Toronto's G-20 Conference: Financial Boon or Boondoggle?

Ever since the ill fated 1999 WTO meeting in Seattle, there has been some debate over the merits of hosting meetings of international organizations in major cities. While some argue that there are economic spin offs from the tourism generated by these conferences, others argue that the security costs far outweigh the benefits. In the lead up to the G-20 meeting in Toronto, there has been a flurry of controversy over the price tag for conference security. The combined security tab for the G-8 and G-20 could end up as high as $900 million dollars. Unfortunately, there has been little discussion about whether the economic spin offs could justify this cost. It seems unlikely, but it would be unfair to jump to any conclusions without looking at the facts.

The tourism industry does have the potential to reap some gains from the G20. The best case scenario for the industry would see 50,000 rooms booked for the conference. Unsurprisingly, Greater Toronto Hotel Association Terry Mundell is excited. "It's a good news story for us," he claims. If we assume (optimistically) that each room goes for $300/night, the hotel industry could make $30 million out of the deal. On top of this, people will obviously be spending money while they're in town. Let's assume that these 50 thousand people consume 4 meals/day at $100/person. This would be a cool $40 million for the restaurant industry. Maybe these folks will have a few drinks. Let's budget in $100/night. After all, these are affluent folks. That's $10 million for the bars. Maybe a few souvenirs to bring back for the kids? Let's say another $10 million. And what if they need some Tylenol? Toothbrushes? Toss in another $10 million. We're up to about $100 million in direct economic benefits. But wait, people need to get to Toronto, and to get around the city. We'll be generous and throw in $100 million for airfare. Add to that $100/day in cabs, and we have another $10 million. This brings the grand total to $210 million. Far from negligible. Unfortunately, that's about double the official estimate of $100 million. Like I said, this is a best case scenario.




On the cost side of the ledger, it is important to note that the costs will be divided between the G-8 Conference in Huntsville, and the G-20 in Toronto. Let be extremely generous and assume it is an even split. Of the $833 million already announced, we'll say $400 million is going to the Toronto conference. This still leaves us with a shortfall of $190 million. Remember, this is an extremely optimistic scenario.

Here's the bad news: even under the optimistic scenario, we still haven't factored in opportunity costs. So far it has been confirmed that three Blue Jays games will be moved to Philadelphia, and the University of Toronto will shut down during the conference. In anticipation of former Jays star pitcher Roy Halliday's first return to Toronto, the team had budgeted for 90,000 fans to attend. At an average revenue of $39/fan, that's a loss of $3.5 million dollars. It's hard to say how many fans would have come into the city from out of town, but it wouldn't be at all unrealistic to say that the city is going to lose at very least another $3.5 million in spin offs.

Even without any similar cancellations, Seattle business managed to lose at least $10 million in revenue as a result of the WTO meeting in 1999 (not to mention the $2 million in property damage). Furthermore, if the G-20 wasn't going to be in Toronto, we don't know how many hotel rooms would have been rented out for other events, or whether the conference goers will crowd out other patrons from restaurants. This is the difficulty with these types of estimates. They take into account the benefits that we see, but not the unseen opportunity costs. It's hard to count a family that decided not to go on vacation, or someone who didn't bother going to the restaurant because it's too busy.

One might argue that the short term costs will be mitigated by long term benefits. After all, some people might like the city so much that they'll want to visit again. Perhaps some number of people will even want to move to the city. I had a similar experience during the G-20 in Pittsburgh last year (though haven't followed through). If we look at it this way, any shortfall could be seen as a tourism advertising expense. Will this pay off in the long run. Unfortunately it is impossible to tell.

So let's assume that the shortfall for the conference is $200 million dollars. That seems pretty reasonable at this point. Let's further assume that there will be a non-trivial long term tourism benefit to the city. In fact, let's assume they make it all back. I still don't buy into the idea of holding major international political conferences in major cities.




My biggest objection is the inconvenience to citizens of the city, which will likely include many people being caught up in violent protests, and police retaliation. No one should have to get tear gassed in the name of boosting tourism. I was there in Pittsburgh when stores were being smashed in, and the police were gassing protesters. Given that I was wise enough to stay away from the protests, I didn't personally witness the chaos. Having said that, there is plenty of footage showing the violent clashes between protesters and police. After Seattle, London, Pittsburgh, and many other cities where these conferences have ended violently, politicians should have learned their lesson. Forget tourism dollars. These conferences are about solving major economic problems. The G-8 meeting is being held in tiny Huntsville, where the G-20 originally was supposed to be held. That's how it should be. It's easier to import police to a small town than to evacuate the downtown of a major city. Hopefully it doesn't take another Seattle to impart this lesson to governments. It probably will.

Foursquare: The Next Airmiles?

I've had a few people ask me lately why I use Foursquare. Superficially, it seems like nothing more than a gift to stalkers all over the world. Users don't receive any direct monetary benefit, and it is impractical as a tool to coordinate social events. When I joined up, I had the exact same question: what is the benefit? The answer lays not so much in what you get from it now, but in the potential it has to function as a conduit for rewards programs.

Foursquare is pretty simple. It is a location based social application. You download it on your smartphone, and the GPS enables you to find the venue you're at, and 'check in.' There are a number of badges that you can earn, and if you've checked in more than anyone else, you become the 'mayor' of the place. This is the most that you will get out of Foursquare itself, but increasingly, venues are partnering with Foursquare to introduce their own rewards.

Though few establishments have began to utilize Foursquare as a marketing tool, there are some significant early adopters. The most notable of which is Starbucks. Starbucks has introduced a rewards program whereby the mayor of each location is entitled to a $1 discount of frappuccinos. That may not seem like much, but it is a start. Now that a major player like Starbucks has entered the fray, there is a good chance that competitors will feel the need to compete with similar rewards programs. McDonald's is actively developing a similar program in collaboration with Facebook.

There are two major hurdles to the spread of such reward programs. The first is that the market for location based social apps is still wide open. Competitors Google Latitude and Gowalla could well end up becoming the dominant technology. The second is a little trickier. Not enough people use any location based social app. Until they become widely used, there will be little incentive for venues to introduce rewards.

In the end, consumers will decide which platform wins out. Maybe location based social apps will die out altogether. It's difficult to forecast which technologies will be adopted by consumers. Only the market can determine this. Regardless of whether Foursquare thrives, the potential for location based social apps is immense. Immediate discounts, combined with social recognition could make location based apps more appealing than Airmiles for some people. I'd bet on it.

Cracking Down On Unpaid Internships | Why Not Just Ban College?

The US Department of Labor is cracking down on unpaid internships. The rational is that internships have become exploitative, leading to little or no benefit to interns. The D.O.L has listed 6 criteria under which unpaid internships can be offered:

• The internship is similar to training that would be given in an educational environment – even though it includes operations of the employer’s facilities.

• The internship experience is for the benefit of the intern.

• The intern doesn’t displace regular employees – he or she works under their supervision.

• The employer receives no immediate advantage from the intern.

• The intern is not necessarily entitled to a job at the end of the internship.

• Both the employer and the intern understand that the intern isn’t entitled to wages.

The most important caveats are the third and fourth. Given the rhetoric around the issue, it is clear that the biggest concern the D.O.L has is that internships are replacing paid entry level positions. While I understand the concern about not replacing paid employees, preventing the employer from receiving any "immediate advantage" is ludicrous. After all, no employer would take on an intern if they didn't feel they'd receive some immediate advantage.

While I've never been an *unpaid* intern, I have had two different internships. In my last internship program, I worked alongside two unpaid interns. To say that they didn't provide any advantage to our employers would be insulting. They were often required to wake up at 5am to do field research, and earned the organization plenty of positive media attention. By this criteria, our employer should be in serious trouble.

Aside from the contribution that they made, these internships certainly paid off. I haven't seen one of them in a few months, but the other is now a full time employee with the organization. She will tell you that her internship was more valuable than anything she ever learned in school. I would agree entirely. Though I've never been an unpaid intern, I have done plenty of volunteer work. I certainly gained more marketable skills from my internships and volunteer experience than from school (and I've got a Masters degree).

If the Department of Labor is serious about cracking down on unpaid internships, maybe they should look at banning post secondary education. After all, students PAY to go to school, with no guarantee of a job after graduation. The work is often more arduous than an internship, and is far more time consuming. Four years of paying to go to school is fare more of a financial hit to students than a 3 month unpaid internship. You could argue that students go to school voluntarily, and that they have reason to believe that it will benefit them in the long run. Then again, the same argument applies to unpaid internships.

It seems that the argument against unpaid internships is based more on a class warfare mentality than actual concern for individual interns. I know some interns from this summer who are still looking for work (unsurprising, given the economy), but I know many who have moved on to rewarding jobs. I certainly don't know of any who are worse off now than they were before. If the Department of Labor is opposed to individuals increasing their long term prospects, than they might as well just ban college.

Vancouver, the Most Liveable City on Earth?

I've always been sceptical of global livability rankings. They always seem to be based on the quality of life of wealthy executives, rather than average denizens. Needless to say, when the Economist ranked Vancouver as the most livable city on earth, I took it with a grain of salt. Wendell Cox at New Geography has confirmed my suspicion. Using the Demographia International Housing Affordability Survey, Cox confirmed that housing in Vancouver is the least affordable major city in the English speaking world.

According to the survey criteria, housing prices in an affordable market should have an index of no higher than 3.0 (meaning that average housing should cost no more than 3 times the average annual gross household income). Vancouver came in at a staggering 9.3. The second most expensive major Canadian city, Toronto, has an index of only 5.2.

There are some obvious reasons why Vancouver is such an expensive city. It's proximity to world class skiing facilities, and it's temperate climate are certainly factors. More significant is it's natural shortage of land. There simply isn't much room to grow. However, David Seymour from the Frontier Center for Public Policy argued that there is still plenty of land left, but onerous land use regulations are preventing it from being developed. I have little specific knowledge of Vancouver's land use policies, but I do know that there is a strong (and obvious) correlation between restrictive land use policies, and high housing costs.

Though I will not offer a solution to this problem, I post this merely to remind people that survey's such as the Economist's Global Liveability Report should be approached critically, and with a good deal of scepticism.

Avatar: A Critical Assessment

As you may have noticed, I did not include a rating for Avatar. This is not because I have no opinion about the film, or that it has no aesthetic value. The reason that I did not rate the film is that I could not in good conscious give a single star to the most offensive movie of the decade.

Going into Avatar, I knew almost nothing about the plot. I had heard that it was an anti-war allegory about the invasion of Iraq. While this didn't bother me (in no small part since I did not support the invasion of Iraq), I expected a heavy handed political message. Unsurprisingly, we find out early in the movie that a corporation, which most certainly represents the American military industrial complex, has invaded a foreign planet in order to obtain unobtainium, a precious metal. At this point I half expected a flashing disclaimer on the screen reminding us that "It's a metaphor." So that was it, I thought. An allegory about the Iraq war. Nothing remarkable. However, it soon became obvious that the allegory was not simply about the Iraq War.

The colonized Na'vi are clearly patterned after indigenous North Americans. Had this been a movie about some of the atrocities that occurred during the colonization of North America, I could have sympathised. What makes Avatar truly insidious is it's ahistorical nature. Rather than portraying a specific instance in a Western society had wronged an indigenous population, the film created an embodiment of every Western stereotype imaginable. The futuristic corporation was a staffed by soldiers that represented the American military industrial complex, who were engaging in colonialism to exploit resources with the zeal of SS operatives. There is not one human character that elicits the least bit of sympathy without entirely rejecting Western civilization. By creating a melange of all these stereotypes, the film erased the notion of Western moral progress. Unlike Dances With Wolves, which focuses on a particular historical event, Avatar creates the impression that colonialism is endemic to Western culture. It paints Western cultures as universally rapacious, insensitive, and dependant on soul destroying technology.

The irony, of course, is that the movie was released by 20th Century Fox, and consumed between $300-500 million dollars, spent mostly on the most lavish display of technological prowess in the history of Western cinema. Using this technology, the film glorifies pseudoscience and a rejection of materialism. Many critics who dislike the message of the film were willing to overlook this since they see Avatar as an important advance in motion picture technology. In this respect, the critics are correct. But surely these same critics should be alarmed that a film that contains a full scale rejection of Western civilization could be so universally praised. Perhaps what insulates Avatar from criticism is that it is not offensive to any specific group. Many critics were offended by the Passion, since it was considered offensive to Jewish people. Of course, it is easy for critics to stand up for marginalized groups. It seems that they are willing to put up with all manners of intolerance, but only when equally applied. Only universal Western self-loathing will do.


*This was orignially posted on my film blog, which can be found here.

The Eglington LRT Dillema: Expropriations, or Major Cost Overruns (Or Both)

The Ambitious Transit City Plan that Metrolinx has designed for the GTA is now getting beyond big picture planning, and into the actual nuts and bolts. To this point, there have been few real costs estimates for the project. Perhaps worse is that no one seemed to alert the public to the possibility of eminent domain use in order to expropriate inconveniently placed homes and businesses. At a recent community meeting, York South Weston Councillor Frances Nunziata revealed that 100 properties would be directly affected by the Eglington light rail line. In order to avoid expropriation, some residents are calling on the government to build the relevant sections of the line underground. Before rushing into a project of this magnitude, someone should have a look at the numbers. Here are some quick facts:

The proposed line is 33 kilometers long (just over 20 miles). The cheapest light rail line built in the last decade cost $31.1 million USD/mile ($33 million Canadian). This was a short rail line along an interstate in Charlotte, North Carolina. Obviously, construction costs will be much higher in Toronto, even if it is entirely above ground. A more likely comparison is the Pittsburgh North Shore extension, a portion of which is underground. That project came in at $243.7 million US ($260 Canadian) per mile. That would bring the cost of the Eglington line to $5.33 billion Canadian Dollars. I should stress that these numbers are taken directly from a pro-light rail organization's website, so it is unlikely that the numbers are exaggerated. The project is projected to cost $4.6 billion dollars. If they increase the proportion of the line that runs underground, my $5.3 billion dollar estimate could look conservative. This also fails to take into account the fact that the average North American light rail line has run 35.8% over budget.





To reiterate: the city plans to spend at least $4.6 billion dollars to replace the current bus routes on Eglington. That is enough to purchase 10,000 of the most expensive transit buses ever constructed (hybrid, of course). This will have little effect on congestion. The Congressional Budget Office estimated that in Portland, the poster child for light rail, the massive investments in light rail only took 1300 cars off of the road during rush hour. That amounts to $225 USD per car every day. At that cost, it would actually be more cost efficient for the provincial government to pay corporations to incentivize telecommuting. $5.3 billion dollars could convince a lot of people not to drive through rush hour traffic. I'm not suggesting the government actually spend this money, but at least it would actually reduce congestion.

One more thing I neglected to mention: the Eglington line only accounts for 33 of the 125 kilometers of rail the city plans to build. Don't be surprised if the total budget for the initiative approaches $20 billion.

The 40th Anniversary of the Altamont Tragedy

The sixties were a tumultuous political era, wrought with intergenerational conflicts, and major civil strife. This fact has been obfuscated by the romanticization of several major events in the decade. The most obvious examples were a pair of music festivals, the Monterey Pop Festival, and Woodstock. The Monterey Festival was a fairly small event in 1967, with a peak attendance of around 10,000. Though it does not have the iconic status of Woodstock, it was the first major rock festival, and was seen as one of the catalysing events of the 'Summer of Love. The festival was considered an unmitigated success.

Unlike the Monterey Festival, Woodstock was far from an organizational success. Several major problems, such as a late change of venue, and the loss of several key acts, threatened to undermine the event's success. Moreover, despite the fact that the concert was supposed to be a profit making enterprise, it was overwhelmed by over 100,000 ticketless fans. The total attendance was around 300,000, despite the fact that the municipality had been informed to expect no more than 50,000. This prompted the local township to declare a state of emergency. Despite the potential chaos, there were only two fatalities at the event. One was from a heroin overdose, and the other a tractor accident. Though the event was marred by horrible traffic and sanitation problems, it was considered successful.

Though the 40th anniversary of Woodstock was met with fanfare earlier this year, the anniversary of it's much neglected cousin, Altamont, has been relatively muted. The infamous Altamont free concert was billed as the West Coast version of Woodstock. The only major difference was that it was going to be free of charge. Like Woodstock, there was a late change of venue, and the peak attendance was estimated at around 300,000. While Woodstock has become a symbol for love and peace, Altamont has become a symbol for the opposite. The festival was headlined by the Rolling Stones, who made the unfortunate decision to ask the Hell's Angels to provide security for the event. For those who were unfamiliar with Hunter Thompson's expose of the Angels, this may not have seemed like such a bad decision. In hindsight, it was.




The concert was punctuated by random acts of violence throughout the day. The two most notable being the beating of a fan by Hell's Angels, curiously armed with pool cues, and the lead singer of Jefferson Airplane receiving a knockout blow to the head. Despite the carnage, the Stones took the stage. By the time the Stones began their third song, Sympathy for the Devil, fights began to erupt. The documentary Gimme Shelter, which followed the entire concert, captured the entire scuffle. Mick Jagger attempted to calm down the crowd, joking how every time they played the ominous song, weird things happened. As they continued, so did the scuffle. At this point, the crowd was beyond control. In the documentary, the camera man is standing behind Jagger, who is flanked by Angels, as the crowd gradually enveloped the stage. This chaotic scene culminated in the death of 18 year old Meredith Hunter, who was stabbed to death by the Hell's Angels after drawing a firearm. It is for this moment that Altamont will forever be remembered.

Though it is conventional wisdom that the chaos at Altamont was entirely the fault of the Hell's Angels, this is a poor interpretation of what happened. Altamont was a tragic experiment in anarchy. Though the Angels aggravated the crowd, they had no real choice. Unlike Woodstock, which did have a significant police presence, Altamont did not. Though most of the victimless crimes were not punished at Woodstock, there were still authority figures to prevent the chaos from erupting. Without that legitimate authority, Altamont was doomed from the start. Even if they had employed a security force other than the Hell's Angels, the situation would still have been unmanageable. With no ability to detain rowdy fans, they were put in a situation where they were often engaging in self defense, rather than policing. This is the lesson that we should all take away from Altamont. Flower children or not, in the absence of a legitimate authority, there is little to prevent minor conflicts from escalating into tragedy. Altamont is to anarchism what the fall of the Soviet Union is to socialism. Though it is not definitive proof that anarchy would be chaotic, it does not bode well. Perhaps in the future, someone will reinterpret these events and prove me wrong. I sincerely doubt this will happen.