The Wolf of Wall Street

Martin Scorsese’s film The Wolf of Wall Street starts where Oliver Stone’s Wall Street ends. Stockbroker Jordan Belfort (Leonardo DiCaprio) enters mere months before Black Monday in 1987. After the crash, Belfort finds work at Long Island strip mall, pushing penny stocks on the working poor. A few years later, he’s opens Stratton Oakmont and makes millions for himself and his friends.

Belfort gets rich because he knows how to sell junk and to teach others to do the same. Belfort is told by his mentor (Matthew McConaughey) that he’ll succeed by making commissions for himself not by making money for clients. But at the end of the movie, 179 minutes later, we don’t really know how he does it, except by breaking the law. The Wolf doesn’t explain junk sales and shows very little of the successful techniques of unscrupulous salesmen. During a sales call, Belfort is more engaged in simulating oral sex for his fawning associates than taking them through a well crafted pitch. Even Stratton Oakmont’s criminal work, including stock manipulation during Steve Madden’s IPO, is glossed over.

Rather than portraying the inside operations of a real company that made millions, often illegally, Scorsese shows how the rich and tacky spend their money – on hookers, quaaludes and dwarf throws. These are high energy scenes with DiCaprio artfully embodying a hopped up cash addict, but the constant acts of sexual and material excess become mundane with repetition, for the players and the audience. These scenes seem made for one audience, would-be wolves who want to sexually exploit very attractive women. For others, it’s tedious and gratuitous.

Without any acknowledgement who loses in the zero-sum game of stock trading, the film becomes a three-hour infomercial for the real life Jordan Belfort, convicted pump and dumper and memoir writer. The real Belfort continues to peddle workshops to people wanting to get rich, using the film to promote his claim that he can empower anyone “to create massive wealth, abundance and entrepreneurial success.” He’s now trying for a reality show.

In an open letter, the daughter of one of Belfort’s partners has condemned Scorsese for glorifying greed and psychopathic behaviour, degrading women and pretending that financial crimes are entertaining. Even some members of the Academy are angry. Scorsese and DiCaprio were heckled at the official screening.

Stone’s Wall Street was a well-researched story about how insider trading helped rich men become even richer in the 1980s, at the expense of unions and other workers. In the last three decades, the American financial industry has provided ample material for critical stories about how the rich continue to make money off everyone else. But, The Wolf doesn’t even try. It’s just a film about how some of this money got spent.

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Canada and The Trial

 9. Everyone has the right not to be arbitrarily detained or imprisoned.

10. Everyone has the right on arrest or detention

(a) to be informed promptly of the reasons therefor;

(b) to retain and instruct counsel without delay and to be informed of that right; and

(c) to have the validity of the detention determined by way of habeas corpus and to be released if the detention is not lawful.

The Canadian Charter of Rights and Freedoms

On Friday, Oct. 11, nine judges of the Supreme Court of Canada will be holding a closed meeting, at a secret location, to consider the legality of Canada’s security certificates. This follows an open meeting of the Supreme Court, held the day before, on the case of Mohamed Harkat.

Harkat has been held on a security certificate since 2002, when he was accused of being an Al-Qaida agent. Harkat spend three and a half years imprisoned in solitary confinement. When released from jail, his bail conditions included house arrest, a GPS monitoring bracelet on his ankle, 24-hour surveillance including cameras in his home and no access to either cell phones or computers. Harkat and his lawyers cannot review any evidence against him, as under a security certificate all intelligence is confidential and the accused is not informed of specific allegations.

The Supreme Court has already ruled, unanimously in 2007, that security certificates are unconstitutional because the use of secret evidence is a violation of the Charter of Rights and Freedoms. In addition, the detention of individuals held under a security certificate could be considered arbitrary if no regular review is conducted. Following this ruling, the Government of Canada introduced ‘special advocates.’ These advocates are lawyers who can review any evidence submitted. However, special advocates are an inadequate response to the serious issue of secret evidence, as they can’t consult with the accused after seeing evidence or conduct their own investigations.

Security certificates cannot be used on Canadian citizens, only permanent residents and refugees. The Canadian Civil Liberties Association has said, “we are concerned that by using Security Certificates against non- Canadians, we are creating a second tier of justice for non-Canadians or permanent residents.”

The security certificate system relies on confidential intelligence, not evidence, and uses immigration hearings not criminal trials. Individuals are imprisoned for years, not based on the criminal law standard of being found guilty beyond a reasonable doubt, but based on possible threats to national security even when no crime has been committed.

On Thursday, Oct. 10 in Ottawa, the Campaign to Stop Secret Trials in Canada will present a staged adaptation of Franz Kafka’s The Trial to protest the Supreme Court’s secret hearing. Like Joseph K in the The Trial, Mohamed Harkat has been shut out of the Supreme Court’s process, only knowing that he has been accused, not hearing any evidence, unable to speak in his own defence. Because of the secrecy of the security certificate system, the Supreme Court must hold a closed hearing. Its decision should be that security certificates are still unconstitutional, putting an end to secret evidence and secret trials.

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Did NDP really break balanced budget legislation?

On this sunny Thursday afternoon, I decided to read Manitoba’s Balanced Budget legislation.  Surprisingly, given all the controversy, it seems something few Manitoba journalists or politicians have actually done.

Since the NDP raised PST to 8%, much has been made in the media and by opposition of Section 10 of the Act:

10(1)       Subject to subsection (2), the government shall not present to the Legislative Assembly a bill to increase the rate of any tax imposed by an Act or part of an Act listed below, unless the government first puts the question of the advisability of proceeding with such a bill to the voters of Manitoba in a referendum, and a majority of the persons who vote in the referendum authorize the government to proceed with the changes:

(a) The Health and Post Secondary Education Tax Levy Act;
(b) The Income Tax Act;
(c) The Retail Sales Tax Act.

Seldom discussed is the following subsection 10(2)

10(2)       Subsection (1) does not apply to

(a) a bill to increase the rate of a tax if, in the opinion of the minister, the increase results from changes in federal taxation laws and is necessary to maintain provincial revenue or to give effect to a restructuring of taxation authority between the federal government and provincial governments; or

(b) a bill to increase the rate of a tax if, in the opinion of the minister, the proposed change is designed to restructure the tax burden and does not result in an increase in revenue.

When the Federal government lowered GST in 2008, part of its argument was that it was creating fiscal room for subsequent PST increases.  A 2006 Parliamentary Information and Research Service paper, Transferring GST Tax Room to the Provinces — A Solution to the Fiscal Imbalance? argued that lowering GST would provide room for provinces to increase the tax.

At the same time, the federal government has slashed funding to the Provinces for infrastructure, health, housing and many other important services.  In effect, there has been no overall change in sales tax in Manitoba, merely a shift in taxation authority as was already envisioned as a possibility under the bill.

If this is the case, it seems there is no real contravention of the the Balanced Budget Act.

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Ideologies Clashing: A Recent History of Shipbuilding in Canada

Last week, the CBC uncovered a major discrepancy in the federal government’s plan to build a series of ice-breakers for Canada’s Arctic waters. Public Works Minister Rona Ambrose has awarded a $288 million contract to Irving Shipbuilding for the design of new patrol vessels, which excludes the cost of actually building the ships. Other countries have been able to design and build similar ships for a fraction of the cost. Norway launched ice breaking patrol vessels for less $100 million in 2002.

Public Works has responded with a public statement claiming that project includes not only design but also a significant amount of preparatory work that accounts for 30% of the total project budget.

The government’s response to the CBC report: “This “design then build” plan will help mitigate cost and schedule risks in the build contract. Reducing design and production uncertainties up front also reduces risk for the Canadian taxpayer over the long term.”

The government news release also highlights the commitment to create high-skill jobs in Canada. If the project goes according to plan, proponents of the plan have suggested that it could revitalize Canada’s moribund shipbuilding industry. Residents of Canada’s west coast will remember this refrain well from the 1990s. Will the Arctic Offshore Patrol Ships program be Stephen Harper’s own Fast Ferries Scandal?

Fast Ferries Controversy

In 1994, the NDP government of British Columbia announced an ambitious plan to rebuild Canada’s shipbuilding industry, creating jobs, skills and using the domestic market as a launching pad to compete on the world stage. A $210 million contract for three high-speed catamarans for use on the high traffic routes connecting Vancouver Island and the mainland was the beginning of a ten-year capital plan that would meet the needs of BC Ferries and offer development opportunities across the province.

By the time the ships were ready in 1999, the cost of the project had more than doubled to $450 million. Worse yet, technical problems with the design led to service delays and the ships required costly repairs. A 1999 Auditor General report on the project effectively sunk the BC NDP’s chances for re-election and the party was reduced the two seats in the 2001 provincial election.

The report’s key findings concluded: “The decision to build fast ferries was not supported by sufficient information and analysis to demonstrate that the ferries would meet either BC Ferries’ needs or the government’s public policy goals in a cost-effective manner”

BC Liberals have frequently attempted to restoke the controversy throughout their three terms of power. Former premier Gordon Campbell conducted a scorched-earth fire sale of the assets in 2001, selling them below scrap value. The issue remains fodder for attack ads from the Liberals, the Canadian Taxpayers Federation and other right-wing groups and a millstone for current NDP leader Adrian Dix’s in his election campaign.

Despite the technical problems and financial overruns, there were significant achievements from the program. Over 350 workers received training from the project, including international welding certification. The BC Shipyards Workers General Federation lists the fast ferry program as “the only real bright spot for B.C. shipyards throughout this long period of uncertainty” since the 1980s.

More recently, in 2011, BC-based Seaspan won an $8 billion shipbuilding contract, part of the federal government’s plan to refurbish Canada’s navy, while promoting a Canadian shipbuilding industry. The BC government responded by creating a shipbuilding workforce table to help coordinate the local industry and workforce and touts the contract as a major opportunity for the province. The project figures centrally in the BC Liberals campaign as evidence of their economic acumen. Ironically, it was the Fast Ferries Program that built the capacity in British Columbia for Seaspan to be in a place to bid on the federal contract. Without the Fast Ferries, it is unlikely that the province would be projecting a billion dollar per year shipbuilding industry. This point is glossed over by both the BC media and Liberal premier Christy Clark.

 Comparisons and lessons

 Mutato nomine de te fabula narratur (Change the name and the story is about you). – Horace

In 2009, the federal government announced an ambitious plan to rebuild Canada’s shipbuilding industry, creating jobs, skills and using the domestic market as a launching pad for building an industry that could compete on the world stage. Already there are apparent cost overruns and, in the case of the Irving Arctic Offshore Patrol Ships contract, a lack of transparency. There are close parallels between Fast Ferries and the patrol ship design contract.

There is a major difference in how the project is being portrayed in the media and its political effects, at least up to now. While the Fast Ferry controversy dominated headlines in British Columbia for several years, thus far no major corporate-owned media has covered the cost controversy at Irving. As yet, the corporate and political elite in Canada still clings to Harper’s Conservative government and is unlikely to abandon it over a few unexplained hundreds of millions of dollars.

 While the laissez-faire economy was a product of deliberate state action, subsequent restrictions on the economy started in a spontaneous way. Laissez-faire was planned; planning was not. – Karl Polanyi

This parallelism further underlines the irony, that despite the laisez-faire rhetoric, the Harper Conservatives, no less than the BC NDP, rely on government intervention to stimulate the economy. As University of Manitoba political economist Radhika Desai points out in her recent book Geopolitical Economy, industrial development has rarely occurred spontaneously and, in all but the most unique circumstances, has required state support for private industry, particularly to launch expensive and complex industries like shipbuilding.

This has been especially true at moments of economic crisis. In times of turmoil, even the most ardent supporters of the laissez-faire liberalism rely on state intervention to keep the economy moving.

The differences between political parties are not a matter of which party supports intervention in the economy, the myth of free-market conservatives versus free spending socialists notwithstanding. All governments get involved with the market. The differences come down to how which interests that intervention supports: is it primarily oriented to increasing profits, or does it work to improve the rights and conditions of working people and reduce inequality.

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The Pros and Cons of Collaboration

Since the 2011 federal election, there have been more frequent discussions on cooperation among the opposition parties: the Greens, the NDP and the Liberals. It is argued by some that had these parties cooperated in the last election they could have defeated Stephen Harper and prevented the dismantling of many important institutions and policies such as the Canadian Wheat Board, gun control, environmental assessment regulation and retirement at age 65.

Pro-cooperation groups like Leadnow have drawn in thousands of supporters across the country, and leadership candidates for both the NDP (Nathan Cullen) and the Liberals (Joyce Murray) have run on cooperation platforms. The cooperationists contend that given the status quo, the Conservatives are likely to remain in power after the next election in 2015 because of ongoing vote splitting.

On the other side, the apparatchiks of both the NDP and Liberals have held steadfast against cooperation. They have claimed that the cultural and political differences between their parties are vast and that cooperation would turn off voters and benefit Harper’s Conservatives. And, on the left, many progressives oppose any collaboration with the Liberals  that will further undermine the already centrist and increasingly corporate NDP.

Historical perspective is useful in judging alternatives. History offers examples of when the left and centre have cooperated and when they have stood apart. The four historical examples below, part of an ongoing series, looks at collaboration between centrist and leftist political groups and interests.

Canadian Welfare State (CCF/NDP and Liberals; 1926-1984)

For many decades, through the middle of the 20th century, minority governments were common in Canada. Beginning in the 1920s when Mackenzie King introduced Canada’s first national pension system, Labour, CCF and then NDP MPs helped prop up Liberal governments in return for modest welfare reforms. Pensions, healthcare, unemployment insurance and federal housing grants are the legacy of this period.

While some of these gains were substantial, progressives voices were the junior partner to Canadian financial and manufacturing capital. Waves of concessions and compromise left workers without an autonomous voice once the system fell apart during the long recessionary period of the 1970s. Workers were unable to organize to defend themselves from wage restraint, free trade and globalization.

China (Communists and the Kuomintang; 1925-1927 and 1937-1949)

Since the early 1900s, Chinese workers, students, the educated middle class and business owners had collaborated against foreign power and imperialist influence in China. Actions included mass demonstrations, boycotts and strikes, by both worker and owners, such as during the May Fourth Movement of 1919, spurred by terms of the Versailles Treaty that gave the Shandong Province to Japan. The strikes and other mass actions succeeded in increasing political consciousness among the workers and strengthening workers organizations.

Nationalism, as an alternative to imperialism, united the people and, by the 1920s, united two political parties: the Kuomintang (Chinese Nationalist Party) and the Communist Party of China. Sun Yat-sen, a social-democrat and leader of the Kuomintang until his death in 1925, had established a constitutional government in Canton Province, with financial support and advice from the Soviet Union and in collaboration with the Communist Party of China.

The two parties then organizing against the warlords who controlled most of the country outside Canton. Communist and nationalist armed forces led by the Chiang Kai-shek began the Northern Expedition, a march that culminated with the defeat of the warlords and an alliance that brought most of China under the control of the national government. However, once victorious over the warlords, the Kuomintang turned against the Communists. In the Shanghai Massacre of 1927, thousands of workers were killed, wounded and arrested, communists were expelled from the Kuomintang, and workers’ organizations were prohibited. Communists moved into the countryside to begin war against the Kuomintang.

At the time of the Japanese invasion in 1937, the nationalist Chinese government was weakened from fighting the communists and by corruption within the national government and army. Both the communists and the nationalists resisted the Japanese, but the communists were better able to mobilize people’s support than the unpopular nationalist government. The two groups collaborated, in a more limited sense than in the 1920s, in that they tactically agreed not to attack each other while fighting Japan.

Successful resistance to the Japanese strengthened support for the communists, led by Mao Tse-tung. Mao received the support of not only peasants and workers, but also many from the educated middle and business classes who saw him as more effective than Chiang at fighting the Japanese. Militarily stronger and with more popular support by the end of the war, the communists were able to defeat the Kuomintang, despite U.S. interference, and form the People’s Republic of China in 1949.

British Free Trade Debate (Chartists and Liberals; 1840s)

In the 1840s, the antagonism between British workers and manufacturing capital was growing and becoming more visible each passing year. Still, the two classes continued to share common interests against the landlords who politically and economically dominated the country. Landlord hegemony was most powerfully represented in a set of duties on grain imports called the Corn Laws. These duties kept out foreign grain and increased land rents. Workers opposed the high of food the system imposed. Manufacturers realized that augmented bread costs increased the cost of labour and reduced their profits. Workers, through their Chartist movement, had their own demands for political representation, as well as economic demands for a shorter working day. However, in 1846, workers largely supported the manufacturers to help end the Corn Laws.

The end of the Corn Laws meant the destruction of tenant farmers marginal land. In Ireland, agricultural production collapsed as a result, combined with a deadly potato blight. Hundreds of thousands perished in the resulting famine, and millions more fled, while the country continued to export food which the local population had no resources to pay for.

Meanwhile after achieving the repeal of the Corn Laws, Chartism and parliamentary reform faded into the background. Its leaders gave up or became isolated on the fringe of minority politics in England until the socialist revival of the1880s.

France, Second Republic (workers and the bourgeoisie; 1848)

In February 1848, a coalition of workers and small shopkeepers overthrew the monarchy of Louis-Philippe in France. At first, the workers’ demands for full employment, greater economic equality and poverty reduction found common cause with liberal demands for constitutionality including electoral reform and ending court favouritism for privileged sections of the commercial classes.

However, within months, the business owners turned on the workers. Elections on May 4 installed a government favourable to big business. Workers feared their small gains would be erased. When workers in Paris threw up barricades in June, the National Guard, supported by the state and all the workers’ former allies suppressed the movement with force. More than 3,000 workers were killed and 15,000 deported without trial during the repression that followed.

The defeat of the workers also crushed the liberal aspirations of the earlier period, as dictatorial power becomes concentrated in the figure of Louis Bonaparte, the nephew of Napoleon. Revolutionary agitation continued, but the workers were increasingly isolated. Throughout this period, they continued to rely on leadership from the more organized and educated classes to disastrous effect.

“The proletariat … attempts to press forward again on every occasion, as soon as the movement appears to make a fresh start, but with ever decreased expenditure of force and always more insignificant results. As soon as one of the social strata above it gets into revolutionary ferment, it enters into alliance with it and so shares all the defeats that the different parties suffer one after the other.”

Karl Marx, The Eighteenth Brumaire of Louis Bonaparte.

Bonaparte was successfully able to play each class off one another. In the end, business was willing to forsake its liberal ideals in favour of economic expediency, while the French workers movement was stalled for 20 years.

We welcome alternative viewpoints and analysis and other examples on the pros and cons of collaboration. Comment below or email mudandwatermail [at] gmail.com.

* Thank you to Victoria songwriter Carolyn Mark for inspiring the title of this essay. Her album, The Pros and Cons of Collaboration, is available from Mint Records.

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Winnipeg Risks Development-Oriented Transit

On March 20, Alan Freeman presented to Winnipeg City Council on the next phase of rapid transit for the southwest area of the city. Freeman states that more homework is needed before the decision can be considered economically and developmentally sound.

The presentation, excerpted below, refers to the Final Report on Southwest Rapid Transit Corridor: Stage 2 Alignment Study. At the March 20 meeting, city council decided to approve a route through heritage urban wetlands for the second stage of the rapid transit system. This is Concept 1B in the final report. Councillors Eadie, Havixbeck, Orlikow, Smith and Swandel voted against this route.

Rapid Transit Alignment
Alan Freeman, March 20

Transit is both critical in its own right, and pivotal to development, poverty reduction, and emission control. This investment, like any other, should be considered in such a way that

(1) benefits can be fully realized
(2) needless detriment can be avoided
(3) unavoidable detriment can be limited and compensated

My main concern is that a sound transit investment depends not just on land costs but ridership projections. If an investment leads to less than the hoped-for change in ridership, that alters its true cost to the public. This may show in later fare hikes or subsidies.

My second concern is that the link between investment in transit and expected development works both ways. Development usually benefits a city in its own right, and transit investments help secure those benefits. But the investment also depends on development, because that’s what produces the extra fares which ultimately pay for it.

The less sure we are about the development, the more Transit-Oriented Development turns into Development-Oriented Transit. The report leans heavily on prospects for new development. A sound decision should be based on existing, known developments. This allows for flexible dialogue around legitimate concerns about the impact on open areas, because development options would remain genuinely open.

My third concern is unintended traffic effects. When assessing how new transit affects ridership, planners expect new systems to be attractive because journey times are shorter. But transit decisions are comparative. In London the bus and Congestion Charge strategies were integrated; we had to make it easier to travel by transit – and harder to travel by car.

When Rapid Transit takes buses off the roads, paradoxically it makes it easier to travel by car. This can unexpectedly reduce ridership. This makes the argument against lane reduction on Pembina less persuasive. Restraints on alternative traffic routes may well be needed to secure the shift to transit that you want.

My final concern relates to the way impacts are assessed. Every piece of heritage, every patch of land or waterfront, every piece of the jigsaw that makes up our culture in the broadest sense, is as much a part of our infrastructure as a bus or a snowplough. If a part goes missing, we all lose; not just the people next door but everyone in the city, and their kids, and their kids too. That is a cost – a hidden cost, but a real one.

The British Treasury requires every public authority to assess all possible impacts, positive and negative, of any new investment. That requirement is not standard for Winnipeg or Manitoba planning decisions.

A proper accounting for all costs and benefits should become a normal part of planning and public dialogue. It should begin at the functional stage of this project and include the environmental impact of all options, including the options of enhanced protection of urban open spaces and supplementary traffic management. This will ensure that Winnipeg’s first full Rapid Transit pays off in every sense of the word.

Alan Freeman is an economist who has lived in Winnipeg since December 2011. From 2001 to 2011, he worked in the economics unit of the Greater London Authority (UK), on culture, the living wage and economic development. He provided economic and planning projections for many London transit plans, including major extensions to the bus network and the Congestion Charge, evaluating projected transit revenue, job and wealth creation, and environmental impact.

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National Round Table Gagged by Harper Government

“It was the day of the Budget announcement, when we learned of the demise of the NRTEE. This had come as a complete surprise to everyone and the natural reactions of staff were of shock, fear, and dismay. Yet that same night staff worked until midnight to ensure we met a deadline commitment we had made for the following day to the government, the same government that hours before had told them that they were no longer needed.” – Jim McLachlan, Acting President, National Roundtable on the Environment and the Economy

In last year’s budget, the federal government announced the closure of the National Roundtable on the Environment and the Economy (NRTEE). Then last week, the Conservative government told the appointed panel of academics, former bureaucrats and environmental experts that its website is being shut down and its papers destroyed. The organization was also ordered not to publish a retrospective paper called Reflections from Past Leaders of the NRTEE.

Last year, the Toronto Star reported that foreign affairs minister John Baird said the government was killing NRTEE over its support for a carbon tax. The government also said that it can rely on free advice rather than pay for expertise on environmental issues.

Since 1988, NRTEE has brought together independent experts to debate and plan Canada’s environmental and economic strategy. According to its governing Act, the purpose of the Roundtable is to act as “catalyst in identifying, explaining and promoting, in all sectors of Canadian society and in all regions of Canada, principles and practices of sustainable development”

The Roundtable played a leading role in many important environmental issues over the last 25 years including water, biodiversity and climate change. As an independent body reporting to the Prime Minister, it has provided solid evidence-based advice to inform policy for both industry and government. The closure of the National Roundtable is expected to save the government $5 million per year.

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