The Pessimist

ThePessimist is a happy camper this week. On Wednesday I attended a lecture by Gwynne Dyer at the local university called Climate Wars. I didn't know it when I acquired the tickets, but this was his world premier "performance" of the topic.

If you don't know Dyer, then you should get to know him. He is described as a free-lance journalist, military historian and author. He writes a biweekly column syndicated in 200 newspapers around the world. But I've read him for years and have seen him speak once before, and in my opinion he is one of the biggest thinkers in the world. He travels widely and speaks with a who's who of scientists, politicians, dissidents, military personnel and think-tanks. He can speak in surprising depth about any topic, and takes a broad view that interconnects all diverse facets of any issue.

So, anyway, that was my fan letter. I'm so happy because his talk confirmed things that I believe and have been saying here for some time.

A couple months ago, the UN Intergovernmental Panel on Climate Change issued a report confirming that scientists have reached a consensus that global warming is directly related to human activities. However, despite taking their 15 minutes on the world stage, they diluted everything they were saying by stating that by the end of the century global warming could cost one million lives. The world then shrugged and took their SUV to the shopping mall.

When I heard this statement, I was certain that they had their estimates off by at least an order of magnitude, if not two.

Dyer spoke for 90 minutes, and I'm sure a book will follow shortly. I of course can't do it justice, but here is the match-book version of his talk:

While global warming will cause consequences such as melting polar ice caps, rising sea levels and more severe weather events, these are not the most important considerations. The most serious impact of global warming will be on agriculture - food production.

Food crises have been predicted for centuries, but food production has always kept ahead of population growth. But not this time. In the last 60 years, world population has tripled from 2 billion to 6 billion. But agricultural output has also tripled due to mechanization of farming methods, putting more land under the till, applying massive amounts of (oil based) fertilizer, and by genetic tinkering with crop yields. But there is nothing left in the bag of tricks to continue this massive expansion of food production. All viable land is already under cultivation, fertilizer has reached the point of diminishing returns (not to mention peak-oil being just around the corner, and most crops are already a mono-culture. There is no potential imminent for another 100% increase in world food production.

But the population has not stopped growing. Yes, birth rates are falling toward replacement levels (2 children per woman), but populations continue to grow because of longer life expectancies. So, the balance between food demand and food supply is very close right now. Enter global warming.

Predictions are of an average increase in temperature over the next century of between 2 and 5 degrees Celsius. Research done for the World Bank estimates that the affect of a 2 degree increase in temperature would be a 25% reduction in agricultural output.

Dyer took the example of India to illustrate. India has 1 billion people. India is self-sufficent in food - neither a net importer nor exporter of food. Much of India's "bread-basket" under a 2 degree change would move toward desertification, becoming nonproductive or less productive. A 25% reduction in food production will leave 250 million people without food.

Scary, eh? Will India import the needed shortfall? From where? China will have the same problem. And, to a lesser extent, so will the U.S and Russia.

One million may die? One hundred million sounds like a more reasonable estimate - two orders of magnitude greater than the UN's estimate last month. The UN has missed their opportunity to ring some alarm bells to call the world to action.

ThePessimist will be long dead before any of this comes to pass; but he pities your grandchildren.

OK, in case you hadn't noticed, I've succumbed to the advertizing world. Google Ads now have a place on this blog site. I saw others doing it, so I thought, what the heck, why not.

I bought their argument that advertizing can help pay for my presence here on the internet. Setting up the account and ad html was very easy. I noted in passing that they won't send me any money until my ad revenue exceeded $100. I knew it wouldn't pay much, but I was still thinking that, if I earned only $1 a month I wouldn't actually see any cash for 10 years.

God, that was wishful thinking. The ads have been on this site for exactly 10 days now, and I have earned exactly $0.00.

Still, the context sensitive ads amuse me. I've been ranting about hijabs lately, and one of the ads that has been appearing is for myfavoritehijabstore.com ! Isn't that a hoot? I don't imagine many people coming to this site are going to be in the market for a hijab, but then, you never know. The ad world is a great leveler and communicator.

So, I'm not actually allowed to suggest that you click on the ads on my site. But I will bring to your attention that the only way to get money out of google is for ads on sites to be clicked. They've got billions of dollars; I trust you to do the right thing.

Act now. Google ads will remain on this website only so long as they continue to amuse me.

(This is the 4th in a series of articles on Executive over compensation.)

The Canadian Government is investigating excessive bank fees on using ATMs (Automated Teller Machines, or ABMs Automated Banking Machines). This is a sure sign that there is an election in the offing, because politicians know that Canadians like nothing better than blaming the banks for excessive fees.

But, you know, I don't really care that much. ATMs are expensive pieces of machinery, that require lots of maintenance and they're on every street corner so they're mighty convenient. If the banks want to charge me $1 to use one, fine.

But why do they cost so much? Sure, they're basically vaults that give out money, and armed guards show up in armoured cars at least once a day to load the hoppers with $10s of thousands of dollars. That ain't cheap.

And where do ATMs come from? Turns out many (most?) of them are made by NCR (formerly known as National Cash Register) which had a large plant in my own home town. And in 2006, the CEO of NCR - William Nuti - took home a compensation package of US$7.4million !!

The guy must have had extraordinary performance to have earned these bonuses and stock options, right? Wrong.

• Earnings dropped from $529 million in 2005 to $382 million in 2006
• Sales increased from $6 billion in 2005 to $6.1 billion in 2006

That sales increase is a whopping 1.6%. Any sales manager would have been fired for a performance like that. And the earnings ... well, the 2005 number is apparently muddied by some $214 million one-time prior period adjustment related to taxes. (Don't think about that too hard. It just means the company found some way to avoid paying $200M in taxes !! Guess who's picking up the slack for that.)

So genius boy managed to increase earnings by $67M (21%). Pretty good, I guess, and I guess he's single handedly responsible for this increase since he decided to take $7m of the $67M for himself.

So, let's do a bit more math. The average salary in Canada is about $45k (the minimum wage was recently increased to $8 per hour or $16.6k per year). Mr. Nuti pays himself 165 times the average Canadian wage (445 times the minimum wage).

What does he do that makes him worth that? His big accomplishment this year was shutting down the home tome plant in Waterloo, Ontario, putting 450 people out of work. These people are his neighbours and mine. He didn't actually eliminate the jobs (as a company expense) ... he's moved these jobs to Mexico and Brazil.

ie. He's taken $20M out of the local annual economy, incurring god knows how much severance and other disruption costs, to save a few million by paying cheaper salaries in another country. If it takes two mexicans to do the work of one Canadian, and the average Mexican wage is one third that of a Canadian, then he has saved the company $7M a year. Which he took all for himself, leaving the company's net cost savings of zero.

If I were a stockholder of NCR, I'd be asking a few questions at the next AGM.

I really believe the folks in Hooterville, Quebec have it right. Immigrants need to do a better job of fitting in.

Little 11 year old Asmahan Mansour, from Ottawa, was ejected from a soccer tournament in Laval, Quebec because she was wearing a hijab. Her whole team left the field in support, and forfeited the game.

The ref cited a rule that prohibits non-regulation apparel as a safety concern. The league backed up the ref, indicating it is totally his call.

In my opinion, this ref really knows where his towel is. He can't be accused of prejudice because the ref himself is a muslim. I totally support this call. If the head costume obscures the player's peripheral vision, then the risk of collisions is greatly increased, threatening the safety of herself and other players. If we let her play with a hijab, what next? Burqas?

This little girl (and her parents, who no doubt put her up to this) needs to be grateful she lives in Canada where she can play soccer at all. If she were in Afghanistan under the Taliban, she wouldn't even be allowed outside without a male relative, let alone wearing scandalous shorts in front of the prying eyes of thousands of infidels.

This is as far as ThePessimist can bend: she can wear a bath cap (or a sports hijab - an oxymoron if there ever was one). That should satisfy her god and not endanger the safety of the game.