Quotulatiousness

November 19, 2014

Net Neutrality is a good thing, right?

Net Neutrality is back in the news thanks to President Obama making a PR push to the regulators who may (or may not) be crafting regulations to bring the internet under government supervision:

Because this issue is still in the FCC’s hands, no one can know for sure what rules the agency will adopt. One important question, though, is: will neutrality apply to wireless services or only to cable-based ISPs, such as Comcast, Time Warner, and AT&T? In addition, will failure to preserve the status quo slow down the speed at which Internet connections and broadband capacity expand (because ISPs won’t be able to shift more of the expansion costs onto the “hogs”)? And what exactly is wrong with ISPs wanting to charge content providers higher prices for more bandwidth and faster, more reliable downloads?

More certain, however, is that regulations requiring “net neutrality” will end up benefiting the large, established ISPs. Incumbent firms have gained from “common carrier” regulation throughout U.S. history. As a matter of fact, the FCC predictably will be captured (if it has not already been) by the very companies President Obama wants to regulate “in the public interest.”

The president’s call to action sounds eerily similar to demands for federal railroad regulation that ultimately led to the creation of the Interstate Commerce Commission in 1887. Until it was put out of business in the early 1980s by President Jimmy Carter, the ICC allowed the railroads and, later, motor carriers and pipelines to charge prices exceeding competitive levels, thereby trying its best to protect the carriers’ profits at consumers’ expense.

William Shugart follows up on his original post:

The source of today’s online bottleneck can be traced back to local and regional government authorities, who quickly recognized the benefits (to them personally) of creating and granting exclusive franchises to one ISP that would, for the term of the contract, be a monopolist. (Government officials can extract more rents if they negotiate with only a handful of contestants.) Given that only one ISP would “win” the right to provide online content to local customers, the local monopolists also recognized a benefit of exclusive franchises: They would have the freedom to discriminate against some content suppliers by adding extra fees for privileged access.

So, a simple solution to the absence of net neutrality is readily available: Foster competition between ISPs.

Some people might raise the objection that, in this realm, robust competition for consumer dollars is unlikely because the suppliers of connections to the Internet are “natural monopolists”. In fact, ISPs are not “natural monopolists” as some commentators would have us believe. They are local government-granted monopolies. (Even Frederic Scherer, the author of the influential textbook Industrial Market Structure and Economic Performance, wrote that such claims of “natural monopoly” are “trumped up.”) Competition between ISPs nowadays is a contest for the favors of mayors and city councils who ultimately will determine who will win the exclusive franchise; it is not competition for the business of paying customers.

November 16, 2014

Breaking: Stephen Harper installed in quiet coup by CIA!

Filed under: Cancon, Government, USA — Tags: , , , — Nicholas @ 12:58

It was such a quiet coup that even the media failed to see it! Mark Taliano screams to us Canuckian sheeple that it’s time to wake up!

The biggest threat to Canada’s national security is internal. It is the offshoot of an extraordinarily successful quiet coup that imposed itself on the country with the federal election of the Conservative Party of Canada (CPC) in 2006, and solidified its impacts with the election of a Conservative majority in 2011.

Author, poet, academic, and former Canadian diplomat Prof. Peter Dale Scott recently disclosed a WikiLeaks cable indicating that the International Republican Institute (IRI), an off-shoot of the CIA, and a subsidiary of the National Endowment for Democracy (NED), helped install Stephen Harper as Canada’s Prime Minister. This was the coup.

Point 12 of the cable explains that In addition to the campaign schools, IRI will be bringing in consultants who specialize in party renovation to discuss case studies of political parties in Germany, Spain, and Canada which successfully carried out the process”

My GOD! Canadian political parties bringing in American advisors? This must be resisted! We won’t stand for filthy imperialistic Yankee scum polluting our pristine and uncorrupted political sphere!! Oh, wait … Justin has American advisors too? Oh. Move along: nothing to see here. Move along.

Dr. Anthony James Hall, Professor of Globalization Studies at the University of Lethbridge, in Alberta, explains the genesis of the Harper Conservative assault on the “Red Tory” traditions of Canada’s indigenous conservative party in Flanagan’s Last Stand?:

    The assault by the Harper-Flanagan juggernaut on the generally friendly orientation of Canadian conservatism towards the state, towards Indigenous peoples, and towards the institutions of Crown sovereignty helped clear aside obstacles to the importation from United States of the Republican Party’s jihad on managed capitalism. Flanagan and Harper took charge of the Canadian version of the Reagan Revolution aimed at transforming the social welfare state into the stock market state.

I’d love to say this was just a parody, but I think at least some people on the left really do believe all of this.

Germany discovers new way to depress church membership

Filed under: Europe, Government, Religion — Tags: , , — Nicholas @ 09:59

They really do things differently in Germany, as Megan McArdle reports:

The German Catholic Church is contemplating denying communion to Catholics who have … wait for it … declined to register as Catholics with the government. The reason? Those Catholics don’t want to pay their “church tax.” That’s right: Germany taxes registered religious believers of major denominations, distributing that money to the country’s churches, temples and the like. And it recently changed the rules for calculating the tax to include capital gains, prompting an exodus of presumably well-heeled Catholics from the official rolls. So the German church is threatening to cut them off. Lots of tax rules seem to be written on a pay-to-play basis, but I’ve never before heard of one that was “pay to pray.” I don’t recall Christ saying anything about an admission fee to hear him preach.

To American ears, this is positively shocking. The American Catholic Church certainly doesn’t want you to take communion if you haven’t been baptized by the church or confessed any mortal sins. But no one checks to see whether you made a deposit in the offering plate. What’s going on here?

What’s going on is a phenomenon that conservative-leaning analysts call “crowding out”: when government provision of a service destroys the voluntary institutions that used to do so. This phenomenon often gets exaggerated, but there’s no doubt that it’s real enough — and in the actions of Germany’s Catholic bishops, I think we are seeing an extreme example of where it can lead.

Without the need to support itself with voluntary offerings, the Catholic Church in Germany has become dependent on government support. And government support has some big drawbacks compared to voluntary contributions. To be sure, government money is nice and steady, but it’s also fixed at the amount of the tax.

November 14, 2014

The “modern” House of Lords

Filed under: Britain, Government — Tags: — Nicholas @ 07:16

The House of Lords is the upper chamber of Britain’s parliament. Canada’s (mostly useless) Senate is our equivalent legislative body, in that the members are not there through any kind of popular vote, and the general public view them — if they have any opinion about them at all — as an odd historical holdover that doesn’t really matter in today’s world. Recently, the Wall Street Journal talked about the House of Lords, and Tim Worstall wants to correct their misunderstandings about that august body:

The change to appointing Life Peers rather than hereditaries really came back in 1958, when it first became possible to appoint someone only for life, rather than appointing someone and finding out that their sons (only first son to first son of course, not all sons) to the nth generation also got membership of the House when the time came. Since then there have been very few hereditary peerages granted and those that have been have been special cases. Ex-Prime Ministers, if they desire, become Earls, ex-Speakers of the Commons Viscounts and after that, well, just some very few special people (such a William Whitelaw who became a Viscount, and everyone was assured that he only had daughters so it would not be inherited).

That is, Blair didn’t so much change the usual method of appointment, for that carried on in much the same way it had for the previous few decades. What he did do was remove the extant hereditaries (except for 92 of them, which is a whole other story). He also created a number of peerages in order to try and balance the party memberships in the Lords. But not excessively so perhaps. There’s a nice listing here of the numbers created under each PM and how many per year. Blair’s numbers are well above the historical average, yes, but rather below Cameron’s numbers per year (Cameron, of course, is trying to reverse the balance in favour of Labour that Blair engineered).

In other words it wasn’t so much “replacement” as the exclusion of the hereditaries leading to a much smaller House.

He also addresses the voiced concern that so many peers have (shock, horror!) business ties that might influence their voting:

Yes, many do indeed have contacts with firms in the economy. Quite possibly too many with not the right kind of firm. But then look back up to that first quote from the article. The Life Peers are drawn from, among other places, the captains of industry (and yes, senior trade union leaders get an equal look in, as do left leaning academics, Lord Glasman comes to mind there, as does my old professor, Lord Layard). If you appoint people from industry to the second house of the legislature then you’re going to have people with links to, and quite possibly paycheques from, industry in that second house of the legislature. George Simpson become Lord Simpson (one of them, there are several I think with that name, the distinction becoming “Simpson of Where”) while he was still ruining GEC. So, obviously, there was the Chairman of a defence related company sitting in the House of Lords. But he was appointed because he was head of GEC.

Similarly, one of the particular peers I did some work for had been instrumental in the creation and running of a very successful financial services firm. It was in part what he was made a Lord for. And while I’ve no idea what his financial relationship with his old firm is or was it wouldn’t surprise me if he was still drawing a paycheque or a pension from it.

November 13, 2014

QotD: Unintended consequences

Filed under: Business, Economics, Europe, Government, Quotations — Tags: , , — Nicholas @ 00:01

After World War II, many left-wing European governments wanted to do something about unemployment. As I discuss extensively in my book, unemployment is about the worst thing that can happen to you in a modern democracy, short of death or dismemberment. So they passed laws making it very, very difficult to fire workers. In Italy, for example, a judge could reverse a layoff decision, not because you’d fired the worker unjustly, but because the judge didn’t think you needed to cut staff. Hurrah! Finally, workers were protected from the dark specter of unemployment!

Well, not quite. Workers were thrilled; employers were terrified. Now hiring a worker meant you were stuck with them unless they committed some absolutely flagrant offense — like, say, emptying the till and running out the door.

That’s a hell of a commitment to make to someone you barely know. So employers didn’t want to hire scary strangers; they wanted to hire close friends and family. Or, better yet, no one at all. Youth unemployment in many of these nations was staggering. The insiders had a great deal, but people without jobs found themselves consigned to a series of temporary, not-very-well-paid contracts. Or the dole.

The lesson is that when you make it harder to exit, you also make people reluctant to enter.

Megan McArdle, “Can Limiting Divorce Make Marriage Stronger?”, Bloomberg View, 2014-04-16

November 12, 2014

Decoding the phrase “national food policy”

Filed under: Bureaucracy, Government, Health, Politics, USA — Tags: , , — Nicholas @ 00:04

In The Federalist, Daniel Payne explains what the food nannies really mean by the term “national food policy”:

In the past I have used the term “food system” as shorthand for the industrial paradigm of food production, but for Bittman et al. to talk about the “food system” in such a way exposes it for the ridiculous concept it really is. There is no “food system,” not in the sense of a truly unified body of fully interdependent constituent parts: the “food system” is actually composed of millions of individuals acting privately and voluntarily, in different cities, counties, and states, as part of different companies and corporations and individual businesses, in elective concert with each other and with the rest of the world. To speak if it as a single “system” is deeply misguided, at least insofar as it is not a single entity but an endlessly complex patchwork of fully autonomous beings.

Thus when the authors write about “align[ing] agricultural policies,” they are not speaking in some ill-defined abstract about government policy; they are talking about forcing actual farmers to grow and do things the authors want. When they write of the Environmental Protection Agency and the U.S. Department of Agriculture monitoring “food production,” they are actually advocating that these federal agencies go after and punish people who are not farming in the way the authors want them to farm — and all this without Congress having passed a single law.

The authors are advocating, in other words, for a kind of executive dictatorship over the nation’s farmers, farms, and food supply. While it is unsurprising that they would use this dictatorship to attack the people who grow the food, it is also undeniable that this “national food policy” would target consumers as well. Such a “food system” cannot exist, after all, without people who are willing to purchase and consume its products.

The authors are not merely fed up with their big agribusiness boogeymen; they are also fed up with you for buying agribusiness products, and they want to use the government to make you stop. That you have broken no laws now, and will have broken no laws even after this “policy” goes into effect, is immaterial. They wish for the government to boss you around simply because your shopping purchases displease them. That they are too cowardly to come right out and say so is very telling of who they are—as men, and as advocates of the “public health.” Shame on them for being too spineless to tell the truth of their motives.

To make renewable energy seem cheap, exaggerate the subsidies that fossil fuels get

Filed under: Business, Government — Tags: , , — Nicholas @ 00:03

Tim Worstall isn’t impressed with a recent report that claims traditional energy companies (oil, gas, and coal) get government subsidies that amount to $88 billion per year, just from the G20 countries:

The report itself is here. Have a look at it yourselves, by all means, but here’s the three things they’ve added up to get to that $88 billion figure:

    A fossil fuel subsidy is any government action that lowers the cost of production, lowers the cost of consumption, or raises the price received by producers of fossil fuels. Types of fossil fuel subsidies include financial contributions or other support from the government, such as grants and direct payments, tax concessions, non-market investments made as a result of government ownership of fossil fuel companies, in-kind support (including specific infrastructure), credit support (loans and loan guarantees), insurance and indemnification, market price support, procurement, and responsibility for decommissioning (Koplow and Charles, 2010; Steenblik, 2008). This report divides ‘exploration subsidies’ into three categories:

    • ‘national subsidies’, such as tax breaks to companies and direct spending by government agencies
    • ‘investment by SOEs and
    • ‘public financing’ including support from domestic, bilateral and multilateral international (e.g. loans, equity, and guarantees)

To take that second one first, SOEs are state owned enterprises. So when Rosneft spends money on drilling a new well, given that Rosneft is largely state owned (and most certainly closely state connected) then this is a government subsidy to fossil fuel exploration. No, this isn’t normally what we mean by a subsidy and shouldn’t be counted as one. Just that one classification error accounts for up to half of their $88 billion. Just to repeat the error: claiming that investment by a state owned company on purely commercial terms is a subsidy simply isn’t true. If Statoil drills a new well, upon which it makes the usual profits and finances it in the normal manner, this is not a state subsidy. Yet this report is trying to claim that it is.

The public financing part is a bit of a stretch to be honest. The claim is that if the World Bank lends money to open a coal mine in some poor country then that’s a subsidy from the rich countries (who subsidise the World Bank) to fossil fuels. You could, I suppose, make that case but it is very much a stretch. And if you were to make that case then the subsidy would be only the difference between commercial lending terms on that mine and the concessionary terms that the World Bank is offering. Which isn’t what they measure at all.

But the real problem is with their insistence that any tax break is a subsidy. In their estimates of tax breaks they include things that any normal company gets it’s just that given the differences in the extractive industries we tend to give them different names. Every company is, for example, able to write off the cost of R&D against future income. Drilling or surveying is a form of R&D but we just have a slightly different set of names for how fossil fuel companies can write off those costs. To include all of those “tax breaks” as subsidies when they’re on offer, in slightly different forms and slightly different names, to all producers of anything is not quite being accurate.

Update: In a post today, he revisits the subsidies argument.

Here’s one report on what the IEA is saying:

    Fossil fuels are reaping $550 billion a year in subsidies and holding back investment in cleaner forms of energy, the International Energy Agency said.

    Oil, coal and gas received more than four times the $120 billion paid out in incentives for renewables including wind, solar and biofuels, the Paris-based institution said today in its annual World Energy Outlook.

Yes, all of that is entirely true. And it’s also true, as the IEA has said in the past, that we really would like to stop those subsidies to fossil fuels. On three grounds, the first that they’re very inefficient, the second that they don’t actually reach the poor they’re aimed at and the third that removing them would take us a long way to meeting our climate change targets.

However, nothing is ever that simple: and the big point to note here is that it really isn’t us in the rich countries that are subsidising fossil fuels.

[…]

There’s our two numbers, the renewables subsidy and the fossil fuel one. And yes it’s entirely true that we’d like to reduce that second, the fossil fuel one. Either so we can increase the renewables one because we have more money or so we can decrease it as we now longer have two policies working in opposition to each other.

However, here’s the thing for public policy. It’s us in the rich countries, largely so at least, who are subsidising the renewables. Great, that’s under our control. But it’s almost entirely not us in the rich countries subsidising the fossil fuels. That means, absent the reintroduction of colonialism, that those subsidies are not something under our control.

We should also note that these are “real subsidies”. These aren’t games being played with statistics as yesterday’s attempt to persuade us that we do subsidise by $88 billion. We’re not including tax breaks, not totting up R&D allowances or anything. This really is $550 billion in cash being spent by governments to subsidise fossil fuels.

November 9, 2014

Rent-seekers and crony capitalists love big government

Filed under: Bureaucracy, Government — Tags: , , , , — Nicholas @ 10:38

One of the reasons I’m a small-government fan is that the less the government tries to do, the less opportunity for rent-seekers and crony capitalists to batten on the inevitable opportunities that big government provides when it controls and regulates far beyond its competence:

A nice little point being made over in the New York Times, that for all of the public rhetoric about free markets and competition it’s not actually true that the Republicans are entirely pro-free market and pro-competition at all levels of governance. There’s an explanation for this too, an explanation that comes from the late economist Mancur Olsen. That explanation being about the level of the system that decides what will happen on a particular matter and thus where the special interests will try to capture governance.

    Republicans have hailed Uber, the smartphone-based car service, as a symbol of entrepreneurial innovation that could be strangled by misplaced government regulation. In August, the Republican National Committee urged supporters to sign a petition in support of the company, warning that “government officials are trying to block Uber from providing services simply because it’s cutting into the taxi unions’ profits.”

Josh Barro then goes on to point out that while the national Republican party might be saying such fine words when we get down to the people who actually regulate taxi rides then local Republicans can be just as pro-taxis and anti-Uber as any group of Democrats.

[…] More likely, to me at least, is that Mancur Olsen had it exactly right. His point being that over time democracy will end up being a competition between special interests for control of that democratic apparatus. The basic background insight is spread costs and concentrated benefits. One analogy is the pig and the chicken deciding what to have for breakfast. If they decide upon bacon and eggs then the chicken is interested but the pig is rather committed there. So it is with the regulation of producers and the competition that they might faced. US consumers of sugar might be paying $50 a year each to protect US sugar producers (that number’s not right but it’s not far off, it’s not $5 each nor $500) but rationally, when there’s so much else for us to think about, it’s sensible enough for us to not get very excited nor angry about this. But the sugar producers are making millions a year out of that same system of restrictions and subsidies. They’re very interested indeed in making sure that it continues.

We who take taxis or Uber are quite interested in Uber (and Lyft and all the others) being able to continue in business. But it’s not the end of our lifestyle if the regulatory apparatus is able to stifle them. But for the people who, for example, own taxi medallions in NYC then the replacement of the traditional taxi market by Uber will mean the potential loss of up to $1 million for each medallion. They’re very much more interested in crimping Uber’s style than we consumers are in expanding it.

Olsen went on to point out that the special interests are obviously more interested than we are in the details of regulation. And they’ll concentrate their efforts at whatever level of the regulatory and democratic system it is that affects their direct interests. Contributing to election campaigns, making their views known and so on, wheeling and dealing to promote their interests.

November 8, 2014

QotD: The light rail obsession among municipal politicians

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

I just don’t get it — why the obsession with streetcars? Why pay zillions of dollars to create what is essentially a bus line on rails, a bus line that costs orders of magnitude more per passenger to operate and is completely inflexible. It can never be rerouted or moved or easily shut down if changes in demand warrant. And, unlike with heavy rail on dedicated tracks, there is not even a gain in mobility since the streetcars have to wallow through traffic and intersections like everyone else.

What we see over and over again is that by consuming 10-100x more resources per passenger, rail systems starve other parts of the transit system of money and eventually lead to less, rather than more, total ridership (even in Portland, by the way).

Warren Meyer, “I Can’t Understand the Obsession with Streetcars”, Coyote Blog, 2014-10-23.

November 6, 2014

The US midterm elections show one thing clearly

Filed under: Government, Politics, USA — Tags: , , — Nicholas @ 00:04

The one thing that is apparent from the results of the US federal mid-term elections is that — despite what voters tell pollsters and reporters — they’re absolutely in love with their current federal representatives:

I see that Americans are well satisfied with their politicians: over 95 percent of incumbents re-elected. Perhaps I should be more gentle in my criticism of a system that can bring such torpor and contentment, and is not so unlike monarchy after all.

For note, that in this fast-changing world, some things do not change; that some jobs stay safe, from year to year and decade to decade.

One wonders why politicians go to the trouble of awarding themselves such extravagant pensions, when they could just leave their names on the ballot, indefinitely. Retirements cost the taxpayer money: for now, instead of the one politician, we must in effect pay for two. With term limits, who knows how many we must keep, in the style to which they have become accustomed?

November 1, 2014

Let’s ditch that outdated relic called Daylight Saving Time

Filed under: Government, USA — Tags: , — Nicholas @ 11:42

In the Wall Street Journal, Jo Craven McGinty examines the pro and con equation for Daylight Saving Time. The US government, of course, says it saves electricity by their measurement:

The historic reason for observing daylight-saving time — which ends at 2 a.m. on Sunday when clocks revert to standard time — is to conserve energy, by pushing sunlight forward into the evening, reducing the need for electric lights.

The U.S. government has found the strategy works. But two academic studies published in peer-reviewed journals rebut the idea, and one even concludes the policy increases demand for electricity.

The most recent government study, by the Department of Energy, tested whether expanding daylight-saving time by four weeks in 2007 reduced the use of electricity, as intended.

The study examined the additional weeks of daylight-saving time using data provided by 67 utilities accounting for two-thirds of U.S. electricity consumption. It compared average daily use in 2006, when there was no daylight saving, with the same period in 2007 when the extension took effect and found a reduction in electricity use of 0.5% in the spring and 0.38% in the fall.

However, non-government studies don’t agree:

The study, which was published in the Review of Economics and Statistics, examined residential data only, but the researchers didn’t believe commercial use would alter their findings.

“Big-box stores don’t turn on or off lights based on whether it’s light outside or dark,” Mr. Kotchen said. “In a commercial building, the lights are on when people are working no matter what.”

Rather than conserving electricity, the study found that daylight-saving time increased demand for electricity. Conditions may vary in other parts of the country, but the study concluded that Indiana is representative of much of the country.

That doesn’t mean daylight-saving time has never worked since its introduction during World War I. But, said Mr. Kotchen, “the world has changed. Lighting is a small amount of energy and electricity use in households. The big things are heating and cooling, particularly as air conditioning has become more prevalent. We’re fooling ourselves to continue calling it an energy policy given the studies that show it doesn’t save energy.”

H/T to Terence Corcoran for the link.

October 31, 2014

US government’s no-fly list at an all-time high

Filed under: Government, Law, Liberty, USA — Tags: , , — Nicholas @ 07:13

In The Atlantic, Conor Friedersdorf talks about the travesty that is the US government’s no-fly list:

An image accompanying the scoop starkly illustrated an out-of-control watchlist. (The Intercept)

An image accompanying the scoop starkly illustrated an out-of-control watchlist. (The Intercept)

Months ago, The Intercept reported that “nearly half of the people on the U.S. government’s database of terrorist suspects are not connected to any known terrorist group.” Citing classified documents, Jeremy Scahill and Ryan Devereaux went on to report that “Obama has boosted the number of people on the no fly list more than ten-fold, to an all-time high of 47,000 — surpassing the number of people barred from flying under George W. Bush.” Several experts were quoted questioning the effectiveness of a watch list so expansive, echoing concerns expressed by the Associated Press the previous month as well as the ACLU.

The Intercept article offered a long overdue look at one of the most troubling parts of the War on Terrorism. Being labeled a suspected terrorist can roil or destroy a person’s life — yet Team Obama kept adding people to the list using opaque standards that were never subject to democratic debate. Americans were denied due process. Innocent people were also put on a no-fly list with no clear way to get off.

As the ACLU put it, “The uncontroversial contention that Osama bin Laden and a handful of other known terrorists should not be allowed on an aircraft is being used to create a monster that goes far beyond what ordinary Americans think of when they think about a ‘terrorist watch list.’ If the government is going to rely on these kinds of lists, they need checks and balances to ensure that innocent people are protected.” The status quo made the War on Terror resemble a Franz Kafka novel.

October 28, 2014

Civil service pensions

Filed under: Cancon, Economics, Government — Tags: , , , — Nicholas @ 07:12

In City Magazine, Steven Malanga looks at Canada’s civil service pension problems, which may not be quite as bad as some US state problems, but are still going to be a source of conflict going forward:

Governments throughout the country are grappling with as much as $300 billion in unfunded government-worker retirement debt. In a country of just 38.5 million people, that’s a pension problem roughly equivalent to the one that California faces. And it’s widely shared.

Municipalities throughout Quebec, for instance, owe some $4 billion in retirement promises that have yet to be funded, prompting the province’s new Liberal government to demand this summer that workers pay more to bolster the system. A new report on the finances of Ontario’s government-owned utilities revealed their pensions to be unsustainable without deep subsidies from Canadian electricity customers. For every dollar that workers contribute toward their retirement, government-owned utilities now spend on average about four dollars, raised through electric bills—though the cost is even higher at some operations. The news is even bleaker at the federal level, where Canada faces more than $200 billion in total retirement debt for public workers, when the cost of future health-care promises made to public-sector workers is combined with pension commitments. One big problem is pension debt at Canada Post, whose budget is so strained that the federal government gave the mail service a four-year reprieve on making payments into its pension system, even though it’s already severely underfunded.

At the heart of Canada’s pension woes are some of the same forces that have helped rack up several trillion dollars in state and local pension liabilities in the United States. For years, Canadian governments have provided generous pensions at low costs to employees. Workers could earn full benefits while retiring in their mid-fifties, even as they lived longer. Politicians relied on optimistic assumptions about stock-market returns to justify those benefits. Governments were quick to grant additional benefits to politically powerful employee groups, but they underfunded pensions when budgets got tight.

October 25, 2014

Harper government to restore part of the military budget?

Filed under: Cancon, Government, Middle East, Military — Tags: , , , — Nicholas @ 09:49

In the Edmonton Leader-Post, Michael Den Tandt reported last week on the chances of the Canadian Armed Forces getting back at least some of the most recent budget cuts, in light of the increasing deployment tempo in Europe and the Middle East:

Even as the Harper Conservatives have deployed CF-18 fighter jets to Eastern Europe, and now to Kuwait to join the air war against Islamic State, also known as ISIL or ISIS, the Canadian Forces have seen their funding slashed. But that may be about to change, as the government considers adding back part or all of the $3.1 billion removed from the military’s piggy bank in last February’s budget.

Friday, it was reported here that Prime Minister Stephen Harper personally intervened recently to settle a dispute between Treasury Board, led by Tony Clement, and the Defence Department, led by Rob Nicholson, over a pending $800-million sole-sourced purchase of next-generation Sea Sparrow naval missiles from U.S.-based Raytheon Co.

Concerns that the acquisition under the U.S. government’s Foreign Military Sales program would tilt the scales in favour of the Raytheon-Lockheed-Martin group in a burgeoning transatlantic competition for up to $18 billion in subcontracts on DND’s new Canadian Surface Combatant fleet, were overruled. As were, apparently, any worries about the optics of making another large military purchase, a la F-35, without opening the process up to competing bids.

October 19, 2014

Brace yourselves for Beer Store price hikes

Filed under: Business, Cancon, Government — Tags: , , , , — Nicholas @ 12:38

In the Toronto Star, Rob Ferguson details the provincial government’s new-hatched plans to pry more money out of consumers (by way of the Beer Store monopoly):

Premier Kathleen Wynne says she won’t shrink from a battle with The Beer Store as her government thirsts for a bigger cut of sales despite brewers’ warnings it would mean higher prices for suds lovers.

The comments came Saturday as Wynne commented in detail for the first time on recommendations from a blue-ribbon panel on squeezing more money from publicly owned agencies and the distribution system for beer, wine and spirits.

“They’ve laid out some challenging ideas for us and I’m absolutely willing take those on,” Wynne said of the panel headed by TD Bank chair Ed Clark.

“Will it be easy, will it be a path that is without any challenges? No it won’t be but that’s not a problem from my perspective. That’s exactly why it needs to be taken on,” she added after a 22-minute speech to party members in this border city for a strategy session and victory party after winning a majority in the June 12 election.

Clark’s recommendations Friday were a timely distraction for Wynne with the legislature starting its fall session Monday and her Liberals under fire for a bailout of the mostly vacant MaRS office tower across from Queen’s Park, with taxpayers on the hook for hefty interest payments.

The government already taxes beer at 44%. I guess they think that’s too little.

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