[G]reen jobs have become the ginseng of progressive politics: a sort of broad-spectrum snake oil that cures whatever happens to ail you. They are the antidote to economic malaise, an underskilled labor force, the inherent unwillingness of the public to suffer any significant economic and personal dislocation in order to save the environment. They enhance nationalistic vigor. (If we don’t act now, the Chinese will steal all of our green jobs!) They stave off aging of stale political platforms. And I’m pretty sure they’re good for bunions, too.
Megan McArdle, “The Jobs Are Always Greener…”, The Atlantic, 2010-03-11
March 11, 2010
QotD: Green jobs
March 10, 2010
California launches yet another attempt to tax out-of-state corporations
California is getting desperate to scrape up every penny it can, so a renewed proposal for a tax grab vetoed by Governor Arnold Schwarzenegger last year is back in play:
The online retail giant [Amazon.com] has enjoyed an edge over many competitors in the state because it is not required to collect sales tax from residents who buy books, top-of-the-line plasma televisions, cases of diapers and thousands of other products from its website. The Seattle corporation has no store, warehouse, office building or other physical presence in California, and the state cannot tax such businesses under a 1992 Supreme Court decision.
Consumers here are required to pay sales tax on the goods they purchase at Amazon but almost never do, because the state has no mechanism for tracking Amazon purchases and collecting the money.
No story is complete without a nasty accusation:
The Democrats who control California’s Legislature plan to put their own bid on the governor’s desk this month in hopes of reaping up to $150 million annually for state and local coffers. The revenue would make only a tiny dent in the state’s $20-billion deficit, but supporters say every dollar counts in tight times, and there’s a principle at stake.
Amazon has “built an entire business model based on tax avoidance,” said Assembly tax committee Chairman Charles Calderon (D-Montebello).
Of course, tax avoidance is perfectly legal . . . he’s trying to smear Amazon (and every other business selling to customers in California) as being tax evaders. Avoidance is not only legal, it’s a sensible strategy to minimize costs and gain a competitive advantage. Tax evasion, on the other hand, is illegal.
So who is going to get hurt if the measure passes — other than Californians who have been remiss in declaring and remitting their sales taxes?
The California proposal seizes on the thousands of online sales affiliates that Amazon contracts with to get customers to its site. Those companies advertise Amazon products, provide links to the company’s website and get a percentage of the resulting sales.
Many of the affiliates are in California. Supporters of the Democrats’ bill, ABX8 8, say that the connections amount to a presence for Amazon as well and that California should be able to force the firm to collect sales tax.
H/T to Clive, who became aware of this through a website he visits regularly which may have to close down due to the proposed law.
March 9, 2010
It’s pesticide-free . . . but don’t call it “organic”
Organic wine, in theory, should be better quality than non-organic wine because the lack of pesticides requires much more manual labour in the vineyard to produce useful grapes. If you have to put in all that extra effort just to get sufficient grapes at harvest, it’s prudent to treat the resulting wine with care and further attention (otherwise, you’re wasting all that effort up front to grow the grapes in the first place). But, after all that (at least in California), don’t put the word organic on the label:
“You’ve heard of the French paradox?” quipped Delmas, associate professor of management at UCLA’s Institute of the Environment and the UCLA Anderson School of Management. “Well, this is the American version. You’d expect anything with an eco-label to command a higher price, but that’s just not the case with California wine.”
[. . .]
So long as they didn’t carry eco-labels, these wines commanded a 13-percent higher price than conventionally produced wines of the same varietal, appellation and year. Their ratings on Wine Specator’s 100-point scale, in which wines tend to range between the mid-50s and high 90s, were also higher. Wines made from organically grown grapes averaged one point higher than their conventionally produced counterparts.
While the higher Wine Spectator scores still prevailed when producers slapped eco-labels on their bottles, the financial rewards for going to the trouble of making certified wine evaporated. The “made from organically grown grapes” label not only wiped out the price premium for using certified grapes but actually drove prices 7 percent below those for conventionally produced wines, the researchers found.
[. . .]
“Organic wine earned its bad reputation in the ’70s and ’80s,” Grant said. “Considered ‘hippie wine,’ it tended to turn to vinegar more quickly than non-organic wine. This negative association still lingers.”
Even today, the absence of sulfites reduces the shelf-life of organic wines, making them less stable, the researchers said.
I’m afraid my experience of “organic” wine is similar: the ones I’ve tried haven’t been very good, mostly due to rapid aging (the wine was already well past its best when others from the same region/same vintage were still improving). I certainly don’t pay extra if I notice an “organic” label, and I’m likely to avoid such a wine in favour of a non-organic option where possible.
Opening the door to arbitrary punishment
Cory Doctorow talks about why the proposed “three strikes” internet ban is such a stupid idea:
Another anti-piracy scheme that hurts legitimate users
French games developer Ubisoft was the target of a DDoS attack over the weekend, which took out their license verification servers. This left thousands of gamers unable to play their games . . . but not all gamers. Only the ones who bought the game legitimately, because the “real” version requires online validation every time you play . . . the cracked versions do not:
PC users started reporting problems accessing some of the French company’s most popular games, including best-seller Assassin’s Creed 2, on Sunday afternoon. It later emerged that attackers had targeted the company’s controversial anti-piracy system, causing it to break down — which in turn left thousands of people unable to play.
The chaos was so widespread because of the way that Ubisoft’s copy protection system — which requires players who have bought the game to log in online and verify that they are not playing a pirated version — is designed. By flooding the anti-piracy servers with web traffic, the unknown attackers forced it to collapse and therefore locked out those players who tried to sign in.
This angered many gamers, who felt that they had been punished for buying legal copies of the company’s games — which cost as much as £50.
“We’ve had to agree to their draconian rules in order to play their game, however Ubisoft haven’t given a single thought to what happens when their servers screw up,” said one disgruntled user on the company’s web forums.
This is far from the only example of companies trying to protect their intellectual property by imposing DRM “solutions” which punish their customers. In the long term, no matter how nice the product may be, it can’t be a good practice to place barriers in the way of the people who’ve paid to use the product.
March 8, 2010
This sounds familiar
The other day, I wrote:
Once upon a time (and this is becoming long enough in the past to qualify as legend), government work was less well-paid than equivalent work in the private sector. The advantage of taking the lower-paid government job was job security: government workers had a “job for life” and a nice pension at the end of it. Private sector workers got more in the weekly pay, but generally had worse pensions and more uncertainty for long-term employment.
During the last generation or so, this basic trade-off has been lost. Government workers now get better paid than their private sector counterparts, still get practically guaranteed lifetime employment, and not-just-nice-but-very-nice pensions. No wonder governments have become the employer of choice.
Clearly I’m not the only one thinking this way, as Kelly McParland makes a similar pitch:
I like they way they put “bail out” in quotations, as if devoting billions of dollars to the rescue of Greece isn’t really a bail-out. Because in union-land, it isn’t. By definition, everything a unionized worker earns is deserved, because someone, somewhere agreed to pay it — especially workers employed by the government, who make up the bulk of the protesting Greeks. And since they earned it, there’s no reason they should make any sacrifices to help the country avoid economic disaster. No, that’s for little people, who don’t have government jobs.
Canada isn’t Greece, but it’s no healthier here to have a country divided into two classes. Class One: Public sector workers with safe, secure, well-paid jobs it is almost impossible for them to lose, with generous holidays, guaranteed pensions and protection against the economic cycles that prevail in the private sector. Class Two: Everyone else.
It used to be that the people in Class Two had an incentive for risking exposure to economic ups and downs. The pay was generally better, and it was possible to spend an entire career with a successful company and enjoy a pension at the end. Not any more. If events of the past few years have proved anything, it’s that no company is too big to fail, and there’s no guarantee benefits promised when you were hired are likely to be there when you leave. If the pension goes splat, like so many have, you’re on your own.
While the incentive to face the risks of the private sector have diminished, life on the government payroll has never been better. After all those nasty cutbacks imposed by Finance Minister Paul Martin, the Conservatives were elected in 2006, and have been spending wildly ever since. All the staff reductions have been reversed and the public payroll is bigger than ever. Salaries have largely caught up with private sector levels, and the pensions are just as rock solid as they’ve ever been. And you can’t be fired, short of indictment for murder.
At some point (and that point may be sooner than anyone believes), growth in civil service has to stop: there won’t be enough non-civil service jobs to pay for all the rest. Especially as government jobs become more and more attractive over their private sector counterparts. Why not take a job paying more money, with longer vacations, guaranteed pensions, and no risk of losing the job? You’d be crazy to take a job anywhere else, wouldn’t you?
March 5, 2010
Government wages and benefits outpace private sector
Once upon a time (and this is becoming long enough in the past to qualify as legend), government work was less well-paid than equivalent work in the private sector. The advantage of taking the lower-paid government job was job security: government workers had a “job for life” and a nice pension at the end of it. Private sector workers got more in the weekly pay, but generally had worse pensions and more uncertainty for long-term employment.
During the last generation or so, this basic trade-off has been lost. Government workers now get better paid than their private sector counterparts, still get practically guaranteed lifetime employment, and not-just-nice-but-very-nice pensions. No wonder governments have become the employer of choice. Katherine Mangu-Ward has the gory details:
There are two million civilian federal workers. 1.1 million of them have direct private sector equivalents. And they are laughing their asses off at those private sector suckers, who are doing similar jobs for less pay — often a lot less.
“Accountants, nurses, chemists, surveyors, cooks, clerks and janitors are among the wide range of jobs that get paid more on average in the federal government than in the private sector,” according to a USA Today report. In jobs where there are private equivalents, the feds are earning $7,645 more on average than their private counterparts.
[. . .]
Note that the figures above are salaries and don’t include the value of benefits, which averaged $40,785 per federal employee in 2008 vs. $9,882 per private worker.
New economic term: the Jukebox economy
Terence Corcoran endorses a neologism from Bob Hoye, which seems to perfectly capture the current notions about the role of government in the economy:
In the economic culture of our time, in which government is seen as the engine of growth and prosperity, maybe it is too much to expect anything more. We live in what veteran Vancouver investment advisor Bob Hoye has called a jukebox economy. “Jukebox economics,” he wrote recently, “is a suitable description of the notion that the economy can only be kept going if the government feeds it quarters.”
So long as jukebox economics is the dominant economic ideology in Canada and elsewhere, the orthodoxy that guides our politicians and the conventional wisdom our media feeds off, we will continue to get budgets like the one Mr. Flaherty delivered on Thursday. In his speech he kept pumping quarters into the machine, calling the spending “investments” and describing the outcome as “jobs.”
Quarters in, jobs out. “We are in the middle of the largest federal investment in infrastructure in over 60 years. We are putting Canadians to work.” Are these good investments producing worthy jobs? Will they boost productivity and real economic gains that will actually generate what Canada desperately needs, which is greater wealth and progress that actually increases the standard of living for Canadians?
Nobody’s really counting. The word “productivity” didn’t cross Mr. Flaherty’s lips, even though it is universally acknowledged as Canada’s single greatest weakness. Even in the best of times, Canada falls behind. In the 424-page official Budget 2010 document assembled by scores of economic experts, the productivity problem is studiously avoided. The case is never made that the massive multi-year spending plans could really generate productivity gains, most likely because Finance Canada officials know they don’t exist. Of about 15 mentions of productivity gains, most are associated with a few tax cuts and the tariff reduction on manufacturing equipment imports — one of the few worthy measures in the budget.
It’s become a common notion that the government has a tap, marked “jobs” which they can easily turn on and off. This is why so many journalists demand that the government “create” jobs — they think that not only is it the government’s role, but that it’s a unique one. Individuals and firms don’t create jobs, in this mental model, unless the government prods them into doing so.
It’s another example of cargo cult thinking . . . that by some form of sympathetic magic, the government can induce the sky gods to produce the required manna on demand.
March 4, 2010
Shooting the messenger over extra taxes
An article in the Chicago Tribune talks about the latest “extra” to appear on restaurant bills in San Francisco: the “health” charge. This is how many restaurants in the city are handling the latest tax increase — making it explicit on the bill — but the Tribune writer appears to feel the restaurant owners should “eat” the new tax as “part of doing business”. Implied in this is that the restaurants shouldn’t raise prices either.
So, let’s all blame those evil restaurant owners, shall we?
The rationale for this one is to cover the employers’ mandatory contribution to the City’s “Healthy San Francisco” health-coverage system. The charge actually is levied on employers, but at least some restaurants are adding a few dollars or percentage points to each customer’s bill to cover this charge.
The restaurants’ excuse for assessing this charge separately is to let customers know how much they’re paying for employees’ health coverage. That’s the same excuse hotels use when they add “resort” or “housekeeping” fees to unsuspecting guests’ room bills. It’s the same excuse airlines would use to exclude fuel surcharges from their advertised fares if the Department of Transportation would allow them. And it’s sheer nonsense. Employees’ health insurance is no less of a cost of doing business than rent, property taxes, food costs, security services and all the other inputs businesses require to operate. To single out health care for a separate surcharge is unwarranted.
What’s missing here is the distinction between mandatory fees or taxes which various levels of government impose, and extra charges for things which logically should be intrinsic to the basic price. I agree that adding a “housekeeping” item to a hotel bill is wrong, but calling out a new tax that has to be paid is correct. Hidden taxes (in which category the Tribune writer misleadingly includes the San Francisco “health” charge) are the ones that don’t get itemized for you on your bill . . . that’s the “hidden” part.
Hidden taxes are far worse than itemized entries, because when prices rise due to changes in the tax rate, they naturally blame the seller (who doesn’t benefit from the raised price) and not the government which raised the tax rate underlying the price increase.
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March 3, 2010
Chilean earthquake damage may go above $30 billion
In addition to the deaths and injuries caused by the massive earthquake, Chile is still assessing the wider damage to the economy. The Guardian reports on the damage:
With the death toll unchanged at about 800 and aid flowing to southern cities, Chile today began to assess the industrial and economic cost of its earthquake.
After meeting business leaders, President Michelle Bachelet announced a grim summary of damaged industrial plants, ports and destroyed bridges. The cost could be as high as $30bn.
Significant amounts of damage impacted the grape growing areas, as they were in the middle of harvesting the grapes when the quake struck:
Southern ports were closed and inside dozens of bodegas, or wine stores, a river of wine soaked into the soil, raising concerns about damage to the industry. Initial estimates put the quantity of lost wine at 100m bottles, or roughly a sixth of the country’s annual export. Antonio Larrain, general manager of the Chilean Wine Corporation, estimated that 20% of Chile’s stored wine may have been lost. He calculated the value at $300m, which did not include the widespread damage to infrastructure ranging from underground irrigation tubing to warehouses.
Wines of Chile, an industry group, held an emergency meeting today and announced that 12% of the country’s wine production had been lost. Reports from individual wineries suggest that does not represent the true scale of the disaster. “Many wineries that lost 80% of their production are publicly saying just 15% was lost,” said one wine executive who asked not be named, citing the fear that distributors would terminate distribution contracts with wineries most heavily damaged. “This is an incredibly touchy subject,” he said.
The Chilean wine export trade has been a huge growth sector over the last twenty years, and the potential lost revenues could make recovery even more difficult.
Update, 4 March: Ironically, the LCBO’s latest issue of their Vintages magazine features Chilean wine:
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Exact terminology aids understanding
Apple Computer has been accused of exploiting child labour, indirectly, in factories that make iPods and iPhones. This is a serious charge, and the moral outrage it provokes is understandable. It evokes images of Victorian factories (those “satanic mills”), with children as young as seven or eight being starved and abused in horrific conditions.
However, the term “child labour” isn’t particularly exact, as Whit points out:
What I found most interesting was the “child” part — when I was 15 I would have slugged anyone who called me a child. During the summer of my 15th year, I was working in our metal stamping plant where the highest temperature reached 103 F (40 C). I had my first factory job when I was 14 turning wheels on a lathe. My Father never read child-labor laws, and thank God for that. It was an invaluable experience that I am sad to say I won’t be able to give to my son.
I can remember in 1998 visiting a factory for a major automotive supplier in Taiwan. There were 14 year old boys working on the lines making seat belt assemblies. I asked about it and found that they were students at the local technical school. They worked half a shift on the line and spent the rest of the day in class studying engineering. Today, 12 years later, they would be around 26 with degrees in mechanical engineering and over a decade of hands-on experience. I imagine some of them are running plants in China now.
So, there are the imagined children in a Dickensian hell, and there are teenagers (“young adults” in some situations) doing co-op terms in factories. Remember that our ideas about appropriate ages to leave school and work in factories or on farms have changed dramatically over the last two generations. Our grandparents wouldn’t have batted an eye at 14-year-olds working in factories. For most of their contemporaries, the concept of “teenage years” just didn’t have any particular cultural meaning. You were a child, you went to school, then you left school and got a job.
Even 60 years ago, however, they would have objected to under-12’s working away from home (but not on the family farm . . . farming families still looked at kids as extra working hands).
I understand that Apple is worried about its image, and I acknowledge that those eleven 15 year olds may not have wanted to be there. But there is a big difference between a 15 year old farm kid fibbing about his age to get a good factory job to help support his family and using 6 year old slave labor in an illegal fireworks factory in Sichuan. It would be nice if the amazingly flexible English language had a concise way of stating the difference. I think “under-aged labor” is more reflective of the reality of the situation.
It’s also not to excuse bad employers or condone involuntary labour (permitted in some developing countries).
February 26, 2010
Detroit has no problem that the government can’t make worse
Detroit has had a rough time lately — if you define “lately” as 50 years. But never fear . . . in spite of depopulation, de-industrialization, urban decay, crime, and soaring rates of illiteracy, the government is going to do something:
From its status as one of the wealthiest communities in the country, with a population of close to 2 million people 50 years ago, it has shrunk to a chaotic, sclerotic mess of 900,000 souls.
So in America, land of the free, the city elders of Detroit are now planning a forced march down Woodward Avenue. Citizens will be relocated from desolate neighbourhoods, their former homes bulldozed.
How will the city get people to move? In some cases, it will invoke eminent domain legislation, that favourite weapon of central planners, and expropriate. In others, it will simply cut off more services as they become too expensive to provide.
Mass state-driven relocation has happened in Communist China, the former Soviet Union, but America? Not since the creation of Native American reservations, and certainly not in 21st century urban areas.
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Is the Corolla the new Pinto?
David Harsanyi examines the different treatment Toyota is getting from the US government (majority owner of the former #1 US automaker):
The Toyota horror is well on its way to transforming the Corolla into the Pinto of the 21st century. Who knows? Perhaps the worst is true about Toyota. Perhaps it is hiding something. Maybe Toyota thought it was infallible. Maybe it is evil. Right now, though you might not know it, it’s all just a bunch of maybes.
There have been to this point 2,600 reported incidents of “sudden unintended acceleration” reported to Toyota — a company that used to sell 9 million cars yearly, most of them in the United States. This yet-to-be defined glitch — maybe a floor mat sticking — has reportedly caused more than 30 deaths.
What we do know is that anyone involved in a Toyota-driven accident now has a scapegoat. And, if they’re smart, a lawyer.
All of a sudden, Toyotas are dangerous. Edmunds.com, which reviewed more than 200,000 complaints filed with the National Highway Traffic Safety Administration over the past decade, found that Toyota ranked fourth- best among the top 20 automakers in the overall number of complaints per vehicle sold.
General Motors came in six spots lower. Then again, GM is special — or, rather, developmentally disabled. Thus, the U.S. government has the majority stake (with funding extracted from taxpayers) in Toyota’s main competitor. It also has the power to drag the CEO of its chief rival to Washington to nearly badger him into cutting off a pinky in one of those ritual atonement ceremonies.
And while Toyota is being subjected to show trials, what would happen if an American car company had to announce a big recall? No need to wonder:
Then there is the administration. Less than a year ago, Ford — a private, non-government good ol’ American corporation — issued the largest single recall in its long history. A total of 4.5 million vehicles were recalled after it was learned that faulty switches were fire hazards.
At the time, the Obama administration’s overmatched Transportation Secretary Ray LaHood gently prodded customers “to pay attention.” When news of Toyota’s problems began to emerge, before we even knew what it was all about, LaHood told Americans to “stop driving” them. (He later claimed to have misspoke.)
In spite of the media’s best efforts to blacken the brand, I’m still very happy with my Toyota Tacoma. If I had to go and buy another vehicle tomorrow, Toyota would still be my first stop, and would most likely be the brand I’d buy (Honda would be a distant second).
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February 25, 2010
“Ontario will have the highest electricity rates in North America”
Parker Gallant is quite disturbed by the most recent annual report from Hydro One, Ontario’s government-owned electrical transmission corporation:
No major media reported on Hydro One’s annual statement to “investors,” as the company puts it, even though the report is a dog’s breakfast of warning signs and bizarre trends that spell trouble.
[. . .]
As debt rises, Hydro One’s debt-to-equity ratio weakened from 1.71:1 to 1.91:1. It borrows money to pay for capital costs surrounding the province’s Green Energy Act and puts the company at risk of a debt ratings downgrade, which will drive borrowing costs up.
Return on equity is down to 8.7% from 9.7% in 2008, indicating an overall decline in the value of the company. Return on assets fell to 3% from 3.5%. As a result, the dividend payment to the province was $188-million, down 27.4%. But the CEO says the company is “on target.”
Even though revenues and costs are rising, and profit falling, Hydro One handles less electricity — 139.2 terawatts, a decline of 6.4%. The cost of distribution per terawatt was up by 14.9%. Operations and maintenance costs keep rising as power transmitted declines. The number of employees rose 7.7%. Since 2002, when the company had 3,933 employees to distribute 153.2 terawatts, total employment has jumped 38% to 4,400 to distribute 9% less power. Are these additional 1500 staff working in the field or at head office working on rate increase applications?
