A "Year of Action"

In front of a joint session of Congress last night, we heard from President Obama, as he described for a fifth time, with his usual eloquence, the state of the union. Although he has three more such annual addresses left in his second term, this was perhaps the last the President had to push his agenda before Washington turns its attention to the 2016 contest to replace him, leaving him as little more than a "lame duck". 

So, with the clock ticking, the President announced that this is to be a "breakthrough" year, and he implored Congress to make it a "year of action". Possibly recognizing that Congress has been in recent years anything but a place of "action", he proceeded to tell Congressional members that he would, if needed, sidestep them. He "would not stand still", taking steps "without legislation, wherever and whenever, to expand opportunity for more American families....". He would tackle unemployment and income inequality, noting the latter had deepened, and restore upward mobility by building "new ladders of opportunity into the middle class". And to do so, he appealed to Congress to raise the national minimum wage (currently $7.25 per hour), to extend now expired long-tern unemployment benefits, and to emphasize early childhood education, better value university education, and equal opportunities in the workplace for women. As well, through executive order, he will raise the minimum wage for new federal contract staff.

If, over the past few years, there has been mutual ill-feeling between the Congress, particularly House members, and this President, with resulting legislative gridlock, it would seem to this writer that last night's address will do only one thing - deepen the enmity. The scorn on Speaker Boehner's face as President Obama declared his intention to bypass Congress, and the Speaker's deliberate abstention from applause at discreet moments, spoke loudly. This writer was left wondering who advised this President to adopt - or perhaps who tried to restrain him from striking - such a needlessly provocative tone.  And if ever there were a gap between rhetoric and specific policy proposals, last night's address was it: the President was quite correct in focusing on the still weak labor market and increasing income inequality; but it's not intuitively obvious how, for example, making labor more expensive, through a mandated increase in its price, is likely to stimulate the demand for such. Indeed, isn't it evident that raising the wage floor can only accelerate replacement of human workers with computers and robots? And in any case, minimum wage increases affect only a tiny portion of the total labor force, so the proposal, apart from being simply bad policy - because it hurts those whom it is supposed to help - is a clear example of mindless playing at the fringe. Substantive initiatives in this regard would have included a call for comprehensive tax reform, a signal that the administration is willing to tackle federal entitlement spending, and a fundamental revamping of education systems to mitigate technology's relentless displacement of last century's low- and mid-skill jobs.

Again, this writer is left to ponder how an American President (and his advisers) - presented with a stage like the State-of-the-Union Congressional address - could have missed the big ideas so completely, instead managing to inflame an already ugly Congressional mood.

AT

In 1973, the well-known British economist Ernst "Fritz" Schumacher published what was to become his most influential work: Small is Beautiful: Economics as if People Mattered. The collection of essays, considered one of the most important books published since the end of World War II, was an immediate hit; it described to a broad audience his concept  of "appropriate technology" (AT),  a movement which he had originally developed more than a decade earlier, as "intermediate technology", when advising first the Burmese then the Indian governments. The idea was to develop and apply, usually though not solely within the context of developing economies, technology that reflects poorer countries' relatively labor-intensive factor inputs. Two decades of experience starting just after World War II, during which it was thought that assisting developing countries was best done by implanting Western, capital-intensive technology, to thereby induce an economic "take-off" through industrialization, had been shown to do little for the long-run development of particularly the poorest economies, and indeed virtually nothing for their pervasive poverty.  Schumacher and others proposed, instead, designing and applying technology that, in general, would entail low capital investment per unit of output; it would be small-scale, locally installed, operated and monitored, easily adaptable to specific circumstances, environmentally friendly and energy-efficient, and above all would exploit the labor surplus typical of developing economies. Examples include hand-powered  and treadle water pumps, water treatment systems that are designed to incorporate community- and/or household-scale point-of-use designs, building design that includes vents, strategically placed for natural ventilation, thermal chimneys and cooling towers, composting toilets and village containment pools, hand-wheel generators, and many more.

The AT movement, which, at its very beginning, floundered, grew dramatically through the 1970's and 1980's, becoming mainstream, supported by all the established aid and development institutions, including the World Bank and the World Health Organization. In 1983, the OECD published the results of an extensive survey of appropriate technology organizations titled, The World of Appropriate Technology,  listing over 1,000 such government and private groups; economic departments of major world universities rushed to establish institutes of overseas development that focused, among other things, on the application of appropriate technology (in one of which, at Strathclyde University in Scotland, this writer participated as a graduate student). In recent years, the concept has taken on a more private-sector, individual involvement, evolving to include what is termed open-source appropriate technology (OSAT), where designs, funding and implementation experience are shared and solicited for freely and broadly on the internet. In certain cases, such as on the OECD website, the term "appropriate technology" is now known as "environmentally sound technologies"; similarly, the United Nations now uses the term "sustainable development" in the place of AT.

One such example of an OSAT organization is Water.org, a non-profit co-founded by the actor Matt Damon and a partner, Gary White. Their mandate, "safe water and the dignity of a toilet, for all, within our lifetime", was developed in the face of dramatic statistics regarding access to and use of clean water in poor countries: 780 million people, about 1 in 9 in the world, lack access to clean water, and more than double that, some 2.5 billion, lack access to a toilet. Noted on their website, Mr. Damon and Mr. White list the consequences:

• More than 3.4 million people die each year from water, sanitation, and hygiene-related causes. Nearly all deaths, 99 percent, occur in the developing world.
• 2.5 billion people lack access to improved sanitation; 1.1 billion still practice open defecation.
• Lack of access to clean water and sanitation kills children at a rate equivalent of a jumbo jet crashing every four hours.
• 443 million school days are lost each year due to water-related illness.
• Women and children bear the primary responsibility for water collection in the majority of households. This is time not spent working at an income-generating job, caring for family members, or attending school.

These statistics are well known within the international development community. But the Damon/White team, with their underlying approach of not just drilling wells, but also delivering sustainable water and sanitation infrastructure that is inexpensive, and locally developed and maintained, aims to exploit the internet for funding of such initiatives - on a micro level. Thus, their new WaterCredit program connects financial institutions to communities with the need for, and the will to implement, water and sanitation projects. Its impact to date is remarkable - it is operating in 5 countries, with 33 active partners, has made some 200,000 loans of an average size of $179, and has already improved clean water access for nearly 1 million people.

Fritz Schumacher, who died suddenly in 1977 at age 66, would have been thrilled - perhaps astonished - to learn how a late-20th-century emerging technology - the internet - has been combined with his concept of appropriate technology to alleviate extreme poverty.

Traveling Canadians

Prime Minister Harper's cabinet ministers were traveling this past week, pitching Canadian energy.

Foreign Affairs Minister John Baird was in Washington, once again making the case, this time with both Republican and Democratic senators, for a prompt decision on the Keystone XL pipeline. More on this in a moment. Also last week, Baird's cabinet colleague, Natural Resources Minister Joe Oliver, together with Alberta Premier Alison Redford, led a trade mission to India, making the rounds in Mumbai and New Delhi, and opening a permanent Alberta trade office in the Indian capital.  Here's why: India is a potentially huge customer of Canadian oil and gas, and Indian firms could become more than just tire-kickers of Canadian energy assets as they continue to invest billions in the sector globally. BP's just-released annual Global Energy Outlook, its time frame this year extended to 2035, forecasts that over the next 20 years India will become increasingly dependent on energy imports despite rapidly rising non-fossil fuel production. Overall, the country's energy consumption will jump 132%, as it becomes the world's most populous country, and even if its rate of GDP growth is only moderate. Here's some perspective on that 132%: it will easily exceed the growth of world energy demand as a whole (41%), will be well above each of the other "BRIC" countries of Brazil (71%), Russia (20%), and China (71%), and will be almost double that of the OECD countries taken in aggregate (69%). Meeting this demand growth will mean that Indian oil imports will increase by 169% and gas imports by 573%, as domestic energy production from all sources, though expanding significantly, falls as a proportion of total Indian consumption.

Canadian energy producers are well aware of India's potential as a very large energy customer. For example,TransCanada Corporation, still frustrated by the Obama administration's apparent opposition to its proposed Keystone XL pipeline from Hardisty, Alberta south to Cushing, Oklahoma, is developing two Plan B's: it has just announced it will build additional rail terminals if Keystone is not approved, and it is now proceeding with its planned $12 billion, 4,400 kilometer Energy East pipeline through Canada to Saint John, New Brunswick, where a deep-water port will be expanded through the construction of a dedicated terminal for super-tanker shipments of Alberta crude oil to, among others, Indian refiners. Reliance Industries' Jamnagar refinery on India's west coast, one of the world's largest, would be a particularly important new customer for Alberta crude, as the refinery expands its own operations to meet India's rapidly growing energy consumption. Another Canadian company, Enbridge Inc., also has Indian (and Chinese) energy demand in its sights, as it continues its efforts to obtain approval to build its Northern Gateway oil pipeline from Bruderheim, Alberta to Kitimat, a deep-water port on British Columbia's coast.

Minister Oliver and Premier Redford, while scouring for new energy customers in India, were also making the case for Indian direct investment in the Canadian energy sector. It's well known that Indian companies have been involved over the years in several biddings for oil and gas assets in Canada, including notably a $5 billion (unsuccessful) bid in 2012 for ConocoPhillips oil-sands properties. But they have remained mostly on the sidelines, somewhat confused by Canada's mixed signals to potential foreign buyers: the Harper government recently closed the door to acquisitions, except minority stakes, in the oil sands by foreign state-owned companies. India's state-owned Oil and Natural Gas Corp. Ltd., which operates in Canada as ONGC Videsh Ltd., has nonetheless indicated it remains very interested in Canadian energy assets to add to the $100 billion worth of oil and gas acquisitions it and other Indian companies have made globally over the past few years.

Given India's and other Asian countries' burgeoning energy demands, and given America's growing capacity to meet its own requirements through domestic shale production, Canadian energy producers will be facing, increasingly, one fundamental challenge: how to not just extract, but also transport, safely, their massive oil and gas reserves to either the west or east coasts of the country, for export to the rest of the world.

Violence, Protests, Celebrations - and Challenge

Egyptians voted yesterday and today, the second time in little over a year, on another new Constitution. There is virtually no doubt regarding the outcome of this vote -  the Muslim Brotherhood, recently designated as a terrorist group by the military government, is boycotting the vote, as are young, secular activists who may detest the Brotherhood but remain loyal to the ideals of the 2011 Arab Spring revolution. So it would appear that most of the Egyptians who are bothering to vote at all are voting yes. Voter turnout, estimated at no more than 50%, is occurring within the framework of a huge security presence, with some 160,000 soldiers and 200,000 policemen - and low-flying military helicopters - deployed throughout the country. Reports suggest a mostly peaceful voting process, even a celebratory atmosphere around polling stations. But clashes between security forces and supporters of former President Morsi have resulted in several people killed.

This constitution is quite different from that drawn up and hastily passed into law under Mr. Morsi, before he was removed and placed under arrest last July, and now facing several criminal charges relating to his time in office. Notably, under the new charter, the President may be impeached by parliament, contrasting sharply with Mr. Morsi's decree in late 2012 granting him the powers to issue any decision or law without any alternative authority, including parliament and the judiciary, having the power to oppose or revoke it. As well, while this Constitution again names Islam as the state religion, and the "principles of Sharia" remain "the main source of legislation", the decision whether legislation conforms to such principles is restored to the Supreme Constitutional Court from the clerics of Al-Azhar. Freedom of belief is "absolute", as distinct from merely "protected" under Morsi's rule. Political parties may not be formed based on "religion, race, gender or geography", effectively excluding the Muslim Brotherhood and its Freedom and Justice party. Finally, personal and political rights, to protest, and as between men and women, are enshrined in much stronger language than past constitutions.

Assuming today's conclusion of the referendum leads to the passage of the draft Constitution, there will be parliamentary then presidential elections within the next several weeks. General Abdel Fattah al-Sisi, Egypt's interim ruler, is considered almost certain to stand for, and win, the post of President, thus completing what he has described as Egypt's "transition to democracy". It is clear, however, that his "transition" will have done little to resolve at least one core issue that will almost certainly continue to destabilize Egyptian society in 2014. It's the economy, which now relies on aid flows from Saudi Arabia, the UAE and Kuwait just to keep it from complete collapse. Tourism receipts are down sharply, as is foreign direct investment, while unemployment, inflation, current account and government budget deficits and outstanding debt continue to expand from record high levels. Recent IMF forecasts indicate a drop in GDP this year and next, and negotiations with the IMF for a $12.5 billion standby loan remain stalled. Within this recessionary environment, the challenge for Egyptian policymakers will be, among many, modifying the long-standing system of subsidies for foodstuffs and petrol without somehow sparking broad reaction from the Egyptian populace that would cut across all political lines. Failure to implement difficult reforms and ultimately restore economic health, or at least to impart a sense among Egyptians that economic prospects will improve relatively soon, could easily undo General Sisi's transition, and lead to a second "revolution" much like the demonstrations in 2011 that ended Hosni Mubarak's long rule.

The World Economic Forum, in its just-released "Outlook on the Global Agenda 2014", notes that its experts "overwhelmingly agree that rising societal tensions in the Middle East and North Africa will be the defining trend of 2014...". Sadly, Egyptian developments in the coming year will be at the forefront of this trend.

Alternative Treatment

Each time there is a mass shooting or bombing in America, typically carried out by one or two individuals who are young, single and male, the gun control/mental illness debates start all over again. They last for a few days or weeks, then dissipate with little or nothing done about either issue, even though it seems completely reasonable to suggest that some more regulation of gun purchase and ownership, and some more budget allotted for the treatment of those with mental disorders, could only be a net positive in any society.

Notwithstanding such reasonableness, gaining political traction for policy changes regarding guns or mental illness is, at the very least, difficult. A current case in point is the effort coming from Gabrielle Giffords, a former member of Congress who, along with 18 others, was shot and critically injured by a mentally-ill young male in 2011 at an outdoor meeting in a suburb of Tuscon, Arizona. Ms. Giffords, still recovering from her head injury, and her husband, Mark Kelly, have founded the nonprofit Americans for Responsible Solutions which, while supporting the Second Amendment, aims at "keeping guns out of the hands of dangerous people like criminals, terrorists, and the mentally ill". In launching their organization one year ago today (just a few weeks after the Sandy Hook Elementary School shooting on December 14, 2012), Giffords noted that their goal was to reduce gun violence by matching the considerable resources of the gun lobby; reports indicate she is well along in obtaining donations - some $11 million by the end of last year - to press her positions in the upcoming 2014 Congressional elections. But no one thinks translating such efforts into new policy will be easy - in April 2013, a bi-partisan bill to simply expand background checks failed to pass the Senate. And to the extent that the American Congress is focused at all, it is on broader budget, unemployment and foreign policy issues.

But while change anytime soon in gun laws through the political process seems improbable, another branch of government has been aggressively addressing the sister issue - mental illness. Courts, in both America and Canada, responding to an ever-increasing number of mentally-disordered accused coming through the courthouse doors, have for over a decade been developing so-called Mental Health Courts. There are now some 300 such courts in the U.S., about a half-dozen in Canada. The movement - essentially, the decriminalization of the mentally ill - has two primary objectives: first, to deal efficiently and expeditiously with pre-trial issues of fitness to stand trial, and secondly, to at least slow down the "revolving door", whereby the mentally ill, often though not always charged with relatively minor offenses, return to court so frequently as to at times overwhelm operations. Treatment under this system is not incarceration, followed by release of persons who then re-offend, only to start the whole process again. Rather, through a team that includes specially-trained judges, prosecutors, clerks, social workers, psychiatrists, and probation officers, all assigned permanently to the court, the goal is to achieve stabilization of the offender, and to ensure that the accused leaves the court equipped with a set of clear conditions and expectations, with clothing and residence, with social assistance and therapy, and with frequent follow-up. The Massachusetts' Mental Health Court program, now being expanded beyond Boston, Springfield and Plymouth, is known as being particularly careful in both its initial assessment and subsequent monitoring, with probation officers checking every day with a relatively small number of clients who must prove they are free of recreational drugs including alcohol, who, if prescribed, must keep themselves appropriately medicated at all times, and who must report to their presiding judge once a week. 

There is little yet in the way of comprehensive evaluation of this new approach to treating mentally ill offenders. Preliminary studies suggest recidivism rates have dropped by half compared with traditional systems. By giving participants a second chance, with a "survival kit" that includes professional monitoring and back-up whenever required, it would seem to be an effective approach to reducing criminal offences, including gun violence. Ms. Giffords may wish to re-think her strategy by focusing more on this court system, rather than continuing to work within a sclerotic political framework in Washington.