Quotulatiousness

August 31, 2014

QotD: Organizational Paralysis

Filed under: Bureaucracy, Humour, Quotations — Tags: , — Nicholas Russon @ 00:01

The first sign of danger is represented by the appearance in the organization’s hierarchy of an individual who combines in himself a high concentration of incompetence and jealousy. Neither quality is significant in itself and most people have a certain proportion of each. But when these two qualities reach a certain concentration — represented at present by the formula I3J5 — there is a chemical reaction. The two elements fuse, producing a new substance that we have termed “injelitance.” The presence of this substance can be safely inferred from the actions of any individual who, having failed to make anything of his own department, tries constantly to interfere with other departments and gain control of the central administration. The specialist who observes this particular mixture of failure and ambition will at once shake his head and murmur, “Primary or idiopathic injelitance”. The symptoms, as we shall see, are quite unmistakable.

The next or secondary stage in the progress of the disease is reached when the infected individual gains complete or partial control of the central organization. In many instances this stage is reached without any period of primary infection, the individual having actually entered the organization at that level. The injelitant individual is easily recognizable at this stage from the persistence with which he struggles to eject all those abler than himself, as also from his resistance to the appointment or promotion of anyone who might prove abler in course of time. He dare not say, “Mr. Asterisk is too able”, so he says, “Asterisk? Clever perhaps — but is he sound? I incline to prefer Mr. Cypher”. He dare not say, “Mr. Asterisk makes me feel small”, so he says, “Mr. Cypher appears to me to have the better judgment”. Judgment is an interesting word that signifies in this context the opposite of intelligence; it means, in fact, doing what was done last time. So Mr. Cypher is promoted and Mr. Asterisk goes elsewhere. The central administration gradually fills up with people stupider than the chairman, director, or manager. If the head of the organization is second-rate, he will see to it that his immediate staff are all third-rate; and they will, in turn, see to it that their subordinates are fourth-rate. There will soon be an actual competition in stupidity, people pretending to be even more brainless than they are.

C. Northcote Parkinson, “Injelititis, Or Palsied Paralysis”, Parkinson’s Law (and other studies in administration), 1957.

August 17, 2014

“Down on the Farm” by Charles Stross

Filed under: Britain, Bureaucracy, Humour, Media — Tags: , , , — Nicholas Russon @ 10:06

I’m quite a fan of the “Laundry” series of SF/horror stories by Charles Stross. I thought I’d read all of them (well, all that have been released, anyway), but a discussion thread on the Lois McMaster Bujold mailing list alerted me that I hadn’t read “Down on the Farm“, which is available for free on the Tor.com website:

Ah, the joy of summer: here in the south-east of England it’s the season of mosquitoes, sunburn, and water shortages. I’m a city boy, so you can add stifling pollution to the list as a million outwardly mobile families start their Chelsea tractors and race to their holiday camps. And that’s before we consider the hellish environs of the Tube (far more literally hellish than anyone realizes, unless they’ve looked at a Transport for London journey planner and recognized the recondite geometry underlying the superimposed sigils of the underground map).

But I digress…

One morning, my deputy head of department wanders into my office. It’s a cramped office, and I’m busy practicing my Frisbee throw with a stack of beer mats and a dart-board decorated with various cabinet ministers. “Bob,” Andy pauses to pluck a moist cardboard square out of the air as I sit up, guiltily: “a job’s just come up that you might like to look at—I think it’s right up your street.”

The first law of Bureaucracy is, show no curiosity outside your cubicle. It’s like the first rule of every army that’s ever bashed a square: never volunteer.

If you ask questions (or volunteer) it will be taken as a sign of inactivity, and the devil, in the person of your line manager (or your sergeant) will find a task for your idle hands. What’s more, you’d better believe it’ll be less appealing than whatever you were doing before (creatively idling, for instance), because inactivity is a crime against organization and must be punished. It goes double here in the Laundry, that branch of the British secret state tasked with defending the realm from the scum of the multiverse, using the tools of applied computational demonology: volunteer for the wrong job and you can end up with soul-sucking horrors from beyond spacetime using your brain for a midnight snack. But I don’t think I could get away with feigning overwork right now, and besides: he’s packaged it up as a mystery. Andy knows how to bait my hook, damn it.

August 11, 2014

QotD: The decay of the profession of arms

Filed under: Bureaucracy, Military, Quotations, USA — Tags: , — Nicholas Russon @ 00:02

We lecture the [West Point] cadets on professionalism but we practice bureaucracy. To summarize the difference, professional cultures debate, discuss, and continually innovate to stay effective in the changing world. Bureaucracies churn out ever-restrictive rules and seek to capture every eventuality in codified routines.

Consider this: From day one at the academy every possible situation that a cadet could conceivably encounter is accounted for by strict regulations. Not sure how many inches should be between your coat hangers, whether you can hold your girlfriend’s hand on campus, or how your socks should be marked? Consult the regulations. Moreover, all activity is subjected to the cadet performance system, which essentially assigns a grade to every measurable event in a cadet’s life (think shoe shines, pushups and pop quizzes) then ruthlessly ranks the entire class from first to last. Cadets at the top of the list get the jobs and postings they want after graduation. Those near the bottom end up driving trucks at Fort Polk, Louisiana.

The result is two-fold: First, cadets have very little experience adapting to unfamiliar environments. After all, what happens when the regulations don’t describe what’s going on around you? Second, cadets devote zero attention to activities that “don’t count.” If it’s not on the syllabus, and it’s not for a grade, the cadets aren’t learning it. Ask a cadet to spend a few minutes writing up a list of the skills, traits, and knowledge that he wishes he’d have when he finally takes over his first platoon in combat. Then compare this to his four-year curriculum and summer training plans. There will be surprisingly little overlap between the two lists, and the cadet has neither the time nor the incentive to learn what’s missing. In the end, we graduate far too many cadets that are more bureaucrat than professional, lacking the expert knowledge of their trade and the flexibility to be effective in the complex environments they’ll soon encounter.

Major Fernando Lujan, U.S. Army, quoted in “West Point faculty member worries it is failing to prepare tomorrow’s officers”, Foreign Policy, 2010-06-11

August 2, 2014

“So that’s what the economists at Treasury mean by ‘priming the pump’”

Filed under: Bureaucracy, Government, Humour, USA — Tags: , , — Nicholas Russon @ 11:28

Kevin Williamson explains that the government is staffed by deviants under-employed workers who have to find ways to spend their time in the office creatively:

Behind closed doors, in private offices off Washington’s corridors of power, there are a lot of mouses getting double-clicked, if you know what I mean. At the Environmental Protection Agency, a senior official spent so much time watching pornography while on the federal clock that the Office of the Inspector General dispatched a special agent to look into it — and the official continued watching porn while the OIG agent was in his office. At the Federal Communications Commission — which, among other things, polices pornography — employees routinely spend the equivalent of a full workday each week watching porn. At the General Services Administration — which, like the FCC, has a lot of fingers in a lot of pies, being charged with minimizing federal operating costs — employees spend up to six hours a day watching porn on the taxpayers’ dime. At Commerce, paralegals were paid upward of $4 million to do no work — any guesses how they filled their days?

It’s a lucky thing that federal employees have such good insurance plans when it comes to workplace-related troubles such as repetitive-stress injuries: One especially heroic employee at Treasury viewed more than 13,000 pieces of pornography in the space of a few weeks, surely setting some kind of gherkin-goosing record in the process. I assume he told his superiors he was busy debugging his hard drive.

If war is politics by other means, as Clausewitz insisted, then administration is a tug of war.

A very lonely tug of war.

It is not just pornography. Federal employees fill their days with online shopping, watching television, trolling dating sites in the hopes of having a relationship with someone other than themselves and the nice webcam ladies at Smut.com

But look on the bright side:

The fact that our bureaucrats spend their days working as amateur snake charmers is, counterintuitive though it may sound, the good news. Rather than fire these tireless onanists, the federal government should upgrade their broadband and invest in … whatever matériel these ladies and gentlemen need to keep up their fearless campaign of hand-to-gland combat. If their brains ever get full use of the blood supply while they’re in the office, mischief surely will ensue.

Better their hands are in their pants than on the levers of power.

July 26, 2014

QotD: French “ultra-liberalism”

Filed under: Bureaucracy, Europe, Government, Quotations — Tags: , , , , — Nicholas Russon @ 00:01

The French press, media and intellectuals castigate ad nauseam what they call the ‘ultra-liberalism’ of the present-day western world: and their characterization, as intellectually lazy as it is inaccurate, now goes virtually by default. Very few are the commentators who see through its inaccuracy. That a country whose public sector accounts for more than half of economic activity, and which is as highly-administered as France (and, it must be said, often well-administered, for who would not rather go on the Paris Metro than the New York Subway?), cannot plausibly be described as ‘ultra-liberal,’ ought to be perfectly obvious even on the most casual reflection, but alas it is not. If France is ultra-anything it is ultra-corporatist, but even that would be an exaggeration. And so present discontents are laid at the door of ultra-liberalism, though in fact a considerable proportion of the resentments and discontents of the young who approve of M’Bala M’Bala are attributable to the rigidity of the French labor market, which is caused precisely by an illiberal nexus of protections and restrictions.

The problem, then, is not ultra-liberalism but insufficient liberalism. The difference between France and other western countries, incidentally, is one of degree and not of type, though even degree can be important: illiberalism in the French labor market has in a matter of a few years turned London into one of the largest French-speaking cities in the world.

Theodore Dalrymple, “Illusions of Control in the Omnicompetent French State”, Library of Law and Liberty, 2014-01-07

July 21, 2014

NASA’s “random mode”

Filed under: Bureaucracy, History, Space, USA — Tags: , , — Nicholas Russon @ 10:55

Robert Zubrin identifies two different modes of operation practiced by NASA since 1961:

Over the course of its life, NASA has employed two distinct modes of operation. The first prevailed during the period from 1961 to 1973, and may therefore be called the Apollo Mode. The second, prevailing since 1974, may usefully be called the Random Mode.

In the Apollo Mode, business is conducted as follows. First, a destination for human space flight is chosen. Then a plan is developed to achieve the objective. Following this, technologies and designs are developed to implement the plan. These designs are then built, after which the mission is flown.

The Random Mode operates entirely differently. In this mode, technologies and hardware elements are developed in accord with the wishes of various technical communities. These projects are then justified by arguments that they might prove useful at some time in the future when grand flight projects are once again initiated.

Contrasting these two approaches, we see that the Apollo Mode is destination-driven, while the Random Mode pretends to be technology-driven but is actually constituency-driven. In the Apollo Mode, technology development is done for mission-directed reasons. In the Random Mode, projects are undertaken on behalf of various internal and external technical-community pressure groups and then defended using rationales (not reasons). In the Apollo Mode, the space agency’s efforts are focused and directed. In the Random Mode, NASA’s efforts are scatterbrained and entropic.

Imagine two couples, each planning to build their own house. The first couple decides what kind of house they want, hires an architect to design it in detail, then acquires the appropriate materials to build it. That is the Apollo Mode. The second couple canvasses their neighbors each month for different spare house-parts they would like to sell, and buys them all, hoping to eventually accumulate enough stuff to build a house. When their relatives inquire as to why they are accumulating so much junk, they hire an architect to compose a house design that employs all the miscellaneous items they have purchased. The house is never built, but an adequate excuse is generated to justify each purchase, thereby avoiding embarrassment. That is the Random Mode.

NASA had an overriding mission from 1961 to 1974: the moon program. Almost all of its resources were devoted to that goal, and it was achieved. Then bureausclerosis set in, politics took over, and we left the moon (so far, for good). If the future of mankind is in space, it’s unlikely that NASA will be a significant part of that future (unless you count its role in working to hold back private enterprise from getting involved on NASA’s “turf” (can I call it “astroturf” in this context?)).

July 19, 2014

Privacy laws are not intended to benefit you

Filed under: Bureaucracy, Law — Tags: , , — Nicholas Russon @ 11:17

It’s been my constant experience that laws that are purported to “protect” my privacy always seem to restrict me from being given information that doesn’t seem to merit extra protection (for example, my son’s university administration goes way out of the way to protect his privacy … to the point they barely acknowledge that I might possibly have any interest in knowing anything about him). The effect of most “privacy” laws is to allow bureaucrats to prevent outsiders from being given any information at all. Anything they don’t want to share now seems to be protected by nebulous “privacy concerns” (whether real or imaginary). It’s not just my paranoia, however, as Stewart Baker points out:

It’s time once again to point out that privacy laws, with their vague standards and selective enforcement, are more likely to serve privilege than to protect privacy. The latest to learn that lesson are patients mistreated by the Veterans Administration and the whistleblowers who sought to help them.

[...]

Misuse of privacy law is now so common that I’ve begun issuing annual awards for the worst offenders — the Privies. The Veterans Administration has officially earned a nomination for a 2015 Privy under the category “We All Got To Serve Someone: Worst Use of Privacy Law to Serve Power and Privilege.”

July 16, 2014

Free speech is so valuable that we need to designate special zones to contain it

Filed under: Bureaucracy, Liberty, USA — Tags: , , , , — Nicholas Russon @ 07:34

Virginia Postrel on the (insane) view that colleges and universities need to create special free speech zones — and to actively censor students and teachers outside those boundaries:

The vague bans on “offensive” language and other “politically correct” measures that most people think of when they imagine college speech codes are increasingly being joined by quarantine policies that restrict all student speech, regardless of its content.

Speech-zone rules require students to ask permission to do such things as hand out leaflets, collect petition signatures, or give speeches; demand that students apply days or weeks in advance; and corral their activities in tiny areas of the campus, often away from the main pathways and quads. The rules aren’t about noise or crowds. They aren’t about disrupting classes. They’re about what you can do in public outdoor areas, and they apply even to just one or two people engaged in unobtrusive activities. They significantly infringe on students’ constitutionally protected speech.

But judging from some of the public response to the Citrus College case, a lot of people think that’s just fine. Debating national security issues, they seem to think, has no place at state colleges.

“The creation of the free-speech zones, and the enforcement of sound-level ordinances, was not to prevent free speech, but give religious or political speech a time, place, and manner that would allow speakers to address their messages to audiences on campuses without disrupting the other fundamental functions of the institutions,” wrote a retired physics professor commenting on a Chronicle of Higher Education report.

“Isn’t an institution of higher education’s primary function … the education/learning and safety of its students? Anything that is considered distracting or obstructive of the primary goals has to be managed. If some students disagree, they are welcome to attend a different college,” wrote a commenter on a public-radio discussion of the case. Another declared: “I welcome the free speech zones. On some campuses in California, you cannot walk from a classroom to the library without being bombarded by propaganda.”

A campus, in this view, should be like a shopping mall. If you’re going about your business, you shouldn’t be bothered by pamphleteers and petitioners. You should be protected against sermons and political rants. Confining controversial speech to a small area is no different from telling the guy selling sunglasses that he’s got to rent a kiosk.

July 14, 2014

When unions took over the public sector

Filed under: Bureaucracy, Business, Economics, Government, USA — Tags: , , , , — Nicholas Russon @ 09:09

Dmitri Melhorn says the union movement is missing an opportunity to be more relevant in the private sector, because public sector unions don’t help poorer workers (because public sector union members are middle class professionals, not working class):

Progressive hostility to [Harris v. Quinn], however, is shortsighted. Harris and decisions like it have the potential to revitalize progressive politics by restoring the relevance and political potency that labor held in the early-to-mid-20th century. The great labor leaders of that era — AFL-CIO President George Meany, President Franklin D. Roosevelt, and the like — agreed with the majority in Harris: it was both impractical and inadvisable to afford public employees compulsory collective bargaining rights.

Roosevelt said that collective bargaining and public workers’ right to strike would be “unthinkable and intolerable.” Meany said it would be “impossible.” In the view of these leaders, civil service laws from the Progressive Era of the 1890s to 1920s had made government jobs good and safe. Labor and progressives, therefore, needed to focus on blue-collar workers’ need to fight collectively for basic safety, dignity and living wages. Through this focus, the United States saw historic gains in the well-being of workers and the country’s middle class.

That labor heyday lasted through the 1950s, but starting in the late 1960s labor lost ground. Public-sector unions grew rapidly, but private-sector unions shrank. By 2012, public-sector workers had union membership rates more than five times higher than rates among private-sector workers.

Essentially, the public-sector unions sucked up all the oxygen. Talented labor organizers opted to work with government workers: their members were relatively prosperous and well connected, so they were easy and lucrative to organize. As explained in Jake Rosenfeld’s book What Unions No Longer Do from earlier this year, this shift to public-sector unions meant that unions no longer fought primarily for the working poor. Instead, much of their muscle was devoted to improving the status of middle-class professionals.

July 13, 2014

Security theatre still running at peak farcicality – no end in sight

Filed under: Britain, Bureaucracy, Government, Liberty — Tags: , , , , — Nicholas Russon @ 10:59

In the Daily Mail, Peter Hitchins sums up all the individual losses to personal liberty, actual security, and civil discourse bound up in the never-ending security theatre performances at airports and other travel centres:

We have become a nation of suspects. The last wisps of British liberty are being stripped away and, as usual, this is happening with the keen support of millions.

[...]

Then there are the comical new ordeals travellers must face if they are foolish enough to want to go anywhere by plane.

At least they would be comical if we were allowed to laugh at them, but even to joke about ‘security’ in the hearing of some grim-jawed official is to risk detention and a flight ban.

There’s an odd thing about this. We are constantly told that our vast, sour-faced and costly ‘security’ services, and various ‘British FBIs’ and ‘British KGBs’ are fully on top of the terror threat, and ceaselessly halting plots.

How is it then that they claim not to know if harmless aunties from Cleethorpes or Worthing are planning to manufacture an airborne bomb with the ingredients of a make-up bag?

Just in case such a person is a jihadi sleeper agent, she, and thousands of other innocents, must be treated as criminal suspects.

Like newly registered convicts, they must stand in humble queues, meek before arbitrary power.

They must remove clothing, allow strangers to peer at their nakedness in scanning machines, permit inspections of their private possessions and answer stupid questions with a straight face.

They must be compelled to accept this treatment without protest or complaint.

In fact, when we enter an airport these days, we enter a prototype totalitarian state, a glimpse of how it will eventually be everywhere if we do not find a way of resisting this horrible change.

July 12, 2014

Sriracha factory dispute – “THIS PROBLEM NEEDS TO BE TAKEN CARE OF NOW, NOT LATER!!!!!”

Filed under: Bureaucracy, Business, Government, Health, USA — Tags: , , — Nicholas Russon @ 00:03

Sriracha rooster sauceSriracha fans were relieved when the Huy Fong plant in California was allowed to re-open after a farcical ‘elf-and-safety’ shakedown (original story here). Reason‘s Zenon Evans has more on the behind-the-scenes bullshit that triggered the near-national panic among hot sauce consumers:

The public just got some new insight into one of the last year’s spiciest (and fishiest) political kerfuffles: the push by the city council of Irwindale, California to shut down Huy Fong Foods, the makers of Sriracha hot sauce. The tireless freedom-of-information requesters at MuckRock yesterday published internal council documents, revealing theatrically furious communication among the local government officials and a desire to exploit regulations to force the company into submission.

[...]

The newly revealed memos and emails show that some members of government were actually “happy to report the scent of chilies” emanating when production began in 2012, but, a year later Ortiz and Councilman David Fuentes, who also lived near the factory (and also ultimately recused himself from the matter), saw a total shutdown as the first and only appropriate course of action.

“I just received notice that the odor at this place is very strong. We must proceed with SHUT DOWN immediately,” demanded Ortiz in an email, despite the fact that he had previously applauded how much safer that part of town had become since the $80 million business moved in.

Fuentes was even more adamant. “THIS PROBLEM NEEDS TO BE TAKEN CARE OF NOW, NOT LATER!!!!!,” he emailed his fellow council members in October. Notably, he also suggested that “if we need to shut them down for non compliance, then let’s do what we have to do.”

Although it’s not clear exactly what Fuentes meant by “non compliance” or if the council made moves based on his plot, the city did sue Huy Fong and got a judge to order a partial shutdown in November, even though that the judge acknowledged a “lack of credible evidence” regarding the health risk claims. Likewise, California’s health regulators stepped in and changed their own food rules in December as they demanded a 30-day hold on operations, which created fear of a national Sriracha shortage.

July 11, 2014

Remember the Y2K bug? It just caused draft notices to be sent to thousands of dead men

Filed under: Bureaucracy, Government, USA — Tags: , , , — Nicholas Russon @ 07:57

This is a story that rightfully should have been published at the beginning of April (except it actually happened):

A year 2000-related bug has caused the US military to send more than 14,000 letters of conscription to men who were all born in the 1800s and died decades ago.

Shocked residents of Pennsylvania began receiving letters ordering their great grandparents to register for the US military draft by pain of “fine and imprisonment.”

“I said, ‘Geez, what the hell is this about?’” Chuck Huey, 73, of Kingston, Pennsylvania told the Associated Press when he received a letter for his late grandfather Bert Huey, born in 1894 and a first world war veteran who died at the age of 100 in 1995.

“It said he was subject to heavy fines and imprisonment if he didn’t sign up for the draft board,” exclaimed Huey. “We were just totally dumbfounded.”

The US Selective Service System, which sent the letters in error, automatically handles the drafting of US citizens and other US residents that are applicable for conscription. The cause of the error was narrowed down to a Y2K-like bug in the Pennsylvania department of transportation (PDT).

A clerk at the PDT failed to select a century during the transfer of 400,000 records to the Selective Service, producing 1990s records for men born a century earlier.

July 7, 2014

QotD: The mother of mediocrity is the university

Filed under: Americas, Bureaucracy, History, Quotations — Tags: , , — Nicholas Russon @ 00:01

Why, almost everywhere you look, should such mediocrity triumph?

Of course, if mediocrity has not triumphed throughout the Western world, there is nothing to explain. There is, after all, no need to search for the origins of the nonexistent. But let us suppose that there is such a trend to mediocrity, a manifestation of which is bureaucratization: What can explain it? (Here I should mention that we should not get too exercised about definitional matters: Words should be used as precisely as possible, but not more precisely than possible. We know what a cloud is without being able to define its limits.)

The explanation lies in the expansion of tertiary education. Earlier in my life I used to think that this was unequivocally a good thing: The more educated a population, the better. But length of education, or attendance at supposedly educational establishments, is not the same thing as education itself. But in the modern world, where governments have to demonstrate tangible progress to their electorates, length of education and education are confounded.

Guerrilla movements in the last half-century or so in Latin American countries, seeking to establish totalitarian utopias, were caused by the expansion of tertiary education, not by peasant discontent. The graduates of that education — many of them, at any rate — found after obtaining their diplomas that the only work available to them, if any at all, was beneath their new status as educated person, a status that formerly would have entitled them to both respect and an important position in society. If they found work, it was work that they could have done without having gone to university. Bitter disappointment and resentment was the natural consequence.

We in the developed Western world do not have guerrilla movements, at any rate to a significant extent. Our equivalent is the bureaucracy that administers increasingly politically correct regulations. In this way people who have gone to the considerable trouble of obtaining a tertiary education that is of value to them neither vocationally nor intellectually may avenge themselves upon an unjust world, though their anger can’t be assuaged, being the only thing that gives meaning to their lives.

Thus, the mother of mediocrity is the university.

Theodore Dalrymple, “Triumph of the Mediocre”, Taki’s Magazine, 2014-01-19.

June 30, 2014

QotD: The new American ruling class

Filed under: Bureaucracy, Government, Quotations, USA — Tags: , , — Nicholas Russon @ 00:02

Our political bureaucracies are grasping and vicious, and some of the larger of them are dominated by people who are, if we’re being frank, not especially bright. No society can long thrive by making its creators and innovators subservient to its pimps and thieves. But agencies with the power to tax or the power to pay themselves out of taxes have the power to command, and, human nature being what it is, it is not surprising that their executives use that power to extort for themselves extraordinary levels of compensation (occasionally through criminal means, as in the Bell case), even as they bore us all to death talking about the sacrifices they have endured on behalf of their careers in “public service.” [...]

It is baffling that my progressive friends lament the influence of so-called big money on government while at the same time proposing to expand the very scope and scale of that government that makes influencing it such a good investment. Where government means constables, soldiers, judges, and precious little else, it is not much worth capturing. Where government means somebody whose permission must be sought before you can even begin to earn a living, when it determines the prices of products, the terms of competition, and the interest rates on your competitors’ financing, then it is worth capturing. That much is obvious. Progressives refuse to see the inherent corruption in the new ruling class — and, make no mistake, we now have a ruling class — because it is largely made up of them, their colleagues, and people who are socially and culturally like them and their colleagues. Getting a couple hundred grand a year to teach one class doesn’t look so crazy if you think you might be the guy who gets the check next time around. You can be an anti-elite crusader on behalf of the poor and disenfranchised from your million-dollar mansion, even if you never find yourself so much as downwind from a poor person, without fearing charges of hypocrisy: Ask Senator Warren. Of course Chelsea Clinton does not have the sense or the good taste to be embarrassed when talking about her blasé attitude toward money: Money is invisible to her for the same reason that water is invisible to a fish — she’d notice it if it weren’t there, and flap like a desperate landed mackerel until she’d secured her next big payday.

Kevin D. Williamson, “Politics Pays”, National Review, 2014-06-29.

June 27, 2014

FATCA puts “private-sector assets on a bonfire so that government can collect the ashes”

Filed under: Bureaucracy, Cancon, Law, USA — Tags: , , — Nicholas Russon @ 00:02

In The Economist, a look at the looming deadline for non-US financial institutions to start turning over all their data on their US clients to the IRS:

FATCA stands for Foreign Account Tax Compliance Act, an American law passed in 2010 to crack down on the use of offshore banks, particularly in Zurich and Geneva, to hide taxable assets. The law, part of which takes effect on July 1st, is the most important and controversial development in decades in the international fight against tax evasion. It is feared and loathed by moneymen because of its complexity, its global reach and the high cost of compliance. One senior banker denounces it as “breathtakingly extraterritorial”.

The US government is so worried that US citizens are stiffing them for “their share” that they’re willing to risk blowing up the financial lives of millions of Americans living and working in other countries just to get those theoretical “missing” taxes. I started to type “ironically”, but I really mean “typically” the measure will cause great hardship for law-abiding Americans and do little to inconvenience the scofflaws.

The financial industry is struggling to work out which funds, trusts and other non-bank entities count as “financial institutions” under the law. There is also confusion over who is a “US person”. The definition is broad and includes not only citizens but current and former green-card holders and non-Americans with various personal and economic ties to the United States. Some Canadian “snowbirds” who travel to America for part of each year could be caught in the net, says Allison Christians, a tax professor at McGill University. As the complexities of implementation have grown apparent, the American authorities have had to extend several deadlines. Banks, for instance, will get a two-year moratorium on enforcement as long as they are striving to comply.

FATCA has already sent a chill through the 7m Americans who live abroad. Thousands have been told by their local banks and investment advisers that they no longer want their custom because it is too much hassle. Many others will now have to spend thousands of dollars to straighten out their paperwork with the IRS, even if they owe no tax (and most do not, since they will have paid a greater amount abroad, which counts as a credit against tax owed in America).

[...]

FATCA is about “putting private-sector assets on a bonfire so that government can collect the ashes,” complains Richard Hay of Stikeman Elliot, a law firm. Mark Matthews, a former deputy commissioner of the IRS now with Caplin & Drysdale, another law firm, argues that the effort put into hunting offshore tax evaders is disproportionate: the sums they rob from the public purse “look like a pinprick” compared with other types of tax dodging, such as the under-declaration of income by small businesses.

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