I came across the idea when we dove underwater megalithic structures off the coast of Brittany, France a few years ago near the site of a treasure trove of "fat lady" statues at Carnac. It's impossible to be close to the megaliths without being impressed, not by the mechanics but the logistics of such undertakings. I don't believe a single word of what scientists say about using technology or slaves or whatever to move and erect the great stones of history. The details are a mystery lost to time but make no mistake - those kind of efforts are only done for love.
Let's cut the crap about "inflation" Inflation is the sustained increase in the general level prices for goods and services. It is almost always caused by governments printing too much money. Inflation is not a rise in specific prices caused by firms raising prices to sustain their profits while paying the lowest level workers living wages. In a market with competition, this can not normally happen, at least not without the collusion of all suppliers and the government. Inflation came to the attention of the general public in the 1970's when increases in the price of oil, gas, and heating fuel were almost perfectly correlated with increases in the consumer price index, a mix of goods most households need to operate. Since that time inflation has been much studied. Economist LOVE to debate the causes of inflation. They are many and varied but generally fall in two categories: Demand and Cost. When there's lots of money chasing scarce goods prices will rise. When costs go up firms would like to increase prices to maintain profit margins. Inflation is not bad in itself. It's a sign that economies are growing and central banks are now expert at managing inflation if it becomes a problem. The levers of inflation control in Canada are in the hands of the federal government. Everyone has heard of the Central Bank moving interests rates up and down to spur the economy or control inflation. This is NOT the domain of the provincial government and the premier's comments on inflation are about as on point as him weighing in on the number of ships in the Queen's navy. Of all the problems we need to concern ourselves with in Nova Scotia inflation is not one. Most people who fret about inflation are thinking old timey thoughts about the 1970's. Interestingly, in modern times globalized economies are much more complicated than they were and even changes in gas prices are now only slightly correlated with inflation. It should be clear to anyone that by comparison a change in the local minimum wage, which by definition only impacts the tiniest most trivial corner of overall local wages, would have next to zero impact on cost inflation relative to gas prices which fuel our whole global economy and everything in it. In the context of discussions this week "inflation" is an undefined fear-mongering buzzword - dog whistle politics heard only by the barking backroom boys - used by the premier of Nova Scotia dishonestly for no other purpose but obstinate obfuscation. In dismissing calls for a reasonable ongoing rise in the minimum wage to match rising global costs of living he is hurting Nova Scotia by aiding a very few who would claw personal wealth from the backs of the most foundational level of workers in our society. Minimum Wage Mtyhbusting Today the Premier of Nova Scotia dismissed a call supported by all reasonable parties and citizens to raise the minimum wage to $15. It's my understanding that both the NDP and PC's support increasing the minimum wage.
The premier 'decreed' there was no point in raising wages because of inflation - firms would just raise their prices to cover the increase causing inflation. For every complex question there's an answer that's simple, intuitive and wrong. If minimum wage hikes automatically resulted in price increases, we would expect to see the inflation rate rise whenever the minimum wage rises. Looking back over 100 years of readily available data, this does not happen. It would also be able to be shown that if Mr. McNeil were correct it would be impossible to ever raise the real minimum wage because any increase would simply be offset by a corresponding increase in inflation. No one would ever care about the minimum wage. Clearly, this is not true and there have been long periods of Nova Scotia history where real wages adjusted for inflation have increased. In reverse, we well know that wages increases have in recent times not kept up with inflation so minimum wage buying power has actually decreased. What’s wrong with his... I was going to say argument? ... but he made no attempt to support his claim. It relies on the assumption that firms pay their workers the maximum amount they can possibly pay while staying in business, such that any increase in wages necessitates raising prices. It's the ultimate pro-fatcat approach to thinking about the economy. It could not be further from the truth or further from traditional Liberal party values. Business is not generally in the business of maximizing wages. It's in the business of maximizing profits. Competitive conditions mainly determine prices, not the cost of goods sold. In a competitive market the slight cost increase induced by minimum wage increases comes out of the firm's profit margin, not the consumers pocket. If Nova Scotia's economy is not working this way. If we are overrun with noncompetitive monopolies whose profitability and pricing is contingent on the cost of minimum wage workers then we have much bigger problems than anyone has imagined. But we don't, not even NSPower works this way. The truth is minimum wage increases are the most powerful tool we have for translating growth that concentrates wealth in the hands of a very few to broad-based increases in prosperity and the shared experience of increased productivity. This is where the math comes into economics and I'm stone-certain that the Premier has not done the math. I genuinely suspect - and this is not meant as an insult, innumeracy is at least as big a problem in NS as illiteracy - that the premier does not understand how percent works - it seems to come up again and again in his thinking. At the minimum wage workers spending is very sensitive to income - there's no room for saving or investing in the budget. An extra dollar/hr is a 10% increase for someone making $10/hr and it results in a 10% increase in spending plus the broadly shared economic impact of that spending. It's different for those making $100/hr, it's a 1% increase and that additional money is often banked or spent outside the region. The cost of minimum wage workers is low, so the additional cost for employers is small. Some of the best studies of this are data collected in southern states when an area increased it's minimum wage while similar adjacent areas did not. Mr. McNeil's expectation would be that the increase would cause business to migrate to the lower-wage area, business that stay would suffer, unemployment would rise and inflation would increase as wage increases are passed along to consumers. In reality what happens is the economy of the area with the higher minimum wage increases and the growth is more broadly-based, businesses do not migrate or fail at any increased rate. Prices rise slightly, but far less than the increase in the minimum wage. This all happens because the economic activity generated by a dollar of minimum wage earner spending is much greater than that of those at the top. And this is where we know from experience that the Premier's math is weak. It's been observed that $3.5 dollars of economic activity are generated per dollar of minimum wage earning, while at the top (over $150,000/yr) it was something like $.79 dollars of activity per dollar earned. The most important point is that raising minimum wages put upward pressure on wages nearest the minimum. This is generally credited with helping to form the strong middle class that rose during and after WWII, and is now being decimated in Nova Scotia. Nova Scotia is great in part because we became wealthy not by making more rich people but by making fewer people poor. That's how it's done. The premier and the Liberal party are wrong. There is a fine line between fishing, and standing on a wharf looking like an idiot Before there was a ferry. Before there were income taxes. Even before there was a Liberal party, their were wharves. Wharves were among the first things we built in Nova Scotia. The most fundamental part of our infrastructure.
All around Nova Scotia we still say "Government Wharf" as if it's just a name. It's easy to forget that wharves were the original business of government in the province. That's what local government did - they financed and built wharves. They financed the government works not through taxes on the citizens, but by tariffs and levies on those wanting to do business in Nova Scotia or with Nova Scotians - those wanting to use the wharves. It was a very different idea about government and the economy - government as the business of infrastructure. Later government built roads and eventually became involved in education. And until the 20th century that was about it. The people - through their industry and good works, the judicial system, and the military took care of everything else. Today wharves are still surprisingly central to Nova Scotia's economy. And from one end of the province to the other they are in trouble. Like all of our government infrastructure, crucial capital investments have been deferred in favour of other business - to the breaking point. 100 years on the neglect is becoming dangerous to people, the economy and our future. Here's a link to the wharves of Nova Scotia. So, it was kind of galling this week to learn that on top of everything else about the Ferry Farce the government was committing a secret undisclosed sum to update and upgrade wharves in Portland Maine. Today Jamie Baillie, leader of the Provincial Progressive Conservative opposition party asked the Premier of Nova Scotia to state clearly how much that would cost and if that money might not be better invested here at home. These are good questions. No mater how we define our problems and priorities here in Nova Scotia, having some critical method and clear decision rules for putting our limited resources to their highest and best use is a fundamental that all citizens and reasonable politicians would agree on. Mr. McNeil, the Premier of Nova Scotia, was not able, or willing, to answer any aspect or implication of the question. His obfuscating response was that he had stood on many wharves in Nova Scotia. I'm sure he has. In 2004 a report on the state of wharves in Nova Scotia, The Land And Sea Report, revealed concerning findings. Little was done and today things are much worse. Investment responsibility has been essentially abdicated and in many cases the communities of Nova Scotia, while paying the highest combined tax burden in all of Canada are, for the first time since Nova Scotia was founded, left to struggle alone to build, maintain and repair wharves. “for coastal communities, harbours and wharves perform functions equivalent to the major public infrastructure in urban areas such as highways, bridges, airports and industrial parks” -- Between the Land and the Sea, 2004 Rising tide levels, rotting timbers, ever bigger boats, and a sea that never lets the land be, challenge Nova Scotia communities like Port Lorne to keep wharves safe. Port Lorne Link Even more desperate, other communities like Port Williams and Bear River have lost their wharves through environmental degradation and neglect, and by extension lost their connection to the sea that brought opportunity, food and the exciting adventure of life. There's a lot of work to be done to reconnect Nova Scotia to the sea. It starts at the wharf in rural Nova Scotia, not at the 'tech hub' in Halifax or the ferry dock in Portland Maine. It's been a year of quarrelsome fussing and fighting, divisive rhetoric, and bureaucratic wrangling since last year's budget brought changes to Nova Scotia's media industries.
It's been a distraction and disappointment for government, industry and the public. No one feels as well off as we were before this exercise. Now what do we do? The Back Story Again (... skip this bit if you think you got it.) The media tax credit is an industrial tool with one original purpose - it was designed to draw federal funding to Nova Scotia in the same way municipal and provincial investments in roads, leisure facilities and the like draw in federal funds. We are in a competitive process with other provinces and we bid to attract federal funding. The typical 'price' of these bids is about one third... the province puts in about $.30 and it draws the Federal funding dollar. We're buying money. And it's on sale! How many dollars would you buy for thirty cents? The stakes are high. This year alone the Canadian Media Fund has announced over $370 Million in funding available to the provinces (read more about them below). Adding in the available funding from Telefilm, National Film Board, CBC productions and other federal programs that can go to any province and the amount of money available approaches $2 Billion dollars. But wait, there's more... there are other benefits to the media tax credit. 1/ It creates jobs. Whatever the number of jobs, those are the people you saw out protesting in the streets over the last year. At a time when we all agree every job maters in Nova Scotia, by definition, these jobs must matter. Don't confuse this side benefit with other labour rebates. It's a tiny piece of the pie. 2/ It draws inward private investment. There are some hooks to the tax credit system. In order to get any tax credits you must sell at market value something someone in the world wants to buy. So, broadcast licences and distribution fees from the biggest TV broadcasters, film studios and distributers in the world also come along as inward investment. The government says that the number is not $160m per year, even though that's their number, but they've never argued it's zero. At a time when Nova Scotia is nearly drained of capital and available investment and the banks are simply not lending to local business, every available investment dollar is crucial. This is good money. 3/ The product. The product created - the shows - is diverse and of all kinds of value to Nova Scotia. The series my company produces, Hope For Wildlife, does a couple things beyond employing 30 families over 8 years so far: it finances the rescue and rehabilitation of over 3,000 injured and orphaned animals each year; it's on the air in 100 countries, showing Nova Scotia's people, places and values to the world; that draws in tourists and people with similar values who want to live in such a wonderful place; it shares our stories; it creates a product that sells - an intellectual property, a modern business beyond our traditional resource extraction industries, that's part of our economic future. Much has been said about how Tax Credits work. The media tax credit was created 20 years ago by the Liberal government. It's been supported by all three parties over the years and has been much emulated - by other provinces, by the Federal government and by states and countries world wide. Taxation as a tool for economic development is complex but it has several main features that are easy to understand. It's accountable, transparent, risk-free, and open to anyone. It is not decided in a pick-a-winner style like the old crony capitalist systems that have caused us so much pain as we watch government throwing tax money at pet projects that invariably fail. Tax credits are not profits. They don't go to corporate welfare or the pockets of the well to do. They are used to finance getting productions made. As Walt Disney said, "we don't make shows to make money, we make money so we can make more shows." Success in media industries is survival, the ability to tell another story, make another show. In 20 years not one project that earned media tax credits failed to deliver what was promised. This incredible stat is so because of the system itself. The companies take all the risk and don't even qualify for tax credits until they've delivered everything promised plus not one, not two , but three levels of independent audit. At a time when we want more audit accountability for bad deals 100% of media tax credit deals are audited and insured. Even then it may be years before the tax credit comes through - it's a very cautious process and that's a good thing. So, now what do we do? The astonishing answer is nothing. All the work's been done. All the required decisions were made. The heavy lifting and crucial conversations are last year's news. The new systems are in place and everything's working fine. What? You didn't hear that? No, of course, that's because it's all working. Just like it was for the last 20 years when exactly no one in Nova Scotia said, 'you know the problem is... all those TV shows we're making..." Here's the thing. It's just like the recent pharmacare story. Shortly after the last budget government heard from the media industries. They realized quickly a miscalculation was made and they quietly put the tax credit back in place. It's now called the digital media and animation tax credit as you can see here in the Finance departments 'tax 101' site and you can read all about how great it is from government here. Unfortunately in the crossfire, a lot of bureaucrats got involved and, as is often the case made more of this than needed to be and we ended up with TWO systems - two complete sets of rules and overhead - where before we only had one. Classic. The second system puffed up the NSBI and fell under the new department of business instead of simply a tax credit administrated by the finance department's systems already in place and working well over 20 years. It's taken a year of work to see the unnecessary extra costs, time and trouble of this boondoggle and moreover to see that it doesn't work. It's not attracting the federal money it was designed to attract as explained by the feds in very plain language to the government and in the national media. The feds chided the NS Liberals for spreading misinformation. More charitably, I think they just tried to fix things and got it wrong. The Solution So, now a year on, the answer is simple. Consolidate the media industries under the single, simple, tried and true accountable system that is in place and working well. Call it the media industries tax credit. Then substantial savings of money, time, effort and PR can be had by shutting down completely the 'incentive' program at NSBI that everyone agrees is not working. The solution requires no new laws, no rules, no new programs or overheard, no changes to existing rules - in fact, no effort at all because government did the hard work last year and got the program back on track as a competitive tool of great economic value. It's working perfectly and flexible for the future. Animated and digital online programs are using the system happily. And no one - not the public, the government or industry - has a problem with any of it. It's a solution that's done. It was done last June. It saves money, creates jobs and investment, follows best practices and international standards, fits with new federal liberal efforts and makes all the protesting go away tomorrow. Will it save the industry or any companies? Will it create new successful companies? Who knows. There's a lot of work to do in a challenging and changing world. But at least we can get back to work and try. On of the many beauties of the media tax credit is, if it doesn't work, if no new business is created, it doesn't cost anything and if it works it really works - returning 3 to 6 times the outlay that does happen until after the economic benefit is in the bank. Here are copies of some of our letters to government explaining the situation. We send a couple letters and calls a week. They never respond. Letter to Business Minister April 2, 2016... http://www.cmf-fmc.ca/…/cmf-announces-2016-2017-program-bu…/ I am writing today to share that the CMF (Canadian Media Fund) has this week announced over $371m in available funding to support film and TV production. This is only one of many federal programs including CBC, NFB, Telefilm, Rogers Fund, the Federal Film Tax Credit and others totalling over $2B in Federal funding available this year. These funds are accessed exactly like all other Canadian federal funding for highways, convention centres, shipbuilding and other infrastructure - the provincial governments bid to attract this funding. Over the past 20 years Nova Scotia has built up systems to attract our fair share (about a proportionate 2% of funds growing at double digits each year) of available CMF funding. Last year when the NS government proposed cutting the film tax credit the government stated incorrectly that federal funding would still come to Nova Scotia anyway. Valerie Creighton, head of the CMF responded in correspondence and in the national media correcting the NS government and saying that federal funding in the creative sector, like all other federal funding, was contingent on competitive provincial participation. http://playbackonline.ca/…/valerie-creighton-to-nova-scoti…/ This is one of many media pieces where the CMF head explained to NS gov how federal funding works and pointed out that they contributed over $39m in inward investment to Nova Scotia. This year, without competitive participation from the NS government it is now likely that the majority of all this available federal funding, amounting to 3 to 4 times the required provincial investment will by-pass Nova Scotia. It seems astonishing that a government that jumps through so many hoops to attract other federal funding would purposefully pass up these opportunities. Citizen letter to Premier April 3, 2016... DHX announces big contracts using NS film tax credits this week... http://thechronicleherald.ca/…/1353010-dhx-media-lands-thre… I am writing today because there seems to be a lot of misinformation out there about there not being any more refundable tax credits for film and TV in Nova Scotia. In fact, there will be more refundable tax credits this year in Nova Scotia than ever before. They are available to research and development, digital media and animation industries for film and TV production. All the rules, regulations and rates remain exactly as they have been for years. And they work! (with R&D being by far the most expensive and unpredictable with by far the most nebulous results) It's only if the output of the TV show or drama is 'live action' that it does not qualify for Nova Scotia's smart and competitive refundable tax credit system. If you can see the actor it's disqualified. If you can only hear their voice it's good to go for Nova Scotia tax credits. In another release this week DHX has been commissioned to produce a new series that combines animation and live action with the BBC's children's broadcaster. It's a great opportunity to draw in foreign investment, high skill creative good paying jobs, new knowledge and assets, create valuable intellectual properties and multiples of available federal production funding. If this series were to be produced in Halifax how it would be handled? The animation portion getting access to the tax credit and the live action portion dipping into the new incentive fund? Who is to say. Why we now have two parallel systems for film and TV - one for animation and digital media that is clearly working well, and one for live action that is clearly broken - is an on-going mystery... but clearly paradoxical and unsustainable in the world of modern multi-platform media and the politics of Nova Scotia. During the initial talks with MLA's last April I was told that the main reason to get out of the Tax Credit was because big companies like DHX were 'draining' the provincial treasury. Yet in the end it was only the big companies that remained to access the ongoing tax credit system and only the small, independent and guest productions that got excluded. Now we are running two parallel and redundant systems: one that works for the big companies like DHX and costing more than ever and one that doesn't work for small, independent, local and guest productions that employed the majority of film workers. What explanation can be given in the modern media age why R&D, digital media and animation industries can access film tax credits but live action - with access to the same talent, broadcasters and federal funding - can not and has been ghettoized to wither in a system that does not serve its purpose? How is this sustainable? What coherent policy, plan or goal does it serve? What actual cost saving is achieved? What is the opportunity costs in lost production and fundamental distraction, negative imaging, and bad press? For Mr. McNeil to continue saying we're 'not going back to tax credits' is deeply misstating the fact that, in the end, we never left tax credits and they are still the most valuable and best working tool for bringing economic development and investment to Nova Scotia... just not if the output of your production is live action... otherwise... good times ! Congratulations DHX on all recently announced broadcast commissions, especially the ones to be produced in Nova Scotia using our GREAT refundable tax credit system. 20 years. Are we better off now than we were before? Who knows. The decision has never been reviewed, seriously studied, or accounted for. 20 years in and not one single analysis, investigation or question to assess if we're better off or not.
Those who even pose the question from time to time are shouted down by those people and interests in power most threatened by any rocking of our titanic boat of a city. How did we get the city we got? How did we get a $300k p.a. civil servant and a traffic czar? A weak mayor system of government and strong sense that things are just not right? I wasn’t paying attention to city government on April Fool’s Day in 1996. I had a new baby, a new house, a new big band, a new business and a brand new plan. Halifax did too – Amalgamation. We are citizens in an historically epic amalgamated city state. Over 5,500 square kilometres. It’s a 200km, three hour drive from Hubbards in the west to Ecum Secum in the East. Halifax is almost four times the size of New York City with its 8 million plus residents. In fact, if they were willing to camp out, the entire population of earth, 7 billion people, could easily tent in HRM. I feel that in order to be a good citizen I have to go back and really understand how we got the amalgamated city we got. The revised edition of Raddall’s Warden of the North gives a thumbnail summary of clues. I went on to read the Graham Royal Commission from 1974. That commission identified a clear problem: “The municipalities are charged with paying for and helping to administer programmes that ought to be the responsibility of the province and over which they have very little control, either with respect to programmes or with respect to their financial contribution.” Local government was not fiscally or administratively empowered to do the work it was being asked to do. The report went on to cite the example of transportation and how the unclear division of power between the provincial and local governments was the source of bad policy and performance. Our Traffic Authority: the winter parking ban, the sign forests that litter our provincial roads and the silly talk this winter about why the Magazine Hill is not cleared properly during snow storms is ultimately a child of this. A Royal Commission sounds awesome but it was shelved and that was that. In 1992 the whole thing was reviewed and reinterpreted by a Taskforce on Local Government. It consisted of six provincial public servants,three senior staff members from three different municipalities, the executive director of the Union of Nova Scotia Municipalities, and an accountant with a major accounting firm. There was no public consultation, no call for public input and no review process. It was the kind of committee that presupposed what it was intended to prove. In late-1992 PC Premier Donald Cameron puppeted arbitrarily that amalgamations would go ahead in Halifax and Cape Breton. In 1993, he was replaced by Liberal Premier Dr. John Savage, who said on the campaign trail that amalgamation was “a crazy idea”. (As quoted in Kevin Cox, “Halifax-area leaders fuming over plan for supercity,” The Globe and Mail, 28 October 1994, A4) By late-1994 Dr. Savage’s government sponsored a bill to amalgamate the Cape Breton region. The move avoided the bankruptcy of some cities and towns in industrial Cape Breton. And it went pretty smoothly. What happened, and didn’t happen, next is really at the heart of the whole matter. HRM amalgamation. The key point is that there was no lobby, no titan of industry, visionary, no community leader, no interest group driving this process. No citizens, petitions, businesses, organizations, unions, parties or charities were asking for amalgamation or even anything like it. The ‘problem’, if there was one, was a creature of the government mind. Only after amalgamation was announced, the Halifax Board of Trade said it supported the initiative. There was no vote, plebiscite or referendum. In fact, a hastily organized plebiscite in the town of Bedford gave a result of 89% against forced amalgamation and sent its young Mayor, Peter Kelly, complaining about “more broken promises… and more lies” from government. There was little or no public demand for amalgamation and there were many alternate courses of action. The notion of an amalgamated city, an HRM, was created and driven completely by the bureaucrats themselves. The bureaucracy alone produced and then pushed the regionalist policy toward amalgamation. This is what the political scientists would call state-centred policy-making… and it is not a good thing. This was the Bureaucratic Singularity: the moment when our government-heavy province was taken over by its own Borg-like bureaucracy. How it happened, through the brief Savage years, why and what it means to us today, and where we should go from here should be things we think and talk about. The mayor of Halifax and the mayor of New York City make about the same salary... does that make sense? In his insightful book LEADOCRACY (which I highly recommend) Geoff Smart makes a clear case: the problems of the day are caused by what he calls 'broken government'. Geoff argues that hiring more great leaders leaders into government is the way to fix broken government. This frames the task well: it's future oriented, it presupposes there is a problem to be solved and offers a real solution - more great leaders.
So, what might stop a great, proven leader from taking a stint in government? In times of challenge and change we look for new ideas, new paradigms, and new ways of looking at things. In the management classic THE INNOVATOR'S DILEMMA Harvard professor Clayton Christensen argues that great, well-run, successful companies fail to innovate and eventually fall behind because the things they do to be successful with their current customers current needs fails at understanding and anticipating unstated and ambiguous future needs. It's even more true in government, which is defined by its rejection of any innovation which its voter 'customers' do not currently want or understand. This is probably the most important of the "Four C's" that make great leaders avoid government: - Citizen's antipathy to CHANGE... even, or especially, among those calling loudest for change. - CONFIDENCE in their ability to make a difference in an organization with deep cultural problems - CONFIDENTIALITY concerns about their privacy and exposure to unwarranted criticism (all "politicians" are held on low regard) - COST of lost income In my view the last one, Cost of Lost Income, is of the least concern, yet vexingly, gets ALL the attention. A committee led by Gerry Walsh was recently struck in Halifax to study the issue. Here's their report. Near the end of his life I spent an overnight flight to London sitting beside Dr. John Savage. By this time he had been 'deposed' as premier of Nova Scotia, ejected from government, his wife had died and he knew he too had cancer. Rather than sit or be bitter, Dr. Savage was on his way to Siberia to work on a Doctors Without Boarders project. One of the memorable things he said to me that night was that "being a politician should NOT be the best job you ever had." Who among our current crop of city councilors could we say that of today? I would venture... none. And this is a major problem. We're not looking for career politicians. They're not able to take the innovative path and responsible risk we need in changing times. We're not looking for people who look at public service as the best job they ever had... or even as a job at all. The main reason 'cost of lost income' should be least concern is because a term in government of 4 to 8 years, even at a very low salary, will make very little difference in a great leader's lifetime income no matter where they fit on the income scale. Besides, public service is fundamentally different than working in private industry. People should be motivated by a desire to help others, not by money. Public service has never been about becoming rich unless you are corrupt. It's supposed to be about serving the public, by definition, and the gratification is not monetary. The salary should be enough to pay the basic bills. Why is the salary issue an ongoing problem? Andrew Killawee recently asked if we could think of a past great government or leader in Nova Scotia we'd like to see back again. Examples do not readily come to mind. From a citizen's perspective the field of candidates we get is usually not as strong as we would like. Selecting the right candidate is challenging and often we are disappointed with whom we choose. Usually the only interaction we have with elected officials is when we are angry and aggrieved or looking for someone to take personal responsibility for a problem. In modern government personal responsibility is unheard of. Guilt and shame are divided down into small forgettable pieces even in the grandest failures, wastes and missteps. Look carefully at the job description for Mayor of Halifax (NS Municipal Gov Act Section 15) . It's a ceremonial position. The word 'responsible' is literally not in the job description. Because of the absence of real responsibility, especially at the most important times - along with absence of accountability, risk, and responsiveness - it is difficult for citizens to support almost any salary at all. That higher salaries help attract the highest caliber of people, especially in a city where many expect to - and need to - earn high wages is not a compelling argument for average citizens. Councillors griping about long hours, email and phone calls is a thin argument, especially when it is our email, phone call or concern that is not being attended to in good time. If elected officials were more enabled to make change in the community and in the culture of government organization; if they were held in higher regard by the community; if they were not criticized so broadly; if they were delivering quantifiable results and being responsible for change; then the issue of salary would be much less problematic. From the elected official's point of view the 80/20 rule of management rules supreme, maybe more like the 98-2 rule. 80 to 98 percent of the elected official's constituents never make a peep, but 2 to 20 percent are insatiable and unsatisfiable. They would take up all the time in the world and elected officials are ill-prepared, untrained and actually unable to deal with their concerns. However, it's a rule of human nature that we all think we have it worse of than our peers, so rather than results, the outcome is simply a want for more compensation to compensate for all the troubles of the other "Four C's". What possible argument could a politician legitimately have for a higher salary? The only argument I know is this: The cost of elected officials per citizen is so cheap it might as well be free. If the mayor earned $150k per year in a city of 400k that means it costs each citizen less than one cent per week to have a mayor. (150000 divide 400000 divide 52 = .7 cents per week). For any citizen to get truly offended by this cost on their taxes they would have to hold the Mayor in astonishingly low regard. However, there are some aspects of the salary discussion that are bothersome and seemingly unfair. What other employee gets to vote on their own salary? Even more concerningly, we are electing these people to keep the cost of of government down. If their salary is tied generally to the cost of government in other places what incentive do they have as a group to do that? Worse, if their salary is tied specifically to the salaries of other government workers they have no incentive to do what is asked of them. In this regard it would make sense to tie their compensation to the average fulltime, parttime and unemployed worker salary OUTSIDE of government in Halifax. Many folks have a sense that part of the problem is that government work in general is not priced correctly. In the end we shouldn't care too much what the current crop of council thinks at all. We're clear that this type of person is not the answer. We're not looking for better politicians, we're looking for great leaders and in the long run it will not be salary that is the main determinant of getting them, it is the other the "C's" that we should really be working on. Pop economist, ex-Secretary of Labour and Canceller of public policy at UC Berkley Robert Reich recently said of Hillary Clinton and Bernie Sanders, “I’ve known Hillary Clinton since she was 19 years old, and have nothing but respect for her. In my view, she’s the most qualified candidate for president of the political system we now have. But Bernie Sanders is the most qualified candidate to create the political system we should have, because he’s leading a political movement for change.” Likewise, we need to develop systems to attract the kind of candidates who can build the city we want to have - one that's right sized, local and going in the same direction as our economy - not one keeping the same old developer driven, "immigrants will fill empty condos", leisure-economy dream, road widening, petty politics, delusion of grandeur, big box government we've been saddled with since our misguided provincial government saddled our vibrant and diverse small unique communities with amalgamation, the cost of which remains untold. We need to concern ourselves with the rising generation and the shape of things to come. That this future city may need to be radically different than the one we now have is far outside the comprehension of the current council or their court. We need to hang question marks on the way we're doing things. We need boorish expressions of doubt, not cheerleading. We need to concern ourselves with the most vulnerable among us. We need to believe that in spite of all our great wealth we can imagine and ask for more and better for those remaining on the outside. Many great natural community leaders have ideas, experience and the risk tolerance to take on the real responsibility. But they're not seeing a way in to the current system. They are working tirelessly for change in spite of of the government we have , most often for no pay. Councillor salary is the least of their concern, and should be the least of ours. I’ve been talking to folks over the last little while about the Film Tax Credit and what insights and improvements it might offer for other creative industries, manufacturing and other industrial tax incentive models such as the payroll rebate system. This is a brief analysis of how and where tax credits work along with a short case study. Lot’s of folks have been talking for a while about how to harness the great sustainable success of Film Industry Tax Credits in other creative industries. Though it’s been discussed for years, it’s been difficult to get consensus on how Tax Credits could be applied, particularly to the music business which some people see as analogous. This is a discussion paper outlining issues and ideas. How The Film Tax Credit Works A film tax credit is a regionally structured, labour-based tax credit. If a Producer employs creative folks in the film and TV business that attracts external investments, particularly TV licences, Federal funding, industry funding and distribution guarantees, he can have that expenditure audited, verified and checked over and if all is good he can claim a tax credit equal to roughly the amount the people he employed paid in taxes (including an economic impact multiplier). In this sense tax credits are Revenue Neutral. That is to say that the source of their financing comes from the tax paid by the people who work on the project whose jobs would not have existed without the project. At very worst it’s a wash, but in reality the people, the jobs, the ideas and the economic activity make a huge positive impact on Nova Scotia. The simplest explanation for this is that government is using taxes collected on high-paying, skill rich, creative work that would not have come to the region under any other circumstances to buy those jobs. Put even more simply, they are buying money. And it’s on sale! They’re getting it for about thirty cents on the dollar. The difficulties and alternatives So how can this successful industrial development tool by applied to other types of creative manufacture? Good analogies in other creative industries are not easy to come by. Few businesses have the scale, the finite schedule, the detailed accountability and the verifiability of a TV or film production. Few other creative industries so plainly draw in investment capital as part of their basic business model that would not come to Nova Scotia under any other circumstances. Over at NSBI they work the same model to draw industry investment to Nova Scotia but they call it a Payroll Rebate and they pick and choose specific businesses to qualify instead of simply opening it up to all businesses in a certain sector or area like the Film Tax Credit. There’s lots wrong with the pick-a-winner style of economic development, mostly it’s just discouraging to all the people and businesses that don’t get picked, and the payroll rebate has not been nearly as successful as the Film Tax Credit. What makes a good tax credit candidate? 1/ Is it a clean, low impact, industry that positively affects Nova Scotia at home and our reputation in the world? 2/ Does it draw in investment that would not come to Nova Scotia under any other circumstances? 3/ Does it require a variety of highly skilled labour positions and offer rich, meaningful, good paying jobs? 4/ Are the companies and projects of such a scale and professional quality that they can handle the administrative responsibility of financing their own business and then auditing the results and proving they have done everything they promised to do before getting any tax credit benefit? 5/ Is it a consistent or growing sustainable industry with promise for future development? It’s pretty simple. We want to support ideas that are positives for the community, that attract and keep creative, positive, skill rich work in Nova Scotia. We want to attract investment. We want to keep our risk at zero by only committing and paying out after the project has verified through audit that it has done everything it said it would do. A good analogous business - Shipbuilding Shipbuilding would be a good candidate for a tax credit system. It’s interesting creative work. It’s a proud part of our heritage and our future. It a positive part of our story at home and abroad. The companies are of a professional scale, even small boat builders, that they can deal with the financing and reporting requirements needed to responsibly account for the people’s tax money. Boats are built on project schedules with clear beginnings and ends that lend themselves to clear accounting and labour billings. A new ship or boat is commissioned. The investment money comes to Nova Scotia. The ship is built and delivered. The builder reports to government, is subject to a detailed audit and then is given a tax credit based on the Nova Scotia labour he employed in the ship production. Instead of the loans, gifts and gobbly gook given away for the Irving navy shipbuilding project, they could have structured a highly accountable, performance and success-based labour tax credit that would have been a lot more responsible and transparent to the tax payers. Importantly, it could have been a shipbuilding tax credit available to all builders – new companies and old, big and small alike - not just the Irvings. To find other types of industries that might be a fit for a tax credit some compromises may have to be made. If the tax credit is a fit for TV and film or shipbuilding why not the music business? Looking at the desirable requirements: 1/ Is it a good clean and desirable industry? Yes! 2/ Do they draw in money from away that would not come otherwise? Well, sometimes, but not as part of the basic business model structure. In the old days when their were record companies it might have been possible to induce them with a tax credit, but their decisions are talent based and no amount of money will get someone to back, buy or listen to music they don’t like. Web development, interactive or otherwise can sometimes draw in money from away, but that’s not the core of the industry and tax credits would not likely make a difference in most financing cases. So, generally no, industries like this, though they have successes, don’t have the attraction of investment capital as a core foundation stone of their productions. 3/ Do they create great quality interesting work? Yep! 4/ Are they of such a scale, schedule and structure to handle interim financing and make transparent, verifiable, accountable audits on which to base labour tax credits? Again, no, some, maybe a few, are, but it’s generally not a hallmark of either industry. 5/ Are they consistent, sustainable or growing industries or sectors? Sure! Sooo… 3 out of 5. We can give up here or we can consider how and why we could make tax credits work for these kinds of industries that don’t perfectly fit the economic model yet there is considerable will to encourage them. Applying Labour Tax Credits to the Music Industry Music is a great cultural product close to the heart of Nova Scotia. We currently have a mishmash of agencies, grants and organizations, heavily bureaucratic and often elitist, funding ad hoc musicians, bands, events and other arts organizations and projects in a piecemeal pick-a-winner style. It would be great to find a better way. Some of the great things about Tax Credits: they blend cultural and industrial mandates; there are no deadline dates, they can be qualified any time; they’re sustainable and don’t need to be funded by a pool – the more tax creditable projects, the more tax credit money is available; industry interim finances and thereby holds all the risk; they are relatively low in bureaucratic overhead, easy to administrate and fairly available to anyone and everyone who qualifies. It’s clear Tax Credits would be a huge improvement over the current systems. The problem is how to argue that they are drawing in investment to Nova Scotia and how the verification and accountability process would work on a reasonable schedule. If musicians and the attendant technicians and talent are the labour, who is analogous to the producer in the TV and Film business? Where does their financing come from? The employers of musicians and technicians are: clubs, festivals, events and ultimately the public who buys their services and products. Their financing doesn’t obviously come from away but it is capital that if not spent on regional labour would spin-off and out of the region much quicker. Clubs, venues, festivals, events and even consumers also have, in their own way, good tax accountability and verifiability through their auditable tax returns. If we offered venues and clubs a tax credit based on the Nova Scotia creative labour they employed, and if we broke the “not for profit” mind-set that the grant-based bureaucracy has instilled in festival and event organizers, a music and arts creative tax credit would be a powerful tool to encourage employment. If consumers were given a tax credit for music and art purchases it would likewise encourage cultural economic activity to develop a stronger and more well-founded local market that could build better exports. One way to mitigate the “cost” factor because investment isn’t coming in from away to justify the economic multiplier, is to make the tax credit simple and not fully refundable, meaning it’s a reduction of taxes otherwise payable not a credit that must potentially be paid out from general revenue. At what rate would a music tax credit really make a difference? What would the cost be? Though impressive economic impact numbers have been generated by music industry lobby groups, the truth is that very little hard cash, relative to GDP, is being spent by Nova Scotia companies on Nova Scotian music, arts and culture. If the conservative view were taken, a 17% tax credit would match the nominal tax rate of those employed and create a sustainable system. But it likely would not encourage employers to do more and perhaps not make any difference because of the administrative burden and interim financing. At the other end of the scale a 100% tax credit, where employers can credit taxes otherwise payable by the full amount they spend on Nova Scotian music, arts and culture would certainly have a huge impact on the ability to employ, present and promote Nova Scotian talent. Would it be sustainable? Government would simply be collecting less in taxes from business and that money would circulate at least one more time in economic activity than it otherwise would, attracting taxes at each cycle. Also, there would be cost savings in the reduction of other, now redundant, music, arts and culture pick-a-winner type funds. The market would be freed to decide – all other things equal – which talent got the most work and money. Artists Get The Benefits – Not The Paperwork All the reporting, audit, and verification would be handled by industry in year-end corporate tax returns. All benefits would ultimately be received by artists. The system would create more competition, more demand for talent and a more entrepreneurial mindset among all the players involved with less bureaucratic involvement. A slightly more complex model, especially for venues and clubs, would be to tie other benefits from other levels of government to the tax creditable talent labour. For example, HRM could have a uniform closing time but allow clubs to stay open later based on the amount they spend on NS talent. In this sense the tax credit, employing NS talent, could be valued at far over 100% without any out of pocket costs for municipal government’s partnership. The key is to structure the tax credit so the benefit is increased employment and the incentive to take on the accounting responsibilities of the system rest with business entity that have the capacity and business cycle schedule to be accountable in a timely and professional manner. Systems are already in place at finance to handle such a tax credit. There would be significant savings in other bureaucratic areas. The tax credit would encourage a new competitive free market, open to all with the talent and effort, that would find a sustainable balance. It would serve both cultural and industrials goals. The total cost in reduced business taxes would likely be less than $1m in year one and balance out at less than $10m per year in a robust local industry. (if a typical performance paid $2500 that would be a minimum of 4000 performances per year – numbers and order of magnitude bigger than what is supported now.) And artists would invest that money as they saw fit in recording, training, media, export development and equity. Other Creative Industries Once the tax credit was up and running in this way in music and arts, it would be possible to review and consider how the tax credit could be considered even more widely for all businesses employing Nova Scotian cultural workers, which could be defined widely to include everything from boat builders to web designers. Ultimately, all manufacturing work is creative and the system might be applied and opened to all industries that meet the basic benefits while creating products and services that put Nova Scotia in business with the world. In the coming months the current government or a new government will come to the table and ask us, the Creative Industries, a simple question… what do we want. We had this conversation 20 years ago and it put us on the map. Now, well, we have to have it again. Let’s look at it as an opportunity to do something awesome. To begin, the answer to the question should come in the form of a simple strategy document that identifies who we are, our economy sector, our industries, our place in the global market, our vision and values, beliefs and goals, where we want to go and how we want to get there. It should look like a simple business plan and have a clear call to action that is future-oriented, inclusive and adaptable. We want a simple film industry strategic plan from government that guides policy and decisions. We want the government to sign and commit to this plan. Here are some points that should be in that plan that I’ve cobbled together from other communities, studies and writers who’ve already worked it out. Vision and Beliefs The creative industries are increasingly important to the economic well-being of Nova Scotia. We believe that human creativity is the ultimate economic resource, and that the industries of the twenty-first century will depend increasingly on the generation of knowledge through creativity and innovation. We believe the ownership and commercial exchange of rights in intellectual property will be the major source of new wealth created in Nova Scotia in the 21st century. Creative industries are woven so deeply into the fabric of modern Nova Scotian society that every citizen is enriched by their pursuit and harmed by their undercapitalization. We believe technology and tradition and natural partners. Though all creative additions to the value chain are important, the highest value is placed on local production, intellectual property rights and copyright ownership. Creative Industries are knowledge-based and labour-intensive, creating rewarding employment and wealth. By nurturing creativity and fostering the environment where innovation can happen societies will maintain cultural diversity and enhance economic performance. Define The Sector Creative Industries are those which have their origin in individual creativity, skill and talent and which have a potential for wealth and job creation through the generation and exploitation of intellectual property. The Creative Industries refer to a range of economic activities which are concerned with the generation or exploitation of knowledge and information. The creative economy comprises advertising, architecture, art, crafts, design, fashion, film, music, performing arts, publishing, R&D, software, toys and games, TV and radio, video games and industries that preserve and promote traditional skills including boatbuilding, metalwork, and woodwork. Cultural Industries are a sub-set of Creative Industries, including textual, music, television, film production and publishing, as well as crafts and design. Goals Our goal is to merge Creativity, Culture and Industry into a seamless, sustainable, sparkling engine of prosperity and wealth creation. Cultural industries worldwide have adapted to the new digital technologies and to the arrival of national, regional and international regulatory and promotional policies. These factors have radically altered the context in which cultural goods, services, and investments flow between regions and countries globally. Consequently, these industries have undergone a process of internationalization and it is imperative that Nova Scotia compete effectively on the world stage using the best tools and techniques available. Support equal treatment and equal access to program for all meeting goals All programs, policies and incentives designed to grow and support the sector should be available to any and all Nova Scotians who succeed in Creative Industrial wealth forming pursuits and who can meet the standards of accountability and best practices. The only limit to growth in the sector should be individual’s capacity for effort. The Benchmarks of Success
*We recognize that Economic Impact Modeling and the talk of ‘spin-offs can only be used as a comparative tool when making choices between alternate and mutually exclusive courses of action and that these tools are not useful when applied inconsistently or as a policy promotion tool. We are competing in a global market $640 billion was the value of the world’s exports of creative goods and services in 2011, of which $87 billion or 14 percent originated in the Americas, according to data compiled by Oxford Economics in the study “The Economic Impact of the Creative Industries in the Americas,” a collation of existing quantitative data on the economic performance of the creative and cultural industries. The report surveys 44 countries—including 34 countries in the Americas and 10 benchmark countries from other regions around the world. It also recommends ways to improve and standardize national measurement frameworks to better track trends within and across countries and support more evidence-based policymaking. The contribution by creative industries to GDP varies widely across the region: from just under 2 percent in Chile to more than 10 percent in Brazil and the United States. Growth rates in the sector are consistently higher than the average of the economy. The creative sector is also an important provider of employment in some countries: between 5 percent to 11 percent of jobs in Canada, Colombia, Mexico, and Trinidad and Tobago. Moreover, the sector has a higher percentage of youth employment than the rest of the economy. The sector is becoming increasingly international. Creative exports from the countries in the Americas accounted for 2.2 percent of all their exports of goods and services. Nova Scotia must commit to effectively competing on the world stage with the goal that local talent, ideas and product on par value with the world is not encumbered by geopolitical disadvantage. Our main competitor is Ontario For policy and decision-making purposes we just agree that our benchmark competitor is the market-leading work done in the province of Ontario. Marketing, regulatory and incentive policy should embrace as ‘fast first follower’ strategy to ensure a favourable competitive position. The government of Nova Scotia should be constantly working with the Ontario and Federal government to ensure fair and balanced treatment of the Canadian regional production centres, explore comparative advantage opportunities, and promote value-adding co-operation where possible. Competitive Advantages Current competitive advantages include:
Programs, Policies and Process Over 20 years Refundable Tax Credits have become the global gold standard in Economic Development Tools for creative industries. When administrated properly they are fair, accessible to all, accountable and effective. They can be adjusted easily for competitive and marketing purposes, and they have a measurable positive effect on the economy. However, they must be understood and administrated by a knowledgeable and forward thinking system of policy, process and oversight. It is this system that has fallen by the way in Nova Scotia and must be rebuilt from the bottom. Program, policy and processes do not need to reinvent the wheel. Nova Scotia has more experience with these programs than any other region. If we understand who our competitor is, our marketing strategy, and our competitive strategy the rates and particulars of the system will flow naturally from policy and be easily adapted to changing economic forces and competitive conditions. **See the blog post document "The Application of Tax Credits" for a decision tree on incentive programming using Tax Credits. Industry Marketing 2015 revealed the innate power of the sector to communicate, market and promote itself, even in the face of criticism and downturn. Industry marketing’s main goal is to bring investment, talent and jobs to Nova Scotia by empowering the industries to promote themselves. Our secondary goal is to promote Nova Scotia – products, people and as a destination for business and travel. Because it’s our proven strength, the focus of marketing should be social, viral, and sharable, seeking and creating personal direct relationships in the industry rather than old-style trade ads, displays and booths. In Relation to the Stars Creative industries are by definition less corporate than traditional industry. Relationships are important. Nova Scotian industry should focus on making great relationships with the best of the best of the world’s creative community. Financial goal is 3 % of Canada’s growing output Creative industries account for $640b in exports alone. This figure has been consistently growing at an average of 10% per year. In Film and TV, Nova Scotia currently represents about 2% of Canadian production and Canada represents about 2% of the global market. That number has grown from .2% 20 years ago. Ten times growth relative to world markets. Our goal should be to punch above our weight and reach 3% of Canadian production by 2021, while also enjoying 10% plus annual growth in global markets. Industry development – Starting Over The sector, the government and creative talent should take on the mindset and the challenge that we are starting over. We should see this as an opportunity to rebuild the unique foundation of local talent, stories and environment that enabled us to join the global market in the past.
Capital, Risk, Assessment and the Shape of Things To Come Cultural Industries executive Ed Cowan wrote in the Globe and Mail this summer that our creative industries could be an ideal gateway to a long-term strategy improving our competitiveness and our capacity for innovation, leading a more certain, sustainable future economy in Canada. This section adapts his report to Nova Scotia. Already innovative tools that we’ve developed here, such as the use of Tax Credits in place of pick-a-winner style investment, have been copied and embraced by the most forward-looking global markets. Nova Scotia’s base creative industries are hugely diverse – advertising, architecture, craft, design, fashion, television, information technology, software, publishing, museums, galleries, libraries, plus the performing and visual arts – they are built on a proud tradition of creativity and storytelling. Our video game developers create some of the world’s bestselling titles. Our animators draw the shows that engage and inform the world’s children. And in television, by far the world’s number one leisure activity, our series and specials continue to entertain the world. The future potential of this market is growing with new platforms, new investment and new technology. We will be part of a golden age of entertainment. Any reduction in public investment in these industries will seriously undermine our creative and cultural ecosystems, creating a downward spiral in which fewer creative risks are taken, resulting in less innovation and declining returns, to the detriment of our economic future. If we are to grow, steps have to be taken to begin to build cross-party political support for a new sustainable economic plan, based on building the environment for innovation, with the creative industries – supported by solid government belief and understanding – leading a major charge. Step one in this initiative should evolve from the development of a creative industries mapping document, a tool kit to accurately and authoritatively measure the sector’s contribution to Nova Scotian economic health and gauge our progress, opportunities, strengths and weaknesses. A similar process was an unqualified success in Britain – in 2001, it led to the British government becoming the world’s first to recognize creativity as a proper industrial sector. The British mapping document also proved that the creative sector outperformed the rest of the British economy in both growth and job creation. A Nova Scotia commission could focus on the public and private investment required for the growth of this cornerstone sector. Tax incentives for film, television, software development, theatre and orchestras are essential, but other forms of public investment could be examined: supporting R&D, testing new ideas, developing new talent and opening doors to innovative collaboration with other industrial sectors. Stimulating this variety of investment and income is a vital national priority. Access to capital is the crucial missing ingredient. We have the talent, the labour, the natural resources. Without adequate baseline investment, we cannot expect to maintain, let alone build on, our fledgling cultural and creative successes. Our cultural and creative industries can drive technological progress, as well as benefit from it. While we are just 15 years into the digital millennium, it is crystal clear that creative and innovative uses of technology are essential to our future sustainable economic success. Ask Frankie MacDonald. The digital revolution has increased participation in informal creative activity and expanded the universe of artists into potential collaborative interfacings with other industrial sectors. It has created the opportunity for new networks and new forms of collaboration and interaction, transformed the production and distribution of established cultural content and allowed new forms of art and culture to emerge, thus enlarging the economic palette for innovation. The public sector has a vital role to play in supporting digital R&D in the creative industries, which must be aimed at increasing innovative content production, audience engagement and financial modelling – thus resulting in new forms of social value, as technologies evolve. Clearly, a strong cultural and creative ecosystem would lead to greater intrasector collaboration and innovation. Education, Culture and The Future This isn’t just about economic sustainability, though. The fruits of creative-sector collaboration, among the commercial creative industries and the purely cultural sectors, already range from familiar products, such as co-produced TV programming, to adventures in multiplatform storytelling that draw on expertise in technology, film, theatre and more. The possibilities are endless. We must also be prepared to fully harness, and financially support, the importance of creativity in education and skills development to maximize our full creative potential. Doing so will ensure an innovative future and provincial well being, based on both a traditional and a digitally based education system, and a new-world curriculum that is infused with multidisciplinary creativity and economic enterprise. Failure to understand this educational issue dramatically reduces our capacity to produce creative, world-leading scientists, engineers and technologists. Making decisive progress is both a social and economic imperative. Public and private financial resources need to be refocused across the cultural and creative industries to achieve this goal. We could take shares instead of taxes. Corporate Taxes in Nova Scotia are a mess. They are not working for anyone. And if there’s one reason why no one cares, it’s because they are such a mess that the tiny amount they generate is near immaterial to our provincial budget. But Corporate Taxes do matter. The 'carrot and stick' of corporate tax is one of the few levers of economic progress in our reach. So why would I advocate abolishing them? Nova Scotia has a personal income tax system that is among the most progressive in the world. Though it sometimes hurts it’s something we can be proud of. Here’s the deal – we all contribute fairly to a common fund that pays for our public goods and services, invests in our future, economic, cultural and social objectives and looks after the poorest and most vulnerable among us making Nova Scotia among the cleanest, healthiest, safest and most prosperous places ever in the history of the world. Take a look: It happens that those making over $150k are the “1%” in Nova Scotia. There’s a little over 6,000 taxpayers in that 1% bracket and they are paying 21% of all the income taxes. Damn decent I’d say. But there are other parts of the tax system that just aren’t working. Nova Scotia has the highest Corporate Income Tax Rates in Canada and the lowest small business threshold. And yet you don’t see Corporate Tax in the chart above. The total amount collected in corporate and capital taxes is only about half what Service Nova Scotia collects in registrations, fees and taxes per year. It’s lumped in with “other sources” and forgotten. Most large corporations operating and selling goods in Nova Scotia pay little or no taxes. New car sales account for the second largest element of consumer spending after food yet Ford and all the other car companies pay no taxes in Nova Scotia. Worse, the banks are taxed on any capital they employ in Nova Scotia leaving them a huge incentive to move all deposits out of Nova Scotia and not invest anything here they don’t have to – so we’re left with mortgages… and that’s about it. Before “income tax” became a thing in Nova Scotia there were still taxes but they were levied - sensibly - on the people and companies wanting to do business in Nova Scotia, give us junk, and extract wealth. It's time again to tax not the creation of wealth, work and income in Nova Scotia, but tax the extraction of wealth and recover the cost of all the disposable junk, packaging and garbage shipped in to Nova by global commerce. Here are three ideas about corporate taxes ranging from obvious and conservative to… BFI 1/ If we want to be competitive and attract industry our corporate tax rates should be lower than the main provincial competitor. And that seems to me to be Ontario. Because of our well-understood geopolitical disadvantages, we can’t be market leaders in taxation. A simple strategy would be to set rate 5% lower than Ontario and small business thresholds 5% higher and take on a fast first follower strategy, keeping our tax rate competitive with theirs. 2/ We should structure corporate taxation to encourage the employment of capital in Nova Scotia, not the extraction. 3/ Here’s the big f%^king idea. Currently corporate taxes accounts for only 4.9% of Nova Scotia provincial revenues. To put that in perspective it’s only about 1 tenth of the amount raised by income tax and HST. Why don’t we just give up on corporate taxes all together, save the cost of administrating a complicated and unproductive system and simply require large public corporations that want to do business in Nova Scotia to pay us in shares for the right to do business in Nova Scotia. As above, the rate – paid annually - would match competitively with Ontario. Tax avoidance would be basically eliminated. Corporate, government and public interests would be aligned, and Nova Scotia – meaning the people of Nova Scotia – would be creating a global, long-term investment in the way the world is inevitably going. Collectively we would again become owners of capital, earning dividends and capital gains, perpetually, driven in part by our own market, instead of victims of corporate globalization endlessly extracting our regional wealth and aggregating it in global centres. This idea is not new. It’s been around for generations but in times and places where corporate taxation is working to advantage it’s not pursued. Nova Scotia is not in that time and place. It’s a creative idea that could do the job. More revenue/ dividends, more capital, more control, less tax avoidance, less administrative and overhead costs. Even talking about it would put us on the global map and on the radar of corporate interests look for an advantage. And nothing could send a stronger signal to the markets and owners of capital that we’re ready, willing and able to do something 'bold', 'innovative', 'new' and partner in the long-run for shared interests instead of undermining quarterly results. Steve Jobs said "Innovation distinguishes between a leader and a follower." What role do "Leaders " play in Canadian society, among the first mature democracies in history?
Maybe the story starts with sorting out Leader, leader and leadership. Arguably Churchill, Hitler, Stalin and Mussolini we all great Leaders, and there is a portion of the population who worship power and control who would love to see more Leaders in this sense. We suspect Donald Trump might be a Leader. In spite of our most modest flirtation with this kind of Leadership, what I'll call strong arm leadership, in the Harper years, I don't think Canada is much interested in Leaders. Small "L" leaders are more our thing and I think Mr. Trudeau is a good example. He's a leader in the sense that he symbolizes and represents who we want to be and where we want to go. This kind of leader is out ahead, a figurehead, representing ideas, culture, and business as we want it to be. One of the hallmarks that distinguishes this leader from Leaders is argument. Open discussions and disagreements must be encouraged, so that all sides of an issue are fully explored. These kinds are folks we rarely see in politics because they have a lot of better things they could be doing. Many view the greatest leader of this sort in modern American history to be Adm. H. G. Rickover, USN. A generation after his work was done Americans learning leadership study his work and marvel at what he accomplished. Here's what he wrote about HOW leadership worked. These folks are interesting to us because they display a mix of attractive qualities we admire and are drawn to. In this sense leadership is a practical skill. It is simply the ability to lead or guide individuals and groups. How that is done is much more complex and represents a whole field of study. Is leadership breed or learned? Are there 'tricks' to it? Does it depend on looks, strength, IQ? How should leaders be rewarded? Should we even want leaders or should we resist these social structures as outmoded? We can think of leaders in the political sense, or as explorers and adventurers, or as executives in business. In the creative world leaders are people who, through their personality, style and presentation attract people. Even a city can be a leader - it can expect more of you, it can be insistent, it can demand excellence and punish mediocrity. Leadership means different things to different people around the world, and different things in different situations. For example, it could relate to community leadership, religious leadership, political leadership, and leadership of campaigning groups. Though how leaders do what they do may be infinity varied we can see what they do simply.
Taken together all these things 'lead' to change. Very few people have become strong or famous leaders by keeping things exactly as they are. Leadership, therefore, is about change. The number one problem in our province today is broken government. Government is on the wrong path and that path is marked by a sign that says BUREAUCRACY. The hallmark of government today is lack of dynamic change, new ideas, and risk. In Nova Scotia we rarely hear even the suggestion of big new or different ideas. Even the most "bold" political statements are just the same old things, cribbed from other places, learned from dusty old professors, and repeated since the sixties. So the first question of leadership might be, "Do we really want leaders?" Generally, I don't think we do. I think too many people have it too good. In spite of our complaints about high prices and taxes most among us have more and better than any previous generation. In this sense calls for leaders and change are just a way of talking, griping, not something we would seriously consider. Why rock the boat when we're getting our cut? But... say we did want leaders in government. How would that work. Well, first of all, we actually would not want to distract leaders too much... they are the ones out working, creating, employing, generating new wealth and attracting capital to our region. They may be far more valuable to society in the market rather than in a cabinet room. In his book Leadocracy, Jeff Smart presents a way to get real leaders and leadership into government. The solution, he argues, is hiring great leaders into government and empowering them to work. If we can replace bureaucratic non-leaders with great leaders who have the courage to act and be responsible we can improve Nova Scotia. So, if it’s this simple what’s the problem? Let’s just do it. Well, there is an obstacle in the way and it’s not the obvious one. What’s really stopping us from improving government bureaucracy through a “leadocracy”? What is stopping our best leaders from engaging in government? Money is an issue; government being held in low regard, ill-repute even, are issues. The loss of privacy; being exposed to public criticism, are issues. But these are easily overcome. Leaders need only offer a term, a couple years – it won’t have much effect on their lifetime earnings. We can surely muster the public tact to appreciate and thank leaders for their public service and define systems to respect their efforts even in a wild media age. The real problem is the notion of empowerment. Why would leaders even try in a system they know is impervious to improvement or change of any kind? In Nova Scotia we’ve fundamentally eliminated risk and responsibility from public life and government. No one is responsible. No one can be held accountable. No one can be fired no matter how abysmally mediocre their effort. The new trend to extensive public consultation, though wonderful on the surface, is making things much worse. It is actually replacing democracy with a type of paralysis marked by complete absence of responsibility in decision-making even in our elected officials – the very core value of democracy. When more than one person is responsible, no one is responsible. Leaders are smart. They can see this and they steer clear. This is what has to change if we really want change. Leaders are also good-hearted and concerned. So what happens? Leaders ‘softly contribute’. They join political parties. Give to charities. They join boards, commissions and taskforces (***cough, Ivany, cough***). They offer their time and their support. And here’s the tragedy. In going along with the system, but without taking real responsibility for the outcome, they become part of the problem. The history of our province is paved with reports – mere observation by people who were born to act decisively. The bureaucracy, like a zombie hoard, transforms our greatest leaders into bureaucrats, consultants, advisors and board members. Slapping on the back, congratulating and rewarding them generously for mediocrity. Exactly the opposite of what we need. Nowhere is this more poignantly painted than in the story of one of Nova Scotia's first great leaders, Joseph Howe. To give an example; imagine instead of being invited to sit on a panel and toss around some ideas, or asked to contribute to this charity or that, Al MacPhee, a local Auto impresario, was empowered to be Minister of Highways for a four year term. And imagine he was empowered to institute more efficient and effective policies, laws and management practices based on his leadership skills and experience. Imagine that he was asked to be responsible and accountable for this work as he has been for hundreds and thousands of jobs and hundreds of millions of dollars in business. Government is broken. We can fix it by stopping it and, where it is necessary, putting leaders from outside politics and government into the position of responsibility with the terms and with the tools to fix it. We can build a Leadocracy... if we actually want change. My personal view is that we don't want leaders because as citizens we're not willing to take on the responsibility and work of change. The Changing Role of Capital In Society"The arts community is generally dominated by liberals because if you are concerned mainly with painting or sculpture, you don't have time to study how the world works. And if you have no understanding of economics, strategy, history and politics, then naturally you would be a liberal." Mark Helprin This is a pitch for talking everyday economics. It's pointed at all my friends who openly say they don't like numbers. Contrary to popular belief learned in crap high schools, economics is a social science that is the only language we have for getting to the good life - the prosperity that we all have the audacity to want for Nova Scotia. Economics is the story we tell ourselves about where our wealth comes from and where it goes.
So economics is a story. And we’re all story experts. So we get frustrated when the story doesn’t make sense, when characters are left out, when plot points don’t seem realistic, when there's bad edits, when the bad guys don’t get their due and when the love interest isn’t brought forward to be central to the story. Then we stop believing. It's All Economics Whether we like it or not, it is a fact that the main issues of present-day politics are purely economic and cannot be understood without a grasp of that subject. Without an understanding of the main problems of economics citizens are merely repeating what they have picked up by the way, chasing self-interests without regard to the big picture, or worse ignorantly acting against their own self-interests. They are easy prey to demagogic swindlers and idiotic quacks. Citizen gullibility and incredulity is the most serious menace to the preservation of our way of life, our resources and the shape of things to come. Economics studies the decisions we make Economics is about much more than accounting, inflation, and supply and demand. At its core, economics studies how people make decisions. Households, companies and whole societies face a series of decisions--what to have for dinner, whether to invest in new equipment, how to fund infrastructure. Economics provides valuable insights into how societies make decisions about their needs and wants and allocates the resources to achieve them. Economics provides a framework for understanding the actions and decisions of individuals, businesses and governments. It provides a means to understand society and for analyzing government policies that affect the families, jobs and lives of citizens. The biggest mistake in Economics The study of economics in Nova Scotia is lazy. Where economics fails it takes too narrow a view and doesn’t consider the broadest possible implications of any policy or decision, now and into the future, for all groups rather than just a few. We want our stories to be inclusive not for just a few. Pick-a-winner crony capitalist economic development is perhaps the worst example of this. It has discouraged tens of thousands in society for every backroom boy it has helped. We only have three resources It's a classic hero's journey. Economics is the social science that examines how individuals, businesses and entire societies manage scarce resources. Resources can come in three forms: land, labour and capital. Resources are, by nature, limited. Only a finite amount of land exists, for example, and people do not have unlimited time to meet all of their needs and wants. Because no resources exist in unlimited quantities, societies must establish priorities and decide how best to allocate resources in such a way that meets as many needs and wants as possible. Capital - Our Lost Treasure A dramatically changing mix of resources used to create the wealth and prosperity we want is the hallmark of the modern age. Though the value of the natural resources in land remains the same it’s relatively less important. The role of labour has been steadily declining for 200 years and exponentially so today. The relative role of capital has become the single most important resource in wealth creation and increased prosperity. Capital, in economics, is the mix of technology, machines, intellectual ideas and knowledge, cash money, access to debt, markets and distribution that enables labour to add value to natural resources. The better capital is employed the more productive labour becomes. Today, globally, labour is very productive. But in Nova Scotia, like in many rural regions, access to capital has not been much of a concern because we simply extract resources to be sent and processed elsewhere. We are far behind, and far less productive because we do not have access to capital, even in the form of our own wealth. Capital is so rare and so drained from our rural region that the McNeil government, Ivany and the rest, like all Nova Scotia governments before it, can’t conceive of it. They stare Golum-like at the provincial treasury mistaking that for our wealth. It's not. They are wrong. It's not even a fraction of our wealth. They can only imagine adding more labour or drawing down more natural resources from the land to create more wealth. This will not work. This is not how the modern world works now or going into the future. The government’s austerity plan is all pain and no gain. Ivany’s adding of more labour is only good for land speculators, monopolists (like the power company) and government. It will not create new wealth for citizens – in fact, each citizen will be individually less well off. Real wealth is created by drawing down fewer natural resources, differentiating them, and processing them to their highest possible use using very limited highly-productive labour by effectively employing capital. Getting Informed and Government For society, economics provides a scientific approach to analyzing and understanding government decisions for ensuring stable economic growth with sustainable output and the highest possible level of employment. Economic methods also provide the tools by which policy analysts, and regular people, study the possible costs, benefits and effects of government policies in a range of areas, from the environment to health care and education. Economic principles can help guide the actions that help foster a prosperous society. Economics is evolving and will help provide answers for dealing with policy issues that affect the future. The most interesting Christmas gift of the year came in five boxes. More exactly, the most interesting gift was five boxes.
Each one is marked: Five Seconds Five Minutes Five Hours Five Days Five Years The idea is that these are boxes to put all your troubles in. The Five Second box is the biggest. This is where you put a lot of problems. Someone wasn't nice to you. You got cut off in traffic. There was a loud noise. Most of your problems can go in this box, put away, and be forgotten. The next is the Five Minute Box. It's pretty big too because it's got to hold all the things that you are putting off: notes to write, calls to answer, bulbs to change, laundry to pick up. All the things that are weighting you down and making you feel guilt because you're putting them off. Most of them only take about five minutes to fix. The Five Hour box holds some serious problems: missed flights, lost stuff, burnt meals, headaches, complex conversations all go in this box. And then that's just about it for troubles. The Five Day box holds things you want to learn, to fix, to accomplish. A work week is five days. But so is a creative week and a holiday week. Learn to draw faces, learn the basics of an instrument, plant a garden... you can learn to weld and build a bicycle from scratch in five days in the right setting. There are very few things you can't start, or stop, in five days. In Five Years? You can change just about anything, even the world. Get a degree. Change careers. Write a book. Start a business. Build a body. Train to run marathons. Have a decent sized family. Walk around the world. Change the government. There's little a person can't do or change with five years. So that's it. Done. A place for everything. All the clutter of all your troubles sorted. Now you can take the biggest box, the five second box, and throw it away. Right now. You don't need any of that stuff. Then get down to the five minute box and start chunking at it. It'll only take... five minutes. Keep the five hour box handy 'cause that's where you put the regular stuff of life. And find a special place for the little five day and five year box, and keep them open where you can see them. These problems are actually all your opportunities and they will form the shape of things to come in 2016. It's going to be great. The difference between finding a career and finding a purpose takes a little work.The idea is a system that trades students university education for service to the community. I believe we should fuse together various existing NS programs, policies and strategies and add an innovative approach to form a branded plan for ‘total education’ of Nova Scotian's children. The idea echoes Kennedy's Peace Corps, an institution that still resonates with young people and helps make a better, more connected world 65 years after it was started. The Nova Scotia Youth Corps (NSYC) would provide the region with valuable public works such as national and provincial public park maintenance, forestry (maintenance and fire-fighting), conservation management (erosion control projects), disaster response and recovery operations, public infrastructure improvement projects, organizing public events and festivals, beautification projects, security augmentation, public social programs (for seniors and vulnerable citizens), statistical projects (like an HRM tree inventory) and all kinds of administrative support to provincial and local governments. Youth would "enlist" in the NSYC for 2-4 years, earning 30 days of annual leave and medical benefits during the period. Honorably-discharged NSYC "veterans" would earn college tuition assistance (1 year paid per 1 year served) and some experience could even count toward course credits. To accomplish the potential of this organization we should draw on our greatest growing resource of the next 25 years. The greying pensioned workforce with their health, wealth and knowledge have so much left to contribute to Nova Scotia. We need to find structured systems to allow them the opportunity to help. The NSYC idea is really just an organization and branding (a marketing aspect of the policy) of many and varied programs already in place. It would provide long-term investment in Nova Scotia's communities and help restore a sense of collective duty to the greater good to Nova Scotia that many older citizens who served in their youth contend is necessary for long-term cultural health and survival. The NSYC would help young people explore and discover Nova Scotia in a meaningful way, bringing rural kids to an urban setting and visa versa. Young people who’ve worked to build Nova Scotia and make it a better place will have a greater stake in the community. This helps with: 1. Problems with university tuition, affordability and debt 2. Current high youth unemployment and future shortages in the workforce due to looming retirement of large numbers of baby-boomers. 3. Deterioration of civic understanding and involvement at the local and provincial level. 4. General workforce knowledge gap of government-industry capabilities and opportunities. 5. Keeping young people positively engaged. Reducing youth crime and vandalism. 6. Freeing up some of the economic burden of education costs that could then be redirected to retirement, savings, healthcare, etc. 7. Providing a systematic influx of young people with the energy and innovative ideas that are desperately needed within the government to affect change necessary in the 21st century. 8. Providing a catalyst to reinvigorate the sense of service and community at all levels, and have knowledge of government enabling them to capitalize on capabilities and opportunities along government-industry seam. 9. Develop the ‘stake’ and investment young people have in their home communities. 10. Breaking down the urban/rural divide through a sense of One Nova Scotia 11. Getting things done. Undertaking important projects (like beautification) that might not otherwise be prioritized. As a bonus, Nova Scotia could send the best of the best NSYC volunteers on international missions to help in foreign countries during disasters or humanitarian crisis, thereby expanding our awareness and knowledge of the world and creating a new sense of pride in our abilities while also promoting Nova Scotia’s friendly, helpful style on the world stage better than any bureaucratic tourism or marketing program. In 2016 I'll be listing and discussing some BFI's (Big F$%^king Ideas) to help improve Nova Scotia and concern ourselves with the shape of things to come. I'm planning to post about one a week and collecting 52 ideas. I'll make some appointments and pitch the ones that get the most interest to key players in government and the political parties. That said, I don't think the answer is in government - I think it's in the power of the idea itself.
I'll also be posting a cumulative reading list that vamps simpatico with these ideas. Generally, I'm interested in geopolitics, economics, story, ideas, argument, beauty and self-improvement. I also like the idea of being mechanically minded and technology with user serviceable parts inside. Nova Scotia could be first in making major economic development, social, ecological and government/bureaucratic breakthroughs. These are ideas for today, 2016 and beyond. Here's a preview of what I'm working on...
Nova Scotia Tax Credit Incentive for the most important new business start-up tool in the world. New Nova Scotia proposal suggests film industry type labour-based refundable corporate tax credit system for a wide variety of start-up, creative, cultural and social businesses.
Crowdfunding has quickly moved from trendy buzzword to a mainstream fundraising model. In less than ten years, Kickstarter has attracted more than ten million contributors pledging over $2 billion, funding more than 100,000 individual projects. Rival fundraising platform Indiegogo can boast of a campaign that single-handedly generated $12 million in pledges. Numbers like these make crowdfunding an attractive option for first-time entrepreneurs and established businesses alike. But even with tools like this available to creators; business starters and job creators in Nova Scotia are still at a deep disadvantage. Our communities have been drained of capital. Networking opportunities to connect with people who have knowledge, experiences, connections, assets and capital are rare because there is simply very few of those people and things within a thousand miles of Nova Scotia. Worse, supply lines, scenes, mentors, talent and all the things that inspire business success are almost as rare as debt and equity financing. Almost. Nova Scotia, like all rural regions has been nearly sucked dry of our natural resource created wealth. Our productivity, a measure of how well capital is employed in an economy, is less than 75% of the Canadian average, which in turn is only 75% of US productivity. We are at a deep geopolitical and productivity disadvantage. Even as the US exchange rate tips the scales heavily in favour of Canadian business, it does not make up for the more than 40% productivity disadvantage and the geopolitical disadvantages. When US money does come to Canada it's coming to Toronto, Vancouver or Montreal and we have no currency advantage over those competitors. But there is a way! A proven strategy that is egalitarian, accessible, easy to administrate, accountable and effective. It can improve capital investment and start-ups by an order of magnitude within one year and double that within ten. It's a strategy created right here in Nova Scotia, proven to work in creative industries and copied Federally, by other provinces and states, and countries the world over. We are experts at administrating it. Labour-based Refundable Corporate Tax Credits. Applying the Tax Credit strategy, the unlikely Nova Scotia-made economic development success story of the last 20 years, that created and grew the film and TV industry in Nova Scotia can be used to attract and grow Kickstarter-based business start-ups in, and to, Nova Scotia. If we act quickly we can become the Kickstarter capital of Canada within two years. The goal in the first year would simply be to 'punch our weight' in the Canadian start-up market place. To do that we'd have to increase our business ten fold. An attainable, measurable goal. The idea is simply this: Successful Kickstarter campaigns, meaning projects that have successfully raised their financing, produced their product, whatever it is, and reported their business results as an incorporated Nova Scotia company with intellectual property rights owned majority by Nova Scotians (defined as people who pay taxes in Nova Scotia), are eligible to receive a labour-based tax credit up to 50% of their Nova Scotia labour expenditure or 25% of their total Kickstarter financing, whichever is less. The Tax Credit system has many favourable features and advantages over poor performing and ill-defined economic development strategies.
Kickstarter by the numbers https://www.kickstarter.com/year/2014/data?ref=yir2014
If you find yourself standing in front of a microphone it most likely means you have something to say and someone wants to hear it. The mic is a tool critical to good communication. What's the least you need to know? 1/ Point the mic at your mouth. There is no way to be subtle or cool here. There's no way to pretend you're not really using the mic. You are. It has to point at your mouth. 2/ Do not touch or tap the end of the mic. Do not cover the mic with your hand. Do not swing the mic. Do not point it toward the loudspeakers or other mics. Do not turn away from the mic while speaking. 3/ If the mic looks like the one on the left above take it easy, you don't have to get too close, they're designed to pick up normal speech in normal situations. 4/ If the mic looks like the one on the right you gotta hold it closer. They're designed to operate in loud situations and will only hear you if you're close. That said, don't press it to your mouth unless you're a rapper and even then be careful, S and P sounds can be unpleasant. 5/ Singers spend a lifetime learning mic control. Mics are complicated to use. What's the right distance from the mic? How loud should you speak? Can people hear you? Take time to think about it. Use your ears to listen. Use your eyes to see if people are comfortable with the sound and volume. Use your voice to clearly ask the audience if you are unsure before you start communicating. 6/ Beyond a certain range you can't really control the volume. Speaking too loudly into a mic doesn't make a pleasant effect - it will sound distorted. Speaking too quietly or holding the mic too far away makes the sound quality poor and often unlistenable. Let the sound person control the volume or adjust the volume yourself if that's the situation. Remember, no one in the audience wants you to fail. They are in the audience. They want to be able to hear you clearly. Everyone is on your side and wants to hear what you have to say. You, the audience and the sound tech people all have the same goal - a comfortable listening experience. The only thing I can offer people who go off about politician salaries and the like is that the first question of economics, and rational thought for that mater, is: IS THAT A BIG NUMBER?
It's a question many don't seem to be able to get their heads around. I offer this simple device. Take the number. Divide it by the number of people in the constituency and then divide by 52 weeks in a year. Then you have the number on a per person per week basis and it becomes something that anyone should be able to understand and judge their own answer to the question, the most important first question of all - IS THAT A BIG NUMBER? For example, say an MLA is paid $138k. Is that a big number? $138k divided by about 940,000 people is about fifteen cents per person. In other words to say politicians nickel and dime us is correct because they cost us each a nickel and a dime per year. Divided by 52 weeks per year equals .2 cents per week per person. Yes, one twentieth of one cent per week is what an MLA cost each Nova Scotian. And I say cent knowing it is an old time denomination of money so small we don't even use it any more. To ask that we look at the bigger picture doesn't seem too much does it? I go on a lot about mediocrity. But at least mediocrity is on the scale... it's in the race. The biggest thing holding us back is inaction... just not doing anything.
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John Wesley
Writing about life, citizenship, and Nova Scotia. Archives
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