Quotulatiousness

May 27, 2013

The economic and technical issues with domestic ship-building programs

Filed under: Cancon, Economics, Military — Tags: , , , — Nicholas @ 12:44

The Royal Canadian Navy is supposed to be getting some new ships (eventually), at a proposed cost of $25 billion. But the best way to get the most bang for our buck is not the way the government is going about it … building these highly specialized vessels in Canada does two things: it guarantees that we’ll pay far more money for fewer hulls, and it briefly raises employment in certain fields (metalworking, electrical work, welding, etc.). What it doesn’t do is create a viable industry for building naval or coast guard ships for other countries — because most other countries can either build their own (France, Germany, the UK, and the US) or have the economic sense to buy from friendly countries that can build efficiently at reasonable cost. Even if we pay a significant premium to build frigates or destroyers in Canada, once that job is over the shipyards will close down and most or all of the workers will be looking for new jobs.

Michael Whalen has more:

Given the above, the second, far more strategic, issue to be discussed is: Should we in fact be building warships in Canada at all? What is the long-term benefit to Canada?

The immediate answer from politicians of all stripes is, interestingly, not great ships, but jobs, jobs, jobs. However, the jobs they are talking about may well be far less valuable than we imagine.

There is no standard breakdown of the costs of building a warship, but a recent study by the South Australian government (as part of its input to that country’s proposed 30-year, $250- billion naval shipbuilding strategy) suggests the actual shipbuilding represents much less than half of the cost of a warship, perhaps 30 per cent to 40 per cent.

The rest comes from the design, armament, engines, electronics, etc., which will largely be procured outside of Canada, certainly outside of Nova Scotia. The benefits to Nova Scotia and to Canada will be in largely blue-collar jobs such as shipwrights, welders, electricians and general labour. In a job-poor province such as ours, these are nothing to sneeze at. This massive expenditure will not, however, create a sustainable long-term industry for our province.

To put it bluntly, there is no market for Canadian-built warships. The major buyers, the Americans, the British, the French, the Chinese, etc., build their own. They will never buy a ship from Canada.

Our governments, federal and provincial, will spend billions establishing a small, inefficient industry for which there is no market outside the government of Canada.

There are economies of scale to consider: for a dozen ships, it makes no sense to essentially create an industry from scratch. For a hundred ships, the costs start to be reasonable (but we don’t need that many, couldn’t crew that many, and nobody will buy them from us). We have an infamous historical test of this, too:

There is something of a parallel here with the aircraft industry. John Diefenbaker has been condemned for nearly 60 years for cancelling the Avro Arrow, Canada’s last attempt at building a warplane.

In retrospect, he was right. Instead of spending billions on a jet for which there was no market, subsequent governments invested in companies like DeHavilland and Canadair (both ultimately purchased by Bombardier) and Pratt and Whitney Canada which focused on the growing market for commercial aircraft, particularly small airliners serving regional markets.

Today this country has a vibrant aerospace industry that is among the world’s largest. Canadian-built aircraft fly on every continent and jobs have been created across the country, including many here in Nova Scotia.

Large parts of this industry resulted from the identification of a sustainable, growing niche market (regional airliners) and investing in the components (e.g. airframe design, small turbine engines, landing gear) required to meet that demand. There is no evidence that kind of strategic thinking has gone into Canada’s shipbuilding program.

Kim Il Sung’s 1974 higher education management text is “a perfect book for our times”

Filed under: Books, Bureaucracy, Humour, Media — Tags: , , — Nicholas @ 09:45

Alex Usher can’t stop recommending On Improving Higher Education, by Kim Il Sung, going so far as to call it “a perfect book for our times”:

Pay raises, for instance are Right Out. “As long as you make an issue out of remuneration, you cannot be a revolutionary,” says Kim, righteously noting that nobody paid Marx to write Das Kapital (the fact that Marx died before completing it might have had something to do with that, but no matter). North Korean intellectuals had the privilege of giving lectures and writing books, “and yet they insist on receiving money for this wonderful task,” Kim splutters.

Work rules, too, come under serious scrutiny. Responding to complaints that “university and college professors lecture a thousand hours a year”, which some consider to be too much, Kim is clear: “You are wrong! Fundamentally speaking, calculating lecture hours is not the attitude of a revolutionary. If you are true revolutionaries who serve the people, you would never calculate the hours; you try hard by all means to work as much as you can”.

(I make the following offer to university administrations across Canada: if any of you decide to try to outflank your faculty union to the left by telling them their views are evidence of captiveness to bourgeois ideology, I’m buying the first round.)

Recreating ancient hairstyles – the “Hairdo archaeologist”

Filed under: Europe, Greece, History — Tags: , , , — Nicholas @ 09:36

BBC News has an interesting short video on the intersection of hairstyles and archaeology:

Janet Stephens earns a living trimming, straightening and dyeing the hair of customers seeking the latest look.

But the stylist from the US city of Baltimore is more interested in the hairdos of the past.

Stephens is a hairstyle archaeologist who specialises in recreating how women in ancient Rome and Greece wore their hair.

She spoke to the BBC about a museum visit that marked the start of a long journey of discovery on which she solved a historical mystery and had her work published in an academic journal.

Toronto’s mass transit planners go for the wallet

Filed under: Cancon, Government — Tags: , , , — Nicholas @ 09:19

680 News is reporting on the latest attempt by Metrolinx to fund their mass transit pipe dreams:

Metrolinx is asking drivers to pay more to fund transit expansion across the Greater Toronto and Hamilton Area (GTHA).

The transportation agency handed over its funding report to Queen’s Park on Monday.

The 25-year, $50-billion Big Move plan includes:

  • 1 per cent increase to HST (generating $1.3 billion/year)
  • 5-cent/litre gas tax (generating $330 million/year)
  • Parking space levy (generating $350 million/year)
  • 15 per cent development charge

Metrolinx CEO Bruce McCuaig said that will generate $2 billion annually for the transit expansion plan.

“Metrolinx is recommending that we have dedicated funds,” he said.

“We are also recommending that these funds be placed into a transportation trust fund to create certainty that The Big Move projects are delivered and to provide the accountability and transparency GTHA residents demand and deserve.”

Someone really should do a version of “The Monorail Song” from The Simpsons for the light rail fan club in Toronto.

QotD: Two lessons from Calvin Coolidge

Filed under: Government, History, Quotations, USA — Tags: , — Nicholas @ 00:01

I managed to talk for more than 15 minutes, but I could have boiled my remarks down to these two points.

  1. Small government is the best way to achieve competent and effective government. Coolidge and his team were able to monitor government and run it efficiently because the federal budget consumed only about 5 percent of GDP. But when the federal budget is 23 percent of GDP, by contrast, it’s much more difficult to keep tabs on what’s happening – particularly when the federal government operates more than 1,000 programs. Even well-intentioned bureaucrats and politicians are unlikely to do a good job, […]
  2. Higher tax rates don’t automatically lead to more tax revenue. Coolidge and his Treasury Secretary practiced something called “scientific taxation,” but it’s easier just to call it common sense. Since Amity’s book covered the data from the 1920s, I shared with the audience some amazing data from the 1980s showing that lower tax rates on the “rich” led to big revenue increases.

Dan Mitchell, “Two Lessons from Calvin Coolidge”, International Liberty, 2013-05-26

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