Taking a Break

The best-laid plans for a few last pre-Xmas posts went awry due to the pressures of work and the holidays. I've decided to admit defeat and simply shut down until after New Year's.

When I return there is one topic I particularly want to focus on over a few posts. That is one of how telephone companies, wired and wireless, use technology to assert control over what users and competitors can do with and on their networks. These are ways they strive to maintain control over their business model, and fight the migration of service intelligence.

So until January, thanks for reading and have a great holiday.

The Price of Regulation

Let's take a quick survey of some of the recent failures of communications regulation in Canada.

• 911 Service: VoIP and wireless emergency service is lagging badly and it is costing lives. Lots of talk and no action. We leave the industry to police itself. VoIP providers are particularly prone to deferring important upgrades such as 911 since they are running bare-bones operations and are at the mercy of the incumbents who make them pay to connect to or integrate with their 911 systems. This is also largely unregulated so they take advantage of their power to make it just expensive enough to cause pain to their competitors without waking up the CRTC.
  
• Spam: Much of the email spam coming from Canada referenced in this article isn't really criminal activity within Canada. It's just that we have lots of unsecure computers being recruiting into zombie/bot-nets. However there have been cases of the actual perpetrators being in Canada, but not being prosecuted.
  
• Telemarketing Fraud: I don't mean the usual crud, it's the criminal activity of phishing and commercial fraud that is the serious problem. The Do-Not-Call registry doesn't stop criminals (no surprise) and, worse, they are now using the DNC registry to harvest more numbers to call, especially mobile numbers which are otherwise unpublished. Pressure from the US did eventually cause Canada to against criminal call centres operating in Canada that targeted Americans, despite most Canadians remaining unaware of the issue.
  
• Surcharges: It's those extra fees you find on all of your telecommunications bills. Things like system access fees and 911 fees. This is a great way (for the service providers) to increase your service charges without changing the basic service charge. It's completely bogus. The US is well on its way to implementing truth in billing, yet sadly that is not even being considered with any seriousness in Canada.

None of this should be cause for surprise. During the 1990s the Liberal federal government made massive budget cuts across every ministry to rein in the deficit. They succeeded in part by reducing regulation and enforcement. Industry self-regulation became their mantra. Of course this was not limited to communications, but also food and product safety, among other areas.

Passing laws is cheap. Enforcement is expensive. Much of the time we don't even bother passing laws. It takes a lot of public chatter and complaint to get regulations enacted and enforced. This has happened recently with food and product safety, water safety in some cases like first nations' reserves, and there will likely soon be action on prescription drug safety. Teleommunications safety, truth in billing, and performance? Forget it. Even with well-documented cases of lives lost due to unimplemented yet available 911 solutions there is only more talk. Politicians are habitually half-deaf so the noise has to be loud and sustained for them to take any notice, and even louder before they act. We aren't there yet.

If The Big 3 Aren't Bailed Out

It will not be doom and gloom. Of the 100s of thousands of people directly impacted, the disruption should be short term. Let's look at this piece by piece.

• Automobile purchases: Much of the projection seem to include the view that the automotive sector will be diminished by the current market share of the failing companies. Yet we will continue to purchase vehicles in the same number and type as before. Obviously, for those who would purchase from one of the failing companies, they will have to choose a car from another manufacturer. But if you're going to buy a car, you will still do so. Therefore the size of the retail car market is unaffected.
• Imports vs. domestic: If you accept the above argument, there is still the prospect that the manufacturing sector will decline proportionately while imports will rise. Short term this may be true since domestic supply will decline. However this is a short-term impact. Other foreign manufacturers (the big 3 are also foreign) have good economic incentives to manufacture locally, and this will not change. Short term they would likely add shifts and hire recently unemployed assembly-line workers from the failed companies.
• Suppliers: Outside the big 3, many of the parts come from overseas rather than from domestic parts suppliers. This is no surprise since there is a very tight relationship between supplier and manufacturer. For the big 3, many of their suppliers were originally part of those companies but were spun off for a variety of (good) business reasons. So, yes, all those parts suppliers could be in trouble. Here is where government could help by pressuring or providing incentives to the remaining manufacturers to source more parts domestically.
• Sales: Ever talk to automobile salespeople? Many of them hop among dealerships quite frequently during their careers. A salesman has no knowledge that is so specialized that it isn't transferrable to selling another company's cars. The dealerships themselves will have to change, of course, but then many have done so in the past as consumer preferences have shifted away from the big 3. There will a short-term acceleration of this trend, which I expect will not be overly disruptive.
• Service: Car dealers have a problem when they, as pointed out above, shift their businesses to selling vehicles from other manufacturers, and yet don't have trained service staff for those brands. Mechanics nowadays are highly trained technicians and much of that training is brand specific. Retraining will be required to support the cars being sold. While dealerships will have to compete in the short term for suitably trained service staff, the mechanics themselves could find themselves in a seller's market and so do quite well. For consumers the impact is not so awful since while the new car sales mix will change overnight, the actual mix of cars on the road will only change gradually. To get good service, consumers may have to change where they do business but the support will be there.

So just what does this government money (our money) accomplish? Buying habits aren't changed by the money, except to slow consumer abandonment of failing companies, which means job losses and factory closures will continue regardless. The workers still lose. Ultimately the money goes to supporting the companies' shareholders and, more significantly, their creditors who cannot so easy sell that debt due to its illiquidity.

Is buying a year or two of time to allow these companies to get their houses in order going to work when they have mostly failed to do so until now, and knowing their business choices were unsustainable? I am unconvinced. Let the market choose the eventual winners and losers.

Deflation In Action

Ottawa is relatively protected in this recession. At least so far. Yet the impact on the local economy seems not far different from that in other locations, ones that are actually seeing major impacts.

This is a reflection of psychology, or what economists often call consumer confidence. When you lose confidence in the economic outlook, even if there is no hint of coming disaster in your own future employment, you change your spending habits. That is happening in Ottawa, a town with a large public sector that is pretty well protected from serious cutbacks. It is hard to ignore the distress all around and continue on as if it's business as usual. Maybe you look at your mutual fund statements and wonder if you'll have the means to retire in comfort, as planned, in 2040. That's an awfully long way off, yet people still worry.

As I go about my daily rounds, shopping for this and that, which I tend to do at smaller establishments, I always like to ask the proprietors and sales staff how business is going. It isn't going well. Even in supposedly safe businesses like groceries (we all have to eat), hair stylists (hair doesn't stop growing) and even coffee shops (for the caffeine addicted), people are radically changing their habits. Yes, people eat, but they eat out less and are choosing more economical food items for the home. As my barber mentioned, hair grows, but rather than come in every 3 to 4 weeks for a trim, more men are figuring that once every two months is good enough. Or, why spend $3 on a premium coffee when you can get it for a tenth that price at home.

This ripples up the supply chain. My preferred (imported) coffee retailer told me to expect some significant price reductions next time I visit. His suppliers are feeling the pinch, which gives the retailers negotiating power over price. This of course ripples further back to the coffee producers. We see this on a larger scale over the entire commodities market, on which Canada's economy relies. Even Alberta is seeing a slowdown.

This is deflation in action. Economic planners fear this since it encourages more deferred spending. The thought-process is, since products will be cheaper tomorrow why buy today. This is the opposite of inflation which encourages spending today since it'll cost more tomorrow, especially where savings interest rates don't keep pace with inflation.

This isn't good. Until consumer confidence reverses the economy will not heal. This is one place where political leadership can help, by promoting confidence in the future. It isn't quite a rational strategy but is nevertheless one that can work. For each of us individually, if we are financially stable we ought not to cut back spending to any great degree. Just go on as before. That isn't easy to do when the media is broadcasting fear 24x7. Turn off the TV and spend like it's Christmas!

Fairness and DSL Wholesale

The latest decision on high-speed DSL wholesale from the CRTC renews an old question: how much should the incumbents be required to offer to their competitors? Many people will rapidly align themselves with one of two extreme viewpoint, either saying everything or nothing should be made available. Although I have a certain self-interest since I am a DSL consumer, my own views are more nuanced.

Bell Canada, Telus and the other incumbent telcos are businesses. As businesses they are obligated to maximize share value, dividends and other returns to their shareholders. Offering wholesale DSL to ISPs who then compete with them in the retail market is not in their business interest. It is therefore perfectly appropriate that they'd fight to stop it. Whether they ought to win is a matter of public policy balanced against the need to let the market work.

Let's briefly look at why the CRTC, and regulators in other developed countries, impose this type of mandate on incumbent telephone companies. Since fairly early in the 20th century the telephone companies have been monopolies. It didn't start out that way. They achieved their status through an aggressive campaign of acquisitions. As telephone service was increasingly considered part of the country's critical infrastructure, government stepped in to regulate these large, dominant companies. The public good was set off against pretty much guaranteed returns for the companies' investors. It was both boring and lucrative. Part of the public good side of the equation was investment in research and development, so that despite their monopoly position these companies did sustain a decent level of innovation.

Various pressures mounted over the years, that when combined with a renewed sense that competition would deliver benefits to the country, the telecommunications market was gradually opened over the past few decades. The US took the lead in much of this, with Canada, Japan and Europe not far behind.

However there was a large problem with creating competition in a such a locked-down industry. The capital cost to build ubiquitous networks is enormous, and would have to be spent far faster than the incumbents own capital budgets if the new entrants were to ever level the competitive field. This is felt most strongly in the so-called last mile, that last bit of copper that is dedicated to each residential and business subscriber. Other capital costs are modest in comparison.

To prime the competitive pump, regulators decided to force the incumbents to lease those copper loops to their competitors. The understanding they had was that, due to the capital costs involved, the last mile was a natural monopoly. Every country mandated this loop unbundling in different ways though the principle was much the same for all. For example, the local loops had to be offered at a wholesale price that permitted others to offer competitively-priced telephone service. As you might guess, all this market-opening policy resulted in a massive amount of government intervention, with ongoing regulation and legal strife. No company gives up their profits and successful business models without a fight.

Now one thing you should never do is let governments pick winners and losers, neither companies nor technologies. Yet that is what happened. By focusing on the copper loops they did not address the existing and evolving competitive local loop technologies, cable and wireless. These were judged by most regulators to be entirely separable matters since, in their view, they did not offer realistic alternatives to copper-based telephony. Of course they do, especially now, yet the regulatory regime continues to mainly target the copper loops.

With that brief tour of the historical background, we can return to DSL wholesale. This odd history explains why, for example, the cable companies are not mandated in Canada, and many other countries, to open up their residential broadband pipes to outside ISPs. Whenever this inequity in regulation was noticed, it was seen as a public good since a cable industry kept whole would, over time, offer competitive voice and data services - which was the objective all along. This has indeed occured. But what now?

Today if you want broadband internet access you have many choices, even though they are not equivalent or fully deployed: DSL, cable, Wi-Fi (in some places), cell-based 3G+, Wi-Max (soon, maybe) and even fiber/FTTH (eventually). Yet the CRTC remains focused on twisted-pair copper local loops and beating up on the incumbent telcos. Is this the right thing for our government to be doing?

Despite my reliance on wholesale DSL via a non-Bell ISP, I am not convinced this is the right thing for the CRTC to be doing. This is not the 1990s (or the 1980s!); everything has changed. If they want more retail competition they need to act more equitably across all the competitive network operators by mandating them to similarly wholesale their broadband data access facilities. Or, to take a more laissez-faire approach, stop mandating DSL wholesale and let all the companies decide on their own what to offer the market. There is broadband internet competition, without wholesale DSL, even if the number of network providers is not large.

Instead, the CRTC has chosen to be consistent in their current policy direction. On that basis it makes sense to level the competitive field by permitting ISPs to offer the higher-speed version of DSL. It includes the same local copper loop natural monopoly, just with improved electronics (modems) at the network end of the loop. If this was a discussion about telco investment in fibre in the last mile, and opening that up to third parties, the conclusion should, and likely would, be entirely different.

Command and Control At Ottawa City Hall

It's both dismaying and disappointing to watch Mayor O'Brien totally fail to provide effective leadership at City Hall. I voted for him, hoping to see improved spending discipline from Council. While he continues to sleepwalk through the remainder of his term it is perhaps worthwhile to look at what I believe are the principle factors for his failure.

Larry O'Brien is a CEO. He is accustomed to having everyone around him do as he says and to anticipate his desires. A CEO is final arbiter in any company, provided he has the support of the board. He can hire and fire at will as one tool for delivering on the company's business objectives. This is a necessary power since the CEO is fully accountable for those results.

Every CEO exercises a mix of command and control, and leadership, though not always in equal proportion. From those who have known him in the corporate world, O'Brien is known more as a command and control kind of guy. This doesn't necessarily make him likable, but that doesn't matter if he produces results. A good leader is one that, when he shouts, "follow me," others willing and enthusiastically follow. A command and control CEO simply removes those who don't follow orders.

Command and control works in many political situations. Think of a Prime Minister in a majority government. Even when in a minority, as Harper is today, command and control can work if used with due care. It doesn't work at all in Ottawa's government since the mayor is in a minority of one; the councillors are all independent. This is where leadership needs to be applied by a mayor who would hope to have success with his agenda.

The trouble with O'Brien isn't his background in command and control. His failure is that he can't adapt his style to one of principally leadership. He knows what needs to happen but he can't figure out how or, more worrisome, he refuses to learn. There is some parallel here with Harper's recent performance as a command and control minority PM where it blew up in his face. Except that when O'Brien fails he's still the mayor; there is no government to fall. So we're stuck with a lame duck whom the more politically-savvy councillors walk all over. We become the biggest losers.

Which brings me to my second point: the councillors. No mayor can successfully lead the councillors when he cannot bring political pressure to bear on them. This is a very difficult task for a good politician, let alone the incumbent. To build political capital the mayor must generate support for his vision among the population, that the mayor can then use as leverage with Council. The premise being that if Council doesn't align itself with the mayor, and therefore citizens, they risk losing their seats in the next election. Another way of looking at it is that the mayor needs to get voters to support him rather than councillors with opposing views.

Regrettably this isn't happening. Voters keep reelecting the same councillors every election while preferring instead to change mayors. The councillors know this and use it to their advantage. This is how they pushed through a 4.9% tax hike while O'Brien stupidly looked on with his jaw hanging open. He has no political currency with Council or with voters, while Council can confidently rely on getting a bye in the next election by only focussing on oiling the squeaky wheels - the special interests generating all the news coverage.

Most voters, even while getting cranky about taxes, will continue to support the freely-spending councillors. It only becomes a problem for them when we start to vote according to the weight of our wallets. Will we ever do that? This is not a problem O'Brien will solve - he has neither the will nor the competence. 

Negative Equity

The latest news out of Nortel is not good, even if not too surprising. A structured bankruptcy filing was certainly a possibility before this, though it perhaps wasn't expected to be telegraphed to the market so soon. Nortel has learned its lesson and now knows to give the market ample notice of potential adverse events. That is, since it is a non-negligible possibility they need to let the market know now so they don't, again, get hit with shareholder lawsuits if this dire outcome occurs.

But why bankruptcy? Nortel's assets and liabilities are finely balanced so that even on commonly-mentioned valuations shareholders are left with approximately zero equity. On that basis the common shares are worth nothing. Yes, that would be $0.00, and not the currently quoted $0.50 price. Anyone buying shares at this price is betting on a turnaround of some sort.

The corporate debt is not now in default and isn't due for some time. Unfortunately their market capitalization is so low (~US$200M US) in comparison to that debt (well over US$1B) that Nortel cannot issue shares to extinguish even a small part of this debt. If they tried, the share dilution would be so severe it would only accelerate the share price drop toward zero. Then there's the pension shortfall, equally large, that is largely a result of the low market cap. For this reason the pension shortfall can only be made worse with a new equity issue.

On the asset side the picture is equally gloomy. The one business unit that does have some good value is MEN, yet there are clearly no buyers coming forward, or just not at the valuation Nortel would like. This impairs the market's view of their business assets. Add to this the slashed capital budgets of their customers and Nortel's enterprise value, and prospects for future cash flow, basically suck. The market is coming to terms with a situation where Nortel will be in a negative equity position, where their liabilities exceed their assets and enterprise value on the basis of the expectation of any realized market price for each.

Nortel isn't alone in this predicament. This also underlies how sub-prime mortgages played a large role in the current economic crisis. As housing prices declined and debt costs rose, so-called home owners were in a negative equity position. This meant they were better off walking away from the house and letting the banks foreclose. This now unwanted asset undermined the banks since the value of the houses is less than value of the asset they replaced (mortgages).

If Nortel does file for bankruptcy protection, the debt-holders will likewise end up owning the company. Shareholders end up with nothing. The debt-holders also lose big time since not only does the debt exceed the assets, they get saddled with a poorly-priced company that is difficult to sell. This is very much like all those foreclosed houses in the US right now.

While I earlier considered that Nortel might be worth buying at some point, I no longer feel it's worth considering. Miracles can happen, but don't bet a lot on it. It's increasingly likely that Nortel's shares go to zero.

Culture of Risk

I've written about it before, and it is a common topic around Ottawa: the lack of early-stage venture capital for technology start-ups. It's a shame since without these companies having access to funding much of the future of the local technology industry is doomed. Entrepreneurs will have to either leave the city or simply give up.

On markets, it is said, bottoms come when despair reaches a crescendo. No one buys, and even the sellers have given up. Despair isn't as visible in the private equity market, yet it is out there. It's a shame really, since this could be the best time to invest, the argument being that the only direction left to go is up. Except when you're cowering at the bottom of a deep dark hole you rarely see the positives about the situation.

So, how to get the funding machinery working again? Except during the height of the dot-com boom nearly a decade ago, VC was never at the same level in Ottawa as in the US. This may be the more conservative nature of Canadians; Americans are more likely to embrace risk than we are. This drive in the face of risk can create some enormous and cutting-edge corporations, while also fomenting disasters such as the current financially-driven crisis. Is it comforting that our banks, being more conservative and more-strongly regulated, are doing better? Is the lack of risk-taking in Canadian business an acceptable by-product of this behaviour? I don't think so.

Absent VC and angel funding, there are alternatives. It's nice to see some local activity to put forward proposals that could increase the pool from which funding is available. This is a double-edged sword since looking toward small investors is necessarily involving less-sophisticated investors. Our governments, in keeping with our tendency to over-protect ourselves, currently prevent what they define as "unsuitable" individuals from investing in this type of venture.

I would also hope that the proposed initiative permits venture funding up to at least $1 million. With the moribund VC situation, companies need some runway to get through the present drought. If you are only permitted to raise $100,000 to $250,000 using this mechanism, you will likely need another round of funding before becoming cash-flow positive. This is typical of product development ventures which require substantial investment before there is revenue. Yet if the VC market has not opened up when that small amount capital is consumed, the company risks failure. We need a complete funding eco-system, not just one piece of it.

Apart from the private market we also have a public market for venture financing - the TSX Venture Exchange. While this can work, and since it's public it is open to everyone, it has its problems. The market tends to be illiquid and opaque, and places an administrative burden on the company. If government regulations put fewer barriers in the way of individual investors there would be less need for a market like this. Nevertheless, it is being used by local companies such as Counterpath.

It is encouraging to see ideas being presented and promoted, yet I have to wonder if it can get traction, and get it soon enough to be of use - the problem that needs solving exists now. Our cultural ambivalence toward risk may well be reflected in the Ontario government's response to this initiative. The promoters are all risk takers, so their action is no surprise. If they plant the seed there will be a lot of work required to ensure the crop thrives.

Political Dissonance

It's over. Whatever chance the coalition had to assume power now appears to be stillborn. Not everyone will agree with me, but that's how I think it will play out over the coming weeks and months. Ssomehow, in his stumbling around in the dark, Harper managed to dodge this bullet. I am now going to shove this matter aside to talk of what I believe is a more fascinating matter - that Canadians' view of government in this country is out of tune, in dissonance, with the formal rules.

Let's review the basics by considering the following two statements. You can think of it as a quiz:

1. Canada is a constitutional monarchy.
   
2. Citizens elect local representatives  to Parliament to represent and defend their interests. The elected MPs select a government. The government selects its leader, the Prime Minister. The government stays in power by retaining the confidence of Parliament.

I expect that any child who has made it to high school could confidently affirm both statements. Every constitutional lawyer and political scientist would agree. Except that they are all very, very wrong. This is not how our political system actually operates, despite the constitution and the law. This became clear to many this week when the system was severely stressed.

Let's first look at the idea of a constitutional monarchy. I know that many people, perhaps even most, felt uncomfortable that an unelected individual could choose our government without consultation and without justifying that choice. That is a monarchy in action, and is perfectly legitimate in Canada. There is the nub of the first dissonance. While we mouth empty words about being a monarchy, our sentiments are republican - we elect those we put into power over us.

With all respect to the Governor General's prerogative, this is unacceptable. I suspect she understands this quite well. While I certainly do not know, I believe this played a role in her acceptance of Harper's recommendation to prorogue. Despite violating tradition and undermining the coalition's ability to govern with the confidence of Parliament, this was the decision that minimized the national dissonance. The realpolitik is that Canada is a republic and she affirmed this by bending to the government's will. Despite the unhappiness of the opposition and their supporters, and their defensible appeals to the constitution, I believe this decision sits best with the country at large. In Canada, the monarch remains a figurehead, as we largely believed all along.

Next, let's look at this idea of electing MPs and selecting a government. Again, everyone understands the rules of the game well enough. The legally correct arguments of the opposition are in dissonance with many people, without regard to their correctness. Canadians are not stupid and don't need a lecture from the politicians. When we go to the polls we go to elect a government. The idea of local representation at the national level has grown very week. Votes are largely cast on the basis of national, not local, interests, and as presented by parties, not individual candidates. I am not saying this is right or wrong, only that this is how we actually cast our votes. Or at least so it seems for the majority, or is at least the uppermost fact in the minds of the majority.

When Harper says that Canadians elected a government, he is wrong in law but right on the street. He has won this game because the street supports him. Even many of those who did not vote Conservative tend to feel this way. Rae's impassioned pleas to the people on the basis of law falls flat since in our bones this is not how we feel about democracy in this country.

Even while I struggle with the strange events of the past week, I am getting more comfortable with the outcome. In my opinion, Harper's peculiar victory, despite some of his unsavoury tactics, could prove to be a victory for democracy in the long run. Our centuries-old traditions need some sprucing up. Forget Westminster, we need a new Canadian parliamentary tradition.

Surviving the (Tech) Recession

Instead of writing a "me too" article about the present political situation, I will look at the economy. Not only is this far more important, it is also of particular interest to me because of the threats facing small technology companies in Ottawa. Small companies don't travel to high-level meetings with politicians and attempt to sway national policy in their favour. They weather the storm or fail.

Rather than write my own thoughts on this topic I want to direct you to an article written by Michael Wakim of Fidus. This short article gets to the heart of matter with a style that is elegant in its simplicity. If you, like me, believe that the small technology firm is the model of success for the high-tech industry in Ottawa, you should read it.

The Business of Unsolicited Communications

Crime doesn't pay.

Do you believe that? Often it's true, but not always. There are both successful and unsuccessful criminals, and the successful ones typically have failed one or more times in the past. Further, success isn't a guarantee against future failure.

It is no accident that the above description is equally valid if every occurence of criminal is replaced with entrepreneur. Too often we define criminality and business using very distinct value systems, which tends to blind us to the common economic foundation for both:

Success(profit) = Revenue > Expense

If you find this morally abhorrant please put the feeling aside for a moment. I will not be arguing that criminality is ok, or that business isn't. Instead I want to say that many forms of economic behaviour are driven by a desire for profit. We value various behaviours differently, as we should(!), yet there is that common ground among them all.

So we come to the subject of this article, the business of unsolicited communications, and specifically email spam and telemarketing. Both are regularly in the news since they are a constant source of grief for almost everyone. What is so often missed is why it exists. If pretty much everyone hates this stuff why does it continue? What's in it for the perpetrators?

As you may have guessed by now, if you didn't already know, it exists because it pays. Its legitimacy or criminality is secondary to its profitability. It pays because for those who do it the revenue exceeds the expense. The same is true of any criminal enterprise, including drugs, property theft, financial malfeasance, protection rackets, and so on. For crimes, there is also the indirect expense of jail time, yet even that can be turned into a dollar figure - opportunity cost. Criminals are businessmen. They are not always successful businessmen, but all are driven by the pursuit of profit.

Email spam is interesting because of the technology angle. Email is cheap. Really, really cheap. That permits the spam merchants to address a large market, repeatedly, and remain profitable even with the very low percentage of targets they convert into customers. They have also branched out into related fields like blogs and social networks.

Telemarketing is more expensive but works because the hit rate is much higher than for email spam. There are social and psychological reasons for this with which we can all identify. With technology also working its way deeper into this sector, for both the legal and illegal telemarketers, their costs are declining. This causes telemarketing to increase in volume and in the range of products sold. They can remain profitable with less revenue potential per outgoing call.

This profit angle is why governments and police forces have found some of their greatest success in fighting crime by increasing the expenses of the criminal enterprises they target. Regrettably this often has a high cost to the taxpayer; enforcement is very expensive. That is a key reason why criminals are hard to stop - as a society we can only afford so much enforcement expense. Indeed, for the large criminal organizations a popular counter-strategy is to increase the cost of enforcement. Often this is achieved through brutal means, such as violence and corruption, but the financial strategy is sound.

In the meantime, every successful enforcement action is given maximum press exposure. This is largely done for political purposes, to try and convince the populace that government is on the ball. The numbers say otherwise. Drugs continue strongly, as do spam and telemarketing. All are increasing. Large court settlements over spam, while often undisputed are impossible to collect, either because the criminals are insolvent or, more often, are anonymous and overseas. Enforcement has failed, and will continue to fail.

Since many of our laws are based on a shared sense of what's right and wrong it is difficult for us to attack the other side of the profit equation - revenue. Drive down the criminal's revenue and you can put them out of business. When it comes to drugs the top strategies seem to be education and legalization. In the former case, reduce demand by getting people to stop consuming drugs (or responding to spam), and in the latter case, reduce the street price by making the drugs legally available. It's quite the dilemma. We see these debates all the time nowadays, and there are no easy answers.

So coming back to unsolicited communications, if as individuals we cannot adequately address either the expense or revenue of the perpetrators what can we do? This is where technological solutions come to the fore. By this I mean spam filters and telephone screening products. These can work, and they are, slowly, getting better. Unfortunately these do come at a price, measured not only in dollars but also in inconvenience and filtering errors. Yet this is all we can truly count on since laws against spam and telemarketing are pointless without the requisite enforcement. For now we are on our own.

No Crisis in Parliament

The antics going on in our federal Parliament right now are very interesting. I believe that no matter the outcome this is very healthy for democracy in Canada. In this article I will attempt to explain why I hold this view. I say this from a somewhat detached viewpoint since I am not a partisan; I hold all our political parties in some degree of contempt.

First, the media is unsurprisingly playing up the events, and I will admit that these are newsworthy since our government, and in particular governance, are at stake. But we should not allow the media to cause us to conclude there is a crisis. That is, while there may be a crisis brewing, it is not our crisis. It is a crisis by and for politicians.

Second turmoil in Ottawa will hamper any federal attempts to intervene in the economy for some months, though it is questionable whether that is a bad thing. Politicians can show leadership yet it is not necessary if citizens are motivated to act on their own behalf. After all, the country's wealth is held by the people, not government, and so the recovery is ultimately up to us. Indeed any intervention the government does take could work to our disadvantage by propping up corporations that are less than viable and shuffling tax dollars from one sector to another or from our region to another. The economy is likely to recover on its own and more effeciently without government intervention.

What the government can best do is try to restore confidence in our future. Too many people left to their own will focus on the dire present, which is not healthy and can further erode the economy. The nice thing about the political crisis is that if it focuses on the economy then every political party is telling citizens that they agree this is the uppermost priority. Even if they do nothing (or if they do something it will most likely be a merely token effort) this picture of the politicians caring about peoples' predicament can raise spirits. I realize that this view sounds cynical and even insulting to those suffering in the recession, yet I believe it can work.

Now I want to remind you that economic leadership isn't really the subject this article. It is the issue of parliamentary governance in Canada as introduced in the opening paragraphs. I only spoke of the economic backdrop to allay concerns that a short-term parliamentary crisis is bad for the economy, or that it should sway us from the bigger issue.

We do not have an admirable record of parliamentary democracy in this country. When a party has a majority they rule like autocrats. When the governing party is in the minority we stumble along from one manufactured political crisis to another, sliding inevitably toward an early election. Some say that minorities work better since there is some amount of compromise required, which better represents the country's diversity of political views. I am unconvinced. Both work only moderately well, just differently.

There are experiments with minorities with which Canada has minimal experience. Coalitions? Nope, not us. Include a broader representation of political outlooks in cabinet, as Obama is now doing in the US? No, not us. Why not? Why is there this fixation in the parties (Liberal or Conservative) with governing as if they had a majority when they don't? It simply isn't effective. What we get is endless political brinksmanship and even greater attempts to discredit others, all in an attempt to stake out positions in front of an (expected) election. We deserve better.

This is why I care about the current crisis. For once there is a possibility that we'll try something different. I have no love for a possible Liberal-NDP coalition supported by the Bloc, yet it is an experiment from which the country could benefit. It's time we tried a coalition. Especially in the present age where we have a greater degree of fragmentation of seats among the parties, and so a decreased probability of majorities. Many others countries do so as standard procedure, yet we tend to implicitly admire the US two-party system and equate coalitions with instability.

A further advantage to coalitions is that elections will matter more, and can result in an engaged citizenry. When there is the possibility that a smaller party can attain even a small share of power there will be less strategic voting toward one of the larger parties and more voting on the candidates and parties individuals truly care about. I believe that's a good thing.

I have no idea what will happen in the coming days and weeks. What I do know is that for once they have my undivided attention.