However, I would like to bring out two points to share with you.

First, to a large extend, increasing reliance on nuclear energy is an integral part of the ongoing green movement.  At present, nuclear is a form of energy and arguably the only reliable source of clean (carbon free) energy that can be produced in such quantity to replace fossil fuel based energy sources.  Taking nuclear out of the equation would make the uphill battle against global warming become seemingly impossible.

Second, nuclear energy is relatively safe.  An article from Slate magazine compares the tolls of different types of energy sources.  All types of energy extractions carry risks.  People are generally extremely risk adverse when it comes to events with low probability and yet high expected lost, such as a nuclear disaster.  Conversely, we are much more willing accept that miners dying in the process of extraction.  Thus, as long as someone else take the risks (i.e. coal miners and oil workers), we are (collectively) willing to accept the risks on their behalves.  How selfish are we.

If Japan decides to move away from nuclear as their main source of energy, the prices of traditional alternatives such as natural gas, coal and oil would definitely soar.

Here is the link to the article in Globe and Mail.

The price of food is a reflection of a simple yet complex market structure.  To start, seeds are planted in fertile soils for fruits, vegetables or cereals to growth.  Inputs such as labour, machinery and technology are important components.  Of course, mother nature could always humble our egos.  Supply shocks due to bad weather could disrupt the entire supply chain.  With low yield due to droughts or floods, there would be no need for transportation and subsequent markets.

Bringing the price of food down is no easy task.  In some parts of the world, rising food price could force individuals to give up education or specialty jobs, as it is no longer economical to leave farming to farmers.  And yet, I have not even mentioned the effect of climate change on farming.  Global warming upsets water cycles which leads to lower yield counts.  Severe droughts and floods could become a common occurrence.

Farmers has long been combating the decrease in yield by increasing the use of fertilizers, driving its price up.  The marginal return on fertilizers has kept diminishing.  What if we don’t waste food?  In poor countries, food is wasted near where it is farmed.  Pets, rats and mice eat crops that are not properly stored.  Proper food storage units such as grain elevators and refrigeration units need money, money that they don’t have.

Better able to predict weather helps, but the security of food production must rely on technology.  Bio-engineered plants that can better resist pets and drought, however we are still years, if not decades to achieve that, partly due to the fact that rich countries did not seek to increase R&D investments in the past.  Western countries with plenty of food to spare spend a disproportion amount of resources on health care research than food.

The pressing issue is not food price, I argue, but the inability to produce more with less.

Latest Update: The 4:00pm slot is no longer available.

As mentioned, I am available between 9 to 5ish on March 2nd on campus.

So far, I’ve more than a few appointments lined up from 9am to 4pm.  If you wish to meet me in person on campus, please email me ASAP.  I still have open slots at 4 and 4:30pm.  If necessary, I will stay behind after 5pm.

Please don’t show up without emailing me in advance.  I may not be able to see you.

I’m not sure what Mr. Donald Trump is up to, but it certainly sounds like he wants to run American as a business, not as a country.

People don’t scrub toilets because they suck at it.  It is because by having someone does it for them, they are freed to do other jobs that are more valuable.  Opportunity cost does matter.

A 25% import tax would certainly startle the Chinese, but Americans have more to loss.  Imagine everything costs even 10% more (assuming Chinese goods are rather inelastic, much of the burden will be shouldered by Chinese companies), it drives up inflation substantially, rendering current monetary policy ineffectively.  Combine high interest rates (in response to inflation) with depressed outputs, you have a recipe for economic depression.

Perhaps he thinks the threat itself would be enough to prompt reaction from the Chinese but the devastating consequences would deem the hollow threat ineffectively.

Mr. Trump is a businessman.  Profits come first.

Or, it is Mr. Trump, the businessman turns politician talking …

Source: http://xcrew.net/content/the_cost_of_bandwidth_canada_versus_the_world.html

I did not attempt to verify the data, but it looks right.  Assuming the graph accurately depicts the pricing structure of involving countries, Canadians are paying the most expensive internet service.

In Canada, the monopoly nature of the industry is well known.  Some argue it is the case of a natural monopoly given our tiny population.  In Calgary, only recently does Telus (Optik) be able to compete head-to-head with Shaw (High Speed).  As an average user, I can attest to the fact that Telus’ service is superior to Shaw’s in terms of speed and stability.  Before the switch to Telus about six month ago, internet service provided by Shaw was slow and spotty.  Customer service was less than satisfactory.

Economic theory stipulates that internet companies (with monopoly power) try to maximize profits by restricting output (bandwidth).  Although it is supported by simply theory, it is rather difficult to prove in court.  I will explain the coming lectures.

To free up available resources, Usage Based Billing (UBB) seems to make economic sense, the internet providers argue.  Imagine that bandwidth is like street roads; it is a common resource for all subscribers.  It only allows a certain number of traffic flow freely.  As traffic volume increases, congestion is usually the results.  Since subscribers cannot be excluded from using the service, having additional traffic to an already congested network would  slow down the flow of all users even further, rendering poorer services.

On the surface, UBB would reduce traffic flow to free up available bandwidth.  The idea sounds simple and could effectively free up bandwidth to create more pleasant experiences for all users, as heavy users must pay a premium for each additional bandwidth they occupy (increasing MC).  But there is a catch.

Unlike roads, internet bandwidth is relatively cheap and scalable.  It is the internet providers that control the amount of resources they put into building additional capacities.  Often, monopolies with market power have no desire to increase capacity.  I would argue, UBB would further discourage internet providers from building extra capacities.  Why would internet providers increase supply (increasing marginal cost) to lower the market price (downward sloping demand / MR) if they find a way out without doing so?

For internet providers, UBB would allow a much more pleasant experience for average users without adding capacity.  To justify price hike within different segments of its market under UBB, internet providers can simply allow existing bandwidth capacity to reach its capacity, blaming yet gain the ‘heavy users’ once again and charge all at a higher price.  It is only fair if UBB is implemented and profit is tightly controlled and regulated, just like power, water and natural gas.  I don’t think companies like this idea.

We all agree having access to the internet has tremendous social benefits.  Both speed and volume count.  The low cost of access to information (unlimited by only opportunity costs) alone benefits all of us.

Building endless private toll roads to solve traffic gridlocks wouldn’t be wise.

We will discuss this case as an example in class.

Not all monopolies are bad.  But only a few operate in the best interest of consumers.

Disclaimer: My small business uses  a third party merchant service that accepts credit card payments.