Wednesday, March 29, 2017

Justin Trudeau needs to deregulate to innovate, but we didn’t see that in the federal budget

Canada’s 2017 federal budget failed to offer any plans for deregulation. This is ironic because regulations are among the most important obstacles to innovation, the holy grail of the government’s plan for future growth. Planned subsidies will not prevent the death of nascent innovations in garages or on desktop computers too small or distant from Ottawa to get the attention of the new, large federal bureaucracy.
The irony is worsened by the policies of President Donald Trump and the Republican Congress, which have begun to deliver on their promise to reform the regulatory system. As they do so, they will encourage Canadian innovators to move south to escape the costly time and red-tape paperwork they face here.
The American reform plans are the response to the staggering costs of existing regulations. Large banks claim that one worker is required to make sure that four others comply with regulations. Government regulations account for 24.3 per cent of the final price of a new single-family home. The burden of compliance is symbolized by the fact that in 2014 the Federal Register for Regulations mentions 1.1 million times the words “shall,” “must,” “may not,” “required” and “prohibited.”
The total cost of U.S. regulations has been estimated to have been US$1.88 trillion in 2015, not including the effect regulations have on future rates of innovation. This figure is equal to more than half of the federal government’s spending that year and while it is on the high end of available estimates, there is no doubt that the costs of regulation are enormous.
To deal with the cost of regulation and the public complaints it has created, Trump has issued an executive order that requires all regulatory agencies to eliminate two existing regulations for every new one they adopt. To prevent the repeal of only regulations that impose little cost, the savings they bring must be at least as great as the costs resulting from the new regulation. Trump also ordered a temporary stop to the hiring of all new government employees including those in regulatory agencies. In his first budget he proposed severe spending cuts for regulatory agencies, such as the 31 per cent facing the Environmental Protection Agency, and appointed known critics as heads of regulatory agencies, such as Scott Pruitt for the EPA.
Congress has also has gotten into the act. On January 6, 2017, it passed the awkwardly named Regulations from the Executive in Need of Scrutiny Act (REINS Act), which will return to politicians the right to approve or reject any new regulations that have an economic impact on the economy greater than $100 million a year. Even before the election, in 2016 the Republican majority in the House of Representatives introduced the Agency Accountability Act, which will require all regulatory agencies to transmit to the treasury fines and fees they have collected from the public, and which reduces their financial resources and incentives to impose fees and fines.
At the core of these reforms is the desire to return the regulatory process to elected politicians and away from unelected bureaucrats in regulatory agencies who, according to Senator Mike Lee from Utah, have created the conditions where: “Today, the vast majority of federal “laws” —upwards of 95 per cent — are not passed by the House and Senate and signed by the president as the Constitution directs; they are imposed unilaterally by unelected Executive Branch bureaucrats.”
Many Canadians will be appalled by the proposed regulatory reforms in the United States, fearing that polluters will again bring skies darkened by smoke and fish killed in rivers. These concerns are not warranted. The proposed U.S. reforms will not repeal such clearly beneficial regulations favoured by the public.
They will instead focus on regulations that bring ephemeral benefits, like those coming from regulations that are highly uncertain, like those aimed at the prevention of global warming and financial instability. The assessment of the net benefits from such regulations will again be made by politicians who reflect the values of the public and not by unelected bureaucrats who have chosen to work in regulatory agencies to advance leftist ideological goals.
Even if Canadians do not like American voters’ instructions to their politicians on regulatory reform, the failure to consider its implications will affect seriously all of the economic and social programs advocated in the 2017 budget. Regulatory reform should be on Canada’s agenda for public discussion and serious political consideration.
Published in the Financial Post on 
http://business.financialpost.com/fp-comment/justin-trudeau-needs-to-deregulate-to-innovate-but-we-didnt-see-that-in-the-federal-budget

Friday, December 9, 2016

Why did Canada increase Immigration Targets?



A couple of prominent members of Prime Minister Stephen Harper’s  cabinet told me that their government’s immigration policies had been “purely in the interest of the party,” which logically means that they were not in the public interest. There is no doubt that the recently announced increases in immigration by Minister of Immigration John McCallum are also purely the interest of the Liberal party.
     So how do politicians get away with making immigration policies that advance their own interests at the expense of the general public? The Liberals just showed us how to do it: Appoint a commission of experts with a fancy name like Advisory Council on Economic Growth, staff it with people you know to be in favor of vastly more immigration, publicize the council’s recommendation and wait for some Libertarians like Terrance Corcoran and Andrew Coyne to support it enthusiastically in the mass media. 
     Then have the Minister of Immigration appear moderate and wise by announcing an increase in immigration by only 15.4 percent from 260,000 to 300,000 rather than the 73 percent to 450,000 recommended by the Council. 
     How does mass immigration serve the interests of political parties? It brings financial and electoral support from employers who profit from being able to employ low-skilled and high-skilled labour at wages that are lower than what they would have to pay for Canadian workers. Electoral support also comes from the owners of real estate, developers and brokers, construction workers and mortgage brokers that gain much from the increased business immigrants bring.
     Parties also gain support from immigrant communities who expect to gain political and economic clout, enjoy having family members join them and benefit from larger markets for ethnic products and media. Support also comes from the large “immigration industry” of social workers, lawyers and language teachers who are paid by the government.  
      These groups benefiting from mass immigration lobby the government effectively while the general public is unorganized and does not. To the contrary, the public is lobbied by the government, which issues a constant flow of propaganda about the alleged economic and social benefits from mass immigration and suppresses the distribution of fact-based accounts of the negative effects.
      The government also issues highly misleading information about the 172,500 “economic migrants” who will be selected in 2017 for their likely economic success. In fact, assuming an average family size of four, only 43,125 of them will be truly economic immigrants, the rest will be their spouses and children. Many will later be joined by their parents and grandparents who will number 20,000 in 2017 and contribute very little to the economy.
      The success of this shielding was revealed on the occasion of a recent Munk debate at the University of Toronto, which pitted advocates in favor against advocates against admitting more refugee claimants. In a poll taken before the debate, 75 percent of the audience wanted more refugees. After the debate and the presentation of facts by the con-side, only 55 percent of the audience still held this view, a figure likely to become even smaller as the audience digests the facts more fully. 
      Information about many negative effects of mass immigration is kept from the public. For example, recent immigrants, even after many years in Canada have lower incomes and pay lower taxes while they absorb the same government services as Canadians. As result, immigrants impose a fiscal burden of $30 billion a year on taxpayers, which will grow all the time with the arrival of new immigrants. For a perspective on this figure, consider that there is much debate over the affordability of spending $30 billion to renew the Canadian navy over the next 30 years!
     Canadians suffer from the effects immigrants have on the cost of housing and the levels of congestion, pollution and overcrowding in schools, universities and hospitals, the latter especially as the many parents and grandparents of immigrants near the end of their lives and add to the every growing wait lists for medical treatment experienced by all Canadians. 
      Immigrants reduce the unfunded liabilities of the Canada Pension Plan but only for a limited time since they have the same age profile as Canadians and as they age stop paying premiums and receive benefits.
      Immigrants raise the total size of national income but not of individual Canadians since immigrants’ pay matches their contribution to output. The gains from the so-called “opportunities to trade” are very small, as are the claimed gains due to economies of scale in production since manufactures and mining companies already access world markets enabled by free trade and low transportation costs.
     Immigrants increase Canada’s cultural diversity but the benefits from it have reached diminishing returns and the development of ethnic enclaves threatens national harmony and security.  
     These and other facts about the detrimental effects of mass immigration on the well being of Canadians are well documented by government statistics and academic research. Unfortunately, governments and the beneficiaries of mass immigration have prevented these facts from reaching wide audiences and allowing political parties to continue the use of mass immigration policies for their narrow self-interest.
     However, the election of President Donald Trump shows that there is a limit to these policies. At some point suffering workers and taxpayers will vote for politicians who promise to put their interests above those of a political party, business and other groups. Voters in many countries of Europe have already done so. Could McCallum’s announced higher immigration levels have the same result in Canada?


Wednesday, November 16, 2016

WHY WAGES AND INCOMES HAVE BEEN STAGNATING


WHY WAGES AND INCOMES HAVE BEEN STAGNATING
According to Nobel laureate and influential public intellectual Joseph Stiglitz, “In the US, the bottom 90% has endured income stagnation for a third of a century. Median income for full-time male workers is actually lower in real (inflation-adjusted) terms than it was 42 years ago. At the bottom, real wages are comparable to their level 60 years ago.”
These statistics drive much of the current political debate in the United States, Canada and most other Western democracies. The trouble is that they measure the wrong thing. Wages and incomes determine the amount of market goods and services consumers can buy. But through time public demand has shifted increasingly to the provision of non-market goods that determine well being and are supplied by governments: the stability and predictability of income, the quality of the environment and characteristics of national culture.
Politicians have responded to these demands with a vengeance. There now are public insurance programs that make incomes more stable and predictable: government-run insurance against the results of personal ill health, accidents, unemployment and retirement. For the entire economy there are regulations for the prevention of financial instability, global warming and harm to the safety of consumers and workers.
The public has also demanded policies that affect its sense of well being by making it feel good: policies to clean the environment; make the distributions of incomes and wealth more equal; create racial and gender equality; accept large numbers of immigrants and refugees and create a multi-cultural society.
There are several aspects of these government policies, which bear directly on the problem of low wages and incomes discussed by Stiglitz. First, the benefits from social insurance programs involve the redistribution of incomes. The value of the programs to society is assumed to be equal to the governments’ cost of operating them, which means that these programs can never increase the productivity of labour and capital and lead to higher average incomes and wages.
Second, policies aimed at the delivery of other non-market goods result in ephemeral, non-measurable benefits at an uncertain time in the future that cannot be recorded in wage-increasing current income, as is the case with policies preventing of global warming or financial crises.
Third, while these non-market benefits are not recorded in national income, their creation results in the use of labour and capital that is withdrawn from the production of market goods. The value of resources used by regulatory agencies and by private firms complying with regulations has been estimated to be worth $1.8 trillion in the United States in 2015.
In addition, some regulations reduce economic growth by imposing costs and delays on entrepreneurship and innovation. Some regulations actually lower growth, as will happen if the efficient use of fossil fuel is replaced by the less efficient use of renewable sources of energy to create electricity. (The US Supreme Court has in fact stopped this replacement on the grounds that the costs are too large.)
In effect, these economic consequences of regulations show again that there is no such thing as a free lunch. The more the public wants greater security in all aspects of their lives and more feel-good policies, the smaller will be incomes and wages that can be used to buy market goods.
These public preferences can also explain the vexing puzzle why since 2008 interest rates near zero have not generated economic growth. The reason is that reduced incomes and wages of the public have lowered the demand for private goods and the need for growth-generating investments by so much that even the very low interest rates are insufficient to induce private sector investment and cause cash-rich companies to buy back shares or their competitors.
The shift of the public demand from market to non-market goods has profound implications for economic policies. Expansionary monetary and fiscal policies to stimulate the production of market goods must fail because the stock of labour and capital are finite and already utilized fully in the production of market and public goods. In addition, expansionary monetary policy will create inflation and expansionary fiscal deficits will eventually become unsustainable. Both pathologies can be cured only by recessions and fiscal austerity.
The preceding analysis does not imply that the growth in the production of non-market goods has failed to increase the well being of the public. However, it does suggest that the public needs to be aware that it is impossible to have both, more market and non-market goods and that asking politicians to ignore this fact will lead to inflation and austerity in the future and possibly much more instability and lower levels of income and wages.

Published in the Financial Post on November 9, 2016, page FP7.


Sunday, November 13, 2016

Why Trump won: Two different explanations

Why Trump Won:
The limited shelf life of governments and Obama’s ideological overreach

Herbert Grubel
Professor of Economics (Emeritus)
Simon Fraser University

If you are not fed up with the repetitive and self-reinforcing flood of pundits’ explanations on why Trump won, you may want to read my own two explanations that are different from the ones in the main media.
            My first explanation involves a powerful law of politics: Governments have a limited shelf-life because their appeal to the public inevitably deteriorates with time, much like that of food on grocery shelves. In politics this deterioration is driven by the fact that every policy a government adopts makes some voters unhappy whiles another set of voters becomes unhappy because the government did not pass policies they had wanted.
            Through time these two sets of disgruntled voters grow inexorably and after eight years typically their numbers have become so large that they determine the outcome of elections. This explains why since 1981, every eight years Americans switched between the election of Republican and Democratic Presidents. The only exception occurred when in 1989 Republican President George Bush Senior followed the Republican President Ronald Reagan, which might be considered evidence of the working of the law of limited shelf-life.  
            The existence of large pools of disgruntled voters every eight years suggests that the optimum strategy of candidates for election is to have their campaign platforms dominated by the promise of change, which captures the support of voters disgruntled by policies adopted by the past president and of voters who expect to see their preferred policies enacted by the next. This strategy was successfully used by candidates Barack Obama’s with his slogan “hope and change” and Donald Trump’s with his slogan “complete change”. To her disadvantage, presidential candidate Hillary Clinton could not use this strategy because she had to support the Obama policies she had helped to create as an administration insider.
            The second reason for Trump’s win involves what Charles Krauthammer considered to be “the most overlooked factor in the election”: the historic and never ending battle between the political right and left in which “Obama overreached ideologically”. The American system of governance has prevented presidents from moving the lines of battle too much, even as it has moved through time in small incremental steps to the ideological left.
            Obama’s overreach involved the pursuit of policies in the tradition of the political left, which sees a large role for governments in the fields of national health care, climate change, foreign policy, income redistribution, immigration and strengthening the rights of minorities. The evidence that these policies represented an ideological overreach is found in the fact that starting in 2012, four years after Obama took office, every election brought to Washington more Republicans who had campaigned on the promise that they would stop these policies, which ultimately led to Republican majorities in both Houses of Congress.
            Obama disregarded the signal these election results had sent and pressed ahead with his legislative agenda with few changes or compromises, forcing Congress to prevent the passage of most of his legislation and producing the infamous Washington stalemate. Obama responded by using executive orders to advance his agenda.
            The American public became increasingly more angered by Washington’s left politics that they believed caused unemployment, kept down wages, worsened domestic and foreign security and interfered with their traditional cultural and religious practices. Shortly before the election, the loss of employment in coal-producing industries and regions and increases in medical insurance premiums effectively reminded voters of this problem while large numbers of voters dealt daily with the annoying and costly regulations affecting their work on farms, as fishermen, in financial institutions, doctors’ offices, hospitals, schools, accounting offices, manufacturing and many other forms of employment.  
            Trump’s appeal to voters was due to his promise to end the Obama’s ideological overreach by dealing harshly with the Washington establishment, which had failed to respond to the message the voters had sent through the election of a Republican majority of Congress. Clinton lost because she had no choice but to promise continuation of the hated Obama policies. She was part of the establishment that had created them, as Obama reminded voters throughout the campaign.

            In sum, Clinton lost in spite of Trump’s confrontational and politically incorrect campaign and style resented by many voters simply because she could not overcome the law of limited shelf-life of governments and the widespread resentment caused by Obama’s ideological overreach. 

Wednesday, November 2, 2016

100 MILLION IN 2100 AND CANADA’S INFLUENCE ON THE WORLD

Recently Terry Corcoran, Dominic Barton and Andrew Coyne have advocated that Canada raise the number of immigrants to 450,000 a year and a population of 100 million in 2100 on the grounds, in Coyne’s words, “it would add to our clout in the world...our ability to project our interests and values on the world stage.”
     The advocates of the higher immigration levels called the Century Initiative believe that Canada is the shining model of a tolerant, caring, egalitarian, democratic, open and economically successful society, the projection of which to the world will be leveraged by the country’s increased size. Canadians will be proud to be citizens of a country able by its example to create a better world. The public intellectuals behind the idea already bask in the praise of their ideological peers everywhere.
     The ability to gain enough clout to engage in such a projection requires a reality check. According to the latest UN Projections, in 2100 the world’s most populous nations will be (in millions): India (1,660), China (1,004), Nigeria (752), USA (450), Republic of Congo (389), Pakistan (364) and Indonesia (314). If the proposed immigration policy will be enacted, Canada’s population in 2100 will be to .97 percent of the world’s total population, double the present .48 and what it would be without the larger annual number of immigrants. 
     Will such a projection take place and be successful? If history is a guide to the future, the outlook is not promising.  In 2100 all countries will continue to have serious problems of their own. The need to combat income inequalities, religious, racial, regional and international tensions will continue to exist. These political realities plaguing countries like India, China and Nigeria are too well known to need elaboration.  They also afflict all the middle sized countries of Europe, Asia and South America as well as the small countries in all parts of the world. For politicians in these countries studies of Canada’s shining success are likely to be very low on their list of priorities.
     It is also possible that by 2100 Canada itself will cease to be the model for the world. The 100 million citizens will have required housing and economic and social infrastructure, the provision of which will be costly and divisive and will be in conflict with policies to combat global warming, preserve the environment and finance the governments of the First Nations. It remains to be seen whether dealing with these problems will be possible without changes in Canada’s ability to be the tolerant, caring, democratic, open and economically successful society it now is.
     These problems will be aggravated if Canada changes from a first-past-the post to a proportional system for the election of its politicians.  Under this system groups Canadians united by common national origins and cultures will form political parties dedicated to fight for their interests. Elected politicians in Ottawa will no longer spend most of their time on the design of the best policies for increasing national output but will instead engage in fights over the distribution of national output among the groups of Canadians represented by their parochial political parties.
     Even in the absence of the proportional system for elections, the very size of Canada’s population resulting from the proposed 450,000 immigrants is likely to create ethnic enclaves where alien languages and cultural institutions dominate life and where, like in Richmond, BC, it is virtually possible to be born, educated, entertained, work, retire and die without knowing a word of English. These enclaves will gain increasing influence on government policies that advance their interests at the expense of the broader public interest. Perhaps public policies can prevent the development of enclaves and their exercise of political power, but it is by no means certain that they can.

    All of the above observations are made before even considering that most of the economic gains expected from the 100 million in 2100 are unlikely to be realized. The discussion of these issues will have to wait for another article.

This article was published in the Vancouver Sun on Saturday, November 12, 2016, page E5 under the title "Canada a beacon at 100 million? That's doubtful. History doesn't paint a rosy picture"

Tuesday, October 4, 2016

TOO MUCH MATHEMATIC IN ECONOMICS?


The excessive use of mathematics in economics has long been discussed by professional economists. The topic has now reached the general public when recently John Robson and Stephen Gordon debated the topic in the National Post, one of Canada’s two national newspapers.[i]

According to Robson “Mathematical technique has severe limits, including that you cannot model the economy. There are too many variables, whose interactions are too uncertain and whose feedbacks are too complex. In short, it is transcomputable. (sic)”

Gordon argues “Robson’s assessment of the complexities involved in economic analysis is depressingly accurate, but these complexities strengthen, rather than weaken, the case for using models and mathematics as tools for understanding economics.”

 Both authors are right and the real issue is whether the use of mathematics in economics is at an optimal level. Larry Boland and I published a peer reviewed article on this subject in 1986.[ii] In it we documented a rapid growth in mathematical economics in publications and teaching, which we considered to be an important problem since it attracted increasing amounts of resources away from research and university teaching needed for students‘understanding of the real world, the design of government policies and political agendas.

The failure of mathematical economists to provide students with this understanding of the real world is due to the fact that most of them are poorly prepared to do so. Many come to economics trained in mathematics and took few if any courses in which they would have learned about economic institutions, real world practices and history.
A second problem arises from the fact that some mathematical economists believe that their abstract reasoning has important policy implications, which often are reported uncritically by media that like the findings for political and ideological reasons. In fact, mathematical models never result in valid policy implications since they use many simplifying assumptions, which logically pre-determine the conclusions and often can be changed at will.

However, mathematical modelling also brings some benefits to the profession and the world claimed by Gordon. It has brought rigor to the formulation of some fundamental ideas in economics, such as the way in which Adam Smith’s “invisible hand” guided by competition leads to a welfare maximizing allocation of resources.[iii] It also is fundamental to the design of computer models that are used with limited success for economic forecasting and the study of the effects of government policies.

Assuming that mathematical modelling produces some useful results and that it is achieved by diverting resources away from more traditional approaches to economic analysis, the question becomes how many resources should be devoted to each of the two disciplines.

Our 1986 study argues that the optimum level has been exceeded because economists specializing in mathematic modelling have formed a cartel. They have much more time than economists analyzing the real world to devote to the promoting and praising their work among the public. They scheme and take over hiring and tenure decisions in economic departments. They become editors of journals and find referees sympathetic to studies heavy on mathematical modelling. The resultant publications lead to tenure and ever more of their friends in university positions. They also are very influential in the committee that chooses winners of the Nobel Prize in Economics awarded annually by the Swedish Central Bank.[iv]

Nobel laureate George Stigler has argued that competition among universities and the success of their economics graduates in finding jobs in the real world limits the ability of mathematical economists to create such a cartel and that at any time the use of mathematical economics is at the optimum level.

Surveys of economists undertaken for our 1986 study showed that most disagree with Stigler and that research and teaching mathematical models has been much above optimal. It would be interesting to know what Gordon and other economists think about this issue in 2016.



http://news.nationalpost.com/full-comment/stephen-gordon-the-case-for-mathematical-models-in-economics. The references show the titles of the articles, which in turn summarize the views expressed by the two authors.

[ii] Herbert G. Grubel and Lawrence A. Boland, “On the Efficient Use of Mathematics in Economics: Some Theory, Facts and Results of an Opinion Survey”, Kyklos, August 2986, found at http://onlinelibrary.wiley.com/doi/10.1111/j.1467-6435.1986.tb00779.x/abstract

[iii] This work has been done by Nobel laureates Kenneth Arrow and Gerard Debreu.  In 1988 I presented a seminar on trade in services at a research institute in New Dehli, India, which demonstrated to me the misuse and misunderstanding that can arise from a faulty interpretation of mathematical modelling. During the discussion a young economist with a PhD from the Massachusetts Institute of Technology challenged me with the proposition that the mathematical model by Arrow and Debreu had proven that capitalism did not work since some of the assumptions they made in their analysis did not hold in the real world. Fortunately, the discussion of this issue ended after the director of the institute reminded his colleague that the theme of the seminar was trade in services, not the merit of capitalism versus socialism.
[iv] In the 1970s Peter Lloyd and I published a number of papers and the book “Intra-Industry Trade: Theory and Measurement of Trade in Differentiated Products” (MacMillan, 1976), which contain very nearly the same models and conclusions reached by Paul Krugman in his papers on the subject. Krugman received the Nobel Prize in 2008 for his work, all of which was published several years after the appearance of the Grubel and Lloyd studies. While we used words and diagrams to develop our theories, Krugman used mathematical models to explain his. However, we are pleased to know that the Nobel committee acknowledged our work as having been the most important inspiration for Krugman who used the empirical evidence we had provided.   



Wednesday, September 28, 2016

CANADA’S OLYMPIC SUCCESS: 10TH OR 62ND BEST IN THE WORLD? HOW TO IMPROVE FUTURE SUCCESS.

Now that the excitement brought on by the Rio Olympics has died down, it is time to have a sober second look on how well Canada’s athletes have done and consider this record in planning for the Tokyo Olympics in four years.

The 4 gold, 3 silver and 15 bronze medals won by our athletes add up to a total of 22, which puts Canada into 10th place.[i] This rank has received the bulk of media attention and is remarkably good, given that 207 teams had been in the competition and 86 of them had won at least one medal.

One problem with using the sum of medals as a metric of success in the minds of many is that it counts equally medals of all colours. For this reason, some prefer ranking on the basis of gold medals won. By this standard, Canada has achieved a very respectable rank of 21st.

Another method is used widely to take account of the fact that medals are of different colour. It assigns 4 points for gold, 2 for silver and 1 for bronze. Canada’s medal count weighted in this way comes to 37, which puts Canada in an excellent 17th  place.

However, these rankings fail to account of differences in the size of countries that sent teams to Rio. Canada is in 33rd place on a list of all countries ranked by the number of medals won for every million of people.

Canada is in 62nd place according to the count of medals won per billion dollars of national income, which reflects the availability countries’ financial resources used for training and selecting athletes.




Team Size and Medals

There is one final and important metric used for ranking countries. It is based on data shown in the table below: the weighted number of medals won and the size of the team, which allows calculation of the percent of team members who have won a medal (the ratio of team size over the number of medals).

The table shows that 53 percent of the US team members won a medal, which ranks that country in second place. Of Canada’s team, only 11 percent won a medal and the country ranks 53rd.[ii]

Rank
Country
Weighted
Size of Team
Ratio of
Medals Won
Team Size/Medals
2
United States
296
554
53
6
Jamaica
32
68
47
7
Great Britain
171
366
46
8
North Korea
16
35
45
9
Kenya
37
89
41
10
China
166
413
40
35
New Zealand
39
199
19
44
Australia
64
421
15
53
Canada
37
314
11

The countries shown in the table were selected for this analysis because their programs for the preparation and selection of athletes are of interest to Canada’s efforts to send successful teams to the Olympics.

Relevant for this quest is the success of the US team. It is due mainly to the competitive sports programs of its colleges and universities, which train and identify talented athletes for the Olympics.

The successes of the teams from North Korea and China are the result of their governments’ sponsorship of expensive training facilities and coercive methods which have little to teach democratic countries like Canada.

Of greatest relevance to the evaluation of Canada’s program is the success of countries like Jamaica and Kenya, ranked in 6th and 9th place, respectively. Both countries sent relatively small teams of athletes who competed in a small number of sports. Jamaicans dominated the sprint events. Kenyans were prominent in endurance races. Their success appears to be based mainly on their focus on a limited range of sports in which they competed.

Great Britain’s medal haul was its largest in 100 years and was based on rich financial support from the National Lottery arranged by the government.[iii] This support for the team in Rio was a record level. But the country’s success is also due to the same policy used by Jamaica and Kenya. A limited number of sports with past success received most of the financial support. To the dismay of many in Britain, some very popular sports like basketball ended up without representation in Rio. 

Canada, New Zealand and Australia have very similar histories, cultures and per capita incomes. New Zealand’s population is 4.5 million, Australia’s 24 million and Canada’s 36 million. These figures suggest that Canada should have outperformed the other two countries. In fact, it ranks the lowest in 53rd place while New Zealand and Australia are in 35th and 44th place, respectively.

The data on the relative performance of Canada’s athletes in the Rio Olympics suggests that its methods for preparing and selection them could be improved. One approach for doing so would encourage more competition among students of the country’s colleges and universities and participation in US academic leagues.

More financial support from governments and the public sector would help, but within any level of such resources, the largest improvement in the success of future Canadian teams in the Olympics is likely to come from limiting the range of sports that receive financial support and the attention of trainers.

Canada has engaged in this policy in the past and it is possible that the low ranking in the Rio Olympics is the result of the focus on the support of competition in the Winter Olympics, but an evaluation of this proposition requires more resources than are available to me.



Political Correctness and the Rio Games

A final note on the Rio Olympics is that they have not been criticized by activists and politicians concerned with fairness, gender balance, human rights, climate change and other efforts to create a better world. There is much to criticize.

·       Out of 207 countries 121 won no medals at all.
·       Out of 22 medals, 16 were won by Canadian women and only 6 by men.
·       Nearly all of the sprints and foot-races were won by black men and women.

Some aspects of the Games would be subject to much political protest if they were found elsewhere.

·       The money spent on the Olympics could have been used to help the needy in the world.
·       Canadian athletes competed against athletes from countries known for the human right violations, creating legitimacy for the often tyrannical governments of these countries. 
·       The Games encouraged nationalist sentiments as medals were awarded while national flags were raised and anthems were played, undermining efforts to create a peaceful world of cooperation and sharing.
·       The games glorified the use of weapons such fire-arms, bows and arrows, sabres and swords, undermining efforts to use dialogue and compromise to settle conflicts. 
·       Horses were confined to small boxes in the holds of airplanes while on their flights to and from Rio, which led to inhumane physical and emotional suffering.
·       The travel of athletes and officials resulted in huge emissions of green-house gases, contributing to catastrophic global warming.

Fortunately, activists and politicians concerned with these conditions stayed away from criticizing the Rio Olympics on these grounds. Let us hope that they will do so in the future. 




[i] All of the data are found in the publication “Medals Per Capita: Olympic Glory in Proportion” found at the website http://www.medalspercapita.com/#medals-by-team-size:2016.

[ii] This calculation disregards the fact that some athletes won more than one medal. It also disregards the fact that all members of a medal winning team receive a medal.  The metric includes only the medal won by the team.
[iii] The analysis of the success of Great Britain’s athletes in Rio draws on:
Ahmed, Murad, Joe Leahy and Samantha Pearson (2016), “Rio Olympics 2016: Britain emerges as sporting superpower”, Financial Times, August 22, found at http://www.ft.com/cms/s/0/e91184a4-67fa-11e6-a0b1-d87a9fea034f.html and

Gibson, Owen, (2016), “Team GB’s Olympic success: five factors behind their Rio medal rush” Rio 2016 Sports Blog The Guardian, August 15, found at https://www.theguardian.com/sport/blog/2016/aug/15/five-factors-team-gb-olympic-success-medal-rush