The Globe and Mail

Monday, May 14, 2012 8:07 AM EDT

What Liberals and RIM shareholders have in common

Research in Motion is a tremendous success story for Canada: A small start-up in Waterloo rises to become the dominant smartphone provider in the world.

But the smart money is that RIM missed its opportunity to continue to grow over the past few years.

Technology companies are only as good as their pipeline of new ideas. For every Google, expanding constantly into new intellectual space, there is a Yahoo that seems doomed to wither.

All products go through a life cycle, which you can see here.

Basically, sales for a product will eventually peak and decline. Companies need to constantly introduce new products to maintain overall revenues. Technology companies will furiously purchase small firms to get their hands on promising technology that can be the next big product.

The argument is that RIM made a major strategic miscalculation when it failed to use its cash to purchase and develop multiple new product lines when Blackberries were selling like – well, Blackberries.

There is likely some truth in that, but RIM enjoys feature advantages in security that will allow it to be a highly successful niche smart-phone player in the future. The recent approval of the Blackberry 7 by the Pentagon means continued preferred access to a market that already owns 250,000 Blackberries.

There is some strategic similarity between RIM and the Liberal Party of Canada.

The Liberals also once seemed like the dominant force in its marketplace, and squandered their opportunities to expand into new products for new markets.

The truly dominant Liberals of the 1940s and 1950s were gradually shorn of their electability in multiple regions of the country. The West became increasingly disenchanted with the Liberals, first switching with Diefenbaker in the 1957 election. The National Energy Program and other policies further alienated Liberals and the West.

Quebec exited the “government coalition” game with the failure of Meech in 1990. Earlier, Quebec voters wisely waited to see how the rest of Canada was voting and then jumped into large majorities at the last minute to remain on the government side. (There were exceptions to this trend when one party had a francophone leader or the dominant policy was explicitly polarizing against francophones.)

But after 1990, Quebec voters were happy to park their MPs in the opposition benches, be it with the Bloc Québécois or – most recently – with the NDP. Furthermore, the Liberal advantages in Quebec – once a unique offering of a francophone leader and a bi-cultural history – are now replicated by other parties.

That left Ontario as the foundation for the Liberal governments of the 1990s and early 2000s. But winning almost all of the seats from the largest province was always a temporary situation resulting from the right dividing into Progressive Conservative and Reform/Canadian Alliance factions. With the resolution of that split in 2003, a significant reduction in Ontario MPs for the Liberals was a given.

The rational response would have been to attempt to find new appeals to new regions of the country with the seats to help form a majority government.

Some attempt was made with the strategy behind the 1995 budget to make in-roads in the West. The theory was that Wmployment Insurance reforms and service cuts would cost seats in Atlantic Canada, but these would be off-set by gains in the West attracted to good fiscal management.

The seat losses in Atlantic Canada came as expected, but the seat gains in the West didn’t materialize. The cultural resistance to the Liberal brand in much of the West was too strong to overcome with bankers reports. The result was a near loss of majority in 1997, and a switch in strategy to “demonize the right and polarize the election.” While this worked remarkably well in 2000 and saved the Liberals in 2004, it has failed since to deliver anything but ever lowering seat counts.

Like the service outages that damaged RIMs reputation, scandals accelerated this slide but were not the root cause. The reality is that the Liberals desperately need a new region where they can make an impact and offer a fresh perspective on government.

Like RIM shareholders, Liberals can still hope that there is a breakthrough product in the pipeline – a leader or polarizing policy or game-changing event that redefines the landscape.

Like RIM shareholders, Liberals should be demanding plans to innovate and grow the organization out of its current cul de sac.

Like RIM shareholders, Liberals can only wish those innovations were made when the organization was at the top, not when it was sliding toward status as a niche player.

Wednesday, April 25, 2012 10:38 AM EDT

Danielle Smith, Stephen Harper and the art of closing the deal

There have been 28 general elections in Alberta since becoming a province, and government has changed hands in just three. So only 10.7 per cent of Alberta elections saw a new party take office.

Compare that to 29 per cent federally, 23 per cent in British Columbia, 30 per cent in Saskatchewan or 27.5 per cent in Manitoba, and you begin to see how unique Alberta’s political stability truly is.

In such a climate, it’s not surprising that so many pundits were wrong in predicting a change of government. It’s been so long since anyone has seen one in Alberta people forget what to look for.

Despite Alberta’s unique electoral history, insurgent parties face exactly the same challenges there that they do around the country, and the lesson of the 2012 Alberta election can be applied to the rest of the country because the forces at play have been seen elsewhere.

Take the federal scene.

In 2004, the new Conservative Party under Stephen Harper looked set to end 11 years of Liberal dominance. That was, until a series of minor mishaps – a ham-handed release accusing Liberals of supporting child pornography and statements by Randy White attacking federal judges – raised concerns about the values of the Conservative Party. These were amplified by the Liberal campaign and the media in the heat of a closely fought campaign.

The result was a Liberal minority, defying pundits predicting a breakthrough for the Conservatives.

In the 2005-2006 writ period, the Conservatives achieved a more stable level of support ahead of the Liberals over the Christmas holiday. However, the momentum toward a majority was halted abruptly in the final week of the campaign. This excellent graph of the polling results during the election demonstrate the trend line cresting in the week of Jan. 9 before falling back into minority range for the Jan. 23rd vote.

In both cases, the Conservatives ran solid campaigns that raised the potential for a change in government, but in both cases they were unable to close the deal with the public.

So how should parties close their election campaign if they are to take power and win a majority?

1. Talk about the choice, not about yourself

In every election I have worked on, we do better when the media is talking about the other guys in the closing days.

Particularly for new parties that are trying to shed an old image, it is crucial that the ballot question not be “Can I trust that new party to form a credible government?” Frankly, the public doesn’t trust politicians generally, so you won’t pass the test. Better the ballot question be a choice like: “Change versus more of the same?”

You want attention focused on the problems of the government’s campaign, the surging third party, the Oscars – anything but you. That will make it easier to cast the election as a choice, not a referendum on you.

It’s a potent example that Stephen Harper finally got his majority just when media attention was focused firmly on the NDP.

2. Play down the polls

The conventional wisdom is that the Ontario NDP won the 1990 election because no one thought they were a credible threat to actually win, and voted to send a message to the Liberals with a minority.

This analysis always seemed a bit sneering at the intelligence of voters, and so is something I avoid, but there was a lack of polling in that election.

Certainly, the polls showing a crushing Wildrose majority – or the Harper majority projections in 2006 – were not helpful to their cause. Strong leads create media scrutiny, which brings you back to point No. 1.

It’s hard to keep the media from reporting the horse race, but playing down the horse race is crucial.

3. Discipline, discipline, discipline

Many is the slip between cup and lip, and slips of the tongue are the most damaging in politics.

The scrutiny strong polling results bring leads inevitably to the weakest candidates nominated in no-hope ridings and not particularly carefully vetted. Making sure the team is united in one message, even in the ridings that aren’t in play, can be the difference between winning and losing.

The Wildrose Party’s libertarian roots make message discipline hard to enforce – but you can bet they will find a way by the next election.

4. Have an end-game tour and message strategy

Most election campaigns diligently map out the first section of an election.

Long before the election is called they know where the leader will be, saying what message, with which alternative tour events in what battlefield ridings. Advertising is in the can. The locations are scouted. Organizers are finding crowds for the rallies.

But the last couple weeks of an election are typically an empty series of boxes on a white board until the debates. Often this is rationalized as being flexible. You don’t know how the election will go until it’s started and everything will probably have to be changed anyway. With only so much time and ability, planning events that might not happen is not optimizing your resources.

Phooey. If you want you win, you better plan to win.

That means before the writ is dropped having a detailed plan to “close the deal” ready to go, including message, tour, advertising, fundraising, and get out the vote. It can be spruced up on the way, but the heat of an election is no time to show people you are calm and prepared by making in up on the fly.

5. Be ready to govern

Voters are smart. While they spend relatively little time reading platforms, they do pick up on physical cues from leaders and candidates. They know who is ready to govern, who is scared they might actually win, and who has been there too long.

If you are an insurgent party, have a transition plan on how you will actually take power. This isn’t just the formalities of cabinet making and staffing, but the crucial issues of interaction with the civil service, how decisions will be made, and how to get the system to respond to your demands.

It will give your leader and team the comfort to know that they are ready to lead if chosen.

* * * * * * * * * *

In sum, elections are no time to prove you are ready to have a majority government.

The hard work of preparing for government has to be done before you get on the campaign bus, or it won’t be done at all. Because once the voters actually put their trust in you with a four year mandate, it will be too late to figure out what you want to do. Events will take hold, and you will be drinking from the fire hose.

So insurgent parties need to prove they are ready before they are even asked.

Thursday, April 12, 2012 8:01 AM EDT

Harper and McGuinty should look to Sir John A. on debt

For Stephen Harper, Dalton McGuinty, Jean Charest and our other first ministers, the temptation when public finances are bad is to think small.

Let’s cut a little here, trim back our vision there, and eventually things will be okay.

But Confederation provides a stirring example of why thinking big is exactly what we need to do in the face of public debt.

The 1860s were a stomach-churning time for Canadian colonialists, one of the most unsettled and exciting periods in our existence. The world was bending into shapes previously unimagined, and British colonists in North America needed to think bravely or collapse.

Forcing our hand, the British were changing from doting imperial parents to neglect.

Canada’s early colonies grew up with the privilege of British mercantile policy. In other words, Canadians had privileged access for our goods to the largest, wealthiest market in the world: the United Kingdom. Just about everyone else on the planet – American, French, Argentina – faced steep taxes on their products if they were sold in London.

With the advent of free trade and responsible government, the age of infant Canada ended and our colonial forbearers had to face the cold hard world on their own.

Losing our privileged access to Britain, Canada entered into a free trade agreement with the United States beginning in 1854. We wanted access to the American market, now that the British one no longer gave us preference.

However, the American Civil War exposed Canadians to the full terror of total war to their south, and the growing American imperialism of the 19th century was no longer aimed at Mexico but squarely at subsuming the vast territory of the North-West between the tiny British Columbia colony and those in the East.

Free trade with the Americans was a dangerous game, and one that the Americans were increasingly unwilling to play.

British footsie with the Confederates turned Northern attitudes against Canada, and calls for invasion were not rare. Irish-American raiders were marauding across the border to wreck and plunder. The Americans began to erect tariff walls against Canadian goods, ending free trade for a hundred years.

Worst of all, Canada lost the race to open the new markets in the American Midwest, and practically went bankrupt in the attempt.

As Rotman lecturer and colleague J.C. Bourque recently noted, the Rowell-Sirois Report from 1940 includes a fascinating chapter on Canada’s pre-Confederation economic origin as a collection of over-extended debtor colonies.

Commercial interests in Montreal pressed to create a seaway along the St. Lawrence River that would allow the Great Lakes to serve as the highway to the American interior. With free trade, our passageway would become the transit point on the future North American economy, creating vast wealth and opening up our own landlocked farmers to the global economy.

It would be Montreal, they thought, not New York that would be the new port to the world, a glittering financial capital growing fat on cargo and credit.

Instead of this vision, New York beat them to the punch. First the Erie Canal from Buffalo to the Hudson River opened up the Midwest to the port of New York. Then the railways consolidated the Empire State’s hold on global trade from the American interior even further.

As Rowell-Sirois state: “Successive colonial governments had been inspired by this dream with the result that government policy and public finance had been harnessed to the grandiose conception of the St. Lawrence as a trade route. In ambitious but always futile efforts to realize this great plan, the Province [of Canada] had accumulated a set of public works and a crushing public debt, both too massive for an economy limited by its own boundaries.”

Compounding the problem were a succession of expensive railway failures in the Maritimes and Upper and Lower Canada that spread this financial catastrophe across the British colonies in the East.

“The attempt at commercial integration with the interior of the continent had irretrievably failed and left behind it a burden of debt which weighed oppressively on the economy.”

The colonies were stuck.

Saddled by debt, they could have thought small and pulled back into their individual interests, allowing the Americans to open up the lands of the Hudson’s Bay colony and leaving BC an isolated naval outpost of the British Empire.

Instead, Canadians made a bold leap.

They doubled-down in betting on themselves and united the British colonies in North America into one country with the financial strength to beat the Americans into the North-West.

The decision was financially risky and not without its costs. Confederation and the National Policy of high tariffs and East-West trade increased prices and lowered our ability to compete. But it was the crucial decision that developed a new nation, separate from the United States and eventually wealthy beyond the dreams of our founders.

Now is not the time for a new National Policy, per se. Canadians have built the infrastructure that links us together and are willing and able to take on the world.

But our current financial challenges should be viewed as an opportunity to think that big.

Canada needs an Asia strategy, both to hedge our economic bets with the Americans and leverage our own cultural ties to Asia to find new markets.

We need a coherent pan-Canadian foreign direct investment strategy to maximize our attractiveness as a job creation and investment hub for global capital, involving the federal government, provinces, municipalities and business.

We need to encourage entrepreneurialism and venture among Canadians, find ways to bridge the investment gulf between start-ups and lenders, and get our corporations to put less cash on their balance sheets and more into productivity enhancement.

We need to confront the pockets of hopeless poverty in our cities, rural areas and reserves, collapsing outdated social programs that aren’t working and finding new ways to end intergenerational privation.

We need an innovation strategy that promotes excellence in our universities, investment in R&D by our companies, and makes rock stars of our leading researchers.

Canada has proven in the past it can buck the odds and build despite debt.

Let’s follow the example from Sir John A. Macdonald, George Brown and Etienne Cartier and take a gamble on ourselves again.

Monday, March 12, 2012 5:58 PM EDT

Do the math: Long primary fight hurts Romney

Republicans are spinning that their long and ugly nomination fight will have no impact on their chances in the 2012 presidential election.

“Clinton and Obama went after each other until June in 2008, and it certainly didn't affect the president's chances going forward when he won that November,” Virginia Governor Bob McDonnell says.

Really? The math says differently. Here’s how.

There have been 20 total nominations since primaries became the preferred method to select nominees in 1972, 10 Democrat and 10 Republican.

Assign each primary a score between one and six for how long and ugly their primary season was, with one being literally bloody and six being uncontested. Then create a single variable for how much worse one party’s nomination process was than the other party’s by simply subtracting the Republican score from the Democrat score in any given year. Finally, use regression analysis to see if there is a relationship between our score for how much better or worse the Republican primary was than the Democrat, and how the Republicans did in November.

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STEP 1: SCORING THE PAST NOMINATIONS

Let’s start with coding the individual processes for each of the 20 nominations.

(We are starting in 1972 because that is the first U.S. presidential election cycle to take place after primaries became the system for choosing party nominees. Prior to 1972, delegates to the national conventions were selected by regional party bosses in most jurisdictions. As a result, conventions in that era were more often brokered between factions on the floor. After 1972, nominees began to routinely sew up the party nomination before the final primary was even held.)

We will assign each of the 20 nominations a score between one and six.

1 – If the nomination is undecided all the way to a vote on the floor.

2 – If the presumptive nominee is openly challenged on the floor.

3 – If the nominee secures presumptive victory between Super Tuesday and the end of the primaries.

4 – If the nominee secures presumptive victory at or before Super Tuesday.

5 – If the clear front-runner faces real challengers which are easily set aside.

6 – If the clear front-runner faces no real challengers.

Now let’s go through the primaries an assign each one a code.

1972

Democrat:This was “perhaps the most contentious convention in the history of the Democratic Party since 1924.” The traditional Democrat coalition of labour unions, city bosses and Southerners narrowly lost control of the Convention on delegate seating rules, allowing Senator George McGovern to get the nomination in a chaotic all-night disaster. One is the lowest score, and it deserves it.

Republican: Richard Nixon faced a couple moderately serious challengers but won the support of all but one delegate at the first scripted set-piece convention. I’m giving this a five.

Result: Nixon beat McGovern in one of the largest landslides on record with 60.7 per cent of the vote.

1976

Democrat: Governor Jimmy Carter beat Senator Scoop Jackson in Pennsylvania and essentially wrapped up the nomination. There were late challenges by Western liberals but the convention was a love-in for Carter. I gave this a three.

Republican: Governor Ronald Reagan challenged President Ford at the convention. However, Ford had a clear majority before the first floor vote after Reagan fumbled the days before the convention with the announcement of a liberal Republican for his VP candidate. The choice lost him conservative support while gaining him nothing with moderates and liberals. This is a two.

Result: Carter narrowly beat Ford.

1980

Democrat: Senator Ted Kennedy viciously attacked President Carter all the way to one of the nastier conventions on record, refusing to drop out until the day before nominations. This is a two.

Republican: Reagan was the presumptive nominee until he unexpectedly lost to George H.W. Bush in Iowa. Victories in New Hampshire and South Carolina put Reagan back on top. This is a four.

Result: Reagan won decisively in the electoral college but only got 50.7 per cent of the popular vote.

1984

Democrat: Senator Gary Hart challenged former vice-president Walter Mondale all the way to the convention, where Mondale had a clear majority thanks to the support of the unpledged “Super-delegates” of the party establishment. This is a two.

Republican: Reagan was unchallenged as sitting President. This is a six.

Result: Reagan won every state except Washington, DC, and Mondale’s home of Minnesota.

1988

Democrat: Governor Michael Dukakis wrapped it up post-Super Tuesday after Rev. Jesse Jackson and Senator Al Gore failed to build momentum. This is a three.

Republican: George H.W. Bush was endorsed by Reagan and overcame a loss in New Hampshire to wrap it up early. This is a five.

Result: Bush won convincingly with 53.4 per cent of the vote.

1992

Democrat: Bill Clinton quickly built a majority coalition, sweeping Super Tuesday, but faced a stubborn refusal to concede from Jerry Brown. This is a three.

Republican: President Bush was challenged by Pat Buchanan. Bush never lost a state. This is a five.

Result: Bush was demolished, getting just 37.5 per cent of the vote, the lowest for a Republican in our series.

(Of all our findings, this one appears to be an outlier. It may be the case that this challenge by Buchanan was more damaging than the numbers would show. There may be an argument that challenging a president is a sign of greater party disunity, which would lead to lower scores for the Republicans in 1976, Democrats in 1980 and Republicans in 1992.)

1996

Democrat: Clinton was unopposed. This is a six.

Republican: Bob Dole was the presumed nominee, faced some challenges, but wrapped up the nomination early and clean. This is a four.

Result: Clinton decisively beat Dole.

2000

Democrat: New Jersey Senator Bill Bradley challenged vice-president Al Gore for the nomination, but Gore won every state. This is a five.

Republican: Texas Governor George W. Bush was the early front-runner and overcame a loss on John McCain in New Hampshire to wrap it up early. This is a 4.

Result: This was the closest election in U.S. history, with Bush edging Gore by a few hundred votes in Florida to win the electoral college while losing the popular vote.

2004

Democrat: John Kerry slowly emerged as the front-runner after Iowa and then quickly locked up the nomination by Super Tuesday. This is a four.

Republican: President Bush was unopposed. This is a six.

Result: Bush narrowly won re-election in the electoral college by winning Ohio, but got a majority of the popular vote with 50.7 per cent.

2008

Democrat: Barack Obama and Hillary Clinton contested primaries into June, but Obama clinched the nomination well before the convention. This is a three.

Republican: John McCain was the presumptive nominee after Super Tuesday, despite Mike Huckabee running a faint hope campaign for several weeks after the result was clear. This is a four.

Result: Obama beat McCain decisively.

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STEP 2: COMPARING THE REPUBLICANS AND DEMOCRATS

Now that we have our scores for each primary, we can compare the nomination process of each party each year and create a value, which is the “bonus” that the Republicans got each presidential election for their nominating process. If the number is positive, the Republicans wrapped up their nomination with more ease and cleanliness than the Democrats. If the value is negative, the Democrats had an easier time selecting a nominee.

Year – Democrat / Republican / Bonus

1972 – Dem. 1 / GOP 5 / Bonus 4

1976 – Dem. 3 / GOP 2 / Bonus -1

1980 – Dem. 2 / GOP 4 / Bonus 2

1984 – Dem. 2 / GOP 6 / Bonus 4

1988 – Dem. 3 / GOP 5 / Bonus 2

1992 – Dem. 3 / GOP 5 / Bonus 2

1996 – Dem. 6 / GOP 4 / Bonus -2

2000 – Dem. 5 / GOP 4 / Bonus -1

2004 – Dem. 4 / GOP 6 / Bonus 2

2008 – Dem. 3 / GOP 4 / Bonus 1

Just looking at the number, some patterns emerge. We see big advantages for the Republicans in 1972 and 1984, years that were Republican landslides. We see slight Democrat advantages in 1976 and 2000, very close years. We see a stronger Democrat advantage when that party had a decisive win in 1996.

STEP 3: REGRESSION

Regression is a mathematical way to test the relationship between two variables.

Basically, we set up a grid. We plot each of our election years according to two variables. Along the bottom x-axis, we find the score for the net Republican bonus for the primary process, the score we just assigned each election. Along the side, on the y-axis, we find either the popular vote for the Republicans in the general election for our first regression, or the Republican electoral college vote in the second regression.

Excel will then take all these points and plot a straight line that finds the least distance between itself and the points of data. Depending on how well the line fits the data, the explanatory power of the model is found in the R-squared and the significance.

If we run this regression, we find a number of things.

First, there is a significant relationship between the nominating bonus and the popular vote (significance 0.036) and the electoral college (significance 0.016). So we can discard the suggestion that any relationship between the two is just random chance or background noise.

Second, the R squared with the popular vote is 0.43 so it is explaining about four-tenths of the behaviour of the electorate when they vote.

Third, the relationship is even stronger when we regress the relative pain of each party’s nominating process against the electoral college results. There we see an R squared of 0.53, so about half of the variation in the electoral college result is related to the variation in the nominating process.

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STEP 4: ANALYSIS

So what does it all mean?

For starters, this model doesn’t explain nearly everything in the general election. There are years where the party with the qualitatively “better” primary process loses the general election. 1992, 2000 and 2008 were like this.

However, there are broader issues at play in the general election dynamic: state of the economy, war, voter exhaustion with one party in the Presidency. The partisan nominating process is one factor that may be turning a landslide into a tight contest (2000, 1992) or a tight contest into a landslide (1972, 1984).

Rather than look just at outcome, it is better to look for relationships between the nominating process and the result in the general election.

At the very least, we can say this: There appears to be a significant impact on voting behaviour and electoral college results in U.S. presidential elections when one party has a smoother nominating process than the other.

If this will turn a close election into a landslide or make the difference between a Democrat and Republican victory this November depends on how ugly the Republican contest gets and the myriad of broader factors from the economy to Iran to debate performance that are yet to be decided.

So far, Mitt Romney still looks likely to sew up the nomination before the convention, earning a 3 compared to Obama’s 6.

But bad blood with Santorum, Gingrich or Ron Paul could turn the convention into a mess, particularly if Romney can’t assemble a clear majority of delegates before the last primary.

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STEP 5: DISCUSSION

There are some important caveats.

This model is based on qualitative assessments of each primary season, which could influence in the outcome. Was the 1984 Democrat process really as destructive as the 1976 Republican showdown? Moving a few of the variables around can influence the outcome enough to make it less significant. The weakness makes it dangerous to draw out “rules” or other general conclusions, but it does show a relationship between long, drawn out primaries and poor electoral results for that party.

Much of this is a question of causation. I don’t think the length of the primary process is actually directly influencing the vote, as if the date on the calendar of some nominee locking up a majority of delegates holds much importance with voters. Instead, the length of the primary process is itself reflecting the challenges within each party, and it is those challenges that are then impacting the general election result.

Some of the lowest scores are associated with parties going through difficult ideological breaks. The 1972 Democrats were split between new Left activists and comparatively conservative union and southern factions. The 1976 Republicans were openly split between Reagan’s conservatives and Ford’s moderates. The 1984 Democrat convention was a fight between the old liberal union establishment from the Roosevelt era and the “new Democrats” who would take power with Clinton. The 1992 Republicans did exhibit signs of a split between hard-core conservatives revolting under Buchanan and the party establishment of more centre-right conservatives who rallied to defend President Bush.

However, some of these are simply personality fights, particularly the 2008 Democrats. There was little ideologically different about Barack Obama and Hillary Clinton, beyond how they would have voted on the Iraq War. The issue there was more about the complex coalition politics of the Democratic Party.

Another example of this is the 1980 Democratic primary, which was to some extent an exercise in hubris by Senator Kennedy in trying to seize the presidential nomination he spurned after Chappaquiddick made it harder for him to win in 1972 and 1976.

Some are issues of the quality of the nominees themselves. The 2004 Democrat field was particularly weak, with Kerry on emerging as the front-runner after winning both Iowa and New Hampshire and even then, failing to positively energize a Democratic Party more desperate to beat Bush than govern. Similarly, the 1996 Republican field was surprisingly weak given Clinton’s standing in the polls in 2004 and early 2005. This may be a function of presidential nominees selecting unknown and somewhat unqualified candidates in an attempt to goose their poll numbers, resulting in fewer “presidential nominee in waiting” level contenders four years later. Dan Quayle, John Edward and Sarah Palin are examples of this recent phenomenon.

There could be an issue of causality here, where the splits within parties are separately impacting their vote in the general election, the quality of the nominees, and the ability to wrap up nominations quietly.

What we could be seeing is that parties that don’t know who they are have a hard time nominating and a hard time winning.

Whether the long nomination process impacts the election, or the splits in the party impact both the nomination and the election, it is clear than the Republican will be carrying something of a primary-imposed anchor going into the general election this November.

Tuesday, March 6, 2012 5:57 PM EST

Lessons for Rob Ford from Clinton, Mitterrand, Harper

Pity the Mayor of Toronto.

Just 15 months ago, the populist crusader was elected in a spasm of public outrage at City Hall. He had a clear mandate, a broad set of council allies, and a consensus to lower taxes and reduce spending.

Now Rob Ford faces the nightmare of political executives everywhere. He has lost control of his legislature and in doing so lost control of the agenda, the power to make law and – potentially – the power to set the budget.

As a separately elected mayor, Ford is somewhat akin to a president. He can lose control of the legislature without losing his job. The history of presidents in this situation may provide some guidance on how to move forward.

For some presidents, the loss of control of the legislature is the fatal moment that ends their term in office.

Andrew Johnson succeeded Abraham Lincoln to office and immediately fell into war with the radical Republican Congress, rejecting the laws they passed and attempting to preserve Southern power structures. After attempting to replace his secretary of war in defiance of Congress, Johnson was impeached by the House and only narrowly avoided removal from office by one vote in the Senate. His presidency is now judged a “flat failure.”

Today, Johnson fills out the bottom rungs on presidential rankings with the pre-Civil War failures Franklin Pierce and James Buchanan. These failed presidents were “stubborn, narrow-minded, unwilling to listen to criticism or to consider alternatives to disastrous mistakes, they surrounded themselves with sycophants and shaped their policies to appeal to retrogressive political forces.”

Even when repudiated by mid-term elections or other political catastrophes, they ignored changing public opinion and clung to their failing policies. Needless to say, nothing was accomplished except their own destruction.

For other presidents, loss of political control of the legislature gave them the enemy they craved.

Harry Truman was a barely known rookie vice-president when Franklin Roosevelt died. His party was badly defeated in the 1946 mid-term elections, after Truman’s handling of labour challenges and rationing in the move to a peacetime economy made him seem weak. The Republicans made smashing victories, winning control of both the House and Senate. Gridlock came to Washington.

In his own re-election, Truman campaigned vigourously against the “do-nothing, good-for-nothing 80th Republican Congress.” He won the election as president, but his accomplishment in engineering the Democratic victories in the House and Senate are underestimated. The swings back to the Democrats were remarkable, and they won control of both parts of Congress in 1948 as well.

However, there is a cloud over this victory. Despite winning back partisan control, Truman had a very limited impact on legislation in his second term. His civil rights bills were rebuffed, and he had to resort to Executive Orders to desegregate the military. His health care plan failed to pass. His judicial appointments were conservative cronies.

Ironically, Truman had defeated his partisan opponents in Congress. But never gained political control of that legislature to pass the program on which he campaigned for their defeat.

Both Johnson and Truman were hostile toward their elected legislative majority. One was soundly defeated and the other won political victory, but both saw their legislative agenda fail.

In contrast, other successful presidencies have been built on compromise.

Facing mid-term legislative defeats, both Bill Clinton and François Mitterrand chose to enter into “cohabitation” with their opponents, a French term for when the president is from one party and the legislative majority from another.

Mitterrand pioneered the approach, inviting Jacques Chirac to sit as prime minister as leader of the right-of-centre parties that won control in the 1986 election. Outwardly, they agreed that Mitterrand retained control of foreign affairs and defence, while Chirac implemented a policy of tax reduction and privatization.

But secretly, Chirac was useful to Mitterrand, who had spent is first few years nationalizing industry until a completely U-turn in 1983 driven by currency devaluations, rising unemployment and economic chaos. Mitterand was able to select issues for conflict with Chirac, assuaging his socialist supporters, while ensuring that critical reforms still passed. Chirac could be blamed for the more unpopular elements of liberalization, while Mitterand enjoyed the economic growth the policy created.

Mitterrand took a moderate stand in the 1988 presidential election, “neither nationalizations nor liberalization” and defeated Chirac in the run-off vote. He was able to achieve his strategic goals, albeit in a different form than he had expected when he took office in 1981. According to the United Nations, France was the only country among the OECD that did not see an increase in income disparity between rich and poor between 1979 and 1989.

Bill Clinton provides the more famous North American example of cohabitation after his mid-term loss of Congress in 1994.

Facing a surging Republican majority in the House and Senate, Clinton at first appeared broken. However, he adopted a policy of choosing his battles. When politics and public opinion were on his side, he faced down his opponents on key issues like the budget deficit and the government shutdown.

When politics was running against him, Clinton would work to moderate Republican initiatives but allow them to pass. “Ending welfare as we know it” was the most famous of these compromises.

In choosing his battles, Clinton was able to secure funding for children’s health care, tax relief for small businesses, pass significant campaign finance reform, produce a series of balanced budgets and create years of robust economic growth.

Like Mitterrand, his methods were not always the ones Clinton would have selected, but the results were in line with where he wanted to end up.

* * * * * * * * * *

Rob Ford looks set to follow in the aggressive footsteps of Johnson and Truman.

A natural political counter-puncher, Ford needs an opponent against which to aim his rhetoric. The prose of government has proven to not be his strength, but the poetry of campaigning is. Effectively removed from power but possessing the bully pulpit, Ford can stoke anger, envy and spite as effectively as any modern Canadian politician.

Will it result in his re-election? Will he emulate Johnson or Truman? That depends on the mood of the public, always difficult to gauge more than 30 months before an election.

What is clear is that the default Ford position will – like both Johnson and Truman – result in the loss of his reform agenda, certainly until the next election and likely afterwards as well. Given the difficulty in defeating incumbents, barring a spate of retirements or the emergence of a party system, his opponents do not appear to be going anywhere.

It doesn’t need to be like this. Ford was elected with a deliberately vague mandate to “stop the gravy train” and he has some successes on that front. Focusing on introducing competition, reforming City Hall’s entitlement culture and securing more appropriate wage settlements will continue this agenda. With modest compromises, he can assemble a working coalition on most of his core issues and implement his agenda.

By being confrontational on every issue and needlessly married to doomed policies, Ford risks the Johnson approach of failing to achieve his ends by being too unyielding on his chosen means. If Mr. Ford was sincere about achieving fundamental reforms at City Hall, now is the time to emulate Clinton and Mitterrand instead.

It isn’t only Socialists and Democrats who engage in cohabitation, after all.

Stephen Harper successfully managed two successive minority governments, while reducing taxes, avoiding major climate change legislation, moving child care funding away from national daycare, passing the Federal Accountability Act, recognizing Quebec as a “nation within Canada”, maintaining forces in Afghanistan, supporting Israel, building up the military readiness, and generally shifting the country away from its liberal heritage.

He did this by picking his battles, working with the opposition when necessary but ruthlessly exploiting opportunities when they were presented.

Ford should emulate political leaders who found success in triangulating against a hostile legislature, rather than those to railed against their opponents and accomplished little legislative reform.

Tuesday, February 21, 2012 2:03 PM EST

Stephen Harper and the new politics of consumerism

An easy lens for understanding most public policy is that of consumers versus producers.

Consumers are all of us. We buy milk, or rides on transit, or songs. Some of us buy a lot and some of us buy only a little, but our purchases are aggregated out over thousands of products purchased multiple times. As a result, the time devoted to thinking about all but the biggest purchases is usually brief. Consumers are interested in keeping prices down generally, but are often price insensitive to particular products for lack of a point of reference.

Producers make – typically – one thing. Milk, or transit services, or songs. They sell one thing into the marketplace and spend almost all of their time thinking about it. They are very, very, very interested in keeping the prices of their items as high as possible. They devote enormous effort to marketing, or increasing the perceived value of an item relative to its cost.

A lot of government policy is devoted to managing the tension between producers and consumers, or more accurately, managing the very high demands placed on them by producers against the broad general interest of consumers that is only weakly felt in the system.

Agricultural subsidies are a great example of this process, and milk especially so. Farmers will purchase a quota for between $15,000 and $30,000 a cow and then sell milk into the system, a complex web of federal and provincial programs.

These systems are designed to keep prices stable and result in keeping prices high. The OECD estimates that Canadian dairy prices are double the world market.

The public policy reason for supply management is basically that the boom and bust nature of agricultural commodities can result in sudden and massive rural depopulation if prices are not made predictable. However, it is also done because it is politically advantageous.

The 15,000 or so dairy farmers are directly and highly interested in maintaining the supply management systems, as they invested literally millions of dollars in buying their quotas over the years and enjoy the benefits of artificially high prices for a products with constant demand. They are powerful proxies for “rural interests” and are perceived to be able to deliver rural seats. Rural seats are massively over-represented in our legislatures.

Consumers on the other hand are relatively ignorant of the nature of what drives the cost of milk. The arcane nature of supply management is dusty and dull. And no political party appears interested in raising the problem, and so risking the wrath of the over-represented rural areas.

So the tail wags the dog because the producers clearly have more interest and information. Consumers don’t really have much of a defence except becoming a milk smuggler and pouring American contraband on their cereal.

The Wheat Board is a more complex example.

Here, it is the producers who are at variance over the continuation of a supply management system. Some farmers, particularly ones located closer to the American border, feel they can get more for their grain on their own, outside of the pool. Farmers further from the border believe this will rob them of their price protection and put them at a transportation-derived disadvantage.

But at no point has anyone successfully made the argument that the Conservative’s changes are driven by concern about consumers. Agriculture Minister Gerry Ritz always presented the changes as being motivated by an interest in putting “farmers first,” although it is more accurately about putting “some farmers first.”

However, the Harper government should be reconsidering their focus on producers over consumers in this and many other policy areas. The reason is the recent explosion of popular outrage in reaction to the Stop Online Piracy Act in the United States.

When it was introduced, SOPA looked like a typical piece of producer-driven public policy.

Entrenched businesses in the production of music and film were seeing their revenues increasingly reduced by new distribution methods on the Internet. Major lobbies like the Recording Industry Association of America and the Motion Picture Association of America took the producer-side tactic of convincing legislators to picket fence their existing business, that further legal changes were needed to protect their copyrights.

Normally, such a move of producer-driven protectionism would be relatively low profile. A few ad campaigns would be run saying how it would ensure Hollywood continued to make great movies and that would be that.

However, consumers were quickly mobilized in opposition. This was supported by some of the new distribution channels, including Google, Wikipedia and others. The resulting backlash drove scores of Congressional Representatives and Senators to change their position from support of SOPA to opposition.

The backlash was primarily driven by consumers refusing to accept greater pro-producer regulation, and using the Internet to identify the problem, organize and then demonstrate their new-found strength. While there was some fear-mongering and Anonymous-driven nastiness, for the most part it was a protest of average consumers refusing to accept restrictions on their options.

The question some have pondered is if the SOPA backlash was a result of the distributors working to defend their profitable channels, or a legitimate grassroots protest by consumers.

It may be irrelevant. If you do believe that consumers remain relatively pliant, how long will it be before other distributors realize that consumers paying less for their regulated goods will have more money to pay for other things, increasing the margins of – say – retail grocery distributors over those of milk producers? After that, will they begin campaigns to gin up consumer anger over agricultural product pricing to further their own commercial interests?

But my belief is that consumers are actually becoming more fluent in commercial policy and organization, thanks to the Internet.

There have been consumer-driven political activities in the past. Fair trade, Buy American, union label, the Chavez grape boycott and others were powerful forced that altered how companies behaved or marketed themselves. However, these campaigns were difficult, expensive and time-consuming to build. A few (Buy American and union label) were arguably driven by producer-side interests.

The recent move to Internet-driven consumerism changes the cost structure of mobilization, and so makes the playing field more even. It is very easy for average citizens to circulate revealing pieces exposing anti-consumer distortions in the economic system, and for consumer anger to form and vent. In that environment, it will become more and more important to consider consumer impact when debating public policy.

The old strategy of buying off producers groups as proxies for regional communities may fall victim to the rising political power of consumers, loosely organized but organized all the same. The Internet makes the costs of organization so low, and the impact of viral campaigns so powerful, that consumers are suddenly capable of upsetting the producer-driven accommodations in Canada’s public policy.

Thursday, February 16, 2012 7:50 AM EST

Hope will help Hudak move forward

Heading into a leadership review, Ontario PC Leader Tim Hudak looks set to win.

The Ontario PC party has been far more likely than the Ontario Liberals (or the federal PC party of old) to keep its leaders on for multiple elections. Joe Wearing’s seminal paper “Ontario Political Parties: Fish or Foul” found this trend was very significant.

In addition, Mr. Hudak has been relentless in his opposition to the Liberal government in Ontario. Tough rhetoric is red meat for a party base in opposition, and Mr. Hudak has been feeding them Angus beef.

Given his party culture, his success in holding the Liberals to a minority, and the absence of an obvious successor, a strong result is to be expected.

However, the path forward after the review is uncertain.

Adam Radwanski wrote this morning about the protest movement gaining steam to elect a reform candidate president of the Ontario PCs.

More »

Monday, February 13, 2012 10:14 AM EST

The revolving anti-Romney

Every few weeks a new “anti-Romney” emerges in the Republican primaries.

Last July, Rep. Michele Bachmann emerged as the darling of the Tea Party. She appeared on the cover of Newsweek with crazy eyes, and that was that.

Texas Governor Rick Perry jumped into the race and appeared to be a substantive challenger to Mr. Romney. With massive fundraising capacity, a record of economic growth, rugged good looks and a natural charm, Mr. Perry looked to be following the George W. Bush path to the White House.

Then he opened his mouth and his campaign collapsed.

The former CEO of Godfather Pizza, Herman Cain rose to take the lead in the Republican primary, until stories about sexual harassment came out and he withdrew from the race. (You can’t make this stuff up.)

More »

Thursday, January 26, 2012 9:14 AM EST

Mitt Romney’s money problem

Mitt Romney is one of the richest men to run for President of the United States.

Wealth is a challenge for a Presidential candidate, because it can set up a essential “otherness” to the politician that creates a barrier between them and the voter.

George H.W. Bush was (inaccurately) believed to have been caught unawares by a grocery check-out scanner in 1992, reinforcing an image of an out-of-touch elitist who sent his chauffer to pick up his milk.

John Kerry was merciless ribbed for his wealth, in part because it was his wife’s in most part.

Steve Forbes never gelled with the public, in part due to his other-worldliness as a man worth half a billion dollars.

But some of American’s greatest presidents were also clearly wealthy.

More »

Tuesday, January 24, 2012 4:51 PM EST

Newt Gingrich and the Rob Ford phenomenon

Times of great angst do funny things to voters.

Sometimes, voters stick with what they know, reasoning that tough times are no time for on-the-job learning. We saw that phenomenon in the recent federal and Ontario elections.

Sometimes, voters switch to the traditional opposition, reasoning that tough times are the incumbent’s fault, not the fault of the system itself. This was generally the response to the 1991-92 recession in English-speaking countries, although there were interesting exceptions.

Sometimes, voters thumb their noses at all the traditional options and pick someone unknown primarily because of their anti-establishment credentials.

Famous examples exist on the left and right, from Hugo Chavez to Silvio Berlusconi.

Typically, these candidates thrive because voters believe the insiders have been captured by corrupt and powerful interests who fail to put the needs of average people first. The outsiders are unencumbered by having to gain the approval and validation of internal elites, and thus have a wider range of promises they can make. Populists often engage in scapegoating and mass simplifications of public policy that will rush benefits to the people.

A recent definition of populism from political science calls it “an ideology that considers society separated into two homogenous and antagonistic groups, ‘the pure people’ and the ‘corrupt elite.’”

Toronto recently saw the potential for success in a populist candidate.

Rob Ford was able to campaign against the established order at a time when the establishment was highly unpopular. He ran against specific scapegoats and with a relatively simple method for change. Unencumbered by the need for elite validation, he was able to out-promise his opponents.

The populist phenomenon is enjoying a true test in the United States this month.

Newt Gingrich is defining his campaign in terms that are absolutely populist.

He cast his win in South Carolina as a blow to “elites.”

He defended himself against charges by his ex-wife with a counter-attack aimed at media elites.

His SuperPAC is targeting Mitt Romney from a distinctly populist, even left-wing populist, perspective attacking capitalist elites.

Even the structure of his campaign is classic populism. Rather than building a large organization, Mr. Gingrich is campaigning solely on his own charisma and messaging ability.

The surprising thing isn’t that Gingrich ran as a populist. After his own campaign team walked out and he failed to earn a significant number of endorsements, running against the traditional establishment of the GOP makes perfect sense.

The surprising thing also isn’t that it’s worked in South Carolina. Populism is always most effective where there is high economic inequality.

It is fascinating that the first two states in the U.S. nominating process are among the top five for income equality in the U.S.

In comparison to relatively equal Iowa (#5) and New Hampshire (#4), South Carolina (#32) has much more spread between the rich and the poor and Florida (#46) should be even more fertile ground for Gingrich populism.

What is surprising is that the Republicans still have not developed anyone who can provide the only antidote for populism: hope.

Populism is the politics of fear and resentment and anger. It’s the politics of pointing at someone alien from the voter, and saying it’s all their fault. But it is a hollow shell that only works in the absence of a compelling and substantial agenda that provides hope to the middle class.

Franklin Roosevelt and Bill Clinton are great examples of U.S. Presidents who overcame powerful populist movements, either in their own party, across the aisle or in non-democratic movements, by the use of hope.

Mr. Roosevelt faced down internal threats to democracy like Huey Long, Father Coughlin or Douglas MacArthur by providing hope to the middle class in the form of the social stability offered by the New Deal.

Mr. Clinton deftly brought the Democrats back to electability by embracing hope as his mantra, reassuring Americans that economic growth would return, facing down of populist plays by Ross Perot, Pat Buchanan – and one Newt Gingrich.

The entire reforming progressive movement of the early 1900’s – Theodore Roosevelt, Woodrow Wilson, George Norris and others – can be seen as the antithesis of the populist movement of that time, an attempt to reform government to adapt to modernity, rather than the Populist Party’s call to return to an idyllic (and non-existent) past of nativist and anti-intellectual agrarianism.

Like these earlier Presidential candidates, the test of Mitt Romney will be how he responds to Mr. Gingrich and his populist surge.

Mr. Romney can attack Mr. Gingrich as a serial philandering, Freddie Mac-advising, Nancy Pelosi-bill co-sponsoring, unelectable jerk. In other words, he can try to out populist Mr. Gingrich.

It’s probably the safest way to gain the Republican nomination, given Mr. Gingrich’s remarkable record of hypocrisy and bad judgment.

But the smart move is to use Mr. Gingrich as a foil to roll out a responsible, compelling and honest plan to address the economic challenges facing the middle class.

Mr. Romney should be a Progressive to Mr. Gingrich’s Populist. Where Mr. Gingrich wants to take American back to a non-existent idyllic past with blatant attacks against non-existent enemies, Mr. Romney can provide real, radical reforms aimed at helping the middle class adapt to a new era of challenge.

For Mr. Romney, this plays to his biographical strengths as a business leader, makes a virtue of his own record, and turns the coming months of campaigning into a springboard to the general election.

Winning this nomination by being the least objectionable person to the Republican Party will leave Mr. Romney fundamentally challenged in winning the Presidency.

In comparison, winning the nomination by having the best plan to restore hope for the middle class will leave Mr. Romney almost unstoppable in November.